Jupai Holdings Limited
Q3 2020 Earnings Call Transcript

Published: 23 Nov 2020

[Operator:]

Thank you for standing by for Jupai's Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Please note that today's conference call is being recorded. I'd now like to turn the meeting over to your host for today's conference, Mr. Eddie Kuo , Jupai's IR representative.

[Unidentified Company Representative:]

Hello, everyone, and welcome to Jupai's earnings conference call for the third quarter ended September 30, 2020. Leading the call today is Mr. Jianda Ni, our Chairman and CEO, who will review the highlights for the third quarter and the first nine months of 2020.I will then discuss our financial results. We will now open the call to questions. At which time, our CFO, Ms. Min Liu, will also be available.

[Jianda Ni:]

Thank you, Eddie. And welcome, everyone, to today's conference call. Jupai's bottom line continued to improve in the third quarter with net loss attributable to ordinary shareholders declining by 93.8% compared with the same period last year and decreasing by 71.7% quarter-over-quarter. Our ongoing cost control measures and enhanced portfolio optimization will continue to support margin improvement going forward, even as investors maintain a cautious mood in the phase of the global COVID-19 pandemic. We are confident in the long-term prosperity of China's wealth management industry, and we will continue to execute our strategies for controlling costs, collecting high-quality products and enhancing our risk control system.

[Jianda Ni:]

I will now turn the call over to Eddie to go through the financial results for the third quarter and the first nine months of 2020. Thank you.

[Unidentified Company Representative:]

Thank you, Ni-san. Our total operating costs and expenses in the third quarter declined by 54.9% compared with the same period last year, while cost of revenue decreased by 50.8%. This is mainly attributable to our continued efforts to control costs, which we expect will help to further improve our bottom line and enhanced operating efficiencies in the coming quarters. Now I will walk you through our financial highlights for the third quarter and the first nine months of 2020. Net revenue for the third quarter of 2020 were RMB85.1 million, a 53.2% decrease from the corresponding period in 2019, primarily due to decreases in one-time commissions and recurring management fees. Net revenues were RMB290.2 million for the first nine months of 2020, a decrease of 55.3% from the same period in 2019. Net revenues from one-time commissions for the third quarter of 2020 were RMB36.3 million, a 64.6% decrease from the corresponding period in 2019, primarily as a result of a decrease in the aggregate value of wealth management product distributed by the Company.

[Operator:]

Thank you. The question-and-answer session of this conference call will start in a moment. Your first question comes from the line of Yuhua Li from UBS. Please ask your question.

[Yuhua Li:]

Thank you for giving me this opportunity to ask question. This is Yuhua Li from UBS. I actually have two questions. The first is, in the third quarter, Jupai's bottom line have significantly improved and is moving towards breakeven. May I ask the management what the factors have contributed to Jupai's performance in the third quarter?

[Unidentified Company Representative:]

Thank you, Yuhua. I will translate your question to our CEO. Thanks.

[Jianda Ni:]

Thanks for your questions. In the third quarter of 2020, we have seen further recovery in manufacturing and production, people livelihood and the overall economy. This comes at the government has applied highly effective coronavirus control measures while implementing incentive policies on multiple levels. China's GDP grew by 4.9% in the third quarter on a year-over-year basis, seeing positive growth for the past three quarters and seeing accelerating growth for third quarter. China's economic recovery appears increasingly solid. However, on a global scale, there are still uncertainties about the economic recovery, including a second wave of coronavirus in Europe and the continued tension between China and the U.S. Due to all the risk factors, high network individuals have remained cautious in their investment activity. For the quarter, Jupai's aggregate value of wealth management products distributed was approximately RMB1.96 billion, a slight increase when compared to the second quarter. In response to the change in market demand, Jupai upgraded its product selection in the third quarter, leveraging our advantages in-sourcing products and experience in the wealth management industry. More particularly, we increased our supply of standardized and secondary market products. Secondary market products as a proportion of the aggregate value of wealth management product distributed increased to 22.4% this quarter from 13.1% in the second quarter. In the third quarter, we were pleased to see our net loss attributable to ordinary shareholders decreased for the fifth consecutive quarter to RMB2.97 million, down 71.7% on a quarter-over-quarter basis, and 93.8% on a year-over-year basis, moving further to breakeven.

[Yuhua Li:]

It's very clear. And my second question is, what is your take on the development prospects of Jupai and the whole industry? And how will Jupai prepare for it?

[Jianda Ni:]

Okay. Thank you, Yuhua. Looking into the fourth quarter, Jupai will continue to implement cost control measures to improve our operating efficiency, further optimize product selection and competitiveness and continuously improve our risk control capabilities. First, our cost control measures have been crucial to having us remain resilient against the pandemic over the past year, while driving our bottom line as the micro environment normalized in the third quarter. In our sales network, we continue to optimize our sales indebtedness in the third quarter and enhanced talent training and resource support for our advisers, while streamlining our personnel and sales network leading to increased aggregate wealth management product value distributed to advisers.

[Operator:]

Thank you, Ladies and gentlemen. I will now turn the call back to Jupai's IR's representative Eddie Kuo for closing remarks.

[Unidentified Company Representative:]

Okay. This concludes today's call. If you have any follow-up questions, please get in contact with us. Thank you.

[Operator:]

Thank you for your participation in today's conference. You may disconnect now. Good day.