Noah Holdings Ltd. Q1 FY2025 earnings call

• Market Environment: Q1 CIO report predicted increased market volatility in 2025 due to factors like Trump's return to presidency, monetary policy lack of coordination, and AI competition. Advice to clients includes disciplined asset allocation, wealth management focus, robust portfolio building, and decisive asset allocation adjustment. - Financials: Non-GAAP net income in Q1 was RMB 169 million, up 4.7% y-o-y and 27.4% q-o-q due to operating costs and expenses dropping 18.8% y-o-y. Total operating costs and expenses in Q1 were RMB 429 million, down 18.8% y-o-y. Operating profit surged 53.1% y-o-y and 35.2% q-o-q to RMB 186 million. - Business Units: Overseas has 131 relationship managers, plans to grow team in Singapore, Southeast Asia, U.S., Japan, Canada. Overseas AUA up 8.7%. Mainland China's renminbi-denominated private secondary products transaction value up 2.6x. Domestic asset management had lower recurring service fees from private equity products.

Overseas Performance: Q1 overseas net revenues were RMB 304 million, up 5% from last quarter and flat from the same period last year, making up 49.5% of the group's total revenue. Revenue from overseas investment products grew 20.3% from last year, while revenue from overseas insurance products fell 22.8%. There are 131 overseas relationship managers, up 44% from last year. Overseas AUM and recurring service fees continue to grow. Overseas AUA reached USD 9.05 billion, up 8.7%, with over 18,200 registered overseas clients as of end March. Mainland China Performance: Net revenues from Mainland China were RMB 310 million, down 9.4%. Renminbi-denominated private secondary products transaction value grew 2.6x from last year. Transaction value of RMB-denominated mutual funds was RMB 4.3 billion, down 51.4%. Net revenues from domestic asset management in Q1 were RMB 167 million, down 14.3%. Net revenues from domestic insurance in Q1 were RMB 6.4 million, down 55.6%.

• Plan to distribute annual and special dividends totaling RMB 550 million in July, subject to AGM approval, representing 100% of 2024 non-GAAP net income. - 2025 priorities: Balance quality and quantity while expanding into new markets with full compliance; grow overseas relationship manager teams; invest in technologies like AI to improve online services; grow insurance sales by building commission-only agent team and offer wider products like trust, relocation, cross-border solutions; strengthen research, product teams, and product mix.

• Market volatility risk: 2025 market volatility will stay high. - Policy execution risk: Chinese tax residents' overseas income tax filing enforcement may affect clients' awareness and sentiment. - Client business risk: Some clients' businesses affected by tariff introduction, with potential impact on investment sentiment.

Q: Helen Li asked about Chinese tax residents receiving tax bureau calls regarding overseas income and its impact on investment sentiment.

A: Qing Pan said the information gathering on high net worth Chinese tax residents' overseas income has been implemented for a few years, but the actual enforcement is new to clients. It doesn't necessarily affect future investments in overseas products significantly but makes clients more aware of tax planning. Zhe Yin added it's a challenge but also an opportunity as it can bring closer relationships with clients.

Q: Peter Zhang asked about market volatility impact on clients, business owners' business affected by tariffs, and overseas business guidance for 2025 and second quarter overseas insurance improvement.

A: Zhe Yin said market volatility has some impact on clients, especially entrepreneur clients in trade-related businesses, but merchants are confident in their products. For overseas business 2025, key drivers include growing overseas teams, offering new products. On overseas insurance in second quarter, no specific sign of immediate improvement mentioned but efforts are ongoing to grow the commission-only agent team.