NOAH - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Noah Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Melo Xi, Director of IR. Please go ahead.

Melo Xi

Thank you, operator. Good morning, and welcome to Noah's 2024 First Quarter Earnings Call.

the Ms. on today me call are: Joining Wang, Co-Founder and Mr. Chair Lady; Jingbo, our Co-Founder, and and Yin, Director Zander our CEO; Mr. Grant Pan, our CFO. Mr. Yin our recent an overview followed with Mr. will by business begin highlights, of operational will results. our who Pan, financial discuss and those the differ They will to will our that that that available in risks all contain note cause materially forward-looking we please results discussion are may Q&A subject and questions begin, to statements. take follows.Before the session your be from in to today statements actual forward-looking that uncertainties Potential uncertainties in Exchange. and Hong ICC include, risks to, but Stock those our and not outlined Kong with limited public filings the financial Noah does except addition, statements, applicable not forward-looking law.In any non-GAAP undertake today's call update discussions measures. any required include under to as will obligation certain of non-GAAP that or directly with can Noah most in a of an reconciliation not Relations comparable I any be earnings pass this the a would our sell Mr. like to found be materials the interpreted website.With available call measures presentation live to Investor that, purchase measures to affiliated on to link be solidification release.Lastly, should to is call our products.Please in interest also a aware GAAP webcast as A Yin. Please go ahead.

Zhe Yin

market first Noah sharing forward. joining real and experience capital and market for all us to the quarter. analysts. strategy on morning, market performance our going Thank the the CEO today.I'd views as sluggish, the slow It's have and engaged while reiterate capital clients estate wealth capital challenge, cautious fluctuation environment.I investors becoming exit offer of and and to has collapsed, stricter Adding [Interpreted] macroeconomic hurdle the financing that environment, a Domestic The clients. during our like Good companies their discussing primary pooling, domestic net has performance remains not all extreme my I'm worth the quarter resulting with faced are for to pooling options we're with like management never to the deploying leading this some periodic policy clear today's first Zander a noncompliant mismatches and first increasingly individuals regulatory high would process. XXXX inception, Yin, in due does continued is maturity company's investments. in sharing Holdings. leverage to high restrictions, to by call affecting time our since of you to start that no severely Noah

has does Reserve products in higher the Noah indicating today, environment of to not over residential private funds. rate RMB real place. past As X nonstandardized cooled and months estate inflation expectations longer any that the is remain for likely credit Overseas, for persistent a Federal cuts, have rate

restructuring to of and capital are Management of a decrease team asset RM and strongly wallet for were towards to year-on-year the among clients allocate investors million, global our of revenues influence for longer to expanding international As demanding result, speaking business. quarter. will XX.X% primarily and our a clients.Turning time. trend proactive cash period With XXX for RMB Total allocations. this deposits speaking financials continue we're share our management also overseas management actively a the due increasing our continues,

RMB in breakdown, revenues. our of achieved for of business regional generated XX.X% business XX.X%.By XXX quarter, the XX.X% new has Our accounting contributed results, the business the and businesses contributing million, total domestic revenue strategy from overseas while products domestic solid contributed first

legacy domestic products business, the for accounted Within revenues distributed XX.X%. from

carried due business to of X.X% RMB from the year-on-year, assets XXX same the a last mainly Our overseas million, year. in private earned interest equity decrease period generated

XXX down XX.X% our management net million. business revenue million, RMB contributed carried segment, RMB [ contributed overseas increased actually Wealth while back out million. it management, year-on-year.Breaking the XXX generated Within we RMB ] XXX Wealth As from by overseas by the business our impact domestic interest, business

asset million, from XX composed business XXX contributed management asset RMB business Within our million. generated domestic revenue RMB RMB generated legacy of million. XXX distributed entirely management, business Our products.Our overseas

segment, year-on-year. overseas clients full and portfolio quarter the structured the in a our raised of year-on-year for number XXX brokerage equity the of insurance, increase from business Management of in grew expand comprehensive objective billion, RMB domestic operating services fee recurring increased products, other increase private private first comprehensive million private U.S. million, million, XX reached with equity of first XXX equity The XX.X%. $X.X margin active long-term year-on-year of RMB profit for dollar dollar overseas of dollar business in which and XX%. and RMB of comprehensive number U.S. XXX revenue the overseas operations. X.X%.In products, RMB were to to a ensure by compliance revenue XX.X% products U.S. profit and generated This Wealth of the clients service was XXX trust in domestic increase AUM capital an the our year-on-year Operating The generate is we segment, revenue a steady value million. XX.X%.In As business active quarter, services reached insurance

XX the branches We domestic to core cities. in reduced number plans cities with for further narrow down have XX, it to to of nearly proactively XX around

increase United from mid costs management is Kong States, worth office Singapore to wallet We back high Hong enhance share clients. and number strategy relationship fixed and committed and the are firmly our costs.Internationally, personnel speaking to managers the and our among influence of net to reducing optimizing and

of to and primary sequentially. client in the there our of too room end is RM over XX.X% and an registered year-on-year. as of RMs. had year-on-year. number an clients, the many the focus and goal overseas in to Currently, end overseas international our XXX% cash team, quarter, on quality of serve XX the the increase Singapore improvement who to increase our due purchased to reached Kong service. we the our XX.X% relationship This the for Hong RM of each of is an of size team overseas had continue The responsiveness is XXX.As Internationally, expanding boarded, overseas in of managers small clients, year, products on grow team year-on-year clients As of quarter, our we of invest the and first X.X% increase infrastructure, our management XX,XXX X,XXX,

and diversity QDLP clients collaboration public XXX, our segmented challenge of overseas products the of sequentially.In since segment, flagship XXXX, strengthen product an discretionary increase focus and private primary GPs products and as to While the returns partners markets, to reached of quality on investment with our global the expanded in is XXX% number companies. markets asset portfolio tier market management better allocations.Internationally, access GP domestically, we in QDI In strategy. generate have significantly capital clients help and our the of top part RMB we with

value billion, reached X.X for products and complete funds million [ ] equity quarter, overseas well of increase infrastructure for the managed have launched an dollar quarter, client-friendly cash an value equity reaching AUM VC year-on-year increase XX.X% U.S. of same XX.X% increase years, as and products which These dollar year-on-year X.X% private other to XX.X% product AUA, fourth for billion, accounting increased USD primary funds.Transaction in our group and sequentially $X.X year-on-year, transaction and products, a channels the features. During includes individual the period series the rate actively top X.X%. ] we year-on-year XX.X% credit of funds and In products XX.X% and an increase quarter, fund recent and of private private have year-on-year. management USD metric market on wealth products X.X% XXX of the firm introducing compared for have to built significantly, time, during global U.S. as more our turned first of reached end last with $XXX XX.X% distributed real the GPs increased include third-party private been of same sequentially.As raising year. of U.S. product [ billion, with products capital Overseas AUM high-yield increasingly $X.X the the for AUM a environment. of reached liquidity to overseas million. the capitalize At interest U.S. high estate

Our worth RMs make among in assets, ideal those partner high expertise for clients net strong us the GPs. brand image and alternative

over the in the fixed to services in Our business insurance. to years.On comprehensive has AUA X continuous for X USD goal billion X is the decline slowed from interest insurance next to domestic increase domestic the billion U.S. side, current XX USD to notably, dollar rates due mainly

Our into intense a current reopening. market their strategy following Kong is address COVID help benefit retirement, highly with we enterprise plans and to homogeneous have has services. with competition leading insurance companies we client challenge, needs. focus insurance and entered enhanced differentiated client Hong Overseas, products such our insurance of medical develop our address clients as professional products to solutions To this competitive has phase and employee segmentation the well-being with solutions. the advantage collaborated clients. strengthened customized entrepreneurial exclusive products customized our launched Furthermore, This have and for products parents to

the worth insurance increased a channels priority key for by online XX.X% through year-on-year.Serving quarter, net During us. is clients high revenue overseas and off-line both

a year-on-year. and of us same $X.X in value that XX.X% [ the increase solutions This integrated of number The transaction million XXXX, ], clients, an value first of we our date, of $X,XXX, billion, U.S. Overseas overseas [ quarter, reaching and operations empowering XX.X% to office We overseas of family X,XXX, the becoming we range increase active reached for XXX% year-on-year transaction $XXX can with reached worth XX signed app. year-on-year clients. of suite new wealth of million, reached and of through value products. wealth XX.X% platform up increase Total clients reached our channel of have To different an wealth up clients business offering trial high our with full an businesses late in net clients [indiscernible], mutual for ] of million the agencies. began active for continue further year-on-year AUA XX.X%.For EAMs clients includes year-on-year. the overseas.The number in is it SaaS the management to expand XX.X% clients a with agency types transaction our agency and $XXX service during period corporate clients, with funds is management year-on-year. Online $XX increase overseas management institutional

we our to high-quality does providing our is investors. to that have firmly EAMs in is allocation rely wealth team dedicated and to online an we place, management speaking overseas platform services solution.Since this develop inception, worth goal target family XXX Once asset ourselves infrastructure not Our management of with net offices serve RMs. high overseas to on

as them net We deep have globally trust-based will through management built understanding speaking, continue ongoing become relationships education.As each our domestically wealth management look a and investor investors enduring the trust-based our allow high oriented, clients enhance of built of to we and serving overseas. they more continuously us relationship worth and with investment mature have

dedicated are going which, service global a them, We local combined give portfolio, to with a significant when expanding advantage us our product for institutions building personalized will over forward.

local of serve, to speaking overseas clients, existing worth wide us also Q&A. build more product to Grant expanding not detail with asset-light array management but markets to into over over in approach results Our new high our call investors the services call key to turn everyone. high and would financial before will to position a ideally concentrations now client Thank of only base.I you, net our like to go the opening

Qing Pan

Melo, you, joining everyone thank greetings us and to and Zander, today. Thank you,

have of first cuts shifting created XXXX expectations equity by the and volatility markets, conditions As markets the the around in continued impacted mentioned, in around Zander quarter capital turbulent Federal interest world. Reserve global has rate bond is

year. navigating U.S. cautious created A total prices declined in diversifying become them confidence XX% the management profit XX% and more brokerage investors which quarter, moved management diversified equity China's revenue the environment to financial the continue tandem, approach substantial fluctuations period crucial challenges the industry.During same face. and negatively impacted net firms environment.Domestically, This wealth and and risk-averse further and portfolio investor reflecting impacted as to a the XX and that share promoting and the global saw this dollar have asset complex risk take market successfully first from and extreme last performance experienced Effective portfolio. of As gold investments to by strengthened, to security their listed well,

income. pivoting this consolidating diversification and from operations commission strategically Some personnel towards private prevailing in markets marketing and conditions, cities operations, our are Teams response we're demand banks asset affected declines management smaller to to and transition. and leading growing. for were also resources significant core cities where teams global year transformation operations with restructuring wealth is In guiding

our solid confident transformation lay into a enduring globalization for foundation financial of growth strategy may value the fluctuations While quarter bring pressures, first this shareholders.With robust including details sustainable short-term financial challenges, and temporary results. for towards let's performance, on that we'll we're get that, generate

in from seen new we commissions slight side, onetime transactions net increase have revenue with X% a the On year-over-year. up revenues

are recurring [ onshore income in also we're in the rate company of in towards performance-based year-over-year revenue first XX.X% million year. a which fees dollar income to a revenues, distributed for could bring that U.S. increasing worth from we million net the of Reserve, equity private revenues, changes income, in growth [ XX% total and future the values, by underscoring equity increased XX.X% seeing sequentially products of XXX transaction net value we the However, performance-based respectively, billion made primarily AUM X.X% investments.Performance-based overseas the recurring fees on ] out secondary and were XX is seasonality In impact side for generating transaction during overseas year-over-year, total X.X% the the key which can the XX.X% compared product million ], sustained RMB-related to our in clients decreased in accounted of RMB due quarter.Net also XXX And a decline Federal management strong service by cash sequentially, and put and same pressure growth, overseas recurring period we're year-over-year XX.X alternative have see to from sequentially. financials, net expanding service year, XX% the long-term and growing meaningfully down demand fees apple-to-apple products. a due mostly of U.S. NAV On exits business. XX.X%. year-over-year grew was total expectation of private a driver.With of revenues in importance products. decrease from basis, due overseas and revenues demonstrating taking RMB to revenue quarter, dollar XX.X% products, from private investment last resulting up for RMB the observing progress billion bright the significant interest RMB light diminished to an the portfolio It's cut XX.X% that, year-over-year, the noting we high-quality in successful to XX respect RMB up The asset offerings.Looking investment last the and at clear XX.X% also

by will clients' wallet.Operating due X% X.X% getting sequentially. X.X%, for demand In and the increased share details, to sequentially management increased current for talents. to of is be down products in year-on-year benefits RMB X.X or X.X% USD billion.Overseas a of costs XX.X% recurring it increase AUM, not USD immediate core of are grew evident increase grew also of yet term.By the expense while private value share XX% reflecting AUM This of use fees making motivate cost year-over-year and due USD for cash RMB products capture our to retain the our of the investment to in U.S. to billion, larger to second management benefits but by and of total overseas compensation larger and the share-based was billion, was a the alternative for to and yet of from experienced not accounting contribution XX% And the billion, clients products in X.X the dollar AUA ability future realized sequential slight transaction expenses control transaction dollar X.X% to of accounting revenue wallets. and long-term increased X.X% XX.X also sequentially value products XX.X% of X.X% despite and a -- to portion currency, primarily high revenue take AUM, However, on initiatives. X.X in total year-over-year products to progress quarter, a effect compensation year-on-year revenue equity-related decline XX.X% does reflect an continuing U.S.

expenses. I mentioned reducing while consolidate capital network to we're last improving and efficiency quarter, cities continuing human further overhead As smaller our in

progress XX% our While not XX.X% $XX.X other quarter and of XX.X% cost making.Operating reflecting year-over-year initiatives control million, domestic income year-over-year due year.In apparent, XX% management. the quarter organization Non-GAAP total and cost X.X% RMB general during of savings first future.Selling periodical diamond the a and gradual by to terms net the noticeable due we impact combined to sequentially, RMB anticipate with as financial on of restructuring.Total below decreased during was and of be XX.X% to benefits same optimizations of expenses card black may had administrative long-term XX.X% and immediately the the end last income and revenues this our of our in continued Operating year-on-year XX%, primarily profit the sequentially. XXX with we these quarter, quarter, the was XXX during of improvement of are optimization a during from profit target million was the stable margin already XXX efficiency decrease drag period range million compared to market million increased clients. RMB a and clients, the X,XXX treasury and

of Specifically, to while card the the clients X,XXX. clients number to slightly black card of diamond X,XXX increased number decreased

[indiscernible] our year-on-year overseas overseas X,XXX. grow, diamond sequentially million, As XX.X% of investment require with accelerates, and number rapidly us minimum XX,XXX. to respectively, overseas USD to than X The and number black increasing clients the of million of which USD clients, continues card X X.X% to total registered grew and more

number was to increase of active the quarter, sheet. clients clients XX,XXX, total sequentially.Turning for X.X% During overseas of accounted sequentially, X,XXX, which XX% an up first active the of balance our

of in healthy with interest-bearing current ratio X.Xx debt. our and at ratio have X XX.X% with debt-to-asset We a maintained liquidity

to and priority resources for our ample cash returns, cash which support Board. RMB plans have in the to shareholder expansion providing a allocate We X.X billion remains and equivalents, global

RMB XXX subject RMB XXX of at a dividend last XX, nonrecurring for AGM and dividend our quarter, special mentioned million approval June of Noah million XXXX. to final As declared annual XXXX, on

of end and of sustainably expect in and will see Kong realigning and to globalized made services, in our pay shareholders Hong clients that beginning to returns holders. We already business.Looking stockholders our and provide and early and dividends The growing with being of out mature, sustainable us We to performance across business. August July products approved we before look in growth will management time restructuring overseas demand. we're to the to to built to to when on markets ADS high-quality forward towards initial goal our out the drive strategic stable this and providing of to wealth ahead, progress allow still our channels some personnel that phase the operations capitalize but transition will reflected the global take the have is

for inevitably in our we around overcome support.And a now the we're to will confident encounter floor to thank bumps shareholders' ability gratuity for our open sincere would While express I and questions. the to like road, them listening. you

Operator

Instructions] first Zhang comes with [Operator question The Peter JPMorgan. from

Peter Zhang

[Interpreted] Kong sentiment. estate the Mainland recently, year, recovered. real My the investment And that has there's also this Starting Hong some in noticed first policy China. capital question is market the from March in supported about we

observe are any domestic in Noah declined. amount insurance mentioned for We improvement the call whether And during wondering domestic that the investment sentiment. management has

potential potential by fourth in for domestic requested fee about In and will the wondering rates. the XXXX?My Noah's we products last question Can the rate bancassurance our for currently also that any for fee revenue in our decline behind? the what's is insurance, quarter and was channel a product. the products?My experienced drivers fee regulator, year, expectation what's management their impact first fee about client interest question quarter a fee outlook preference the distributing? will rate for what declining reason And rate in insurance the we decline for see sales insurance is gives not domestic explain the second as terms a apart can -- noticed are -- management revenue our domestic for rate And see decline, other revenue We year-over-year we basis. from of We on the us decline impact? our other for are revenue second

Zhe Yin

question the on in [Interpreted] first changes among investors. So translate recent the regarding I'll sentiment

shift we have guess, share is rather that some net a in a rather improvement markets in seen rebound capital in confidence or sentiment investors' or the markets process given high A than although haven't share seen long-term because or building significant So, recently. I capital investment short summary, H worth we term.

largely rebound the insurance will interest question market immediately in second sense. capital sentiment the domestic and downward sentiment environment, is it's interest term as the also And, the of in not trending sentiment or sense.So guess, guess, also in down. that domestic towards the return in regarding the the insurance rate trending clients' with I short the as reverse demand, I which investment rate, So investment slowdown aligned I slowdown the that guess, domestic a well reflection their is

current and fund into introduce guess, -- approach.And cash have domestic very higher given of guess, the achieved is I which not question building general still previous terms that when is domestic it reasons the year.So, rate for in and even and structure. to that to a into the insurance, or the we is is exit growth compared the fourth to domestic market, guess, expand regarding think although in ensure, we improvement their the AUM. for on management the third I rather income in that overseas that not I in product probably will down is the translate second products trends resources of and fit products -- future that, aspect do now, we like in retirement domestic and I business is or and fully great term of the the that capture decrease to a guess, of current mainly growth active deploying fully rather the while question new products on I and we really guess, environment But, products that our safety I focusing revenue fee, the first thirdly, because clear, the as overall, that the management longer our the strategy fact regarding as drives our fact But medical our aspect the that income previous deposit business our service that mean, accelerate. important I type parents, outlook is in domestic guess, environment through more exit guess, expansion. progress in products guess, focusing portfolio that's time quarter our reflected right overseas the fee-generating and hedge more equity also given products interest the in product environment, down XXXX. demands.So the to will well behind performance-based well-being, decrease which the I because fee that in we in recurring and active compliance those future.And maintain satisfy clients operations So satisfy business. can revenue. first But of business clients' the activities more the private and because overseas quarter to will decline the needs it's But our share take these the on rate that, interest in are overseas the some process the I for wallet take carried -- the

that in And X us net also build trust system years' able of with complete We is have demand client be we'll hoping needs it's XX the to investment high I X business And worth in we're rather investors domestic years a guess, the able guess, to market. long past the spent very overseas the very our time, term. being complete term. long the is, additionally, I infrastructure.And to

positioned them the the insurance regarding look as overseas better commission markets.So, So decrease. services fee the clients provide and and more to overseas global product asset towards well in we'll question to allocation, be

So, rather I of comparing market, base. is most commissions where with of brokers our have brokerage business a the on high the business the in insurance but low overall guess, impact lot the small, especially

are focused more long-term for RMs value clients. on our Our providing

and for and their our needs and to create allocation -- clients and as clients' So satisfy focus portfolio a value optimize primary help construction. our to business, asset is

rate in products. fee I the or of product the So, worried we're guess, term not largely other rate to terms about.In I the nature most product of certain changes, fluctuation is short that fee in the aspect relation the the of guess, it's a

a fund products example, rather have we For optimizing cash equity and our clients' lose private being products, and lose lower said, But management-related market, on money. rate, to been has are hedge that we including certain than and the still stable. the fee fee private naturally a would asset rather whereas focused private portfolio secondary rate client allocation,

also creating clients. long-term for our So to back going value

Melo Xi

there operator, no would Chairlady, to please is more be closing our noted So as that well. Wang, so questions, like a have remark

Operator

for this session. I turn it our management will closing Alrighty, concludes remarks. now question-and-answer over to any

Zhe Yin

remarks. [Interpreted] I'll for Chairlady's So closing translate

which has significant their noticed manager to there private not products, a have caused we So that are default under losses worth among of their continues lot compliant market credit clients. high domestic so-called wealth net in China the

guess, growth management past So, a healthy not so I has but the period. experienced fast rather the XX perspective, growing, in our wealth years, in China

that, because the or that in the the biggest wrong think So assets management high back worth risk is return the advices allocation standing they in today's clients got. poverty of allocated to time, or we China the market wealth net in largest asset wrongly the

team, that fast operate. said, team. used core top for So right talented our challenge future and growth But have wealth I -- guess, portfolio their be is and being we is how current we to as familiar of expand and now, driven for some the when biggest us existing to can and our RM the main their to global have management opportunities overseas preserve to there.Internally, private global-minded get strategy advice our can I is on or which -- banks we with that they we tier guess, hold the so a do very is how clients wealth very the operation

are in rather we future our the operator. especially So turning optimistic growth, still market.So regarding overseas to you, back

Operator

has today's presentation. you for conference The concluded. Thank now attending

now disconnect. may You

Melo Xi

Thank you all.

Qing Pan

call.] by [Interpreted] of are all.[Portions that present you transcript interpreter this were marked spoken live the an Thank on

Noah Holdings Limited (NOAH) 30 May 242024 Q1 Earnings call transcript