- Quarterly Earnings Exceed Prior Guidance -
- Quarterly Basic and Diluted EPS up 40.2% and 35.9% Year-over-Year, Respectively -
- 38% Year-over-Year Growth for Earnings Expected for Third Quarter 2010 -
GUANGZHOU, Aug. 24 /PRNewswire-Asia-FirstCall/ -- CNinsure Inc., (Nasdaq: CISG), (the "Company" or "CNinsure"), a leading independent insurance intermediary company operating in China, today announced its unaudited financial results for the second quarter and first half 2010 ended June 30, 2010.(1)
(1) This announcement contains translations 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 RMB6.7815 to US$1.00,
the effective noon buying rate as of June 30, 2010 in The City of New
York for cable transfers of RMB as set forth in H.10 weekly
statistical release of the Federal Reserve Board.
Financial Highlights：
Highlights for Second Quarter 2010
-- Total net revenues: RMB365.8 million (US$53.9 million), representing an
increase of 28.1% from the corresponding period of 2009.
-- Income from operations: RMB107.2 million (US$15.8 million),
representing an increase of 30.1% from the corresponding period of 2009.
-- Net income attributable to the Company's shareholders: RMB118.6 million
(US$17.5 million), representing an increase of 40.2% from the
corresponding period of 2009, which exceeded the previous guidance of
approximately 35% year-over-year growth.
-- Basic and diluted net income per American Depositary Share ("ADS"):
RMB2.600 (US$0.383) and RMB2.494 (US$0.368), respectively, representing
an increase of 40.2% and 35.9%, respectively, from the corresponding
period of 2009.
Highlights for First Half 2010
-- Total net revenues: RMB647.8 million (US$95.5 million), representing an
increase of 29.2% from the corresponding period of 2009.
-- Income from operations: RMB179.9 million (US$26.5 million),
representing an increase of 40.2% from the corresponding period of 2009.
-- Net income attributable to the Company's shareholders: RMB186.0 million
(US$27.4 million), representing an increase of 42.9% from the
corresponding period of 2009.
-- Basic and diluted net income per ADS: RMB4.076 (US$0.601) and RMB3.928
(US$0.579), respectively, representing an increase of 42.9% and 38.6%,
respectively, from the corresponding period of 2009.
"CNinsure reported another solid quarter and once again beat our previous guidance, with total net revenues and net income attributable to CNinsure's shareholders growing 28.1% and 40.2% year-over-year, respectively," commenting on the financial results, Mr. Yinan Hu, chairman and chief executive officer of CNinsure, stated. "We are thrilled to see that the strong growth momentum in our life insurance business continued into the second quarter, with life insurance growing over 138% year-over-year and accounting for 36.1% of our total net revenues, driven by the increases in first year commission rate, accumulation of renewal commissions and performance bonus. Meanwhile, the profitability and bargaining power of our P&C business was greatly enhanced by our initiatives to promote bundled sales, establish strategic partnership and co-develop customized products with more insurers and strengthen our insurance brokerage business to refine the mix of our P&C business which we believe will help improve our earnings stability in the long run."
Mr. Hu continued, "While continuing to grow our existing three businesses, we are gearing up to build groundwork for long-term growth by adding new profit centers. As of date, we have extended our service offerings to consumer credit brokerage business, established an insurance brokerage business unit to facilitate our expansion from retail to corporate insurance brokerage business, and recently acquired an e-commerce insurance service company in an effort to build a tri-dimensional distribution channel by combining the e-commerce platform with our existing nationwide distribution and service network. To fund the establishment of the new profit centers, CNinsure completed a follow-on public offering in July. Although the offering may lead to a dilution to our EPS in the short term, the management expects the Company will still be able to achieve the target of over 30% EPS growth for 2010."
"In the past decade, CNinsure has kept a successful track record of expanding into new areas and diversifying product offerings to fuel the Company's growth. We believe that the vision and strong execution of the management will make our aforementioned new initiatives another success. CNinsure, with its early-mover advantage, will continue to lead the insurance intermediary market in the years to come," Mr. Hu concluded.
Financial Results for the Second Quarter Ended June 30, 2010
Total net revenues for the second quarter ended June 30, 2010 were RMB365.8 million (US$53.9 million), representing an increase of 28.1% from RMB285.7 million for the corresponding period of 2009. The increase was primarily driven by the significant growth of the life insurance business as a result of the growth in sales volume, the increase in commission rate for new life insurance policies and the growth in renewal commissions.
Total operating costs and expenses were RMB258.6 million (US$38.1 million) for the second quarter of 2010, representing an increase of 27.2% from RMB203.3 million for the corresponding period of 2009.
Commissions and fees expenses were RMB174.8 million (US$25.8 million) for the second quarter of 2010, representing an increase of 23.7% from RMB141.4 million for the corresponding period of 2009. The increase was primarily due to sales growth and largely tracked the increase in net revenues from commissions and fees.
Selling expenses were RMB18.2 million (US$2.7 million) for the second quarter of 2010, representing an increase of 57.1% from RMB11.6 million for the corresponding period of 2009, primarily due to sales growth and an increase in expenses incurred in connection with the establishment of new outlets.
General and administrative expenses were RMB65.5 million (US$9.7 million) for the second quarter of 2010, representing an increase of 30.3% from RMB50.3 million for the corresponding period of 2009. The increase was primarily due to increases in the following non-cash items:
(1) an increase of 84.9% in depreciation of fixed assets from RMB3.4
million for the second quarter of 2009 to RMB6.3 million (US$0.9
million) for the second quarter of 2010, largely as a result of the
operation of the upgraded IT system in more affiliated entities in the
second quarter of 2010;
(2) an increase of 88.1% in amortization of intangible assets from RMB2.8
million for the second quarter of 2009 to RMB5.3 million (US$0.8
million) for the second quarter of 2010, largely as a result of the
acquisitions that we made in 2010; and
(3) an increase of 77.8% in share-based compensation expenses from RMB3.3
million for the second quarter of 2009 to RMB5.8 million (US$0.9
million) for the second quarter of 2010, associated with the grant of
options to various directors, officers and employees in February 2010.
As a result of the foregoing factors, income from operations was RMB107.2 million (US$15.8 million) for the second quarter of 2010, representing an increase of 30.1% from RMB82.4 million for the corresponding period of 2009. Operating margin was 29.3% for the second quarter of 2010, compared to 28.8% for the corresponding period of 2009.
In the second quarter of 2010, the Company acquired an additional 41% equity interests in each of Ningbo Baolian Insurance Agency Co., Ltd. ("Ningbo Baolian") and Shangdong Fanhua Mintai Insurance Agency Co., Ltd ("Fanhua Mintai"), which increased its equity interests in both entities from 10% to 51%. As a result, the Company recognized RMB27.8 million (US$4.1 million) investment income, representing gains from re-measuring the 10% equity interests formerly held by the Company in Ningbo Baolian and Fanhua Mintai. Meanwhile, the Company recognized a RMB7.0 million (US$1.0 million) deferred income tax expense, which was included in income tax expense.
In the second quarter of 2009, the Company also recognized a RMB18.9 million investment income and a RMB4.7 million deferred income tax expense in relation to the re-measurement of the 10% and 5% equity interests formerly held by the Company in Hangzhou Fanhua Zhixin Insurance Agency Co., Ltd. ("Hangzhou Zhixin") and Zhengzhou Fanhua Anlian Insurance Agency Co., Ltd. ("Zhengzhou Anlian"), respectively, when it acquired additional 41% and 46% equity interests in the two entities, respectively, in the second quarter of 2009.
Interest income for the second quarter of 2010 was RMB6.1 million (US$0.9 million), representing a decrease of 30.1% from RMB8.8 million for the corresponding period of 2009, primarily due to a decrease in bank deposits.
Income tax expense for the second quarter of 2010 was RMB27.8 million (US$4.1 million), representing a decrease of 8.6% from RMB30.4 million for the corresponding period of 2009. The decrease was primarily attributable to a tax holiday enjoyed by an affiliated subsidiary of the Company. The effective income tax rate applicable to the Company was 19.7% for the second quarter of 2010, compared to 29.2% for the corresponding period of 2009.
Net income attributable to the Company's shareholders was RMB118.6 million (US$17.5 million) for the second quarter of 2010, representing an increase of 40.2% from RMB84.6 million for the corresponding period of 2009.
Net margin was 32.4% for the second quarter of 2010 compared to 29.6% for the corresponding period of 2009.
Basic net income per ADS was RMB2.600 (US$0.383) for the second quarter of 2010, representing an increase of 40.2% from RMB1.854 for the corresponding period of 2009. Fully diluted net income per ADS was RMB2.494 (US$0.368) for the second quarter of 2010, representing an increase of 35.9% from RMB1.835 for the corresponding period of 2009.
As of June 30, 2010, the Company had RMB1,280.6 million (US$188.8 million) in cash and cash equivalents.
Financial Results for the First Half Ended June 30, 2010
Total net revenues for the first half ended June 30, 2010 were RMB647.8 million (US$95.5 million), representing an increase of 29.2% from RMB501.6 million for the corresponding period of 2009. The increase was primarily driven by the significant growth of the life insurance business, and the increase in performance bonuses paid by life insurers as a result of the growth in sales volume and more contracts entered into with life insurers at group levels.
Total operating costs and expenses were RMB467.9 million (US$69.0 million) for the first half of 2010, representing an increase of 25.4% from RMB373.2 million for the corresponding period of 2009.
Commissions and fees expenses were RMB315.8 million (US$46.6 million) for the first half of 2010, representing an increase of 20.1% from RMB263.0 million for the corresponding period of 2009. The increase was primarily due to sales growth and largely tracked the increase in net revenues from commissions and fees.
Selling expenses were RMB32.7 million (US$4.8 million) for the first half of 2010, representing an increase of 68.9% from RMB19.4 million for the corresponding period of 2009, primarily due to sales growth and an increase in expenses incurred in connection with the establishment of new outlets.
General and administrative expenses were RMB119.4 million (US$17.6 million) for the first half of 2010, representing an increase of 31.4% from RMB90.9 million for the corresponding period of 2009. The increase was primarily due to the following factors:
(1) an increase of 85.3% in depreciation of fixed assets from RMB5.7
million for the first half of 2009 to RMB10.6 million (US$1.6 million)
for the first half of 2010, largely as a result of the operation of
the upgraded IT system in more affiliated entities in the first half
of 2010;
(2) an increase of 116.8% in amortization of intangible assets from RMB4.1
million for the first half of 2009 to RMB8.9 million (US$1.3 million)
for the first half of 2010, largely as a result of the acquisitions
that we made in 2010; and
(3) an increase of 128.6% in share-based compensation expenses from RMB4.5
million for the first half of 2009 to RMB10.4 million (US$1.5 million)
for the first half of 2010, associated with the grant of options to
various directors, officers and employees in February 2010.
As a result of the foregoing factors, income from operations was RMB179.9 million (US$26.5 million) for the first half of 2010, representing an increase of 40.2% from RMB128.3 million for the corresponding period of 2009. Operating margin was 27.8% for the first half of 2010, compared to 25.6% for the corresponding period of 2009.
In the first half of 2010, the Company acquired an additional 41% of equity interests in each of Hebei Fanlian Insurance Agency Co., Ltd. ("Hebei Fanlian"), Ningbo Baolian and Fanhua Mintai, which increased its equity interests in each of these entities from 10% to 51%. As a result, the Company recognized RMB38.1 million (US$5.6 million) investment income, representing gains from re-measuring the 10% equity interests formerly held by the Company in Hebei Fanlian, Ningbo Baolian and Fanhua Mintai. Meanwhile, the Company recognized a RMB9.5 million (US$1.4 million) deferred income tax expense in relation to the investment income, which was included in income tax expense.
In the first half of 2009, the Company recognized a RMB18.9 million investment income and a RMB4.7 million deferred income tax expense in relation to the re-measurement of the 10% and 5% equity interests formerly held by the Company in Hangzhou Zhixin and Zhengzhou Anlian, respectively, when it acquired additional 41% and 46% equity interests in the two insurance agencies, respectively, in the second quarter of 2009.
Interest income for the first half of 2010 was RMB12.4 million (US$1.8 million), representing a decrease of 33.0% from RMB18.6 million for the corresponding period of 2009, primarily due to a decrease in bank deposits.
Income tax expense for the first half of 2010 was RMB50.8 million (US$7.5 million), representing an increase of 10.6% from RMB45.9 million for the corresponding period of 2009. The increase was primarily attributable to the increases of operating income and effective income tax rate in Shenzhen from 20% in 2009 to 22% in 2010. The effective income tax rate applicable to the Company was 22.0% for the first half of 2010, compared to 28.6% for the corresponding period of 2009, the decrease was primarily due to an income tax holiday enjoyed by an affiliated subsidiary of the Company starting from the second quarter of 2010.
Net income attributable to the Company's shareholders was RMB186.0 million (US$27.4 million) for the first half of 2010, representing an increase of 42.9% from RMB130.1 million for the corresponding period of 2009.
Net margin was 28.7% for the first half of 2010, compared to 25.9% for the corresponding period of 2009.
Basic net income per ADS was RMB4.076 (US$0.601) for the first half of 2010, representing an increase of 42.9% from RMB2.852 for the corresponding period of 2009. Fully diluted net income per ADS was RMB3.928 (US$0.579) for the first half of 2010, representing an increase of 38.6% from RMB2.835 for the corresponding period of 2009.
Recent developments:
-- In August 2010, CNinsure and China Pacific Property Insurance Co., Ltd.
("China Pacific"), introduced a co-branded homeowner insurance product,
which is the first customized product developed by China Pacific for
CNinsure's exclusive distribution, following the announcement of a
strategic partnership in November 2009. As of date, CNinsure has worked
with seven insurance companies for the exclusive sales of eight
customized products.
-- On July 29, 2009, CNinsure announced the acquisition of 65.1% equity
interest in InsCom Holding Limited ("InsCom"), which beneficially owns
100% equity interest in Shenzhen InsCom E-commerce Co., Ltd. Meanwhile,
CNinsure's equity interests in six of its affiliated property &
casualty insurance agencies will be transferred to an affiliated
subsidiary of InsCom in exchange for preference shares newly issued by
InsCom. With the holding of the preference shares, CNinsure is entitled
to all of the profits of InsCom for a certain period and reserves the
right to require InsCom to redeem the preference shares.
-- On July 15, 2010, CNinsure announced the closing of its follow-on
public offering of 4,600,000 American depositary shares, each
representing 20 ordinary shares of the Company. The net proceeds
received by CNinsure, in an amount of approximately $109.6 million,
after deducting underwriting discounts and commissions and estimated
offering expenses payable by the Company, will be used to fund the
establishment of four new profit centers.
-- On July 6, 2010, CNinsure announced the acquisition of an additional
45% equity interest in Henan Zhongrui Insurance Agency Co., Ltd.,
bringing its total shareholding from 10% to 55%.
-- As of June 30, 2010, CNinsure's distribution and service network
consisted of 49 insurance agencies, three insurance brokerages and
three claims adjusting firms with 576 sales and services outlets
operating in 23 provinces, compared to 45 insurance agencies, five
insurance brokerages and four claims adjusting firms with 408 sales and
service outlets operating in 22 provinces as of June 30, 2009. CNinsure
had 46,857 sales agents and 1,358 professional claims adjustors as of
June 30, 2010, compared to 34,276 sales agents and 1,262 professional
claims adjustors as of June 30, 2009.
-- On June 1, 2010, CNinsure announced the establishment of a corporate
insurance brokerage business unit, in an effort to expand its product
offerings from retail to commercial lines. The insurance brokerage team
will focus on providing corporate clients with property and casualty
insurance, liability insurance, employee benefits and specialty risk
insurance and reinsurance services, etc.
-- On May 27, 2010, CNinsure singed strategic partnership agreement with
Taiping General Insurance Co., Ltd. for product distribution,
development of custom-designed insurance products, data sharing and the
outsourcing of claims adjusting service. This is the sixth strategic
partnership agreement CNinsure has signed with property and casualty
insurance companies at the group level.
-- Net revenues from commissions and fees derived from the property and
casualty insurance, life insurance and claims adjusting businesses for
the second quarter of 2010 each contributed 52.9%, 36.1% and 11.0% of
the Company's total net revenues, respectively, compared to 69.2%,
19.4%, 11.4%, respectively, for the same period of 2009.
Business Outlook
CNinsure expects its net income attributable to the Company's shareholders to grow by approximately 38% for the third quarter 2010 compared to the corresponding period of 2009. This forecast reflects CNinsure's current and preliminary view, which is subject to change.
Conference Call
The Company will host a conference call to discuss the second quarter and first half 2010 results at
Time: 9:00 pm Eastern Daylight Time on August 23, 2010
or 9:00 am Beijing/Hong Kong Time on August 24, 2010
The dial-in numbers:
United States: +1-866-549-1292
United Kingdom: 0808-234-6305
Canada: +1-866-8691-825
Singapore: 800-852-3576
Taiwan: 0080-185-6004
Hong Kong & Other Areas: +852-3005-2050
China (Mainland): 400-681-6949
Password: 885507#
A replay of the call will be available for 30 days as follows:
+852-3005-2020 (Hong Kong & other areas)
PIN number: 142589#
Additionally, a live and archived web cast of this call will be available at: http://www.corpasia.net/us/CISG/irwebsite/index.php?mod=event
About CNinsure Inc.
CNinsure is a leading independent intermediary company operating in China. CNinsure's distribution network reaches many of China's most economically developed regions and affluent cities. The Company distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China, and provides insurance claims adjusting as well as other insurance-related services.
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements 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, the 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 CNinsure and the industry. Potential risks and uncertainties include, but are not limited to, those relating to CNinsure's limited operating history, especially its limited experience in selling life insurance products, 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 and their potential impact on the sales of insurance products. All information provided in this press release is as of August 23, 2010, and CNinsure undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although CNinsure 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 CNinsure is included in CNinsure's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.
CNINSURE INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
As of As of As of
December 31, June 30, June 30,
2009 2010 2010
RMB RMB US$
ASSETS:
Current assets:
Cash and cash equivalents 1,457,890 1,280,603 188,838
Restricted cash 1,957 10,317 1,521
Accounts receivable, net 181,360 216,761 31,963
Insurance premium receivables 230 72 11
Other receivables 52,108 46,065 6,793
Deferred tax assets 2,602 5,808 856
Amounts due from related parties 25,337 25,239 3,722
Other current assets 6,015 9,135 1,347
Total current assets 1,727,499 1,594,000 235,051
Non-current assets:
Property, plant, and equipment, net 108,318 106,751 15,742
Goodwill 535,911 939,197 138,494
Intangible assets, net 81,485 133,065 19,622
Deferred tax assets 3,801 3,406 502
Investment in affiliates 86,701 94,036 13,866
Other non-current assets 2,250 1,925 284
Total assets 2,545,965 2,872,380 423,561
LIABILITIES AND EQUITY:
Current liabilities:
Accounts payable 72,716 89,192 13,152
Insurance premium payables 1,957 2,765 408
Other payables and accrued expenses 182,139 90,707 13,376
Accrued payroll 24,152 23,398 3,450
Income tax payable 37,410 33,448 4,932
Amounts due to related parties 19,274 52,604 7,757
Dividend payable -- 40,863 6,026
Total current liabilities 337,648 332,977 49,101
Non-current liabilities:
Other tax liabilities 2,537 4,215 621
Deferred tax liabilities 19,075 39,343 5,802
Total liabilities 359,260 376,535 55,524
Ordinary shares 7,036 7,044 1,039
Additional paid-in capital 1,604,774 1,536,687 226,600
Statutory reserves 103,877 103,874 15,317
Retained earnings 348,663 534,647 78,839
Accumulated other comprehensive loss (72,542) (72,589) (10,704)
Total CNinsure Inc. shareholders'
equity 1,991,808 2,109,663 311,091
Noncontrolling interests 194,897 386,182 56,946
Total equity 2,186,705 2,495,845 368,037
Total liabilities and equity 2,545,965 2,872,380 423,561
CNINSURE INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except for shares and per share data)
For The Three Months Ended June 30,
2009 2010 2010
RMB RMB US$
Net revenues:
Commissions and fees 285,539 365,763 53,935
Other service fees 142 57 9
Total net revenues 285,681 365,820 53,944
Operating costs and expenses:
Commissions and fees (141,397) (174,843) (25,782)
Selling expenses (11,594) (18,216) (2,686)
General and administrative expenses (50,290) (65,541) (9,665)
Total operating costs and expenses (203,281) (258,600) (38,133)
Income from operations 82,400 107,220 15,811
Other income, net:
Investment income 18,905 27,820 4,102
Interest income 8,800 6,147 906
Interest expense (1) -- --
Others, net 104 150 22
Changes in fair value of contingent
consideration payables (5,946) -- --
Net income before income taxes and
income of affiliates 104,262 141,337 20,841
Income tax expense (30,446) (27,831) (4,104)
Share of income (loss) of affiliates 7 3,835 566
Net income 73,823 117,341 17,303
For The Six Months Ended June 30,
2009 2010 2010
RMB RMB US$
Net revenues:
Commissions and fees 501,193 647,690 95,508
Other service fees 359 86 13
Total net revenues 501,552 647,776 95,521
Operating costs and expenses:
Commissions and fees (263,024) (315,796) (46,567)
Selling expenses (19,358) (32,694) (4,821)
General and administrative expenses (90,861) (119,398) (17,607)
Total operating costs and expenses (373,243) (467,888) (68,995)
Income from operations 128,309 179,888 26,526
Other income, net:
Investment income 18,905 38,050 5,611
Interest income 18,575 12,436 1,834
Interest expense (3) -- --
Others, net 958 250 37
Changes in fair value of contingent
consideration payables (5,946) -- --
Net income before income taxes and
income of affiliates 160,798 230,624 34,008
Income tax expense (45,939) (50,804) (7,492)
Share of income (loss) of affiliates (27) 7,335 1,082
Net income 114,832 187,155 27,598
CNINSURE INC.
Unaudited Condensed Consolidated Statements of Operations-(Continued)
(In thousands, except for shares and per share data)
For The Three Months Ended June 30,
2009 2010 2010
RMB RMB US$
Less：Net (loss) income attributable
to the noncontrolling interests (10,775) (1,295) (191)
Net income attributable to the
Company's shareholders 84,598 118,636 17,494
Net income per share: Basic 0.093 0.130 0.019
Diluted 0.092 0.125 0.018
Net income per ADS: Basic 1.854 2.600 0.383
Diluted 1.835 2.494 0.368
Shares used in calculating net
income per share: Basic 912,497,726 912,561,283 912,561,283
Diluted 922,053,371 951,230,096 951,230,096
For The Six Months Ended June 30,
2009 2010 2010
RMB RMB US$
(15,312) 1,171 173
Less：Net (loss) income attributable
to the noncontrolling interests 130,144 185,984 27,425
Net income attributable to the
Company's shareholders 0.143 0.204 0.030
Net income per share: Basic 0.142 0.196 0.029
Diluted 2.852 4.076 0.601
Net income per ADS: Basic 2.835 3.928 0.579
Diluted 912,497,726 912,529,329 912,529,329
Shares used in calculating net
income per share: Basic 918,084,553 946,882,743 946,882,743
Diluted
Source: CNinsure Inc.
