Q1 2024 Earnings Summary
- Noah Holdings is strategically expanding its overseas business, expecting to complete its overseas infrastructure in 3 to 5 years, which is anticipated to drive future growth.
- The company maintains a strong focus on long-term client value and trust, prioritizing creating long-term value over short-term gains, which can lead to sustained business growth.
- As clients increasingly look towards overseas asset allocation, Noah is well-positioned to provide better products and services in the overseas and global markets, capitalizing on this shift.
- No significant improvement in domestic investment sentiment: Despite some rebound in capital markets, NOAH has not observed a significant shift or improvement in high net worth investors' investment sentiment in China, which could negatively impact their domestic business.
- Decline in domestic insurance demand and lower interest rates: There is a slowdown in demand for domestic insurance products, aligned with the trending downward return or interest rates in the domestic market, affecting NOAH's insurance business.
- Decreased first quarter revenue and domestic AUM: NOAH reported a decline in first quarter revenue year-over-year due to a decrease in recurring service fees or management fees, primarily because of exits from domestic portfolios and no new product introductions in the domestic market, leading to a drop in domestic AUM.
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Revenue Decline and 2024 Outlook
Q: Why did first quarter revenue decline, and what's the revenue outlook for 2024?
A: Management explained that the first quarter revenue declined due to decreased management fees from active exits in domestic portfolios and the absence of new domestic products, which reduced AUM. Additionally, growth in overseas business has not fully impacted revenue due to the current high interest rate environment. They expect that as overseas expansion accelerates over the next 3 to 5 years, revenue will improve. -
Investment Sentiment in China
Q: Has Noah observed improvement in domestic investment sentiment?
A: Despite recent capital market rebounds in Hong Kong and Mainland China, Noah hasn't seen significant improvement in high net worth investors' sentiment. Building confidence is a long-term process, and short-term market movements haven't reversed investor sentiment. -
Fee Rate Decline Impact
Q: What's the impact of declining fee rates on domestic insurance sales?
A: The decline in insurance commission fees has a minimal impact on Noah's business, as their relationship managers focus on long-term client value rather than high commissions. Fee rates for cash management products are naturally lower, while those for private equity and hedge funds remain stable. -
Overseas Expansion Strategy
Q: What's the strategy for overseas business expansion?
A: Noah aims to focus resources on expanding their overseas business, expecting to build complete overseas infrastructure within 3 to 5 years. They acknowledge the process will take time but are confident in capturing clients' needs as they shift towards global asset allocation. -
Domestic Insurance Product Focus
Q: What products are being emphasized in domestic insurance?
A: Noah is focusing on products that satisfy retirement well-being and medical needs for clients and their parents. This shift reflects the declining interest rate environment and clients' long-term needs.
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