Noah Holdings Limited
Q3 2020 Earnings Call Transcript

Published:

  • Operator:
    Good day. And welcome to the Noah Holdings Limited Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Jingbo Wang. Please go ahead, sir.
  • Jingbo Wang:
    Thank you. 2020 is a new beginning after 30 years of development. Shanghai has developed into an international financial center, specializes in Renminbi oriented asset allocation. Currently, more than 50% of the Renminbi assets held by overseas market entities are here, making the city an open Renminbi asset allocation business. This year 2020 also marks Noah's 15th year of Inception and Noah Holdings 10th Listing Anniversary on the New York Stock Exchange. Noah was founded in Shanghai. We're still headquartered here.
  • Grant Pan:
    Thank you, Chairlady, and thank you, Sonia for translating. Hello everyone. We're very excited to share with you the stellar financial results for the third quarter of 2020, marking a very successful transformation arising from resumed client trust and confidence of the economic outlook. While also very happy to report that we are ahead of schedule to deliver the full year non-GAAP net income guidance amidst a very volatile and challenging environment this year.
  • Operator:
    And our first question will come from Ethan Wang with CLAS (sic) . Please go ahead.
  • Ethan Wang:
    Thank you, and good morning, management. I have two questions. The first is on our full year guidance. Just wondering if our full year guidance is too conservative, because based on our first three quarters results, it seems like we can increase our full year guidance a bit and so we are going to have, say, in the fourth quarter revenue, if we think about like a reasonable growth from last year then your guidance should be higher. How should we think about that? That's my first question. And the second question is on the regulations and two parts, can you guys update on the latest development of fund advisory licenses? And the second is on the internet deposits, because it seems like regulators have recently tightened their grip in this area, so this effects our business down the road and what's our latest trend for our departed business? Thank you.
  • Grant Pan:
    Hi, Ethan. Can you repeat the last half of your question about the internet deposit?
  • Ethan Wang:
    Sure. It seems that regulators have recently tightened our internet deposit, PBOC, Financial Credit Report went out to state some irregularities in this area. So this affects our business because previously we were selling with plan to going through this system. Does this affect our plan?
  • Grant Pan:
    Sure, Ethan. Thank you for your question. I'll take the first question and Chairlady, Wang, will address the second? For the first question, I believe, when we actually gave the full year financial guidance at the beginning of the year, obviously, the outlook for 2020 was quite uncertain. We believe that we made a, I would say, reasonable, I wouldn't say, it's overly conservative, I believe at that time was still pretty challenging, looking at the road ahead of us, especially knowing that the gate to Hong Kong wouldn't be open very soon. So we'll be missing a pretty big chunk of revenue from overseas insurance. So we don't believe that target was set too overly conservative. And we’re very lucky to see a very strong financial performance in the third quarter, but we remain calm for the rest of the year. As you know, in the industry, we do experience some sort of seasonality in the fourth quarter, because holiday season, as well as the fund uses for institutions. So, we'll still maintain the same guidance. Although, we're very confident that we'll be able to at least get to the very high end of that range, a little bit exceeding that particular guidance. So I'll let Chairlady, Wang, to take the second question.
  • Jingbo Wang:
  • Grant Pan:
  • Operator:
    And our next question will come from Xue Yuan with BICC (sic) . Please go ahead.
  • Xue Yuan:
    Thank you.
  • Grant Pan:
  • Jingbo Wang:
  • Grant Pan:
  • Jingbo Wang:
  • Grant Pan:
    Okay.
  • Jingbo Wang:
  • Grant Pan:
  • Jingbo Wang:
  • Xue Yuan:
  • Operator:
    Our next question will come from Daphne Poon. Please go ahead.
  • Daphne Poon:
    Hi. Good morning, management. Thanks for taking my questions. I want to first congratulation on the strong result. So I have three questions. So first is regarding your Grofers management fee. We saw that the management fee has been picking up quite consistently in the past few quarters. So in the latest quarter by our calculation is about 92 basis points. So just wondering if there's any particular drivers behind and whether the management see this as a sustainable trend? And second is also regarding Grofers, so we noted that the AUM for the purpose of clarity from the Grofers, the growth has been also muted in the past few quarters. So just wondering, what's the reason behind and what's the outlook there and also if the management can share the outlook on the overall Grofers AUM, like, when you expect for a turnaround maybe sometime even next year? And lastly, just wondering if there's any update on the Camsing paying in terms of your client acceptance so far? Thank you.
  • Grant Pan:
    Thank you, Daphne. Let me ask the question first.
  • Jingbo Wang:
  • Grant Pan:
    Daphne your question on the Grofers management fee, first of all, it keeps going up, one, we actually having thicker layer on private equity, so which actually comes in with the higher management fee than the credit products that have little management fee – recurring management fee. And two is the increase this quarter actually still has a little to do with the continued exit of some of the credit products that have back end management fees. We expect that to at least the increasing in the PE products will continue to bring in health management fee flow. And in terms of the Camsing update, we have, as of November the 13th, the first batch day for the settlement plan, we have two batch dates. As of the first batch day, we have signed about 240 contracts with our clients. The one-third in terms of number of people and it's almost 30% as well for the total amount outstanding. So it's about 1 billion in dollar amount and about 240 in number of holders. And the second batch comes along at the end of the year, which will be end of the settlement plan. We expect that to be probably going to be around 50% to 60% of total number of people to be conservative.
  • Daphne Poon:
    Okay. Thank you. Sorry, can I just clarify the 50% to 60% is just for segment management or total number of clients.
  • Grant Pan:
    Total number of clients as -- usually it also coincides with amount. So it's about 50% to 60% and 50% to 60% of the dollar value. So that's on the conservative side. If we are being a little bit optimistic, I think, it's probably in the range of 70% to 80%. We'll see.
  • Daphne Poon:
    Okay. Got it. Thank you.
  • Grant Pan:
    Okay. Thanks, Daphne.
  • Operator:
    This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Grant Pan for any closing remarks. Please go ahead.
  • Grant Pan:
    Okay. So thank you shareholders and analysts. Very excited to be able to deliver these results for you and we'll have, obviously, one-on-one calls afterwards, so we could probably talk a little bit in more details. So see you in a bit.
  • Operator:
    The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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