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Combining revenue growth and effective cost controls is a time-tested formula for boosting profits. But doing both is easier said than done since business expansion often requires big spending, especially for strategic acquisitions. Insurance broker Fanhua Inc. (FANH.US) has found a clever way to tackle that tricky problem by using shares to pay for a string of recent acquisitions that provided an immediate lift to its top line revenue.
Fanhua’s total net revenue grew about 21% year-on-year to 827.7 million yuan ($116 million) in the first quarter, according to its latest quarterly results released on Tuesday last week. At the same time, the company limited growth in its operating expenses to a milder 15%, helping its operating profit to nearly triple to 60 million yuan.