FANHUA Inc. (Nasdaq: FANH) (the “Company” or “FANHUA”), a leading
independent financial services provider in China, today announced
its unaudited financial results for the fourth quarter and fiscal
year ended December 31, 20231.
Financial Highlights for Year 2023
|
(In thousands, except per ADS data and percentages) |
2022 (RMB) |
2023 (RMB) |
2023(US$) |
Change % |
|
Total net revenues |
2,781,614 |
|
3,198,389 |
|
450,484 |
|
15.0 |
|
|
Operating income |
168,675 |
|
195,825 |
|
27,581 |
|
16.1 |
|
|
Net income attributable to shareholders |
100,272 |
|
280,477 |
|
39,504 |
|
179.7 |
|
|
Adjusted EBITDA2 |
184,786 |
|
243,300 |
|
34,268 |
|
31.7 |
|
|
Diluted net income per ADS |
1.87 |
|
5.21 |
|
0.74 |
|
178.6 |
|
|
Cash, cash equivalent, short-term investments at end of the
period |
915,279 |
|
1,449,808 |
|
204,201 |
|
58.4 |
|
|
Key operating metrics |
|
|
|
|
|
|
|
|
|
Total life gross written premiums (“GWP”) |
12,408,998 |
|
16,109,985 |
|
2,269,044 |
|
29.8 |
|
|
• First year premium (“FYP”) |
2,556,867 |
|
3,478,110 |
|
489,882 |
|
36.0 |
|
|
• Renewal premium |
9,852,131 |
|
12,631,875 |
|
1,779,162 |
|
28.2 |
|
|
Financial Highlights for the Fourth Quarter of
2023:(In thousands, except per ADS data and
percentages) |
2022Q4 (RMB) |
2023Q4 (RMB) |
2023Q4(US$) |
Change % |
|
Total net revenues |
767,365 |
|
603,392 |
|
84,986 |
|
(21.4 |
) |
|
Operating income |
84,893 |
|
16,242 |
|
2,288 |
|
(80.9 |
) |
|
Net income (loss) attributable to shareholders |
70,616 |
|
(27,189 |
) |
(3,829 |
) |
N/A |
|
|
Adjusted EBITDA2 |
77,103 |
|
40,150 |
|
5,655 |
|
(47.9 |
) |
|
Diluted net income (loss) per ADS |
1.31 |
|
(0.51 |
) |
(0.07 |
) |
N/A |
|
|
Key operating metrics |
|
|
|
|
|
|
|
|
|
Total life gross written premiums (“GWP”) |
3,465,190 |
|
3,969,430 |
|
559,083 |
|
14.6 |
|
|
• First year premium (“FYP”) |
918,822 |
|
564,170 |
|
79,462 |
|
(38.6 |
) |
|
• Renewal premium |
2,546,368 |
|
3,405,260 |
|
479,621 |
|
33.7 |
|
________________________
|
1 |
|
This announcement contains currency conversions of certain Renminbi
(“RMB”) amounts into U.S. dollars (US$) at specified rate solely
for the convenience of the reader. Unless otherwise noted, all
translations from RMB to U.S. dollars are made at a rate of
RMB7.0999 to US$1.00, the effective noon buying rate as of December
29, 2023 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 |
|
Adjusted EBITDA is defined as net income before income tax expense,
share of income of affiliates, net of impairment, investment
income, interest income, financial cost, depreciation, amortization
of intangible assets, share-based compensation expenses and change
in fair value of equity investments and contingent
consideration. |
| |
|
|
| |
|
|
Mr. Yinan Hu, Founder, Vice-Chairman and
Chief Executive Officer, commented: “In 2023, we faced
challenges from both regulatory policy changes and industry
transformation. However, we demonstrated resilience and achieved
steady growth, fully showcasing the successful implementation of
our strategy of driving growth through 'Professionalization,
Specialization, Digitalization, and Open Platform.'
"In the past year, we have continuously
strengthened our efforts to develop top agents and to enhance their
professional capabilities with remarkable results; through digital
platforms, we have provided support to our insurance advisors,
offering end-customers a superior service experience; the
diversified service ecosystem we have built has already brought a
competitive advantage to the company and our open platform has
become one of the key drivers of our growth. In addition, our
internationalization strategy is also steadily advancing, with two
subsidiaries in Hong Kong recently officially commencing
operations.
“With the implementation of the policy on
reported and actual fee consistency and commission cap across all
distribution channels, the life insurance industry is expected to
face significant challenges. However, it will present favorable
opportunities for leading players like FANHUA that have
already achieved scale and are able to offer diversified services
and platform-based companies with digitization and artificial
intelligence capabilities. As such, we believe FANHUA is posed
to emerge as one of the greatest beneficiaries.
"The completion of the proposed strategic
investment from White Group in FANHUA will bring about an
upgrade to our strategies in terms of artificial intelligence
development and internationalization. With the support of White
Group, through mergers and acquisitions, we plan to accelerate our
expansion in the international market while also deepening our
presence in the field of family services globally. This will enable
us to provide customers with more comprehensive and efficient
family asset allocation services, thus creating broader development
opportunities for us and propelling the company to higher
levels.
“Looking ahead, we firmly believe that the
industry's development will move towards more concentration, with a
few major players taking dominating position. Service and
technology will be the primary driving forces. We will actively
explore the 'insurance + service + technology' model, providing
comprehensive products and diversified services to our customers
while leveraging technology to enhance service efficiency. Our
focus will be on serving the high-net-worth end-customers and
Million-dollar Round-table Members-qualified (“MDRT”) agents. In
2024, leveraging on industry-leading technology platforms,
comprehensive service capabilities, and capital strength to acquire
high-quality assets, we will further expand our business scale to
make market share."
Ben Lin, Director and Chief Strategy
Officer of FANHUA, commented: “Despite multiple challenges
in the macroeconomic environment and the insurance industry, we are
pleased to report solid results for the full year of 2023. Total
insurance premiums facilitated for the year reached RMB 16.4
billion, representing a year-on-year growth of 28.7%. First year
premiums amounted to RMB3.8 billion, reflecting a year-on-year
growth of 30.3%. Operating income came in at RMB195.8 million, an
increase of 16.1% compared to the previous year, with net income
attributable to shareholders reaching RMB280.5 million,
representing a remarkable growth of 179.7% year-on-year.
“Looking ahead to 2024, due to the significant
uncertainty surrounding the specific timing and intensity of the
upcoming policy on commission cap across all distribution channels,
we are unable to accurately predict the full-year performance
targets yet. However, it is foreseeable that while the
implementation of this policy may result in short-term challenges,
it will also present important opportunities for the development of
our open platform.
“Under this backdrop, our strategic focus will
center on:
1) Maximizing the opportunities brought about by
policy changes to grow the number of high-quality agents,
especially MDRT members;2) Further expanding the ‘insurance+’
service ecosystem by connecting to resources in education, elderly
care, and overseas travel;3) Actively exploring development
opportunities in the Southeast Asian market in collaboration with
partners to expand our global presence; and4) Leveraging our
capital advantage to accelerate the pace of mergers and
acquisitions, facilitating global and intelligent development.
"We believe that these initiatives will create
broader development opportunities for the company's long-term
sustainable and high-quality growth."
Open Platform and M&A Contributions
over the Year 2023
- The number of platform professional
users who used our Open Platform reached 854 as of December 31,
2023, generating RMB1.1 billion in first year premiums for 2023
which accounted for 32.4% of our life insurance FYP;
- 23.7% of our life insurance FYP and
24.2% of our net revenues for the life insurance business for 2023
were generated from entities we acquired within the past 12
months.
Share Repurchase Program
On December 20, 2022, the Company’s board of
directors announced a share repurchase program under which the
Company may repurchase its American depositary shares, or ADSs,
with an aggregate value of US$20 million from time to time. As of
December 31, 2023, the Company had repurchased an aggregate of
598,906 ADSs, at an average price of approximately US$7.7 per ADS
for a total amount of approximately US$4.6 million under this share
repurchase program.
Business Outlook and
Guidance
We expect adjusted EBITDA to be no less than
RMB50.0 million for the first quarter of 2024. This forecast is
based on the current market conditions and reflects FANHUA’s
preliminary estimate, which is subject to change caused by various
uncertainties.
Analysis of our Financial Results for
the Fourth Quarter of 2023
Revenues
Total net revenues were
RMB603.3 million (US$85.0 million) for the fourth quarter of 2023,
representing a decrease of 21.4% from RMB767.4 million for the
corresponding period in 2022.
-
Net revenues for agency business were RMB483.5
million (US$68.1 million) for the fourth quarter of 2023,
representing a decrease of 27.1% from RMB662.8 million for the
corresponding period in 2022. Total GWP increased by 13.3%
year-over-year to RMB4,048.0 million, of which FYP decreased by
37.4% year-over-year to RMB642.7 million while renewal premiums
grew by 33.7% year-over-year to RMB3,405.3 million.
- Net
revenues for the life insurance business were RMB446.5
million (US$62.9 million) for the fourth quarter of 2023,
representing a decrease of 28.8% from RMB627.5 million for the
corresponding period in 2022. The decrease was mainly due to (i)
the business fluctuation caused by the pricing rate change to life
insurance products from 3.5% to 3% effective on August 1, 2023
which caused a spike in new business sales in July 2023 and then
followed by a significant drop in sales since August 2023,
partially offset by ii) contribution from entities acquired in the
first quarter of 2023. Total life insurance GWP increased by 14.6%
year-over-year to RMB3,969.4 million of which life insurance FYP
decreased by 38.6% year-over-year to RMB564.2 million while renewal
premiums grew by 33.7% year-over-year to RMB3,405.3 million.Net
revenues generated from our life insurance business accounted for
74.0% of our total net revenues in the fourth quarter of 2023, as
compared to 81.8% in the same period of 2022.
- Net
revenues for the non-life insurance business (formerly categorized
as “property and casualty insurance business”) were
RMB37.0 million (US$5.2 million) for the fourth quarter of 2023,
representing an increase of 4.8% from RMB35.3 million for the
corresponding period in 2022. Net revenues generated from the
non-life insurance business accounted for 6.1% of our total net
revenues in the fourth quarter of 2023, as compared to 4.6% in the
same period of 2022.
-
Net revenues for the claims adjusting business
were RMB119.8 million (US$16.9 million) for the fourth quarter of
2023, representing an increase of 14.5% from RMB104.6 million for
the corresponding period in 2022. The increase was mainly due to
business recovery after the pandemic. Net revenues generated from
the claims adjusting business accounted for 19.9% of our total net
revenues in the fourth quarter of 2023, as compared to 13.6% in the
same period of 2022.
Gross profit
Total gross profit was RMB219.9
million (US$31.0 million) for the fourth quarter of 2023,
representing a decrease of 19.5% from RMB273.0 million for the
corresponding period in 2022. By product line, the results
were:
-
Life insurance business recorded a gross profit of
RMB162.3 million (US$22.9 million), representing a decrease of
26.7% from RMB221.3 million for the fourth quarter of 2022. Gross
margin for the period was 36.3%, as compared with 35.3% in the same
period of 2022.
-
Non-life insurance business recorded a gross
profit of RMB11.0 million (US$1.5 million), representing a decrease
of 14.1% from RMB12.8 million for the fourth quarter of 2022. Gross
margin for the period was 29.7%, as compared with 36.3% in the same
period of 2022. The decrease in gross margin was mainly due to
changes in product mix.
-
Claims adjusting business recorded a gross profit
of RMB46.6 million (US$6.6 million), representing an increase of
19.8% from RMB38.9 million for the fourth quarter of 2022. Gross
margin for the period was 38.9%, as compared with 37.2% in the same
period of 2022.
Operating expenses
Selling expenses were RMB60.2
million (US$8.5 million) for the fourth quarter of 2023,
representing an decrease of 2.6% from RMB61.8 million for the
corresponding period in 2022. The decrease was due to cost savings
from personnel optimization and decreased rental costs of our sales
outlets.
General and administrative
expenses were RMB143.5 million (US$20.2 million) for the
fourth quarter of 2023, representing an increase of 13.6% from
RMB126.3 million for the corresponding period in 2022. The increase
was mainly due to expenses incurred by the acquired business which
was consolidated since the first quarter of 2023 amounting to
approximately RMB15.9 million (US$2.2 million) and increased IT
cloud service.
As a result of the foregoing factors, we
recorded operating income of RMB16.2 million
(US$2.3 million) for the fourth quarter of 2023, representing a
decrease of 80.9% from RMB84.9 million for the corresponding period
in 2022.
Operating margin was 2.7% for
the fourth quarter of 2023, compared to 11.1% for the corresponding
period in 2022.
Loss from fair value change was
RMB61.5 million (US$8.7 million) for the fourth quarter of 2023,
which primarily represents: (i) an unrealized holding loss of
RMB68.1 million (US$9.6 million) in the fourth quarter of 2023, to
reflect the change in the fair value of the Company's owned 2.8%
equity interests in Cheche Group Inc. ("Cheche"); (ii) partially
offset by an unrealized income of RMB6.6 million (US$0.9 million)
representing the fair value change of the contingent consideration
in regard to business combinations in the first quarter of
2023.
Investment income was RMB22.2
million (US$3.1 million) for the fourth quarter of 2023,
representing an increase of 152.3% from RMB8.8 million for the
corresponding period in 2022. The increase reflects the quarterly
fluctuation in yields from short-term investments in financial
products as it is recognized when the investment matures or is
disposed of.
Income tax expense was RMB5.0
million (US$0.7 million) for the fourth quarter of 2023,
representing a decrease of 73.0% from RMB18.5 million for the
corresponding period in 2022.
Net loss was
RMB15.1 million (US$2.1 million) for the fourth quarter of 2023, as
compared with net income of RMB65.5 million for the corresponding
period in 2022, primarily due to a change in the fair value of the
Company's equity investment in Cheche.
Net loss attributable to the Company’s
shareholders was RMB27.2 million (US$3.8 million) for the
fourth quarter of 2023, as compared with net income attributable to
the Company's shareholders of RMB70.6 million for the corresponding
period in 2022.
Net margin was -4.5% for the
fourth quarter of 2023, as compared to 9.2% for the corresponding
period in 2022.
Adjusted
EBITDA2 was RMB40.2 million (US$5.7
million) for the fourth quarter of 2023, representing an decrease
of 47.9% from RMB77.1 million for the corresponding period in
2022.
Adjusted EBITDA margin3 was
6.7% for the fourth quarter of 2023, as compared to 10.0% for the
corresponding period in 2022.
Basic and diluted net loss per
ADS were RMB0.51 (US$0.07) and RMB0.51 (US$0.07) for the
fourth quarter of 2023, respectively, as compared to Basic and
diluted net income per ADS of RMB1.31 and RMB1.31 for the
corresponding period in 2022, respectively.
Basic4
and diluted5 adjusted
EBITDA per ADS were RMB0.75 (US$0.11) and RMB0.75
(US$0.11) for the fourth quarter of 2023, representing a decrease
of 47.9% and 47.6% from RMB1.44 and RMB1.43 for the corresponding
period in 2022, respectively.
As of December 31, 2023, the Company had
RMB1,449.8 million (US$204.2 million) in cash,
cash equivalents and short-term
investments.
________________________
|
3 |
|
Adjusted EBITDA margin is defined as adjusted EBITDA as a
percentage of net revenues. |
| 4 |
|
Basic adjusted EBITDA per ADS is defined as adjusted EBITDA divided
by total weighted average number of ADSs of the Company outstanding
during the period. |
| 5 |
|
Diluted
adjusted EBITDA per ADS is defined as adjusted EBITDA divided by
total weighted average number of diluted ADSs of the Company
outstanding during the period. |
| |
|
|
Analysis of our Financial Results for
the Year 2023
Revenues
Total net revenues were
RMB3,198.3 million (US$450.5 million) for 2023, representing an
increase of 15.0% from RMB2,781.6 million in 2022.
-
Net revenues for agency business were RMB2,760.4
million (US$388.8 million) for 2023, representing an increase of
16.1% from RMB2,376.9 million for 2022. Total GWP increased by
28.7% year-over-year to RMB16,444.6 million, of which FYP grew by
30.3% year-over-year to RMB3,812.7 million while renewal premiums
increased by 28.2% year-over-year to RMB12,631.9 million.
- Net
revenues for the life insurance business were RMB2,593.8
million (US$365.3 million) for 2023, representing an increase of
15.9% from RMB2,237.3 million for 2022. The increase was mainly due
to (i) productivity improvement in performing agents and increase
in contributions from top-performing agents; (ii) contribution from
newly acquired entities, partially offset by the decrease in
renewal commission income as a result of the decreased average
portfolio based renewal commission rate, and to a lesser extent,
due to changes in product mix. Total life insurance GWP increased
by 29.8% year-over-year to RMB16,110.0 million, of which FYP grew
by 36.0% year-over-year to RMB3,478.1 million while renewal
premiums increased by 28.2% year-over-year to RMB12,631.9
million.Net revenues generated from our life insurance business
accounted for 81.1% of our total net revenues in 2023, as compared
to 80.4% in 2022.
- Net
revenues for the non-life insurance business (formerly categorized
as “property and casualty insurance business”) were
RMB166.6 million (US$23.5 million) for 2023, representing an
increase of 19.4% from RMB139.5 million for 2022. Net revenues
generated from the non-life insurance business accounted for 5.2%
of our total net revenues in 2023, as compared to 5.0% in
2022.
-
Net revenues for the claims adjusting business
were RMB437.9 million (US$61.7 million) for 2023, representing an
increase of 8.2% from RMB404.8 million for 2022. The increase was
mainly due to business recovery after the pandemic. Net revenues
generated from the claims adjusting business accounted for 13.7% of
our total net revenues in 2023, as compared to 14.6% in 2022.
Gross profit
Total gross profit was
RMB1,052.9 million (US$148.3 million) for 2023, representing an
increase of 6.8% from RMB986.0 in 2022. By product line, the
results were:
-
Life insurance business recorded a gross profit of
RMB844.3 million (US$118.9 million), representing an increase of
5.4% from RMB800.7 million for 2022. Gross margin for the period
was 32.6%, as compared with 35.8% in the same period of 2022.
-
Non-life insurance business recorded a gross
profit of RMB47.4 million (US$6.7 million), representing a decrease
of 2.3% from RMB48.5 million for 2022. Gross margin for the current
period was 28.5%, as compared with 34.8% for the same period of
2022. The decrease in gross margin was mainly due to changes in
product mix.
-
Claims adjusting business recorded a gross profit
of RMB161.2 million (US$22.7 million), representing an increase of
17.8% from RMB136.8 million for 2022. Gross margin for the period
was 36.8%, as compared with 33.8% in the same period of 2022.
Operating expenses
Selling expenses were RMB250.2
million (US$35.2 million) for 2023, representing a decrease of 8.3%
from RMB272.7 million in 2022. The decrease was due to expenses
savings from personnel optimization and decreased number of sales
outlets, partially offset by the increase in sales conference
events and the recognition of RMB13.6 million (US$1.9 million)
share-based compensation expenses related to shares options granted
to MDRT agents.
General and administrative
expenses were RMB606.9 million (US$85.5 million) for 2023,
representing an increase of 11.4% from RMB544.6 million in 2022.
The increase was mainly due to the expenses incurred by the
acquired business which was consolidated since the first quarter of
2023 amounting to approximately RMB76.2 million (US$10.7 million)
and increased IT services, partially offset by cost savings from
personnel optimization and decrease in the number of branches since
2022.
As a result of the foregoing factors, we
recorded operating income of RMB195.8 million
(US$27.6 million) for 2023, representing an increase of 16.1% from
RMB168.7 million in 2022.
Operating margin was 6.1% for
2023, compared to 6.1% in 2022.
Gains from fair value change
was RMB102.9 million (US$14.5 million), primarily represents: (i)
an unrealized holding gain of RMB96.2 million (US$13.6 million) in
2023, reflecting a change in the fair value of the Company's owned
equity interests in Cheche; (ii) an unrealized income of RMB6.6
million (US$0.9 million) representing a change in the fair value of
the contingent consideration in regard to business combinations in
the first quarter of 2023.
Investment income was RMB49.1
million (US$6.9 million) for 2023, representing an increase of
175.8% from RMB17.8 million in 2022. The investment income in 2023
consisted of yields from short-term investments in financial
products and is recognized when the investment matures or is
disposed of.
Income tax expense was RMB59.4
million (US$8.4 million) for 2023, representing an increase of
44.9% from RMB41.0 million in 2022. The effective tax rate for 2023
was 17.0% compared with 20.9% in 2022.
Net income was RMB289.1 million
(US$40.7 million) for 2023, representing an increase of 237.3% from
RMB85.7 million in 2022.
Net income attributable to the Company’s
shareholders was RMB280.5 million (US$39.5 million) for
2023, representing an increase of 179.7% from RMB100.3 million in
2022.
Net margin was 8.8% for 2023,
as compared to 3.6% in 2022.
Adjusted
EBITDA2 was RMB243.3 million (US$34.3
million) for 2023, representing an increase of 31.7% as compared to
RMB184.8 million in 2022.
Adjusted EBITDA
margin3 was 7.6% for 2023, as compared to
6.6% in 2022.
Basic and diluted net income per
ADS were RMB5.22 (US$0.74) and RMB5.21 (US$0.74) for 2023,
respectively, representing an increase of 179.1% and 178.6% from
RMB1.87 and RMB1.87 in 2022, respectively.
Basic4
and diluted5 adjusted
EBITDA per ADS were RMB4.53 (US$0.64) and RMB4.52
(US$0.64) for the fourth quarter of 2023, respectively,
representing an increase of 31.7% and 31.4% from RMB3.44 and
RMB3.44 in 2022, respectively.
FANHUA’s Insurance Sales and Service
Distribution Network:
- As of
December 31, 2023, excluding newly acquired entities, FANHUA’s
distribution network consisted of 561 sales outlets in 23 provinces
and 80 services outlets in 31 provinces as of December 31, 2023,
compared with 675 sales outlets in 24 provinces and 99 services
outlets in 31 provinces as of December 31, 2022. The decrease in
the number of sales outlets reflected our focus on growing
profitable branches, coupled with the challenging decisions to
close those which were not yielding profits. The number of the
Company's in-house claims adjustors was 2,303 as of December 31,
2023, compared with 2,170 as of December 31, 2022.
Conference Call
The Company will host a conference call to
discuss its fourth quarter and fiscal year 2023 financial results
as per the following details.
Time: 9:00 p.m. Eastern Daylight Time on March 20, 2024
or 9:00 a.m. Beijing/Hong Kong Time on March
21, 2024
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:
https://register.vevent.com/register/BI91a942d345f74c0a8c371f7dee5f6bfb
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/pbcb4gmh
About FANHUA Inc.
Driven by its digital technologies and
professional expertise in the insurance industry, FANHUA Inc. is
the leading independent financial service provider in China,
focusing on providing insurance-oriented family asset allocation
services that covers customers’ full lifecycle and a one-stop
service platform for individual sales agents and independent
insurance intermediaries.
With strategic focus on long-term life insurance
products, we offer a broad range of insurance products, claims
adjusting services and various value-added services to meet
customers’ diverse needs, through an extensive network of digitally
empowered sales agents and professional claims adjustors. We also
operate Baowang (www.baoxian.com), an online insurance platform
that provides customers with a one-stop insurance shopping
experience.
For more information about FANHUA Inc., please visit
https://ir.fanhgroup.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 including
macroeconomic conditions in China. Except as otherwise indicated,
all information provided in this press release speaks 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.
About Non-GAAP Financial
Measures
In addition to the Company’s consolidated
financial results under generally accepted accounting principles in
the United States (“GAAP”), the Company also provides adjusted
EBITDA, adjusted EBITDA margin and basic and diluted adjusted
EBITDA per ADS, all of which are non-GAAP financial measures, as
supplemental measures to review and assess operating performance.
Adjusted EBITDA is defined as net income before income tax expense,
share of income of affiliates, net of impairment, investment
income, interest income, financial cost, depreciation, amortization
of intangible assets, share-based compensation expenses and change
in fair value of equity investments and contingent consideration.
Adjusted EBITDA margin is defined as adjusted EBITDA as a
percentage of net revenues. Basic adjusted EBITDA per ADS is
defined as adjusted EBITDA divided by total weighted average number
of ADSs of the Company outstanding during the period. Diluted
adjusted EBITDA per ADS is defined as adjusted EBITDA divided by
total weighted average number of diluted ADSs of the Company
outstanding 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. The Company’s non-GAAP
financial measures do not reflect all items of income and expenses
that affect the Company’s operations. Specifically, the Company’s
non-GAAP measures exclude interest income, investment income,
financial cost, income tax expense, depreciation, amortization of
intangible assets, share of income of affiliates, net of
impairment, share-based compensation expenses and change in fair
value of equity investments and contingent consideration. Further,
these non-GAAP financial measures may not be comparable to
similarly titled measures presented by other companies, including
peer companies. The presentation of these non-GAAP financial
measures has limitations as analytical tools, and investors should
not consider them in isolation from, or as a substitute for
analysis of, 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 Net
Income to Adjusted EBITDA and Adjusted EBITDA Margin” set forth at
the end of this press release.
|
|
|
FANHUA INC.Unaudited Condensed
Consolidated Balance Sheets (In
thousands) |
|
|
|
|
As of December 31, |
|
As of December 31, |
|
As of December 31, |
|
|
2022 |
|
2023 |
|
2023 |
|
|
RMB |
|
RMB |
|
US$ |
|
ASSETS: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
567,525 |
|
521,538 |
|
73,457 |
|
Restricted cash |
59,957 |
|
53,238 |
|
7,498 |
|
Short term investments |
347,754 |
|
928,270 |
|
130,744 |
|
Accounts receivable, net |
667,554 |
|
639,418 |
|
90,060 |
|
Insurance premium receivables |
— |
|
16 |
|
2 |
|
Other receivables |
231,049 |
|
111,754 |
|
15,740 |
|
Other current assets |
419,735 |
|
121,331 |
|
17,090 |
|
Total current assets |
2,293,574 |
|
2,375,565 |
|
334,591 |
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
Restricted bank deposit – non-current |
20,729 |
|
27,228 |
|
3,835 |
|
Contract assets, net - non-current |
385,834 |
|
711,424 |
|
100,202 |
|
Property, plant, and equipment, net |
98,459 |
|
91,659 |
|
12,910 |
|
Goodwill and intangible assets, net |
109,997 |
|
432,465 |
|
60,912 |
|
Deferred tax assets |
20,402 |
|
40,735 |
|
5,737 |
|
Investment in affiliates |
4,035 |
|
— |
|
— |
|
Other non-current assets |
11,400 |
|
235,752 |
|
33,205 |
|
Right of use assets |
145,086 |
|
136,056 |
|
19,163 |
|
Total non-current assets |
795,942 |
|
1,675,319 |
|
235,964 |
|
Total assets |
3,089,516 |
|
4,050,884 |
|
570,555 |
|
Current liabilities: |
|
|
|
|
Short-term loan |
35,679 |
|
|
164,300 |
|
|
23,141 |
|
|
Accounts payable |
436,784 |
|
|
406,807 |
|
|
57,298 |
|
|
Insurance premium payables |
16,580 |
|
|
14,943 |
|
|
2,105 |
|
|
Other payables and accrued expenses |
174,326 |
|
|
185,999 |
|
|
26,197 |
|
|
Accrued payroll |
96,279 |
|
|
94,305 |
|
|
13,283 |
|
|
Income tax payable |
130,024 |
|
|
100,260 |
|
|
14,121 |
|
|
Current operating lease liability |
62,304 |
|
|
57,164 |
|
|
8,051 |
|
|
Total current liabilities |
951,976 |
|
|
1,023,778 |
|
|
144,196 |
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
Accounts payable – non-current |
192,917 |
|
|
401,385 |
|
|
56,534 |
|
|
Other tax liabilities |
36,647 |
|
|
34,368 |
|
|
4,841 |
|
|
Deferred tax liabilities |
102,455 |
|
|
149,151 |
|
|
21,007 |
|
|
Non-current operating lease liability |
74,190 |
|
|
71,311 |
|
|
10,044 |
|
|
Other non-current liabilities |
— |
|
|
33,373 |
|
|
4,701 |
|
|
Total non-current liabilities |
406,209 |
|
|
689,588 |
|
|
97,127 |
|
|
Total liabilities |
1,358,185 |
|
|
1,713,366 |
|
|
241,323 |
|
|
|
|
|
|
|
Ordinary shares |
8,091 |
|
|
8,675 |
|
|
1,222 |
|
|
Treasury stock |
(10 |
) |
|
(178 |
) |
|
(25 |
) |
|
Additional Paid-in capital |
461 |
|
|
162,721 |
|
|
22,919 |
|
|
Statutory reserves |
559,520 |
|
|
608,376 |
|
|
85,688 |
|
|
Retained earnings |
1,087,984 |
|
|
1,319,605 |
|
|
185,862 |
|
|
Accumulated other comprehensive loss |
(32,643 |
) |
|
(27,936 |
) |
|
(3,935 |
) |
|
Total shareholders’ equity |
1,623,403 |
|
|
2,071,263 |
|
|
291,731 |
|
|
Non-controlling interests |
107,928 |
|
|
266,255 |
|
|
37,501 |
|
|
Total equity |
1,731,331 |
|
|
2,337,518 |
|
|
329,232 |
|
|
Total liabilities and equity |
3,089,516 |
|
|
4,050,884 |
|
|
570,555 |
|
|
|
|
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 Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
2023 |
|
2023 |
|
|
2022 |
|
2023 |
|
2023 |
|
| |
RMB |
|
RMB |
|
US$ |
|
|
RMB |
|
RMB |
|
US$ |
|
| Net
revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency |
662,755 |
|
483,552 |
|
68,107 |
|
|
2,376,851 |
|
2,760,448 |
|
388,801 |
|
|
Life insurance business |
627,479 |
|
446,510 |
|
62,890 |
|
|
2,237,312 |
|
2,593,803 |
|
365,330 |
|
|
Non-life insurance business |
35,276 |
|
37,042 |
|
5,217 |
|
|
139,539 |
|
166,645 |
|
23,471 |
|
| Claims adjusting |
104,610 |
|
119,840 |
|
16,879 |
|
|
404,763 |
|
437,941 |
|
61,683 |
|
| Total net
revenues |
767,365 |
|
603,392 |
|
84,986 |
|
|
2,781,614 |
|
3,198,389 |
|
450,484 |
|
| Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency |
(428,707 |
) |
(310,200 |
) |
(43,691 |
) |
|
(1,527,572 |
) |
(1,868,672 |
) |
(263,197 |
) |
|
Life insurance business |
(406,188 |
) |
(284,161 |
) |
(40,023 |
) |
|
(1,436,606 |
) |
(1,749,475 |
) |
(246,408 |
) |
|
Non-life insurance business |
(22,519 |
) |
(26,039 |
) |
(3,668 |
) |
|
(90,966 |
) |
(119,197 |
) |
(16,789 |
) |
| Claims adjusting |
(65,702 |
) |
(73,210 |
) |
(10,311 |
) |
|
(268,031 |
) |
(276,744 |
) |
(38,979 |
) |
| Total operating
costs |
(494,409 |
) |
(383,410 |
) |
(54,002 |
) |
|
(1,795,603 |
) |
(2,145,416 |
) |
(302,176 |
) |
| Selling expenses |
(61,754 |
) |
(60,245 |
) |
(8,485 |
) |
|
(272,706 |
) |
(250,223 |
) |
(35,243 |
) |
| General and administrative
expenses |
(126,309 |
) |
(143,495 |
) |
(20,211 |
) |
|
(544,630 |
) |
(606,925 |
) |
(85,484 |
) |
| Total operating costs
and expenses |
(682,472 |
) |
(587,150 |
) |
(82,698 |
) |
|
(2,612,939 |
) |
(3,002,564 |
) |
(422,903 |
) |
| Income from
operations |
84,893 |
|
16,242 |
|
2,288 |
|
|
168,675 |
|
195,825 |
|
27,581 |
|
| Other income (loss), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gains (loss) from fair value
change |
— |
|
(61,459 |
) |
(8,656 |
) |
|
— |
|
102,867 |
|
14,489 |
|
| Investment income |
8,765 |
|
22,224 |
|
3,130 |
|
|
17,809 |
|
49,106 |
|
6,916 |
|
| Interest income |
3,899 |
|
2,576 |
|
363 |
|
|
13,674 |
|
15,047 |
|
2,119 |
|
| Financial cost |
— |
|
(2,009 |
) |
(283 |
) |
|
— |
|
(9,357 |
) |
(1,318 |
) |
| Others, net |
(12,743 |
) |
12,896 |
|
1,816 |
|
|
(3,823 |
) |
(3,670 |
) |
(517 |
) |
| Income (loss) from
operations before income taxes and share income of
affiliates |
84,814 |
|
(9,530 |
) |
(1,342 |
) |
|
196,335 |
|
349,818 |
|
49,270 |
|
| Income tax expense |
(18,465 |
) |
(5,000 |
) |
(704 |
) |
|
(41,016 |
) |
(59,402 |
) |
(8,367 |
) |
| Share of income (loss) of
affiliates, net of impairment |
(841 |
) |
(554 |
) |
(78 |
) |
|
(69,596 |
) |
(1,317 |
) |
(185 |
) |
| Net
income(loss) |
65,508 |
|
(15,084 |
) |
(2,124 |
) |
|
85,723 |
|
289,099 |
|
40,718 |
|
| Less: net (loss) income
attributable to non-controlling interests |
(5,108 |
) |
12,105 |
|
1,705 |
|
|
(14,549 |
) |
8,622 |
|
1,214 |
|
| Net income (loss)
attributable to the Company’s shareholders |
70,616 |
|
(27,189 |
) |
(3,829 |
) |
|
100,272 |
|
280,477 |
|
39,504 |
|
| |
|
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 Twelve Months Ended |
| |
December 30, |
|
|
December 30, |
|
|
2022 |
|
2023 |
|
2023 |
|
|
2022 |
|
2023 |
|
2023 |
|
|
RMB |
|
RMB |
|
US$ |
|
|
RMB |
|
RMB |
|
US$ |
| Net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.07 |
|
(0.03 |
) |
— |
|
|
0.09 |
|
0.26 |
|
0.04 |
|
Diluted |
0.07 |
|
(0.03 |
) |
— |
|
|
0.09 |
|
0.26 |
|
0.04 |
| Net income
(loss) per ADS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.31 |
|
(0.51 |
) |
(0.07 |
) |
|
1.87 |
|
5.22 |
|
0.74 |
|
Diluted |
1.31 |
|
(0.51 |
) |
(0.07 |
) |
|
1.87 |
|
5.21 |
|
0.74 |
| Shares used in
calculating net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
1,074,204,304 |
|
1,070,501,493 |
|
1,070,501,493 |
|
|
1,074,196,310 |
|
1,074,372,067 |
|
1,074,372,067 |
|
Diluted |
1,075,017,689 |
|
1,070,501,493 |
|
1,070,501,493 |
|
|
1,074,457,821 |
|
1,076,740,198 |
|
1,076,740,198 |
| Net income
(loss) |
65,508 |
|
(15,084 |
) |
(2,124 |
) |
|
85,723 |
|
289,099 |
|
40,718 |
| Other comprehensive (loss)
income, net of tax: Foreign currency translation adjustments |
(1,018 |
) |
(6,354 |
) |
(895 |
) |
|
3,728 |
|
2,249 |
|
317 |
|
Share of other comprehensive income of affiliates |
— |
|
— |
|
— |
|
|
4,688 |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized net (losses) gains
on available-for-sale investments |
(3,157 |
) |
(5,625 |
) |
(792 |
) |
|
(1,919 |
) |
2,458 |
|
346 |
| Comprehensive income
(loss) |
61,333 |
|
(27,063 |
) |
(3,811 |
) |
|
92,220 |
|
293,806 |
|
41,381 |
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive (loss) income
attributable to the non-controlling interests |
(5,108 |
) |
12,105 |
|
1,706 |
|
|
(14,549 |
) |
8,622 |
|
1,214 |
| Comprehensive income
(loss) attributable to the Company’s
shareholders |
66,441 |
|
(39,168 |
) |
(5,517 |
) |
|
106,769 |
|
285,184 |
|
40,167 |
|
|
|
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 Twelve Months
Ended |
|
|
December 31, |
|
|
December 31, |
|
|
2022 |
|
2023 |
|
2023 |
|
|
2022 |
|
2023 |
|
2023 |
|
|
|
RMB |
|
RMB |
|
US$ |
|
|
RMB |
|
RMB |
|
US$ |
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
65,508 |
|
(15,084 |
) |
(2,124 |
) |
|
85,723 |
|
289,099 |
|
40,718 |
|
| Adjustments to reconcile net
income to net cash generated from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment income |
(8,032 |
) |
（8,479 |
) |
(1,194 |
) |
|
(10,963 |
) |
(17,047 |
) |
(2,401 |
) |
| Share of loss (income) of
affiliates, net of impairment |
841 |
|
554 |
|
78 |
|
|
69,596 |
|
1,317 |
|
185 |
|
|
Other non-cash adjustments |
53,295 |
|
90,583 |
|
12,733 |
|
|
168,371 |
|
67,194 |
|
9,464 |
|
|
Changes in operating assets and liabilities |
43,305 |
|
(9,064 |
) |
(1,253 |
) |
|
(174,975 |
) |
(235,578 |
) |
(33,179 |
) |
|
Net cash generated from operating activities |
154,917 |
|
58,510 |
|
8,240 |
|
|
137,752 |
|
104,985 |
|
14,787 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of short-term investments |
(556,540 |
) |
(1,481,600 |
) |
(208,679 |
) |
|
(2,550,300 |
) |
(4,399,910 |
) |
(619,714 |
) |
|
Proceeds from disposal of short-term investments |
751,694 |
|
1,493,611 |
|
210,371 |
|
|
3,239,556 |
|
4,226,001 |
|
595,220 |
|
|
Prepayment for acquisition of short-term investments |
(200,000 |
) |
—- |
|
— |
|
|
(540,000 |
) |
— |
|
— |
|
|
Cash rendered for loan receivables from third parties |
— |
|
(50,000 |
) |
(7,042 |
) |
|
(205,800 |
) |
(160,000 |
) |
(22,536 |
) |
|
Cash received for loan receivables from third parties |
4,500 |
|
9,000 |
|
1,268 |
|
|
24,500 |
|
229,000 |
|
32,254 |
|
|
Purchase of a long-term investment |
— |
|
(10,463 |
) |
(1,474 |
) |
|
— |
|
(135,463 |
) |
(19,080 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others |
(1,271 |
) |
(7,540 |
) |
(1,062 |
) |
|
(95,518 |
) |
(5,449 |
) |
(767 |
) |
|
Net cash used in investing activities |
(1,617 |
) |
(46,992 |
) |
(6,618 |
) |
|
(127,562 |
) |
(245,821 |
) |
(34,623 |
) |
|
Cash flows from financing activities： |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
— |
|
— |
|
— |
|
|
(52,069 |
) |
— |
|
— |
|
|
Proceeds from bank and other borrowings |
35,679 |
|
32 |
|
5 |
|
|
35,679 |
|
182,300 |
|
25,676 |
|
|
Repayment of bank and other borrowings |
— |
|
(35,712 |
) |
(5,030 |
) |
|
— |
|
(56,627 |
) |
(7,976 |
) |
|
Interests paid |
— |
|
(2,930 |
) |
(413 |
) |
|
— |
|
(9,358 |
) |
(1,318 |
) |
|
Acquisition of additional equity interests in non-wholly owned
subsidiaries |
— |
|
— |
|
— |
|
|
— |
|
(110 |
) |
(15 |
) |
|
Repurchase of ordinary shares from open market |
(3,984 |
) |
(5,012 |
) |
(706 |
) |
|
(3,984 |
) |
(29,044 |
) |
(4,091 |
) |
|
Capital contribution from non-controlling interests |
— |
|
7,330 |
|
1,032 |
|
|
— |
|
7,330 |
|
1.032 |
|
|
Others |
— |
|
— |
|
— |
|
|
3 |
|
— |
|
— |
|
|
Net cash generated from (used in) financing
activities |
31,695 |
|
(36,292 |
) |
(5,112 |
) |
|
(20,371 |
) |
94,491 |
|
13,308 |
|
|
Net increase (decrease) in cash, cash equivalents and
restricted cash |
184,995 |
|
(24,774 |
) |
(3,490 |
) |
|
(10,181 |
) |
(46,345 |
) |
(6,528 |
) |
|
Cash, cash equivalents and restricted cash at beginning of
period |
462,837 |
|
633,006 |
|
89,157 |
|
|
656,522 |
|
648,211 |
|
91,299 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
379 |
|
(6,228 |
) |
(877 |
) |
|
1,870 |
|
138 |
|
19 |
|
|
Cash, cash equivalents and restricted cash at end of
period |
648,211 |
|
602,004 |
|
84,790 |
|
|
648,211 |
|
602,004 |
|
84,790 |
|
| |
|
FANHUA INC.Reconciliations of Net Income
to Adjusted EBITDA and Adjusted EBITDA Margin(In
thousands, except for shares and per share data) |
| |
| |
For The Three Months Ended |
|
|
For The Twelve Months
Ended |
|
| |
December 31 |
|
|
December 31 |
|
|
|
2022 |
|
2023 |
|
2023 |
|
|
2022 |
|
2023 |
|
2023 |
|
| |
RMB |
|
RMB |
|
USD |
|
|
RMB |
|
RMB |
|
USD |
|
|
Net income |
65,508 |
|
(15,084 |
) |
(2,124 |
) |
|
85,723 |
|
289,099 |
|
40,718 |
|
| Income tax expense |
18,465 |
|
5,000 |
|
704 |
|
|
41,016 |
|
59,402 |
|
8,367 |
|
| Share of income(loss) of
affiliates, net of impairment |
841 |
|
554 |
|
78 |
|
|
69,596 |
|
1,317 |
|
185 |
|
| Investment income |
(8,765 |
) |
(22,224 |
) |
(3,130 |
) |
|
(17,809 |
) |
(49,106 |
) |
(6,916 |
) |
| Interest income |
(3,899 |
) |
(2,576 |
) |
(363 |
) |
|
(13,674 |
) |
(15,047 |
) |
(2,119 |
) |
| Financial cost |
— |
|
2,009 |
|
283 |
|
|
— |
|
9,357 |
|
1,318 |
|
| Depreciation |
4,654 |
|
3,909 |
|
551 |
|
|
19,473 |
|
16,192 |
|
2,281 |
|
| Amortization of intangible
assets |
— |
|
4,198 |
|
591 |
|
|
— |
|
17,858 |
|
2,515 |
|
| Share-based compensation
expenses |
299 |
|
2,905 |
|
409 |
|
|
461 |
|
17,095 |
|
2,408 |
|
| Change in fair value of equity
investments and contingent consideration |
— |
|
61,459 |
|
8,656 |
|
|
— |
|
(102,867 |
) |
(14,489 |
) |
| Adjusted
EBITDA |
77,103 |
|
40,150 |
|
5,655 |
|
|
184,786 |
|
243,300 |
|
34,268 |
|
| Total net revenues |
767,365 |
|
603,392 |
|
84,986 |
|
|
2,781,614 |
|
3,198,389 |
|
450,484 |
|
| Adjusted EBITDA Margin |
10.0% |
|
6.7% |
|
6.7% |
|
|
6.6% |
|
7.6% |
|
7.6% |
|
| Adjusted EBITDA per
ADS ： |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.44 |
|
0.75 |
|
0.11 |
|
|
3.44 |
|
4.53 |
|
0.64 |
|
|
Diluted |
1.43 |
|
0.75 |
|
0.11 |
|
|
3.44 |
|
4.52 |
|
0.64 |
|
| Shares used in
calculating adjusted EBITDA per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
1,074,204,304 |
|
1,070,501,493 |
|
1,070,501,493 |
|
|
1,074,196,310 |
|
1,074,372,067 |
|
1,074,372,067 |
|
|
Diluted |
1,075,017,689 |
|
1,070,501,493 |
|
1,070,501,493 |
|
|
1,074,457,821 |
|
1,076,740,198 |
|
1,076,740,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source: FANHUA Inc.
For more information, please contact:
Investor Relations
Tel: +86 (20) 8388-3191
Email: qiusr@fanhgroup.com
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