Q4 2021 Noah Holdings Ltd Earnings Call
Good day and welcome to the Noah Holdings fourth quarter 2021 earnings conference call.
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Note. This event is being recorded I would now like to turn the conference over to Chairlady. Wang. Please go ahead.
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On today's conference call, but on.
Today's conference call I'd like to talk about my observation of the micro environment, then recall, Tom Noah's overall results in 2021 and performances of major business segments. Our CFO . Mr. Peng GE will then introduce detailed annual financial results of the company followed by a Q&A session.
Looking back on the past year, we once again experienced the complexity and periodicity of the financial markets in China, The wealth management and asset management industry has undergone paradigm transformation.
That's real changes distance ecology characteristic positioning are different from those in the past the industry has ushered in an inflection point in the evolution of business model. The loose supervision cycle ended and a sales orientation became the past the underlying assets provided by domestic.
Thanks to clients migrated from where we sit down to an 80 basis points embracing the inga equity products. We believe that we must replace the sales mindset with our client centric one in order to survive the competition.
Investors and practitioners have been gradually materially the aging population and increase our residents as well as helping the continuous growth of the industry. All of these developments show that China's wealth management industry is developing steadily and healthily.
Same time, the inflation of risky assets is part of England across the growth due to the quantitative easing policy and surplus of liquidity that has persisted for a long time, the reversal of quantitative easing will change regulatory models and market valuations of many industries.
Over the past 10 years, China's economy has achieved remarkable growth, but there are also certain major structural issue that concerns the market Shadow banking NIM at least the imbalance financing platform industry with over capacity as well as resource industries with high pollution on high.
Energy consumption after a long terms of some adjustments we can see that in 2022, the shadow banking real estate and government invisible liabilities that the central bank are worried about in the past have been collected.
China's micro strategy of steady growth and structural adjustment has achieved good results.
In 2020 to China's economy will further return to real economy, the manufacturing industry will be upgraded to BBB.
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Sadly the industrial competitiveness will be significantly improved small and medium sized enterprises will continue to be active and enjoy a low tax rate manufacturing exports and key supply chain has shown strong resilience and vitality China's private enterprises pay more attention.
Two high quality development and begin to see expenses in management.
These findings allow us to have full confidence in China's economy, and the market, while the ongoing Russia, Ukraine wall is Walgreens, we can be sure that in this process. The market will continue to fluctuate from the perspective understanding the financial needs and well sources of the market.
In the first strategy report of no CIO office in 2022, we plan to suggest our wealth management clients to adopt the strategy of protection before gross festival actively check the asset allocation of themselves and their family and make sure asset protection and SSA Scott.
Secondly, further balance their global asset allocation and consider the long term situations of excessive currency issuance and inflation.
In the secondary market, primarily utilizes multi strategy portfolio allocation strategy in the primary market adopts the strategy to pay more attention to the cross cycle early investments behind technology.
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In 2021, no one made a great step forward to successfully transform from non standardized products two <unk> based product and further optimize that the S. Allocations for clients. We also internally and structurally promoted the transformation from product driven to some client centric despite the ink.
<unk> of the epidemic now, let's do achieved unprecedented growth in terms of net revenues non-GAAP net income the number of Black Hawk and Diamond card clients and the number of active clients in 2021 throughout the year 2021, Noah achieved net revenues of <unk> $4 3 billion, an increase of 30%.
Year on year and achieved a non-GAAP net income attributable to shareholders of renminbi $1 4 billion, an increase of 22% EMEA, which is also a 14, 4% higher than the annual guidance. Despite the effects of the epidemic and volatility in the market our net revenues and net income both hit record highs.
We believe that our success of business is inseparable from the trust of our clients.
Currently no asset under advisory is approximately RMB $280 billion over 85% of which are private equity and private secondary product lockup period.
With respect to the overseas market in 2021, we reported a net revenue of RMB 1 billion.
38, 6% growth year on year, and 7% growth compared with 2019, indicating the performance at the overseas market has rebounded to the pre epidemic levels. One time Commission management fees and performance based income increased by 43% four 4% and 200.
43% EMEA overseas transaction value reached RMB 14, 3 billion, a big increase of 61% EMEA. The overseas <unk> was <unk> 20.
$28 4 billion accounting for 18, 2% the total of the group representing an increase of 14% from the end of 2020. Thanks.
Noah's overseas colleagues for their outstanding achievements under the influence of the epidemic.
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In terms of core business data the net revenue of wealth management segment reached $3 2 billion renminbi up 35% year on year the transaction value of financial products was $97 2 billion, a slight increase of two 6% EMEA, among which private equity was <unk>.
$18 1 billion up one 1% year on year private secondary funding standardized product was 37 8 billion up seven six or seven 4% EMEA mutual funds was $37 2 billion a slight decrease of two 1% year on year affected by the risk averse.
And the clients on the market fluctuations in the second half of the year the transaction value of other comprehensive services such as insurance products reached $4 2 billion a year on year increase of 35%.
In 2021, the high net worth clients of Noah continues to grow and remains active the number of total EF declines, including mutual fund only clients exceeded 42000 people up 25% year on year, the aggregate number of Black Hawk and Diamond core clients increased by 18, 2% in the year.
Of which the number of black Hawk clients increased by 38% and Diamond core clients increased by 14% growth that exceeded our expectations.
Fact that the three main categories of clients number reached record high again indicated our client incentives transform has been well received by our clients.
Information of our marketing strategy is both to the Mellotron NGO service model, which focuses on coordinated business development and professional specialization is proved to be effective in upgrading our service quality and constant client stickiness.
In 2021, we also launched a smile treasury SaaS platform to connect small and medium sized enterprises and allow them to buy mutual funds with payloads Treasury services for convenient online cash management with the aim to help improve the investment and operating efficiency of corporate cash and to satisfy their needs.
Working capital management.
The end of 2021 small change recovered 95% of the mutual funds and 90% of mutual fund managers in the market.
Institutional clients from 14 industries, including real estate finance and technology.
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The asset management business reported a net revenue of one point.
Over $4 billion, an increase of 19% EMEA Gophers AUM increased slightly by 2%, reaching RMB 156 billion with continuing to optimize the economics to the specific <unk> private equity was 131 billion up 11% year on year public Securities.
With the $11 billion of 13, 4% year on year, while real estate assets decreased by 48% year on year to $6 6 billion, including U S rental apartments funds.
Gophers asset structure has been continuously optimized now healthy and in line with expectation for public securities by the end of 2021 Gulf of standardized products have delivered steady investment performance among them. The annual return of Gulf of Megatrend Mum manager of managers fund was.
14, 2% exceeding the benchmark, we can rate by 9% during the same period.
His top 30 fund of hedge funds posted an annual return of 13%, beating the benchmark rate by four 5%. During the same period goes as overseas selected U S telephones and your return rate was 16% exceeding the benchmark by 10, 5%. During the same period. It is worth mentioning that <unk> is well stabilized.
Targa strategy with a stable strategy launched in August balanced and positive strategies launched in April 2021 achieved accumulated returns of one 1% four 9% and five 4% respectively by the end of 2021 effectively limited fluctuations and control.
The pullbacks amid market volatility.
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In terms of private equity goes we'll continue to promote the establishment and investments on the phone.
And secondary funds and co investment funds one of arms length, our capital in cutting edge technology and health care subsequent with more than 7000 underlying companies through more than 230 cellphones secondary funds have been ranked as one of the top 20 banks second refunding the world a global false Association.
Second consecutive year in 2021.
<unk> direct and co investments on mainly focus on areas such as early stage Fintech consumer technology, and pharmaceutical projects Gopro Silicon Valley venture capital funds and growth in New York Real estate funds have achieved large scale successful exits from certain projects in 2021 with excellent investment.
And between Gopher has constructed.
As constructed an infected investment research system <unk> compose those funds researching micro strategy researching and industry research team appropriate and integrated product development process.
Being implemented for all funds managed by Gopher around the world.
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In 2021 in accordance with our plan the strategic direction. We finished the reform of qualification systems for relationship managers and greatly increase the base salary for them the company continuously make strategic investments in three areas.
<unk> client interface technology system, and investment and research in 2021, the number of <unk> clients grew significantly thanks to the strategic investments in our core client base client service experience has also been homes in 2022, we will continue to invest in the development of core client basis and Kate.
And key cities the improvement with technology and investment research capabilities, so as to paint the ground for long term healthy and sustainable growth of Noah, while maintaining profit growth at a reasonable level.
2014, Noah has been publishing to Noah corporate sustainability report for seven consecutive years. The report was awarded the Triple a high risk rating four excellent corporate social responsibility report by the Ministry of industry and information technology, and the fourth China International import Expo and <unk>.
For the first time to be awarded to a private financial company in China in 2021, we launched especially ESG transactions on our domestic some smiles and overseas I know what platforms among gopher.
Investment portfolio, a number of excellent investment cases in line with the principle of sustainable development has been identified.
Together with our partners and clients Noah has organized to plant <unk> and consists of approximately 360000 trees in the desert and identified 23 with thesis through NOLA arc bio.
Rohit Conservation project in 2021 verified by the International certification body SGA Noah obtained the companywide greenhouse gas emission inflammation certification of international standard specification system's latest carbon verification qualification and reporting standard ISO for.
146 for one 2019, becoming the first enterprise in China to posses version of defend it.
In addition to focusing on sustainable development and fulfilling corporate social responsibility now also actively promote women's equal rights in 2021 and signed my supposed statement on the principle of empowering women at U N win I'm very pleased that by the end of the year female employees accounted for 62.
2% of all employees of Noah senior executives accounted for 37% and there was no significant agenda based income gap. There also one third of female members of the company's board of directors.
No I also wonder UN women Asia Pacific West Award for transparency and reporting in China. This year, marking the only enterprise to win the award in the country.
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I'd also like to give you an update on our status on the holding foreign companies accountable Act, but I think we estimated that 273 registrants might be identified as commission identified issuers under the act.
Dissipate that a large number of U S listed companies with operations in Hong Kong and other parts of China will be added when we file our annual report reports with the SEC around April this year.
As part of our continued regulatory focus in the United States.
<unk> to audit and other information currently protected by National laws in particular, China's the act requires the SEC to prohibit the securities of any covenant issue or from being traded on any of the U S Securities and exchange. It is the auditor of the cover issuers financial statements is both subject to inspection by the U S.
Public company accounting oversight board for three consecutive years beginning in 2000.
'twenty, one Noah holdings, maybe provisionally named as a commission identify issuer following our filing of the annual report on form 20-F at the end of this month with SEC.
Our company's American Depositary shares may face the risk of being delisted from the new York's always changing early 2000 22024.
In addition legislation is being considered in the U S shortened a number of known infection years from three years to two years.
We will continue to monitor market developments and evaluate all strategic options.
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In 2021, we the position now to focus on serving global high net worth clients as a one in 100 wealth management company by connecting leading as I managers around the world to provide high quality wealth management services for high net worth and socially responsible families and institutions.
In 2021 with a United efforts of our seasoned team no. One moved forward without burdens achieved sustained net revenues growth and drove our net income to a new level without any exposure to real estate high yield bonds, where in a rapidly growing industry, we respected common sense and market moves reflected in correct.
Ourselves after the encounter of risks so even under the complex market conditions in 2020 . One we still successfully protected interest of most clients and creating long term value for them in 2022, now or will continue to understand and reflect on the wealth management industry understand the changes and Darren in the market in <unk>.
Needs in very.
In variance in the market and client needs respect commonsense respect market continue to deepen organizational change and truly practice from product driven to a client centric survival as the bottom line and professional people oriented to create value for all of our clients China's wealth management and asset management industry is at an inflection point.
The future market will further test of a professional capacities of ethane location client service and technology will continue to work in the direction of being committed specialized and in debt to achieve one meter wide and a thousand meters deep sheets benefits in management and become a one in 100 wealth management company.
Global high net worth clients uncertain that we still have a lot of good space and we will go a long way today Noah positioning is clearly a more focused the brand vision of Noah is with the young well devote ourselves to creating a legacy for generations to come now please welcome.
Group CFO pension to report our detailed financial performance in 2021. Thank you.
Thank you Tanya Thank you chairlady and Hello investors.
Yeah.
Looking back at 2021 has been a very challenging year as supply chain inflationary pressure globally.
An outbreak of COVID-19.
Coupled with stricter regulatory policy.
Any industry and a bumpy equity market.
And it's also what makes it special that the young.
<unk>, Brian Noah.
As accomplished a record setting year with unprecedented shipments across revenue and profit.
Benefiting from a well executed client focused strategy and our investments in client relationships that paid off.
Now let me walk you through the detailed financial results of the fourth quarter and full year 2021.
Net revenues for 2021 RMB one three.
3 billion up 30% year over year and also the highest.
Lifting.
To start increases in performance based income.
Arising from the distribution of insurance products.
Benefiting from the successful execution of core client strategy, one time commissions grew 57% to RMB, one 3 billion.
Recurring service fee recurring service fees were RMB, two 1 billion up 9% year over year as a result of a larger asset base, we manage for our clients.
Performance based income achieved another milestone amounting to RMB $780 million.
More than doubled from the previous year.
Specifically long Jewish inquired, the equity products and probably a good secondary products accounted for 46% and 48% performance based income respectively, again, demonstrating our excellent investment product selection capability that in turn translated into value creation for our clients.
Income from operations was RMB, one 2 billion down 5% year over year due to increased talent retention.
Efforts continued strategic investments in clients.
To better meet the evolving needs of our high network clients as well as expenses incurred related to our new headquarter renovation.
We increased our investments in technology investment research talent.
At RMB 120 million as part of talent acquisition strategy.
In 2021, we continue to satisfy our strategic budget totaling RMB, one three RMB 130, remember, which accounted for about 3% of our annual net revenue covering key initiatives, including client acquisition.
Our interfaces digitalization development of new products compliance transformation.
As well as operational announcements in key cities and regions.
I am happy to note that these investments have harvested excellent results as we have accomplished prominent.
Improvements in our technology infrastructure.
The investment research capability as well as record breaking growth.
Cortland and.
And the overall client activity.
Investment income was RMB 65 million compared to a loss of RMB 86 from 2020 equity earnings.
More than tripled to RMB $302 million from previous year.
These were mainly attributable to fair value adjustments made to the group's direct investments.
Underlying.
Corporates one.
We recorded a non-GAAP net income of RMB, one 4 billion for the year of 22% increase year over year with a profit margin of 32%.
6% over the upper end of our new <unk>.
Guidance with.
We plan to continue our strategic investment.
In areas, where we could strengthen our unique positioning and competitive advantage to achieve continued growth over the long term, while maintaining an efficient and disciplined expense management.
In terms of segmented results net revenues from the wealth management business.
$3 2 billion for the year up 35% year over year accounting for 74% of the total net revenues of the group.
The growth you know wealth management business was supported by robust client activities and strong growth core clients.
Total active clients, including mutual fund clients during the year was 42764, 25% from previous year.
As I have mentioned previously expanding our diamond and Black card. One group was one of the key strategic initiatives for the year.
Accomplishments on this front.
With 14% and 38% increases in diamond and Black card clients, respectively, and an 18% increase overall.
By deepening our wallet share of existing clients and attract new client acquisition strategy.
That includes more targeted marketing spending more high quality off one client activities.
Refined clients or process empowered by our nowhere triangle service model as well as large client management.
<unk>, essentially indicating effective client centric reform.
Total transaction value for 2021 was RMB 97, 2 billion up 3% year over year.
We noticed in our respective clients flight to safety.
It's the market Volatilities and successfully allocated more insurance products, while maintaining slight increases in private equity and private secondary funds products.
Net revenues from the ACA management business were RMB around $1 billion of <unk>.
19% year over year.
We continued to exit private credit assets.
Real estate assets in 2021.
Successfully maintained their marginal growth.
The net increase of two 7% to 1% to RMB 156 billion.
Since the start of the standardization transformation Gulfport has exited and distribute it over RMB 32 billion.
The credit assets to Oklahoma.
The mix of our U M.
Months RP in public Securities.
By 11% and 13% to RMB 131 billion and RMB 11, respectively, while our real estate AUM decreased by almost 50% to RMB 7 million.
Despite the COVID-19 pandemic overseas business posting exceptionally strong growth.
Which would net revenues increased by 39% year over year to RMB 1 billion driven by larger.
And 243% increase in performance based income.
We're proud to have a resilient intelligent team, who strive to create value for our clients.
End of 2020 , one we offer more than 1300 standardized on us our offshore wind platform I know.
And we will continue to Smiths L capability, providing global asset allocation services for clients.
When it comes to our fourth quarter results net revenues were RMB, one 3 billion up 32% year over year, and 39% quarter over quarter also the highest single quarter industry.
One time commissions were RMB.
$479 million up 76% year over year, and 123% quarter over quarter.
Recurring income was RMB.
500 with the Union.
Up 28% year over year, and down 2% quarter over quarter.
Performance based income was RMB $173 million down 16% year over year, but.
Kevin.
111% quarter over quarter.
Total operating costs and expenses were RMB, one 1 billion up 83% year over year, 66% quarter over quarter, mainly due to increased expenses related to offline activities include the theories of black card gala events as well as increased arm commission in relation.
Two higher insurance sales in the quarter.
As a result operating profits were RMB $132 million down 61% year over year, 42% quarter over quarter.
non-GAAP net income on the other hand.
Was RMB $290 million.
10% year over year, and 2% quarter over quarter.
Equity earnings.
It increased by 300% year over year, and 150% quarter over quarter to RMB $161 million due to a favorable fair value adjustments made to the underlying assets.
Gophers homes.
The bumpy equity market throughout the quarter led to sweat shirt investment preference from our clients resulted in a 13% quarter over quarter in our transaction value during the quarter. However, we're able to cater our diverse product offerings to meet with our clients change in risk appetite, which.
<unk> turned out to more allocation of insurance products.
The financial results.
<unk>.
In terms of the balance sheet, our cash has increased to RMB three 4 billion in total assets stood at RMB 10, 9 billion as of December 2021.
Our current ratio was two four.
Multiple.
Asset ratio was 25, 2% again.
No interest bearing debt.
We're mindful about the usage of the cash one facing uncertainties, but are also considering to install a long term shareholder return mechanisms when the timing is right.
Looking forward, we'll likely we would likely see another year mixed with uncertainty and market volatility.
Escalate the frequency of disruptions or travel and commuting when China adjust to post COVID-19 partners.
A charity has mentioned our clients have demonstrated high risk averse preferences, and we're committed to refining our client services and product offerings.
Essentially creating value for clients and shareholders by enhancing our products collection rich searching.
Technology capabilities.
In 2021 weeks.
We successfully converted difficult market environment into regular time net revenues and net income.
We believe the contribution to clients and tenants are if not the only reason.
In 2022, we plan to provide more varieties of market risk neutral alternatives, such as sculptures target strategy products fixed income in hedge funds and insurance products.
Confident they will continue to deliver growth in 2022 by enlarging core client base, increasing market share and giving more wallet share of the existing clients.
At the same time, we'll continue to implement our strategic spending budget in 2022 to focus on core client acquisition operational improvements in key cities incubating innovative products and services as well as key operational and digital transformations in our effort just a structural foundation.
Our long term growth.
With that in mind, I would like to announce that the non-GAAP net income guidance for 2022 will be in the range of RMB 145 billion to RMB 155 billion, reflecting managements current business outlook.
Thank you everyone for listening I will now open the floor for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question today comes from Ethan Wang with CLSA. Please go ahead.
One example.
Yeah.
On diesel and can do it here.
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Junior <unk> hallmark value of.
Of course in Germany, I'm really kind of cool.
Two disappointing quarters, though.
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Li Xiang.
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Good call.
That's undrawn.
How should be quite a woman she knows who will share with you.
<unk> do a ton of opposition.
Yes.
Sean can build up on aluminum ball women.
<unk> two should be a holder J girl.
John Ricardo <unk> senior.
You don't want doing dropdown launching the Colgate.
Sure.
And so we jumped off of women.
The cost to reach them.
Yeah.
But in any one month.
Two questions the first.
First one is based on the fourth quarter last year and year to date market environment.
Are we seeing any change in the product.
Uh huh.
Neutral.
Private segment products.
First question another question that will notice.
Paul has been kind of fast.
In the first quarter.
We mentioned that.
Due to the talent acquisition. So just wondering if management can explain more details our strategic country and region.
And our cost growth.
Especially given the context.
Small compartment and the Covid situation in China. Thank you.
<unk> pension portola.
Okay.
Just a word or do they just.
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Just.
To get back to quantity the pay for teen comp now what did you pay for that.
I work on Jason once you how does a woman Nicole Youll.
<unk> just a couple of the Calgary, Bob Shanks senior women battery the.
We will be able to react with that one so that's what you asked about political will to do that.
Yeah, George touched on maybe should have that kind of hydro Shandong.
That said you do feel and live and that's where our chimpanzee <unk> don't know what you asked a good question Joseph a woman to be angry.
Well the Bangladesh for sometime now Brooklyn accident.
Gilead has the diodes and that's as good a changing I push again, then the EOG likes you don't know women do it fun surely it's a bathroom slowly taxes.
You do things out about what would cause you to have someone do you feel differently about that.
Thank.
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Is that one of the higher pension lag franchise, well Jimmy Choo will go into the how do you just forgot <unk> well known Pan Diana for hours about the Tam conversations really don't go there he or she tends to be a full national bank is sitting there as a woman with are you interested in going to cover the goto merger.
You shall ballpark a couple they told you thought do you want to answer that <unk>, what's interesting I recall to reaching Jim Tom total Tmall, how can then pick a cohort.
How do you go over quarter, regardless of the deal we can do.
Hospice Chin punching lives from Shanghai and that kind of stuff.
Now with him about one component on that.
Uh huh.
First of all to your question Ethan.
First question is that.
It seemed pretty apparent.
Our clients have turned quite conservative in terms of investment.
Terrific.
But we have tried our best to exit.
Some of the products that already.
Earning profit and distribute that back to our clients.
But it seemed our clients are more cautious.
This year in terms of.
The health check their overall asset allocation strategy. So obviously, we have noticed a shift.
<unk>.
<unk> cash or allocating more assets towards our insurance product as well as some of the trust structural design.
Would have segregation.
<unk> from <unk>.
More risky returns so that shift is actually.
Pretty obvious would see.
And in terms of outlook Oh.
COVID-19 situation it seems that it's.
Robbie.
Not to be a good question.
Theyre, probably would get different cities.
Towns that have.
Continuous, but obviously occasion of shutdowns.
Towards the 20th annual conference.
National Conference.
We also have to be looking at that as opportunity to where actually people get shut off from the.
Offline activity probably.
Intend to trade and allocated them to more online also is more willing to engage in interactions with us in terms of on the knowledge sharing.
Okay. So that's the first question.
Second question in terms of the cost of the fourth quarter.
It's actually a little bit.
I guess the mix of.
Seasonality and also the result of transformation.
First of all the fourth quarter is actually typically the conventional season, where we have.
A pretty high number of annual client activities, including a series of Black card gala events.
In Grayling in December as well as.
The separate.
Diamond card client conferences.
Our cities so the actually accounted for quite a bit of inquiry.
In marketing expenses.
And two it's also part of the result of the transformation.
Well, we actually upgraded the compensation scheme.
British managers.
As you probably are familiar with that that would have increased.
Fixed pay.
Or am by close to 30% we did the first batch in the upper half of the year and also the rest of the lemon.
Regions and cities actually also came into program.
In fourth quarter. So obviously that also increased expenses.
Of the fourth quarter and looking forward at 2022, we'll continue to actually monitor expenses, but it seems the hikes.
In terms of in the transformation.
<unk> in the compensation mechanism.
Not.
As a.
Peaky.
In the fourth quarter, and obviously looking at the margin we're continue to actually maintain pretty prudent.
Could you.
Towards the uncertainties in the year of 2022.
Yeah.
So we want them to their own destiny bundle, that's all fair questions.
As a reminder, if you would like to ask a question. Please press Star then one on your Touchtone phone.
The next question comes from Emma Xu with Bank of America. Please go ahead.
Your line is something that you think you want to do but I'll, let <unk> go ahead.
Okay.
We have to keep thinking of vivo.
Ill jump back.
Okay.
You can go.
One two times.
Strategically with Samsung.
Then you kind of thinking about yet and I'm, hoping to ask.
<unk>.
I want to go quickly.
Nicole Kingsley. Thank you would hold you back.
Thank you <unk>.
So one can say walnuts, usually will come out once again.
Thank you for that.
Yes.
While about equal.
Yeah.
That's just one movement.
Okay.
Uh huh.
Just a formula.
Uh huh.
<unk> I'd say that Q1 as a whole during Q1.
Oh I see.
Yeah.
Sure.
Although net margin five points.
No I mean for I D.
Wow.
One module.
Sure.
Uh huh.
Could you just allow me a short of this year.
Right.
I think that today that will come out with your question.
Oh, I am Duffy that she wants that.
Two questions.
So no no women.
Enzo to watch.
Yeah.
All of these new terms.
Translate my question. So my first question is that Oh, listen who would be China.
China Adi.
I'll talk a pullback significantly impacting.
Impacting our performance goldfish.
Excellent.
By product of that third party managers and how will it impact the.
Behavior of your clients that ambition.
It is too low.
Uh huh.
We booked a large.
What we call simple yet won't be big for us.
Is that probably half of it.
Two of your lending business and June okay.
Will you continue to book more a commodity cost for this business going forward and we think that you have that margin declines to allow timber lines that can be cool.
122% in the fourth quarter meeting the guidance that you want to keep the net margin between 30% to 35% do you continue to backfill and we see that your demand more of your clients in the fourth quarter.
The reason I D and <unk>.
Plans for growth and we see thank you.
Uh huh.
Uh huh.
No well I agree that the Eagle wouldn't you have just what would you say Shannon Boy I Hope you are sharing back to womens fashion Fortune Society join your module got saw total I have to counter so your women's shoe in the sort of woman Tunguska Mayo.
<unk>.
Cigar Lake.
They found that you got to go find me. Thanks, Sean why don't you go to that woman. They also are you.
Yes about a couple of just how well its value is just really hard to go out from a profound data. So you know a woman the cocoa she's a woman junior high or we got out of Cushing Joseph figure out all the cohort.
Hello, Copel would happen.
<unk> been seeing a woman who kind of woman.
Got it.
Functional should be up and she was about <unk> <unk>.
Some guys will hook uncle that either through the quarter, even a woman. The Delta order you just commented Hep C. Kendall women that are they are you know on the types of la have bottomed out and now the greenway. So dollars carry tcs lung cohorts, you'll note that we unlock the Ohio issue of military should Ohio bundle Chicago cheese Yogurts.
<unk> still got a G.
I just had a.
But on kind of the way the cohort the tango and Michelle Bachelet Alicia.
Women in the cohort.
How would you do let's say against the gene that you laid out some good cohort that have forgotten the sugar content. So you go why did just that.
You can knowhow don't go.
Coke and the other three.
So you can also you have and I'll make sure that those are that balco attributed to that.
Joe Chin salary to become volatile right now.
A coffee drinking energizing thing ways to cope with this half of the town Joseph Mccallum and what else is autos would you would the secondary fund did you should count that.
Bulk water without fear that this could be Jean <unk>, Hello, Amanda G suite Honda won't be all quite Bob will be Australia. She said also the outcomes are quite sure well figure out that BELBUCA will just hand it to that.
Changing your Buffalo Army Army understanding attempting to go with that one as well.
<unk> does that then so either would you hazard a coke oil feedstock.
So we'll just have dual BOP quota.
With me always it depends on the <unk>.
Sure Sheila.
Our Cta vocal for when they talk you don't have to do so.
Buckled towards handle Hydrozoa yachts.
That's our theory, she had to go up to kind of tackle childhood cancer gene chips away, So I forgot that.
Amanda patenting, given how those sorts and yet not well together a couple of the Ohio.
The machine vision.
Or chunky. So this is helping you with one final thought that Massachusetts, J D C office product.
Actually I kind of look at you know, we have a portfolio of well.
No Adam go pay the box and don't have to.
Sunday Dr Chin.
Opinions in Chicago.
She had a one time searching and got on Huh.
Oh, well more than what's timber I won't go into on the <unk>.
Great.
Finally aesop.
First of all.
Think COVID-19, YY actually started transformation.
I was pretty lucky that they gave us actually room in time to adjust.
Product mix and as of end of 2021, we have pretty much.
Completed.
First of all private credit products as well as any credit exposure that relates to real estate.
Which actually made our portfolio pretty.
Stable for our clients.
Two as well so actually noticed probably that will be emerging.
A new group of clients that also have experienced.
Some of the losses that they may have experienced from other.
Institution, where they actually have investments in the so called non standard non standard private credit products.
And this will be a nuclear plant to actually help.
<unk>.
Probably with their allocation of assets this year.
In terms of portfolio of Gopher and Noah.
As you know that majority of the assets.
The <unk> that we have is within the primary market the PE products.
But also in the Europe plenty of 'twenty, one we have exited.
Some of the products are actually.
For our clients to materialize the game on the products that would be helpful.
So I think overall for the clients of Noah.
Okay position comparing to the volatility we have seen on the public market.
<unk> recently, but.
But I one of the things that we have noticed obviously is that the demand.
The asset allocation.
We've obviously taken that turn.
In face of such high level of volatility and uncertainties. They are.
Probably.
Is there much risk burst and.
Also have demonstrate high interest in terms of protection and allocation type of a product.
And one of the main key transformation initiatives for Goldberg.
Is to become the fundamentals here.
<unk> of choice for our clients' asset portfolio for example.
Secondary P products, which actually generates great.
Cash returns for our clients as well as the targeted return products and also some of the balanced portfolio of products that generates moderated returns, but at the same time and probably give them.
A better stability in terms of the asset.
And we did notice that some of the.
Products that would help distribute.
Some of the products actually still show a pretty resilient.
Returned including the CPA type of products and then also multi strategy products.
That actually still have maintained a small but positive return as of yesterday.
Recently, so obviously that that strategy is working and the highly volatile market.
But again I think the fact is for them the deep value Blue chip types.
Types of products.
Probably our experiments in a little bit difficulty.
But again some of the major hedge fund that we held.
For our clients.
Actually has a three year lockup period.
Probably at this time of uncertainty and volatile period.
Probably also provides another.
Later protection for clients assets, so over the or for the client.
That.
No. It has we believe there probably in the okay.
Position.
Then the rest.
So moving onto your second question Emma.
In terms of the credit loss on the <unk>.
Loan products is that we actually proactively re.
Retracted.
From the original.
Uh huh.
Loan product if you if you recall in 2019 that we actually have.
Issued products on the loan on the back of some of the real estate products and we have decided.
Moving on to your second probably will have decided actually sees the offering overall similar products. So in terms of the restructuring.
We're going to continue to.
Exit this type of product and we have pretty much you know based on the valuation model that we have worked with our audits.
The majority of the credit loss have been computed.
I don't foresee a large increase in that type of reserve going forward. As we are now continue to expand that business.
What was the third question Hema.
My second question is about your net margin you previously guided to Covid could you said that.
It was 221% first quarter and why there was a decline.
Relationship managers both quarters. Thank you.
Yes, well then their margin.
Blaming eaton's question.
First of all it's actually a pretty concentrated.
Untraded marketing season.
So basically the theory is the marketing conferences, including the offline Black card dollar and also the callout separate cities. So that's one thing and two is that.
The increase in R&M.
<unk>.
Fixed pay so that obviously the last batch, which is also half of the population of volume.
<unk> joined.
The reform also actually out a little bit pressure on the cost in a single quarter, but while we are talking about the net margin, we usually take a look.
Margin from the annual budget process.
We're still actually and to maintain around 30% or $2, 35% operating margin for the year.
So against fourth quarter is a low quarter, but overall, we're probably I think close to 28, 29% of all of our operating margin. So.
From that standpoint, that's still the goal there will maintain it.
Two is that in terms of the RM.
We did have some proactive adjustments in terms of the RM mixed as we have mentioned in the transformation.
We are actually forming the try and book.
We are actually only appointing a I guess the high performing rig managers into the direct client interface or account representative. So there is a there has been quite a bit of regrouping activities.
Especially when absorbing in the last half of the RMR group into the reform. So there is becoming a little bit of volatility in terms of.
It's a mix between.
When they are adjusting to the new reform and also be proactive.
Adjusting on the low performing better.
Relatively low performing arms.
But at the same time, we're continuing to put in.
Pretty reasonable amount of budget for recruiting in 2022, and we believe actually the market the good timing for us too.
Probably heightened.
The investment in terms of talent acquisition in 2022 so.
We'll see a moderate increase in the total number if I am.
But I guess at the same time, we're actually very being.
Selective in terms of getting some of the talent they probably wouldn't have.
Have the opportunity to acquire in a normal market condition.
Got it thank you.
No problem as a reminder.
If you have a question. Please press Star then one can be joined to the queue.
The next question comes from Andrew <unk> with <unk>. Please go ahead.
Hi, Thank you for taking my question.
I was hoping to ask a question on capital allocation.
You all have a exceptionally strong and clean balance sheet, which I think is a testament to really the quality of the business with over $500 million in U S dollar cash.
And your headquarters, which I think you purchased just this past year.
Virtually no debt on the business.
And even with.
The strategic investments in talent that you've made it sounds like youre projecting still quite healthily cash flow positive year next year.
With the volatility that we've seen in the share price.
You could spend just a bit of that cash and half.
That would be quite accretive, but if it goes towards <unk>.
Share repurchases and I know at the end of 2020.
I think you all spent about $100 million on share repurchases at prices that were at.
30% to 40% premium to where the stock price closed today, So I was hoping to understand the willingness to.
Maybe look at capital allocation.
In terms of some return to shareholders.
In that form.
Thank you Andrew.
Uh huh.
One of them that Cingal will absolutely not make the MTA.
Do you want to pick up more of them now.
So thanks Andrew.
I guess to put it into simple way that's definitely.
One of the considerations that we have and also one of the topics we have discussed extensively.
Internal meetings, so obviously I'm very cautious of the R E of our stock and at this time it seems.
It's.
A very low point.
And I guess.
I'm actually not at the convenience of comment too much on this.
But I just wanted to assure the shareholders and analysts.
We are definitely keeping that in mind and when the timing is right.
We are planning to install some shareholder return mechanism.
That will be probably including.
All kinds of tools that we have but we'll have to wait for the right timing and understand.
I guess, that's also a risk selection.
Management style that was trying to keep.
Abundance of liquidity to cope with the uncertainty of the market.
Same time.
Also very conscious of.
Creating value and returns for our shareholders.
Okay.
That's helpful to understand thank you.
Thanks, Sean.
Yeah, So Andrew Hudson pending will thanks.
Of course.
Yes.
Well, it's easier but should that go on that.
Well, it's really took also have found little Gwen yes.
Or do you think you can assortments and how.
Do you see a woman teams all phones.
Well the truth is that Gilenya mill, I'll say, a woman that you're doing and pulled out the dig away too.
The tone attempting the shelf, which you don't.
Hopefully the only thing that's even the idea of the cortisone thoughtful of cohort two that.
Which as you can do.
A woman does it goes cohorts of heico's with ascent.
Copel will do them and they'll quickly Shin young.
Okay Pedro woman townships issued a opex towards the childhood, Ohio way is to go to the Doctor Friedhelm, Gwen who don't really know RGA Award.
The way you just said.
We're doing die off on a whole lot there.
So if at all.
Is there anything that.
Don't launching.
Yeah.
Okay.
No.
Charlie do you want actually supplement near term color on this question.
First of all I think especially.
On the side of the stock price.
Thank for the Chinese <unk> overall.
The low point, that's probably a majority of the value is not correctly reflect it but from management Airport, Charlie we're still very optimistic.
About our future.
And especially the industry and also the company's position.
In this particular situation.
And I guess, we're lucky that we're starting to transformation, probably two years earlier and we have no burden.
No matter from balance sheet died or portfolio of AUM, and we actually managed to protect.
The majority of the client's assets through this.
Wave of uncertainty is probably some of the volatility.
And as you can see evidenced by the returning.
Especially the core group of clients, which is probably the competitive.
Were the competitors, putting all their resources trying to gain weight.
We're still made about 18% increasing close to client group in the year of 2021.
So I guess when in pretty good position.
And also chairlady Wang mentioned that she is also the biggest shareholder of the company obviously.
Vernon much conscious.
About inquiries, thus far in return for all of our shippers.
Okay.
For the additional color very helpful and.
Yes, I think its undoubted.
Yeah.
Operationally you all have been exceptional in terms of execution and as a shareholder it's Ben.
Fun to watch and congratulations on all the success I think.
From a shareholders' perspective.
Seeing some of those positive signs on a capital allocation front would be.
The Cherry on top and even I think even more pointing towards the optimism so.
We'll look forward to the future with much.
Industrial I. So thank you very much for answering the questions.
Great. Thanks, Andrew.
This concludes our question and answer session I would like to turn the conference back over to grant Pan for any closing remarks.
Great I don't have any more remarks, and thank you everyone for your time and we have separately conferences scheduled and we'll talk to you soon on those costs. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.