Q4 2019 Earnings Call

Yes, sir. Your name, please?

Mr. Brown your company, sir.

Thank you, sir. You'll be on hold until the call begins.

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For today's agenda. I will first share my views on the micro-economy and then Briefly summarize nervous overall performance for the full year 2019 the development of our business office and the gangs and challenges during our transformation. Our CFO grandparents will follow with a detailed discussion of Noah's for year and quarterly financial performance. We will confirm the call with questions and answer sessions the past the 2019 was a tough year for Noah where the canceling incidents has tested the bottom line of our business ethics and operations Thursday. We didn't expect that twenty-twenty poses an even bigger challenge or more ultimate Challenge which tests our attitude as Humanity when facing a crisis that's threatening our lives at this point. I'm very grateful for having experienced the canceling incident in 2019, which has become a gift with a profound influence on North strategic decisions.

Because of The Incident Management teams reflected on how we started through listening to the voices of our employees and clients to understand the real demands. We're thinking more about this vision and business plan for the next five to ten years. Therefore we're able to reach a clear consensus and what we should persists in our core strategy for the long run and will show off we should abandon immediately starting from the second half of 2019. We determined to terminate single counterparty non-standardized private credit assets, totally entered the field of a standardized product concurrently. We shifted our operations from offline to online such initiatives and efforts have fully prepared us to confirm the difficult situation in 2021 containment measures such as men they travel travel restrictions and longtime telecommuting deployed to combat the sudden breakout of birth.

Covid-19 academic next I will go over Noah's 2009 performance in 2019 High Revenue reached Raymond, 3.39 billion up 3.1% year-over-year now get net income attributable to shareholders reached Raymond big one point four billion up 2.7 year-over-year 2.7% year-over-year in terms of cooperation of results. They're transaction value of financial products for the wealth management segment was remain be 78.5 billion the AUM of our ex management segment continue to grow reaching and 170.2 billion among which private Equity Investments reached Raymond, B104 FM 104.9 billion. We distribute to the trimming the 26.4 billion of standardized products for the full year up 93.9% year-over-year after we dead

Stop offering single counterparty non-standardized private credit products. The transaction value of standardized products in the fourth quarter was close to running be ten billion representing a significant increase of 580.8% over a year and 30.4% quarter-over-quarter. We can continue to optimize an upgrade Noah's bulb Mutual songs from smile in 2019. The transaction value of mutual funds increased by Raymond B16, 16.4 billion setting a new distribution record for a single year and a single quarter considering the internal and external challenges. We faced with satisfied about such a treatment in 2019.

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Oh, yeah, she went send the change was on her. She's a woman killed but nineteen academic this year transaction value of standardized products maintained an encouraging growth momentum. It demonstrates the initial success of Noah's paradigm shift on the product, We will scale up investment to consistently it systems and operational processes. So as to continuous optimize clients experience. Meanwhile, we have launched a new relationship manager compensation scheme that emphasizes on um, based compensation with an adjusted incentive plan to align the interests of woke up managers Noah and clients. We believe such assessment forms a win-win situation in enhancing clients thickness and relationship managers loyalty to the company wage.

A 2019 Noah's high-net-worth client base continued to expand with over 35,000 active clients for the year up 27.7% off the year which included mutual funds clients. The number of ultra-high net-worth clients Black Card members with per capita assets under management of overwhelming a million also continued to increase up 14.7% year-over-year for 2019 on the wealth management segment. We have established a VIP Center to Super clients and continuously improve the conversion rate of black high-tops clients. Thanks to the Strategic transition to standardized Products off almost all of our business has shifted from offline to online during the covid-19 epidemic 100% of orders placements by our clients are made online.

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Online business in addition to we have also studied know as clients by their behavior patterns and divided them into three categories discretionary prestige management specific product-driven and self-service transactions. We can see that the numbers of all three types of clients have increased for overseas bank statement that revenues increased by 25.4% to nearly women be 1 billion accounting for 27.9% of the group's total revenues as compared with 25% in 2018. Un reached Raymond be 24.8 million, sorry billion in 2019 accounting for 14.6% of the group's total, um, remaining flat compared with 2019. Sorry 2018 with no as increasingly comprehensive service offerings. We are strengthening connections with other clients globe.

With an in-depth understanding of their intrinsic and long-term wealth management demands.

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That's all. I'm trying to forget may go to the end of 2019 and reach the remedy $170 a month and among which of a voluntary decisions is offering single counterparty. Non-standardized private credit products cost net decrease of rumon be ten billion in a um actively managed funds have achieved different levels of growth in um, specifically of standardized products represented by the public Securities products increased by 15.3% year-over-year and the AUM of a multi-strategy has raised by 31% year-over-year. We also achieved solid growth in our conventional products. I'm trying to activate for public Securities products Coastal focuses on large asset allocation and pursues low-volatility and absolute return which are high net-worth clients. Yep.

In 2019, the investment return of go for public Securities Flagship force and Mum plant was up by over 15% our quantitative for realized a 34.8% return with a low volatility of 3.8% among Gophers multi-strategy funds the smart better index enhanced strategy really and quantitative strategy fund has generated a return of 30.1% in 2019, since it's launched. This product has generated excess returns for 82% of its clients all the package for mrs. Reflect Gophers continuously strengthened investment and management capabilities in the field of public Securities products at the same time. I would like to clarify months behind that was clients still have strong demand for our vcpe and real estate products, which are also our featured products that traditionally had strong performances dead.

We have built a Stella brand image in the market. Our product strategy shift to standardized products does not represent giving up on other advantages in these product categories month. We will continue to optimize and deepen our co-operation in this area to enhance our advantages specifically will keep enhancing our brand and in fact through collaborations with the best alternative investment managers and working with the best alternative investment team in the United States to strengthen our globalization approach. Kissimmee. You shall be fined man. I mean you doing something wrong you didn't know saying ma'am.

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She told them in terms of operational efficiency total operating expenses in 2019. But I mean be 2.4 billion up 4.3% Year-over-year non-gaap net profit margin was 30.6% which included one-off expenses of Remedy 163 million as a result of Canton, Georgia legal.

Expensive if excluding these one of expenses the net profit margin would have 35.4% showcasing great Improvement in management efficiency reflects the efforts made by the management in streamlining operations. Noah always believes that talent and professionals are the most precious wealth of the company and has been screening Elysian ship managers our relationship managers contributed to most of our Revenue generation capacity while the turnover rate was only 4.1% in 2019 down 0.5 percentage points compared with 2018. We will continue to strengthen the professional capacities of our relationship manager key and provide excellent investment advisory service to clients.

The goal of our transformation and you positioning is to be a platform company that provides comprehensive Financial Services to clients with advantage of serving high-net-worth Club. We're expanding our reach to a broader client base through the internet. Both our products and channels are open to our partners applied from Noah's direct sales team opening China's is one of our future strategies. We're continuously enhancing our internal resources through optimizing and recruiting relationship managers and construct our VIP Center which serves super client simultaneously, we are cooperating with banks distribution channels and serving more independent financial advisers as part of its overall transformation strategy. The company has decided to further increase his investment in writing infrastructures and online platforms development this wage.

Primarily consists of the major upgrades of phones my lap the construction of the global version of from smart app and the creation of a new star system for institutional changes on each one. You have any defense lawyer took $20,000 off? Well, my guy so dollars she's out.

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She teases in 2019 the paradigm shift in China's wealth management space was well underway. No one was determined to lead the old track. I entered a worldwide recognized new Arena. We believe that the wealth management marketing China is full of New Opportunities. We're facing new environment New Market and new clients as well as of refresh the market landscape and up and up.

Grated mechanism of operation most importantly through crisis know squat team has gained a more profound insight into the industry. We spend a lot of time and efforts in Alliance just of our employees and clients. We have repositioned the core management capacity of go for management to focus on comprehensive effort allocation pursuing products with low volt an absolute return that are welcomed by hand with clients. We expect huge Market potential in this area at the same time. We are delighted to see that with the illusion of choice. It guarantees been broken and reformed on the financial supply-side. The market has rapidly presented new clients demands, which is even exceeding our expectations on the page management products and clients wants previously. We have completely stopped offering private credit products. Our transformation has just matched clients new demands there for our products wage.

Received welcome reception and recognition the transaction value of standardized products driven by client strong demand demonstrates promising momentum and the trend of our transformation and which further proves of a strong pressure resilience and resistance. We believe that a successful wealth management and FM management companies shows for features, excellent performer cyber fight products broad distribution channels and significant not a single feature can be emitted. Noah has made many achievements in the past fifteen years and most important of which was the establishment of the price of the product platform and direct sales channels that are open to the globe in the coming decade. No one will continue to understand clients evolving needs pivot around clients interests and improved stability of our performance in the mean time. We're opening up our channels to promote wage.

Our product from direct sales to selling on a commission basis and to serving independent financial advisers with a goal of constantly expanding of aliens with 17,000 phone for the top of time including her condiments eating lunch with the chili dog. So she eats and she's yeah, she's young woman dead.

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She may have pressed plus button on normal daily operations faced with this unexpected situation. We are deeply aware of the importance of online operations and the role of dog capacities in Noah future development online transaction capabilities of standardized products will be the key area of our strategy investment going forward during the epidemic with diverse and sufficient leading products supplies. We have a field demands of our clients in addition. We also introduced a variety of online investor education activities to enhance client.

Stickiness such online activities have covered five hundred sixty thousand people and help us enhance interactions and relationships with other clients during the academic these practices doing the covid-19 outbreak also demonstrated the resilience of our business under Southern crisis. We also remain committed to our social responsibility and have donated cash and valuable medical equipment to who they Province through Shanghai no foundation and the beginning of the epidemic outbreak finally. I believe the covid-19 demek will eventually be contained and life will continue. We're about living as the minimum yet optimal strategy for ourselves families and businesses. The epidemic is likely to accelerate economic recession, but Noah has already set the bottom line. We have a strong sense of Crisis, and we're also firm optimists.

Becomes an incident and the covid-19 epidemic have served as a wake-up call. We cherish the opportunities to implement fundamental changes to our work life and spirit our perception of Life financial industry of a families and other core values. We all be recalibrated based on common sense and intrinsic quality. We were emphasized a family and community-oriented wage agent and healthy lifestyle instead of glorifying lavish entertainment. We also aim to become real Puritan entrepreneurs to accumulate to save money and to contribute as much as we can with honesty dignity discipline self alert fortitude and extraordinary perseverance, as our core values these valve that will allow us to overcome future challenges rise above corruption and tasteless Indulgence driven by Basic Instinct and restore order reason Simplicity and space. Yep.

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Life we're confident that such changes will enable us to remain focused on our long-term goals instead of opportunistic tunnel visioning and short-term results.

Having experienced this unprecedented epidemic. We are confident to become a better firm. We will Reserve strength in the downturn for future development just as we need to score before wage or what we're examining our Mission Vision Values and our organizational as well as human resources. Keep you guys through the crisis. We determined to realize that overall in-home operating concept and mechanism Human Resources technology product and Market in 2019. Noah entered the vast and competitive landscape of products from a small Market centering around alternative Investments have a rich experience in the industry mature Market relationship managers and clients and the management in-depth understanding and knowledge of the wealth management industry and client needs all enable is to provide Superior Services to high-net-worth clients.

20/20 will be a new starting point for Noah and we are confident in our development going forward. In the meantime. We firmly believe that no one's transformation is in line with a dead end of wealth management and management industry in China with a gradual containment of the covid-19 epidemic in China. We can say that we have not wasted this crisis.

Thank you. So, thank you Charlie for sharing across and this is Grant D Masters in Dallas. Good morning.

Today we're certainly when is in lots of turbulence has in recent World economy as well as the coronavirus pandemic, but when we do look back the year of 2019 our rep showed signs of changing and challenging business environment that ranged from the Sino us trade friction the Hong Kong situation and other geopolitical issues.

On top of the external he'll wind we underwent a major transformation in our product and service strategy this last quarter, which is quite a three we see the offering of a major product issue or a single counterparty non-standardized private credit. It's a really long time. So I'm going to refer that as SD credit going forward products that once accounted for its high life over two-thirds of the transaction values in last year. However, it's here lady one has already mentioned. We managed to deliver solid Financial results for the full year and Achieve our life for 2019 reporting a non-gaap. Net income of our MB 1.04 billion up 2.7% and net revenues reached our MB 3.4 billion up 3.1% year-over-year when this growth may appear modest comparing to our previous years, but considering the obstacles and changes we had to go through and overcome wage.

Get here management very happy.

You with the firm's resilience and determination now, let me take you through quickly further details of financial results as well as performances for the fourth quarter.

The revenues management fees and performance-based income which reflects our asset management and investment capabilities reached nearly RMB to billing for the year up 2.1% specifically management fees increased by 3.9%

On the other hand, we experienced pressure on the one-time commission Revenue due to the discontinuation of the offering of SSD products transaction values decreased by 28% year-over-year to RMB 78.5 billion which led to RMB 924 million commission revenue or 9.4 lower than last year.

The transaction values for the fourth quarter, however, stabilized at thirteen point two billion following thirteen billion last quarter. I mean quarter of 2019 and I'm also happy to share that the upward Trend in the transaction values is much more obvious in the first three months of 2028 speaking of transformation to standardized products. The amount of standardized product distributed increased by 94% year-over-year to RMB 26.4 billion showing a very nice positive sign for the client's acceptance towards the new asset class.

If we do an apple to Apple comparison, excluding SC products for both years. The transaction values were no one's other products reached R&B 4444 down to billions in 2019 increased by 28% from R&B 34.5 in 2018.

In terms of earnings for the full year 2018-2019. We realized non-gaap net income to Noah shareholders of our MB 1.4 billion up 2.7% Margin remain flat compared to the previous year at 30.6% But this number probably doesn't reflect complete or real picture of the the effort and the result we had achieved in increasing our operational efficiency this year.

We did incur one of expenses of R&B hundred sixty-three million or 4.8% of the total operating margins can be attributed to wage expenses that incurred on campus in case as well as allowances made an account receivables in associating with canceling.

To elaborate on the rear coil packs strengthen policy and smarter traveling has cut our traveling conference caused by 15% year-over-year and as some of you may be aware of where we commenced the consolidation and simplification of internal organization structure that brought down our total headcount from by 13% from year of 2018.

When it comes to the balance sheet as a result of continuous effort to increase the turnover of access.

The balance of accounts receivable decreased by 11% year-over-year to mind you that's on the back of increasing Revenue are currently should still at 4.5 with a dead a celebration of just shy of twenty percent and our net assets reached our MB 7.87 billion up 27 up 27.4% year-over-year wage, and we don't have any interest bearing debt. I think it's fair to say that Management's consistent effort in preserving capital is one of the reasons that we're able to afford a major transformation in the middle of a year as well as to withstand, rainy or even stormy days if you will as witnessed by today's backdrop of a worldwide uncertain economy as well as coronal mass index.

For this quarter like at mentioned before the transaction value has stabilized at 13.2 billion but management also acknowledges that recovery to full capacity would take some time besides the sheer amount. We're more delighted to see the initial sign of success in the standardized products reached just shy of ten billion up 586% year-over-year and 30% growth quarter-over-quarter, which sets a record in this product category for a single clutter transactions.

So after the transformation took place in the third quarter 2019, we had raised a total of 17.2 billion worth of standardized products for the 2,000 in the second half of 2019.

Affected by temporary decrease in the total transaction matters the revenues for this quarter will be $781 down 5% year-over-year, but our revenues from Wisconsin missions continues to face the most pressure during the the quarter for our 2019 recording a 33% decrease year-over-year, but if it compared to the last quarter wage, the quarter three, it had recovered to RMB hundred sixty million actually a 6% increase from the third quarter of 2019.

This quarter's revenues from recurring service fees or management fees if you will and performance-based income increased by 14.6% year-over-year to R&B 530 million driven by our long-term dedication to strengthening our asset management and investment capabilities.

Return service fees increased by 4.5% year-over-year as a result of the continuous growth of a um, it's also worth mentioning that out of the RMV $58 million performance-based income this quarter about 16 million out of that comes from standardized products managed by external managers. It reflects our ability to affect outstanding products and create value in return for clients as well and as a manager,

Compliance with regulatory guidance. We actively reduce the landing business volume this quarter resulting in a 16.3% year-over-year decline in other service fees.

Operating profit for the quarter was a hundred twenty million comparing to R&B hundred sixty million statement. Last year. But again, I'd like to remind you that one of expenses as I mentioned before got a recording this quarter was about eighty million. So actually excluding that we would have had operating profit of R&B two hundred million.

The after-tax net income for this quarter was R&B hundred eighty million non-gaap. Net income was the same number hundred Seventeen million representing a decrease of or $107 a year over a year in addition to the changes in net income itself. The difference also comes from non-gaap reconciliations for the two. That includes oil changes and Equity Investments as well as share-based compensation that two amounts contributed around forty million to the difference cheerleading check out through quite a great details in business segments. So I would go light a segment based analysis on this car, but just to highlight a few points for the wealth management segment wage revenues rising from the value-adding services that's classified as other revenues for the year while R&B 220 lb of 96% year-over-year demonstrating our ability wage.

To satisfy our clients comprehensive need for service other than purely Financial products.

And I'll ask the management segment continued its trend of high net profit. Margin that was recorded at 50% for the year 3% higher.

For the oversee business net revenues increased by 25.4% to nearly R&B R&B 1 billion for the year accounting for about 28% of total revenues. So it really reflects the progress and execution of our global positioning strategy.

Lastly about the Titans. I'd like to remind you that the guidance we put forward in the 6K reflects our best estimate as of now of how the coronavirus pandemic would impact business, but uncertainty remains depending on when the travel bans and normal social order will be restored as some of the oversee area because some of the oversee value-added Services we offer to our clients for instance Insurance Services actually do require physical visits to the oversee area. But from what we have seen so far in the first three months this year, we expect the impact on conventional Financial products sales to be limited and we're reasonably reasonably confident under-recovery or even moderate growth in total track from that was 20 planets.

in the meantime

We're determined to make our transformation a long lasting success and will further increase our investments in buildings. It infrastructure system platforms as well as investing tens how management has laid out very comprehensive plans on these initiatives and estimate that investment account for between 3 to 5% of the total net revenues.

Last but not least responsible investment has become a global Trend in China regulators and institutions are also actively encouraging adopting such approach know I have completed a m e s t initiative since 2014 and it was included in the msci index and msci overseas China index in 2018. And in 2019, we have implemented ESG into our group strategy development and corporate governance. We will continue pursuing sustainable growth in EST in 2020.

I operator that's the prepared speech part.

Yes, thank you and will now begin the question-and-answer session to ask a question. You may press the stars and one on your touch-tone phone if your speaker phone no, please pick up your handset before pressing the keys. We try your question, please press * then two at this time. We will pause momentarily to assemble the roster wage. And the first question comes from reason wrong with clsa.

Okay. All right management. Maybe I will ask the questions in Chinese first and I would translate it into English. When is your birthday song go in and have one of each month and see what kind of work did you want me to go where you cook with its engine has should be okay at the time. I talked to Joseph Choi.

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Don't want my friends page now. It's I sound kind of in a condo to rebuilding my time can see? Okay. So the first one is on Works package payment. Uh, so on appeal On Cue basis with think that uh, the transaction volume active card has been on a decline insurance. So with that maybe two reasons wage because of the increasing the relatively fast increase of active clients, and certainly they may maybe from our strategies

We focus on the standardized products, but we want to hear more from the management on these issues that will help the investors and my second question is on the timer go faster management side Q mq basis or in the fourth quarter the total AUM has declined. So we want the reason behind so that's what credit card that's the other has also declined. So, is there any special reason behind this? And my cell question is the combination impact the manager has a Chevy that you on this but understand more about what Management's side because Noah has been focusing on the standardized products and we understand that in the first quarter this year. The domestication Mark has been very strong. So I wasting any strong growth in a standard product sales in first quarter birth.

Thank you, Ethan. And thanks for translating your own questions as well. I'm going to take the first two questions and Charlie. The one will be adding a little bit month or thoughts are the Cog nineteen part. So I think you actually pointed out pretty accurately in terms of average transaction value change in the fourth quarter. Yeah, we do have more active orders if you will on standardized products in this quarter. So as you you can actually see that are active clients for the call. She reached $15,000 but you know as the feature of the standardized product the average purchases probably not as high as the conventional for example, the p e r or some of the credit products. So that's one of the reasons but the the active the level of activeness that were like to see is definitely showing the wage.

So that's a very encouraging sign as well in terms of the shift in Gophers. You're right the majority of the shift actually contributes to mujhe Teri and actually accelerated repayments of the credit products and the to decreases in actually very slight decrease in p and am product or normal and aspirations as we have recorded carries or performance-based income for this quarter. So one for the real estate peace wage and the other ones for the equity piece.

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I don't know if you answered that your first two questions. If if it does I can probably start on the third question in terms of the pandemic situation.

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Yeah, because we actually because the impact on the traveling so we didn't hold the diamond conference that as originally scheduled but I guess we got lucky that the real strong performance is share market as well as the equity Market really stimulates the passion of clients, you know investment needs demands during that. So we actually prepared to move lots of the conference's as well as knowledge-sharing online that maintains the level activity especially interaction with our clients doing that. So, it doesn't seem that the virus situation that impacted the level of activities between especially arms interaction with the clients so much and we're actually very happy to see the distribution or transaction value on them fight exceeding expectations originally.

Okay, thank you. Yes. Thank you and the next question.

No, ma'am. What's the temperature 152 the house have one here with the operating profit a.m. Till 6 a.m.

Okay, thanks. Mr. Shrimp and let me translate your question first. The first question from cic see Mister. Is that for the wealth management segment? We do have probably higher decreased speed operating profit than the Declaration on the net total revenue off. So the reason is really because of the one-off expenses that's really was mainly attributed to the wealth management segment. So basically the camp scene related legal fees as well as some of the accounts receivables allowance was recorded in that particular segment. If we do exclude those amounts, the actual operating margin was slightly higher than the same period in 2018. So there was basically to be concise. There was one of expenses recorded in in the wage.

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In terms of the investments in it infrastructure. So we had a pretty long stretch of discussions among the management. I guess also thanks to the pandemic situation that people cannot travel. So we're able to lock everybody in the boardroom to have extensive discussions on the Strategic transformation and lots of time actually took it to the strategy how to enhance our clients experience user experience as well. As you know, the arms user experience on the online Platforms in our main platform for the standardized products is called smiling fund app as well. As you know, the continuing Investments to enhance that as well. As you know, once you deal with the standardized product the transaction volume at probably goes from 200 300 orders a day to now $20,000 or $15,000 a day off.

We actually wanted to make sure that infrastructure from the capacity standpoint as well as the security standpoint. I can handle that kind of transaction volume am also actually being in investing in the global version. If you will smiling fun app in in Hong Kong and we already started a team of thirty people wage and started the initial launch of that particular product. It depends on

Thank you. And the next question comes from Katherine Lee with JPMorgan.

Hi Katherine. Hi. Hi, good morning. So I have two questions at the first question is do on product on your standardized for the can you give us more details on say for example, how is it different from the standardized product offered by like say China Merchants Bank or other like auto manufacturers like the Bangkok the second thing is that in terms of like say there's a sufficiency and then the management fee of this standardized product. How is it like, can you give us more details on that and how does differentiate from like say the non-sense product that you offer before? So this is the first question second question is do on the camping case. Can you give us some update on like say what is the progress with the legal procedure? And then what should we expect that? That would be like some kind of verdict from the court and also that wage.

On Cline activities like can you give us some color on like say for example, what's the percentage of affected by the Camden case has already Place new orders off the sentiment and then also the reactions to this case so far. Thank you.

Thank you Catherine. Give me a couple of minutes to translate that question for everyone. I'm sorry for this side. Just 1 second.

So for your first question Catherine, let me address. The first one is the in terms of the subscription fee rate or the revenue structure from the standard not respond. We have mentioned before I guess to give everybody on the cloud back one. It's when we first started the transformation to standardized products in the third quarter of 2019 off the main product referred to the standardized bond funds and for the standardized bond funds. Typically you would only charge management fee without subscription fees. So I guess the total revenue side was slightly lower than the SD credit products, but right now actually developing quite a few products that would provide people with more a little bit more balanced portfolio. So it basically have $50 or $20 you have a little bit of a stock favor flavor in that particular product. So we're able to charge a dead.

Distribution fee classic 1% distribution fee and depending on on the manager. We actually are typically able to share about fifty basis points to speak with the manager. So basically the entire product will have increased sort of fear eight from sixty basis points to actually hundred fifty or a hundred seventy. So I guess from that standpoint the transformation in products will provide more gross profit to us on that particular category. So in terms of the difference how it competes with our counterparties cmbs market Standard products. I'm going to invite your lady to give us a little more insight on that wage.

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Okay, so thanks fair lady. So the main difference, you know between our standardized product offered to the clients and I you know the CMB also some of the banks standardized products. One of the biggest difference is the holding. You're holding duration. So average holding. For the bank's products is probably between a 54 days. So basically less than 2 months and four know was part that's that we offer to the clients usually have a 3-year lock-in. Three lock down still for one year's hard lock and to yourself plug. So with that longer holding. The class actually are able to benefit from you know, most people that took most of the investors having difficulty making money, even with the excellent fund is the, you know, wrong timing of entering and exit because birth

The ability to actually provide that kind of longer holding. Be good managers the top managers in the market are willing to work with us and because of that it also willing to you know, have a pretty good sharing portion of the management fee with us. And if you look at the Gophers break breakdown about pretty good majority of that as actually assets with longer durations for example has a 10-year holding. May as well as the multiple strategy assets that actually doesn't have a defined period of holding. So usually it's between five to seven years on average. Also, we're changing wage relation managers compensation scheme to be from, you know, one-time commission transaction-based to have more flavor on the um based off.

Decision scheme. So from the arm standpoint, they're more incentivized to sell longer period of products so that we actually have accumulated. In fact, we serve their clients with buene acquaintances, you know, how you could you could just attention back to the cortisone now a woman that, you know, go back from society the code if she's dead.

So in terms of the camping update because of the coronavirus impact the pace of the investigation actually slows down a little bit like I mentioned before it has basically completed the stage of police investigation have been passed to the district attorney. But I guess the processing time length in a little bit because of the recent pandemic impact

But surely they also wanted to share two very encouraging data point one is for the camps in clients about 30% of the client have a separate new orders with Noah and that total amount is about 3 billion. So close to the entire I guess principal for the cam seeing products and one other one is the pollution diary clients that the entire original principal for that Investments about $500 million and also 30% of that sort of clients have made separate new orders were Noah and the amount actually is also close to three buildings. But if you look at that that's like six times of what they had English and product so that really provides us with pretty encouraged sign of clients continuous trust and satisfaction with no way Jose.

Catherine does that answer a question?

Yes, can I pull up with two more questions re on the on the standardized product? What is your average ticket price of the product home because our concern is that would that be substantially would that have a difference with like say the other standardized product ticket size available in the market? So this is for 1 second, is that I'm not so sure if I have missed it in in an announcement. What is your guy probably guidance for the for 2020. Thank you.

Okay.

Calculator me answer the guidance. Yes. We do have the guidance in the 6K and the last paragraph the forecast. That number is between $800 to $900 million wage Gap net income.

Okay, and in terms of the average transaction value of ticket size and your concerns on standardized products or ask a lady to give you a little bit more insight on that bill don't have to tell me how old my Pandora has the flu shot. So you need to come home and seeing a woman's you'll Kendall say a woman to take a bath so you have the identity.

Just a couple pattern has the payment I had to do the job.

When our clients actually make the purchases online, they will go through.

The relation managers and do some self service director transactions on the standardized products. We actually seeing that Trend to continue in the future wage in terms of the average ticket size of standardized obviously comparing to probably private Equity or real estate in the past. The one of other probably will appear lower in terms of frequency as well as the actual transactions that will occur the total amount. We expect that to be higher. I think that's pretty evident. I will be pretty evident when we have the quarter one results come in.

Kathleen

yeah, I think that's good. Thank you. Okay. Thank you very much. Thank you and the next question comes from Stephanie in the city.

Hi, definitely.

I have simply picking my questions. So the first question is just want to understand more about the the driver for your 2026 someone specifically on the transaction value for this year like to expect that to actually drop you over a year. And in terms of the cause of makes an extended project. Uh, we have been pretty good momentum. But once you also, uh talk more about the other projects, for example, the people's thoughts. Are we seeing on the momentum here? I guess over the past two years. She has been relatively muted because of the whole industry Vestal. But just wondering whether you expect any recovery or pickup in the volume for ten cents and um and also like

What would be the overall a u n Roll for this year, do you expect positive and also the next is about the operating margin off since you mentioned you expect to spend more on the it fill out does that means that operating margin of we should see a decline this year actually additional room for you to maybe cut the cost for Hector with with and lastly also want to check on the management fee that we see in the fourth quarter. The management fee is still pretty high like just wondering what's the driver here where the issue is also because of the some early Redemption of your credit card deposit.

Okay. Thank you. Definitely. Give me a second.

okay, so in terms of the guidance the total

Transaction value to not only referring to standardized products, but the entire transaction value, we actually are reasonably confident or expect a recovery or even moderate growth. Then there's total transaction value 2019. So obviously the main drivers come from standardized products, but that's not to say that we're going to be like like we have mentioned before in the speech that we're going to give up or move away or disregard clients demand Equity products as well as real estate products and other traditional popular products. So as a matter of fact, we actually have already put out a schedule of top private Equity managers as well as continue with efforts to find Excellent projects and real estate and other alternative Investments if you will, so I guess transformation I want to clarify again is moving.

Going away only from the single counterparty credit products. We're still continue to offer actually find good products for a class to have especially private Equity, We actually will have a pretty good distribution of a particular big name in the first quarter of this year already and also in terms of Taco Mayo M for gopher because of the continual Redemption as we plan to basically to reduce the balance on SD credit projects for the year. So it will continue to come down it will partly offset the growth in the total a Liam in Ingo for in 2020. So we expect thank you for go for to be flat with 2019 in terms of the operating margin like I mentioned before we actually quite did quite a little bit dead.

Work this year, especially after the second quarter. We would have had operating profit margin have around thirty-five thirty-six percent if we didn't have the one-off expenses as well as right right off of accounts receivable, which we don't expect to have very unusual one of expenses relating to this particular matter of in 2020. So I guess in terms of operating profit. Margin, I'm pretty comfortable to predict should still be pivot around 30% off. We have we have done in the past. Obviously if if there's room for further Improvement, I will continue to do that. I think one of the things that I like to mention is, you know, once the pandemic month started after New Year's Festival Noah was the first one who comes out and say okay we probably want to plan for emergency when we do have very healthy cash flows and profits wage.

but a monster

First ones to actually exercise, you know, the non-pay leaves as well as the senior Management's waiver or even a very significant reduction on their salary month to month. So we're very cautious and on the cost. I want to assure you of that and in terms of the operating fee management fee for the fourth quarter. Yeah. We did have a little bit of the management fee sort of similar to third quarter in the back end, but the number is not very significant in the fourth quarter. So it's still it's a continuous growth of um, especially the growth in standardized products. So the management fee rate might be low for this type of product but the actual growth in volume off for the standardized products actually pretty significant as we have mentioned in the future.

Thank you, Destiny. Can I just quickly follow up on the PE? So we'll say that I feel like I'm improving can you 20 and and that would drive the recovery in the volume or a u n?

Okay, is that a question or comment?

Is the question was just want to confirm.

You wanted to confirm the P also will grow we have.

Can you repeat on both the demand and supply-side because I think either with some other office supplies.

Yeah, I I think we'll basically see the recovery on both supply and demand side. Well, the supply never never went away. Like I mentioned a shared earlier that there's some seasonality in terms of peace offering are doing their fundraising so a little bit of Randomness in that in that timing if you will but this year the actual stronger performer in secondary Market do Drive the need for good P products, but only associated with the top names we see that actually very apparent a client's home. Actually. It's a probably General market condition that clients concentrate the capital or investment in the top names, but for the smaller and you know less no names they will wage lose the challenge. So we we do see a recovery in the fundraising in both supply and demand side if you want.

Oh, okay. That's very helpful. Thank you. Okay. Thanks Jeff. Thank you and answer my questions the present time it would like to return to Florida management for any closing comments.

Okay, if we don't have any further questions that will be all we also schedule some conference calls afterwards. If you have questions that when answered feel free to contact me or the our team directly. Thank you so much.

Thank you for choosing this presentation disconnect your lines.

Okay. Thank you. Bye.