NOAH HOLDINGS LIMITED ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2024

Rhea-AI Summary

Noah Holdings announced Q1 2024 unaudited financial results, showing a 19.2% YoY decrease in net revenues to RMB649.5 million (US$90.0 million). This decline was attributed to reduced performance-based income and recurring service fees from private equity products. Income from operations fell by 56.4% to RMB121.5 million (US$16.8 million), while net income attributable to shareholders decreased by 46.2% to RMB131.5 million (US$18.2 million). The number of registered clients grew by 3.9%, and the aggregate value of investment products distributed increased by 12.4% to RMB18.9 billion (US$2.6 billion). The asset management business saw a slight dip in assets under management to RMB153.3 billion (US$21.2 billion).

Positive

• Total number of registered clients increased by 3.9% YoY to 457,705.
• Increase in the number of overseas registered clients by 17.1% YoY.
• Aggregate value of investment products distributed grew by 12.4% YoY to RMB18.9 billion.
• Investment products in overseas markets experienced a 58.5% YoY increase in value.
• Increase in one-time commissions by 6.0% YoY, driven by insurance product distribution.

Negative

• Net revenues decreased by 19.2% YoY to RMB649.5 million.
• Income from operations fell by 56.4% YoY to RMB121.5 million.
• Net income attributable to shareholders declined by 46.2% YoY to RMB131.5 million.
• Decrease in net revenues from mainland China by 28.8% YoY.
• Operating margin dropped to 18.7% from 34.7% YoY.
• Operating costs and expenses increased by 0.7% YoY to RMB528.0 million.

Financial Analyst

Key Insights: The significant 19.2% decline in net revenues year-over-year and 18.8% quarter-over-quarter primarily due to decreased performance-based income and recurring service fees signals financial challenges for Noah Holdings Limited. The RMB131.5 million net income attributable to shareholders, albeit a 46.2% drop, still reflects a profitable quarter, but the 56.4% drop in income from operations is concerning. Investors need to watch the share-based compensation impact and increased G&A expenses, which have further strained profit margins. Moreover, the 28.8% revenue dip from mainland China reveals a domestic market slowdown. However, the overseas revenue segment's 4.5% decline is milder, indicating a relatively stable international business. The operational updates about expanding overseas with an increase in registered and active clients suggest a strategic pivot that may mitigate domestic market struggles in the long term.

Market Research Analyst

Strategic Implications: Noah Holdings' operational focus shift towards overseas expansion amid a sluggish domestic market is a strategic move, but not without risks. The 17.1% and 39.6% increases in overseas registered and active clients, respectively, reflect positive traction. However, the 19.2% fall in net revenues and 56.4% drop in operating income indicate underlying issues that need addressing. The 60.6% increase in overseas mutual fund product distribution is a growth area and the upcoming product rollouts in Japan and Dubai could be potential revenue drivers. Yet, the substantial decline in mainland China revenue by 28.8% could signal broader systemic issues that might impact long-term stability. Investors should consider these strategic shifts while evaluating potential risks and rewards.

Legal Expert

Regulatory Considerations: Noah's significant decrease in net revenue and profit could raise eyebrows among regulatory bodies, especially given the increase in share-based compensation. The RMB36.6 million share-based compensation due to new schemes may attract scrutiny for transparency and fairness. Also, the company's decision to reduce its presence from 68 to 18 cities in mainland China could have implications for compliance with local regulations and client service obligations. This reduction might streamline operations but could also alienate a portion of its client base. Moreover, Noah's strategic expansion into international markets will require adhering to varied regulatory environments, which could present compliance challenges. Investors should keep an eye on any regulatory announcements or changes that might impact Noah's operations.

SHANGHAI, May 29, 2024 /PRNewswire/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH and HKEX: 6686), a leading and pioneer wealth management service provider offering comprehensive one-stop advisory services on global investment and asset allocation primarily for Mandarin-speaking high-net-worth investors, today announced its unaudited financial results for the first quarter of 2024.

FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS                                                                                                                           

• Net revenues for the first quarter of 2024 were RMB649.5 million (US$90.0 million), a 19.2% decrease from the corresponding period in 2023, mainly due to decreases in performance-based income generated from USD private equity products and recurring service fees generated from RMB private equity and private secondary products. The Company recorded a 6.0% increase in one-time commissions from the corresponding period in 2023 due to a 4.6% increase in revenues generated from the distribution of insurance products. Net revenues decreased by 18.8% from the fourth quarter of 2023, mainly due to decreases in one-time commissions.
  
  Net revenues from mainland China for the first quarter of 2024 was RMB342.8 million (US$47.5 million), a 28.8% decrease from the corresponding period in 2023, mainly due to decreases in recurring service fees generated from private equity and private secondary products. Net revenues from overseas for the first quarter of 2024 was RMB306.7 million (US$42.5 million), a 4.5% decrease from the corresponding period of 2023, mainly due to decreases in performance-based income generated from private equity products.

 

Net Revenues by segment is as follows:
(RMB millions, except percentages)	Q1 2023			Q1 2024			YoY Change
Wealth management	586.9			462.7			(21.2 %)
Asset management	205.2			180.3			(12.1 %)
Other businesses	11.4			6.5			(42.8 %)
Total net revenues	803.5			649.5			(19.2 %)

 

 

Net Revenues by geography is as follows:
(RMB millions, except percentages)	Q1 2023			Q1 2024			YoY Change
Mainland China	482.1			342.8			(28.8 %)
Overseas	321.4			306.7			(4.5 %)
Total net revenues	803.5			649.5			(19.2 %)

 

• Income from operations for the first quarter of 2024 was RMB121.5 million (US$16.8 million), a 56.4% decrease from the corresponding period in 2023, primarily due to i) a 19.2% decrease in net revenues, ii) a 10.4% increase in other compensations, mainly due to the new share-based compensation scheme granted in December 2023 and March 2024 amounting to RMB36.6 million (US$5.1 million); and iii) a 55.6% increases in general and administrative expenses, mainly due to the relatively lower base in the first quarter of 2023, which occurred immediately after the lifting of pandemic restrictions.

 

 

Income from operations by segment is as follows:
(RMB millions, except percentages)	Q1 2023			Q1 2024			YoY Change
Wealth management	204.5			65.3			(68.1 %)
Asset management	103.8			84.9			(18.2 %)
Other businesses	(29.4)			(28.6)			(2.5 %)
Total income from operations	278.9			121.5			(56.4 %)

 

• Net income attributable to Noah shareholders for the first quarter of 2024 was RMB131.5 million (US$18.2 million), a 46.2% decrease from the corresponding period in 2023, mainly due to a 56.4% decrease in income from operations, and partially offset by a 34.3% increase in interest income.
• Non-GAAP^[1] net income attributable to Noah shareholders for the first quarter of 2024 was RMB161.2 million (US$22.3 million), a 32.7% decrease from the corresponding period in 2023.

 

FIRST QUARTER 2024 OPERATIONAL UPDATES

Wealth Management Business

Noah offers global investment products and provides value-added services to global mandarin-speaking high-net-worth investors in its wealth management business. Noah primarily distributes private equity, private secondary, mutual funds and other products denominated in RMB, USD and other currencies.

• Total number of registered clients as of March 31, 2024 was 457,705, a 3.9% increase from March 31, 2023, and a 0.4% increase from December 31, 2023. Among which, the number of overseas registered clients as of March 31, 2024 was 15,725, a 17.1% increase from March 31, 2023 and a 5.3% increase from December 31, 2023.
• Total number of active clients^[2] who transacted with us during the first quarter of 2024 was 10,391, a 7.5% decrease from the first quarter of 2023, and a 15.0% increase from the fourth quarter of 2023. Among which, the number of overseas active clients who transacted with us during the first quarter of 2024 was 2,745, a 39.6% increase from the first quarter of 2023, and a 9.1% increase from the fourth quarter of 2023.
• Aggregate value of investment products distributed during the first quarter of 2024 was RMB18.9 billion (US$2.6 billion), a 12.4% increase from the first quarter of 2023, primarily due to a 26.4% increase in mutual fund products distribution. Among which, Noah distributed RMB8.4 billion (US$1.2 billion) of overseas investment products, a 58.5% increase from the first quarter of 2023, primarily due to a 60.6% increase in the value of mutual fund products.

 

[1] Noah's Non-GAAP financial measures are its corresponding GAAP financial measures excluding the effects of all forms of share-based compensation and net of relevant tax impact, if any. See "Reconciliation of GAAP to Non-GAAP Results" at the end of this press release.

[2]  "Active clients" for a given period refers to registered investors who purchase investment products distributed or receive services provided by us during that given period.

 

 

The aggregate value of investment products distributed, categorized by product type, is as follows:
Product type	Three months ended March 31,
	2023				2024
	(RMB in billions, except percentages)
Mutual fund products	10.0		59.4 %		12.6		66.8 %
Private secondary products	4.3		25.5 %		3.8		20.0 %
Private equity products	1.3		7.8 %		1.2		6.3 %
Other products[3]	1.2		7.3 %		1.3		6.9 %
All products	16.8		100.0 %		18.9		100.0 %

 

 

The aggregate value of investment products distributed, categorized by geography, is as follows:
Type of products in Mainland China	Three months ended March 31,
	2023				2024
	(RMB in billions, except percentages)
Mutual fund products	7.6		66.3 %		8.8		84.3 %
Private secondary products	2.7		23.5 %		1.0		8.8 %
Private equity products	0.4		3.2 %		-		0.0 %
Other products	0.8		7.0 %		0.7		6.9 %
All products in Mainland China	11.5		100.0 %		10.5		100.00 %

 

 

Type of overseas products	Three months ended March 31,
	2023				2024
	(RMB in billions, except percentages)
Mutual fund products	2.4		44.3 %		3.8		44.9 %
Private secondary products	1.6		30.0 %		2.8		33.9 %
Private equity products	0.9		17.7 %		1.2		14.2 %
Other products	0.4		8.0 %		0.6		7.0 %
All Overseas products	5.3		100.0 %		8.4		100.00 %

 

• Coverage network in mainland China included 18 cities as of March 31, 2024, compared with 68 cities as of March 31, 2023 and 44 cities as of December 31, 2023, as a result of the Company's efforts to streamline its operations in China with a focus on strengthening its operations in central hub cities.
• Number of relationship managers was 1,109 as of March 31, 2024, a 16.4% decrease from March 31, 2023, and an 11.4% decrease from December 31, 2023. Among which, we had 91 overseas relationship managers as of March 31, 2024, a 2.2% increase from December 31, 2023.

[3]  "Other products" refers to other investment products, which includes insurance products, multi-strategies products and others.

 

Asset Management Business

Noah's asset management business is conducted through Gopher Asset Management Co., Ltd. ("Gopher Asset Management"), a leading multi-asset manager in China with global investment capabilities and overseas offices in Hong Kong and the United States. Gopher Asset Management develops and manages assets ranging from private equity, real estate, public securities to multi-strategy investments denominated in RMB, USD and other currencies.

• Total assets under management as of March 31, 2024 remained relatively stable at RMB153.3 billion (US$21.2 billion), compared with RMB157.6 billion as of March 31, 2023 and RMB154.6 billion as of December 31, 2023. Mainland China assets under management as of March 31, 2024 were RMB116.1 billion (US$16.1billion), compared with RMB124.2 billion as of March 31, 2023 and RMB118.6 billion as of December 31, 2023. Overseas assets under management as of March 31, 2024 were RMB37.2 billion (US$5.1 billion), compared with RM33.4 billion as of March 31, 2023 and RMB36.0 billion as of December 31, 2023.

 

Total assets under management, categorized by investment type, are as follows:
Investment type	As of  December 31,  2023				Growth		Allocation/  Redemption		As of March 31,  2024
	(RMB billions, except percentages)
Private equity	132.2		85.5 %		1.0		1.4		131.8		85.9 %
Public securities	11.5		7.4 %		2.7		3.3		10.9		7.1 %
Real estate	6.2		4.0 %		0.2		0.7		5.7		3.7 %
Multi-strategies	4.2		2.8 %		-		(0.1)		4.3		2.9 %
Others	0.5		0.3 %		0.1		-		0.6		0.4 %
All Investments	154.6		100.0 %		4.0		5.3		153.3		100.0 %

 

 

Total assets under management, categorized by geography, are as follows:
Mainland China Investment type	As of  December 31,  2023				Growth		Allocation/ Redemption		As of March 31,  2024
	(RMB billions, except percentages)
Private equity	105.2		88.7 %		-		1.7		103.5		89.2 %
Public securities	7.1		6.0 %		0.1		0.3		6.9		6.0 %
Real estate	3.2		2.7 %		-		0.7		2.5		2.2 %
Multi-strategies	2.6		2.2 %		-		-		2.6		2.2 %
Others	0.5		0.4 %		0.1		-		0.6		0.4 %
All Investments	118.6		100.0 %		0.2		2.7		116.1		100.0 %

 

Overseas Investment type	As of  December 31,  2023				Growth		Allocation/ Redemption		As of March 31,  2024
	(RMB billions, except percentages)
Private equity	27.0		74.9 %		1.0		(0.3)		28.3		75.7 %
Public securities	4.4		12.3 %		2.6		3.0		4.0		10.8 %
Real estate	3.0		8.2 %		0.2		-		3.2		8.6 %
Multi-strategies	1.6		4.6 %		-		(0.1)		1.7		4.9 %
All Investments	36.0		100.0 %		3.8		2.6		37.2		100.0 %

 

 

Other Businesses

Noah's other businesses mainly include providing clients with additional comprehensive services and investment products. Operating results for other businesses also include headquarter rental income, depreciation and amortization, as well as operating expenses.

Ms. Jingbo Wang, co-founder and chairwoman of Noah, commented, "We made significant progress during this quarter in repositioning ourselves to drive growth in this challenging market environment. While sluggish domestic markets had a stronger-than-expected impact on our business during this quarter, we strategically used this window of opportunity to increase the pace of our overseas expansion as client demand for global asset allocation continues to grow. Excluding performance-based income, which was elevated due to the high base effect from the same period last year, net revenues from our overseas business increased 22.4% year-over-year. Transaction value from USD denominated products also increased significantly, as did the number of overseas registered and active clients, which increased 17.1% and 39.6% year-over-year, respectively. With these tailwinds, we are rapidly expanding our global offerings and expect to roll out new products originated from Japan and Dubai later this year. While we are still in the relatively early stages of our overseas expansion, these results have reinforced our confidence in our strategy going forward."

FIRST QUARTER 2024 FINANCIAL RESULTS

Net Revenues

Net revenues for the first quarter of 2024 were RMB649.5 million (US$90.0 million), a 19.2% decrease from the corresponding period in 2023, primarily due to decreases in performance-based income generated from private equity products and recurring service fees generated from RMB private equity and private secondary products.

• Wealth Management Business
  • Net revenues from one-time commissions for the first quarter of 2024 were RMB186.4 million (US$25.8 million), a 7.4% increase from the corresponding period in 2023, primarily due to a 4.6% increase in revenues generated by the distribution of insurance products in first quarter of 2024.
  • Net revenues from recurring service fees for the first quarter of 2024 were RMB244.1 million (US$33.8 million), an 18.5% decrease from the corresponding period in 2023, mainly due to decreases in recurring service fees from private secondary products as a result of decrease in assets under management in Mainland China.
  • Net revenues from performance-based income for the first quarter of 2024 were RMB6.5 million (US$0.9 million), compared with RMB55.7 million in the corresponding period of 2023, primarily due to a decrease in performance-based income from certain offshore private equity products.
  • Net revenues from other service fees for the first quarter of 2024 were RMB25.6 million (US$3.5 million), compared with RMB58.3 million in the corresponding period in 2023, primarily due to a reduction in the value-added services Noah offers to its high-net-worth clients.
• Asset Management Business
  • Net revenues from recurring service fees for the first quarter of 2024 were RMB172.5 million (US$23.9 million), a 1.4% decrease from the corresponding period in 2023, primarily due to decreases in recurring service fees generated from RMB private equity products.
  • Net revenues from performance-based income for the first quarter of 2024 were RMB7.8 million ( { "@context": "https://schema.org", "@type": "FAQPage", "name": "NOAH HOLDINGS LIMITED ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2024 FAQs", "mainEntity": [ { "@type": "Question", "name": "What were Noah Holdings' net revenues for Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "Noah Holdings' net revenues for Q1 2024 were RMB649.5 million (US$90.0 million), a 19.2% decrease from Q1 2023." } }, { "@type": "Question", "name": "What caused the decrease in Noah Holdings' net revenues for Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "The decrease in net revenues was primarily due to reduced performance-based income and recurring service fees from private equity products." } }, { "@type": "Question", "name": "How did Noah Holdings' income from operations perform in Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "Income from operations decreased by 56.4% YoY to RMB121.5 million (US$16.8 million) in Q1 2024." } }, { "@type": "Question", "name": "What was the net income attributable to Noah Holdings' shareholders for Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "The net income attributable to Noah Holdings' shareholders for Q1 2024 was RMB131.5 million (US$18.2 million), a 46.2% decrease from Q1 2023." } }, { "@type": "Question", "name": "How much did Noah Holdings' aggregate value of investment products distributed increase in Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "The aggregate value of investment products distributed increased by 12.4% YoY to RMB18.9 billion (US$2.6 billion) in Q1 2024." } }, { "@type": "Question", "name": "What was the performance of Noah Holdings' one-time commissions in Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "Noah Holdings' one-time commissions increased by 6.0% YoY, mainly due to a 4.6% rise in insurance product distribution revenues." } }, { "@type": "Question", "name": "How did Noah Holdings' assets under management perform in Q1 2024?", "acceptedAnswer": { "@type": "Answer", "text": "Assets under management remained relatively stable, ending at RMB153.3 billion (US$21.2 billion) in Q1 2024, slightly down from RMB157.6 billion in Q1 2023." } } ] }

    FAQ

    What were Noah Holdings' net revenues for Q1 2024?

    Noah Holdings' net revenues for Q1 2024 were RMB649.5 million (US$90.0 million), a 19.2% decrease from Q1 2023.

    What caused the decrease in Noah Holdings' net revenues for Q1 2024?

    The decrease in net revenues was primarily due to reduced performance-based income and recurring service fees from private equity products.

    How did Noah Holdings' income from operations perform in Q1 2024?

    Income from operations decreased by 56.4% YoY to RMB121.5 million (US$16.8 million) in Q1 2024.

    What was the net income attributable to Noah Holdings' shareholders for Q1 2024?

    The net income attributable to Noah Holdings' shareholders for Q1 2024 was RMB131.5 million (US$18.2 million), a 46.2% decrease from Q1 2023.

    How much did Noah Holdings' aggregate value of investment products distributed increase in Q1 2024?

    The aggregate value of investment products distributed increased by 12.4% YoY to RMB18.9 billion (US$2.6 billion) in Q1 2024.

    What was the performance of Noah Holdings' one-time commissions in Q1 2024?

    Noah Holdings' one-time commissions increased by 6.0% YoY, mainly due to a 4.6% rise in insurance product distribution revenues.

    How did Noah Holdings' assets under management perform in Q1 2024?

    Assets under management remained relatively stable, ending at RMB153.3 billion (US$21.2 billion) in Q1 2024, slightly down from RMB157.6 billion in Q1 2023.