泛华保险(FANH)
　　What happened
　　On March 3, CNinsure announced that it received noticefrom PICC P&C that it had temporarily suspendedbusiness cooperation with CNinsure. CNinsure will urgePICC P&C to resume cooperation. It also said in theannouncement that “Assuming the business relationship withPICC P&C will not be able to resume in 2017, the impact on itsnet profits will be limited at around Rmb3mn to Rmb5mn.”
　　Comments
　　According to the announcement, PICC P&C contributed27% of the group’s total revenue in 2016. However, only1.6%-2.7% of its 2017E net profits.
　　Life agency, rather than P&C agency business will evolveinto the dominant monetization driver going forward. AsCNinsure subsidized its P&C business to gather clients’data/agents for cross-selling of life policies, it actually makesmoney from life agency, which becomes the core strategy of itsnew “eight year plan”. According to our calculation, P&C agencybusiness has been suffering losses from 1Q16 to 3Q16 (total lossof Rmb175mn in 9M16) and source of profits is actually lifeagency business (total profit of Rmb92mn in 9M16). We believeimpact on profits is limited.
　　More clarification by management in upcoming analyst briefingand strong revenue growth in FY16e results will serve asnear-term catalysts. We expect CNinsure will maintain strongmomentum in revenue, especially life agency, with its profitson-track; we preview its 2016 results in a separate note titled Weforecast 56% net revenue growth for 2016.
　　Risks
　　Worse-than-expected macroeconomic climate; regulatory riskstowards third-party platforms for agents.[China International Capital Corporation Hong Kong Securities Limited]
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