Noah Holdings Limited (NYSE: NYSE:NOAH), a leading wealth and asset management service provider in China, has announced its financial results for the first quarter of 2024. The company reported a 19.2% year-over-year decrease in total revenues, amounting to RMB 654 million, as it undergoes a strategic business restructuring.
Despite the decline, Noah Holdings saw a significant portion of its revenue—77.1%—coming from its burgeoning overseas business. The company has set an ambitious target to grow its overseas assets under management (AUM) from the current USD 8 billion to over USD 20 billion in the next 3 to 5 years.
Key Takeaways
- Noah Holdings' Q1 2024 revenue fell by 19.2% YoY to RMB 654 million due to business restructuring.
- Overseas business contributed 77.1% of new business and product revenue.
- The company aims to grow overseas AUM from USD 8 billion to over USD 20 billion within 3 to 5 years.
- A new online wealth management platform for EAMs and family office clients is in development.
- Despite global market volatility, overseas net revenues grew by 22.4% YoY.
Company Outlook
- Noah Holdings is focusing on expanding its overseas operations and international relationship manager team.
- The company is working on an online platform for External Asset Managers (EAMs) and family office clients, targeting to serve 300 entities.
- A strategic shift towards global markets is seen as a foundation for sustainable growth.
Bearish Highlights
- The company has not observed significant improvement in investor sentiment.
- There is a slowdown in demand for domestic insurance products due to declining interest rates.
- First-quarter revenue decline was driven by decreased recurring service fees and slow growth reflection in overseas business.
Bullish Highlights
- Noah Holdings is building personalized services and expanding its global product portfolio.
- The company is positioning itself to capture growth as high net worth individuals seek overseas asset allocation.
- The Chairlady emphasized the importance of preserving wealth and avoiding asset allocation mistakes.
Misses
- The decline in insurance commission fees had a minimal impact on the business.
- The company prioritizes long-term value over short-term fee rate fluctuations.
Q&A Highlights
- The company's focus on safety and compliance in domestic operations is paramount while expanding overseas.
- Noah Holdings is looking to optimize client portfolios, emphasizing long-term client relationships over immediate profit.
- Adapting to global private banking operations is acknowledged as a challenge, but the company remains optimistic due to its management and relationship manager team's capabilities.
In conclusion, Noah Holdings is navigating through challenging market conditions with a clear focus on international expansion and providing high-value services to its clients. The company's strategy to pivot towards global markets and manage assets for high net worth individuals internationally is expected to lay the groundwork for future revenue growth and shareholder value.
InvestingPro Insights
Noah Holdings Limited (NYSE: NOAH) has faced a challenging first quarter in 2024, with a notable decline in revenue. Despite this, the company's strategic focus on expanding its overseas operations and the ambition to significantly increase its assets under management internationally suggest a long-term vision that could resonate with investors seeking growth in global markets. Here are some insights based on real-time data from InvestingPro and InvestingPro Tips:
InvestingPro Data:
- The company's market capitalization stands at $891.69 million, reflecting its size in the industry.
- With a P/E ratio of 14.28 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 6.09, the company is trading at a low earnings multiple.
- Revenue for the last twelve months as of Q4 2023 is reported at $464.19 million, with a gross profit margin of 55.78%, indicating a strong ability to retain earnings from sales.
InvestingPro Tips:
- Noah Holdings is trading at a high P/E ratio relative to near-term earnings growth, which may be a point of consideration for investors evaluating the company's current valuation and future earnings potential.
- The company's liquid assets exceed short-term obligations, providing financial stability and the ability to cover immediate liabilities, which is a positive sign for investors concerned with short-term financial health.
For investors interested in a more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/NOAH. These tips include insights on the company's performance over the last three months, its current profitability, and its trading activity near the 52-week low, among others. To access these valuable insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are a total of 8 InvestingPro Tips available for Noah Holdings, providing a comprehensive view of the company's financial health and potential investment opportunities.
Full transcript - Noah Holdings Ltd (NOAH) Q1 2024:
Operator: Good day, and welcome to the Noah Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Melo Xi, Director of IR. Please go ahead.
Melo Xi: Thank you, operator. Good morning, and welcome to Noah's 2024 First Quarter Earnings Call. Joining me today on the call are: Ms. Wang, Jingbo, our Co-Founder and Chair Lady; Mr. Zander Yin, our Co-Founder, Director and CEO; and Mr. Grant Pan, our CFO. Mr. Yin will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. 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 that are subject to risks and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include, but not limited to, those outlined in our public filings with ICC and the Hong Kong Stock Exchange. Noah does not undertake any obligation to update any forward-looking statements, except as required under applicable law. In addition, today's call will include discussions of certain non-GAAP financial measures. A reconciliation 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 solidification to sell or purchase an interest in any Noah affiliated products. Please also be aware that a link to a live webcast with presentation materials is available on our Investor Relations website. With that, I would like to pass the call to Mr. Yin. Please go ahead.
Zhe Yin: Good morning, all investors and analysts. I'm Zander Yin, and this is my first time sharing and discussing company's performance as CEO of Noah Holdings. Thank you all for joining us today. I'd like to start today's call by sharing our views on the macroeconomic environment, our performance for the first quarter of 2024 and the strategy we're deploying going forward. Domestic capital market continued to experience extreme fluctuation during the first quarter. The real estate market remains sluggish, while the primary market faced hurdle due to the periodic policy restrictions, resulting in a slow exit process. It's clear that high net worth individuals are becoming increasingly cautious with their investments. Adding to the challenge, some noncompliant wealth management companies with capital pooling have collapsed, severely affecting domestic clients and leading to a stricter regulatory environment. I would like to reiterate that since our inception, Noah has never engaged in capital pooling, has no maturity mismatches and does not offer high leverage financing options to clients. As of today, Noah does not have any nonstandardized private credit products and RMB residential real estate funds. Overseas, persistent inflation over the past 3 months has cooled the expectations for Federal Reserve rate cuts, indicating that a higher for longer rate environment is likely to remain in place. As a result, investors will continue to allocate capital towards cash management and deposits for a longer period of time. Management speaking clients are also strongly demanding for global asset allocations. With this trend continues, we're expanding our international RM team and actively increasing our influence and wallet share among overseas management speaking clients. Turning to our financials for the quarter. Total revenues were RMB 654 million, a decrease of 19.2% year-on-year primarily due to the proactive restructuring of our business. Our overseas business strategy has achieved solid results, contributing 77.1% of the revenue generated from new businesses and products in the first quarter, while domestic business contributed 22.9%. By regional breakdown, our domestic business contributed RMB 348 million, accounting for 53.1% of the total revenues. Within the domestic business, revenues from legacy distributed products accounted for 89.6%. Our overseas business generated RMB 307 million, a decrease of 4.5% year-on-year, mainly due to the carried interest earned from private equity assets in the same period last year. As we back out the impact from carried interest, overseas net revenue actually increased by 22.4% year-on-year. Breaking it down by segment, our Wealth management business generated RMB 464 million. Within Wealth management, our domestic business contributed RMB 235 million, while the overseas business contributed RMB 229 million. Our asset management business generated RMB 181 million. Within asset management, our domestic business contributed RMB 103 million, entirely composed of revenue from legacy distributed products. Our overseas business generated RMB 78 million. As we expand our portfolio of overseas private equity products, the number of active clients in U.S. dollar private equity and structured products reached 583 in the first quarter, a year-on-year increase of 97%. The value of capital raised for U.S. dollar private equity products, which generate long-term recurring service fee revenue reached RMB 165 million. This grew U.S. dollar AUM to $5.2 billion, a year-on-year increase of 6.1%. In the comprehensive services segment, domestic insurance brokerage business generated RMB 19 million in revenue and revenue from overseas insurance, trust and other comprehensive services were RMB 150 million, a year-on-year increase of 86.8%. The number of active clients in the overseas comprehensive business increased by 51.9% year-on-year. Operating profit for the first quarter was RMB 121 million, with an operating profit margin of 18.7%. In the Wealth Management segment, our domestic business objective is to ensure full compliance and steady operations. We have proactively reduced the number of branches in domestic cities for nearly 80 to 18, with plans to further narrow it down to around 10 core cities. We are firmly committed to reducing fixed costs and optimizing mid and back office personnel costs. Internationally, from Hong Kong and Singapore to the United States, our strategy is to increase the number of relationship managers and enhance our influence and wallet share among high net worth management speaking clients. As of the end of the first quarter, Hong Kong and Singapore had 91 relationship managers on boarded, an increase of 225% year-on-year and 2.2% sequentially. Currently, due to the small size of our overseas RM team, each overseas RM serve too many clients, and there is room for improvement in the quality and responsiveness in our client service. Internationally, our primary focus is on expanding the team of overseas RMs. This year, our goal is to grow the team to 200. As we continue to invest in our international infrastructure, as of the end of the quarter, we had over 15,700 overseas registered clients, an increase of 17.1% year-on-year. The number of clients who purchased our cash management products reached 4,108, an increase of 89.4% year-on-year. While the number of discretionary investment clients reached 873, an increase of 167% sequentially. In the asset management segment, domestically, our primary challenge is to strengthen private market access in collaboration with GPs and portfolio companies. In public markets, we focus on QDI and QDLP products to help clients generate better returns in the global capital markets with RMB allocations. Internationally, since 2022, we have significantly expanded the diversity and quality of our overseas products as part of our top tier GP partners and segmented flagship product strategy. During the quarter, the transaction value for U.S. dollar cash management product increased 49.4% year-on-year and 33.6% sequentially to USD 840 million. At the same time, we have built a complete product metric and launched high-yield U.S. dollar products to capitalize on high interest rate environment. These include private credit and infrastructure products, as well as actively managed VC firm fund funds and the fourth series of our U.S. real estate funds. Transaction value of our U.S. private equity products increased significantly, reaching $165 million in the first quarter, an increase of 21.3% year-on-year and 81.3% sequentially. As of the end of the quarter, AUM for overseas products reached USD 5.2 billion, an increase of 6.1% year-on-year, accounting for 20.4% of the group AUM compared with 21.2% during the same period last year. AUM for overseas private equity and other primary market funds reached $3.9 billion, an increase of 5.9% year-on-year. Overseas AUA, which includes third-party distributed products reached $8.3 billion, a year-on-year increase of 9.2%. In recent years, top global GPs have increasingly turned to private wealth channels for capital raising and have been introducing more individual client-friendly products with liquidity features. Our strong brand image among high net worth clients and RMs expertise in alternative assets, make us the ideal partner for those GPs. Our goal is to increase U.S. dollar AUA from the current USD 8 billion to over USD 20 billion in the next 3 to 5 years. On the comprehensive services side, domestic insurance business has slowed notably, mainly due to the continuous decline in fixed interest rates for domestic insurance. Our current strategy is to focus our insurance products to help clients address their parents retirement, well-being and medical needs. Overseas, the Hong Kong insurance market has entered into a phase of intense competition with highly homogeneous products following the COVID reopening. To address this challenge, we have strengthened client segmentation and collaborated with leading insurance companies to develop exclusive products and customized solutions. Furthermore, we have launched customized enterprise client solutions such as employee benefit plans for our entrepreneurial clients. This has enhanced our competitive advantage with differentiated products and professional services. During the quarter, overseas insurance revenue increased by 86.8% year-on-year. Serving high net worth clients through both online and off-line channels is a key priority for us. We continue to further expand the range and types of clients that we can service through [indiscernible], our overseas wealth management app. This includes the offering of different solutions to clients, businesses and agencies. Online wealth management is becoming our new channel for us in the overseas. The number of overseas active high net worth clients reached 2,745, an increase of 39.6% year-on-year. Total transaction value during the same period reached $1.2 billion, up 15.7% year-on-year. The number of active clients for U.S. mutual funds reached $2,327, an increase of 65.2% year-on-year with transaction value of $521 million, up 52.7% year-on-year. Overseas transaction value for corporate and institutional clients reached $85 million in the first quarter, an increase of 143% year-on-year with AUA reaching $187 million, a year-on-year increase of 58.5%. For agency clients, our overseas wealth management business began trial operations in late 2023, it is empowering EAMs and family office clients with a SaaS platform integrated with our full suite of products. To date, we have signed 70 agency clients. Our goal is to develop an overseas online wealth management platform that does not rely on our team of RMs. Once our overseas infrastructure is firmly in place, we target to serve 300 EAMs and family offices with this solution. Since inception, we have dedicated ourselves to providing high-quality asset allocation services to management speaking high net worth investors. We have built a enduring trust-based relationship with each of our clients and continuously enhance our understanding of wealth management and investment through ongoing investor education. As management speaking, high net worth investors become more mature and globally oriented, the deep trust-based relationships we have built domestically will allow us to continue serving them as they look overseas. We are dedicated to building a personalized service for them, which, when combined with our expanding global product portfolio, will give us a significant advantage over local institutions going forward. Our asset-light approach to expanding into key overseas markets with high concentrations of management speaking high net worth investors and wide array of product services will ideally position us to serve, not only our existing clients, but also build a new local client base. 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. Thank you, everyone.
Qing Pan: Thank you, Melo, and thank you, Zander, and greetings to everyone joining us today. As Zander has mentioned, the first quarter of 2024 is impacted by continued volatility in the global capital markets, shifting expectations around Federal Reserve interest rate cuts have created turbulent conditions in equity and bond markets around the world. As the U.S. dollar strengthened, equity and gold prices moved in tandem, reflecting the complex environment that investors continue to face. Effective risk management and global diversified portfolio have become crucial to successfully navigating this environment. Domestically, the A share market experienced extreme fluctuations as well, which negatively impacted investor confidence promoting them to take a more cautious and risk-averse approach to investments and further diversifying their portfolio. This created substantial challenges and impacted the financial performance of China's wealth and asset management industry. During the first quarter, 43 listed security brokerage firms saw total revenue and net profit declined by 20% and 30% from the same period last year. Some leading private banks were also affected with significant declines in commission income. In response to prevailing marketing conditions, we're strategically restructuring our wealth management operations, consolidating teams and resources from smaller cities to core cities and pivoting operations and personnel towards global markets where demand for asset diversification is growing. Teams guiding operations this year are transformation and transition. While this transformation may bring short-term challenges, pressures, including temporary fluctuations on financial performance, we're confident that we'll lay a solid foundation for robust sustainable growth towards our globalization strategy and generate enduring value for shareholders. With that, let's get into the details of first quarter financial results. On the revenue side, we have seen a slight increase in net revenues from new transactions with onetime commissions up 6% year-over-year. However, the decline in recurring service fees and performance-based income put pressure on total net revenues, which decreased 19.2% year-over-year and 18.8% sequentially due to seasonality to RMB 650 million in the first quarter. Net revenue from recurring service fees were RMB 417 billion, down 12% year-over-year and 2.6% sequentially, due to a decrease mostly in onshore AUM resulting from changes in NAV and also exits from RMB-related investments. Performance-based income was RMB 14 million compared to RMB 83 million in the same period last year, primarily due to the successful asset of a private equity portfolio company last year. The bright side is that, we're seeing increased interest towards U.S. dollar investment products. In light of the diminished expectation of a rate cut by the Federal Reserve, we're observing a strong sustained demand from clients for U.S. dollar cash management products. It's worth also noting that the transaction value for overseas private equity and private secondary products, which could bring long-term recurring fees in the future are also generating significant growth, increasing 21.3% and 70.6% year-over-year, respectively, demonstrating the progress we have made in expanding our high-quality alternative investment product offerings. Looking at the financials, we can see clear growth in overseas business. On an apple-to-apple basis, taking out the impact of performance-based income, overseas net revenues grew meaningfully by 22.4%. And the total overseas net revenues accounted for 47.2% of total revenues, up 7.2% year-over-year, underscoring the growing importance of a key revenue driver. With respect to transaction values, we distributed RMB 18.9 billion of products during the quarter, up 12.4% year-over-year and 14% sequentially. However, the immediate contribution on revenue is not yet evident despite the high demand for U.S. dollar cash management products and also the revenue -- recurring revenue from private equity-related products will not take effect in the second quarter, but it does reflect the progress of continuing making in getting a larger share of clients' wallets. And the long-term benefits of the increased portion of alternative investment products to future management fees are also yet to be realized in the current term. By currency, transaction value for RMB products was RMB 10.5 billion, down 8.8% year-on-year and 1.5% sequentially or transaction value for U.S. dollar products increased by 50.7% and 40.2% sequentially to USD 1.2 billion. Overseas AUM grew 6.1% to USD 5.2 billion, accounting for 24% of total AUM, while overseas AUA grew 9.2% year-over-year to USD 8.3 billion, accounting to 24% of total AUM, reflecting our ability to capture a larger share of clients use of wallet. Operating costs and expenses experienced a slight year-on-year increase of 0.7%, a sequential decline of 8.8% due to our cost control initiatives. In details, compensation and benefits increased by 5% year-over-year and 29.3% sequentially. This was primarily due to an increase in share-based compensation expense to motivate and retain core talents. As I mentioned last quarter, we're continuing to consolidate our network in smaller cities and further improving human capital efficiency while reducing overhead expenses. While the financial benefits of these optimizations may not be immediately apparent, we anticipate a gradual and noticeable impact on our cost savings in the future. Selling and general and administrative expenses combined decreased 6.3% year-over-year and 47.9% sequentially, reflecting the progress our cost control and efficiency improvement initiatives are already making. Operating profit during the quarter was RMB 121 million, a decrease of 56.4% year-over-year and 45% sequentially. Operating profit margin was 18.7% during this quarter, below our long-term target range of 30% to 35%, primarily due to the drag from domestic market revenues and periodical organization restructuring. Total other income increased by 82.1% year-on-year to $55.3 million due to continued optimization of treasury management. Non-GAAP net income during the quarter was RMB 161 million compared with RMB 239 million during the same period last year. In terms of clients, as of the end of the first quarter, we had a stable total of 9,560 with diamond and black card clients. Specifically, the number of diamond card clients decreased slightly to 7,272 while the number of black card clients increased to 2,296. As our overseas [indiscernible] accelerates, the number of overseas registered clients continues to grow, increasing 17.1% year-on-year and 5.3% sequentially to 15,725. The total number of overseas diamond and black card clients, which require minimum investment with us of USD 2 million and USD 5 million, respectively, grew rapidly to more than 1,500. During the first quarter, the total number of active clients was 10,391, up 15% sequentially, of which overseas active clients accounted for 2,745, an increase of 9.1% sequentially. Turning to our balance sheet. We have maintained a healthy liquidity in with our current ratio of 4.1x and debt-to-asset ratio at 16.6% with 0 interest-bearing debt. We have RMB 5.1 billion in cash and cash equivalents, providing ample resources to support our global expansion plans and allocate to shareholder returns, which remains a priority for the Board. As mentioned last quarter, Noah declared annual dividend of RMB 509 million and a nonrecurring special dividend of RMB 509 million for 2023, subject to final approval at our AGM on June 12, 2024. We expect to pay out dividends when approved before the end of July to Hong Kong stockholders and in early August to our ADS holders. We look forward to providing stable and sustainable returns to shareholders that will drive growth across our business. Looking ahead, our goal is to provide clients with high-quality and globalized products and services, restructuring of wealth management channels and realigning our operations and personnel that will allow us to sustainably capitalize on this growing demand. The strategic transition towards overseas markets still in the initial phase of being built out and will take some time to mature, but we're already beginning to see the progress we have made reflected in the performance of the global business. While we inevitably encounter bumps around the road, we're confident in our ability to overcome them and would like to express a sincere gratuity to our shareholders' support. And thank you for listening. I will now open the floor for questions.
Operator: [Operator Instructions] The first question comes from Peter Zhang with JPMorgan.
Peter Zhang: My first question is about the investment sentiment. Starting from the March this year, we noticed that the capital market in Hong Kong has recovered. And recently, there's also some real estate supported policy in Mainland China. We are wondering whether Noah observe any improvement in domestic investment sentiment. And management mentioned during the call that the amount for domestic insurance has declined. We are also wondering what the client preference for their interest in terms of the products? My second question is about the revenue outlook and fee rates. We noticed that the first quarter revenue decline, not a revenue decline on a year-over-year basis. Can management gives us -- can management explain was reason for drivers behind? And what's our expectation for the Noah's revenue in 2024? My second question is about the fee rate for our product. In fourth quarter last year, domestic bancassurance channel experienced a decline in insurance fee rate as requested by the regulator, we will see potential fee rate decline for our domestic insurance sales and what's the potential impact? And apart from the domestic insurance, will we see any other fee rate declining impact for our -- for other products we are currently distributing?
Zhe Yin: So I'll translate on the first question regarding the changes in recent sentiment among investors. So, although given that we have seen some rebound in the capital markets or H share or A share capital markets recently. I guess, in summary, we haven't seen a significant shift or improvement in high net worth investors' investment sentiment because building confidence is rather a long-term process rather than short term. So the short term capital market rebound will not immediately reverse the investment sentiment in that sense. So the second question regarding the domestic insurance and I guess, the slowdown in demand, as well as the trending downward return or interest rate, I guess, it's largely aligned with the domestic interest rate environment, which is also trending down. And, I guess, the slowdown in the clients' sentiment towards domestic insurance is also a reflection of their investment sentiment in that sense. So right now, in terms of domestic insurance, we are more focusing on the products that will satisfy the retirement well-being, as well as the medical needs of clients and their parents, the type of products that will satisfy that those demands. So the third question regarding the reasons behind the decline in first quarter revenue. I guess, the first aspect is that, the decrease in recurring service fee or the management fee, mainly because of the active exit activities in our domestic portfolio and the fact that we do not really introduce new products in the domestic market, which drives down our domestic AUM. But, I guess, that's a rather active approach. And the second aspect is that, although given we have achieved a great improvement or progress in our overseas business and expansion. But given the current higher for longer interest rate environment and the product that fit into that environment, I guess, the growth in overseas business is still not fully reflected in our current revenue structure. But we think that to capture and maintain clients' wallet share to even through cash management and term deposit product is also very important because it is building for future growth when interest rate trends down that we can translate these products into more fee-generating products like private equity and hedge fund products in the future. And thirdly, I guess, it's the fact that the decrease in carried income and performance-based income because of the -- I guess, the general exit environment compared to the previous quarter -- I mean, the previous year. So, I guess, the fourth question regarding the outlook on 2024. I guess, overall, the strategy is rather clear, which is to ensure, I guess, safety and compliance in our domestic operations while focusing on deploying more resources and to expand our overseas business. But that process take -- will probably take some time for our overseas business to fully accelerate. We have spent the past 20 years being able to build a rather complete system in the domestic market. And we're hoping that in the 3 to 5 years' time, we'll be able to complete our overseas business infrastructure. And additionally, I guess, the client trust with us is, I guess, it's very long term. And the investment demand needs of high net worth investors is also very long term. So as clients look more towards overseas asset allocation, we'll be well positioned to provide better product and services to them in the overseas and global markets. So, the question regarding the insurance commission fee decrease. So, I guess, the overall impact on our business is rather small, especially comparing with a lot of the insurance brokerage business in the market, where most of the brokers have high commissions but low base. Our RMs are more focused on providing long-term value for our clients. So -- and as a business, our primary focus is to satisfy our clients' needs and create value for clients and help to optimize their asset allocation and portfolio construction. So, I guess, the short term or the fluctuation in the fee rate of a certain product is not the most aspect that we're worried about. In terms of other product fee rate changes, I guess, it's largely in relation to the nature of the products. For example, cash management-related products naturally have a lower fee rate, whereas the private market, including private equity and private secondary hedge fund products, the fee rate has been rather stable. But that being said, we are still focused on optimizing our clients' portfolio and asset allocation, and we would rather lose a certain client than to lose money. So also going back to creating long-term value for our clients.
Melo Xi: So operator, so please be noted that there is no more questions, our Chairlady, Wang, would like to have a closing remark as well.
Operator: Alrighty, this concludes our question-and-answer session. I will now turn it over to management for any closing remarks.
Zhe Yin: So I'll translate for Chairlady's closing remarks. So we have noticed that there are a lot of not compliant so-called wealth manager in the China domestic market continues to default under their private credit products, which has caused significant losses among their high net worth clients. So, I guess, in our perspective, in the past 10 years, the China wealth management has experienced a rather fast growing, but not so healthy growth period. So standing in today's time, we think that the largest or the biggest risk in the wealth management market in China is that, the high net worth clients return back to poverty because of the wrongly allocated assets or the wrong asset allocation advices they got. So right now, our main advice to our existing clients is to hold on to their current wealth and portfolio so that they can preserve their wealth and -- which is driven for future growth when the opportunities is there. Internally, I guess, the biggest challenge for us as we expand our overseas strategy is the -- I guess, how fast we can get used to or be familiar with the operation of how global private banks operate. But that being said, we have a very talented core management team, and we do have some very global-minded and top tier RM team. So we are still rather optimistic regarding our future growth, especially in the overseas market. So turning back to you, operator.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Melo Xi: Thank you all.
Qing Pan: Thank you all.
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