Noah Reports Q2 Earnings, Driven by Robust Growth in Overseas Markets

Rhea-AI Summary

Noah Holdings (NYSE: NOAH, HKEX: 6686) reported strong Q2 2024 results, with total net revenues of RMB 616 million (US$ 85 million). The company's overseas business contributed significantly, generating RMB 279 million (US$ 38 million). Noah's operating profit reached RMB 134 million (US$ 18 million), with an improved operating profit margin of 21.8%.

Key highlights include:

• Overseas registered clients increased by 23.0% year-over-year
• US$ 152 million raised for US private equity products, up 46.2% year-over-year
• Overseas revenue contribution increased to 46.3% in H1 2024
• Assets under management grew 14.1% year-over-year
• Overseas relationship manager team expanded by 101.8% year-over-year

The company also announced a US$ 50 million share repurchase program, signaling confidence in its future growth and commitment to shareholder value.

Positive

• Total net revenues reached RMB 616 million (US$ 85 million) in Q2 2024
• Overseas business contributed RMB 279 million (US$ 38 million)
• Operating profit increased to RMB 134 million (US$ 18 million)
• Operating profit margin improved to 21.8% from 18.7% in Q1 2024
• Overseas registered clients increased by 23.0% year-over-year
• US$ 152 million raised for US private equity products, up 46.2% year-over-year
• Assets under management grew 14.1% year-over-year
• Overseas relationship manager team expanded by 101.8% year-over-year
• Announced US$ 50 million share repurchase program

Negative

• Strategic adjustments towards overseas markets had a temporary impact on profitability

Financial Analyst

Noah's Q2 results demonstrate a strategic pivot towards international markets, with overseas businesses contributing RMB 279 million (US$ 38 million) to total net revenues of RMB 616 million (US$ 85 million). The operating profit margin improved to 21.8% from 18.7% in Q1 2024, indicating enhanced operational efficiency.

The overseas segment's growth is particularly noteworthy, with a 23.0% year-over-year increase in registered clients and a 14.2% rise in high-value Diamond and Black Card clients. This expansion suggests Noah's services are gaining traction among global high-net-worth individuals, potentially leading to increased AUM and recurring revenue streams.

The US$50 million share repurchase program signals management's confidence in the company's undervaluation and future prospects. However, investors should monitor the impact of this strategic shift on short-term profitability as the company continues to invest in global expansion.

Market Research Analyst

Noah's Q2 results reflect a well-timed strategic shift towards global markets, capitalizing on changing macroeconomic conditions. The company's success in raising $152 million for US private equity products, a 46.2% year-over-year increase, demonstrates its ability to align client interests with market trends, such as the cooling US inflation rate of 2.9% in July 2024.

The expansion of Noah's overseas private banking team by 101.8% year-over-year and 24.2% sequentially is a significant investment in future growth. This aggressive hiring strategy, coupled with the 40.2% year-over-year increase in funds raised for overseas primary market products, positions Noah to capture a larger share of the global high-net-worth market.

However, investors should be aware that this international expansion may pressure short-term profitability as the company invests in growth. The share repurchase program could provide some support for the stock price during this transition period.

SHANGHAI, Aug. 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 advisory services on global investment and asset allocation primarily for Mandarin-speaking high-net-worth investors, today announced its unaudited financial results for the second quarter of 2024.

The Company recorded total net revenues of RMB 616 million (US$ 85 million) in the second quarter of 2024, with overseas businesses contributing RMB 279 million (US$ 38 million). Noah's operating profit reached RMB 134 million (US$ 18 million) in the second quarter of this year, representing an operating profit margin of 21.8%, an increase from 18.7% in the first quarter of 2024. The second quarter also marked a significant milestone in Noah's strategic transformation, as the Company continues to pivot towards international markets.

Financial Results Breakdown

In the second quarter of 2024, Noah achieved total net revenues of RMB 616 million (US$85 million), driven by the strong performance of its overseas business. The overseas segment generated RMB 279 million (US$ 38 million), underscoring the Company's successful global expansion. For the first half of 2024, Noah's total revenues reached RMB 1.3 billion (US$ 174 million), with the overseas segment contributing RMB 585 million (US$ 81 million).

Notably, the Company made significant strides in expanding its international client base in the first half of 2024, with the number of overseas registered clients increasing by 23.0% year-over-year. The number of overseas Diamond and Black Card clients also expanded by 14.2% year-over-year, demonstrating the growing appeal of Noah's wealth management services among high-net-worth individuals globally.

Global Strategy Drives Growth

In response to the evolving macroeconomic environment, Noah has implemented its unique global asset allocation strategies that align with market trends and client needs. The U.S. Consumer Price Index (CPI) cooled to 2.9% in July 2024, the first time the inflation rate dipped below 3% since March 2021. During the quarter, Noah raised approximately $152 million for US private equity (PE) products, a significant increase of 46.2% year-over-year. The increment reflects the alignment of clients' interests with market expectations of a potential Fed rate cut and reflects the accuracy of Noah's previous CIO investment report forecasts, showcasing the Company's integrated research and investment capabilities in supporting client portfolio decisions that may contribute to the growth of the Company's US$ AUA.

The strategic adjustments, aimed at realigning Noah's business towards overseas markets, had a temporary impact on profitability. Yet the Company's goals become clearer and compliance is further strengthened. By continuing to expand its overseas private banking team and enhancing its professional service capabilities in Hong Kong, Singapore, Japan, and the United States, Noah will strengthen its position among high net worth overseas Chinese clients, which may contribute significantly to future growth.

Share Repurchase Signals Undervaluation

As part of its commitment to enhancing shareholder returns, the board of directors of the Company authorized a share repurchase program under which the Company may repurchase up to US$50 million of its American depositary shares or ordinary shares, effective immediately. The authorized term for carrying out this share repurchase program is two years. 

Mr Zhe Yin, CEO of Noah, said, "This quarter marked a pivotal moment for Noah as we continue to realign our strategy to drive growth in a dynamic global market. Our overseas revenue contribution increase to 46.3% in the first half of 2024 and asset under management increasing 14.1% year-over-year during the quarter. We also raised US$ 338 million for overseas private equity, private credit, and other primary market funds year-to-date, a significant 40.2% year-over-year increase."

"In addition, our team of overseas relationship manager hits over 110, a dramatic growth of 101.8% year-over-year and 24.2% sequentially during the quarter. This achievement underscore our commitment to providing innovative solutions that meet the evolving needs of our clients worldwide. We believe that wealth management is a long-term career. Our business is built on the premise that it will bring long-term value to our clients, shareholders, and management broad. "Yin said.

China's wealth management industry is currently facing a challenging period and undergoing a transition. This share repurchase program, along with the recently completed dividend payout, reflects the unwavering commitment to prioritizing shareholder interests and delivering sustained returns from the Company. Furthermore, it demonstrates the Company's confidence in its future growth.

Ms. Jingbo Wang, co-founder and chairwoman of Noah, commented, " We believe that our stock is deeply undervalued and does not reflect our growth prospects, robust balance sheet and cash reserves, or the special bond we have formed with the Mandarin-speaking HNWIs globally. We value both our long-term and new shareholders and are committed to sharing our success with them through more proactive capital allocation policies moving forward. "

Looking ahead, the Company's ongoing focus on international markets, coupled with its expertise in global allocation strategies and a strong emphasis on compliance, positions Noah for sustainable growth.

 

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SOURCE Noah Holdings Limited

FAQ

What were Noah Holdings' (NOAH) Q2 2024 financial results?

Noah Holdings reported total net revenues of RMB 616 million (US$ 85 million) in Q2 2024, with an operating profit of RMB 134 million (US$ 18 million) and an operating profit margin of 21.8%.

How much did Noah's (NOAH) overseas business contribute in Q2 2024?

Noah's overseas business contributed RMB 279 million (US$ 38 million) in Q2 2024, representing a significant portion of the company's total net revenues.

What was the growth rate of Noah's (NOAH) overseas registered clients in H1 2024?

Noah's overseas registered clients increased by 23.0% year-over-year in the first half of 2024.

How much did Noah (NOAH) raise for US private equity products in Q2 2024?

Noah raised approximately US$ 152 million for US private equity products in Q2 2024, representing a 46.2% increase year-over-year.

What share repurchase program did Noah Holdings (NOAH) announce in Q2 2024?

Noah Holdings announced a US$ 50 million share repurchase program, effective immediately with a two-year authorized term.