Jupai Reports First Quarter 2021 Results

Rhea-AI Summary

Jupai Holdings Limited (NYSE: JP) reported a 13.4% decline in Q1 2021 net revenues of RMB83.7 million compared to Q1 2020. One-time commissions dropped by 20.9% to RMB31.2 million, while recurring service fees decreased by 13.1%. Despite revenue declines, the company returned to profitability with a net income of RMB3.9 million, up from a loss of RMB19.9 million in Q1 2020. Active clients increased by 33% sequentially to 608, and total assets under management were RMB32.9 billion, a decrease from RMB39.8 billion year-over-year. Jupai remains optimistic about China's wealth management market.

Positive

• Net income for Q1 2021 was RMB3.9 million, a turnaround from a loss of RMB19.9 million in Q1 2020.
• Total number of active clients rose by 33% sequentially to 608.
• The aggregate value of wealth management products distributed increased by 29.1% year-over-year, totaling RMB1.9 billion.

Negative

• Net revenues fell by 13.4% from Q1 2020, primarily due to decreases in one-time commissions and recurring service fees.
• Total assets under management decreased from RMB39.8 billion in Q1 2020 to RMB32.9 billion in Q1 2021.

SHANGHAI, May 18, 2021 /PRNewswire/ -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE: JP), a leading third-party wealth management service provider, focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China, today announced its unaudited financial results for the first quarter ended March 31, 2021.

FIRST QUARTER 2021 FINANCIAL HIGHLIGHTS

• Net revenues in the first quarter of 2021 were RMB83.7 million, a decrease of 13.4% from the corresponding period in 2020.

(RMB '000, except percentages)	Q1 2020		Q1 2020 %		Q1 2021		Q1 2021 %		YoY Change %
One-time commissions	39,496		40.9%		31,227		37.3%		-20.9%
Recurring management fees	25,293		26.2%		24,826		29.7%		-1.8%
Recurring service fees	31,798		32.9%		27,622		33.0%		-13.1%
Total net revenues	96,587		100.0%		83,675		100.0%		-13.4%

• Income from operations in the first quarter of 2021 was RMB3.5 million, as compared to loss from operations of RMB12.1 million from the corresponding period in 2020.
• Net income attributable to ordinary shareholders in the first quarter of 2021 was RMB3.9 million, as compared to net loss attributable to ordinary shareholders of RMB19.9 million from the corresponding period in 2020.
• Adjusted net income attributable to ordinary shareholders (non-GAAP^[1]) in the first quarter of 2021 was RMB4.3 million, as compared to adjusted net loss attributable to ordinary shareholders of RMB17.2 million from the corresponding period in 2020.

FIRST QUARTER 2021 OPERATIONAL UPDATES 

• Total number of active clients^[2] during the first quarter of 2021 was 608, as compared to 559 active clients during the first quarter of 2020.
• The aggregate value of wealth management products distributed by the Company during the first quarter of 2021 was RMB1.9 billion, a 29.1% increase from the corresponding period in 2020.

	Three months ended
	March 31, 2020			March 31, 2021
Product type	(RMB in millions, except percentages)
Fixed income products	971	67%		1,085	58%
Private equity products	212	15%		229	12%
Secondary market equity fund products	206	14%		505	27%
Other products	59	4%		51	3%
All products	1,448	100%		1,870	100%

• Jupai's coverage network as of March 31, 2021 included 32 client centers covering 30 cities, as compared to 44 client centers covering 39 cities as of March 31, 2020.
• Total assets under management^[3] as of March 31, 2021 were RMB32.9 billion, as compared to RMB39.8 billion from March 31, 2020.

Assets under management – breakdown by product type
	As of
	March 31, 2020			March 31, 2021
Product type	(RMB in millions, except percentages)
Fixed income products	13,048	33%		9,604	29%
Private equity products	24,684	62%		21,048	64%
Secondary market equity fund products	994	2%		1,053	3%
Other products	1,090	3%		1,162	4%
All products	39,816	100%		32,867	100%

"In the first quarter 2021, we were pleased to see the gradual recovery of investment sentiment among high net worth individuals in China," said Mr. Jianda Ni, Jupai's chairman of the board and chief executive officer. "Jupai's total aggregate value of wealth management products distributed increased to RMB 1.87 billion in the first quarter from RMB 1.16 billion in the fourth quarter of 2020 as we continued to improve client experience and develop our product portfolio in line with our Asset Transparency System strategy. We remain optimistic in the company and the long term prospects of China's wealth management industry."

Ms. Min Liu, Jupai's chief financial officer, said, "Jupai continued to improve business performance and profitability. Net profit attributable to ordinary shareholders increased nearly 100% and total number of active clients also resumed growth, increasing 33% compared to the fourth quarter last year. Jupai will continue to implement our key strategies and offer a range of more diverse high-quality products and service for high net worth clients."

[1] Jupai's non-GAAP financial measures are derived from adjusting the corresponding GAAP financial measures by excluding the effects of share-based compensation.

[2] "Active clients" for a given period refer to clients who purchase wealth management products distributed by Jupai at least once during that given period.

[3] "Assets under management" or "AUM" of Jupai refers to the amount of capital contributions made by investors to the funds managed by the Company, for which the Company is entitled to receive management fees. The amount of AUM of Jupai is recorded and carried based on the historical cost of the contributed assets instead of fair market value of assets for almost all AUM of Jupai. For assets denominated in currencies other than Renminbi, the AUM are translated into Renminbi upon their contribution, without interim value adjustments solely due to changes in foreign exchange rates. As a result, Jupai's management fees for almost all its AUM are calculated based on the historical cost balance of the AUM.

FIRST QUARTER 2021 FINANCIAL RESULTS

Net Revenues

Net revenues for the first quarter of 2021 were RMB83.7 million, a 13.4% decrease from the corresponding period in 2020, primarily due to decreases in one-time commissions and recurring service fees.

• Net revenues from one-time commissions for the first quarter of 2021 were RMB31.2 million, a 20.9% decrease from the corresponding period in 2020, primarily due to the change in product mix.
• Net revenues from recurring management fees for the first quarter of 2021 were RMB24.8 million, a 1.8% decrease from the corresponding period in 2020. Nil and RMB31.9 thousand carried interest was recognized as part of Jupai's recurring management fees in the first quarter of 2021 and 2020, respectively.
• Net revenues from recurring service fees for the first quarter of 2021 were RMB27.6 million, a 13.1% decrease from the corresponding period in 2020. The Company recognized RMB4.6 million and RMB0.4 million variable performance fees in the first quarter of 2021 and 2020, respectively.

Operating Costs and Expenses

Operating costs and expenses for the first quarter of 2021 were RMB80.2 million, a decrease of 26.2% from the corresponding period in 2020.

• Cost of revenues for the first quarter of 2021 was RMB37.4 million, a decrease of 39.7% from the corresponding period in 2020. This was primarily due to decrease in headcount of wealth management advisors and client managers.
• Selling expenses for the first quarter of 2021 were RMB17.9 million, a decrease of 10.1% from the corresponding period in 2020, primarily due to the decrease in marketing and promotion activities.
• General and administrative expenses for the first quarter of 2021 were RMB25.1 million, a decrease of 28.9% from the corresponding period in 2020, mainly due to continuous improvement in operating efficiency.
• Government subsidies received by the Company for the first quarter of 2021 was RMB0.2 million, a decrease of 97.2% from the corresponding period in 2020. Government subsidies were recorded when received, with their availability and amount dependent upon government policies.

Operating margin for the first quarter of 2021 was 4.1%, as compared to -12.6% for the corresponding period in 2020.

Income tax expenses for the first quarter of 2021 were RMB0.3 million, a decrease of 97.3% from the corresponding period in 2020, primarily due to taxable losses for the first quarter of 2021.

Net Income

• Net Income

- Net income attributable to ordinary shareholders for the first quarter of 2021 was RMB3.9 million, as compared to net loss attributable to ordinary shareholders of RMB19.9 million from the corresponding period in 2020.

- Net margin attributable to ordinary shareholders for the first quarter of 2021 was 4.7%, as compared to -20.6% from the corresponding period in 2020.

- Net income attributable to ordinary shareholders per basic and diluted American depositary share ("ADS") for the first quarter of 2021 was RMB0.12 and RMB0.12, respectively, as compared to net loss attributable to ordinary shareholders per basic and diluted ADS of RMB0.59 and RMB0.59, respectively, from the corresponding period in 2020.

• Adjusted Net Income (non-GAAP)

- Adjusted net income attributable to ordinary shareholders (non-GAAP) for the first quarter of 2021 was RMB4.3 million, as compared to adjusted net loss attributable to ordinary shareholders of RMB17.2 million from the corresponding period in 2020.

- Adjusted net margin attributable to ordinary shareholders (non-GAAP) for the first quarter of 2021 was 5.1%, as compared to -17.8% from the corresponding period in 2020.

- Adjusted net income attributable to ordinary shareholders per diluted ADS (non-GAAP) for the first quarter of 2021 was RMB0.13, as compared to adjusted net loss attributable to ordinary shareholders per diluted ADS (non-GAAP) of RMB0.51 from the corresponding period in 2020.

Repurchase of Shares

As of May 17, 2021, we had repurchased 539,142 ADSs as part of the Company's share repurchase program of up to US$10 million announced in February 2020, at a total cost of US$748,848, inclusive of transaction charges and related fees.

Balance Sheet and Cash Flow

As of March 31, 2021, the Company had RMB612.2 million in cash, cash equivalents and restricted cash, as compared to RMB657.2 million as of December 31, 2020.

Net cash used in operating activities during the first quarter of 2021 was RMB14.5 million, as compared to RMB21.2 million from the corresponding period in 2020, primarily due to the change in working capital.

Net cash used in investing activities during the first quarter of 2021 was RMB30.5 million, as compared to RMB2.0 million from the corresponding period in 2020, primarily due to the payment for investment.

Net cash used in financing activities during the first quarter of 2021 was nil, as compared to RMB7.1 million from the corresponding period in 2020, primarily due to the repurchase of shares in 2020.

CONFERENCE CALL

Jupai's management will host an earnings conference call on May 18, 2021 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Please register in advance for the conference call using the link provided below. Upon registering, you will be provided with a calendar invite with participant dial-in numbers, passcode, and a unique access pin by email. To join the conference, simply dial the number you receive after preregistering, enter the passcode followed by your pin, and you will join the conference instantly.

PRE-REGISTER LINK: http://apac.directeventreg.com/registration/event/9649917

A replay of the conference call may be accessed by phone at the following number until May 26, 2021:

U.S./International:	+1-855-452-5696 or +61-2-8199-0299
Mainland China:	400-602-2065
Hong Kong:	800-963-117
Singapore:	800-616-2305
Passcode:	9649917

Additionally, a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of share-based compensation. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented, management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation, to supplement U.S. GAAP financial data. As such, the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders, non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP, the Company recognized significant amounts of expenses for the restricted shares and share options. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE: JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population.

For more information, please visit http://jupai.investorroom.com.

SAFE HARBOR STATEMENT

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Jupai's strategic and operational plans, contain forward-looking statements. Jupai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Jupai's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development, financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Jupai does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under applicable law.

Contacts:
Jupai Investor Relations
Email: ir@jpinvestment.cn

Philip Lisio
The Foote Group
Phone: +86 (10) 8429 9544
Email: Jupai-IR@thefootegroup.com

 

 

 

 

Jupai Holdings Limited
Unaudited Condensed Consolidated Balance Sheets
(In RMB or USD, as indicated)
	As of
	December 31,		March 31,		December 31,		March 31,
	2020		2021		2020		2021
	RMB'000		RMB'000		USD[4]'000		USD[5]'000
Assets
Current assets:
Cash and cash equivalents	630,417		583,765		96,616		89,100
Restricted cash	26,819		28,480		4,110		4,347
Accounts receivable	7		40		1		6
Other receivables	61,255		61,794		9,388		9,432
Amounts due from related parties	20,182		22,666		3,093		3,459
Other current assets	16,034		15,335		2,457		2,341
Total current assets	754,714		712,080		115,665		108,685
Long-term investments	218,950		218,950		33,556		33,418
Investment in affiliates	100,342		130,737		15,378		19,954
Amounts due from related parties — non-current	229,155		229,006		35,119		34,953
Property and equipment, net	17,094		15,244		2,620		2,327
Intangible assets, net	34,177		33,445		5,238		5,105
Other non-current assets	13,539		12,415		2,075		1,895
Right-of-use assets	39,119		36,032		5,995		5,499
Deferred tax assets	4,312		4,161		661		635
Total Assets	1,411,402		1,392,070		216,307		212,471
Liabilities and Equity
Current liabilities:
Accrued payroll and welfare expenses	57,926		49,804		8,877		7,602
Income tax payable	85,592		85,766		13,118		13,090
Other tax payable	2,644		899		405		137
Amounts due to related parties — current	16,626		16,773		2,548		2,560
Deferred revenue from related parties	10,364		8,277		1,588		1,263
Deferred revenue	8,599		7,428		1,318		1,134
Other current liabilities	59,760		58,980		9,159		9,002
Total current liabilities	241,511		227,927		37,013		34,788
Deferred revenue — non-current from related parties	11,425		988		1,751		151
Deferred revenue — non-current	1,284		1,234		197		189
Operating Lease Liabilities — non-current	12,620		11,141		1,934		1,700
Total Liabilities	266,840		241,290		40,895		36,828
Equity	1,144,562		1,150,780		175,412		175,643
Total Liabilities and Total Shareholders' Equity	1,411,402		1,392,070		216,307		212,471
[4] The conversion of Renminbi (RMB) into U.S. dollars (US$) in this column is based on the noon buying rate on December 31, 2020, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB 6.525 to US$1.00.
[5] The conversion of Renminbi (RMB) into U.S. dollars (US$) in this column is based on the noon buying rate on March 31, 2021, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB 6.5518 to US$1.00.

 

 

 

Jupai Holdings Limited
Unaudited Condensed Consolidated Income Statements
(In RMB or USD, as indicated, except for ADS data and per ADS data)
	Three months ended
	March 31,		March 31,		March 31,		March 31,
	2020		2021		2020		2021
	RMB'000		RMB'000		USD[6]'000		USD[7]'000
Revenues
Third party revenues	62,333		46,174		8,803		7,047
Related party revenues	34,407		37,324		4,859		5,697
Total revenues	96,740		83,498		13,662		12,744
Taxes and surcharges	(153)		177		(21)		27
Net revenues	96,587		83,675		13,641		12,771
Operating costs and expenses:
Cost of revenues	(61,996)		(37,415)		(8,755)		(5,711)
Selling expenses	(19,924)		(17,910)		(2,814)		(2,733)
General and administrative expenses	(35,348)		(25,131)		(4,992)		(3,836)
Government subsidies	8,549		236		1,207		36
Total operating cost and expenses	(108,719)		(80,220)		(15,354)		(12,244)
Income (loss) from operations	(12,132)		3,455		(1,713)		527
Interest income	1,180		1,092		167		166
Investment income (loss)	975		(67)		137		(10)
Other income (loss)	384		(343)		54		(52)
Total other income	2,539		682		358		104
Income (loss) before taxes and Gain (loss) from equity in affiliates	(9,593)		4,137		(1,355)		631
Income tax expense	(12,670)		(341)		(1,789)		(52)
Gain (loss) from equity in affiliates	(2,313)		395		(327)		61
Net income (loss)	(24,576)		4,191		(3,471)		640
Net loss (income) attributable to non-controlling interests	4,683		(283)		662		(44)
Net income (loss) attributable to ordinary shareholders	(19,893)		3,908		(2,809)		596
Net income (loss) per ADS:
Basic	(0.59)		0.12		(0.08)		0.02
Diluted	(0.59)		0.12		(0.08)		0.02
Weighted average number of ADSs used in computation:
Basic	33,682,030		33,222,952		33,682,030		33,222,952
Diluted	33,682,030		33,293,931		33,682,030		33,293,931
[6] The conversion of data from Renminbi (RMB) into U.S. dollars (US$) for three months ended March 31, 2020 in this table and the following tables is based on the noon buying rate on March 31, 2020, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB 7.0808 to US$1.00.
[7] The conversion of data from Renminbi (RMB) into U.S. dollars (US$) for three months ended March 31, 2021 in this table and the following tables is based on the noon buying rate on March 31, 2021, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB 6.5518 to US$1.00.

 

 

 

Jupai Holdings Limited
Unaudited Condensed Comprehensive Income Statements
(In RMB or USD, as indicated)
	Three months ended
	March 31,		March 31,		March 31,		March 31,
	2020		2021		2020		2021
	RMB'000		RMB'000		USD'000		USD'000
Net income (loss)	(24,576)		4,191		(3,471)		640
Other comprehensive loss, net of tax:
Change in cumulative foreign currency translation adjustment	3,751		1,679		530		256
Other comprehensive loss	3,751		1,679		530		256
Comprehensive income (loss)	(20,825)		5,870		(2,941)		896
Less: Comprehensive income (loss) attributable to non-controlling interests	(4,720)		273		(667)		42
Comprehensive income (loss) attributable to ordinary shareholders	(16,105)		5,597		(2,274)		854

 

 

 

Jupai Holdings Limited
Reconciliation of GAAP to Non-GAAP Results
(In RMB, except for ADS data, per ADS data and percentages)
	Three months ended
	March 31,		March 31,
	2020		2021
	RMB'000		RMB'000
Net margin attributable to ordinary shareholders	-20.6%		4.7%
Adjusted net margin attributable to ordinary shareholders (non-GAAP)	-17.8%		5.1%
Net income (loss) attributable to ordinary shareholders	(19,893)		3,908
Adjustment for share-based compensation (net of tax effect of nil for both three months ended March 31, 2020 and 2021)	2,701		347
Adjusted net income (loss) attributable to ordinary shareholders (non-GAAP)	(17,192)		4,255
Net income (loss) attributable to ordinary shareholders per ADS, diluted	(0.59)		0.12
Adjusted net income (loss) attributable to ordinary shareholders per ADS, diluted (non-GAAP)	(0.51)		0.13
Weighted average number of ADSs used in computation:
Diluted	33,682,030		33,293,931

 

 

 

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SOURCE Jupai Holdings Limited

FAQ

What were Jupai's financial results for Q1 2021?

Jupai reported net revenues of RMB83.7 million for Q1 2021, a 13.4% decrease from Q1 2020.

How did Jupai's net income perform in Q1 2021?

Jupai achieved a net income of RMB3.9 million in Q1 2021, compared to a net loss of RMB19.9 million in the same quarter of 2020.

What is the status of Jupai's assets under management as of March 31, 2021?

As of March 31, 2021, Jupai's total assets under management were RMB32.9 billion, down from RMB39.8 billion a year prior.

How many active clients did Jupai have in Q1 2021?

Jupai had 608 active clients in Q1 2021, reflecting a 33% sequential increase.

What factors contributed to Jupai's revenue decline in Q1 2021?

The revenue decline was primarily due to a 20.9% decrease in one-time commissions and a 13.1% drop in recurring service fees.