Q4 2023 Noah Holdings Ltd Earnings Call
Operator: Good day and welcome to the Noah Holdings 4th Quarter and Full Year 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone.
Okay.
[music].
And welcome to the Noah Holdings fourth quarter and full year 2023 earnings conference call.
All participants will be in a listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
You asked a question you May press Star then one on a touchtone phone.
Melo Xi: To withdraw your question, please press star then. Please note, this event is being recorded. I would now like to turn the conference over to Melo Xi, Director of Investor Relations. Please go ahead.
No withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Mellow <unk> director of Investor Relations. Please go ahead.
Yes.
Melo Xi: Thank you, Operator. Good morning, welcome to NOAA's 2023 fourth quarter earnings call. Joining me on the call today are Ms. Wang Jingbo, our Co-Founder and Chairperson, Mr. Xander Ng, our Co-Founder, Director, and CEO, and Mr. Grant Pan, our CFO. Ms. Wang will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financials and operating results. They will all be available to take your questions during the Q&A session.
Mellow: Thank you operator.
Mellow: Good morning, all welcome to <unk> 2023 fourth quarter earnings call. Joining me on the call today are Mr. <unk>, our co founder and chairman.
Mellow: Mr. Denver in our co founder director and CEO, Mr. Grant Pan our CFO, Mr. <unk> will begin with an overview of our recent business highlights followed by Mr. Pan who will discuss our financials and operating results.
Mellow: They will all be available to take your questions in the Q&A session that follows before we begin. Please note that the discussion today will contain forward looking statements.
Melo Xi: Before we begin, please note that the discussion today will contain forelooking statements that are subject to risks and uncertainties and may cause actual results to differ materially from those in our forelooking statements. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the ICC and the Hong Kong Stock Exchange. Noah undertakes no obligation to update any forward-looking statements, except as required under the applicable law.
Mellow: Object to resin uncertainties and may cause actual results to differ materially from those in our forward looking statements.
Mellow: Risks and uncertainties include but not limited to those outlined in our public filings with the ICC in the Hong Kong stock exchange, nor does not undertake any obligation to update any forward looking statements except as required.
Mellow: Falloff. In addition, today's call will include discussions of certain non-GAAP financial measures reached completion of non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release Lastly, this call should not be interpreted as a solicitation to sell or purchase any interest in any.
Melo Xi: In addition, today's call will include discussions of certain non-GAAP financial measures. A rich compilation of non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings report. Lastly, this call should not be interpreted as a solicitation to sell or purchase any interest in any NOAA or NOAA-affiliated product. Please also be aware that a link to a live webcast with presentation materials is available on our Investor Relations webchat. With that, I would like to pass the call over to Ms. Wang. Please go ahead.
Mellow: No no affiliated products. Please also be aware that the link to what.
Mellow: What types with presentation materials available on our Investor Relations website.
Speaker Change: I would like to pass the call over to Mr. <unk>. Please go ahead.
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Jingbo Wang: Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class B, Noah Holdings Ltd. Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class A, I'd like to begin today's call by sharing some recent thoughts on the industry and macroeconomic landscape before I review our performance for the fourth quarter and full year and dive into our strategy going forward. Over the past year, the Chinese wealth management industry has faced considerable challenges. Fundamental shifts are taking place across the sector that require a different strategy and approach to asset allocation for Mandarin speaking Pai Network individuals.
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Speaker Change: I'd like to begin today's call by sharing some recent thoughts on the industry and macro economic landscape before I review, our performance for the fourth quarter and full year and diving into our strategy going forwards.
Speaker Change: Over the past year, the Chinese wealth management industry faced considerable challenges.
Fundamental shifts taking place across the sector that require a different strategy and approach to asset allocation for Mandarin speaking kind of worked individuals' noticed relentless focus on client needs spearheaded our transition from a product focused model to a solution driven approach over the past year ensured our ability to increase the resilience of <unk>.
Jingbo Wang: Noah's relentless focus on client needs spearheaded our transition from a product-focused model to a solution-driven approach over the past year, ensuring our ability to increase the resilience of clients' portfolios in a challenging market environment. Our proactive decisions to prematurely exit the domestic real estate market in 2016 and non-standardized single-counterparty private credit products in 2019 earned us significant trust from clients. Our semi-annual CIO Health View and CCI model continue to reflect our strategic foresight over the past three years, which has resonated strongly with clients. We adopted a three-pronged strategic approach to navigate this challenging market environment over the past year. Firstly, we're later focused on ensuring our resilience and adaptability during an economic downturn.
Speaker Change: Portfolios in a challenging market environment, our proactive decisions to materially accurate domestic real estate in 2016, non standardized single counterparty private credit products in 2019 earned us significant trucks from clients, our semiannual Seattle House view on CCI model continued to.
Speaker Change: Our strategic foresight over the past three years, which resonated strongly with clients.
Speaker Change: We adopted a three pronged strategic approach to navigate this challenging market environment over the past year.
Speaker Change: Firstly, we're laser focused on ensuring our resilience and adaptability through economic downturns.
Jingbo Wang: Secondly, we are actively accumulating strength to emerge as a leader in the forthcoming recovery. And finally, prioritizing the development of our core capabilities to position us for future growth when opportunities arise. Noah is a company built on both pragmatism and efficiency, allowing us to strike a careful balance between fortifying our position and seizing new opportunities.
Speaker Change: Secondly, we are actively accumulating strength to emerge as a leader in the forthcoming recovery and finally prioritizing the development of our core capabilities to position us for future growth when the opportunities arise.
Speaker Change: Noah It's a company built on both pragmatism and inefficient.
Speaker Change: Power us to strike a careful balance between fortify our position and seizing new opportunities.
Jingbo Wang: By enhancing operational efficiency, retaining top talent, strategically calling cuts while simultaneously investing in new international markets, channels, technologies, and the development of a global product and service offering, We are ideally positioned to help clients traverse this market. Over the past year, we strengthened our full suite of wealth management products and services for mentoring speaking clients globally. One key focus has been expanding our ability to offer clients alternative investment on a global basis. We're also seeing global fund managers increasingly focus on underserved private wealth channels to fuel primary market fundraising.
Speaker Change: By enhancing operating operational efficiency, retaining top talent strategically calling cuts while simultaneously investing in new international markets channels technologies and development of <unk>.
Global product and service matrix, we are ideally positioned to help clients are versus market.
Speaker Change: Over the past year, we strengthened our full suite of wealth management products and services for Mandarin speaking clients globally. One key focus has been expanding our ability to offer clients alternative investments on a global basis. We're also seeing global farm managers increasingly focusing on underserved.
Speaker Change: Private wealth channels to feel primary market fundraising.
Jingbo Wang: As a leading private wealth manager, recognized for its expertise in alternative investments and extensive network of Mandarin-speaking professional investors, this trend presents enormous opportunities for NOAA. Going forward, we'll be amplifying this strategic global investment. This includes expanding our service network, bolstering investment research capabilities, and significantly enhancing product selection and technological infrastructure. These investments will solidify our foundation as a leader, enabling us to meet growing demands among clients for globally diversified wealth and asset management services. Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class A, Looking at our financials for the year, Noah generated total revenues of RMB 3.3 billion, an increase of 6% year on year.
Speaker Change: Leading leading private wealth manager recognized for its expertise in alternative investments.
Speaker Change: Extensive extensive network of Mandarin speaking professional investors.
Speaker Change: Trend presents enormous opportunities for Noah.
Speaker Change: Going forward, we'll be emphasizing this strategic global investments. This includes expanding our service networks bolstering investment research capabilities and significantly enhancing product selection.
Speaker Change: Logical infrastructure these.
Speaker Change: These investments will solidify our foundation as a leader, enabling us to meet growing demand among clients for globally diversified wealth and asset management services.
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Jingbo Wang: Our domestic business contributed RMB 1.9 billion, an increase of 18.1% year on year, and accounting for 56.8% of the total. Within revenue from our domestic business, revenue generated by legacy distributed products was RMB 1.4 billion, accounting for 73.9% of the domestic revenue. Our overseas business generated RMB 1.4 billion, a significant increase of 73% year on year, driving the overseas revenue contribution from 26.5% of the total net revenues last year to 43.2% this year. Of revenue generated from new business and products in 2023, our overseas and domestic business accounted for 68.1% and 31.9%, respectively. Breaking it down by segment.
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Speaker Change: Looking at our financials for the year Noah generated total revenues of RMB, three 3 billion, an increase of 6% year on year, our domestic business contributed RMB. One 9 billion an increase of 18, 1% year on year and accounting for 50 556, 8% of the total.
Speaker Change: Within revenue from our domestic business revenue generated by legacy distributed products was RMB, one 4 billion accounted accounting for 73, 9% of the domestic revenue.
Jingbo Wang: Our wealth management business generated RMB 2.5 billion in 2023, an increase of 13.1% from last year. Within Wealth Management, domestic business contributed RMB $1.4 billion, a decrease of 11.7% from last year, which was primarily composed of RMB $0.9 billion in revenue generated by legacy distributed products, accounting for 67.7% of the domestic wealth management revenue. Our overseas business contributed RMB $1.1 billion. 71.3% increase year-on-year. Our asset management business generated RMB $769 million in revenue during the year, a decrease of 8.4% from last year.
Our overseas business generated RMB, one 4 billion a significant increase of 73% year on year driving overseas revenue contribution from 26, 5% of the total net revenues last year to 43, 2% this year.
Speaker Change: Revenue generated from new business and product in 2023, our overseas and domestic business accounted for 68, 1% and 31, 9% respectively.
Speaker Change: Breaking it down by segment, our wealth management business generated RMB two 5 billion in 2023, an increase of 13, 1% from last year within wealth management domestic business contributed RMB, one 4 billion a decrease of 11, 7% from last year, which was primarily.
Speaker Change: Composed of RMB <unk> 9 billion in revenue generated by legacy distributed products accounting for 67, 7% of the domestic wealth management revenue our overseas business contributed RMB, one 1 billion.
Speaker Change: 71, 3% increase year on year.
Speaker Change: Our asset management business generated RMB 769 million revenue during the year, a decrease of eight 4% from last year.
Jingbo Wang: Within asset management, our domestic business generated RMB $469 million, a decrease of 30.3% from last year, which was primarily composed of RMB $467 million in revenue generated by Lex Distributed Products, accounting for 99.4% of the domestic asset management revenue. Our overseas business contributed RMB $299 million, an increase of 80% year-on-year, driven primarily by growth in overseas AUA and AUM. On the comprehensive services side, revenue from domestic insurance products increased by 1.6% in 2023, of which 88.9% was generated by new business. Revenue from Overseas Insurance Trust and other comprehensive services surged 301.5% from last year. Sponsored ADR Class B Sponsored ADR Class C. Over the past year, we continue to make upgrades to our technology stack aimed at improving client experience globally. We're working with leading insurers to streamline our underwriting process.
Speaker Change: Within asset management, our domestic business generated RMB $469 million, a decrease of 33% from last year, which was primarily composed of RMB $467 million in revenue generated by legacy distributed products accounted for 99, 4% of the domestic asset management.
Speaker Change: Revenue or.
Our overseas business contributed RMB $299 million, an increase of 80% year on year, driven primarily by growth in overseas.
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Speaker Change: On the comprehensive services side revenue from domestic insurance products increased by one 6% in 2023.
Speaker Change: Of which 88, 9% were generated by new businesses revenue from overseas insurance trusted in the other comprehensive services search 301, 5% from last year in tandem the number of active overseas clients for comprehensive services also grew by $376 three.
Speaker Change: Percent year on year.
Speaker Change: Over the past year, we continue to make upgrades our technology stack aimed at improving client experience globally.
Speaker Change: Working with leading insurers to streamline our underwriting process across markets globally. We were the first broker in Hong Kong. So long launch a fully online underwriting process and allow clients the option to make insurance premium payments through our Hong Kong nominee account, which was a significant enhancement for our client experience.
Jingbo Wang: Sponsored ADR Class B Sponsored ADR Class C, Operating profit for the year came in at RMB 1.1 billion with an operating profit margin of 33.3 percent. Sponsored ADR Class A Sponsored ADR Class A, Sponsored ADR Class A, Sponsored ADR Class A, Looking at our domestic wealth management business, we continue to carry on the strategy to focus on first tier and core cities in China. Through our ongoing organizational restructuring, we decreased the number of offices we have from 77 to 44 by the end of the year and further relocated resources to 18 core cities as of now. As of the end of 2023, the number of domestic relationship managers decreased by 7.6% year-over-year and 12.6% sequentially to 1,163.
Speaker Change: Operating profit for the year came in our RMB, one 1 billion with an operating profit margin of 33, 3% call. It a catholic whether he or she telco, so that somebody who share her dosing because there's definitely something to go to tackle the child's it takes a long dance when she's she's a gaping yeah more John Ddos forgot someone can't wait.
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Jingbo Wang: On the Domestic Wealth Management Fund, our primary focus has been on strengthening the service capabilities of our relationship managers and enhancing the user experience of technology, technological upgrades to our stack, allowing us to continuously generate new leads from ongoing client services. The Small Treasury Platform for Corporate and Institutional Clients, which relaunched in 2022, now serves nearly 6,000 clients, a 28.9% increase from last year. Over the past year, the number of active client services increased by 73.7% year-over-year, with average client AUA exceeding RMB 600,000. Turning overseas, our wealth management business continued to expand its presence as more relationship managers were brought on board in Hong Kong and Singapore. As of the end of 2023, we had 89 relationship managers onboard, an increase of 15.6% sequentially.
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Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Looking at our domestic wealth management business, we continue to carry on this strategic strategy to focus on first year in core cities in China.
Speaker Change: Through our ongoing organizational restructuring we decrease the number of offices, we have from 77% to 44 by the end of the year and further relocated resources to 18 core cities as of now.
Speaker Change: As of the end of 2020 three the number of domestic relationship managers decreased by seven 6% year over year, and 12% 12, 6% sequentially to 1163 under.
Speaker Change: Domestic wealth management front, our primary focus has been on strengthening the service capabilities of our relationship managers and enhancing the user experience of technology technological upgrades to our staff, allowing us to continuously generally generate new leads from ongoing client services.
Jingbo Wang: We're committed to further expanding our international RM team, targeting a headcount of 200 by the end of 2024. As of the end of 2023, we had over 14,900 overseas clients, reflecting a 14.2% increase from last year. The number of clients who purchased our cash management products reached 3,093, a sequential increase of 19.1%, while the number of discretionary investment clients reached 803, an increase of 23% sequentially. As of the end of 2021, we have continued to enrich the range of our products and expand our customer service. Customers from C-end to B-end and A-end can now choose different solutions.
Speaker Change: The small treasury platform for corporate and institutional clients. We launched in 2022 now serves nearly 6000 clients a.
Speaker Change: 28, 9% increase from last year over the past year. The number of active clients served increased by 73, 7% year over year with average client exceeding RMB 600000.
Speaker Change: Turning overseas.
Speaker Change: Wealth management business continued to expand its presence that's more relationship managers are brought on board in Hong Kong and Singapore.
Speaker Change: At the end of 2023, we had 89 relationship managers on board at an increase of 15, 6% sequentially. We're committed to further expanding our international RM team targeting a head count of 200 by the end of 2024.
Speaker Change: As of the end of 2023, we had over 14900 overseas clients, reflecting a 14, 2% increase from last year. The number of clients, who purchased our cash management products reached 3093, a sequential increase of 19, 1%, while the number of discretion.
Jingbo Wang: In terms of C-end clients, in 2023, the number of overseas active discretionary clients reached 4,629, an increase of 38%. The total net worth reached $33.3 billion, an increase of 83.4%. Among them, the number of American public funds active clients reached 3,130, a sequential increase of 72%.
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Jingbo Wang: The total net worth reached $11.6 billion, a sequential increase of 110.1%. As of the end of the year, the number of B-end clients has successfully expanded to more than 230 overseas French clients. The total number of C-end overseas public funds is about $200 million.
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Jingbo Wang: Sponsored ADR Class A, We continue to expand the product offering through our Overseas Wealth Management Act, providing an expanded array of solutions for clients, businesses, and agencies. The number of overseas active net high net worth clients reached 4629 in 2023, a significant 38% increase from last year. Total transaction value during the same period reached US$3.3 billion, up 83.4% year-on-year. The number of active clients for our US dollar mutual fund products reached 3,130, up 72% year-on-year, with transaction value of US dollar $1.2 billion, up 110.1% from last. On the 2B side, we have successfully onboarded more than 230 overseas corporate and institutional clients, which resulted in the transaction value of overseas mutual funds reaching approximately US$200 million. On the two agency sides, our overseas online wealth management business began trial operations in late 2023, aiming to empower EAM and family offices clients with a SaaS platform integrated with our full suite of products.
Speaker Change: We continue to expand the products offered through our overseas wealth Management Act, providing an expanded array of solutions for our clients businesses in agency the.
Speaker Change: The number of overseas assets high net worth clients reached 4629 in 2023 are significant.
Speaker Change: 38% increase from last year total transaction value during the same periods.
U S dollar $3 3 billion up 883, 4% year on year.
Speaker Change: The number of active clients for our U S. Dollar mutual fund products reached 3130, 72% year on year with transaction value of U S dollar $1 2 billion up.
Speaker Change: 100 <unk>.
10, 1% from last year.
Speaker Change: On the <unk> side, we have successfully on boarded more than 230 overseas corporate and institutional clients, which should result in transaction value of overseas mutual funds, reaching approximately.
Speaker Change: I'll start with $200 million.
Speaker Change: On the two agency sides are overseas online wealth management business began trial operations in late 2023, Amy and empower.
Speaker Change: And family offices clients with a SaaS platform integrated with our full suite of products as of today, we have signed nine agents and clients with a long term target of serving 300 <unk>.
Jingbo Wang: As of today, we have signed 9 agency agreements with a long-term target of serving 300 EAMs and family offices overseas for our country. Sponsored ADR Class A Sponsored ADR Class A, Sponsored ADR Class A [inaudible] Sponsored ADR Class B Sponsored ADR Class A, 95.9% in terms of asset management. Gopher's total AUM was RMB 154.6 billion in 2023, a decrease of 1.6% year-on-year. RMB AUM decreased by 4.8% from last year to RMB 118.6 billion.
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Jingbo Wang: This was primarily driven by exits from RMB private equity assets and a decline in the net asset value of some RMB public market products. Internationally, we'll continue to enhance our global investment product matrix. Overseas AUM reached US$5.1 billion in 2023, an increase of 7.6% from last year, driving from an increase in its contribution to total AUM from 20.7% to 23.3%. Overseas AUA, which includes distributed products, reached US$8.4 billion, an increase of 10.2% year-on-year. Beyond traditional PE and VC products, we have gradually expanded our alternative offerings to include infrastructure, GP stake, PE secondary, and private credit products. To provide a more comprehensive product, we also recently launched Series 4 of our actively managed U.S. dollar, U.S. real estate funds, focusing on development opportunities in suburban rental apartments in the U.S. Sunbelt area. It's fun as well, as an upstream player within the institutional real estate value chain.
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Speaker Change: Yes.
Speaker Change: In terms of asset management Gophers total AUM was RMB $154 6 billion in 2023, a decrease of one 6% year on year RMB AUM decreased by 448% from last year to RMB $118 6 billion. This was.
Speaker Change: Primarily driven by <unk> from RMB private equity assets and decline in the net asset value of some RMB public market products.
Speaker Change: Internationally, we continue to enhance our global investment product matrix overseas.
Jingbo Wang: As of the end of 2023, the UN for Overseas Private Equity and Other Primary Markets reached US dollar 4 billion, an increase of 4.7% year on year. Turning to public markets, we intensified the screening coverage and inclusion of top hedge fund managers globally. We have launched 10 of the top global top 50 hedge fund products, including Sponsored ADR Class A, while enhancing the diversity of fund managers and product strategy. We are simultaneously expanding to include structure products with a principled protection mechanism.
Speaker Change: U S. Dollar were $5 1 billion in 2023, an increase of 676% from last year driving from an increase in its contribution to total <unk> from 27% to 23, 3% overseas.
Speaker Change: Which include distributed products reached USD eight 4 billion, an increase of 10, 2% year on year.
Speaker Change: Beyond traditional PE and VC products, we have gradually expanded our alternative offerings to include infrastructure GP stake P. Secondary in private credit products to provide a more comprehensive product matrix.
Speaker Change: Also recently launched the series four of our actively managed U S dollar.
Speaker Change: Real estate funds focusing on development opportunities in the sub urban rental apartments in the U S Sunbelt iridium.
Jingbo Wang: In 2023, the transaction value of overseas public markets and structured products reached US$180 million, an increase of 95.9% from last year. Sponsored ADR Class A [inaudible] Sponsored ADR Class A. Next, Qing Pan will introduce you to the full details of 2023. Thank you.
Speaker Change: <unk> is well positioned as an upstream player within the institutional real estate value chain.
Speaker Change: I felt the end of 2023 U S or overseas private equity and the other primary market funds reached <unk> 4 billion, an increase of four 7% year on year.
Turning to public markets, we intensified the screening coverage and inclusion of hedge fund managers globally. We have launched 10 of the top global top 50 hedge fund products with 10 more in the due diligence process.
Jingbo Wang: Lastly, we announced a change to our leadership structure last year by separating the roles of chairperson and CEO. Mr. Daniel Ng was appointed CEO while I will retain my position as chairperson of the board. This decision will enhance corporate governance, organizational efficiency, promote collective decision-making, and facilitate NOAA's succession plan and generate opportunities for NOAA's deep bench of management talent. As a co-founder, Xander has been part of Noah's journey since the beginning.
Speaker Change: I think the diversity of fund managers and product strategies. We are so I'm intensely expanding to include strict structure products with principal protection mechanisms in 2023, the transaction value of overseas public markets and structured products reached U S dollar $188 million an increase of 95.
Five 9% from last year.
Speaker Change: It's also fully fund me at one value I'm, saying to you and technical so glad he can attend to railcar jumped on cities, where she her social Cushing by mid single family than the English instantly. So she pushing back closer to where down tissue and also gives a sure thing.
Speaker Change: <unk> J took too bad she saw him that utility switching GTK trucking, taking it really happened at coupon when you go out and touch on Dot Com does have it seems like.
Speaker Change: So really I'm costanza English isn't someone else who needs it yoga and potent single technical fixes have autonomy do you find that.
Jingbo Wang: He played a pivotal role in building Oklahoma asset management and possesses a deep understanding of NOAA's operations and our client-centric company culture. Our strongly support vendor, in his new role, will continue to steer NOAA's overall strategy and be responsible for board management and corporate governance. Please also kindly note that our CEO, vendor, and CFO Grant will be reporting quarterly results starting next quarter. I will still take part in the Q&A.
Speaker Change: And frankly, we're going to enjoy the things they really have a union who go through it in Copel is launching a chihuahua to based on present, Egypt that English isn't issue could you well John tissue patches.
Speaker Change: Thank you for the Los Angeles downtown So I don't think you're glad he who ultimately to go find me or John told you can do this again.
Speaker Change: It won't be a auction lanes or pans out about torture, but wouldn't that yoyo bullish attitude, okay, well Mcdaniel CEO enjoyed pension that we thought that's what you do here to talk about where that tissue Hershey that went out one to two.
Grant Pan: I would now like to turn the call over to Grant to go over our financial results in more detail before opening the call to Q&A, where Jenner and myself will also present the results. Thank you, everyone. Thank you Melo, thanks Chairlady.
Speaker Change: I can pension with I guess, all I can understand you intend in the chassis.
Speaker Change: [noise] Lastly, we announced a change to our leadership structure last year by separating the roles of chairperson and CEO. These are tender was appointed CEO well I will retain my position as chairwoman of the board.
Grant Pan: I'm sure most investors are already very familiar with Mr. Zander, and we welcome him to join our future earnings releases and also meetings and calls with our investors. 2023 was a challenging year for China's wealth management industry. China's post-pandemic economic recovery proved to be a little slower than initially anticipated, as housing and local government debt problems remained widespread and persistent, dragging domestic capital markets and growth.
Speaker Change: This decision will enhance corporate governance organizational efficiency promote collectively a collective decision, making and facilitate lowest succession plan and generate opportunities for newest deep bench of management talent.
Speaker Change: As a cofounder tender has been part of <unk> journey is just beginning.
He played a pivotal role in building over asset management and possess a deep understanding of <unk> operations and our client centric company culture.
Oh firmly support vendor in his new role, while continuing to stare at lowest overall strategy and be responsive responsible for management of corporate governance.
Grant Pan: The performances of China's domestic market share, the A-share market, and the Hong Kong stock market also took some heavy adjustments, impacting the issuance of new investment products domestically. The new issuance of mutual fund products, for example, in the domestic market fell 22.7% throughout the year. On the contrary, in 2023, the Dow Jones Industrial Average Index rose by 13.7%, with the S&P 500 Index and the MSCI World Equity Index up over 20%. On the alternative side, global fund managers are increasingly focusing on the underserved private wealth channels to fuel primary market fundraising. According to McKinsey, as of June 30, 2023, the total AUM in private markets reached USD$13.1 trillion, growing nearly 20% per annum since 2018. The sharp divergences in economic and capital market conditions between onshore and offshore markets have created considerable challenges for high net worth clients, while demands for global asset security and diversification, insurance products, and other defensive-driven strategies continue to grow.
Speaker Change: Please also note that our our CEO Denver, and our CFO Grant will be reporting quarterly results starting from last quarter.
Speaker Change: Still take part in the Q&A session.
Speaker Change: Now I'd like to turn the call over to grant go over our financial results in more detail before opening the call to Q&A will that where gender and myself will also participate thank you everyone.
Grant Pan: Thank you mellow thanks Shirley.
Grant Pan: Sure most investors are already very familiar with Mr vendor is.
Grant Pan: We welcome him to join our future, earning releases and Alco meetings and calls with our investors.
Grant Pan: 2023 was a challenging year for China's wealth management industry.
Grant Pan: China's post pandemic economic recovery proved to be a little slower than initially anticipated as housing and local government problems remained widespread and persistent driving domestic markets and growth.
Grant Pan: Performance is of China's domestic market shifts ACO market and stock market also took some heavy adjustments impacting the issuance of new investment products domestically the new issuance of mutual fund products. For example in the domestic market. So 2000 2022, 7% throughout the year.
Grant Pan: And in contrast in 2023, the Dow Jones Industrial average index rose by 13, 7% with the S&P 500 index and the MSCI World equity index of over 20%.
Grant Pan: On the alternative side Global fund managers are increasingly focusing on the underserved private wealth channels to fuel all primary markets are raising.
Grant Pan: According to Mckinsey as of June 32023, the total AUM in private markets reached U S. Dollar $13, one trillion growing nearly 20% per annum since 2018.
The sharp divergence is economic and capital market conditions between onshore and offshore markets have created.
Grant Pan: <unk> challenges for high net worth clients or demand for global as a security and diversification insurance products and other defensive driven strategies continues to grow.
Grant Pan: As a leading wealth management company recognized for its expertise in alternative investments and extensive network of Chinese professional investors, these trends directly align with our strategic transition from a product-based to a solution-based offering and our ongoing investment in overseas products and services. In this context, we deliver solid financial results, and our business has proven again to be resilient and adaptive in the face of challenging market environments. Net revenues for the year continue to grow, along with a healthy operating margin of 33.3%.
Grant Pan: As a leading wealth management company recognized for its expertise in alternative investments and extensive network of Chinese professional investors. These trends directly align with our strategic transaction transition from a product based to a solution based offerings.
Grant Pan: Our ongoing investments in overseas products and services.
Grant Pan: In this context would deliver solid financial results and our business has proven again to be resilient.
Grant Pan: In the face of challenging market environments.
Grant Pan: Revenues for the year continue to grow along with a healthy operating margin of 33, 3%.
Grant Pan: Combined with our asset life model generating strong operating cash flow and ample cash on the balance sheet, we're extremely confident in the resilience of our business and ability to thrive even in complex economic conditions. With that, let's get into the details of our quarter 4 and entire fiscal year 2023 financial performance. Quarterly Net revenues came in just shy of RMB$800 million, a 6.6% increase sequentially.
Combined with our asset light model generating strong operating cash flow and ample cash on balance sheet. We're extremely confident in the resilience of our business and the ability to thrive even in complex economic conditions.
Grant Pan: With that let's get into the details of our quarter four.
Grant Pan: Higher fiscal year, 2023 and financial performance.
Grant Pan: Quarterly net revenues came in just shy of RMB $800 million.
Grant Pan: Six 6% increase sequentially and their revenues for the year was RMB three 3 billion up $6 three year over year.
Grant Pan: Our Net Revenue for the year was RMB$3.3 billion, up 6.3% year-over-year. In terms of breakdown of net revenues for the year, one-time commissions, or RMB 1.1 billion, up 60% year-over-year, mainly due to the strong distribution of insurance products.
Grant Pan: In terms of breakdown net revenues for the year, one time commissions or RMB, one 1 billion up 60% year over year.
Primarily due to a strong distribution of insurance products.
Grant Pan: Recurring service fees, a key stabilizer in the revenue mix, or RMB 1.8 billion, slightly down 4.8% year-over-year due to a decrease in onshore ARAM resulting from changes in NAV and structure products. Performance-based income was RMB $137 million, down 55.5% year-over-year, mainly due to the underperforming domestic capital market and limited exit opportunities, and other service fees were RMB $258 million, Breaking down net revenues by region, overseeing net revenues of a year were RMB 1.4 billion, increased by 73% year over year, accounting for 43.5% of total net revenues. We've been following our clients' demands and made significant progress in expanding our international presence in 2023. We have managed to recruit over 100 overseas relationship managers as of today. Sponsored ADR Class A, In 2023, we officially launched our office in LA and are actively exploring the opportunities of rolling out services and products in many other places in the world, such as Dubai and Japan. Probably a Southeast Asian nation.
Grant Pan: Recurring service fees are key stabilizing our revenue mix or RMB, one 8 billion slightly down four 8% year over year due to a decrease go onshore resulting from changes in NAV and.
Grant Pan: And structured products.
Grant Pan: Performance based income was RMB $137 million down 55, 5% year over year, mainly due to the underperforming domestic customer and limited opportunities.
Grant Pan: And the other service fees were RMB $258 million up 23, 4% year over year, primarily due to more value added services provided to our clients.
Grant Pan: Breaking down revenues by region overseas revenues every year were RMB, one 4 billion increased by 73% year over year accounting for 43, 5% of total net revenues.
Grant Pan: Well move following our clients' demands and made significant progress expanding our international presence in 2023.
Grant Pan: Managed to recruit over hundred oversee relationship managers as of today.
At the same time, we'll continue to enrich our product offerings, hence cooperation with top global primary and secondary market funds managers and insurance companies driving the increased oversea transaction value.
Grant Pan: By 83, 4% and 10, 2% respectively.
Grant Pan: In 2023, we officially launched our office in Italy.
Grant Pan: Actively exploring the opportunities are rolling out services and products in many other places in the world such as Dubai and in Japan.
Grant Pan: Probably south East Asian Nations.
Grant Pan: With respect to transaction values, we distributed RMB 16.5 billion in products during the year during the quarter, down 8.1% year-over-year and 25% quarter-over-quarter. By region, transaction value for Chinese products in the quarter was RMB 10.7 billion, down 17.4% year-over-year and 30.5% quarter-over-quarter, while transaction value for U.S. dollar products increased by 12% year-over-year and down 13.4% quarter-over Total transaction values for the year reached RMB74.1 billion, up 5.4% year-over-year. Breaking this down by region, the transaction value for RMB products was RMB $50.3 billion, down 13% year-over-year, while the transaction value for US dollar products increased 83.4% to US$ $3.3 billion, driven by US dollar cash management and structured products. As of the end of the year, our Overseas EM grew Operating costs and expenses increased by 9.2% during the year.
Grant Pan: With respect to transaction values, we distributed RMB 16, $4 5 billion products during the year during the quarter.
Grant Pan: <unk>, eight 1% year over year, and 25% quarter over quarter by.
Grant Pan: By region transaction value for RMB products in the quarter was RMB 10, 7 billion down 70 reported 17, 4% year over year, and 35% quarter over quarter or transaction value per U S. Dollar products increased by 12% year over year and down 34%.
Grant Pan: Quarter over quarter to $6 eight $2 8 million.
Grant Pan: Total transaction values for the year reached RMB $74 1 billion up five 4% year over year.
Grant Pan: Breaking this down by region the transaction value for RMB products.
Grant Pan: RMB 53 billion down 13% year over year, while the transaction value.
Grant Pan: For U S. Dollar products increased 83, 4% two years dollar $3 3 billion driven by U S dollar cash management start to products.
Grant Pan: As of the end of the year overseas.
Grant Pan: 746% year over year to U S dollar by $2 1 billion.
Grant Pan: Counting for 23, 3% of the total EUR.
Grant Pan: Operating costs and expenses increased by nine 2% during the year.
Grant Pan: Primarily due to the low base effect created by COVID lockdowns in 2022, which curtailed both marketing activity and business travel, as well as increased transfer travel this year in support of global expansion. Combined with our strategic cost controls, operating costs kept reasonable and in-line with revenue growth. Expecting operating costs for the year were number one time expenses that would generate cost savings over the long term. With the continued urbanization of China, Chinese high net worth investors are increasingly migrating to first tier cities.
Grant Pan: Primarily due to the low base effect created by Covid Lockdowns in 2022.
Grant Pan: Which curtailed both marketing activity and business travelers as well as increasing in terms of travel this year in support of global expansion.
Grant Pan: Combined with our strategic cost controls operating cost caps reasonable and in line with revenue growth.
Grant Pan: So baked into our operating cost for the year with a number of onetime expenses that will generate cost savings over the long term.
Grant Pan: While the continued urbanization of China Chinese high net worth investors increasingly migrating to a first tier cities, we have been consolidating teams and resources in smaller cities to nearby hubs, mostly capital in first tier cities.
Grant Pan: We have been consolidating teams and resources in smaller cities to nearby hubs, mostly capital and first tier cities and international regions accordingly. We expect to benefit from consolidations of these, the Network to save approximately RMB 10 million annually going forward. We also looked closely at improving human capital efficiency.
Grant Pan: International resource Accordingly.
Grant Pan: We expect to benefit from consolidations of these.
Grant Pan: Networks to save approximately RMB 10 million annualized.
Grant Pan: Annualized going forward.
Grant Pan: We also looked closely at improving human capital efficiency.
Grant Pan: The total headcount decreased by 10%, 10.4% overall, in 2023, most of which stemmed from mid and back office personnel, which decreased by 17.2%. This will save RMB 64 million annually going forward. At the same time, we're allocating resources and firmly implementing overseas talent development. Total overseas headcount increased by 16.1% to 426 in 2023. Operating profit during this quarter was RMB 221 million, effectively flat when compared to the same period last year and down 11.3% sequentially. Operating profit margin during the quarter improved on a year-over-year basis to 27.6%.
Grant Pan: Total head count decreased by 10% 10, 4% overall in 2023.
Grant Pan: Most of which will stem from mid and back office personnel, which decreased by 17, 2%.
Grant Pan: This will save RMB $64 million annualized going forward.
Grant Pan: At the same time, we're allocating resources and from the implemented overseas talent departments total overseas head count increased by 16, 1% to 426 from two phase III.
Grant Pan: Yeah.
Grant Pan: Operating profit during this quarter was RMB 221 million effectively flat when compared to the same period last year and down 11, 3% sequentially.
Grant Pan: Operating profit margin during the quarter improved on a year over year basis to 27, 6%.
Grant Pan: A decrease compared with the previous quarter, as we typically have more marketing and client activities during the fourth quarter. Operating profit for the year was RMB 1.1 billion, a slight increase of 0.9% year-over-year, while operating profit margin for the year remained at a healthy level of 33.3%. Total other income for the year was RMB111 million, an increase of 82.2% year-over-year, mainly due to optimization over capital management and currency mixes. This was partially offset by non-cash investment losses from certain balance sheet investments due to mark-to-market adjustments. Non-GAAP net income during the quarter was RMB234 million, up 56.7% year-over-year, and RMB1 billion during the year, a slight increase of 1% from the last quarter.
The decrease compared with the previous quarter as we typically have more marketing and client activity during the fourth quarter.
Operating profit for the year was RMB, one 1 billion, a slight increase of 0.9% year over year, while operating profit margin for the year remains at healthy level of 33, 3%.
Grant Pan: Total other income for the year was RMB $111 million increased by 82, 2% year over year, mainly due to optimization of our capital management and currency missed this.
Grant Pan: This was partially offset by noncash investment losses from certain balance sheet investments due to mark to market adjustments.
non-GAAP net income during the quarter was RMB $234 million up 56, 7% year over year in RMB 1 billion, showing a slight increase of 1% from last year.
Grant Pan: Turning to the results of each segment during the year, Net revenues from Wealth Management were RMB $2.5 billion, and Net revenues from Asset Management were RMB $766 million, accounting for 75.26% and 23.3% of total Net Revenues respectively. On the client side, as of the end of the quarter, we had 7,369 diamond card clients, down 2.8% year over year and 1.2% quarter over quarter. However, the number of black card clients, higher tier clients, increased by 8.8% year over year and 1.7% quarter over quarter, reaching a total of 2,289. The total number of Diamond and Blackheart clients was 9,658, sliding down 0.3% year-over-year.
Grant Pan: Turning to the results of each segment during the year net revenues from wealth management or RMB, two 5 billion and net revenues from asset management.
Grant Pan: 766 million accounting for $75, two 6% and 23, 3% with total net revenues respectively.
Grant Pan: On the client side as of the end of quarter.
Grant Pan: 7369, Diamond card clients down two 8% year over year, and one 2% quarter over quarter.
Grant Pan: However, the number of black card clients higher tier clients increased by eight 8% year over year, and one 7% quarter over quarter, reaching a total of 2000 $280 million.
Grant Pan: The total number of Diamond and Black card clients was 9650, <unk> slightly down 0.3% year over year.
Grant Pan: Sponsored ADR Class A, That being said, we're still confident in capturing more market share by continuing enhancements in our global product and service offerings and achieving a 1% market share in the high net worth individual wealth management market as a goal. Overseas registered clients at the end of the year increased by 14.2% year-over-year to $14,929, and overseas active clients for the year increased by 38% year-over-year to $4,629 as we continue to build up our overseas presence. Turning to our balance sheet, we have maintained a healthy liquidity position with our current ratio at 3.8 times and our debt to asset ratio at 17.8%, with zero interest bearing debt. We have RMB 5.2 billion in cash and cash equivalents, providing ample resources to support our global expansion plans and make improvements in shareholder return, which the board has always considered a priority.
Grant Pan: Why werent you to a sluggish equity market and don't meet the investment sentiment.
Grant Pan: That being said, we're still confident to capture more market share by continuing enhancements.
Grant Pan: Global product service offerings, and achieving a 1% market share in the high net worth individuals wealth management market as a whole.
Grant Pan: Overseas registered clients at the end of the year increased by 14, 2% year over year to 14900 between the overseas active clients of the year increased by 38% year over year to 4629.
Grant Pan: Continue to build up overseas presence.
Grant Pan: Turning to our balance sheet, we have maintained a healthy liquidity position with a current ratio of three eight times.
Grant Pan: Debt asset ratio at 17, 8% with zero interest bearing debt.
Grant Pan: We have RMB, five 2 billion cash and cash equivalents, providing ample resources to support our global expansion plans to make improvements.
Grant Pan: Shareholder return.
Grant Pan: Which the board has always consider is the priority.
Grant Pan: Therefore, I'm very delighted to announce that based on a strong clean balance sheet.
Grant Pan: Our liquidity position.
Grant Pan: After considering the necessary investments associated with global expansion plan.
Grant Pan: The board has approved an annual dividend of RMB $509 million for 2023, which is equivalent to 50% of the use of non-GAAP net income attributable to Noah shareholders.
Grant Pan: Therefore, I'm very delighted to announce that based on our strong and clean balance sheet and strong liquidity position, and after considering the necessary investments associated with our global expansion plan, the board has approved an annual dividend of RMB509 million for 2023, which is equivalent to 50% of the year's non-GAAP net income attributable to NOAA shareholders. In accordance with the capital management and shareholder return policy announced last quarter. In addition, the board has also approved a non-recurring special dividend for the year of RMB 509 million in total for 2023.
Grant Pan: In accordance with a couple of management.
Grant Pan: Shareholder return policy announced last quarter.
Grant Pan: In addition, the board has also approved a nonrecurring special dividend for the year of RMB $509 million in total for 2023.
Grant Pan: Thus the amount of total shareholder returns for 2023 in the form of cash dividend will be RMB 1 billion equivalent to 100% of 2023 and non-GAAP net income.
Grant Pan: Two final approval of the AGM in June 2024.
Grant Pan: At the current market value of recurring power plant provides a very attractive dividend yield of over 10% and the total payout plan.
Grant Pan: And a special dividend or yield over 20% and for shareholders.
In summary, we believe that the share price for Noah is significantly undervalued to its intrinsic value. We remain extremely confident in our long term growth prospects. We're also committed to improving our return on equity and to creating more value for our shareholders through enhanced shareholder returns.
Grant Pan: Thus, the amount of total shareholder returns for 2023 in the form of a cash dividend will be RMB 1 billion, equivalent to 100% of 2023 non-definite income, subject to final approval of the AGM in June 2024. At the current market value, our recurring payout plan provides a very attractive dividend yield of over 10%, and the total payout plan with the additional special dividend will yield over 20% for shareholders. In summary, we believe that the share price of NOAA is significantly undervalued compared to its intrinsic value.
Speaker Change: Once again once it materially appreciate all showed a support for your ongoing trust. Thank you for listening and I'll now open the floor for questions.
Speaker Change: Operator.
Speaker Change: We will now begin the question and answer session.
Speaker Change: You asked a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the teeth.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yeah.
Speaker Change: The first question today comes from Helen Lee with UBS. Please go ahead.
Helen Lee: Finally, Tom.
Helen Lee: That should all get a pace your phone call now a whole bunch of them. Yeah. That's outlined here, but just can you go into the industrial will come out over time.
Helen Lee: So I don't all surface.
Tom: Actually the actual physically I shouldn't he says I don't know if you have I wish I could I guess, you mean I can't really say sometime again, I'm, saying, Oh, My God, Oh sure Hydrosol Women's you don't pay that interest.
Grant Pan: We remain extremely confident in our long-term growth prospects. We're also committed to improving our return on equity and to creating more value for shareholders through enhanced shareholder returns. Once again, we sincerely appreciate all of your support for your ongoing trust. Thank you for listening, and I'll now open the floor to questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key.
Tom: Well I don't want to take local and then actually lets you cautious on that.
Tom: Yeah.
Speaker Change: Should that chernenko, probably here Shawn this is Jonathan.
Speaker Change: Luckily you all it seems like it wasn't country they shouldn't.
Jonathan: So let me take that one of them would you say.
Jonathan: Doesn't that just before intention they saw a cohort that you question posting hung somehow how does just that.
Speaker Change: Uh huh.
Speaker Change: Do you have to show up on time is well I don't know Angela.
I mean, I assume anchovy and things like that.
Speaker Change: So let me translate my question.
Speaker Change: So this is how long can you ask two questions if I may say that.
Speaker Change: <unk> covered cities declined to 44, and our EMS declined 11% in the fourth quarter.
Speaker Change: Is it because of loss of our M from bench.
Speaker Change: Or I can lay them off.
Speaker Change: What's your future plans for the onshore business in terms of R&D and as my second question and last year's open day, we'll talk about structural brought back and hedge fund products, which could be a driver from one time commissions going forward, what's the penetration rate of this product and what is your product strategy. This year and what's the business outlook for trying to come forth. Thank you.
Heqing Li: If at any time your question has been addressed and you would like to withdraw your question, please press star then. At this time, we will pause momentarily to assemble our. The first question today comes from Helen Li with UBS. Please go ahead.
Speaker Change: Thank you Helen I think I will take the first question as a whole.
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Heqing Li: Thank you very much, Administrator Wang, for mentioning Class A this time. I have two small questions. The first question is, I see that the number of people in the city has dropped to 44, and the number of financial advisors has also dropped significantly to 1,252. Is this due to the shutdown of some online stores, or is there a loss of personnel, or are we taking the initiative to recruit people? What is the future plan for domestic financial advisors? The second question is, on the opening day of last year, you mentioned that we would have structural products, which would be used as a foundation to supplement the cost of fundraising for the front end. , 2024,,,,,,,,,,, First, the number of covered cities declined to 44, and RM declined 11% in the fourth quarter.
Speaker Change: So to your first question Helen.
Speaker Change: I guess, it's probably a result of both.
Speaker Change: One is obviously the consolidation of networks.
Speaker Change: Obviously some of the.
Speaker Change: Our relation managers choose to not be the smallest city and it works in the hub city, so theres still a little bit of a commute.
Speaker Change: Between the hub city other ethnicities, so theres, some natural loss, but its actually doesn't.
Speaker Change: Account for too much of the decrease.
Speaker Change: Two is really obviously the optimization.
Speaker Change: Increasingly improve.
Speaker Change: Improving the threshold in terms of assessment efficiency of these arms. So naturally for the arms they have to reach a higher threshold if you will.
Speaker Change: To be continually to remain in the team.
Speaker Change: But we're actually.
Speaker Change: Actively adjusting the structure obviously with.
Speaker Change: The heavier investments on the global side oversee items.
Speaker Change: We'd probably also emphasizing on the overall comprehensive.
Speaker Change: Capabilities of the skill set of the arms.
Speaker Change: They go to England between how much of your volume. So this is jay towards at least.
Speaker Change: The new Texas Wichita.
Speaker Change: Uh huh.
Speaker Change: Yeah.
Speaker Change: Tricia you okay.
Speaker Change: Any thoughts around again the Audi.
Speaker Change: And so I can see that.
Speaker Change: Push another one when Michelle chipped in filling out the truth.
Michelle: She said, yes, I'll talk to a human.
Michelle: Social and might that.
Michelle: Tennessee put yourself in the FY <unk> full year and add up.
Michelle: You get a sense of the hotel he had to him. So it's all about you know the ship hasn't changed that much of a question about the way you surpass either women to cope with it.
Michelle: Maybe they changed at all that you know that when we show them a bunch out there you go.
Michelle: Filling out the digital audience at cohort, two which handset shall remain the Hampton I should say change how much well, yeah and I had thought.
Michelle: I can't offer their shaking itself out this year.
Heqing Li: Is it because of a loss of RM from bench closure, or are you laying off RMs? And what's your future plan for the onshore business in terms of RM? And my second question, at last year's open day, you talked about structural products and hedge fund products, which could be a driver for one-time commissions going forward. What's the penetration rate of this product?
Michelle: Sure.
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Michelle: Social media Sheila good door to cheat Fastly intrinsic total couldn't multiply it by four were difficult to your assortment. Thanks.
Speaker Change: Yes. Thank you a couple of official Thiago question Vinci element to the center of a whole bunch of them quite yet.
Heqing Li: And what's your product strategy this year? And what's the business outlook for 2024? Thank you. Thank you, Helen. I think I will take the first question.
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Speaker Change: Which I would say this that if would you.
Speaker Change: Just a hint that you gave to <unk>. So I guess it wasn't that Jean Michel you don't have a cut off there.
Grant Pan: Then, Mr. Yin, our CEO, please add something about our overall strategic layout plan. Secondly, regarding the product, Mr. Yin and Mr. Wang, please answer together. So to your first question, Helen, it's, I guess it's probably a result of both. One is obviously the consolidation of networks. You know, obviously, some relationship managers choose to not leave the smaller city and work in the hub city. So there's still a little bit of a commute between the hub city and their original city.
Speaker Change: Yeah, he's the CFO of <unk>.
Speaker Change: The charge had.
You can find you can go about <expletive> yield that you got sort of the Eagle project.
Speaker Change: Let me add a little about you're starting to show that.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay. So three other yeah, yeah, how should you know element tight shoe yet city to Hudson So agenda.
Speaker Change: UIC each other yet.
Speaker Change: And of course, you don't pass it sounds a good bullish of course I can they get that that number if that changes.
Speaker Change: Yeah. So let me ask you think Shelby that Joe.
Speaker Change: You can do the cheaper they can see and we'll have that behind us.
Speaker Change: <unk> shuddered in there. So that's what that is I should say.
Grant Pan: So there's some natural loss, but it actually doesn't account for too much of the decrease. And two is really, you know, obviously, the optimization. We're increasingly improving the threshold in terms of assessment and efficiency of these arms. So naturally, for the arms, they have to reach a higher threshold, if you will, to remain in the team.
Speaker Change: He can't eat 30 that Youll frontier, what I sort of what you saw there that you could checkout empty that.
Speaker Change: She said I thought you got a deal with whether you've got she cynical about that limits, what should that she's hesitating, because having a heart attack.
P&G and our culture.
Speaker Change: Portfolio that I think for us.
Essentially it's not easy to get there.
How do you see it.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: So I will take the translation for for Gander.
Speaker Change: So in terms of the optimization of our domestic network.
Grant Pan: But we're actually actively adjusting the structure, obviously, with heavier investments on the global side, overseas arms. We're probably also emphasizing, you know, the overall comprehensive capabilities of the skill set of the arms. Do you want to add anything, Mr. Yin? It's about the city's structure and the number of people in your city.
Speaker Change: We always.
Speaker Change: Adhere to the strategy of following the footsteps of our clients and you know over the past few years, we have noticed the trend of high net worth individual clients too.
Speaker Change: Ah relocate from lower tier cities, where they basically accumulated there first bucket of coats to core cities in first tier cities and.
Speaker Change: As you know.
Our strategy all of them so and also on the other hand, given the current challenging macro economic condition, we need to.
Unknown Executive: Okay. [inaudible] Sponsored ADR Class A Sponsored ADR Class A, Sponsored ADR Class A, Unknown Attendee, Melo Xi, Heqing Li, Heqing Li, Noah Holdings Ltd. Sponsored ADR Class A, Grant, so I will take the translation for Xander. So, in terms of the optimization of our domestic network, you know, we always adhere to the strategy of following the footsteps of our clients.
Speaker Change: Concentrate and we allocate our core strengths and resources to improve operational efficiency.
Speaker Change: Therefore in the fourth quarter last year, we basically.
Limited some of the underperforming.
Speaker Change: RMS and professionals.
Speaker Change: So this is quite a.
Speaker Change: Quite different from our <unk>.
Speaker Change: Pension strategy strategy in the past. So now we are more focusing on allocating our strengths and resources to the.
Unknown Executive: And, you know, over the past few years, we have noticed the trend of high net worth individuals and clients to, you know, relocate from lower tier cities, where they basically accumulated their first bucket of goats, to core cities and first tier cities. And, you know, our strategy follows, on the other hand, given the current challenging macroeconomic conditions, we need to, you know, Sponsored ADR Class A. So now we are more focusing on allocating our strength and resources to individuals with high performance. And in fact, the top performers over the past year, basically, their KPIs, and the AUM, or transaction value per head, have increased more than 30% over the past year. Chiyao Huang, Qing Pan, Melo Xi, Jeff Li, Heqing Li, Noah Holdings Ltd.
Speaker Change: Individuals with high performance and in fact, the top performers over the past year.
Speaker Change: They're basically their K P I and the AUR more transaction value per head has increased to more than 30% over the past year.
Speaker Change: Oh John.
Speaker Change: Okay.
Speaker Change: So that Hasnt had L. A D. G shop. It talks about that sort of thing that would be tested James I'll be sure to Oklahoma longer and Gamestop.
Speaker Change: How's it going I'm, sorry, and then just Hello, how are you.
Speaker Change: Jim with that particularly in Canada, now that Hanjin Genoa Jacob attempting when does when do you think the attempting to Hawaii.
Speaker Change: Well I mean, just.
Speaker Change: So first of all the lines on the Tenncare and Central He has got people tell me if you kind of thought that you did to do.
Speaker Change: Do you have handy I'll pass it over to someone else.
Speaker Change: I feel and that it shouldn't be that difficult Mckool sheetrock.
Speaker Change: Why does he work towards its encore.
Speaker Change: Copel has to be out people get 10-K M. J just a couple of Duane I don't feel convinced that Hudson Jacob I'll say you hit this one do you think the pending sale.
Speaker Change: She did a chicken Colgate journey has been about.
Unknown Executive: So in conclusion, you know, in the past few quarters, we have rather focused on consolidating our domestic network. So you can probably see that the speed of the RM headcounts domestically, the decrease in the headcount is actually slower than the decrease in the number of cities we consolidated, which means we are currently still under further evaluation for our workforce. So in terms of your second question, on the penetration rate for hedge fund products, structure products, and cash management products, we're not seeing that the penetration rate for hedge funds and structure products is still very low. However, in the first quarter of this year, in 2024, the penetration rate for structure products, especially with the principal protection mechanism, has been increasing.
Okay.
Speaker Change: Yeah.
Speaker Change: So in conclusion.
Hudson Jacob: In the past few quarters, we are we have a rather focus on you know.
Hudson Jacob: Consolidating our domestic network.
Hudson Jacob: So you can probably see that the speed of the RM head counts domestically the decrease of the head count is actually slower than the decrease of.
Hudson Jacob: The number of cities to be consolidated.
Hudson Jacob: Which means we are currently still under further evaluation of our for our workforce.
Hudson Jacob: So in terms of your second question on the.
Hudson Jacob: The penetration rates for hedge fund products structured products and cash management products. So we're not seeing that the penetration rate for our hedge fund and structured product, it's still very low.
Hudson Jacob: However, in the first quarter of this year in 2024.
Hudson Jacob: The penetration rate for structured products, especially with the principal protection mechanism.
The increasing and we are also seeing the potential of clients, who whose wallet with US is currently in cash management related product.
Unknown Executive: And we are also seeing the potential of clients whose wallet with us is currently in a cash management related product as the interest rate is starting to, or is expected to trend down in the future. We see the opportunity to convert these wallet shares into other alternative investment products, including hedge fund and structure products. [inaudible] Very clear. Thank you, Chiyao Huang, Qing Pan, Chiyao Huang, Peter Zhang, Grant Pan, Unknown Attendee, Melo Xi, Heqing Li, Heqing Li, Noah Holdings Ltd. As a reminder, if you have a question, please press star and 1 to be joined into the question. The next question comes from Peter Chong with JP Morgan. Please go ahead.
Hudson Jacob: The interest rates, starting to or is expected to trend down in the future. We see the opportunity to convert these wallet shares into other alternative investment products, including hedge funds and structured products.
Hudson Jacob: Hello.
Very clear thank you.
Speaker Change: Your line is open.
Speaker Change: As a reminder, if you have a question please press star.
Speaker Change: Everyone be joined into the question queue.
Speaker Change: The next question comes from.
From Cowen.
Speaker Change: Zhang with Jpmorgan. Please go ahead.
Peter Zhang: Uh huh.
Peter Zhang: So you're gonna, particularly with Eagle life, you have yourself place not just with the Codell.
Peter Zhang: Okay.
Zhang: So you don't play ball that you thought that.
So what I'm, saying is that a woman took off price.
Peter Zhang: My first question is about the special tax. I think this is a great improvement for shareholder returns. I would like to know what considerations are behind the special tax.
Some are called out.
Zhang: Call it all of them, but that's the type one diabetes sondage tempting I shall hand, chopped or whether like cryo EM, Ohio Mill, you did quite well.
Peter Zhang: Considering that the cash on our asset debt table is still very strong, in the future, do we still have any return plans or some long-term shareholder return plans? This is the first question. The second question is about our investment at the end of the fourth quarter. There is a loss of about 50 million RMB at the end of the fourth quarter. I would like to know what the reason behind this is.
Zhang: To keep up with the Egypt on SEDAR.
Zhang: T O plastics is eagle that and see it.
Speaker Change: Got you.
Speaker Change: Sure.
Speaker Change: Some people to the sales forces I also serves since equal torches by you know you called out that.
Speaker Change: Why does it go closer pushout of delegates go sure.
Peter Zhang: And what are the main assets that we invest in? Okay, let me translate. My first question is about the dividend. I wish to chat with management.
Speaker Change: So I would say hold a gangster somebody in a hole.
Speaker Change: Well, we all should not yet.
Speaker Change: It wasn't that towards the second half.
Speaker Change: What I find is that my first question I asked about the dividend.
Speaker Change: I wish to tablets.
Peter Zhang: What's the rationale behind the special dividend payment for this year? And given that we still have a very strong cash balance on our balance sheet, looking ahead, do we have any share buyback plan or other long-term shareholder return plan? My second question is about the investment income in the other income in our P&L. There were 54 million investment losses in the fourth quarter due to investment losses.
Speaker Change: But what's the rationale behind the special dividend payment.
Speaker Change: But this year the game and if that was still has a beverage.
Speaker Change: <unk> balanced all balance sheet looking ahead do we have any oh.
Speaker Change: Share buyback plan.
Speaker Change: Are they long shareholder return.
And my second question is about the investment income in the other income in our P&L up here, Here's the 54 billion.
Speaker Change: The market.
Speaker Change: Fourth quarter due to investments.
Peter Zhang: I wish to understand what's the rationale behind them and what are the underlying investments. Thank you. Thank you, Peter. I'll take the first question.
Speaker Change: Got it.
Speaker Change: That was the rationale behind and whatnot.
Speaker Change: But thank you.
Speaker Change: Thank you Peter I'll take the first question and Nora and vendor.
Grant Pan: And Nora and Zender will jump in as needed. So for the special dividend, you know, after ample discussions with our investors, and we have basically passed on the message to the board, we'll continue to anticipate strong cash flows from our future operations. And after carefully evaluating the capital need for global expansions and really not any, I guess, clear target for heavy capital utilization, we believe that it is the right time to return to our shareholders with a heavier ratio in terms of special dividend in the form of special dividend. I guess with the Depreciation on the Chinese ADR share price mostly not too much associated with the fundamentals. We don't believe stock repurchase actually adds too much value at this point. We obviously will not exclude that option going forward, but for this year, we prioritize the cash dividend payout in the form of a special dividend.
Speaker Change: He is needed.
Speaker Change: For the special dividend.
Speaker Change: Input discussions with our investors and we have basically pass on the message. The board will continue to anticipate strong cash flows from our future operations.
Speaker Change: And by after carefully evaluating.
Speaker Change: The capital need FERC global expansions.
Speaker Change: And really not any I guess clear targets for heavy capital utilization, we believe that it's the right time.
Speaker Change: To return to our shareholders with a.
Speaker Change: Heavier ratio in terms of special dividend in the form of special dividend.
Speaker Change: I guess with the.
Speaker Change: Depression Chinese ship.
Speaker Change: Share price, mostly actually not too much.
Speaker Change: Associated with the fundamentals.
Speaker Change: We don't believe so.
Speaker Change: Stock repurchase actually ask too much value at this point, we obviously would not exclude that option going forward, but for this year would prioritize on the cash dividend payout in the form of special dividend.
Grant Pan: This is my supplementary on the Specialized Section. In terms of investment, we also have a market-based investment benchmark that everyone is familiar with. It is also a relatively large financial investment institution.
Speaker Change: Oh sure Vasu, what they could be apache to be able to issue.
Speaker Change: Uh huh.
Speaker Change: Total Glen I'll take quite a while we will Miss you said it yesterday oil towards us.
Speaker Change: You guys talked about though because we see that.
Speaker Change: Bush's although you could pose Adobe is detaching the jewels Chico are women those who got adjustment on the valuation is pretty much on par with the market.
Grant Pan: Our adjustment on the valuation is pretty much on par with the market. So, if everyone is interested in Oneonone, we can discuss this further. Peter,. Thank you very much. Yeah,.
Speaker Change: Within the power Gen.
Speaker Change: 101 by those seems to hover makes it team for the truth.
Speaker Change: Peter Thank you very much.
Speaker Change: Let me talk to you that's very clear thank you very much.
Peter Zhang: That's very clear. Thank you very much. Yeah.
Speaker Change: Oh sure.
Speaker Change: This concludes our question answer session I would like to turn the conference back over to Mr. Grant Pan for any closing remarks.
Grant Pan: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Grant Pan for any closing remarks. Okay. Thank you very much for our shareholders and analysts for continued trust and support. And this will conclude today's annual release. And if you have further questions, we have arranged one-on-one sessions. I'll be very happy to share more insights with you.
Grant Pan: Okay. Thank you very much for our shareholders and analyst for continued trust and support and this will conclude todays earning release and if you have further questions. We have arranged one on one sessions I'll be very happy to share more insights with you. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.
Speaker Change: Okay.
Speaker Change: [music].
Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Sponsored ADR Class A