Hot stock to watch: Fanhua Inc (NASDAQ: FANH)

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Fanhua Inc (NASDAQ: FANH) stock rose over 5.7% on 19th March, 2020 (Source: Google finance). At the end of December, 2019, the number of registered users of Lan Zhanggui crossed 1 million mark with monthly average visits of over 290,000 up 13% from last year, and yearly active users of over 630,000. At the end of December, 2019, the Company had RMB1,782.0 million (US$256.0 million) in cash, cash equivalents and short-term investments. The company’s operating income rose by 36.9% year-over-year to RMB114.1 million in the fourth quarter of 2019, which brought the total operating income in 2019 to RMB469.4 million, which represents a growth of 10.2% year-over-year. Moreover, in the fourth quarter of 2019, the company’s life insurance gross written premiums rose by 37.4% year-over-year to RMB2.4 billion, due to strong growth in both first year premium and renewal premiums. First year premium of life insurance segment hit record height of RMB934.5 million, which represents a year-over-year growth of 39.8%.

The company reported net loss attributable to the Company’s shareholders was RMB224.7 million (US$32.3 million) for the fourth quarter of 2019, as compared to net income attributable to the Company’s shareholders of RMB112.6 million for the corresponding period in 2018. The company’s Non-GAAP net margin reduced to 9.4% for the fourth quarter of 2019 as compared to 12.9% for the corresponding period in 2018. Renewal premiums rose by 35.8% year-over-year to RMB1.5 billion, while annualized premium equivalentrose by 10.4% year-over-year to RMB516.5 million. In the fourth quarter of 2019, the percentage of annuity products in the total life insurance business in terms of APE has rose to 49.9% from 24.5% a year ago. Critical illness products accounted for 44% as compared to 68.3% a year ago. And whole life insurance accounted for 4.3% of the total life insurance business in the fourth quarter of 2019, compared to 2.4% in the same period last year in terms of APE, due to 383% year-over-year growth.

The company has delivered the net revenues for the life insurance business of RMB866.9 million (US$124.5 million) for the fourth quarter of 2019, which represents an increase of 17.9% from RMB735.0 million for the corresponding period in 2018.

FANH has declared an annual dividend of US$0.05 per ordinary share, or US$1.0 per American Depository Shares (“ADS”) in 2020, which will be payable in four quarterly installments of US$0.25 per ADS, or US$0.0125 per ordinary share, payable in each of the next four quarters.

For the first quarter of 2020, Fanhua anticipates its operating income to be no less than RMB50 million.

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