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Fanhua Stock Slides After-Hours on Revenue Decline; Dividend Announced

Shares in Fanhua declined 2 percent Monday evening to $25 per ADS after the earnings release, despite the company's announcement of a cash dividend.

CapitalWatch Staff
    Aug 20, 2018 5:10 PM  PT
Fanhua Stock Slides After-Hours on Revenue Decline; Dividend Announced

Fanhua Inc. (Nasdaq: FANH) said its income increased 22 percent, while revenue inched lower during the second quarter, sending its stock down 54 cents in after-hours trading late Monday.

The company also announced that on or around Sept. 19, it would pay a quarterly dividend of 25 cents per American depositary share to shareholders of record on Sept. 5.

Fanhua, a Guangzhou-based insurance and financial services provider, said today that its income rose to $26.1 million compared with $21.4 million for the second three months a year ago. Earnings per share were 40 cents, representing a 20 percent year-over-year increase.

Its revenue, however, inched down 3 percent during the second quarter to $146.9 million. Fanhua attributed the decline to a 73 percent drop in revenue from its property and casualty (P&C) insurance business, offset by the increase in sales of life insurance. The company said it has disposed of some of its equity interest in P&C insurance entities and was undergoing a transition in its auto insurance business.

The news sent the shares of Fanhua down 2 percent in after-hours trading to $25 per American depositary share.

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Shares in Fanhua declined 2 percent Monday evening to $25 per ADS.

Chunlin Wang, the chief executive officer of Fanhua, called the results of the quarter "strong," and said the operating profit, which rose 77 percent to $19.3 million, exceeded the company's expectations.

Looking ahead, the company said it expected its operating profit to grow to at least 100 million yuan ($14.6 million) in the third quarter. For the full year, Fanhua expects operating income to rise as much as 50 percent from 2017.

"Despite the regulatory restriction on the sales of short term and fast-return savings-focused life insurance products, we remain confident in our ability to achieve positive growth in annualized life insurance premiums in 2018 and we believe the fast growth in our renewal business will continue," Wang said.

For the first half of 2018, the company's revenue decreased 22 percent year-over-year to $274.3 million. Income for the six months soared 52 percent to $45.7 million.

As of June 30, the company had $422.1 million in cash, cash equivalents, and short-term investments.

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