China Finance Online Co. Limited
Q3 2013 Earnings Call Transcript

Published: 3 Jan 2014

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the JRJC Third Quarter 2013 Earnings Call. At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions). I must advise you that this conference is being recorded today, Friday, the 3rd of January, 2014. I would now like to hand the conference over to your first speaker for today, Mr. Shiwei Yin. Thank you. Please go ahead.

[Shiwei Yin:]

Thank you, Shiweya, and thank you everyone for joining us today. Before we begin, I would like to remind all listeners that throughout this call we may present statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, estimate, plan, expect, anticipate, project, target, optimistic, intend, aim, future, will, or similar expressions are intended to identify forward-looking statements. All statements other than historical facts may be deemed forward-looking statements. These forward-looking statements are based on current expectations or beliefs, including, but not limited to statements concerning China Finance Online’s operations, financial performance and condition. China Finance Online cautions that these statements by their nature involve risks and uncertainties and actual results may differ materially depending on a variety of important factors, including those discussed in China Finance Online’s reports filed with the Securities and Exchange Commission from time-to-time. China Finance Online specifically disclaims any obligation to update any forward-looking information in the future. I will now turn the call over to Mr. Zhao for prepared remarks. Mr. Zhao, please proceed.

[Zhiwei Zhao:]

Thank you, everyone. We made solid progress in our business fundamentals in 2013. After three year of consolidation we are starting to turn things around amid a challenging market environment. Our revenues grew on a sequential basis for three consecutive quarters and net loss has been trending lower. In addition we also achieved progress in consolidating and integrating with the complementary industry resources. Within a sluggish stock market we are further developing an Internet-based finance business capitalizing on our robust Internet capabilities. We established new brokerage services such as the growing precious metal trading business. We also laid the foundation for our new wealth management service, such as Yinglibao, which is an online financial service platform that integrates cash management and mutual fund distribution. After a successful trial run Yinglibao has formally launched service. Over time Yinglibao will enhance its services and develop new products to become a one-stop-shop where customers can access a variety of investment products. In 2014 we intend to enhance our core competitiveness through services and reestablish our vision for growth around 'Let’s make investment easier' for our clients and users. Leveraging our strong Internet capabilities we are creating an online investment platform that is intuitive and easy to operate for our massive user base. Focusing on innovation and user experience we are introducing diverse and high quality investment products to service our growing customers and users of our flagship web portals. Now I will turn over the call to Mr. Jun Wang, Chief Financial Officer for an overview of our financials.

[Jun Wang:]

Thank you. Now let me first review our third quarter 2013 financial results. All financial numbers are presented in US dollars and rounded to one decimal point for approximation. Our net revenues for the third quarter were US$13.2 million compared with US$7.2 million for the third quarter of 2012 and up from US$7.6 million for the second quarter of 2013. Recently we have recapitalized the components of our net revenues to better reflect the evolving nature of our business. Our net revenues are now categorized under

[Operator:]

Ladies and gentlemen, we’ll now begin the question-and-answer session. (Operator Instructions) Your first question comes from the line of Kevin Vincent. Please ask your question.

[Unidentified Analyst:]

Thank you. In light of the recent improvement in your business fundamentals do you think this trend will continue going forward?

[Jun Wang:]

Well, thank you for question. You can see from our release that our top-line has been increasing for three quarters in a row on a sequential basis, and most of that growth comes from financial services, which include brokerage-related revenues and our recently launched precious metal trading service. And the Chinese stock market underperformed again in 2013 in a year that S&P gained 29%, Wuxi up 16% and Nikkei [inaudible], [Shaw High Composites] actually declined by 10%. So amid such a weak domestic stock market Chinese investors are safeguarding their rising personal wealth by seeking alternative investment opportunities. So in that sense by leveraging our solid international ability and tremendous user base we proactively rolled out precious metal trading and also our wealth management service platform, Yinglibao to address investors’ evolving needs. And since launch both services have been well received by customers and quickly picked up our growth momentum. So our goal in the New Year is to further manage the growth of these business segments and also we intend to initiate further cost cutting measures as needed. Thank you very much.

[Unidentified Analyst:]

Thank you. I have a second question for you. Can you tell us a little more about the wealth management landscape in China?

[Jun Wang:]

Well sure. We believe the wealth management industry has actually tremendous market potential in China. Actually according to, actually a research report issued by [Beckman] Consulting Group and also the China Construction Bank, one of the leading banks in China, after more than 20 years capital accumulation in China at the end of 2012, the number of individuals investable assets was forecasted to have reached to more than RMB73 trillion and high net-worth individuals investable assets was forecasted to have reached RMB33 trillion with a capital growth rate of more 10% and such pace is expected to continue in the near future. However industries that are serving this growing affluent population are just emerging. And to give you xamples on the increasing popularity of wealth management products the industry’s bank financial products increased from RMB 5 trillion in 2009 to over RMB 15 trillion in 2011 with a cap rate exceeding 73%. And over the next decade also we believe the market demand is expected to remain robust and such including significant increase, the growth potential of our business in the long run. Thank you for the question.

[Unidentified Analyst:]

Thank you.

[Operator:]

There are no further questions at this time. I would now like to hand the call back to Mr. Shiwei Yin. Please continue.

[Shiwei Yin:]

Thank you to all those participating in this earnings call and webcast. We look forward to speaking with you again. Thank you.

[Operator:]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.