Fanhua Reports Third Quarter 2019 Unaudited Financial Results
Financial Highlights for the third quarter of 2019:
(In thousands, except per ADS) | 2018Q3 (RMB) |
2019Q3 (RMB) |
2019Q3 (US$) |
Change % |
Total net revenues | 783,948 | 823,351 | 115,192 | 5.0 |
Operating income | 124,573 | 151,447 | 21,188 | 21.6 |
Non-GAAP operating income2 | 124,573 | 111,623 | 15,617 | (10.4) |
Net income attributable to the Company’s shareholders | 195,248 | 168,332 | 23,551 | (13.8) |
Non-GAAP net income attributable to the Company’s shareholders3 | 195,248 | 128,508 | 17,979 | (34.2) |
Diluted net income per ADS | 3.00 | 3.12 | 0.44 | 4.0 |
Non-GAAP diluted net income per ADS4 | 3.00 | 2.38 | 0.33 | (20.7) |
Commenting on the financial results of the third quarter of 2019, Mr.
“Although this industry-wide adjustment period may continue for a while, we firmly believe that such adjustment is temporary since the key forces that drive industry growth, such as consumer buying power and increasing demand for insurance products, have not changed fundamentally and the trend of the industry’s spiral growth is irreversible. We are convinced that through continuous regulatory overhaul, the industry will transition to a period of more healthy, sustainable and rapid development in the medium-to-long term.
“Fanhua delivered solid results in the third quarter of 2019, with total life insurance premiums increasing by 42.0% year-over-year to
“During the third quarter of 2019, we have achieved remarkable results in implementing our campaign to introduce at least one thousand reserve entrepreneurial sales teams by the end of
“For the coming quarters, we will continue to focus on executing the
Share Repurchase Program
From
Pursuant to its share buyback programs carried out in both 2018 and 2019, a total of 3,934,965 ADSs have been repurchased at an average price of approximately
Financial Results for the third quarter of 2019
Total net revenues were
- Net revenues for the life insurance business were
RMB696.0 million (US$97.4 million ) for the third quarter of 2019, representing an increase of 6.3% fromRMB654.5 million for the corresponding period in 2018. The increase was mainly driven by the increase in renewal commissions of 42.3% year-over-year toRMB193.9 million , partially offset by slight decrease in first year commissions due to the high base created by a one-off performance bonus income of approximatelyRMB38.0 million recognized in the third quarter of 2018, despite year-over-year growth of 6.2% in APE in the third quarter of 2019. Revenues generated from our life insurance business accounted for 84.5% of our total net revenues in the third quarter of 2019. - Net revenues for the P&C insurance business were
RMB32.6 million (US$4.6 million ) for the third quarter of 2019, representing a decrease of 34.1% fromRMB49.5 million for the corresponding period in 2018. Revenues for the P&C insurance business in the third quarter of 2019 primarily consisted of commissions generated from Baowang (www.baoxian.com) and the technology service fees based on the volume of insurance premiums transacted through CNpad. The decrease was mainly due to the decline in the sales volume of our auto insurance business. Revenues generated from the P&C insurance business accounted for 4.0% of our total net revenues in the third quarter of 2019. - Net revenues for the claims adjusting business were
RMB94.8 million (US$13.3 million ) for the third quarter of 2019, representing an increase of 18.6% fromRMB79.9 million for the corresponding period in 2018. The increase was mainly due to strong growth of our medical insurance-related claims adjusting business. Revenues generated from the claims adjusting business accounted for 11.5% of our total net revenues in the third quarter of 2019.
Total operating costs and expenses were
- Commission costs were
RMB530.8 million (US$74.3 million ) for the third quarter of 2019, representing an increase of 10.3% fromRMB481.4 million for the corresponding period in 2018.
- Costs of the life insurance business were
RMB449.0 million (US$62.8 million ) for the third quarter of 2019, representing an increase of 10.9% fromRMB404.7 million for the corresponding period in 2018. The increase was in-line with the increase in net revenues generated from our life insurance business. Costs incurred by the life insurance business accounted for 84.6% of our total commission costs in the third quarter of 2019. - Costs of the P&C insurance business were
RMB22.6 million (US$3.2 million ) for the third quarter of 2019, representing a decrease of 30.5% fromRMB32.5 million for the corresponding period in 2018 which was largely in line with the decrease in net revenues generated from our P&C insurance business. The costs of the P&C insurance business mainly represent commission costs we incurred for operating Baowang (www.baoxian.com). Costs incurred by the P&C insurance business accounted for 4.3% of our total commission costs in the third quarter of 2019. - Costs of claims adjusting business were
RMB59.1 million (US$8.3 million ) for the third quarter of 2019, representing an increase of 34.0% fromRMB44.1 million for the corresponding period in 2018. The increase was in line with the increase in net revenues generated from our claims adjustment business. Costs incurred by the claims adjusting business accounted for 11.1% of our total commission costs in the third quarter of 2019.
- Costs of the life insurance business were
- Selling expenses were
RMB39.3 million (US$5.5 million ) for the third quarter of 2019, representing a decrease of 31.1% fromRMB57.0 million for the corresponding period in 2018. The decrease was primarily due toRMB28.4 million (US$4.0 million ) fair value adjustments to the share-based compensation expenses related to shares subscribed by sales team leaders under the Company’s 521 Plan in the third quarter of 2019. Selling expenses which excluded share-based compensation expenses wereRMB67.7 million (US$9.5 million ) in the third quarter of 2019, representing an increase of 19.0% fromRMB57.0 million for the corresponding period of 2018, mainly due to the expansion of life insurance distribution network. - General and administrative expenses were
RMB101.8 million (US$14.2 million ) for the third quarter of 2019, representing a decrease of 15.9% fromRMB121.0 million for the corresponding period in 2018. The decrease was mainly due toRMB11.4 million (US$1.6 million ) fair value adjustments to the share-based compensation expenses related to shares subscribed by key managerial personnel under the Company’s 521 Plan in the third quarter of 2019. General and administrative expenses which excluded share-based compensation expenses wereRMB113.2 million (US$15.8 million ) in the third quarter of 2019, representing a decrease of 6.5% fromRMB121.0 million for the corresponding period in 2018.
As a result of the preceding factors, we had an operating income of
Non-GAAP operating income2 which excluded share-based compensation expenses was
Operating margin was 18.4% for the third quarter of 2019, compared to 15.9% for the corresponding period in 2018.
Non-GAAP operating margin5 was 13.6% for the third quarter of 2019, compared to 15.9% 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
Non-GAAP net income attributable to the Company’s shareholders3 was
Net margin was 20.4% for the third quarter of 2019 compared with 24.9% for the corresponding period in 2018.
Non-GAAP net margin6 was 15.6% for the third quarter of 2019 compared with 24.9% for the corresponding period in 2018.
Basic and diluted net income per ADS were
Non-GAAP basic7 and diluted net income per ADS4 were
As of
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.
- The number of registered users of Lan Zhanggui was 820,880 as of
September 30, 2019 , representing an increase of 14.6% from 716,397 as ofSeptember 30, 2018 ; - The number of active users of Lan Zhanggui8 was 50,248 in the third quarter of 2019, as compared to 53,713 in the corresponding period of 2018. The number of active users of Lan Zhanggui who have sold at least one life insurance policy was 42,051 in the third quarter of 2019, as compared to 44,686 in the corresponding period of 2018;
- Insurance premiums generated through Lan Zhanggui were
RMB684.4 million (US$95.7 million ) in the third quarter of 2019, consisting of life insurance premiums ofRMB665.8 million (US$93.1 million ) and non-life insurance premiums ofRMB18.6 million (US$2.6 million ). Insurance premiums generated through Lan Zhanggui wereRMB482.6 million in the corresponding period of 2018, consisting of life insurance premiums ofRMB445.3 million and non-life insurance premiums ofRMB37.3 million .
- The number of registered users of Lan Zhanggui was 820,880 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 613,027 times as of
September 30, 2019 , representing an increase of 23.4% from 496,930 times as ofSeptember 30, 2018 ; - The number of active users of CNpad Auto Insurance App9 was 34,188 in the third quarter of 2019, representing a decrease of 39.3% from 56,304 in the corresponding period of 2018;
- Insurance premiums generated through
CNpad Auto Insurance App wereRMB335.6 million (US$47.0 million ) in the third quarter of 2019, representing a decrease of 31.5% fromRMB490.0 million in the corresponding period of 2018.
- CNpad Auto Insurance App had been downloaded and activated 613,027 times as of
- eHuzhu - Our online non-profit mutual aid platform:
- The number of registered members was 3.8 million as of
September 30, 2019 , representing an increase of 0.7% from 3.8 million as ofSeptember 30, 2018 .
- The number of registered members was 3.8 million as of
- Baowang (www.baoxian.com) - Our online insurance platform:
- The number of registered customer accounts was 2.6 million as of
September 30, 2019 , representing an increase of 30.8% from approximately 2.0 million as ofSeptember 30, 2018 ; - The number of active customer accounts10 was 158,275 in the third quarter of 2019, representing an increase of 12.8% from 140,300 in the corresponding period of 2018;
- Insurance premiums generated through Baowang (www.baoxian.com) was
RMB86.6 million (US$12.1 million ) in the third quarter of 2019, representing an increase of 19.6% fromRMB72.4 million in the corresponding period of 2018.
- The number of registered customer accounts was 2.6 million as of
Recent Developments
- On
September 10, 2019 ,Fanhua Inc. won the “2019 Jinnuo Innovative Brand Communication Award” and “2019 Corporate Social Responsibility Communication Award”. The awards were initiated and organized by theChina Insurance News , a prestigious trade newspaper in China, in recognition of companies demonstrating significant brand influence and strong social responsibility in the insurance industry in China. - As of
September 30, 2019 ,Fanhua had 658,145 sales agents and 1,319 professional claims adjustors, compared with 716,397 sales agents and 1,169 professional claims adjustors as ofSeptember 30, 2018 . The number of performing agents11 was 111,486 and the number of performing agents for selling life insurance products was approximately 43,470 in the third quarter of 2019. As ofSeptember 30, 2019 ,Fanhua's distribution network consisted of 755 sales outlets in 22 provinces and 144 services outlets in 31 provinces, compared with 626 sales outlets in 22 provinces and 128 services outlets in 31 provinces as ofSeptember 30, 2018 .
- On
October 10, 2019 , the conversion right granted under the convertible notes (or “Convertible Loan”) issued byBeijing Cheche Technology Co., Ltd. (“Beijing Cheche”) to us was triggered andFanhua elected to partially convert the convertible notes into 28,684,255 ordinary shares ofCheche Technology Inc. (“Cheche”), the parent company of Beijing Cheche at a conversion price ofUS$0.48 per share. Upon completion of the transaction,Fanhua , through its wholly-owned subsidiary, owns less than 5% of the equity interests of Cheche, and the principal amount of the Convertible Loan was reduced toRMB50 million , which will be repaid by cash upon maturity inOctober 2020 . - On
October 18, 2019 ,Fanhua Inc. was ranked among the “2019 iFenxiChina Top 30 Insurance Technology Innovation Enterprises”. The ranking was published by iFenxi, a professional research institution dedicated to covering technology innovation, to recognize enterprises that pioneer the adoption of digital insurance technologies in the Chinese insurance industry. - On
November 8, 2019 ,Fanhua Insurance Sales Service Group Company Limited won the "Insurance Intermediary Brand of 2019", which is one of the most prestigious and influential awards in the industry. It was initiated and organized by theInsurance Culture Magazine and selected by a panel of experts from the insurance, brand sectors and the financial media, in recognition of companies showing outstanding achievements in culture and brand building and product innovation.
Business Outlook
Conference Call
The Company will host a conference call to discuss its third quarter 2019 financial results as per the following details.
Time: 8:00 p.m. Eastern Standard Time on November 20, 2019 | ||
or 9:00 a.m. Beijing/Hong Kong Time on November 21, 2019 | ||
The toll free dial-in numbers: | ||
United States | 1-866-519-4004 | |
United Kingdom | 0808-234-6646 | |
France | 0800-912-761 | |
Germany | 0800-182-0671 | |
Australia | 1-300-717-205 | |
Canada | 1-866-386-1016 | |
Hong Kong, China | 800-906-601 | |
Japan | 0120-925-376 | |
South Korea | 080-850-0474 | |
The toll dial-in numbers: | ||
China (Mainland) | 400-620-8038 | |
Other Areas | +852 30186771 | |
Conference ID #:4128698 | ||
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) 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) CNpad, a mobile sales support application; (3) Baowang (www.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
About Non-GAAP Financial Measures
In addition to the Company’s consolidated financial results under GAAP, the Company also provides Non-GAAP operating income, Non-GAAP operating margin, Non-GAAP net income attributable to the Company’s shareholders, Non-GAAP net margin and Non-GAAP basic and diluted net income per ADS, all of which are non-GAAP financial measures. Non-GAAP operating income is defined as operating income before share-based compensation expenses which are solely associated with the Company’s 521 Plan. Non-GAAP operating margin is a non-GAAP measure that is defined as Non-GAAP operating income as a percentage of net revenue. Non-GAAP net income attributable to the Company’s shareholders is defined as net income attributable to the Company’s shareholders before share-based compensation expenses which are solely associated with the Company’s 521 Plan. Non-GAAP net margin is a non-GAAP measure that is defined as Non-GAAP net income attributable to the Company's shareholders3 as a percentage of net revenue. Non-GAAP basic net income per ADS is a non-GAAP measure and is defined as net income attributable to the Company’s shareholders before share-based compensation expenses which are solely associated with the Company’s 521 Plan divided by total weighted average number of ADS outstanding of the Company during the period. Non-GAAP diluted net income per ADS is defined as net income attributable to the Company’s shareholders before share-based compensation expenses which are solely associated with the Company’s 521 Plan divided by total weighted average number of diluted ADS outstanding of the Company during the period. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance and when planning and forecasting future periods. One limitation of using these non-GAAP financial measures is that such measures exclude items that were significant in the third quarter of 2019, and these items have been, and will continue to be, significant recurring factors in our business.
In light of these limitations, the presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. We encourage investors and other interested persons to review our financial information in its entirety and not rely on a single financial measure. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures” set forth at the end of this release.
FANHUA INC. Unaudited Condensed Consolidated Balance Sheets (In thousands) |
||||||||
As of December 31, | As of September 30, | As of September 30, | ||||||
2018 | 2019 | 2019 | ||||||
RMB | RMB | US$ | ||||||
ASSETS: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 772,823 | 159,992 | 22,384 | |||||
Restricted cash | 75,343 | 92,041 | 12,877 | |||||
Short term investments | 1,554,060 | 1,600,974 | 223,984 | |||||
Accounts receivable, net | 508,474 | 674,510 | 94,367 | |||||
Insurance premium receivables | 5,267 | 6,164 | 862 | |||||
Other receivables | 86,150 | 72,728 | 10,175 | |||||
Other current assets | 58,990 | 63,014 | 8,816 | |||||
Total current assets | 3,061,107 | 2,669,423 | 373,465 | |||||
Non-current assets: | ||||||||
Property, plant, and equipment, net | 37,934 | 40,417 | 5,655 | |||||
Goodwill and intangible assets, net | 111,133 | 110,426 | 15,449 | |||||
Deferred tax assets | 9,320 | 8,157 | 1,141 | |||||
Investment in affiliates | 587,517 | 675,627 | 94,524 | |||||
Other non-current assets | 59,600 | 53,472 | 7,481 | |||||
Right of use assets12 | — | 186,963 | 26,157 | |||||
Total non-current assets | 805,504 | 1,075,062 | 150,407 | |||||
Total assets | 3,866,611 | 3,744,485 | 523,872 |
Current liabilities: | ||||||||
Accounts payable | 332,685 | 357,907 | 50,073 | |||||
Insurance premium payables | 15,248 | 22,018 | 3,079 | |||||
Other payables and accrued expenses | 254,824 | 207,087 | 28,973 | |||||
Accrued payroll | 97,637 | 87,209 | 12,201 | |||||
Income tax payable | 205,189 | 152,787 | 21,376 | |||||
Current operating lease liability | — | 78,319 | 10,957 | |||||
Total current liabilities | 905,583 | 905,327 | 126,659 | |||||
Non-current liabilities: | ||||||||
Refundable share rights deposits | 138,328 | 274,029 | 38,338 | |||||
Other non-current liabilities | — | 3,480 | 487 | |||||
Other tax liabilities | 70,350 | 70,350 | 9,842 | |||||
Deferred tax liabilities | 5,624 | 17,184 | 2,404 | |||||
Non-current operating lease liability | — | 110,481 | 15,457 | |||||
Total non-current liabilities | 214,302 | 475,524 | 66,528 | |||||
Total liabilities | 1,119,885 | 1,380,851 | 193,187 | |||||
Ordinary shares | 9,583 | 9,235 | 1,292 | |||||
Treasury stock | (1,156 | ) | (1,146 | ) | (160 | ) | ||
Additional paid-in capital | 437,176 | — | — | |||||
Statutory reserves | 480,881 | 469,918 | 65,744 | |||||
Retained earnings | 1,799,989 | 1,856,466 | 259,729 | |||||
Accumulated other comprehensive loss | (93,290 | ) | (82,033 | ) | (11,477 | ) | ||
Total shareholders’ equity | 2,633,183 | 2,252,440 | 315,128 | |||||
Non-controlling interests | 113,543 | 111,194 | 15,557 | |||||
Total equity | 2,746,726 | 2,363,634 | 330,685 | |||||
Total liabilities and equity | 3,866,611 | 3,744,485 | 523,872 |
FANHUA INC. Unaudited Condensed Consolidated Statements of Income and Comprehensive Income (In thousands, except for shares and per share data) |
|||||||||||||||||
For The Three Months Ended |
For The Nine Months Ended |
||||||||||||||||
September 30, |
September 30, |
||||||||||||||||
2018 |
2019 |
2019 |
2018 |
2019 |
2019 |
||||||||||||
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||||||
Net revenues: | |||||||||||||||||
Agency | 704,052 | 728,524 | 101,925 | 2,369,570 | 2,439,188 | 341,255 | |||||||||||
Life insurance business | 654,513 | 695,968 | 97,370 | 2,135,788 | 2,326,746 | 325,524 | |||||||||||
P&C insurance business | 49,539 | 32,556 | 4,555 | 233,782 | 112,442 | 15,731 | |||||||||||
Claims adjusting | 79,896 | 94,827 | 13,267 | 229,757 | 254,236 | 35,569 | |||||||||||
Total net revenues | 783,948 | 823,351 | 115,192 | 2,599,327 | 2,693,424 | 376,824 | |||||||||||
Operating costs and expenses: | |||||||||||||||||
Agency | (437,264 | ) | (471,668 | ) | (65,989 | ) | (1,612,137 | ) | (1,639,456 | ) | (229,369 | ) | |||||
Life insurance business | (404,719 | ) | (449,020 | ) | (62,820 | ) | (1,426,396 | ) | (1,564,815 | ) | (218,926 | ) | |||||
P&C insurance business | (32,545 | ) | (22,648 | ) | (3,169 | ) | (185,741 | ) | (74,641 | ) | (10,443 | ) | |||||
Claims adjusting | (44,118 | ) | (59,102 | ) | (8,269 | ) | (138,319 | ) | (150,461 | ) | (21,050 | ) | |||||
Total operating costs | (481,382 | ) | (530,770 | ) | (74,258 | ) | (1,750,456 | ) | (1,789,917 | ) | (250,419 | ) | |||||
Selling expenses (including fair value adjustments to share-based compensation expenses of RMB(28,446) and RMB2,486 in the three months and nine months ended September 30, 2019, respectively, and nil and nil in the three months and nine months ended September 30, 2018) | (56,959 | ) | (39,309 | ) | (5,500 | ) | (159,556 | ) | (200,988 | ) | (28,119 | ) | |||||
General and administrative expenses (including fair value adjustments to share-based compensation of RMB(11,378) and RMB994 in the three months and nine months ended September 30, 2019, respectively, and nil and nil in the three months and nine months ended September 30, 2018) | (121,034 | ) | (101,825 | ) | (14,246 | ) | (346,964 | ) | (347,286 | ) | (48,587 | ) | |||||
Total operating costs and expenses | (659,375 | ) | (671,904 | ) | (94,004 | ) | (2,256,976 | ) | (2,338,191 | ) | (327,125 | ) | |||||
Income from operations | 124,573 | 151,447 | 21,188 | 342,351 | 355,233 | 49,699 | |||||||||||
Other income, net: | |||||||||||||||||
Investment income | 75,458 | 16,761 | 2,345 | 152,510 | 69,684 | 9,749 | |||||||||||
Interest income | 13,502 | 620 | 87 | 33,386 | 2,590 | 362 | |||||||||||
Others, net | 1,234 | (1,028 | ) | (143 | ) | (74 | ) | 10,866 | 1,521 | ||||||||
Income before income taxes and income of affiliates | 214,767 | 167,800 | 23,477 | 528,173 | 438,373 | 61,331 | |||||||||||
Income tax expense | (66,423 | ) | (30,241 | ) | (4,231 | ) | (167,511 | ) | (109,969 | ) | (15,385 | ) | |||||
Share of income of affiliates | 48,275 | 32,596 | 4,560 | 138,421 | 86,839 | 12,149 | |||||||||||
Net income | 196,619 | 170,155 | 23,806 | 499,083 | 415,243 | 58,095 | |||||||||||
less: net income attributable to noncontrolling interests | 1,371 | 1,823 | 255 | 1,775 | 1,634 | 229 | |||||||||||
Net income attributable to the Company’s shareholders | 195,248 | 168,332 | 23,551 | 497,308 | 413,609 | 57,866 |
Net income per share: | |||||||||||||||||
Basic | 0.15 | 0.16 | 0.02 | 0.38 | 0.38 | 0.05 | |||||||||||
Diluted | 0.15 | 0.16 | 0.02 | 0.38 | 0.38 | 0.05 | |||||||||||
Net income per ADS: |
|||||||||||||||||
Basic | 3.01 | 3.12 | 0.44 | 7.65 | 7.53 | 1.05 | |||||||||||
Diluted | 3.00 | 3.12 | 0.44 | 7.64 | 7.52 | 1.05 | |||||||||||
Shares used in calculating net income per share: Basic |
1,299,349,068 | 1,077,381,239 | 1,077,381,239 | 1,299,944,226 | 1,098,906,389 | 1,098,906,389 | |||||||||||
Diluted | 1,300,948,198 | 1,077,780,976 | 1,077,780,976 | 1,301,809,669 | 1,099,443,163 | 1,099,443,163 | |||||||||||
Net income | 196,619 | 170,155 | 23,806 | 499,083 | 415,243 | 58,095 | |||||||||||
Other comprehensive income (loss), net of tax: Foreign currency translation adjustments | 5,160 | 2,631 | 368 | 2,906 | 6,021 | 842 | |||||||||||
Share of other comprehensive gain (loss) of affiliates | (4,666 | ) | 1,147 | 160 | (6,392 | ) | 1,270 | 178 | |||||||||
Unrealized net gains on available-for-sale investments | — | 3,964 | 555 | — | 3,964 | 555 | |||||||||||
Comprehensive income | 197,113 | 177,897 | 24,889 | 495,597 | 426,498 | 59,670 | |||||||||||
Less: Comprehensive income attributable to the noncontrolling interests | 1,371 | 1,823 | 255 | 1,775 | 1,634 | 229 | |||||||||||
Comprehensive income attributable to the Company’s shareholders | 195,742 | 176,074 | 24,634 | 493,822 | 424,864 | 59,441 |
FANHUA INC. Unaudited Condensed Consolidated Statements of Cash Flow (In thousands) |
|||||||||||||||||
For The Three Months Ended |
For The Nine Months Ended |
||||||||||||||||
September 30, |
September 30, |
||||||||||||||||
2018 | 2019 | 2019 | 2018 | 2019 | 2019 | ||||||||||||
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||
Net income | 196,619 | 170,155 | 23,806 | 499,083 | 415,243 | 58,095 | |||||||||||
Adjustments to reconcile net income to net cash generated from operating activities: | |||||||||||||||||
Investment income | (61,547 | ) | (11,298 | ) | (1,581 | ) | (124,078 | ) | (56,655 | ) | (7,926 | ) | |||||
Share of income of affiliates | (48,275 | ) | (32,596 | ) | (4,560 | ) | (138,421 | ) | (86,839 | ) | (12,149 | ) | |||||
Other non-cash adjustments | (20,116 | ) | 859 | 121 | 15,321 | 97,946 | 13,703 | ||||||||||
Changes in operating assets and liabilities: | 238,976 | 993 | 139 | 79,966 | (316,084 | ) | (44,223 | ) | |||||||||
Net cash generated from operating activities | 305,657 | 128,113 | 17,925 | 331,871 | 53,611 | 7,500 | |||||||||||
Purchase of short term investments | (4,163,260 | ) | (2,780,221 | ) | (388,967 | ) | (9,854,617 | ) | (5,948,901 | ) | (832,282 | ) | |||||
Proceeds from disposal of short term investments | 5,033,868 | 2,460,289 | 344,207 | 10,804,445 | 5,962,606 | 834,199 | |||||||||||
Others | 595,540 | 1,512 | 211 | 603,621 | (7,050 | ) | (987 | ) | |||||||||
Net cash used in (generated from) investing activities | 1,466,148 | (318,420 | ) | (44,549 | ) | 1,553,449 | 6,655 | 930 | |||||||||
Dividends paid | (106,302 | ) | (115,078 | ) | (16,100 | ) | (297,009 | ) | (321,820 | ) | (45,024 | ) | |||||
Repurchase of shares | (1,336,809 | ) | (154,325 | ) | (21,591 | ) | (1,336,809 | ) | (484,016 | ) | (67,716 | ) | |||||
Others | 28,448 | (3,790 | ) | (530 | ) | 55,746 | 126,982 | 17,766 | |||||||||
Net cash used in financing activities | (1,414,663 | ) | (273,193 | ) | (38,221 | ) | (1,578,072 | ) | (678,854 | ) | (94,974 | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 357,142 | (463,500 | ) | (64,845 | ) | 307,248 | (618,588 | ) | (86,544 | ) | |||||||
Cash, cash equivalents and restricted cash at beginning of period | 379,306 | 702,064 | 98,222 | 439,033 | 848,166 | 118,663 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 5,160 | 13,469 | 1,884 | (4,673 | ) | 22,455 | 3,142 | ||||||||||
Cash, cash equivalents and restricted cash at end of period | 741,608 | 252,033 | 35,261 | 741,608 | 252,033 | 35,261 |
FANHUA INC. Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures (In RMB in thousands, except shares and per share data) |
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For The Three Months Ended September 30 | |||||||||
2018 | 2019 | ||||||||
GAAP | GAAP | Share-based compensation expenses |
Non-GAAP | Change% | |||||
Net revenues | 783,948 | 823,351 | — | 823,351 | 5.0 | ||||
Selling expenses | (56,959) | (39,309) | 28,446 | (67,755) | 19.0 | ||||
General and administrative expenses | (121,034) | (101,825) | 11,378 | (113,203) | (6.5) | ||||
Income from operations | 124,573 | 151,447 | 39,824 | 111,623 | (10.4) | ||||
Operating margin | 15.9% | 18.4% | — | 13.6% | (14.5) | ||||
Net income attributable to the Company’s shareholders | 195,248 | 168,332 | 39,824 | 128,508 | (34.2) | ||||
Net margin | 24.9% | 20.4% | — | 15.6% | (37.3) | ||||
Net income per share: | |||||||||
Basic | 0.15 | 0.16 | — | 0.12 | (20.0) | ||||
Diluted | 0.15 | 0.16 | — | 0.12 | (20.0) | ||||
Net income per ADS | |||||||||
Basic | 3.01 | 3.12 | — | 2.39 | (20.6) | ||||
Diluted | 3.00 | 3.12 | — | 2.38 | (20.7) | ||||
Shares used in calculating net income per share: | |||||||||
Basic | 1,299,349,068 | 1,077,381,239 | — | 1,077,381,239 | — | ||||
Diluted | 1,300,948,198 | 1,077,780,976 | — | 1,077,780,976 | — |
For The Nine Months Ended September 30 | |||||||||
2018 | 2019 |
||||||||
GAAP | GAAP | Share-based compensation expenses |
Non-GAAP | Change% | |||||
Net revenues | 2,599,327 | 2,693,424 | — | 2,693,424 | 3.6 | ||||
Selling expenses | (159,556) | (200,988) | (2,486) | (198,502) | 24.5 | ||||
General and administrative expenses | (346,964) | (347,286) | (994) | (346,292) | (0.2) | ||||
Income from operations | 342,351 | 355,233 | (3,480) | 358,713 | 4.8 | ||||
Operating margin | 13.2% | 13.2% | — | 13.3% | 0.8 | ||||
Net income attributable to the Company’s shareholders | 497,308 | 413,609 | (3,480) | 417,089 | (16.1) | ||||
Net margin | 19.1% | 15.4% | — | 15.5% | (18.8) | ||||
Net income per share: | |||||||||
Basic | 0. 38 | 0. 38 | — | 0. 38 | — | ||||
Diluted | 0. 38 | 0. 38 | — | 0. 38 | — | ||||
Net income per ADS | |||||||||
Basic | 7.65 | 7.53 | — | 7.59 | (0.8) | ||||
Diluted | 7.64 | 7.52 | — | 7.59 | (0.7) | ||||
Shares used in calculating net income per share: | |||||||||
Basic | 1,299,944,226 | 1,098,906,389 | — | 1,098,906,389 | — | ||||
Diluted | 1,301,809,669 | 1,099,443,163 | — | 1,099,443,163 | — |
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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 RMB7.1477 to US$1.00, the effective noon buying rate as of September 30, 2019 in The City of New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board. | |
2 | Non-GAAP operating income is defined as operating income before share-based compensation expenses. | |
3 | Non-GAAP net income attributable to the Company’s shareholders is defined as net income attributable to the Company’s shareholders before share-based compensation expenses. | |
4 | Non-GAAP diluted net income per ADS is defined as net income attributable to the Company’s shareholders before share-based compensation expenses divided by total weighted average number of diluted ADS outstanding of the Company during the period. | |
5 | Non-GAAP operating margin is defined as Non-GAAP operating income as a percentage of net revenue. | |
6 | Non-GAAP net margin is defined as Non-GAAP net income attributable to the Company's shareholders as a percentage of net revenue. | |
7 | Non-GAAP basic net income per ADS is defined as Non-GAAP net income attributable to the Company’s shareholders divided by total weighted average number of ADS outstanding of the Company during the period. | |
8 | Active users of Lan Zhanggui included users who sold at least one life insurance policy and/or non-life insurance policy through Lan Zhanggui (including both its mobile application or WeChat public account) during the specific period. | |
9 | Active users of CNpad Auto Insurance App included users who made at least one purchase of auto insurance policy through CNpad Auto Insurance App (including both its mobile application and WeChat public account) during the specific period. | |
10 | Active customer accounts of Baowang 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. | |
11 | 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. | |
12 | In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)" and associated ASUs related to Topic 842, which requires organizations to recognize lease assets and lease liabilities on the balance sheet for the rights and obligations created by those leases. On January 1, 2019, the Company adopted Topic 842, using the modified retrospective transition approach, applying the new standard to leases existing at the date of initial adoption, and prior periods were not restated. In addition, the Company elected to apply the package of practical expedients permitted under the transition guidance which does not require reassessment of prior conclusions, lease classification and initial direct lease costs. Adoption of the new standard resulted in the recording of lease assets and liabilities of RMB182 million and RMB181 million respectively on January 1, 2019. The adoption of the new guidance did not have a material impact on the Company's consolidated statements of income and consolidated statements of cash flows. |
For more information, please contact: Oasis Qiu Investor Relations Manager Tel: +86 (20) 8388-3191 Email: qiusr@fanhuaholdings.com
Source: Fanhua Inc.