CNinsure Inc. (CISG) is poised for growth in a red hot Chinese economy.

Company Description

CNinsure sells property, casualty, and life insurance products that are underwritten by other companies. The company distributes to China’s developed region and large cities.

Revues Up 33%

CNisure reported a 33% spike in revenues, to $41.8 million, in its last quarterly report, on Aug 26. Net income picked up nearly 40% to $12.4 million, or 27 cents per share.

Prior to the report, the Zacks Consensus Estimate was 17 cents, making back-to-back earnings surprises.

Positive Comments

Chairman and CEO, Yinan Hu, commented, “…Amid the global financial crisis, the management has effectively capitalized on new growth opportunities and proactively explored new ways to develop the Company, which has further enhanced our competitiveness and laid a solid foundation for the Company’s sustainable growth in the coming years.”

Estimates Up

Full-year estimates for 2009 are now averaging 85 cents, up from 75 cents prior to the release. The Zacks Consensus Estimate for 2010 is up 6 cents to $1.01. If these levels are met, year-over-year growth would be 39% and 20%, respectively.

Fundamentals

Shares of CISG are not a bad value at 22 times forward earnings. The PEG ratio is 0.8, meaning the growth is reasonably priced. CNinsure’s ROE is 12.9%, just above the industry average, its net profit margin is 23%, about 6% ahead of its peers.

The Chart

A recent sell off, felt strongly in China, could provide investors with a better entry point. As you can see below, share are off sharply but could stabilize and continue to rise.

Zacks Investment Research
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