Fanhua Reports First Quarter 2020 Unaudited Financial Results
Financial Highlights for the First Quarter of 2020:
(In thousands, except per ADS) | 2019Q1 (RMB) |
2020Q1 (RMB) |
2020Q1 (US$) |
Change % | |||
Total net revenues | 971,654 | 722,623 | 102,054 | (25.6 | ) | ||
Operating income | 126,423 | 60,044 | 8,480 | (52.5 | ) | ||
Share of income (loss) of affiliates | 25,413 | (12,339 | ) | (1,743 | ) | - | |
Net income attributable to the Company’s shareholders | 147,268 | 45,793 | 6,467 | (68.9 | ) | ||
Diluted net income per ADS | 2.62 | 0.85 | 0.12 | (67.6 | ) | ||
Cash, cash equivalents and short- term investments (As of March, 31, 2019 and 2020) | 2,394,009 | 1,843,238 | 260,315 | (23.0 | ) |
Commenting on the financial results of first quarter of 2020, Mr.
“Affected by the pandemic, a large number of enterprises at home and abroad have suffered serious losses, with many struggling to survive. Against this market backdrop, we beat expectation with operating income of
“We previously expected the Covid-19 outbreak would be nearly over in
“Since the outbreak,
“Based on our preliminary assessment, we remain optimistic that we will be able to outpace industry growth and achieve positive quarter-over-quarter growth in the second quarter of 2020, with APE to be no less than
“As the insurance market is a crucial part for China’s plans to become a financial powerhouse, we believe that the underlying growth trend of the Chinese insurance market remains unchanged in the long run. In addition, risk awareness has been significantly enhanced among Chinese consumers during this unprecedented health crisis, which is expected to significantly drive the demand for insurance products. We believe we are well-positioned to benefit from such growth opportunities.
“Despite the uncertainties caused by the pandemic, we are confident that we will be able to remain profitable with stable operating cash flow. As such, management reiterates that we will maintain our regular dividend policy of
Financial Results for the First quarter of 2020
Total net revenues were
- Net revenues for the life insurance business were
RMB625.2 million (US$88.3 million ) for the first quarter of 2020, representing a decrease of 27.2% fromRMB859.2 million for the corresponding period in 2019. The decrease was mainly due to the decline of 42.5% in first year commission fromRMB670.2 million toRMB385.2 million , offset by the growth of 27.0% in renewal commissions fromRMB189.0 million toRMB240.0 million as a result of the accumulation of renewal business and high persistency ratio. Revenues generated from our life insurance business accounted for 86.5% of our total net revenues in the first quarter of 2020. - Net revenues for the P&C insurance business were
RMB25.0 million (US$3.5 million ) for the first quarter of 2020, representing a decrease of 34.4% fromRMB38.1 million for the corresponding period in 2019. Revenues for the P&C insurance business are mainly derived from commissions generated from Baowang (www.baoxian.com). The decrease was primarily due to the cessation by certain insurance companies in underwriting several popular accident insurance products distributed through Baowang (www.baoxian.com). Revenues generated from the P&C insurance business accounted for 3.5% of our total net revenues in the first quarter of 2020. - Net revenues for the claims adjusting business were
RMB72.4 million (US$10.2 million ) for the first quarter of 2020, representing a decrease of 2.7% fromRMB74.4 million for the corresponding period in 2019. The decrease was mainly due to the decline in auto-insurance related claims adjusting business, offsetting the growth in our medical insurance-related claims adjusting business. Revenues generated from the claims adjusting business accounted for 10.0% of our total net revenues in the first quarter of 2020.
Total operating costs and expenses were
- Commission costs were
RMB490.9 million (US$69.3 million ) for the first quarter of 2020, representing a decrease of 26.6% fromRMB668.7 million for the corresponding period in 2019. The decrease in commission cost was mainly in line with the decrease of life insurance business.- Costs of the life insurance business were
RMB427.4 million (US$60.4 million ) for the first quarter of 2020, representing a decrease of 28.9% fromRMB601.5 million for the corresponding period in 2019. The decrease was in line with the decline in net revenues generated from our life insurance business. Costs incurred by the life insurance business accounted for 87.1% of our total commission costs in the first quarter of 2020. - Costs of the P&C insurance business were
RMB16.7 million (US$2.4 million ) for the first quarter of 2020, representing a decrease of 32.1% fromRMB24.6 million for the corresponding period in 2019. The costs of the P&C insurance business mainly represent commission costs we incurred for operating Baowang (www.baoxian.com). The decrease was in line with the decrease in net revenues generated from our P&C insurance business. Costs incurred by the P&C insurance business accounted for 3.4% of our total commission costs in the first quarter of 2020. - Costs of claims adjusting business were
RMB46.8 million (US$6.6 million ) for the first quarter of 2020, representing an increase of 9.9% fromRMB42.6 million for the corresponding period in 2019. Costs incurred by the claims adjusting business accounted for 9.5% of our total commission costs in the first quarter of 2020. The increase was due to the growth in our medical insurance-related claims adjusting business, which has a relatively lower margin.
- Costs of the life insurance business were
- Selling expenses were
RMB61.3 million (US$8.7 million ) for the first quarter of 2020, representing a decrease of 5.1% fromRMB64.6 million for the corresponding period in 2019. - General and administrative expenses were
RMB110.4 million (US$15.6 million ) for the first quarter of 2020, representing a decrease of 1.3% fromRMB111.9 million for the corresponding period in 2019.
As a result of the preceding factors, we had an operating income of
Operating margin was 8.3% for the first quarter of 2020, compared to 13.0% for the corresponding period in 2019.
Investment income was
Interest income was
Income tax expense was
Share of loss of affiliates was
Net income was
Net income attributable to the Company’s shareholders was
Net margin was 6.3% for the first quarter of 2020 as compared to 15.2% for the corresponding period in 2019.
Basic and diluted net income per ADS were
As of
Key Operational Metrics for Fanhua’s Online Initiatives in the First Quarter of 2020:
- Lan Zhanggui - Our one-stop insurance service platform:
- The number of registered users of Lan Zhanggui was 1.2 million as of
March 31, 2020 , representing an increase of 35.9% from 860,550 as ofMarch 31, 2019 ; - The number of active users of Lan Zhanggui2 was 34,278 in the first quarter of 2020, as compared to 61,468 in the corresponding period of 2019. The number of active users of Lan Zhanggui who have sold at least one life insurance policy was 30,489 in the first quarter of 2020, as compared to 52,529 in the corresponding period of 2019;
- Insurance premiums generated through Lan Zhanggui were
RMB451.7 million (US$63.8 million ) in the first quarter of 2020, among which life insurance premiums wasRMB438.4 million (US$61.9 million ) and non-life insurance premiums wereRMB13.4 million (US$1.9 million ), respectively, as compared toRMB887.5 million total insurance premiums generated through Lan Zhanggui which includedRMB757.4 million life insurance premiums andRMB130.0 million non-life insurance premiums in the corresponding period of 2019.
- The number of registered users of Lan Zhanggui was 1.2 million as of
- eHuzhu - Our online mutual aid platform:
- The number of paying members was 3.4 million as of
March 31, 2020 , as compared to 3.5 million as ofMarch 31, 2019 .
- The number of paying members was 3.4 million as of
- Baowang (www.baoxian.com) - Our online insurance platform:
- The number of registered customer accounts was 2.8 million as of
March 31, 2020 , representing an increase of 21.7% from approximately 2.3 million as ofMarch 31, 2019 ; - The number of active customer accounts3 was 142,004 in the first quarter of 2020, representing an increase of 71.4% from 82,869 in the corresponding period of 2019;
- Insurance premiums generated on Baoxian.com was
RMB69.3 million (US$9.8 million ) in the first quarter of 2020 as compared toRMB90.2 million in the corresponding period of 2019.
- The number of registered customer accounts was 2.8 million as of
Recent Developments
- As of
March 31, 2020 ,Fanhua had 650,065 sales agents and 1,668 professional claims adjusters, compared with 860,550 sales agents and 1,213 claims adjusters as ofMarch 31, 2019 . The decrease in the number of sales agents was mainly due to our efforts to clean up sales force and focus more on higher quality sales agents. The number of performing agents4 was 95,932, and the number of performing agents for selling life insurance products was approximately 33,152 in the first quarter of 2020. As ofMarch 31, 2020 , Fanhua’s distribution network consisted of 763 sales outlets in 21 provinces and 159 services outlets in 31 provinces, compared with 709 sales outlets in 21 provinces and 143 service outlets in 31 provinces as ofMarch 31, 2019 .
Business Outlook
Conference Call
The Company will host a conference call to discuss its first quarter 2020 financial results as per the following details.
Time:
or
Due to the outbreak of COVID-19, operator-assisted conference calls are not available at the moment. Please pre-register online in advance to join the conference call by navigating to the link provided below and dial-in 10 minutes before the call is scheduled to begin. Conference call details will be provided upon registration.
Conference Call Preregistration: http://apac.directeventreg.com/registration/event/2348224
Additionally, a live and archived webcast of the conference call will be available at Fanhua’s investor relations website https://edge.media-server.com/mmc/p/25m7duce
About
Our online platforms include: (1) Lan Zhanggui, an all-in-one platform which allows our agents to access and purchase a wide variety of insurance products, including life insurance, auto insurance, accident insurance, travel insurance and standard health insurance products from multiple insurance companies on their mobile devices; (2) Baowang (www.baoxian.com), an online entry portal for comparing and purchasing short term health, accident, travel and homeowner insurance products and (3) eHuzhu (www.ehuzhu.com), a non-profit online mutual aid platform in China.
As of
For more information about
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements, including the statements relating to the Company’s future financial and operating results, are made under the “safe harbor” provisions of the
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
As of |
As of |
As of |
||||
20195 | 2020 | 2020 | ||||
RMB | RMB | US$ | ||||
ASSETS: | ||||||
Current assets: | ||||||
Cash and cash equivalents | 169,653 | 503,323 | 71,083 | |||
Restricted cash | 95,952 | 123,037 | 17,376 | |||
Short term investments | 1,612,351 | 1,339,915 | 189,232 | |||
Accounts receivable, net | 682,171 | 490,520 | 69,275 | |||
Insurance premium receivables | 5,067 | 660 | 93 | |||
Other receivables | 61,570 | 117,629 | 16,612 | |||
Other current assets | 54,987 | 46,143 | 6,517 | |||
Total current assets | 2,681,751 | 2,621,227 | 370,188 | |||
Non-current assets: | ||||||
Property, plant, and equipment, net | 40,806 | 38,568 | 5,447 | |||
110,191 | 109,970 | 15,531 | ||||
Deferred tax assets | 7,327 | 10,188 | 1,439 | |||
Investment in affiliates | 363,414 | 351,925 | 49,701 | |||
Other non-current assets | 46,917 | 46,170 | 6,520 | |||
Right of use assets | 190,437 | 192,338 | 27,163 | |||
Total non-current assets | 759,092 | 749,159 | 105,801 | |||
Total assets | 3,440,843 | 3,370,386 | 475,989 | |||
Current liabilities: | ||||||
Accounts payable | 382,882 | 269,913 | 38,119 | |||
Insurance premium payables | 7,901 | 25,980 | 3,669 | |||
Other payables and accrued expenses | 220,290 | 210,638 | 29,748 | |||
Accrued payroll | 101,664 | 79,233 | 11,190 | |||
Income tax payable | 155,251 | 160,867 | 22,719 | |||
Dividend payable | — | 114,060 | 16,108 | |||
Current operating lease liability | 79,986 | 80,557 | 11,377 | |||
Total current liabilities | 947,974 | 941,248 | 132,930 | |||
Non-current liabilities: | ||||||
Refundable share rights deposits | 266,901 | 271,464 | 38,338 | |||
Other tax liabilities | 70,350 | 67,219 | 9,493 | |||
Deferred tax liabilities | 7,898 | 12,648 | 1,786 | |||
Non-current operating lease liability | 103,252 | 104,875 | 14,811 | |||
Total non-current liabilities | 448,401 | 456,206 | 64,428 | |||
Total liabilities | 1,396,375 | 1,397,454 | 197,358 | |||
Ordinary shares | 9,235 | 9,235 | 1,304 | |||
(1,146 | ) | (1,146 | ) | (162 | ) | |
Additional paid-in capital | 393 | 492 | 69 | |||
Statutory reserves | 508,739 | 508,739 | 71,848 | |||
Retained earnings | 1,479,494 | 1,403,704 | 198,241 | |||
Accumulated other comprehensive loss | (65,429 | ) | (58,298 | ) | (8,233 | ) |
Total shareholders’ equity | 1,931,286 | 1,862,726 | 263,067 | |||
Non-controlling interests | 113,182 | 110,206 | 15,564 | |||
Total equity | 2,044,468 | 1,972,932 | 278,631 | |||
Total liabilities and equity | 3,440,843 | 3,370,386 | 475,989 |
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income
(In thousands, except for shares and per share data)
For The Three Months Ended | ||||||||
2019 | 2020 | 2020 | ||||||
RMB | RMB | US$ | ||||||
Net revenues: | ||||||||
Agency | 897,304 | 650,211 | 91,827 | |||||
Life insurance business | 859,185 | 625,205 | 88,296 | |||||
P&C insurance business | 38,119 | 25,006 | 3,531 | |||||
Claims adjusting | 74,350 | 72,412 | 10,227 | |||||
Total net revenues | 971,654 | 722,623 | 102,054 | |||||
Operating costs and expenses: | ||||||||
Agency | (626,097 | ) | (444,097 | ) | (62,718 | ) | ||
Life insurance Business | (601,482 | ) | (427,419 | ) | (60,363 | ) | ||
P&C insurance Business | (24,615 | ) | (16,678 | ) | (2,355 | ) | ||
Claims adjusting | (42,597 | ) | (46,816 | ) | (6,612 | ) | ||
Total operating costs | (668,694 | ) | (490,913 | ) | (69,330 | ) | ||
Selling expenses | (64,642 | ) | (61,255 | ) | (8,651 | ) | ||
General and administrative expenses | (111,895 | ) | (110,411 | ) | (15,593 | ) | ||
Total operating costs and expenses | (845,231 | ) | (662,579 | ) | (93,574 | ) | ||
Income from operations | 126,423 | 60,044 | 8,480 | |||||
Other income, net: | ||||||||
Investment income | 36,825 | 8,860 | 1,251 | |||||
Interest income | 419 | 2,895 | 409 | |||||
Others, net | 1,449 | 2,014 | 285 | |||||
Income from operations before income taxes and share income of affiliates | 165,116 | 73,813 | 10,425 | |||||
Income tax expense | (42,863 | ) | (18,657 | ) | (2,635 | ) | ||
Share of income (loss) of affiliates | 25,413 | (12,339 | ) | (1,743 | ) | |||
Net income | 147,666 | 42,817 | 6,047 | |||||
Less: net income (loss) attributable to noncontrolling interests | 398 | (2,976 | ) | (420 | ) | |||
Net income attributable to the Company’s shareholders | 147,268 | 45,793 | 6,467 |
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income-(Continued)
(In thousands, except for shares and per share data)
For The Three Months Ended |
||||||
2019 | 2020 | 2020 | ||||
RMB | RMB | US$ | ||||
Net income per share: | ||||||
Basic | 0.13 | 0.04 | 0.01 | |||
Diluted | 0.13 | 0.04 | 0.01 | |||
Net income per ADS: | ||||||
Basic | 2.62 | 0.85 | 0.12 | |||
Diluted | 2.62 | 0.85 | 0.12 | |||
Shares used in calculating net income per share: |
||||||
Basic | 1,122,290,708 | 1,073,891,784 | 1,073,891,784 | |||
Diluted | 1,123,329,865 | 1,074,291,427 | 1,074,291,427 | |||
Net income | 147,666 | 42,817 | 6,047 | |||
Other comprehensive income (loss), net of tax: Foreign currency translation adjustments | (4,747 | ) | 3,720 | 525 | ||
Share of other comprehensive gain (loss) of affiliates | (1,278 | ) | 850 | 120 | ||
Unrealized net gains on available-for-sale investments | — | 2,561 | 362 | |||
Comprehensive income | 141,641 | 49,948 | 7,054 | |||
Less: Comprehensive income (loss) attributable to the noncontrolling interests | 398 | (2,976 | ) | (420 | ) | |
Comprehensive income attributable to the Company’s shareholders | 141,243 | 52,924 | 7,474 |
Unaudited Condensed Consolidated Statements of Cash Flow
(In thousands, except for shares and per share data)
For The Three Months Ended | ||||||||
2019 | 2020 | 2020 | ||||||
RMB | RMB | US$ | ||||||
OPERATING ACTIVITIES | ||||||||
Net income | 147,666 | 42,817 | 6,047 | |||||
Adjustments to reconcile net income to net cash generated from operating activities: | ||||||||
Investment income | (32,899 | ) | (5,102 | ) | (721 | ) | ||
Share of (income) loss of affiliates | (25,413 | ) | 12,339 | 1,743 | ||||
Other non-cash adjustments | 24,852 | 33,064 | 4,670 | |||||
Changes in operating assets and liabilities | (67,394 | ) | 51,444 | 7,264 | ||||
Net cash generated from operating activities | 46,812 | 134,562 | 19,003 | |||||
Cash flows from investing activities: | ||||||||
Purchase of short term investments | (1,604,900 | ) | (2,780,732 | ) | (392,714 | ) | ||
Proceeds from disposal of short term investments | 1,824,222 | 3,060,832 | 432,272 | |||||
Cash paid for loan receivables to a third party | — | (60,000 | ) | (8,474 | ) | |||
Others | (4,404 | ) | (2,189 | ) | (309 | ) | ||
Net cash generated from investing activities | 214,918 | 217,911 | 30,775 | |||||
Cash flows from financing activities: | ||||||||
Repurchase of shares from open market | (82,381 | ) | — | — | ||||
Proceeds of cash consideration related to disposal of subsidiaries | 5,000 | — | — | |||||
Subscription of 650 million ADSs to Participants upon 521 Plan | 111,305 | — | — | |||||
Net cash generated from financing activities... | 33,924 | — | — | |||||
Net increase in cash and cash equivalents, and restricted cash | 295,654 | 352,473 | 49,778 | |||||
Cash and cash equivalents and restricted cash at beginning of year | 848,166 | 265,605 | 37,511 | |||||
Effect of exchange rate changes on cash and cash equivalents | (4,524 | ) | 8,282 | 1,170 | ||||
Cash and cash equivalents and restricted cash at end of year | 1,139,296 | 626,360 | 88,459 |
For more information, please contact:
Investor Relations
Tel: +86 (20) 8388-3191
Email: qiusr@fanhuaholdings.com
Source:
1 | This announcement contains currency conversions of certain Renminbi (RMB) amounts into |
2 | Active users of Lan Zhanggui included users who sold at least one insurance policy through Lan Zhanggui (through either its mobile application or WeChat public account) during the specific period. |
3 | Active customer accounts are defined as customer accounts that made at least one purchase directly through www.baoxian.com, its mobile application, or WeChat public account during the specified period. |
4 | Performing agents are defined as agents who have sold at least one insurance policy during the specified period. |
5 | In |
Source: Fanhua Inc.