Fanhua Reports First Quarter 2019 Unaudited Financial Results
Financial Highlights for the First Quarter of 2019:
(In thousands, except per ADS) | 2018Q1 (RMB) |
2019Q1 (RMB) |
2019Q1 (US$) |
Change % |
Total net revenues | 843,263 | 971,654 | 144,781 | 15.2 |
Operating income | 90,181 | 126,423 | 18,837 | 40.2 |
Net income attributable to the Company’s shareholders | 130,218 | 147,268 | 21,944 | 13.1 |
Diluted net income per ADS | 2.00 | 2.62 | 0.39 | 31.0 |
Commenting on the first quarter 2019 financial results, Mr.
“Against this backdrop, our life insurance business registered strong growth of 45.1% year-over-year to
“Driven by the steady growth of our life insurance business, our operating profit reached
Results of Independent Review:
On
As previously announced, the Special Committee is comprised of three independent directors of the Company, Mr.
Financial Results for the First quarter of 2019
Total net revenues were
- Net revenues for the life insurance business were
RMB859.2 million (US$128.0 million ) for the first quarter of 2019, representing an increase of 27.7% fromRMB673.0 million for the corresponding period in 2018. The increase was mainly driven by the growth in first year commissions due to sales volume expansion and the growth in renewal commissions as a result of high persistency ratio. First year commissions increased 27.3% year-over-year toRMB670.2 million and renewal commissions increased 29.4% year-over-year toRMB189.0 million . Revenues generated from our life insurance business accounted for 88.4% of our total net revenues in the first quarter of 2019. - Net revenues for the P&C insurance business were
RMB38.1 million (US$5.7 million ) for the first quarter of 2019, representing a decrease of 58.8% fromRMB92.5 million for the corresponding period in 2018. The decrease was primarily due to the termination of cooperation between Baoxian.com and one of its major channel partners inJune 2018 . Revenues for the P&C insurance business are mainly derived from commissions generated from Baoxian.com and the technology service fees based on the volume of insurance premiums transacted through CNpad. The technology service fee is typically much smaller than the commission we previously received from insurance companies, though our costs are minimal. Revenues generated from the P&C insurance business accounted for 3.9% of our total net revenues in the first quarter of 2019. - Net revenues for the claims adjusting business were
RMB74.4 million (US$11.1 million ) for the first quarter of 2019, representing a decrease of 4.4% fromRMB77.8 million for the corresponding period in 2018. Revenues generated from the claims adjusting business accounted for 7.7% of our total net revenues in the first quarter of 2019.
Total operating costs and expenses were
- Commission costs were
RMB668.7 million (US$99.6 million ) for the first quarter of 2019, representing an increase of 11.9% fromRMB597.4 million for the corresponding period in 2018. The increase in commission cost was mainly in line with the growth of life insurance business.
- Costs of the life insurance business were
RMB601.5 million (US$89.6 million ) for the first quarter of 2019, representing an increase of 28.4% fromRMB468.3 million for the corresponding period in 2018. The increase was in line with the growth in sales. Costs incurred by the life insurance business accounted for 89.9% of our total commission costs in the first quarter of 2019. - Costs of the P&C insurance business were
RMB24.6 million (US$3.7 million ) for the first quarter of 2019, representing a decrease of 69.3% fromRMB80.2 million for the corresponding period in 2018. The decrease was in line with the decrease in sales. The costs of the P&C insurance business mainly represent commission costs incurred for business on Baoxian.com. Costs incurred by the P&C insurance business accounted for 3.7% of our total commission costs in the first quarter of 2019. - Costs of claims adjusting business were
RMB42.6 million (US$6.3 million ) for the first quarter of 2019, representing a decrease of 13.1% fromRMB49.0 million for the corresponding period in 2018. Costs incurred by the claims adjusting business accounted for 6.4% of our total commission costs in the first quarter of 2019.
- Costs of the life insurance business were
- Selling expenses were
RMB64.6 million (US$9.6 million ) for the first quarter of 2019, representing an increase of 32.6% fromRMB48.7 million for the corresponding period in 2018. The increase was primarily due to an increase of sales outlets in 2018. - General and administrative expenses were
RMB111.9 million (US$16.7 million ) for the first quarter of 2019, representing an increase of 4.6% fromRMB107.0 million for the corresponding period in 2018.
As a result of the preceding factors, we had an operating income of
Operating margin was 13.0% for the first quarter of 2019, compared to 10.7% for the corresponding period in 2018.
Investment income was
Interest income was
Income tax expense was
Share of income of affiliates was
Net income was
Net income attributable to the Company’s shareholders was
Net margin was 15.2% for the first quarter of 2019 compared with 15.4% for the corresponding period in 2018.
Basic and diluted net income per ADS were
Key Operational Metrics for
- Lan Zhanggui - Our one-stop insurance service platform that integrates the key functions of both the
CNpad Auto Insurance and CNpad Life Insurance Apps.- Lan Zhanggui had been downloaded and activated 860,550 times as of
March 31, 2019 , representing an increase of 48.5% from 579,348 downloads as ofMarch 31, 2018 ; - The number of active users of Lan Zhanggui2 was 61,468 in the first quarter of 2019, as compared to 64,685 in the corresponding period of 2018. The number of active users of Lan Zhanggui who have sold at least one life insurance policy was 52,529 in the first quarter of 2019, representing an increase of 10.2% from 47,682 in the corresponding period of 2018;
- Insurance premiums generated through Lan Zhanggui were
RMB887.5 million (US$132.2 million ) in the first quarter of 2019, among which life insurance premiums wasRMB757.4 million (US$112.9 million ) and non-life insurance premiums wereRMB130.0 million (US$19.3 million ), respectively, as compared toRMB631.0 million total insurance premiums generated through Lan Zhanggui which includedRMB513.0 million life insurance premiums andRMB118.0 million non-life insurance premiums in the corresponding period of 2018.
- Lan Zhanggui had been downloaded and activated 860,550 times as of
- CNpad Auto Insurance Mobile Application (“CNpad Auto Insurance App”) - Our proprietary mobile sales support system for auto insurance:
- CNpad Auto Insurance App had been downloaded and activated 568,367 times as of
March 31, 2019 , representing an increase of 35.9% from 418,342 times as ofMarch 31, 2018 ; - The number of active users of CNpad Auto Insurance App3 was 51,064 in the first quarter of 2019, representing a decrease of 20.2% from 63,955 in the corresponding period of 2018;
- Insurance premiums generated through
CNpad Auto Insurance App wereRMB423.0 million (US$63.0 million ) in the first quarter of 2019, representing a decrease of 25.9% fromRMB571.0 million in the corresponding period of 2018.
- CNpad Auto Insurance App had been downloaded and activated 568,367 times as of
- eHuzhu - Our online non-profit mutual aid platform:
- The number of registered members was 3.5 million as of
March 31, 2019 , representing an increase of 13.4% from 3.1 million as ofMarch 31, 2018 .
- The number of registered members was 3.5 million as of
- Baoxian.com - Our online insurance platform:
- The number of registered customer accounts was 2.3 million as of
March 31, 2019 , representing an increase of 42.2% from approximately 1.6 million as ofMarch 31, 2018 ; - The number of active customer accounts4 was 82,869 in the first quarter of 2019, representing an increase of 33.4% from 62,100 in the corresponding period of 2018;
- Insurance premiums generated on Baoxian.com was
RMB90.2 million (US$13.4 million ) in the first quarter of 2019 as compared toRMB605.0 million in the corresponding period of 2018. The decrease was primarily due to termination of business cooperation with one channel partner, a third party online lending service provider. Insurance premiums directly generated on Baoxian.com which excluded insurance premiums generated through its channel partners was approximatelyRMB90.2 million (US$13.4 million ), representing an increase of 62.8% fromRMB55.4 million in the corresponding period of 2018.
- The number of registered customer accounts was 2.3 million as of
Recent Developments
- On
April 25, 2019 ,Fanhua Insurance Sales Service Group Company Limited won the “Outstanding Insurance Intermediary Company of the Year” at the 1st Insurance Today - Insurance Intermediary Awards 2018. The award was initiated and organized by Insurance Today, a well-known insurance trade magazine, in recognition of the outstanding performance of the leading players in the insurance intermediary sector. - As of
March 31, 2019 ,Fanhua had 860,550 sales agents and 1,213 professional claims, compared with 579,348 sales agents and 1,253 claims adjusters as ofMarch 31, 2018 . The number of performing agents5 was 123,053, and the number of performing agents for selling life insurance products was approximately 53,486 in the first quarter of 2019. As ofMarch 31, 2019 ,Fanhua's distribution network consisted of 709 sales outlets in 21 provinces and 143 services outlets in 31 provinces, compared with 541 sales outlets in 21 provinces and 142 service outlets in 31 provinces as ofMarch 31, 2018 .
Business Outlook
Conference Call
The Company will host a conference call to discuss its first quarter 2019 financial results as per the following details.
Time:
The toll free dial-in numbers:
United States | 1-855-500-8701 |
United Kingdom | 0800-015-9724 |
France | 0800-918-648 |
Germany | 0800-184-4876 |
Australia | 1-300-713-759 |
Canada | 1-855-757-1565 |
Taiwan | 0809-091-571 |
Hong Kong | 800-906-606 |
Japan | 0120-925-493 |
South Korea | 080-850-0565 |
The toll dial-in numbers:
China (Mainland) | 400-120-0654 |
Hong Kong & Other Areas | +852 30186776 |
Conference ID #:9309498
Additionally, a live and archived web cast of this call will be available at: http://ir.fanhuaholdings.com/events-and-presentations
About
Our online platforms include: (1) LanZhanggui, 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) CNpad, a mobile sales support application; (3) Baoxian.com, an online entry portal for comparing and purchasing health, accident, travel and homeowner insurance products and (4) 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 U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “believes,” “anticipates,” “intends,” “estimates” and similar statements. Among other things, management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
As of December 31, | As of March 31, | As of March 31, | |||
2018 | 2019 | 2019 | |||
RMB | RMB | US$ | |||
ASSETS: | |||||
Current assets: | |||||
Cash and cash equivalents | 772,823 | 1,026,371 | 152,934 | ||
Restricted cash | 75,343 | 112,925 | 16,826 | ||
Short term investments | 1,554,060 | 1,367,638 | 203,784 | ||
Accounts receivable, net | 508,474 | 644,464 | 96,028 | ||
Insurance premium receivables | 5,267 | 6,707 | 999 | ||
Other receivables | 86,150 | 97,790 | 14,571 | ||
Other current assets | 58,990 | 57,820 | 8,615 | ||
Total current assets | 3,061,107 | 3,313,715 | 493,757 | ||
Non-current assets: | |||||
Property, plant, and equipment, net | 37,934 | 38,729 | 5,771 | ||
Goodwill and intangible assets, net | 111,133 | 110,898 | 16,525 | ||
Deferred tax assets | 9,320 | 7,894 | 1,176 | ||
Investment in affiliates | 587,517 | 611,652 | 91,139 | ||
Other non-current assets | 59,600 | 58,970 | 8,787 | ||
Right of use assets6 | — | 177,690 | 26,477 | ||
Total non-current assets | 805,504 | 1,005,833 | 149,875 | ||
Total assets | 3,866,611 | 4,319,548 | 643,632 |
Current liabilities: | |||||||
Accounts payable | 332,685 | 444,334 | 66,208 | ||||
Insurance premium payables | 15,248 | 48,228 | 7,186 | ||||
Other payables and accrued expenses | 254,824 | 238,559 | 35,546 | ||||
Accrued payroll | 97,637 | 81,254 | 12,107 | ||||
Income tax payable | 205,189 | 198,787 | 29,620 | ||||
Dividend payable | — | 93,947 | 13,999 | ||||
Current operating lease liability6 | — | 61,630 | 9,183 | ||||
Total current liabilities | 905,583 | 1,166,739 | 173,849 | ||||
Non-current liabilities: | |||||||
Refundable share rights deposits | 138,328 | 257,818 | 38,416 | ||||
Other non-current liabilities | — | 3,304 | 492 | ||||
Other tax liabilities | 70,350 | 70,350 | 10,482 | ||||
Deferred tax liabilities | 5,624 | 5,925 | 883 | ||||
Non-current operating lease liability6 | — | 116,771 | 17,399 | ||||
Total non-current liabilities | 214,302 | 454,168 | 67,672 | ||||
Total liabilities | 1,119,885 | 1,620,907 | 241,521 | ||||
Ordinary shares | 9,583 | 9,583 | 1,428 | ||||
Treasury stock | (1,156) | (1,230) | (184) | ||||
Additional paid-in capital | 437,176 | 341,248 | 50,848 | ||||
Statutory reserves | 480,881 | 480,881 | 71,654 | ||||
Retained earnings | 1,799,989 | 1,853,533 | 276,185 | ||||
Accumulated other comprehensive loss | (93,290) | (99,315) | (14,798) | ||||
Total shareholders’ equity | 2,633,183 | 2,584,700 | 385,133 | ||||
Non-controlling interests | 113,543 | 113,941 | 16,978 | ||||
Total equity | 2,746,726 | 2,698,641 | 402,111 | ||||
Total liabilities and equity | 3,866,611 | 4,319,548 | 643,632 |
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income
(In thousands, except for shares and per share data)
For The Three Months Ended | |||||
March 31, | |||||
2018 | 2019 | 2019 | |||
RMB | RMB | US$ | |||
Net revenues: | |||||
Life insurance Business | 672,967 | 859,185 | 128,023 | ||
P&C insurance Business | 92,459 | 38,119 | 5,680 | ||
Claims adjusting Business | 77,837 | 74,350 | 11,078 | ||
Total net revenues | 843,263 | 971,654 | 144,781 | ||
Operating costs and expenses: | |||||
Life insurance Business | (468,253) | (601,482) | (89,624) | ||
P&C insurance Business | (80,167) | (24,615) | (3,668) | ||
Claims adjusting Business | (49,006) | (42,597) | (6,347) | ||
Total operating costs | (597,426) | (668,694) | (99,639) | ||
Selling expenses | (48,702) | (64,642) | (9,632) | ||
General and administrative expenses | (106,954) | (111,895) | (16,673) | ||
Total operating costs and expenses | (753,082) | (845,231) | (125,944) | ||
Income from operations | 90,181 | 126,423 | 18,837 | ||
Other income, net: | |||||
Investment income | 33,111 | 36,825 | 5,487 | ||
Interest income | 10,757 | 419 | 63 | ||
Others, net | (1,120) | 1,449 | 216 | ||
Income from operations before income taxes and share income of affiliates | 132,929 | 165,116 | 24,603 | ||
Income tax expense | (43,824) | (42,863) | (6,387) | ||
Share of income of affiliates | 40,484 | 25,413 | 3,787 | ||
Net income | 129,589 | 147,666 | 22,003 | ||
less: net (loss)income attributable to noncontrolling interests | (629) | 398 | 59 | ||
Net income attributable to the Company’s shareholders | 130,218 | 147,268 | 21,944 |
Net income per share: | ||||||
Basic | 0.10 | 0.13 | 0.02 | |||
Diluted | 0.10 | 0.13 | 0.02 | |||
Net income per ADS: | ||||||
Basic | 2.00 | 2.62 | 0.39 | |||
Diluted | 2.00 | 2.62 | 0.39 | |||
Shares used in calculating net income per share: | ||||||
Basic | 1,300,191,084 | 1,122,290,708 | 1,122,290,708 | |||
Diluted | 1,302,989,111 | 1,123,329,865 | 1,123,329,865 | |||
Net income | 129,589 | 147,666 | 22,003 | |||
Other comprehensive income (loss), net of tax: Foreign currency translation adjustments | (7,322) | (4,747) | (707) | |||
Less: Comprehensive income attributable to the noncontrolling interests | (1,827) | (1,278) | (190) | |||
Comprehensive income | 120,440 | 141,641 | 21,106 | |||
Less: Comprehensive income attributable to the noncontrolling interests | (629) | 398 | 59 | |||
Comprehensive income attributable to the Company’s shareholders | 121,069 | 141,243 | 21,047 | |||
Unaudited Condensed Consolidated Statements of Cash Flow
(In thousands, except for shares and per share data)
For The Three Months Ended | |||||
March 31, | March 31, | March 31, | |||
2018 | 2019 | 2019 | |||
RMB | RMB | US$ | |||
OPERATING ACTIVITIES | |||||
Net income | 129,589 | 147,666 | 22,003 | ||
Adjustments to reconcile net income to net cash generated from operating activities: | |||||
Depreciation and amortization of property and equipment | 2,367 | 3,638 | 542 | ||
Amortization of intangible assets | 7,740 | 235 | 35 | ||
Noncash lease expense | — | 14,767 | 2,200 | ||
Allowance for doubtful accounts | 3,892 | 1,210 | 180 | ||
Compensation expenses associated with 521 Plan | — | 3,304 | 492 | ||
Gain on disposal of property, plant and equipment | (23) | (30) | (4) | ||
Investment income | (29,419) | (32,899) | (4,902) | ||
Share of income of affiliates | (40,484) | (25,413) | (3,787) | ||
Deferred taxes | 7,221 | 1,728 | 257 | ||
Changes in operating assets and liabilities: | (50,329) | (67,394) | (10,042) | ||
Net cash generated from operating activities | 30,554 | 46,812 | 6,974 | ||
Cash flows used in investing activities: | |||||
Purchase of short term investments | (2,440,997) | (1,604,900) | (239,138) | ||
Proceeds from disposal of short term investments | 2,221,749 | 1,824,222 | 271,818 | ||
Purchase of property, plant and equipment | (4,012) | (4,637) | (691) | ||
Proceeds from disposal of property and equipment | 26 | 233 | 35 | ||
Net cash (used in) generated from investing activities | (223,234) | 214,918 | 32,024 | ||
Cash flows from financing activities: | |||||
Proceeds of employee subscriptions | 24,013 | — | — | ||
Dividends paid | (4,927) | — | — | ||
Repurchase of shares from open market | — | (82,381) | (12,275) | ||
Proceeds of cash consideration related to disposal of subsidiaries | 11,630 | 5,000 | 745 | ||
Subscription of 650 million ADSs to Participants upon 521 Plan | — | 111,305 | 16,585 | ||
Net cash generated from financing activities | 30,716 | 33,924 | 5,055 | ||
Net (decrease) increase in cash and cash equivalents, and restricted cash | (161,964) | 295,654 | 44,053 | ||
Cash and cash equivalents and restricted cash at beginning of year | 439,033 | 848,166 | 126,381 | ||
Effect of exchange rate changes on cash and cash equivalents | (7,322) | (4,524) | (674) | ||
Cash and cash equivalents and restricted cash at end of year | 269,747 | 1,139,296 | 169,760 |
Source:
1 This announcement contains currency conversions of certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of
2 Active users of LanZhanggui included users who sold at least one life insurance policy and/or non-life insurance policy through LanZhanggui (including both its mobile application or WeChat public account) during the specific period.
3 Active users of CNpad App included users who made at least one purchase of auto insurance policy through CNpad App (including both its mobile application and WeChat public account) during the specific period.
4 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.
5 Performing agents are defined as agents who have sold at least one life insurance policy and/or non-life insurance policy during the specified period.
6 In
For more information, please contact: Investor Relations Tel: +86 (20) 8388-3191 Email: qiusr@fanhuaholdings.com
Source: Fanhua Inc.