Q1 2020 Earnings Call
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This time all participants are in a listen only mode. After managements prepared remarks, there will be a <unk> session. Today's conference call is being recorded if you have any objections you may disconnect at this time.
No like to turn.
The conference over to your host for today's conference call Mr., Daniel you when it chief of staff and head of IR us so too.
Please go ahead Sir.
Thank you operator, and thanks for joining us today to discuss our first quarter 2020 result.
Joining me on the call today are Mr. leaves Lee, our chairman and Chief Executive Officer, author, Chen Chief Financial Officer, and Robbins shoot Senior Vice President.
As a reminder, today's call may include forward looking statements, which represent the company's belief regarding future events.
Which by their nature are not certain and are outside of the company's control.
Forward looking statements involving here and the certainty.
We caution you that a number of important factors could cause actual results to differ materially from those containing any forward looking statement.
More information about the potential risks and uncertainties. Please refer to the company's filings with the FCC, including his registration statement.
So with that I would now I'll turn the call over to legally leaves when they could columns in Chinese and I will translate.
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Hello, everyone. Thank you for joining us today, we're pleased to announce that we generated remarkable growth across our operating matrix leads in the first quarter of 2021.
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We added 40154 claim claims on that basis, and the first quarter, which account for over 60% of our total net pain client additions in 2019.
This brought our total number of paying clients to 203, 9060% year on year, which marks our highest paid claim growth rates since the first quarter of 2019.
Notably, our Hong Kong business again maintain a significant growth rate.
Total number of Hong Kong paying clients almost doubled from the last March quarter.
Adding to a streak of over 90% year on year growth rate since we launched our Hong Kong business.
We believed that the Hong Kong market offers tremendous opportunities and we're confident to drive further business growth there with our diversified product and affluent user experience.
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Besides total paying clients are two other KP eyes, namely client retention and total playing out that also performed well in the first quarter, we maintained a high paying claims quarterly retention rate of 98.1%.
Despite the equities market plunge in March we were still able to increase our total client assets by 59% year on year to 99 billion Hong Kong dollars as at the end of first quarter.
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As our paying client base and rapidly expanded and that's a huge market swings peak trading and trust Toto trading volumes reached 595 billing Hong Kong dollars and the first quarter, representing 866% year on year entry.
In March we officially launched Hong Kong Index Futures trading we will continue to expand our trading product offerings in the quarters to calm.
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As for our wealth management business, we on boarded mutual funds from a number of leading fund houses in the first quarter, including Blackrock Pimco Pine bridge bearing alliance Bernstein, et cetera, which greatly enriched our equity and fixed income fund offerings.
In early April Blackrock conducted a life streaming event on our platform discussing the investment opportunity in the healthcare sector.
Blackrocks mentioned that this is their first time doing a life broadcast session with an online distributor, which demonstrates the increasing influence if our wealth management business in the region.
We will continue to explore ways to deepen our collaboration with leading fund houses to bring high caliber investor education content to our users.
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Daily average client assets and mutual funds were 6.9 billion Hong Kong dollars and the first quarter of 2020 up 70% sequentially.
Total client assets in mutual funds were 6.3 billion Hong Kong dollars as the quarter around which was flat on a sequential basis.
The discrepancy between daily average and quarter end numbers with mainly due to a surge in mutual fund redemptions for stock trading during the March stock market plunge.
We have witnessed a quick rebalance in this segment in the second quarter, so far and we're confident about the growth prospect of our mutual fund distribution system.
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With respect to our enterprise service out there relies on face to face meetings. It was negatively impacted in the first quarter by the social distancing measures due to the Calvin 19 pandemic. Nevertheless, we entered into 12, New Aesop service contract, which brought our total number of eats up climbed to 91.
In addition, we provided subscription services to for Us IPO during the first quarter.
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Moving onto the industry. According to assets. These statistics, the smaller brokerages fifth market shares in terms of stock turnover rank number 65 or lower among the totaled 648 brokerages heavy combined market share as about southern person in the first quarter of 2020.
Compares with over 35 precise in the first quarter of 2000.
Since the brokerage business typically demonstrates economies of scale, we're not surprised that the larger players gained market share over the years in that industry consolidation.
As a leading online brokerage and wealth management platform through two will seize the opportunity brought about by the increasing industry consolidation, especially given the structural trend of users migrating from awfully training platform to online financial service providers.
So that I also want Minnesota is how we were also I do hope is how we got this next I like to invite our CFO author to discuss our financial performance.
Thanks Lisa.
First quarter would deliver outstanding financial results on top of the remarkable operating matrix. We recorded total revenue of 491 minute Hong Kong up 108% year over year comes up 58% Q on Q non-GAAP. Adjusted net income was 161 million in Hong Kong up 226% year over year on the Q.
Thank you let me walk you through some of our key financial details for the first quarter.
Brokerage Commission the handling talking income was 299 million in Hong Kong and an increase of 161 consent from the same here in 2019 and up nine consumer percent from the last quarter. The growth was primary due to 166%.
Year over year growth in our total trading volume our blended commission rate. This quarter was five basis points flat year over year, but down from 6.7 basis point in the last quarter.
The sequential decrease was primary due to the increase in Cleveland boarding paradox for clients that are used the flat for raised pricing packaging options, we offer for the use stock trading.
Apple to Apple basis, our commission rates remain quite stable.
Brokerage commission and handling how to income accounted for 61% of our revenue in the quarter.
Interest income was 145 million Hong Kong, an increase of 34% year over year, and a 13% appeal to.
Margin financing interest income increased pulled back on higher daily average margin financing balance IPO Foster financing interest income surge. Thanks to the active Hong Kong IPO market. However, interest income from the bank deposits decreased by 10% since the fed reserve cover benchmark interest rates to nearly zero.
Interest income contribute about 29% of our total revenue.
Other income was 47 million Hong Kong, the 238% year over year growth was primary due to high IPO financing service charge income and the high up on distribution service income.
Other income comfortably above 10% of our total revenue.
On the cost side total cost 118 million of Hong Kong increase of 92% of year over year under 36% Q on Q.
Brokerage Commission handling talk expenses grow 140% to 15 minute, Hong Kong, which was mostly in line with our trading volume growth.
Interest expenses increased by 62% to 33 million Hong Kong primary due to higher module financing because expenses and also IPO financing because approved interest expenses.
Perfect and the service costs increased by 74% to so they find him. The rise was primary due to an increasing the marketing information that they could have been will increase in the number of protein controller.
As trading volumes skywalk is in the quarter. We have another 100 protein controller. So that we can execute a large amount from Hong Kong stock trades simultaneously.
Total gross profit increased a 113% the year over year, two or 373 million Hong Kong.
Gross margin was 76% versus 74% in the same here with an off here.
Total operating expenses were 196 million Hong Kong, an increase of 74% year over year, an 8% Q on Q.
R&D expenses were 84 million in Hong Kong, an increase of 57% from the last year into 13% from last quarter. The you will be a rise was primary due to the increasing the IB Hong Kong.
In 2009, King as we continue to enrich Kwan offerings.
Selling and marketing expenses was 65 million at Hong Kong up 100, a 5% of year over year under 100 sympathetic to on Q, Ohio branding and marketing spending in the quarter, resulting a highest quarterly paying claims tradition of over 14000.
Jim expenses was 47 million Hong Kong increase of 71% our yearly basis and the degrees of 15% on a sequential basis the year over year life was primary due to the increasing the headcount for the Janney personnel and the coupon to decrease was mostly due to lower professional service fees.
Net income increased by 240% of year over year to 150 155 in Hong Kong. The rise was primary due to explanation, though topline growth and a significant operating leverage benefit.
The market volatility in the first quarter and increasing industry consolidation presents a unique opportunity for us to scale. All operation. We will continue to be mindful of the opportunities to grow our business and at the same time remain vigilant on all expenses.
Regarding the.
Regarding the Pandemics so far the key effects all financial include higher trading revenue from increased so trading activities hi on net interest margin from the margin financing business and the lower interest income from bank deposits, resulting from lower bench Mark interest rate today, we have not to identify.
And in materials contingency or impairment.
As a result August pandemic.
Having said that while the pandemic into mainland China, and Hong Kong has show signs of stabilization.
The ongoing post on the global economy, and our future business is harder to predict at this moment, we will continue to closely monitor our business operation.
Now conclude our prepared remarks, and we are now I'd like to open the call two questions. Operator. Please go ahead.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone and lead training to be announced if you wish to cancel your question. Please press the pound or have scheme.
Once again, if you wish to ask a question you May press star one on your telephone keypad.
Your first question comes from flying wait Shanghai Tang. Please ask your question.
Hi, Hi, lead author and tenure.
Yeah first congratulates on the very robust first quarter results I got two questions. One is about a turnover.
So as you mentioned at the market share of through two has grown tremendously in the first quarter as we see.
So, it's basically 100 percentage points growth Q on Q outpacing.
The Hong Kong's change or turnover, so can you share more on the.
Like how you dissect the growth of smoking sure why on one hand, and we see the pink line grows quite strong as a 40000 and also the Cline turnover has also peak.
It's actually.
I think it's the highest over the past.
I'm quarters as we had seen so is any particular drivers we know them market boats. UTI is a is quite hard to drive to determine what but is there any other circulars that will to drive overall volume increase and also regarding the.
The paying kind gross how much of that is coming from a Hong Kong local investors pursues coming in China, and how do you think I'm.
Second quarter Allrecipes year, how the trend of.
In client growth and your turnover.
We'll be bike.
The second question is regarding the calls so we see in the first quarter.
Operating leverage is quite significant so netting to a much higher bottom line growth. So regarding PR boasts the R&D and the marketing spends is there any bucketing for fall off with 2020, particularly for marketing so we.
Either.
Cline acquisition cost has come down quite a lot I'm not sure, it's because of steel seasonality or T.
It's just the peaking of single quarter paying quite growth that led to a decline or not quite acquisition cost and how the.
Are you see the client acquisition costs will be like rest of the year.
Thank you.
Okay. Thank you wait times Oh. This is also I will answer your first question regarding the market share and also Pos partial and you'll see a couple questions regarding the call I'm I leave the trend although paying clients in the first quarter has also the remaining years onto my colleagues robbing late home our income some obvious you if you're right.
We have paying them off your share in Hong Kong, particularly in the first quarter compare with last the last year last the last Q4, Oh estimation is on average all market share has increased by 20% in Hong Kong or at the end of last year, our market share in Hong Kong, what's a longer one point.
Zero, 3% and this year Oh average.
The first quarter.
Hi, Mark issue is the highest is close to one 1.4%.
And also I think the despite the print volumes you have really relate to the overall market Volatilities, particularly in February and also in March.
On the cost side, Oh, we have some of them to the marketing the in the fourth quarter I think the fourth quarter, earning call last time, we expect the number of our had a cost this year would be roughly in the range of 20% or something a wrong.
So the marketing expenses, we target for the acquisition cost.
Two new clients will be 10% lower.
Then the average numbers of loss here I think some fall in the first quarters all progress.
Let's move so.
We will not give a fixed the absolute amount on the marketing expenses will be more depending our acquisition strategies given that the brief.
Our this year's economically Unix do make valid a sense I think for US is will be we will be more aggressively on the marketing spending in order to further enhance our market shifts and also the number of all paying claims I wouldn't leave.
More comments.
To ramping up for the the number on paying clients trend he observed in the second quarter and also all estimation.
In the second half of this of this year. Thank you.
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So a large part of our pain claimed growth can be attributed mill to the strong growth momentum of our Hong Kong logo that that so in the first quarter as Lisa mentioned in his opening remarks are a number of Hong Kong paying clients grew 97% he'll over here and that growth rate has consistently top 90% so for the rest.
Every year in our for Q2 thousand 19 earnings results, we gave a guidance of 90000 not paying client attrition in 2020, and so far observing from in the run rate, we're pretty confident about succeeding as previous guidance that we gave out partly because I think we're ramping up.
Our marketing in Hong Kong local market and also we have seen very growth <unk> very strong growth momentum from word of mouth paying claims a referral.
Yeah, Thank you Raul being and author.
Actually I just have a very small panel of course, you recall you deal.
The tax rate.
We do see the tax rate in the first quarter is around 10% infected texturing, whose data like a normalized or what we can expect from the rest of year or like first quarter is just like it was still some said analyses on recognizing the tax.
Oh sure, which we expect that this year school year effective tax rate will be in the range of 10% to 12% mainly due to our offshore tax claim benefiting Hong Kong.
Also our tax Truman preferential treatment in the maintenance and also I think this effective tax rate will be values.
The next one or two years as well thank you.
Yeah, Greg Thanks.
Once again, if you wish to ask a question. Please press star in the number one on your telephone keypad.
There are no further questions at this time I know likes to handicap back to Mr., Daniel human for the closing remark.
That concludes our call today on behalf to pitching management team I would like to thank you for joining US today. If you got any further questions. Please do not have day to contact knee or any other industrial relations representative thank you and goodbye.
Ladies and gentlemen that does conclude our conference for today. Thank you for participating in all disconnect.
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Hello, Ladies and gentlemen, welcome to suit do holdings first quarter 2020 conference call. At this time all participants are in a listen only mode. After managements prepared remarks, there will be a <unk> session today's conference call. It.
Being recorded if you have any objections you may disconnect at this time.
I would now like to trend.
The conference over to your host for today's conference call Mr., Daniel you when it chief of staff and head of IR attitude.
Please go ahead Sir.
Thank you operator, and thank you for joining us today to discuss our first quarter 2020 result, joining me on the call today are Mr. Li late our chairman and Chief Executive Officer, author, Chen Chief Financial Officer, and Robbins, She senior Vice President Al.
A reminder, today's call may include forward looking statements, which represent the company's belief regarding future events.
Which by their nature are not certain and are outside of the company's control.
Forward looking statements involve inherent risks and uncertainty.
We caution you that a number of important factors could cause actual results to differ materially from those containing any forward looking statement.
More information about the potential risks and uncertainties. Please refer to the company's filings with the CP, including its registration statement.
So with that I would now I'll turn the call over to legally leaves will make us columns in Cheney and I will translate.
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Hello, everyone. Thank you for joining us today.
We're pleased to announce that we generated remarkable growth across our operating matrix lead in the first quarter of 2020.
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We added 40150 4000 clients on net basis in the first quarter, which account for over 60% of our total net pain client additions in 2019.
This brought our total number of paying clients to 203, 9060% year on year, which marks our highest paid claim growth rate since the first quarter of 2019.
Notably, our Hong Kong business again maintain a significant growth rate.
Total number of Hong Kong paying clients almost doubled from the last March quarter, adding to a streak of over 90% year on year growth rate since we launched our Hong Kong business.
We believed that the Hong Kong market offers tremendous opportunities and we're confident to drive further business growth there with our diversified product and absolutely user experience.
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Besides total paying clients are two other KP eyes, namely client retention and total client assets also performed well in the first quarter, we maintain a high paying claim quarterly retention rate of 98.1%.
Despite the equities market plunge in March we were still able to increase our a total client assets by 59% year on year to 99 billion Hong Kong dollars. That's at the end of first quarter.
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As our pain client base and rapidly expanded and that's the huge market swings pig trading interest.
No trading volumes reached 595 billing Hong Kong dollars and the first quarter, representing 866% you on your entry.
In March we officially launched Hong Kong Index Futures trading we will continue to expand our trading product offering in the quarters to call.
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As for all or wealth management business, we on boarded mutual funds from a number of leading funhouse. It in the first quarter, including Blackrock and go pine Britsch bearing lines, Bernstein et cetera, which greatly enriched our equity and fixed income fund offering.
In early April Blackrock conducted a life streaming event on our platform discussing the investment opportunities in the healthcare sector.
Blackrock pensions that this is their first time doing a life broadcast session with an ongoing distributor, which demonstrate the increasing influence if our wealth management business in the region.
We will continue to explore ways to deepen our collaboration with leading fund houses to bring high caliber and Doctor education content to our users.
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Daily average client outlets and mutual funds were 6.9 billion Hong Kong dollars and the first quarter of 2020 up 70% sequentially total client assets in mutual funds were 6.3 billion Hong Kong dollars as a quarter around which was flat on a sequential basis.
The discrepancy between daily average at quarter end numbers with mainly due to a surge in mutual fund redemptions for stock trading during the March stock market plunge.
We have witnessed a quick rebound in this segment in the second quarter, so far and we're confident about the growth prospects that are a mutual fund distribution business.
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With respect to our enterprise service out there relies on face to face meeting it was negatively impacted in the first quarter by the social distancing measures due to the Calvin 19 pandemic.
Nevertheless, we entered into 12, new Aesop service contract, which brought our total number of eats up plan to 91.
In addition, we provided subscription services to for you, but IPO during the first quarter.
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Moving onto the industry.
According to the theme statistics, the smaller brokerages with market share in terms of stock turnover rank number 65 or lower I'm. All the totaled 648 brokerages, having combined market share about southern person in the first quarter of 2020.
Compares with over 35% into first quarter of 2000.
Since the brokerage business typically demonstrates economies of scale, we're not surprised that the larger players gained market share over the years and that industry consolidation.
As a leading online brokerage and wealth management platform through two will seize the opportunity brought about by this increasing industry consolidation.
Especially given the structural trend of users migrating from awfully trading platforms to online financial service providers.
Did that I don't want with us or just how about that I. Just hope is that no I like to invite our CFO author to discuss our financial performance.
Exactly.
First quarter would deliver outstanding financial results on top of the remarkable operational matrix. We recorded total revenue of 491 minute Hong Kong up 108% year over year end up 58% Kilkeel non-GAAP. Adjusted net income was 161 million in Hong Kong up 226% year over year looking.
Onto.
Let me walk you through some of our key financial details for the first quarter.
Brokerage Commission the handling talking income was 299 at Hong Kong and an increase of 161% from the same here in 2019 and apply consumer percent from the last quarter. The growth was primary due to 166%.
Yeah, when you grow our total trading volume our blended commission rates. This quarter was five basis points flat year over year, but down from 6.7 basis points in the last quarter.
This sequential decrease was primarily due to the increase in creating boarding dogs for client W. The flat to raise pricing package option, we offer for the U.S. still trading.
Apple to Apple basis, our commission rates remain quite stable.
Brokerage commission and the handling charge income accounted for 61% of our revenue in the quarter.
Interest income was 140 fine you know Hong Kong increase of 34% year over year, and a 13% appeal to modern financing interest income increased on the back of higher daily average margin financing balance.
IPO Faso financing interest income such thanks to the active Hong Kong IPO market. However, interest income from the bank deposits decreased by 10% since the fed reserve cut the benchmark interest rates clearly there will.
Interest income contributed about 29% of our total revenue.
Other income was 47 million phone call the 238% year over year growth was primary due to high IPO might not seem service charge income and the high up on distribution service income.
Other income comfortably above 10% all of our total revenue.
On the cost side total Cort 118, when I phone call increase of 92% of year over year under 36% kiln fuel.
Brokerage commission handling charge expenses grow 140% to 15 minute, Hong Kong, which was mostly in line with our trading volume growth.
Interest expenses increased by 62% to still have free may not Hong Kong primary due to higher mortgage financing because expenses and also IPO financing because it will incur expenses.
Professional service costs increased by 74% to so they find me then the rice was primary due to an increase in the market information that they could have been as well.
Increased the number of protein controller.
Trading volume skywalk, it seem to quarter. We added another 100 the protein controller. So that we can execute a large amount of Hong Kong stock trade simultaneously.
Total gross profit increased a 113% year over year to 373 million in Hong Kong.
Gross margin was 76% growth is 74% in the same here with a lot here.
Total operating expenses were 196 million phone call, an increase of 74% a year over year, an 8% killing too.
R&D expenses was 84 million in Hong Kong and increase of 57% for the loss here in the social stem from last quarter.
The year over year life was primary due to the increasing the idea telecom.
In 2019, we continue to enrich pawn offerings.
Selling and marketing expenses was 65 million at Hong Kong up 100, the pipe within the year over year under 27% <unk>.
Oh, hi up running on the marketing spending in the quarter, resulting in a highest quarterly pain. CLI addition of over 40000.
Gn expenses was 47 million Hong Kong increased from 71% our yearly basis and the decreased 15% on a sequential basis the year over year life was primary due to the increasing the headcount for the JV personnel and the two off to decrease was mostly due to lower professional service fees.
Net income increased by 240% the year over year to 150 55 billion at Hong Kong. The rise were primarily due to explanation of the topline growth and the significant operating leverage Bennett.
The market volatility in the first quarter, that's increasing industry consolidation presents a unique opportunity for us to scale all friction.
We would continue to be mindful of the opportunities to grow our business and at the same time remain vigilant on all expenses.
Regarding the.
Regarding the Pandemics so far the key effect all financial include a higher trading revenue from increased their trading activities hi on net interest margin formed a mortgage financing business and the lower interest income long basketball that resulting from lower bench Mark interest rate today, we have a lot of identify.
And then material contingency on Pellman.
As a result of the pandemic.
Having said that Wilder pandemic into mainland China, Hong Kong helps fuel cycle stabilization.
The ongoing pass on the global economy, and our future business, it's harder to predict at this moment, we will continue to closely monitor I'll get this operation.
No conclude our prepared remarks, and the we are now like to open the call two questions. Operator. Please go ahead.
Ladies and gentlemen, we will now begin the question and answer session. If you wish to asked a question. Please press star one on your telephone and lead free name to be announced if you wish to cancel your question. Please press the pound or has risky.
Once again, if you wish to ask a question you made press star one on your telephone keypad.
Your first question comes from flying the weight Shanghai Tang. Please ask your question.
Hi, Hi, lead author and tenure.
Yeah first congratulates on the very robust first quarter results I got two questions. One is about a turnover.
So as you mentioned I think if the market share up through two has grown tremendously in the first quarter as we see.
So it's basically 100 percentage points growth Q on Q outpacing the the Hong Kong's change or turnover. So can you share more on the.
Like how you dissect the growth of Smoky sure why on one hand, and you see the.
Paying quite grows quite strong.
40000.
And also the climb turnover has also peak you know it actually I.
I think it's the highest over the past nine quarters as we got seat.
So is there any particular drivers we know them market boats UTI is a is quite hard to drive to determine what but is there any other particulars will to drive overall volume increase and also regarding t.
Hi, gross how much of that is coming home Hong Kong local investors, who is coming in China.
And how are you seeing.
Second quarter or rest of year, how the trend of.
In closing growth and your turnover.
We'll be pike.
The second question is regarding the calls so we see in the first quarter.
Operating leverage is quite significant so maybe to a much higher a bottom line growth. So regarding P. R boasts the R&D and the marketing spends is there any packaging for fall off 2020, particularly for marketing so weve.
The to the quote Cline acquisition cost has come down quite a lot I I'm not sure is because of steel seasonality or T.
Just a peaking of single quarter paying quite growth that led to a decline or not but quite acquisition cost and how the.
Do you see the <unk> acquisition costs will be like rest of the year.
Thank you.
Okay. Thank you wait 10 or this is also I want to go first question regarding them off this year and also a pop partial of you'll see a couple of questions regarding the call I'm I meet the transalta paying clients in the first quarter and also the remaining years to my colleagues robbing late home he comes to market issue if you're right.
We have kind of market share in Hong Kong, particularly in the first quarter compared with last the last year lost a lot Kupol Oh estimation is all average all market share has increased by 20% in Hong Kong.
At the end of last year, our market share in Hong Kong, what's the longer 1.03% and does this year Oh average.
The first quarter all market. She has the highest is close to one 1.4%.
And also I think the despite the trading volume is heavily relate to the overall market volatilities, particularly in February and also gotten much.
On the cost side, Oh, we have.
HM two the marketing the in the fourth quarter I think the fourth quarter, earning call last time, we expect the number of our head of cost this year would be roughly in the range of 20% or something a wrong.
In terms of the marketing expenses are we talking for the acquisition cost.
Each new clients will be 10% lower or send the average numbers of last years I think so far in the first quarters all progress what's very smooth so.
We will not give a fixed absolute <unk> a loss on the marketing expenses would be more depending on <unk> acquisition strategies given that just a brief.
Oh, what is your economically Unix still make commanded a sense I think this will be we will be more aggressively on the marketing spending in order to further enhance all unlock issue and also the number of all paying claims I wouldn't leave.
More comments.
To ramping up for the the number of paying clients trad. He also during the second quarter and also all estimation.
In the second half of the obvious here. Thank you.
Yeah. When you go up I guess, what they call within valeo, when he they'll be robby not setting at age it or <unk>.
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Sure.
Fundamentally important thing and for the Johnny you sort of some assumptions that you tell either.
Hi, good problem, that's how I should help each other.
Although digital falling fuel that Jim good chunk in local beef up that you said it was down the Johnny doesn't know section just how are you guys Sherwood towboat magician it autos and jump up on the chip.
And they would have into that.
So a large part of our pain claim growth can be attributable to the strong growth momentum of our Hong Kong local business. So in the first quarter athlete mentioned in his opening remarks, our number of Hong Kong paying clients grew 97% deal over here and that growth rate has consistently Tom 90% so for the rest.
Here in our Fourq 2019 earnings first of all we gave guidance of 90000, not paying client additions in 2020, and so far absorbing some of the run rate, we're pretty confident about exceeding the previous guidance that we gave out partly because I think we're ramping up.
Our marketing in Hong Kong local market and also we have seen Gary growth smokes very strong growth momentum off I'm word of mouth and quite a referral.
Yeah, Thank you Raul being and author.
Actually I just haven't those small portal accounts you recall you deal.
The tax rate.
You see the tax rate in the first quarter is around 10% effective tax rate. So is that a like a normalized or what we can expect from the rest of year or like first quarter I'd just like it was few subset analyses on recognizing the tax.
A show, which we expect that just your full year effective tax rate will be in the range of 10% to 12% mainly due to our offshore tax claim benefiting Hong Kong.
And also our pets Freeman prevention treatment in the maintenance and also I think this effective tax rate will be badly in the next one or two years as well. Thank you.
Yeah, great. Thanks.
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There are no further question at this time I have no likes to have gone back to Mr., Daniel you win for the closing remark.
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Ladies and gentlemen that does conclude our conference for today. Thank you for participate didn't even know all disconnect.