Cninsure Q4 Earnings Beat as Revenues Rise, View Upbeat - Analyst Blog
Cninsure Inc. CISG posted net income of 9 cents per share in the fourth quarter of 2014, which surpassed the Zacks Consensus Estimate by 80% and improved 5.6% year over year.
The stellar results came on the back of top-line growth, which stemmed from strong performance by the property and casualty insurance agency business and insurance brokerage business.
For 2014, the company delivered net earnings of 51 cents per share on revenues of $346.5 million. While the top line saw a 22.4% year-over-year increase, the bottom line improved 67%.
Shares gained 6.57% in the after-market trading session reflecting investor optimism following solid performance by the company.
Behind the Headlines
Cninsure generated total net revenue of $102 million in the reported quarter, growing 25.6% yearoveryear and surpassing the company guidance.
The insurance agency business saw 26.3% improved revenues owing to an increase in net revenue derived from the P&C insurance agency business as well as life insurance agency business.
Revenues from the insurance brokerage business spiked up 108.4% year over year from an increased customer base due to the expansion of sales channels and development of innovative products in the pastfew years.
Cninsure’s total operating cost and expenses increased 30.8% year over year to $102.3 million in the reported quarter.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the fourth quarter were $3.6 million, down 38.6% year over year. Adjusted EBITDA margin declined 370 basis points to 3.5%.
Interest income decreased 13.3% year over year to $3 million due to lower term deposits, stemming from increased short-term investment.
At 2014-end, Cninsure had a distribution and service network of 548 sales and services outlets operating in 27 provinces, up from 480 sales and service outlets operating in 27 provinces as of 2013 end.
Cninsure exited the quarter with cash and cash equivalents of $338.9 million (down 8.2.2% from 2013 end-level). Cash from operations amounted to $42.1 million in 2014, reflecting a nearly fourfold year-over-year increase.
Total shareholders' equity for Cninsure was $517.5 million as of Dec 31, 2014, up 6% from2013 end.
Outlook
Cninsure expects total insurance premiums of over RMB10 billion in 2015. The insurance broker also projects this year’s total net revenue to increase 30% year over year.
Online insurance sales, which accelerated 39 times in just four years, have scope for further improvement in the next few years according to management. As such, the company will focus on the O2O business model by leveraging on the strength of the offline network.
Zacks Rank
Currently, Cninsure has a Zacks Rank #3 (Hold).
Performance of Other Insurance Brokers
Bottom line at Brown & Brown Inc. BRO, Willis Group Holdings plc WSH and Validus Holdings, Ltd. VR outperformed their respective Zacks Consensus Estimates in the fourth quarter.
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