Q3 2019 Earnings Call

Good day, ladies and gentlemen.

Holdings limited third quarter, two dozen 19 financial results conference call.

At this time, all participants are in listen only mode.

Following managements prepared remarks, there will be acuity session.

During the Q1 <unk> session. We ask you please limit your questions to choose [noise].

[noise] if he would like to ask additional questions. He may reenter the queue to do so.

As a reminder, this conference is being recorded.

After the U.S. marketplace on Monday, no issue a press release announcing its does she doesn't the 19 financial results, which is available on the Companys IR website at <unk> I don't know group Dot com.

This call is also being webcast live it will be available for replay purposes on the company's website.

I would like to call your attention to the Safe Harbor statements in connection with today's call.

The company will make forward looking statements, including those with respect to fix it future operating results and expansion of its business.

[laughter] leave that to the respective inherent in the company's business.

It had been followed with the FCC.

[laughter] actual results may materially different from any forward looking statements [laughter] [noise].

[noise] Noah Holdings limited does not undertake any obligation to update any forward looking statements as a result of new information feature events or otherwise, except as required under the applicable.

The results announced today, an unaudited and subject to adjustments in the connection with the completion of the company's or would it.

Additionally, the knowing that she anything [laughter] financial discussion.

Yeah I'm.

Really I Shouldnt GAAP and non-GAAP financial results can be found in earrings press release I sit on the company's website.

Today.

As stated by Mr., Wang Ginzburg try Lady and see Ari Mr. Zhao either [laughter] license and grant pay group Deputy CFO sorry.

With that I would like to hand, the call I thought to Mr. Joey Noah's Group President. Please go ahead.

[noise] <unk> quite yet due out where either the what's what whistle gentlemen, John no chips and you know that junkie edge. It did you thought you up on quite a fun and she will hold one was you without that you're talking quenching, Oh jeez I mean could you know it. She was granted we thought that she is on Sunday.

That's how I wish it they hold true well don't Linda. Thank you operator for today's agenda I will first briefly summarize nos overall performance for the first three quarters as well as did the Boston our second them business surely. The one will then provide an overview of the macroeconomic environment and the company's product strategies.

Updates on the come to an extent.

Glenn then will then follow with a detailed discussion of north third quarter financial performance well conclude the call was a Q and they session.

I mean, when somebody off we bought it would you use it you already you do and then do Sungy, though when we actually here in Q1 total body I see I hope you saw some five new that's the quantity shot down by one just send us. The so you kind of what you need to answer I know, we've got home yourselves and passenger cars. The Sunday are cheap quenby sounds in the five I'm just trying to sit here.

[laughter] children's either which they can choose whole ours is the way you got Toby you sounds in the passenger we don't think I would you need to do what they are you at Columbia. Some downtime in just a cheap sounds either what I do you watch all done that you want your no issue that you on a true yeah deep well, that's only you've gotten done my heat in the third quarter or 29, <unk>, nor generate isn't that right.

Yes, all RMB 840 million.

Point, there points work because that year over year, but down 3.4% quarter over quarter non-GAAP that income RMB 350 million up 23.7% year over year and up 34.3% quarter over quarter in the first three quarters net revenues reached RMB 2.6 billion up 5.5.

<unk> year over year, no GAAP net income reached RMB 920 minutes up 17% year over year, we're encouraged to see the Saudi results achieved against the backdrop of challenging market conditions in third quarter [noise].

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And you don't want you don't you buy sagely, Julie do I saw your Trina Punchy Giambi, you'll you buy we'll see the shot yeah. I don't think how do you feel was only time in the usual she'd holiday timing that when would you tell me. Some downtime you buy you said Youre <unk> cool. So she show that she that builds and watch I mean, you. Once you should build I did you close.

And would you do spend you don't see Accordo coal that she liked your <unk> would you don't quite have you thought she sometime to choose to sit outside [noise].

In terms of wealth management as part of our overall transformation strategy on our product offerings, we have stopped offering probably would probably be crowded products in the third quarter as a result with distribute it the total of RMB 13 bid and products. During this quarter, representing a decrease of RMB 15 bidding compared with December .

Area last year.

We compares the distributions during the superior is on an apples to apples basis.

Hi, guys, excluding the impact I'll, probably be crowded product the distribution of other products increased by 119% year over year as it the alternative I'll, probably be crowded product I would bode phone and the mutual fund products in particular are continuously gaining trust and the support from our CFO .

Hi, its consequently distributions of our standardize the products increased substantially by 70, 74.3% compare to the previous quarters.

Judges sunday's on well these high Suzhou, each and somebody there was a biden fine you know I'm told when Youre popping cheese unfunded pension that Jaguar journeys has to do Boucher when do you change sungy that would easily we spend just send out she used to those <unk> told all James you couldn't yes, you well done some John <unk> coalition without all Bob its usual.

I mean can be summed on June five and Josh.

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Engines for no toll, what's your which has not yet as all the end of the third quarter. The number up relationship managers was 1368, demonstrating our efforts to proactively optimized and improve our RM roster. The number off the elite relationship managers remained stable with a turnover rate Oh.

Only 3.7% in the first three quarters. Meanwhile, Ultra high net worth clients are increasingly loyal to our service. The number of like car clients were bridge, the 875 up around 20% year over year their asset advised the by US also increased the by 53.2% year over year.

While per capita a rose about RMB 90 media.

Finally, the gold usually I was just asked is on the Cds onto your phone can vision two would Josh in no way on opposed to do that Charlie EDA tools.

Sungy, though why aren't you buy and she by its usually what time Poser do I tell you why don't studio forgot engine. We're told what you don't one Jesus you had the shares Allen Poe's or Joe If you had come soon as well machine ebuys supposed to each TTM well on the onto them Josh somebody Georgia. So what do you find so this will at some don't eat RG one.

Meanwhile, you told me when they go do you need engine for the outdoor you end up page as usual nobody out sushi won't phones, you Mpower typhoon bouchon. So those are unchanged on June one time, p. and so forth use funds on June one time in Chicago cheesy that she has only show you some jobs.

Wow High network individuals how about better understanding of risks from the evolving market dynamics. We also strengthen our investor education effort in the third quarter organized to 776 Investor education activities.

Directly covering over 15000 clients as off the analog to October we have launched the 141, we do episodes of our Investor education programs with this new programs on our online platform. We recorded a 4 million more we use with an increase off 19000 in program followers and the same time.

We continue to provide financial products and the service that how high net worth client mitigate risk preserve well and they heron assets. This service not only ensured that we fulfilled their complex and diversified allocation. These but also enable us to benefit from increasing synergy effect with the self system.

Of our traditional financial products.

Well I live on both of them into digital SUNS you go well.

I'm glad you Queen Watson be it some dump Ivan just you know quoted shutdowns I've enjoyed that's the way each and she buys you will show you that quite a bit shutdown should a woman toys jostled times in size you know how do you don't teach and thought she chooses I eat phebe I assume that's the time toward trying to do it sounds you machine that Mike Hi, what globally. So this hot.

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In terms of the asset management, the U.M. by the end of the third quarter increase the by 7.5% year over year, but decreased the by 2.4% quarter over quarter to RMB 176.5 billion the quarter over quarter decrease is due to the exit of ready the Mitch maturity of 7.3 bed and private credit product.

Which is that active choice by the us to accelerate our product the transformation, except for the credit asset category that is under our strategic transformation or other asset categories have zoomed along their growth trajectories. It is worth mentioning that the total U M bump on denominated in RMB and U.S. dollar.

Sustain if growth momentum from the second quarter to reached RMB five point 40 to 49 billion in third quarter, which is up 40, 42.8% quarter over quarter. This growth demonstrates the benefits that we have started to reap from our product the transformation.

The last movie that's the one time be Juno towards your thoughts you would change on could you get hung up and then so Josh I don't use all bunch on time incident.

Selling and usually say knowing that you know, which you don't give it a dual either with some Don will go visit us on John So wonder what's his home page. It. So you told you. It if we bought tone, which is a cool July that's the time why do you consider a.

Additionally, Gopher asset management products are being included in the why list of Modi large scale security dealers and the banks. So far we have complete the productive adoption procedure for one off the security dealers liberalism that the expansion of external distribution channels will drive go PERS multi multi.

I mentioned no well.

In the future Gopher will keep focusing their strategy, that's the allocation and that investment we're confident that our commitment to our core values will help establish gopher asset costs to work the asset management company.

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By Quenby GE bunch of he did.

Well, John I'll Dodson Goncourt L. Johnson piece when that holds the gene Qualys impact off does it did she though for me I was just Hans you Zhankui poses to hook why did it impact Dol choose the other piece Suncor Hi, Josh. So you know what I found on terms Oh Gen, namely holds the belden with Jon Hagey away with Biogen noise.

Well you find so you could tell me can do follow me do it all up would you be aldrin there Jim could not out yeah. We use is always ji yoon changing that she did we told you I talked about how tons you told us all the [noise].

Our overseas business maintains strong growth momentum and the first three quarters. The total revenues of our overseas business increased by 33.7% year over year to RMB seven corner and 10 minute accounting for 27.2 present of the groups that have revenues as off the end of the third quarter. The overseas you.

Rich the RMB 25.6 billion up 7.8% year over year, while remaining relatively stable on a sequential basis in September our Canadian office successfully opt in licensed to operator as an investment fund manager he shouldn't by two Canadian Province, which is the third license after all.

Turning our exempted dealer and the portfolio manager license.

In addition, the election love, our Hong Kong office as a member of the Asia Pacific Committee of the standards Board for alternative being Massman in October illustrated the global recommendation of our standardize the practices and then quick and integrity.

Well go leverage our new status to launch our phone operation into a new cycle of gross and to create a long term excess returns for our investors.

Did that and then do you try and you should you choose and so we aren't you. It's what do you know you last season. That's usually you usually is on the new lead you to quote unquote Cogen. All you also joggers and you do it on fees you change the dial it up yeah.

As you go that usual just young woman that Sun you those same quality shots you go from in the homes or.

No I would like to briefly update or what do we have down to enhance our operational efficiency since the beginning of 2019, our efforts in optimizing management destructor and establishment operating procedures have started to improve our operational efficiency building all what do we have achieved in the last quarter. We further enhanced the hour.

Efforts in the following areas during the third quarter.

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These sometimes shortly.

So again phones, yet trend the ocean Palm Valley.

Firstly, we upgraded our risk management system, we further beefed up our independent risk management and the compliance team to each individual business level now to not only strengthen our risk management capabilities, but also ensure better compliance with regulators requirements at the group level we continuously.

Our products end to end the risk management process now our Systematica risk management process covers continuous optimization of risk management procedures disposing risk project and sorting underlying assets.

Hi, John to unwind.

Youre pods or did you go woman seemed yellow pages. She has at least one by one being shot down diamond jewelry that she told well due to we all see even though onecomm. Since you have failed at least homebound Jewish out since she will my Giada poultry and total jelly not only the yields on as you well underway poses a time it she wants you to yours.

That's why you and your secondly, we're putting in place and more stringent cost cost control measures and optimize our organizational structure.

The personnel related expenses were reduced the by 9.7% quarter over quarter was improved oversight a major expenses were also seeing sequential reductions in non personnel related at administrative costs.

That said however, we are still committed in our investment and the product related researching capabilities and the established an independent research center dedicated to providing timely and effective professional research for our investment teams.

So actually it's only on a year audio Chung tons, you seem to know how far that sungy too quickly. It's all going on which is you did I guess could you should see Nvidia She yen John do you all see our usual, though good on TV season, Sean Yes, you can use on the <unk>, possibly team since you go more jobs going on Sean.

Yeah. So this yellow time enjoy your fortunes on chime in Wichita, Kansas, but I'm sure you thoughtful cheese on these hedges at January .

Thirdly, we continue to drive Big these are still ideation process for our core business procedures and the scenarios in the third quarter, we upgraded the dual recording system to support point to point redo verification. We also launched the outgrow CR base to contract the validation system to further digitize our compliance procedures.

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It was a newly launched the mutual funds separate management account realizing company the paperless products transactions, they lack totaling contract signings will greatly improve their business development efficiency off relationship managers.

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Sure and you'll find cogent cohu could she lined up she is going.

Going forward, we will remain devoted to building up with diversified high quality open platform.

In addition, we will also folks are expanding our presence in overseas market as well as developing a complete the process of comprehensive financial service. Although we faced challenges ahead, our determination to maintain market leadership and become a reliable platform for global Chinese high network clients will remain unchanged.

Well, if I understood it shut in Boston gel, there's no way out on his way through sheet. So she does anyone wanting to unused to quit that I will like to turn the call over to loss Chair Lady and the CEO , It's wonderful [noise].

[noise] unequal in yen [laughter] on what's happening here fast is that the I mean, yes, so Lee jagoda, thanks, Dan since it well and you heard Jim Henson took I didn't know higher but since we feel the chips wishing do you tend to lets you that did you tell everybody hates it when the lately how you go up on that.

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So you sorry, yeah, well popular bezel has actually it's it hasn't equates its intrigue Banco do Brasil Hedgelets attended then deemed sitting great. You weigh that you bought on that seem to have that 10 million.

Thank you Charlie the year of 2019 will mark the beginning of the paradigm shift in China's wealth management industry.

What I meant by paradigm shift, meaning the occurrence of the fundamental change in industries on the line I met dynamics following changed in the microeconomic environment and the regulatory policies.

Wealth management, and Abscess management, adding example, all industry players, including but not limited to asset management companies distribution channels trustee agencies client relationship managers and other are embracing the paradigm shifts that chance how value is created through out the industry value chain in the face off new.

Laws regulations and the micro policies.

The introduction and the gradual implementation of the new asset management to finalize have truly broken the illusion of implicitly guarantees all participants and formed the industrial consensus of supply side finance reform by converting not intended to extend the product.

October tough the Central Bank issued Russo important the terming standardized that assets on its website fully launching the era, often they face to standardize the products.

Oh wait I definitely bosh Accenture, Deloitte I hope, you'll see that's absolutely pending maybe at the team.

That's helpful, but only that should all Dan on the edge influential garching for why aren't you also have 24 genser consumption Temptingly consultation usually test system tiny shows, which you don't tend towards the one she's on the foundation.

Pennsylvania, and attempting telephony conjuncture genotypes impact you intention goings on the fashion TV and hopefully the going here. So I'll go full funding. So you should get cohorts you one bifurcation pushing that central Lou I didn't do it to the for mental Guardians to cope with it so she'll sounded like how on the gene clearly at that time attended or listened how does.

Essentially two quarters into play Acos and bundled your tangible that you'll see me essentially to attempt. It won't you claim what you guys and see how many shutdown sodium back so you'll see a phone she telephone forgotten <unk>. Thank you do congeal I bet you still to this evaluation digestion S&P country from did you say, maybe she's shopping channel that she said you know and sandy.

Sunbelt States and they don't pay Balco 10.1, 200, since we don't pretend to achieve that sounds unfortunate into shops will be pattern that underwriting.

In terms of our wealth management. This we remain the dedicated to providing comprehensive wealth management service to high net worth trying these individuals all over the world our commitment to maintaining an open platform and the cultivating industry, leading relationship managers enabled us to transform from product so products, that's driven to investment.

Consultant driven.

In terms of product insurance, where more focusing on distributions of products from major financial product suppliers and the selective to top managers for other comprehensive services. We continue to provide clients was multi effects that service such as insurance trusted credit and maker immigration related service so as to me.

The diverse knees of high network clients overall, our operational strategy has being well received the by our teams and the market and the third quarter. The total number of active clients in the group level was 9961.

In the third quarter total transaction value of our products was RMB 13, bidding down 46.8% quarter over quarter due to the termination of our private credit product in the third quarter 266, private credit phones in the amount of 7.3 billion well distributed to our clients among.

All of which consumer finance and the auto finance accounted for nearly 80% for the remaining similar products. We're also working with the counterparties to accelerate the maturities as contract for me until they are fully repaid clients, but then I sometimes on the essentially the when would you anticipate please see I mean being tone deaf, Wisconsin.

It's about 20000, Beth Anderson, Daniel She's on dental hygiene tempting to downtime between passenger sat through the we showed you gave you. The Sanjay he is essential to pinion Coleman teaching will generally Joe. So we didn't really you and maybe engine to answer would be I. Thank you to go which otherwise would want even though that consists of dangelo huntington that baton to send it back.

For public security products, the total transaction value rich the NIM RMB 7.4 billion in third quarter increases year over year, and 23.6% quarter over quarter, the transaction value of bonds laws and the mutual funds accounted for nearly 92% of the total.

Since the launch of our smartphone app as off the end of the third quarter total transaction matter for mutual funds have reached the RMB nine point 56 million billing for the first the three quarters and per <unk> and a per capita about it is 152000 the number of active clients for Mitchell.

In the third quarter half being up 40.9% year over year end of 53.8% quarter over quarter.

Well you will find me out when we can judge Indiana, taking go visit finishing the way go basis since we don't gladly that just have anymore.

Listen to what I, just had paid three cohorts HR generally about kids irony doing essentially to go through blending the single changing data each anyway, Gilly pump deepened, our Bakken Janssen and even though you do.

Thank you do go frequently this similar changes you know you actually I wanted to ones like what do I felt shino jacko talking about flat Fandango seeking quickly Joseph tenets importantly, I need to essentially Dumont coffee did entered into planning Gloomily, you bought back to achieve in beat Tony census sat in chief underwriting.

The asset management to segment, where reemphasizing that gopher, if that's good comprehensive asset allocation strategies and decreasing absolute returns clients as I'll be third quarter of 29 thing the U.M. of Gophers private equity funds reached RMB 105.9 billion up nine.

3% year over year, and a 1.4% quarter over quarter in the third quarter. Among all private equity funds managed by Gopher nine companies have gone public domestic and overseas capital markets, including five listed on the sign Tech Innovation Board. Additionally, three companies have being approved the by B C.

RC and are making final preparation for their IPO as off the end of the third third quarter of 29 during the quarter you of real estate funds increased the to RMB 18.7 billion up 12.7% year over year and down 2.1% quarter over funded and using those claims attempt.

Yes.

If you don't include she bought Josh it's a little Matt So leaching data about what you're showing.

Okay shiny gone I assume you jumanji without would you that also coffee granita highlight detection and publishing then make one you'll find you tend to England the tough into any of that.

For our core real estate assets, the occupancy rates of show HEICO per center and achieve our Q2 office building both exceeded 95%.

We have also completed the construct dropped constructions for shell HEICO for Shelly you Plaza, which has been entered the rental stage in terms of the copper overseas realistic phones in the third quarter. The U.M. of our you asked New York Real estate investment funds increased by over U.S. dollar 30 minutes.

Thank you to more closely going faster time to time when include more two point, you're still even beat home beaten dump and Joe showed NGL competes indasec sheet.

We also had stage and you didn't Cinderella pool from cohort. They go through attempting to shoot you will send you do organically more teams and to your book the window to ranging fishing and tensions and thats what will be towards that Jay So senior ankle vigilant on Wednesday, the RG <unk> bundle phone from mom she didn't egencia telco battle, so that she some on for Jim Sidoti.

Essentially no hobbled using seem a binding arsone essentially coffee going when deciding to do you think light jets on each Antony and I see on the balance sheet venue, we bought.

Well go people today, it's the kind of anymore that Boston, maybe Tony Genzyme patents elucidate Bachmann beaten that city should the U.M. of school first public security products exceeded RMB 9.5 billion up 95.9% overeat year over year, and the 17% quarter over quarter four portion of our climb.

And our been found effectively for food their demands for fixed income products that you of our phone funnel was about RMB 3.5 billion as Nate based the products are gradually accepted by investors Massman returns of copper mentioned, the secondary markets off and mom flagship funds both.

Exceeded 15% specifically the flagship mom fun to achieve the positive return of 19 point, 46%, while quantitative fall off able to put positive return of eight point, 23% things establishments go first public fund the portfolio found the stat worship has delivered an annual return of 70.

10%. Moreover, the U.M. of multi strategy funds reached RMB 8.9 billion up six the 4.8 present year over year, and the 4.7% quarter over quarter.

Yeah, I can definitely by handling things you know Abbas again, its with the team you went to the NDRC vacation. So far so do you see enhances units. We don't do the sand you wanted to see that people go Atlas is that it's the Dallas, how would you actually I mean, she's angeliki shots on this again.

See into again at least attended attending that some and Douglas all that taking drugs such as you know have us again, the fashion uncertainty loudly <unk> Apple <unk> pending the when she ULA whereby you didn't do on the theories on tank with <unk> Scott can keep on does do that's again that telecom I told you that a female equal to 10 new dealer.

Comfy Valley, so attention she doesn't have to each other content you don't battle for Cheadle content. He shelf that you don't that's helpful. Any Cheadle push also given what you don't also don't Glennie. The told you then if you don't that sequentially. They sit on the gene wait to see now I'm incredibly tough general Benson next I will like to provide a brief update on the progress off.

Becomes the instant the comes the instant assist suspected to be a carefully planned and the complex fraught with a long time spend and the number of suspect we continue to fully cooperate with the public securities and the judiciary investigations as they look into this matter. It is expected to take a long time too.

Completely discover the truth and the soft the issue we engaged a group of talk law firms with different specialties as well as especially with Heska force that by senior management members that are responsible for this issue the counts against and was a tschudy a wake up call for everyone and Noah and the reviewed the.

Be concentration on a single product category.

As our implies an at the truth maybe they.

Division to move away from our dependency on private credit products. In addition, we are also determinant to accelerate our transformation from private credit funds to more.

Standardize the product such as well, but from a product driven strategy to a more comprehensive service driven strategy from product of the sounds oriented to investment advisory oriented from tunnel vision on the scale of transaction that is to overall enhancing investment capabilities of active management.

The instant Hassane, Virginia, and our regiments about the market and helped us to realign our focus on common sense and our founding principles also EMEA gunson cool the retailers have frequently let's just have any higher to put it that she'd had you who saw the high depending how flat Tony Hawk I still go cohorts.

I'd have to go any Hudson Valley highlighted how those halted Appleton copel meal banks, not pandemic attempting to hop away, yeah, well thought pendant that'll foreseeable wisely, putting two cohorts your ones that Tony as it Docomo will happen to me that you're intending to incidents announce 18. So you've got you fully 20 years or PCR Jimmy Choo since into so to put into it.

Frankly, getting Jason so trying to push it poses I'd tell you Hussein's your who'll go told us how he isn't that is.

Well not be ship out there he had a Tom Watson's Pentagon. Good hope is been pathogens systems, what city that belted.

Total bluestone quite until telephones, yet, but can they put that out before though.

You know suppose Latino.

Gene Hook wonderful yellow well either for example in shell to Jonathan So maybe you could you talk let me go tempt you may recall, what those she also hubs contagious. Meanwhile, it helped us to form a deeper understanding of the wealth management and asset management industry.

Almost all other industries client experience is deciding factor for product the quality by contrast in the wealth management and asset management industry. The vast majority of the clients Kellogg the directly evaluate the quality offer product or service that the receipt. This is not only the case for clients.

And the regulators even practitioners may sometimes having a hard time evaluating the real quantity of each financial product onto the investment value has been fully realized.

Therefore practitioners of this industry must truly value their fiduciary duty on the are the hand, investor education and the selection of qualified investors are also be cornerstones of the industry, we must the pass our common sense and the knowledge of the industry to qualified investors and the regard this as our world.

Moral responsibility.

The investments are not deposit it has some risks while we don't offer implicit empliciti guarantee it does not mean data we are a responsible finance industry. It's all about operating and of managing risks, which is not a sometime which is not something one can completely eliminate but it can only diverse and dispersed.

Every financial advisers every client and every product the developer that need to add here to the principle of the application.

Hi, how are you doing ancillary I'll tell you that these selenium Sochi, Sony enrollments angle for Mace events will doesn't home phase I want me olefin [laughter] you guys energy <unk> looks like and legal how did you Celanese Simeon Gutman [laughter] cumulative should go to whole Fortunately on introduction to Incent JV the times for the June .

Well design, so that should all male gushing different mutations, hoping they'll go that pizza. So that you think totally totally woman again, you don't really tough one engine on the consequence entertainment say into each cohort, but teaching fourth we will not be on Washington, So thats a quick with issue.

Thank you Glen do you envisage ask the question is on what you that pay TV Julio teaching, let's say she said you saw him an uphill going out with half of any higher though to go to Inc. 2019 marks the sixteens years thinks the establishment of Noah.

In the past the 16 years, we have made many mistakes h., bringing us memorable or even sometimes painful experience.

But they also present opportunities to reflect on our practice and makes continuous improvement the lessons that we learn from our mistakes enabled us to make better business decision and understand the importance of preservation and the sacrifice.

North survivals ROE various cycles and the risk dependent on our commitment to common sense by ensuring that all phones are the independently managed the in custodial account.

Without adding practice of fun polling cycle financing MC lease the guarantees term mismatch or utilization of leverage of our mission statement as enriching lives with wealth and most of them.

Meanwhile, we cherish the core values of integrity, and the professionalism climb to certification and the passion they service willingness to adapt as well as high moral values.

Our commitment to our principles and a core values are what's keeping us inspired and motivated I firmly believe that by dedicating to this core values and the principles time will fuel the resilience of Noah and the wealth management.

[noise] so highly density Shambo Shen downwards since you know I see unfolded. So fearful grandparent, John do you Tivo Alco sale for you to pensions and you said 13 TMT to health plan that you make one national office, so quite GE in Georgia, and Josh also tell you I only all make one shank ensemble Assembly.

So we feel quite you said that says.

Hey, Tom Daschle Shank. Once you do conference also that you took ownership tiny and general constantly going off Andover footwear Lavanya shall we can't wait engines is there any time soon be that how do you see all lets out by higher Michel if I recall has the rutile, Arkansas switching so that when they shouldn't that I'll Cook other Shin CFO entail wenjun sitting hotel function.

Hi, James on the event this and they're going to the banking team, Phil let bendel, well, who tend to go out in those when should you wish I'm sorry, I forgot your shall we go through the full tool could change with the she it so and hedging whole each person.

Finally was mixed feelings I would like to announce that Shannon is leaving the from and the pursue a different career path in the new industry as of this marks our deputy CFO Graham pen will assume shows responsibilities as our CFO .

And was a former partner of Demoing China's a member of National account in the first expert group Hey, how certified public account in the qualifications in the United States Hong Kong as they are and the mainland China.

I'd like to take this opportunity to express my gratitude for shines our outstanding contributions to Noah since joining us in 2011, we all highly admire shots on as the personalities strong execution capabilities on favoring dedication in the P. Eight past eight years and affirmed determination to follow through on every task.

Even after he decided to explore new opportunities in another industry.

As professional and the responsible as ever leaving his duty only after helping us a wrapping up a few key issues and located according to buy the CFO replacement, everyone at Noah, including myself. The plead respect his professionalism responsibility and the devotion to the company.

For life. This thanks, Shannon again for his efforts and the devotion to Noah and wish him all the best in the future.

Thank you Madam Wang AD spend in order to work for no. Other past eight plus years as mentioned I'll be pursuing new endeavors outside of the financial services industry.

I'm confident Grand will continue to strive for excellence in his new role, especially with Investor Community Lastly, I am proud to have been part of the Miller team and I wish everyone. The best [noise].

Thank you Shannon and Hello, everyone.

Before I dive in this quarter's results I'd also like to express my gratitude show and it has been a great three years appear at working with them side by side, it's always hard to see a friendly but at the same time I'm also already excited to see him succeed elsewhere with his talents and experiences. Thank you and we will.

Yes, you are the best chance.

In the past quarter, we did travel stretch of Trump bump erode, including the product transformation.

Camping incident, as well as global and regional Turbulences, but I'm pleased to report a solid steady financial results for third quarter, which fairly demonstrated the resilience arising from a revenue structure and continuous improvement operational efficiency.

For the third quarter. Our total net revenues were RMB 842 million up 0.4% year over year and down by 3.4% quarter over quarter.

non-GAAP net income was RMB 353.7 million.

Up to 23.7% over the same period last year and 34.3% from the last quarter, showing earning power arising from business diversification.

Now, let me take you through performances by revenue mix them by segment.

If we look at the type of revenues on the onetime Commission revenue due to the fact that we stopped offering private credit products in this quarter onetime Commission revenues of this quarter were RMB 150 million down 35% comparing the same pure last year.

But keep in mind in that period last year, 80% of the 22.8 billion.

80% or 22.8 dealing with private credit products now if we do a comparison apple to Apple the transaction values. This quarter actually increased by 119% from the same period.

More than that would distribute it RMB 6.9 billion of standardized products with the 74.3% increase quarter over quarter. The transformation has started showing good momentum.

On the other hand recurring service fees were RMB 521.6 million up 9% year over year, where the further proportional growth to total revenue.

The key attributes of the growth were primarily incremental total am as well as fees arising from accelerated repayments of certain credit products.

We're also delighted to report that this is the 22nd consecutive quarter that we have recorded performance based income for RMB 42.7 million.

In addition revenues from other comprehensive financial services to our clients is also growing.

This quarter revenues from lending and other services for providing value, adding service clients were RMB 132 million grew almost a third 33.5% year over year.

The temporary pressure on the onetime commission revenue caused by product strategy shift.

Alleviated by the growth in recurring revenues and comprehensive service revenues, which led to an overall slight increase overall rate.

[noise] from a segment standpoint wealth management business still the number one revenue contributor alone accounted for 64.4% of total revenue recorded total revenue of RMB 542.3.

And down by 6% comparing with corresponding period in 2018.

Asset management business achieved revenues from RMB 240.4 million recorded a strong growth of 21% 0.1 year over year and accounted for 28.6% of total revenues.

The continuing growth of asset management business and performance based income also demonstrated our well enhanced capabilities of active management assets and investment capability.

And how having a steady case of AIU M helps the business, we're a choppy cycle of economy.

Operating profit for the third quarter was RMB 234.3 million down 7.0% year over year.

Operating margin was 27.8% comparing to 32.3% year over year.

The decrease can be mainly attribute it to a higher SGN expenses of RMB 104.5 million up 74% year over year.

The majority of that increase or generated by litigation and legal expenses that we have incurred as an effort to preserve and to recover assets from the counseling incident.

Meanwhile, we continue to focus on improving our operational efficiencies by limiting the number of nonperforming personnel, both in the front and back offices.

During the third quarter the number of total employees declined by 6% and total compensation benefits expenses decreased almost 10% correspondently on quarterly basis.

We also adopted stringent cost control focusing on eliminating unnecessary business travel and internal meeting.

Conferences.

non-GAAP net income came to a single quarter historical high 354 million would be adjusting items of share based compensation expenses 21.3 million as well as 140 million of gains realized upon the sales of our investments in equity securities.

Now with the effort made to improve operational efficiency, one of our finance strategy strategic priorities also to improve the asset turnovers and liquidity with sped up the collection of accounts receivables this quarter, which declined by 12.6% sequentially and with the proceeds received from.

The securities.

Cash and cash equivalents have rising about 800 million.

The debt asset ratio has being lowered to historical low of 16.4% with no interest bearing debt our book.

We believe we have built a robust balance sheet that is ready to take us through the cycle of economy, that's still with filled with unknown challenges.

Oh, we're very happy with the results of third quarter and confident with the firm's future performance on the back of our comprehensive service offerings as well as diversified revenue stream, we're confident about maintaining the previous guidance for the war for the one to 1.1 from one to 1.1 billion Nunca.

Net income for the year 2019.

No we're ready to take questions [noise].

Operator [noise].

[noise] now.

The session.

To ask a question press Star then one touch time.

If you're using a speakerphone please pick up your handset before parsing the case.

If at any time you question has been addressed.

I would like to withdraw your question. Please press Star then.

I would now pause momentarily.

Your first question today comes from it Kathy.

P. Morgan. Please go ahead.

Good morning.

Hi, good morning.

Thanks.

Thanks for giving me these opportunities as the first question.

To maybe the first one is on the Hong Kong business.

New from Hong Kong.

But we Q. So I'm wondering like first is that as it related partially to the true unrest in Hong Kong and what does the trends going forward and then.

Maybe to what you have.

Well so far.

Good thing is the credit because we know that that says this very.

Shop crop and well that's the Q.

It's <unk> may be careful stuff withdrawn also.

[noise] I'm just wondering what are you going to truly be all about that I saw that.

Strategy are you looking to retain some of the good quality one.

Going forward and then also about what is the trend.

Wealth management so.

And ladies.

Credit products, so far in Fourq <unk>.

Thank you Catherine.

Let me translate into two questions to Madam Wang and group President then we'll get back to shortly.

Okay.

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He said.

Okay.

So the first question Oh met him one comment is that.

In the association with the social unrest situation being Hong Kong.

It did not have a lot of impact on the asset management side.

Actually our main business in Hong Kong is the raising and distribution product.

In terms of the insurance as they actually requires a physical visit to Hong Kong to finished the physical check. So it doesn't have a short term impact on that I would you have backup plans I were actually undergoing the plans to actually establish a and obtaining the licenses from Macau and.

Singapore, which we believe will provide a good alternative to our clients in terms insurance product.

And on the credit product side on yes, we have made a strategic choice I would completely moving away from the single counterparty credit product as you could see this quarter, but a you know obviously, we're not ruling out that if there is a very good quality of similar products were looking to see if we have.

A different model that would actually how a place that product for our client.

And in terms of the P. product.

Actually seeing very encouraging sign that with a more stringent kyi few requirement lots of milder P.G.P., they're having sort of a difficult days raising funds and also the fund distributions are concentrated for the top GPS, which we happened to maintain very strong relationship with these.

Top GP. So we believe that a one is that we're continuing to demonstrate our conventional spread income distribution for the PE products and we're actually seeing a growing trend in terms of distribution fees for the top GPS as.

You know the services where have to put in place.

To come to comply with the strange NK why I see as well as you know the a follow up services for claim but were seeing a good signs in terms of P. distribution.

I hope that answers your question Kathryn.

Oh, thank you.

Well up question. So I'm sure most product does it does it include like.

The consumer credit really the product.

And also that like late in goals all right. What is the solve all small credit products do in gold.

[noise] six hours either.

Sure.

Okay. So is that on the non credit does that include the consumer credit but you.

You have with my something wrong, but you corporate with.

Does that include non type product. So the second question is that.

Your goal for a you Ed what it does yeah, Oh no credit.

With that because I assume that those once they reach maturity that you can go over right. So I just wanted to see what is the potential downside on on on the asset management business as well. Thank you.

Okay.

[noise].

[laughter].

Thank you Catherine the the answer to your first question is yet.

On the non standardized, especially a were strictly speaking about the single counterparty private credit product.

Includes consumer financing product like Jewish in my sounds like you have smashing.

And the impact on the go for a U M is primarily on I mentioned before that the chance in the U.M. mix that is going to shift basically from a especially the single counterparty credit product shoe standardized products.

In that particular categories. So the remaining duration for the a private credit products is probably between you know 12 months to 60 month.

The original terms so for the remaining products were seeing a hopefully completing a coming down to a limited amount in the second happened that next year and then the same time that distributions for the standard <unk> products are climbing up and I'm, hoping that growth in the particular.

Our standard size products will take up a little bit of space for that.

Void sort of in the U.M. for Gopher.

Sure, so I'm not close or the on doors Shafi, given a lot chief digital on how many you realize little defensive Oh the ABS.

I don't think about that attempting that how I'm just wondering could you can do so does the you can't say valley. So tempting to two data I want me if you might even one of course you did how many ofi, how often do that media about allocating got into our me accrete idle time. The go more the to the idea I don't think a doctor will do the Cogen cannot yeah. Thank you do.

Hi, John D. The UN Paul Knight here too. So this is yes, we do indianization gosh, the ones I'd say he wasn't doses and those guys without that I think the bouncing back on me and does it go cone Jeffrey Dahmer, just kinda and how he led the way more and give them yeah. So yeah. It's helpful fashion that.

So truly anyone supplemented that during the transformation in the third quarter, Oh did rolla did realize that there is still very ample room in terms of standardized phone market and with the a strong counterparties that we have worked with in the past for example, just hand Marcia.

And they also have being issuing public ABS it.

In the past and we believe if we do you know im looking to that are satisfied with the quality of those products. We believe on the public it'd be a side, we'll be able to partner with them from a standardized bond fund side.

Oh Woman's AD Union yen, which was Angela does a shrinking the time day by <unk> go ahead of time dollar Diane Joshing team want me, it's really hard home that just put out a division be tentative glioma seasonally I'm just glad he did a deleveraging the rolling out one Sean and go kind sort of Tevens yeah.

Yeah. We have also added a in house credit rating team.

And since the beginning of this year I also adding the research teams.

To enable the researching ability for the standardized bon investing capabilities.

Thank you Kathy <unk>.

<unk> <unk>.

Thank you.

Once again, if you have a question. Please press Star then one.

Your next question comes from issues should we see I see see please go ahead.

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Yeah.

Yeah, Okay for the benefit of the audience our translates to Shaygan question from the ITC. The first question regarding the change in number of active clients in third quarter and he was wondering what is the main reason for the change or do you Chris especially.

Even with which tier the lowest bureau, the hired here of the client basis.

Definitely has a question specifically for surely one about the macro environment I, especially in the downward cycle of economy, and what will be the competitive landscape.

The next few quarters.

Yeah, I hope I recap your question Okay.

Thank you.

Okay.

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Okay.

Let me translate the first question as well for the.

Previous sort of a.

Criteria to define the active clients, who actually only included clients with transaction single transaction values over 1 million, but now we're transforming to standardized products, including the mutual fund. So sometimes are transaction values may not be over 1 million, but if we do include that.

Particular group of clients. The total number of active client is actually close to 10000. It's 9961. So that's actually a indicates a pretty good jump from the previous period.

And also if you look at our core group of clients are the higher to your clients which is.

On the Black card client pick them as example.

I actually have the increase of 7% from the same care last quarter, a and their actual average am or a with US is over 90 million. So if you look at the top tier clients or the total number.

Active clients actually showed a pretty good trend of growth.

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During the you'll see that.

Okay.

So.

On the topic of macro environment as well as comp competitive landscape.

I would believe actually the situation or environment now is the actually helping us in terms of competition.

The first important reason is that investors are gaining deeper understanding of this financial service industry in the past and they actually started to appreciate companies like us who continuously being transparent transparent and disclosed risk risk or.

Sometimes.

You know.

The things went probably not doing perfectly but they are gaining more trust for this though for this type of clients and for example, after the camps to answer then we'll have started a sort of a group to initiate the one on one discussions with our clients and I believe we're pleasantly surprised that.

A lot of our clients are getting more and more matured in terms of where the knowledge of this market.

And they understand especially on the risks associated with the investment and secondly in terms of competitors, especially from a maybe some security brokers or some brokerage firms that were seeing recently or they are being quite aggressive to be honest, but where I.

Then about remaining the competitive advantage from Oh size is that one you know where obviously, we're having the first mover advantage, a and we're having pretty good customer loyalty and up stickiness with US and third is we have a very stable group of elite arms that will help us.

Through this particular cycle and the three things were doing are focusing on to maintaining that competitive advantage is a one one continuing focusing on the investor education and two is to train up around especially on our confirmation of new products and I see capabilities.

As well as you know continuing strength in on the product strategy [noise].

[noise] situation.

Oh petition.

[noise] yeah.

[noise] [noise]. This concludes our question answer session.

Has now concluded thank you.

Today's presentation you may now disconnect. Thanks, everyone.

Yes.

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Yes.

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