GUANGZHOU, China, Nov. 23, 2021 (GLOBE NEWSWIRE) -- Fanhua Inc., (Nasdaq: FANH), (the “Company” or “Fanhua”), a leading independent financial services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 20211.
Financial Highlights for the Third Quarter of 2021:
(In thousands, except per ADS) | 2020Q3(RMB) | 2021Q3(RMB) | 2021Q3(US$) | Change % | |
Total net revenues | 812,003 | 683,537 | 106,083 | (15.8 | ) |
Operating income | 73,326 | 28,163 | 4,371 | (61.6 | ) |
Net income attributable to the Company’s shareholders | 75,322 | 34,250 | 5,316 | (54.5 | ) |
Diluted net income per ADS | 1.40 | 0.64 | 0.10 | (54.3 | ) |
Cash, cash equivalents and short- term investments (As of September 30, 2020 and 2021) | 1,700,472 | 1,397,727 | 216,923 | (17.8 | ) |
Commenting on the financial results of third quarter of 2021, Mr. Chunlin Wang, chairman and chief executive officer of Fanhua, stated, “China's life insurance industry continues to be under pressure in 2021, as consumer confidence has not yet fully recovered from concerns over macroeconomic uncertainties, especially for products such as life insurance that are not considered to be imminently-needed. Total gross written premiums (“GWP”) in the life insurance industry fell by 1.9% year-over-year in the third quarter of 2021.
“Fanhua's overall performance in the third quarter of 2021 was in line with our expectations: total GWP hit RMB2.7 billion, representing a year-over-year increase of 8.9%, outperforming the industry. New policy sales reached RMB567.0 million, growing by 11.2% quarter-over-quarter. Operating income achieved RMB28.2 million, surpassing previous guidance.
“We are happy that we made good progress in executing Fanhua’s ‘Professionalization, Digitalization and Open Platform’ strategy in the third quarter of 2021, among which, we completed the target of building 10,000 digital entrepreneurial teams well ahead of schedule. We are currently focused on operating WeCom-based chat groups of these digital entrepreneurial teams to drive conversion.
“Meanwhile, Fanhua is actively advancing product customization and has made remarkable achievements. Since the beginning of this year, Fanhua, together with insurers and reinsurers, has co-launched 9 customized products, ranging from whole life, annuity, critical illness and term life insurance to million-yuan medical insurance. In the third quarter of 2021, customized products contributed over 30% to our total new policy sales.
“Looking forward to the fourth quarter of 2021, we see both challenges and opportunities. The Notice on Further Regulating the Internet Life Insurance Business of Insurance Institutions (referred to as the ‘New Regulation’) issued by China Banking and Insurance Regulatory Commission on October 22, 2021 has become a trending topic in the industry. The rationale behind the New Regulation is to refocus on offline insurance distribution, particularly for longer term high-value products. Insurers and brokers with extensive offline sales network coverage will significantly benefit from the New Regulation and usher in broader development opportunities over the long run.
“We believe that our Professionalization, Digitalization and Open Platform strategy and our positioning of catering to the needs of 400 million middle-class families for family asset-allocation services well align with market trends and we are on the right track to fully capitalizing on the market opportunities.
“In the fourth quarter of 2021, Fanhua remains focused on the execution of our growth strategy, and get well prepared for the Jumpstart Sales Campaign 2022 to achieve our full year target for 2021 while winning a good start for 2022. Operating income is expected to reach approximately RMB80 million for the fourth quarter of 2021.”
Financial Results for the Third Quarter of 2021
Total net revenues were RMB683.5 million (US$106.1 million) for the third quarter of 2021, representing a decrease of 15.8% from RMB812.0 million for the corresponding period in 2020.
Total operating costs and expenses were RMB655.4 million (US$101.7 million) for the third quarter of 2021, representing a decrease of 11.3% from RMB738.7 million for the corresponding period in 2020.
As a result of the preceding factors, we recorded an operating income of RMB28.2 million (US$4.4 million) for the third quarter of 2021, representing a decrease of 61.6% from RMB73.3 million for the corresponding period in 2020.
Operating margin was 4.1% for the third quarter of 2021, compared to 9.0% for the corresponding period in 2020.
Investment income was RMB8.8 million (US$1.4 million) for the third quarter of 2021, representing a decrease of 31.8% from RMB12.9 million for the corresponding period in 2020. The investment income in the third quarter of 2021 consisted of yields from short-term investments in financial products. The decrease in investment income was mainly due to a decrease in cash available for investment in short-term investment products.
Income tax expense was RMB9.3 million (US$1.4 million) for the third quarter of 2021, representing a decrease of 56.3% from RMB21.3 million for the corresponding period in 2020 due to the decrease in taxable income. The effective tax rate for the third quarter of 2021 was 21.4% compared with 22.9% for the corresponding period in 2020.
Share of income of affiliates was RMB2.5 million (US$0.4 million) for the third quarter of 2021, representing a decrease of 73.1% from RMB9.3 million for the corresponding period in 2020, mainly attributable to the decrease in income from CNFinance Holdings Limited.
Net income was RMB36.8 million (US$5.7 million) for the third quarter of 2021, representing a decrease of 54.5% from RMB80.8 million for the corresponding period in 2020.
Net income attributable to the Company’s shareholders was RMB34.3 million (US$5.3 million) for the third quarter of 2021, representing a decrease of 54.5% from RMB75.3 million for the corresponding period in 2020.
Net margin was 5.0% for the third quarter of 2021 as compared to 9.3% for the corresponding period in 2020.
Basic and diluted net income per ADS were RMB0.64 (US$0.10) and RMB0.64 (US$0.10) for the third quarter of 2021, respectively, representing decreases of 54.3% and 54.3% from RMB1.40 and RMB1.40 for the corresponding period in 2020.
As of September 30, 2021, the Company had RMB1,397.7 million (US$216.9 million) in cash, cashequivalents and short-term investments.
Key Operational Metrics for Fanhua’s Online Initiatives in the Third Quarter of 2021:
Recent Developments
Business Outlook
Fanhua expects its operating income to be approximately RMB80 million for the fourth quarter of 2021. This forecast is based on the current market conditions and reflects Fanhua’s preliminary estimate, which is subject to change caused by various factors.
Conference Call
The Company will host a conference call to discuss its third quarter 2021 financial results as per the following details.
Time: 8:00 PM Eastern Daylight Time on November 23, 2021 or 9:00 AM Beijing/Hong Kong Time on November 24, 2021
The toll free dial-in numbers:
United States | 1-833-239-5565 | |
United Kingdom | 0800-279-8057 | |
France | 0805-101-226 | |
Germany | 0800-182-0671 | |
Australia | 1-300-717-205 | |
Hong Kong, China | 800-906-601 | |
Japan | 0120-925-376 | |
South Korea | 080-850-0474 | |
The toll dial-in numbers: | ||
China (Mainland) | 400-820-5286 | |
Hong Kong, China & Other Areas | +852 30186771 | |
Conference ID #: 6049226 | ||
Additionally, a live and archived web cast of this call will be available at: https://edge.media-server.com/mmc/p/swgrgv7o
About Fanhua Inc.
Fanhua Inc. is a leading independent financial services provider. Through our online platforms and offline sales and service network, we offer a wide variety of financial products and services to individuals, including life and property and casualty insurance products. We also provide insurance claims adjusting services, such as damage assessments, surveys, authentications and loss estimations, as well as value-added services, such as emergency vehicle roadside assistance.
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 September 30, 2021, our distribution and service network is consisted of 750 sales outlets covering 23 provinces, autonomous regions and centrally-administered municipalities and 110 service outlets covering 31 provinces.
For more information about Fanhua Inc., please visit http://ir.fanhuaholdings.com/.
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 Fanhua and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in the Chinese insurance industry, its ability to compete effectively against its competitors, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China, future development of COVID-19 outbreak and their potential impact on the sales of insurance products. All information provided in this press release is as of the date hereof, and Fanhua undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although Fanhua believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by Fanhua is included in Fanhua's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.
FANHUA INC.Unaudited Condensed Consolidated Balance Sheets (In thousands)
As of December 31, | As of September 30, | As of September 30, | ||||||
2020 | 2021 | 2021 | ||||||
RMB | RMB | US$ | ||||||
ASSETS: | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 245,428 | 615,534 | 95,529 | |||||
Restricted cash | 83,981 | 92,830 | 14,407 | |||||
Short term investments | 1,307,865 | 782,193 | 121,394 | |||||
Accounts receivable, net | 583,116 | 563,235 | 87,413 | |||||
Other receivables | 50,242 | 66,547 | 10,328 | |||||
Other current assets | 41,148 | 39,222 | 6,087 | |||||
Total current assets | 2,311,780 | 2,159,561 | 335,158 | |||||
Non-current assets: | ||||||||
Restricted bank deposit - non current | 20,689 | 15,735 | 2,442 | |||||
Accounts receivable, net - non-current | — | 139,553 | 21,658 | |||||
Property, plant, and equipment, net | 36,778 | 44,190 | 6,858 | |||||
Goodwill and intangible assets, net | 109,913 | 109,869 | 17,051 | |||||
Deferred tax assets | 10,032 | 16,128 | 2,503 | |||||
Investment in affiliates | 357,661 | 386,175 | 59,933 | |||||
Other non-current assets | 33,743 | 31,686 | 4,918 | |||||
Right of use assets | 200,403 | 202,902 | 31,490 | |||||
Total non-current assets | 769,219 | 946,238 | 146,853 | |||||
Total assets | 3,080,999 | 3,105,799 | 482,011 |
Current liabilities: | ||||||||
Accounts payable | 377,386 | 300,076 | 46,571 | |||||
Insurance premium payables | 25,421 | 36,844 | 5,718 | |||||
Other payables and accrued expenses | 188,448 | 164,644 | 25,552 | |||||
Accrued payroll | 105,739 | 97,733 | 15,169 | |||||
Income tax payable | 145,983 | 123,090 | 19,103 | |||||
Current operating lease liability | 86,233 | 87,070 | 13,513 | |||||
Total current liabilities | 929,210 | 809,457 | 125,626 | |||||
Non-current liabilities: | ||||||||
Accounts payable – non-current | — | 72,409 | 11,238 | |||||
Other tax liabilities | 67,219 | 67,219 | 10,432 | |||||
Deferred tax liabilities | 26,380 | 61,199 | 9,498 | |||||
Non-current operating lease liability | 103,526 | 104,866 | 16,274 | |||||
Total non-current liabilities | 197,125 | 305,693 | 47,442 | |||||
Total liabilities | 1,126,335 | 1,115,150 | 173,068 | |||||
Ordinary shares | 8,088 | 8,088 | 1,255 | |||||
Statutory reserves | 553,911 | 553,911 | 85,966 | |||||
Retained earnings | 1,306,554 | 1,355,166 | 210,318 | |||||
Accumulated other comprehensive loss | (34,994 | ) | (41,486 | ) | (6,439 | ) | ||
Total shareholders’ equity | 1,833,559 | 1,875,679 | 291,100 | |||||
Non-controlling interests | 121,105 | 114,970 | 17,843 | |||||
Total equity | 1,954,664 | 1,990,649 | 308,943 | |||||
Total liabilities and equity | 3,080,999 | 3,105,799 | 482,011 | |||||
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, | ||||||||||||||||
2020 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||
RMB | RMB | USD | RMB | RMB | US$ | ||||||||||||
Net revenues: | |||||||||||||||||
Agency | 691,593 | 562,127 | 87,241 | 2,107,511 | 2,139,684 | 332,073 | |||||||||||
Life insurance business | 652,370 | 525,241 | 81,516 | 2,006,030 | 2,037,264 | 316,178 | |||||||||||
P&C insurance business | 39,223 | 36,886 | 5,725 | 101,481 | 102,420 | 15,895 | |||||||||||
Claims adjusting | 120,410 | 121,410 | 18,842 | 308,660 | 328,801 | 51,029 | |||||||||||
Total net revenues | 812,003 | 683,537 | 106,083 | 2,416,171 | 2,468,485 | 383,102 | |||||||||||
Operating costs and expenses: | |||||||||||||||||
Agency | (472,512 | ) | (367,452 | ) | (57,028 | ) | (1,452,077 | ) | (1,405,090 | ) | (218,066 | ) | |||||
Life insurance Business | (447,634 | ) | (341,577 | ) | (53,012 | ) | (1,381,898 | ) | (1,331,519 | ) | (206,648 | ) | |||||
P&C insurance Business | (24,878 | ) | (25,875 | ) | (4,016 | ) | (70,179 | ) | (73,571 | ) | (11,418 | ) | |||||
Claims adjusting | (68,851 | ) | (73,426 | ) | (11,396 | ) | (179,917 | ) | (205,182 | ) | (31,844 | ) | |||||
Total operating costs | (541,363 | ) | (440,878 | ) | (68,424 | ) | (1,631,994 | ) | (1,610,272 | ) | (249,910 | ) | |||||
Selling expenses | (78,460 | ) | (71,627 | ) | (11,116 | ) | (209,859 | ) | (229,352 | ) | (35,595 | ) | |||||
General and administrative expenses | (118,854 | ) | (142,869 | ) | (22,172 | ) | (344,006 | ) | (409,292 | ) | (63,521 | ) | |||||
Total operating costs and expenses | (738,677 | ) | (655,374 | ) | (101,712 | ) | (2,185,859 | ) | (2,248,916 | ) | (349,026 | ) | |||||
Income from operations | 73,326 | 28,163 | 4,371 | 230,312 | 219,569 | 34,076 | |||||||||||
Other income, net: | |||||||||||||||||
Investment income | 12,910 | 8,847 | 1,373 | 27,039 | 25,388 | 3,940 | |||||||||||
Interest income | 3,196 | 468 | 73 | 11,140 | 1,510 | 234 | |||||||||||
Others, net | 3,359 | 6,116 | 949 | 28,747 | 24,111 | 3,742 | |||||||||||
Income from operations before income taxes and share income of affiliates | 92,791 | 43,594 | 6,766 | 297,238 | 270,578 | 41,992 | |||||||||||
Income tax expense | (21,286 | ) | (9,315 | ) | (1,446 | ) | (69,910 | ) | (57,906 | ) | (8,987 | ) | |||||
Share of income of affiliates | 9,279 | 2,486 | 386 | 1,427 | 28,813 | 4,472 | |||||||||||
Net income | 80,784 | 36,765 | 5,706 | 228,755 | 241,485 | 37,477 | |||||||||||
Less: net income attributable to noncontrolling interests | 5,462 | 2,515 | 390 | 8,327 | 1,445 | 224 | |||||||||||
Net income attributable to the Company’s shareholders | 75,322 | 34,250 | 5,316 | 220,428 | 240,040 | 37,253 | |||||||||||
FANHUA INC.Unaudited Condensed Consolidated Statements of Income and Comprehensive Income-(Continued)(In thousands, except for shares and per share data)
For The Three Months Ended | For The Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2020 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||
RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||
Net income per share: | |||||||||||||||||
Basic | 0.07 | 0.03 | 0.01 | 0.21 | 0.22 | 0.03 | |||||||||||
Diluted | 0.07 | 0.03 | 0.01 | 0.21 | 0.22 | 0.03 | |||||||||||
Net income per ADS: | |||||||||||||||||
Basic | 1.40 | 0.64 | 0.10 | 4.11 | 4.47 | 0.69 | |||||||||||
Diluted | 1.40 | 0.64 | 0.10 | 4.10 | 4.47 | 0.69 | |||||||||||
Shares used in calculating net income per share:Basic | 1,073,891,784 | 1,073,891,784 | 1,073,891,784 | 1,073,891,784 | 1,073,891,784 | 1,073,891,784 | |||||||||||
Diluted | 1,074,291,392 | 1,074,291,210 | 1,074,291,210 | 1,074,291,409 | 1,074,291,220 | 1,074,291,220 | |||||||||||
Net income | 80,784 | 36,765 | 5,706 | 228,755 | 241,485 | 37,477 | |||||||||||
Other comprehensive income, net of tax: Foreign currency translation adjustments | 6,302 | (279 | ) | (43 | ) | 10,159 | (7,968 | ) | (1,237 | ) | |||||||
Share of other comprehensive (loss) gain of affiliates | (1,553 | ) | 197 | 31 | (694 | ) | (299 | ) | (46 | ) | |||||||
Unrealized net gains on available-for-sale investments | 3,917 | 4,469 | 694 | 15,702 | 1,775 | 276 | |||||||||||
Comprehensive income | 89,450 | 41,152 | 6,388 | 253,922 | 234,993 | 36,470 | |||||||||||
Less: Comprehensive income attributable to the noncontrolling interests | 5,462 | 2,515 | 390 | 8,327 | 1,445 | 224 | |||||||||||
Comprehensive income attributable to the Company’s shareholders | 83,988 | 38,637 | 5,998 | 245,595 | 233,548 | 36,246 | |||||||||||
FANHUA INC.
Unaudited Condensed Consolidated Statements of Cash Flow(In thousands, except for shares and per share data)
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2020 | 2021 | 2021 | 2020 | 2021 | 2021 | ||||||||||||
RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||
Net income | 80,784 | 36,765 | 5,706 | 228,755 | 241,485 | 37,477 | |||||||||||
Adjustments to reconcile net income to net cash generated from operating activities: | |||||||||||||||||
Investment income | (8,030 | ) | (1,736 | ) | (269 | ) | (13,132 | ) | (3,163 | ) | (491 | ) | |||||
Share of income of affiliates | (9,279 | ) | (2,486 | ) | (386 | ) | (1,427 | ) | (28,813 | ) | (4,472 | ) | |||||
Other non-cash adjustments | 31,153 | 10,390 | 1,612 | 102,090 | 5,769 | 895 | |||||||||||
Changes in operating assets and liabilities | 32,625 | (25,228 | ) | (3,916 | ) | (14,465 | ) | (157,196 | ) | (24,395 | ) | ||||||
Net cash generated from operating activities | 127,253 | 17,705 | 2,747 | 301,821 | 58,082 | 9,014 | |||||||||||
Cash flows from investing activities: | |||||||||||||||||
Purchase of short term investments | (2,326,840 | ) | (1,510,370 | ) | (234,405 | ) | (6,934,962 | ) | (7,255,010 | ) | (1,125,960 | ) | |||||
Proceeds from disposal of short term investments | 1,827,416 | 1,842,576 | 285,963 | 7,078,630 | 7,798,830 | 1,210,359 | |||||||||||
Cash received from disposal of nominee shareholding | — | — | — | — | 10,200 | 1,583 | |||||||||||
Cash paid for loan receivables to a third party | — | — | — | (90,000 | ) | — | — | ||||||||||
Others | (3,832 | ) | (2,841 | ) | (441 | ) | (9,575 | ) | (20,232 | ) | (3,140 | ) | |||||
Net cash (used in) generated from investing activities | (503,256 | ) | 329,365 | 51,117 | 44,093 | 533,788 | 82,842 | ||||||||||
Cash flows from financing activities: | |||||||||||||||||
Dividends paid | (91,865 | ) | (51,958 | ) | (8,064 | ) | (300,695 | ) | (191,427 | ) | (29,709 | ) | |||||
Repayment of borrowing related to nominee shareholding | — | — | — | — | (10,200 | ) | (1,583 | ) | |||||||||
Dividend distributed to non-controlling interest | — | — | — | — | (7,580 | ) | (1,176 | ) | |||||||||
Net cash used in financing activities | (91,865 | ) | (51,958 | ) | (8,064 | ) | (300,695 | ) | (209,207 | ) | (32,468 | ) | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (467,868 | ) | 295,112 | 45,800 | 45,219 | 382,663 | 59,388 | ||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 786,737 | 429,330 | 66,631 | 265,605 | 350,098 | 54,335 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (709 | ) | (343 | ) | (53 | ) | 7,336 | (8,662 | ) | (1,345 | ) | ||||||
Cash, cash equivalents and restricted cash at end of period | 318,160 | 724,099 | 112,378 | 318,160 | 724,099 | 112,378 | |||||||||||
Source: Fanhua Inc.
____________ | |
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 RMB6.4434 to US$1.00, the effective noon buying rate as of September 30, 2021 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 | Active customer accounts are defined as customer accounts that made at least one purchase directly throughwww.baoxian.com, its mobile application, or WeChat public account during the specified period. |
3 | 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. |
4 | Performing agents are defined as agents who have sold at least one insurance policy during the specified period. |