News Alert: Fanhua Inc. (NASDAQ: FANH)

Leslie Bryant

I am Leslie Bryant and I focus on breaking news stories and ensuring we (“Guru Online News”) offer timely reporting on some of the most recent stories released through market wires about “Earnings” sector.

I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for Guru Online News specializing in quicker moving active shares with a short term view on investment opportunities and trends.

Address: 2165 Fantages Way, West Paris, ME 04289, USA
Phone: (+1) 207-674-4349
Email: lesliebryant@guruonlinenews.com
Leslie Bryant

GUANGZHOU, China, September 8, 2019 – Shares of Fanhua Inc. (NASDAQ: FANH) showed the bullish trend with a higher momentum of 0.67% to $27.02. The company traded total volume of 255.068K shares as contrast to its average volume of 354.99K shares. The company has a market value of $1.77B and about 65.34M shares outstanding.

Fanhua Inc. (FANH) reported total net revenues of RMB971.70M (US$144.80M) for the first quarter of 2019, representing a boost of 15.2% from RMB843.30M for the corresponding period in 2018.

Net revenues for the life insurance business were RMB859.20M (US$128.00M) for the first quarter of 2019, representing a boost of 27.7% from RMB673.00M for the corresponding period in 2018. The increase was mainly driven by the growth in first year commissions because of 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 to RMB670.20M and renewal commissions increased 29.4% year-over-year to RMB189.00M. 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 RMB38.10M (US$5.70M) for the first quarter of 2019, representing a decrease of 58.8% from RMB92.50M for the corresponding period in 2018. The decrease was mainly because of the termination of cooperation between Baoxian.com and one of its major channel partners in June 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 formerly 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 RMB74.40M (US$11.10M) for the first quarter of 2019, representing a decrease of 4.4% from RMB77.80M 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 RMB845.20M (US$125.90M) for the first quarter of 2019, representing a boost of 12.2% from RMB753.10M for the corresponding period in 2018.

Commission costs were RMB668.70M (US$99.60M) for the first quarter of 2019, representing a boost of 11.9% from RMB597.40M 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 RMB601.50M (US$89.60M) for the first quarter of 2019, representing a boost of 28.4% from RMB468.30M 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 RMB24.60M (US$3.70M) for the first quarter of 2019, representing a decrease of 69.3% from RMB80.20M 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 RMB42.60M (US$6.30M) for the first quarter of 2019, representing a decrease of 13.1% from RMB49.00M 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.

Selling expenses were RMB64.60M (US$9.60M) for the first quarter of 2019, representing a boost of 32.6% from RMB48.70M for the corresponding period in 2018. The increase was mainly because of a boost of sales outlets in 2018.

General and administrative expenses were RMB111.90M (US$16.70M) for the first quarter of 2019, representing a boost of 4.6% from RMB107.00M for the corresponding period in 2018.

As a result of the preceding factors, we had an operating income of RMB126.40M (US$18.80M) for the first quarter of 2019, representing a boost of 40.2% from RMB90.20M for the corresponding period in 2018. Operating margin was 13.0% for the first quarter of 2019, contrast to 10.7% for the corresponding period in 2018.

Investment income was RMB36.80M (US$5.50M) for the first quarter of 2019, representing a boost of 11.2% from RMB33.10M for the corresponding period in 2018. The increase was mainly because of the investment income from certain one-year investment products which matured in the first quarter of 2019. The investment income represents yields from short-term investments in financial products which mainly consist of wealth management products issued by banks or collective trust products with terms ranging from half a year to two years and interest payable on a quarterly, semi-annual or annual basis. Our investment income fluctuates from quarter to quarter because investment income is recognized when received.

Interest income was RMB0.40M (US$0.10M) for the first quarter of 2019, representing a decrease of 96.3% from RMB10.80M for the corresponding period in 2018. The interest income in the first quarter of 2019 solely represented interest income from bank deposits while the interest income in the first quarter of 2018 was mainly contributed by a one-year loan to a third party, with 7.3% annual interest rate, which was fully settled in the third quarter of 2018.

Income tax expense was RMB42.90M (US$6.40M) for the first quarter of 2019, representing a decrease of 2.1% from RMB43.80M for the corresponding period in 2018. The effective tax rate for the first quarter of 2019 was 26.0% contrast with 33.0% for the corresponding period in 2018. The decrease in effective tax rate was mainly because of the tax holiday enjoyed by one of our wholly-owned auxiliaries starting from the fourth quarter of 2018.

Share of income of associates was RMB25.40M (US$3.80M) for the first quarter of 2019, representing a decrease of 37.3% from RMB40.50M for the corresponding period in 2018, mainly attributable to a decrease of profits from CNFinance Holdings Limited because of the upgrade of its business model.

Net income was RMB147.70M (US$22.00M) for the first quarter of 2019, representing a boost of 14.0% from RMB129.60M for the corresponding period in 2018.

Net income attributable to the Company’s shareholders was RMB147.30M (US$21.90M) for the first quarter of 2019, representing a boost of 13.1% from RMB130.20M for the corresponding period in 2018.

The Company offered net profit margin of 15.70% while its gross profit margin was 33.70%. ROE was recorded as 21.50% while beta factor was 1.35. The stock, as of recent close, has shown the weekly downbeat performance of -1.35% which was maintained at 23.10% in this year.

Leslie Bryant

Leslie Bryant

I am Leslie Bryant and I focus on breaking news stories and ensuring we (“Guru Online News”) offer timely reporting on some of the most recent stories released through market wires about “Earnings” sector. I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for Guru Online News specializing in quicker moving active shares with a short term view on investment opportunities and trends. Address: 2165 Fantages Way, West Paris, ME 04289, USA Phone: (+1) 207-674-4349 Email: lesliebryant@guruonlinenews.com