Q2 2020 Futu Holdings Ltd Earnings Call

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Hello, ladies and gentlemen.

Welcome to Fuji Holdings second quarter Twentytwenty Conference call at this time, all participants on listen only mode. After managements prepared remarks, there will be questioning on submission.

Today's conference calls is being recorded if you have any objections you may disconnect at this time.

I would now like to turn the call what's your host for today's conference call.

Daniel Young Chief of staff and head of IR at food <unk>.

Please go ahead sure thing here.

Thanks, operator, and thank you for joining us today to discuss our results for the second quarter 2020.

Joining me on the call today are Mr., Li Chairman and Chief Executive Officer, author, Chen Chief Financial Officer involving shade Senior Vice President.

As a reminder, today's call may include forward looking statements, which represent the company's belief regarding future.

Which by their nature are not certain and our outside of the company's control.

Forward looking statements involve inherent risks and uncertainty we caution you that a number of important doctors could cause actual results to differ materially from those containing any forward looking statements.

For more information about the potential risks and uncertainties. Please refer to the company's filings with the FCC, including its registration statement.

So with that I'll now turn the call over to leave Leif will make it comes 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 continue to achieve exponential growth across our operating and financial matrices and the second quarter 2020, following a very successful first quarter, well millennials and whose ones out.

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That's what you saw.

We achieved the highest paid claim growth rate since our IPO in the first quarter of 2019, we added 64566 paying claims on a net basis and the second quarter, bringing our total number of paying claims to 303102 of 84% year on year.

Both our China mainland in Hong Kong paying clients recorded stellar growth, our China mainland paying claims hit a record high growth rates since the fourth quarter 2018, while the number of Hong Kong paying claims jumped 125% year on year.

Notably organic growth continued to contribute over half our new paying clients.

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During our fourth quarter 2019 earnings call. We guided for 90000 paid claims addition in 2020.

Six months into 2020, we have already exceeded our full year growth target.

We are now lifting their guidance to 280000 net new paying clients this year, which translates to 141% year on year growth in our total number of pain class.

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Besides todo pay claims we also witnessed robust growth momentum in total client assets and stable claims attention.

With growth in best paying claims and average assets per client or a total client assets reached 142.4 billion oncomed dollars, representing 108% growth on a year on year basis, and 44% growth on a quarter over quarter basis.

The past quarter with our sixth consecutive quarter with a churn rate below or equal to 2%.

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Elsewhere trading volume Aritomo trading volume reached a historic high of 643.9 billion Oncomed dollars, a 202% year on year USDOT trading volume was 429.3 billion, Hong Kong dollars, which accounted for 66.7% if our total trading volume.

In July we launched Hong Kong stock Futures, and MSC I Index futures trading.

Going forward, we will continue to enrich our derivatives trading offerings.

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The increase in U.S. listed Chinese companies seeking secondary listing in Hong Kong and the surge of high profile Hong Kong Ipos Act tests major tailwinds for us to further grow and engage our paying claims.

Our clients total subscription for JD dot com and net in Hong Kong Ipos that has exceeded 15 billion hung on dollars.

We have also seen our plans developed growing appetite for biotech ipos with a total subscription for page on medical and keeps US IPO is exceeding 19 billion and 14 Bill in Hong Kong dollars respectively.

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So your views on the R&D boots module to tackle those with up by the by yourself or Ms. Allison.

Well, you would say what when could we don't listen Julio I, often thought it isn't that much.

Money plus maintain strong brands in the second quarter in remains our strategic focus.

Established new partnerships with eight reputable mutual fund managers, including T. Rowe price Franklin Templeton and a Monday.

We also started offering our professional investors private equity funds in June, including a real estate funds from luxury.

Besides expanding fund offerings, we continue to add on new features including an automatic investments in that allows for automatic investments into the same funds at Predefine time internal.

As of June Thirtyth total client assets in wealth management reached 8.6 billion, Hong Kong dollars, representing 37% sequential growth.

Over 25000 clients over 8%, if our total paying clients help mutual fund positions as of quarter end and we see significant room for further penetration into our plan.

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Our enterprise service continue to scale, we had 104 Aesop plans and 64 IPO and I are planned as at the end of two Q.

Our Aesop service is gaining increasing traction among industry leaders and TMT automobile in biotech sector.

Companies like Baker Shuffle Motors in home care pharma and page and medical have all retained as after he saw provider.

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As a leading online brokerage and wealth management platform through to offer superior technology infrastructure that allows for stable trade execution.

Despite a highly volatile stock market due to token 19, our service availability rate into first half of 2020 reached 99.98%.

In April we doubled our throttled rate in Hong Kong from 100 to 202 process, a higher number as concurrent trade.

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I am pleased to share that on August 12, two to Singapore eliminate was granted in principle approval from the monetary authorities thing or to the capital markets services license application.

This marks the milestone as our internationalization and we will continue to look for new markets to extend the footprint at our business.

Just not seeing associates have requested also just hold and that's how we got you next I'd like to invite our CFO author to discuss our financial performance.

Thanks, Lee brand the Daniel.

Second quarter, we continue to deliver outstanding financial results. We recorded total revenue of 688 million a Hong Kong older up 165% year over year in the 40% killed who own net income was 236 minutes on homebuilder of 329% year over year, 52% become Q O Q.

Revenue structure and the key revenue line, having largely consistent with prior to this quarter. Let me walk you through some key all of our financial details for the second quarter.

Okay commissioned and handling charge income was 410 billion Hong Kong dollar an increase of 236% from the same period in 2019 and up 37% from Q1.

The growth was primary due to 202% year over year grossing our total trading volume.

Our blended commission rate went up to 6.4 basis points on the back of increasing penetration of the road trading the U.S. market.

Also more Klein trade is low value stocks during the quarter into us markets, which led the implied take rate higher.

Brokerage income contributed 60% of our total revenue in the quarter.

Interest income Mortwo hundred 8 million dollar increase of 82% year over year, and the 44% of kiln fuel.

Marketing financing interest income increased on the bank whole, 49% year over year growth in daily average margin financing balance.

IPO financing interest income increased significantly thanks to our active Hong Kong IPO market, and our clients increasing appetite to subscribe high quality IPO with on margin.

Band interest income increased due to climb higher idle cash balance.

Interest income so total contributed about 30% although total revenue.

Other income was 17 million Hong Kong dollar.

The 192% the year over year growth was primary due to increased IPO financing service charge income and the fund distribution service income from our wealth management business.

Other income contributed about 10%, although total revenue.

On the call side total cost was 154 million a hard dollar increase of 141% year over year and facility one plus on Q on Q.

Brokerage commission of handling charter expenses grew 221% year over year to seven to send them into Hong Kong order, which was mostly in line with our trading volume growth.

<unk> expenses increased the by 111% year over year to 40 million in Hong Kong dollar, mostly in line with our module financing business and IPO activities in Hong Kong.

And the service cost increased by 76% year over year to 37 million in Hong Kong dollar. The rise was primary due to increasing the marketing formation in the date happy as well has increased in the food Hall rate.

As a result gross profit increased a 172% of year over year to 534 million at home homeowner gross margin was 78% most 75% in the same care in the last few.

Total operating expenses were 264 million whole dollar increase of 82% year over year, and the 35% of Q on Q.

Among the R&D expenses were 100.

17 million, a Hong Kong dollar increase of 83% from the same here with the Lafayette and the 39% from last quarter. The increase was primarily due to the continuous increase in the R&D how to call US we continue to invest our technology platform to sustain long term growth.

Moving on the marketing expenses was 96 minute Hong Kong dollars up 129% year over year, and the 48% appealing to US we continue to roll out our marketing and branding activities to attract new paying clients.

Our acquisition costs per each new paying client was around a 1500, Hong Kong dollars down 8% Q on Q.

Do you any expenses were 51 million hard dollar increase of 31% year over year in the 9% of Q on Q, which is largely in line with our overall growth business growth.

The result, our non-GAAP adjusted net income increased by 312% to 243 million homeowner. The strong bottom line growth was primary due to significant top line improvement and approval operating leverage.

That concludes our prepared remarks, and the we'd now like to open the call two questions. Operator. Please go ahead.

Okay, certainly ladies and gentlemen, we will now begin the question and answer session. If you wish to Osgood, Greg Kim. Please press star one on your telephone keypad and wait for your name to be announced if you wish to get into your request the British pound.

Once again star followed by one asking question in queue.

Once again, if you wish to ask your question. Please press star one of your telephone keypad and wait for your name to be announced.

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Once again, if you wish to ask a question. Please press star one on the telephone keypad and wait for your name to be announced.

We have the first question from line of weight Chen Tong. Please go ahead.

Hi lease also yeah. Thanks for the introduction and personally Congratulates on a very robust earnings in the second quarter two questions. A one is about to paying clients, we see a well I salary declined acquisition second quarter, even better then.

No [laughter] thoughtful high in the first quarter like 40, K. now we have like 55, K. you paying clients. So can you elaborate more on the drivers of the pain on growth and how do you see the momentum will continue in the second half.

Well this year.

The second question is more like a broader questions. So basically we see on the retail activity, particularly the online reach out.

Trading activity has picked up quite a lot across the region like Hong Kong, China and do it and so it's a very good like operating environment for fall through to but also we see a competition is also rising we saw a swap highs introducing a give a commission.

Package in Hong Kong.

A few months ago, and maybe there are more competitors entering the market. So so our.

I like to ask like you're looking at a 123 years horizon is youre. What are you seeing is the biggest opportunity as well as the because it's a challenge for food to thank you.

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So there on I think there are three major reasons behind our robust paint line growth. The first one being you know the cover 19th and Dominic has actually expedite as they changed after behavioral patterns of our the retail client it came migrating from offline I Financial Institute.

It is to only trading platforms and besides the increased volatility in the market has attracted a lot of new investors and new capital.

And the second reason being dot who to has long been devoted to optimizing our user experience and have created a very strong network effect and theory and established raising brand awareness and in the first two quarters that this year I can see that organic growth continue to contribute over 50%.

Are you paying claims growth and the third reason is that on our operating efficiency also continue to improve the conversion rate from our leads to paying clients also continues to improve.

And so those are three main reasons behind our pain claim growth and on I think going forward.

We think we haven't very optimistic view towards our pain claim grows and we feel very strong paying claims contribution from various channels.

At the end of 2019, I think about 70% of our paid claims are from mainland and 30% from Hong Kong and by the end of this year, we expect Hong Kong pain plans to contribute to over 40% at article I think client base and also we just got the in principle approval or license application Singapore.

So we think that the U.S. local market in the Singapore, Mark and I could be or index that offer a pain claim.

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Right. So there has been a lot of brokers in Hong Kong that offer zero commissions auto has now the first one and it'll certainly not be the last one and to be honest, we haven't felt much pressure from these players and you can see that are paying client growth has demonstrated a stronger growth momentum than ever on so.

If you look at Hong Kong market, you know there is 800 stamp duty. So for two is now targeting three that's for Hong Kong stock trading and we think a further decrease in our training commission actually bring little incremental value to the reduction of overall trading costs and a further long time through to have not been.

The broker the offers the lowest commission rate in the market. We believe that were in the wine the half the strongest overall user experience. So besides charting a commission rate not significantly lower than industry average, we have them as in Dallas a market data, we have a very stable with train system that allows.

For high quality trade execution them have very high 40 market news and a very active social community platform and these are all very important reason on to attract new customers and then be all require a long time to establish.

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Oh really that's even better than touches a douglass because they don't really all the cuts.

In terms of our market opportunities, we believe that our target markets.

Offers tremendous opportunities for growth and in terms of the trade market and I believed that the Hong Kong and he wants stock markets are still to this track to actually market in the world and hung on the whole stock market ranked number one in 2018 and 2019 in terms that the equity in them right.

Right, Yes, and we believe that's more on high quality, new economy companies come to lift in Hong Kong, that's more Chinese yards onto their secondary listing Hong Kong. This will further contribute to the prosperity to Hong Kong stock market and the same time, the U.S. not markets still have and as the most attractive on is that means.

Yes men targets in the World and we believe these two markets will continue to attract new capital and food to we'll be able to continue to increase over market share in these tougher in these two markets and in terms of our client base and we believe that I'm. The only brokerage business had a very strong network effect and we're very confident.

Sustain rapid growth in our total number as planned and there are over 20 million a Chinese nationals that overseas assets and they're at about 2 million, we tell stock traders in Hong Kong. So considering two to only has about 300000 pain plan. We still think there's a there's a long runway for growth and.

The the policies in the Green Bay area will further opened up our tan and besides our two main target markets right now, which is China mainland Hong Kong I think we'll continue to expand globally and our I remove them out that's targeting mostly targeting the domestic U.S. market has already attracted in large fan base in.

Continue to optimize our products and increase our important and yesterday, our Singapore entity also got in principle approval offer license application from the lighter it's already a Singapore and we'll continue to look out for opportunities Intel South East Asia, as well and I was the wealth management business, there's certainly a very important strategic Phil.

Yes, and we finished our business or less than a year and our total client assets is now over 8.6 fill in Hong Kong dollars and from the current statistic. We can see that wealth management continues to attract additional at that and we want it fell to two into a one stop a wealth management platform into a track claims to put more assets.

To food to onto knowledge, and lastly, about our challenge as as our paint lines growth as trading volume skyrocketed and out there is increasing volatility in a market that poses a lot of pressure on our trading system and also our risk management system and we'll continue to ramp up our R&D investment two inch.

Sure the stability of our train system and to increase our risk management capabilities and as our business continues to grow we'll continue to hire more people and how to optimize our town structure, how to continue to increase talents with finance background and with international background and how to retain and instead.

Device, our current talent pool, that's awful is very important task for us.

Hi weekend that that answer a question.

Can we move to the next question.

Yes.

The next question comes on line of stops and food from Citi. Please go ahead.

Ah first congratulation on a very strong Oh, I'm, sorry, I had a couple of questions. Yeah first it's we got in your Uh Huh.

The new patent patent so first would like to.

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Okay and also.

Looking at your full year guidance on that you're paying high and we see 280 outcome, which has a very strong.

So just wondering if you can share some kinda on the.

R&D, we think two months like July and August Congress, so far.

Like I wish there or how you're kind of part is Uh huh.

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If you strip.

And also one more on B pack size that we see that.

I have one thing I can you also mentioned earlier.

Pardon me the logistics having to pay.

I'm just wondering.

So because oh, hi, Oh compression. They are you happy with the Hong Kong hands.

Hi, guys. Thanks.

I have no range. So I'm, just wondering if you're kind of breakdown.

The conversion rate for the 62 back.

And then next I will also nature at all your trading volume that you reported at the Oh Youre you asked I'm actually accordion. This quarter, we shall we say acting very strong well and that much stronger than our market. So I'm wondering if you can share like what you see asked.

Reason behind driving their strike wrong and and also rather this is like a more skewed towards the U.S. comedies R&D Chinese yeah, but to your finger strength is I got sustainable going hard and lastly, I'm sorry, it quite a lot suppression.

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Oh, yes.

Paul I guess thinking longer term, maybe a two three years or even longer and.

What's your thought about the chance of HM.

Thank you.

Okay. Thank you Stephanie let me just to answer your first second and also to both questions I will leave does so the question to robbing under the final question regarding the Asia market access to my colleagues leap in terms of the a breakdown of new client acquisition for this quarter.

China, roughly uncomfortable 53% of the total and the remaining 47% came from the time.

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And also in terms of the trading volumes a few mentioned.

Before.

The U.S. trading volume of roughly uncomfortable tooth tussaud's, although total trading volumes achieved in this quarter.

In terms of the stock trading by all Cline, that's what I think it will be more schools, who these people the U.S. styles, such as Tesla Facebook and they even G et cetera.

The whole more Chinese 80, honest trading volumes, our U.S. trading volume side is roughly about 15%.

And.

In terms of the trading volume sustainability I think it is more.

Because of the high volatility in the U.S. markets, particularly in the first half of this years going forward I think the proportion of the Hong Kong trading volumes will continue to go up because we continue to kingdom market shares in the home home office compare with the first.

Quarters.

Which we achieved a 1.4% cash and warrant a stone market shares in Hong Kong All markets you answer they continue to increase to 1.6%.

The second quarter and the such Momenta actually will continue has continued into July and.

August.

Roughly speaking in July our market shares in Hong Kong already achieved a 2.5%, which I think it's which will underpin our growth tragedies in into Hong Kong market trading volumes.

So I wouldn't have more being also your second question about the conversion rate going forward and also our.

Asia market access.

By the thank you.

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So there are three main reasons between behind the higher conversion rate from onshore claims to a total paying claims and the first reason is as it just that definitely.

There is a higher percentage and contribution from our own comping clients and Hong Comping claims are typically demonstrate high conversion rates and the second reason as Robin just mentioned as relations question. So we see increasing conversion rate between our lead to our pain.

So we have increased our operating efficiency, we have optimized at the account opening and the cash on deposit processing, so which made it easier on for our clients to become our Pink line and the third reason is because the general market volatility and the increased at a high quality, China 80 hours coming back to Hong.

So a lot of our clients want to take advantage of this opportunity to to make money and 10 also resulted in a higher conversion rate.

Certainly going to you should get I'll leave that tissue food show any chance you dollar issuance and the open issues on a go do now just how they said we want and your whole foods that if we should have moved from the T. a lot when I don't know thing into April I jumped on me you'll notion HMA treaties is.

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There are though you gave with adult.

That's what would be what we saw chip alia, though you're going to choose you read through to the users and bill.

Just on which enjoyed elements of the Embeds water has it will sit on border such as the so the woman she civil War.

Is it.

So we have continued to look out for opportunities in the Asia Marquette and five years ago, we became the level to market data provider in cooperation with the Shanghai's trying to talk is cheap stock exchange and we continue to.

To optimize our market data our news a retreating offering for Asia stocks to through stock connect and we've also noticed they're relative policy aptiv with regards to to the cramping area and at the right time, I think we will consider getting the issue license, but it's not on our image.

Got it agenda right now and there are still alive other things that we could do and we should focus on right now thank you.

Offenses, it's very helpful. Just want to a follow up on the commercial I Wonder if you can share as well as to composure rainfall Okay Oh.

Hi.

And as you've just one mark a question if I may its regarding all our and you could have shown.

Excellent. Thank me ask you a happening.

Turning fast [laughter] Gen tapping into new markets.

Yeah, so when they feel kind come out.

Thank you.

Definitely couldn't can you repeat your second question.

I think let me just to answer your first question for you to sequential rate conversion rate for the Hong Kong peoples Bancorp.

Now the SNC off.

Local people to open.

Counseling.

My model I turn it into that.

Permit and if the 10000 home homeowners to activate the outcome. So essentially the conversion rate of Hong Kong paying clients is almost close to 100% send the remaining part of the mainland people the conversion rate between Reg E Com Cline and.

Hi declines is along the suited close to 30%.

Okay got it yes. The second question is just.

Indeed.

No.

The rate as you have huge expand your business including D.

Hi, Jim.

I think.

We ended the second quarter, if you look out all the margin a balance which was our long the 7.5 billion Hong Kong dollars. This.

Yes, I'll add to the include our rather 20% of.

The percent of this anomalies petrone belongs to the.

Stock lending, which has no limitations all equity base, if we take how the.

Just pop out on margin balance is around the 6 billion Hong Kong versus our total equity close to 3 billion Hong Kong, So I think.

The leverage ratio is still well manageable.

Okay got it helpful. Thank you.

Thank you.

Thank you we'd have the next question from the line.

Orange Young from Credit Suisse. Please go ahead.

Hi, I'm. Thank you for taking my questions say, congratulations on the very strong quarter.

Just a follow up question on the cost side Ondansetron paying kinds guidance would you provide any.

Outlook on the customer acquisition cost in terms of chance, but the trends for the second happens this yet.

And demarcation for sounds much any expenses and also a related question, which I think these touched upon earlier with strong growth in better market conditions I use the team to revise your plant at news that its not if I'm not unless it's good news.

They can I use previously guided for 20% a year on year grows in new staff in the total number of staff <unk> Oh.

Are there any new thoughts on this plan.

Okay. Thank you.

Let me also your second question for interim how to call Youre right. We plan to increase more had a calling to second half altogether new line haul very strong operating growth in the first half year.

So you mentioned it before we guidance around the 20% year over year has become growth in the first half in line of the recent development of our business. We now considered the pool you had to come increase compared with last year may achieve making the range of 35% to 40%.

And.

In terms of the acquisition cost.

Oh, each client seem to signal here.

In the first copper yeah, our blended acquisition cost for you can you hang clients around the in the range of 1500 to 1600, we hope so true suffering will remain largely insane.

In the second half of our new client acquisition.

Understood. Thank you very much.

Thank you.

Can we move to the next question.

Yes.

Yeah.

Yeah. The next question comes from the line Oh Levy.

From HSBC. Please go ahead.

Two questions on the first one is that Oh, yeah. So do we have the statistics that how much is brokerage income and interest income.

Second quarter, it's generated from Oh I'm sorry.

And could you share about that seem to cancer, that's Uh Huh IPO for example.

Yes, its two.

Yeah, we're in a subscription from JP and.

How much do charge them and what is the interest targeting duration and also the rate difference.

Between our normal transaction.

And my second question is not so I knew assumption its appeal.

Professional investors since this is usually the battle to.

Resources into selling a person whos.

Hmm, providing their high net worth claim.

Safe to say we're.

I'm, sorry on services or customized sensitive so what is ours and try to.

Strategies to there's a lot the P.I. business and how is our business. This trend on the traditional private bank in her comments in terms of Ah Ah target customer group and I see racial and also does.

Okay.

Thank you.

Okay. Thank you.

Let me also the person restaurant believed the second question to my colleagues Daniel.

Just some quick numbers.

In terms of the Hong Kong IPO.

The second half for the brokerage income roughly 3% how does come from the Hong Kong IPO subscription in the trading and the within the interest income roughly 20% contribute from the Hong Kong IPO.

We touch several different.

Boulder form the Hong Kong IPO, including the.

Handling fees, which is normally 50 to 100, Hong Kong dollars per person per subscription and also many investors will pay.

We're used to leverage to make the subscription the relatively interest income will be including our interest income items under the first the handling targets, which I mentioned the before will he be including our other income then they will be some rebate roughly 1% or base.

They'll subs, Chris subscription was successful and the goal this year from the company's locations.

Rebates will be including our trading commission item as well.

Hi, Libby to your second question on our private equity fund offering you are definitely right you know the most of the private banks in Hong Kong, the very much rely on face to face interactions with the professional investors.

Selling the alternative investment funds for Q2 will be still relying 100% on our online platform will not have planned service representatives to reach out to the professional investors and market our products and the whole tenets of food to is to equip our investors with information and tools to make welding form in.

Thats been decision and that philosophy continues to our private equity fund offerings will offering our platform a rich and adequate information about the different private equity funds and hopefully that's enough me information for them to make up their investment decisions and so far it's only been a little over a month since we started offering.

Private equity funds and we have seen a pretty nice eelam ramp hot in this area. So in terms of lithium product strategy. So I think our fee will still be lower than most of the then when most of the private banks charge. So on average we plan to charge about 1% subscription fee for our private equity funds.

And for our product selections since most of our clients are still stock trading clients. So we'll focus more on the fixed income fund offerings.

And for the equity offerings.

We will focus more on the tech related hedge funds.

Thank you.

Thank you very clear.

Thank you.

We have our next great <unk>.

On the line of written shouldn't get 2.72. Please go ahead.

Yeah.

Thanks for taking my question Huh.

I have oh several questions. The first is a follow on question on your on your new paying customer how targets.

Or youre just nearby rise up you'll see it's harder to 218 seldon. So that means you expect to grow new paying customer by another 170 paid in the second half.

Can I get it or some color is about the run rate in July and August, namely, how many new paying customers you already achieving these two loans.

And well where you are.

What's the strategy to your truck is that peak number of new customers.

Names.

What type of customers mainly from.

In China also on local.

Retailers investors and well these well give or take number.

Big increasing new customers dilute the average.

Assets. So claims this system first question and that the second question I wanted to ask has about at the age of the parents like U.S. and China attentions and U.S. also.

I'm trying to like Cascadia companies to abate rose to submit or these findings, which can cause some disruption boosting and operations. So were you thinking about also come to conduct a secondary listing Hong Kong being near future.

Yeah. That's my two questions. Thank you.

Okay. Thank you for your question, let me answer your first question from in terms of the the full year guidance you're right.

Our full year guidance implies around the 180000 paying high single second half of this year.

Which brings our average each month, we should achieve so 2000.

New paying claims.

We do we do not difficult monthly you know stoping claims numbers, but I do think you know based on the current situations. We observed in July and early August.

The run rate is we're on track.

The second question regarding the second Cigna lifting in Hong Kong 40, Eightv up at home.

We will this thing homes in the U.S. in the first quarter.

A lot here, so say roughly speaking we cannot applying a second the lifting in Hong Kong until the early days old to some the.

To sum the 22. So it is due to early for us to make a final assessments, we are still grill cooling closely monitoring.

The the lens is the politics landscape and also the new.

Policies.

Adam Okayed by Dongles don't change. So currently we have no confirmed the timetable and an old come from the ideas about cigna resisting. Thank you.

Okay. Thanks.

Just a quick people go up on the are you paying customers.

I went well do you think you can.

Well due to mix of these are you paying customers I mean, how how much percentage welcome song Hong Kong and how much comes funding in China.

And well, where you think I expect that didn't pets.

On on the asset line average claim assets.

New claims well with this cost like dilution.

Yeah.

Dilution.

Second quarter Yeah.

Yes.

And I think you know roughly speaking with you a copy of 50% from Hong Kong, the remaining 50% from the maintenance and.

You will cost us about dilution I think will mainly depends on the market swill. If the volatility continues it will further increase increased the intentions for people to jumping more monies into multiple that's why we strive to provide a more service offering and also point to offering to.

Salary more monies from private banking account on the static basis.

The balance of the Hong Kong.

It's not calls will be slightly lower roughly 20% to 25% lower compared with the balance average on combat and fund the main outcomes.

Okay. Thank you very much.

Thank you.

Thank you.

I like to hand, the call back to Mr., Daniel Young for any closing remarks. Thank you.

That concludes our call today on behalf of the food to management team I like to thank you for joining US today. If you have any further questions. Please do not hesitate to contact me for any of our Investor Relations representative Thank you and goodbye.

Thank you, ladies and gentlemen that does conclude to concentrate today. Thank you for participating you may disconnect now thank you.

[music].

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[noise], Hello, ladies and gentlemen.

Im just Fuji Holdings second quarter Twentytwenty conference call at this time, all participants and listen only mode. After managements prepared remarks, there will be questioning on submission today's conference call. It's been just caught it if you have any objections you may disconnect at this time.

Now I'd like to turn the call what's your host for today's punching Charles.

Mr., Daniel Young Chief of staff and head of IR at <unk>.

Please go ahead sure. Thank you.

Thanks, operator, and thank you for joining us today to discuss our results for the second quarter 2020, joining me on the call today are Mr., Li Chairman and Chief Executive Officer, author, Chen Chief Financial Officer in Robbins Shade 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 inner 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 statements.

For more information about the potential risks and uncertainties. Please refer to the company's filings with the FCC, including its registration statement.

So with that I would now I'll turn the call over to leave Leif will make it comes 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 continue to achieve exponential growth across our operating and financial matrices and the second quarter of 2020. Following a very successful first quarter woman or you can cut was what's my job.

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And who knows what especially when you saw.

We achieved the highest paid claim growth rate since our IPO in the first quarter 2019, we added 64566 paying claims on a net basis and the second quarter, bringing our total number of England to 303102 of 84% year on year.

Those are a China mainland in Hong Kong paying claims recorded stellar growth.

Our China mainland paying claims hit a record high growth rates since the fourth quarter 2018, while the number of Hong Kong paying claims jumped 125% year on year.

Notably organic growth continued to contribute over half are you paying claims.

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During our fourth quarter 2019 earnings call. We guided for 90000 paid claims addition in 2020.

Six months into 2020, we have already exceeded our full year growth target. We're now lifting their guidance to 280000 net new paying claims this year, which translates to 141% year on year growth in our total numbers in class.

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Besides todo pay claims we also witnessed robust growth momentum in total client assets and stable client retention.

With growth in best paying claims and average assets for Atlanta, or a total client assets reached 142.4 billion uncle dollars, representing a 108% growth on a year on year basis, and 44% growth on a quarter over quarter basis.

The past quarter, with our sixth consecutive quarter, where the churn rate below or equal to 2%.

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Elsewhere trading volume Aritomo trading volume reached a historic highs of 643.9 billion Hong Kong dollars, a 202% year on year U.S. stock trading volume with 429.3 billing hung on dollars, which accounted for 66.7% at our total trading volume.

In July we launched Hong Kong stock Futures and MSC, Our index futures trading.

Going forward, we will continue to enrich our derivatives trading offerings.

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The increase in U.S. listed Chinese companies seeking secondary listing in Hong Kong and the surge of high profile, Hong Kong Ipos Oc test major tailwinds for us to further grow engage our paying claims.

Our claims total subscription for JT dot com and nothing Hong Kong Apios, both exceeded 15 billion Hong Kong dollars.

We have also seen our plans developed growing appetite for biotech ideas with a total subscription for page on medical and keeps US IPO is exceeding 19 billing and 14 Bill in Hong Kong dollars respectively.

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Hi, everybody. It was that one could was on listen Holden I often thought it isn't it.

Money plus maintain strong brands in the second quarter in remains a strategic focus.

We established new partnerships with eight reputable mutual fund managers, including T. Rowe price Franklin Templeton and a Monday.

We also started offering our professional investors private equity funds in June including it real estate funds for luxury.

Besides expanding fund offerings, we continue to add new features including an automatic investments in that allows for automatic investment into the same fund at Predefine time internal.

As of June Thirtyth till the plant assets in wealth management reached 8.6 billion Hogan dollars, representing 37% sequential growth.

Over 25000 clients over 8% as our total Inc. land held mutual fund position as of quarter.

And we see significant room for further penetration into our plant.

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Our enterprise service continue to scale, we had 104 heats up plans and 64 IPO and I are classified as at the end of two Q.

Every sub service is gaining increasing traction among industry leaders and TMT automobile in biologics sectors.

Companies like Baker Shuffle Motors, and don't care pharma and page on medical all retained after aesop provider.

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In that combine them usage of somebody portal.

As a leading only brokerage and wealth management platform through to offer superior technology infrastructure that allows for stable trade execution.

Despite a highly volatile stock market due to token 19, our service availability rate in the first half of 2020 reached 99.98%.

In April we doubled our us rather rating Hong Kong from 102, 202 process, a higher number as country.

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Hi, I'm pleased to share that on August 12, two to Singapore loving It was granted in principle approval from the monetary authorities thing or the capital markets services license application.

Smartly milestones as our internationalization and we will continue to look for new markets to extend to train our business.

Does that seem so she's having but also just hope that's how we've got you net I'd like to invite our CFO author to discuss our financial performance.

Thanks, leaving the Daniel.

Second quarter, we continue to deliver outstanding financial results. We recorded total revenue of 688 million at Hong Kong owner walking to 65% year over year in the 40% Q on Q O. Net income was 246 minute homebuilder of 329% year over year to 52% account.

Oh total revenue structure and the key revenue line, having largely consistent with prior to this quarter. Let me walk you through some key although financial details for the second quarter.

Brokerage Commission handling charge income was 410 within home called alert an increase of 236% from the same who are willing to sell in the 19 and up 37% from Q1.

The growth was primary due to 202% year over year grossing our total trading voting.

Our blend the commission rate went up to 6.4 basis point on the backlog increasing penetration of the road trading the U.S. market.

Also more Klein trade low value stocks during the quarter in the U.S. market, which led to imply to take rate higher.

Brokerage income contributed 60% of our total revenue in the quarter.

Interest income was 200 and AIDS Me, then hotel dollar increase of 82% Neal yet and the 44% of killing two marketing financing interest income increased on the back whole, 49% year over year growth in daily average margin financing balance.

IPO financing because income increased significantly thanks to a active Hong Kong IPO market, an old clients, increasing appetite to subscribe high quality IPO with on margin.

Band interest income increased due to clarify idle cash balance interest income. So total contributed about 30% although total revenue.

Other income was 17 million Hong Kong older.

The 192% a year over year growth was primary due to increased IPO financing service charge income at a fund distribution service income from our wealth management business.

Other income contributed about 10%, although total revenue.

On the call side put almost 154 minute hall dollar increase of 141% year over year and facility one person Q on Q.

Okay Commission and the handling charter expenses grew 221% yeoman yet to 70 some of them into Hong Kong order, which was mostly in line with our trading volume growth.

Interest expenses increased by 111% year over year to 40 minute Hong Kong dollar mostly in line with all module financing business and the IPO activities in Hong Kong.

Processing and the service costs increased by 76% year over year to 37 million in Hong Kong or the rice was primary due to increasing the market information that they talk to leave US well has increased in the suitable rated.

As a result gross profit increased a 172% of year over year to 500 authority for minimum homeowner gross margin was 78% most 75% in the same here in the last year.

Total operating expenses were 264 minute whole dollar increase of 82% human yet and the 35% appealing to.

Among the R&D expenses were 100.

17, being a Hong Kong older increase of 83% from the same here with the Lafayette and 39% from last quarter. The increase was primarily due to the continued increasing the idea how to call us we continue to invest Oh, what technology platform to sustain long term growth.

Moving on the marketing census was 96 minimum caldolor up 129% year over year, and 48% appealing to US we continue to roll out our marketing and branding activities to attract new paying clients.

Our acquisition costs per each new pain climate around the 1500, Hong Kong dollars.

Tom 80% Q on Q.

Do you any expenses well could see one minute homeowner increase of 31% yeoman yet in the 9%, killing two which is largely in line with no overall growth business growth.

That's a result, our non-GAAP adjusted net income increased by 312% to 243 minute hold on the strong bottom line growth was primary due to significant top line improvement and the pool with operating leverage.

So to conclude our prepared remarks, and the we'd now like to open the call two questions. Operator. Please go ahead.

Secondly, ladies and gentlemen, we will now begin the question on succession. If you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced if you wish to cancel your request the British pound or Heskey once again the stock.

Followed by one asking question in queue.

Once again, if you wish to ask your question. Please press star one of your telephone keypad and wait for your name to be in August.

[noise].

Once again, if you wish to ask a question. Please press star one on the telephone keypad make few name to be announced.

We have the first question from line of weight change Tong. Please go ahead.

Hi lease also yeah. Thanks for the introduction and personally Congratulates on a very robust earnings in the second quarter two questions. A one is about to paying clients, we see a well I salaries declined acquisition second quarter, even better than.

No [laughter] the historical high in the first quarter.

Okay. Now we have bikes 55, K Ukraine clients. So can you elaborate more on the drivers of the pain on growth and how do you see the momentum will continue in the second half of this year.

The second question is more like a broader questions. So basically we see the reach activity, particularly the online retail trading activity has picked up quite a lot across the region like Hong Kong, China, and U.S. and so it's a very good.

Like operating environment for Q2, but also we see a competition is also rising we saw a pot pies, introducing a give a commission package in Hong Kong.

A few months ago, and maybe there are more competitors entering the market. So so I would like to ask like you're looking at a 123 years horizon. If youre. What are you seeing is the biggest opportunity as well as the because it's a challenge for foods.

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Okay. Thank you wait and I think I said, just my colleagues moving onto your first question.

And the leap well for your second question.

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So there on I think there are three major reasons behind our robust paint line growth. The first one being you know the coming 19 pandemic has actually would expedite has it changed after behavioral patterns of our the retail clients. It came migrating from offline I financial and.

Situtions to only trading platforms and besides the increased volatility in the market has attracted a lot of new investors and new capital and the second reason being dot Hutu has long been devoted to optimizing our user experience and have created a very strong network effect and theory.

Established raising brand awareness and in the first two quarters at this year I can see that organic growth continued to contribute over 50% at argue pink line growth and the third reason is that on our operating efficiency also continue to improve the conversion rate from our leads to paint.

And also continue between.

And so those are three main reasons behind her pain claim growth and I think going forward. We think we haven't very optimistic view towards our paint line grows and we feel very strong paying claims contribution from various channels and at the beginning 2019 I think.

And this person harping plans are from mainland and 40% from Hong Kong and by the end of this year, we expect Hong Kong pain plans to contribute to over 40% at artful banking client base.

So we just got the in principle approvals or license application, Singapore. So we think that the U.S. local market in the Singapore market I could be or next that offer a paid claims.

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So what are your that down there so as we've seen that limits will ship. So those are seeing good hopefully all the usual limits odious a.

She also often told US again should not more hurts you like.

Yes.

Right. So there have been a lot of brokers in Hong Kong that offers the or commissions auto has now the first one and it'll certainly not be the last one and to be honest, we haven't felt much pressure from these players and you can see that are paying claims growth has demonstrated stronger growth momentum than ever so.

If you look at a local market you know there is 800 stamp duty. So through two is now targeting three best for Hong Kong stock trading and we think a further decrease in our training commission actually bring little incremental value to the reduction of overall trading costs and a long time through two has not been.

The broker the offers the lowest commission rate in the market, but we believe that where the one that has the strongest overall user experience. So besides charting a commission rate not significantly lower than industry average, we have the mezz and that's a market data we have a very stable with train system that allows.

For a high quality trade execution them have very high 40 market news and a very hotez social community platform and these are all very important reason to attract new customers and then these all require a long time to establish.

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We also true you'll find that such a goal Shushing general hook, what do you want to able to them.

Oh real goods retailer that attaches to the focus is because it okay. All the cuts.

In terms of our market opportunities, we believe our target markets do offers tremendous opportunities for growth and in terms of the trading market I believed that the Hong Kong and the U.S. stock markets are still institute and his track to actually market and the world and Hong Kong the whole stock market rent.

Number one in 2018, and 2019 terms that the equity amount raised through ideas and we believe that's more on high quality new economy companies come to lift in Hong Kong, that's more Chinese yards I do their secondary listing Hong Kong. This will further contribute to the prosperity to to the Hong Kong stock market.

And at the same time, the U.S. not markets still have a tendency most attractive on his investment targets in the world and we believe these two markets will continue to attract new capital into two will be able to continue to increase over market share in these topics in these two markets and in terms of our client base and we believe.

That I'm the only brokerage business has a very strong network effect and we're very confident to sustain rapid growth in our total number plan and there are over 20 million a Chinese nationals assets and they're at about 2 million, we tell stock traders in Hong Kong. So considering two to only had about 300.

I was in pain plan, we still think there's a there's a long runway for growth and the the policies in the Green Bay area will further open up or 10 emphasize our two main target markets right. Now, we're just trying to mainland Hong Kong and I think we'll continue to expand globally and our removing that that's.

Targeting mostly targeting the domestic U.S. market has already attracted you large fan base and continue to optimize our products and increase our important and yesterday, our Singapore entity also got the in principle approval offer license application from the lighter authority of Singapore, and we'll continue to look out for opportunities Intel.

South East Asia, as well and the wealth management business, there's certainly a very important strategic focus and we flashed our business or less than a year and our total client assets is now over 8.6, feeling on dollars and from the current statistic. We can see that wealth management continues to attract additional at that and we want.

It's still too to into a one stop a wealth management platform into a truck claims to put more assets to food to onto knowledge and Laci about every challenge as as our paint lines growth as trading volumes skyrocketed and out there is increasing volatility in the market that poses a.

A lot of pressure on our trading system and also a risk management system and we'll continue to ramp up our R&D investments to ensure the stability of our trading system and to increase our at risk management capabilities and as our business continues to grow we'll continue to hire more people and how to optimize our town structure how does.

Continue to increase talent with finance background, and with international background, and how to retain and incentivize. Our current talent pool. That's awful is very important task for us.

Hi, we turned that that answer a question.

Jimmy moved to the next question.

Yes.

The next question comes on line of stops in food from Citi. Please go ahead.

First congratulate on me a very strong Uh huh.

So I have a couple of questions. Yeah first since we got in your Uh Huh.

New payment patterns, so first would like to our App.

Between Hall, and make I try not Uh huh.

Oh, you have something you can.

The second quarter and also like looking at your full year guidance on that you're paying higher we see a try it out which has a very strong number. So just wondering if you can shed some kinda on the Oh.

Our recent tool box like July August Congress, so far.

Oh, which.

How are you pick apart.

Oh yeah.

And also when <unk> size.

Okay.

I had one thing I can you also mentioned earlier that I can be matches, the kind to paint I'm just wondering whether business also because oh, hi, Oh Congressman they are you happy with the Hong Kong.

Hi, guys. Thanks.

Okay.

No one Rachel.

I'm just wondering if you can break down accomplish array part D. A 42 back.

And then next I would also like true at all your trading volume that you reported at the Oh.

Treating guardian this quarter, we shall we say affecting the finished strong well and it's like much stronger than our market shop.

When they if you can share.

What you see asked the reason behind driving this drop was and.

And also Radnet. This is like more steer towards the U.S. comedies, R&D Chinese yeah, and better your fingers stream, that's I got sustainable going forward and lastly, I'm sorry, quite a lot so crushing and lastly, just one tool a check on Yahoo.

Oh the international expansion.

Yeah I understand your thought you mentioned.

The.

Okay Bobcat up also watch forgot your thought on the HM <unk> license.

And then.

Oh, yes.

Like I, suppose I guess thinking longer time, maybe.

Sure, Yes, Oh, you along the road, what's your thought about the chance of getting it yet.

Thank you.

Okay. Thank you Stephanie let me just to answer your first second and also to both questions I will leave the sort of concern to robbing under the final question regarding the Asia market access.

To my colleagues leap in terms of the a breakdown of new client acquisition for this quarter.

I know roughly a comfortable 53% of the total and the remaining 47% came from the China.

Huh.

And also in terms of the trading volumes. So you mentioned.

Before.

The U.S. trading volume roughly uncomfortable tooth tussaud's, although total trading volumes achieved in this quarter's a interim sort of stock trading my old Cline, that's what I think it would be more.

School to these purely U.S. styles, such as Tesla, Facebook and they even GE et cetera.

The overall Chinese 80, honest trading volumes, our U.S. trading volume side, it's roughly about 15%.

And.

In terms of the trading volume sustainability I think it is more of those because of the high volatility in the U.S. markets, particularly in the first half of this years.

Going forward I think the proportion of the Hong Kong trading volumes will continue to go up because we continue to kingdom off this year.

Hi, Mark is compared with the first quarter.

Which we achieved a 1.4% cash and the warrant still market shares in Hong Kong All markets you answer they continue to increase to 1.6% in the second quarter and the such moment actually will continue has continued into July and.

Okay.

Roughly speaking in July our market shares in Hong Kong already achieved a 2.5%, which I think is which will underpin our growth.

Strategies.

Into Hong Kong market trading volumes.

So I wouldn't have warping also your second question about the conversion right going forward and also our.

Asia market access.

By the thank you.

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Yeah.

How are you Williams will sure.

So he doesn't gorczyca or shouldn't put too much I don't know copel, she's outreach and good towards the event with fringe. How you. It's usually shift a hotel I don't want structure should even how should we should not showing the trend and showing who wouldn't yeah. We've been trying to drive to do something useful she should.

So there are three main reasons between behind the higher conversion rate from a total claims to a total pink line and the first reason is as it just that definitely.

There is a higher percentage and contribution from our on helping clients and Hong Kong paying claims are typically demonstrate higher conversion rates and the second reason as a Bobby just mentioned as relations question. So we see increasing conversion rate between our lead to our pink line.

So we have increased our operating efficiency, we have optimized at the account opening and the cash on deposit processing, so which made it easier for our clients to become are paying clients and the third reason is because the general market volatility and the increased at a high quality, China 80 are coming back to Hong Kong.

So a lot of our clients want to take advantage of this opportunity to two to make money and that also resulted in a higher conversion rate.

Suddenly going to you should get I'll leave it up a tissue food show any chance you dollar issuance I'm, hoping you should jump up until now it's just how they said we bought at your whole foods that it we should have moved from the T. a lot when I don't know opinions on April I don't hold me, you'll notion HMA to TD He says.

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<unk>.

So we have continued to look out for opportunities in the Asia market and five years ago, we became the level to market data provider in cooperation with the Shanghai's Chinese stock exchange stock exchange and we continue to optimize our market data our news arbitrage.

The offering for exercise to through stock connect and we've also noticed they're relative policy aptiv with regards to to the cramping area and a at the right time I think we will consider getting the issue license, but it's not on our immediate agenda right now and there are still a lot of other things on that.

We could do and we should focus on right now thank you.

Offense. This is very helpful. Just want to a follow up on the call pressure way out when the if you can share.

Well as to commercial rainfall okay freshness.

Hi.

And actually with just one Mark a question if I may its regarding though adequate cash.

Absolutely.

Uh huh.

It's very fast that business expansion and tapping into new markets.

So when they feel can come out that thank you.

Definitely couldn't can you repeat your second question I think it was limited to alter your first question for you to sequential rate is conversion rate for the Hong Kong peoples Bancorp.

No the SNC off.

Local people to open a call, Florida online model actually they need to that.

Remit and if the 10000, Hong Kong owners to activate the outcome. So essentially the conversion rate of Hong Kong Pink highs is almost close to 100% send the remaining part.

Maintenance people the conversion rate between registered account Cline end up paying claims is along the Soviet close to 30%.

Okay got it yeah. The second question is just.

Any potential.

As you continue to expand your business, including <unk>.

Merger.

I think.

We ended the second quarter, if you look out our margin a balance which was our long the 7.5 billion homebuilders. This this I'll actually include our rather 20% of 20% of this anomalies has really been onto the.

Stall lending, which has no limitations all equity base, if we take hold its.

Just pop out on margin balances are wrong, the 6 billion Hong Kong versus our total equities close to 3 billion Hong Kong. So I think you know the leverage ratio is still well manageable.

Okay got it helpful. Thank you.

Thank you.

Thank you we have the next question from the line.

Yeah Orange Young from Credit Suisse. Please go ahead.

Hi, I'm. Thank you for taking my questions I'm say congratulations on the very strong cotter.

Just a follow up question on the cost side ondansetron paying kinds guidance.

Would you provide any outlook on the customer acquisition cost in terms of trends for the trends for the second happens this yet.

And demarcation for sounds much any expenses and also a related question, which I think got these touched upon earlier with strong growth in better market conditions are you looking to revise your plant at news that's its not if I'm not in this is good.

They can I use previously guided for 20% a year on year grows in new staff in the total number of staff <unk>.

Are there any new thoughts on this plan.

Okay. Thank you.

Let me also your second question for interim how to call Youre right. We plan to increase more how to calling to second half altogether new line called very strong operating growth in the first half year.

So you mentioned it before we guide up around the 20% year over year had account growth in the first half in line of the recent development of our business. We now considered the pool you had to come increase compared with last year may achieve making a range of 35% to 40%.

And.

In terms of the acquisition pools, Oh, each client seem to signal here.

In the first half a year, our blended acquisition close coordination youre paying clients around the in the range of once on the 500 to 1600, we hope so true suffering will remain largely insane.

The second half of our new client acquisition.

Understood. Thank you very much.

Thank you.

Can we move to the next question.

Okay.

Yeah. The next question comes from the line Oh, we renewed.

As we see please go ahead.

Two questions on the first one is that Oh, yeah. So do we have a this statistic that how much is brokerage income and interest income a into second quarter. It's generated from Oh, I'm quite happy hour and could you share about HM.

The canton and that's Uh Huh IPO for example.

The 15.

Yeah, we're in a subscription from GBM.

How much do charge them and what is the interest targeting duration and also the rate between.

Between our normal section.

And my second question is not new function, it's the Pea.

Professional investors. So this is usually a the patent suit.

Ah resources into selling a person out.

Hmm, providing their high net worth claim.

Face to face or or onsite services, what customize the sensitive so what is ours right.

Strategy to there's a lot the P.I. business in Hollywood.

Our Oh Dear friends on the traditional private bank in her comments.

Ah Ah target customer group and I see racial and also does.

Okay.

Thank you.

Okay. Thank you.

Let me also the person culture. The leave the second question to my colleagues Daniel.

Just some quick number in terms of the phone call IPO.

The second half for the appropriate incomes roughly 3% how does come from the Hong Kong IPO subscription in the trading and the within the interest income roughly 20% contribute from the Hong Kong IPO.

We touched several different Boulder formed Hong Kong IPO, including the.

Handling fees, which is normally 50 to 100, Hong Kong dollars per person per subscription and also many investors will pay a were used to leverage to make the subscription the relatively interest income will be including our interest income items under the first the handling.

I'll, just which I mentioned it before will he be including our other income then they will be some rebate roughly 1% or base.

They also true subscription was successful and the go to shift from the company's locations.

This rebates will be including our trading commission item as well.

Hi, Libby to your second question on our private equity fund offering you are definitely right you know the most of the private banks in Hong Kong, the very much rely on face to face interactions with the professional investors have been selling the alternative investment funds for Q2 will be delivered.

Line, 100% on our only platform will not have planned service rep. reach out to the professional investors in market, our product and the whole tenets of food to is to equip our investors with information and want to make welding form investment decision and that philosophy continues to our private equity fund.

Offerings will offer an hour platform, a rich and adequate information if all the different private equity funds and hopefully that nothing information for them to make up their investment decisions and so far it's only been a little over a month since we started off from private equity funds and we have seen a pretty nice Ala ramp hot.

This area. So in terms of lithium product strategy. So I think RFP will still be lower than most and then when most of the private banks charge. So on average we plan to charge about 1% subscription we throw private equity funds and for our product selections since most of our clients.

Our still on stock trading clients. So we'll focus more on to fixed income fund offerings.

And for the equity offerings.

We will focus more on the tech related hedge funds.

Thank you.

Thank you very clear.

Thank you.

We have our next great.

From the line of <unk> Vincent.

Morning, seven could you. Please go ahead.

Yeah.

Thanks for taking my question Huh.

I have oh several questions. The first is a follow on question on your on your new paying customers, how target or Youre just nearby rise up you'll see it's harder to 218 seldon. So that means you expect to grow new paying customer by another 170.

He came in second half.

[music].

Can I get it some colors about the run rate in July and August, namely, how many new paying customers you already achieving these two months.

And well where you.

What's the strategy to attract is that peak number of new customers.

Means what type of customers, mainly from mainland China, all from Hong Kong locally.

Retailers investors as well these well give or take number.

Peak, increasing new customers dilutes the average.

Asset so clients or it's just the first question and that the second question I wanted to ask has about it the AG the parents like U.S. and China pensions and U.S. also.

I'm trying to like Cascadia companies to abate rose to submit or these findings, which can cause some disruption boosting and operations. So were you thinking about oh, So that's conductus secondary listing Hong Kong being near future.

Oh, Yeah. That's my two questions. Thank you.

Okay. Thank you for your question, let me offer a first question for in terms of the the full year guidance you're right.

Our full year guidance implies around the 180000 paying twice in the second half of this year.

Which brings our average each month, we should achieve so 2000.

New paying claims Oh, we do we do not difficult, mostly you know stoping claims numbers, but I do think you know based on the current situations we observed in July and August.

The run rate, yes, we're on track.

The second question regarding the second the second the lifting Hong Kong for the up at home.

We will this thing homes in the U.S. in the first quarter.

We have lost here, so say roughly speaking we cannot applying a second the lifting in Hong Kong until the early days old Tucson.

To sum the 22. So it is due to early for us to make a final a assessment we are still real cooling closely monitoring.

The.

The lens is the politics landscape and also the new.

Policies.

Advocated by Dongle store change. So currently we have no come from the timetable and an old come from the ideas about six number this thing. Thank you.

Okay. Thanks Tonight, just some quick people go up on the are you paying customers.

I well well do you think you can.

Well the mix of these are you paying customers being how how much percentage welcome song Hong Kong and how much comes from you in China.

And well, where you think expected the impact on.

On the asset line average clay I said to.

New claims well with this cost like dilution.

Ah yes.

Yeah.

Dilution.

Second quarter Yeah.

[laughter] I think you know are roughly speaking with you talking 50% from Hong Kong, the remaining 50% from the maintenance and.

No concerns about dilution I think well mailing depends on the market as well if the volatility continues it will further increase increased the intentions for people to jumping more money into multiple that's why we strive to provide a more service offering and also point to offering to.

Salaried more money from private banking Oncomed.

Static basis.

The balance of the Hong Kong.

Just a cost will be slightly lower roughly 20% to 25% to lower compared with the balance every jacobellis bundling that comp.

Okay. Thank you I think as much.

Thank you.

Thank you.

I like to hand, the call back to Mr., Dan you're gone for any closing remarks. Thank you.

That concludes our call today on behalf of food to management team I like to thank you for joining US today. If you have any further questions. Please do not hesitate to contact me for any of our Investor Relations representative.

Thank you and goodbye.

Thank you, ladies and gentlemen that does conclude to concentrate today. Thank you for participating you may disconnect now thank you.