Release Date: March 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Noah Holdings Ltd (NYSE:NOAH) made significant progress in restructuring its domestic sales team to comply with evolving regulatory requirements, creating independent and licensed business units.
• The company launched new internationally focused brands, such as Arc, Olive, and Glory Family Heritage, to expand its overseas presence.
• Despite a challenging year, Noah Holdings Ltd (NYSE:NOAH) remains confident in its business model's resilience and strong cash flow generation.
• The company has seen a 200% sequential increase in transaction value for private secondary products in the fourth quarter, demonstrating its ability to capitalize on market upturns.
• Noah Holdings Ltd (NYSE:NOAH) is expanding its team of overseas relationship managers, with a 55.1% increase in overseas RMs, and plans to continue this growth in underserved Mandarin-speaking communities.

Negative Points

• Full-year net revenues decreased by 21.1% year over year, primarily due to declines in domestic and overseas insurance product distribution.
• Non-GAAP net income fell by 46% to RMB 550 million, impacted by restructuring costs and an increased effective tax rate of 31.5%.
• The company faced a 27.5% year-over-year decline in net revenues from mainland China due to a subdued market environment.
• Noah Holdings Ltd (NYSE:NOAH) experienced a decline in the number of overseas relationship managers by 5% sequentially in the first quarter, falling short of its target.
• The company is facing fierce competition in the Hong Kong insurance market, impacting its overseas insurance product distribution.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with NOAH.

Q: Since the beginning of this year, what has been the demand for investment products among high-level clients? Which type of products have been more popular? What's our CRO's current investment strategy, and which types of products are being promoted? Will the decline in insurance product sales continue into 2025? Which products will be the main source of revenue growth in terms of one-time commissions? A: The demand for investment products among high-level clients has been rebounding, driven by improved market performance and increased client confidence. Popular products include public market securities, hedge funds, and semi-liquid primary market products like private credits and infrastructure. The CRO's strategy emphasizes global asset allocation and suggests clients engage in a diversified investment approach. The decline in insurance product sales is expected to stabilize as we work with insurance firms to offer competitive products. Revenue growth will likely come from overseas investment products and enhanced insurance offerings.

Q: Can you provide information on the business development in the United States? Currently, which countries or regions are the main sources of overseas revenue growth? A: In the United States, we are focusing on product development and have established teams in Silicon Valley and New York, focusing on tech-oriented VC funds and real estate, respectively. We are also building advisory capabilities to establish a booking center in the US. The main sources of overseas revenue growth are Hong Kong, Singapore, and the US, with plans to expand into Canada and Southeast Asia to serve Mandarin-speaking communities.

Q: What is the outlook for 2025 in terms of revenue stabilization or recovery? A: We expect 2025 to show signs of revenue stabilization and potential recovery, driven by improved client sentiment and demand for investment products. The focus will be on expanding our overseas investment portfolio and enhancing insurance offerings to offset declines in domestic markets. We anticipate a rebound from the bottoming out experienced in 2024.

Q: Why did the number of overseas relationship managers decline by 5% sequentially in the first quarter, and what is the outlook for 2025? A: The decline in overseas relationship managers was due to year-end reviews and adjustments to align with our strategic goals. We are focusing on hiring top talent and fresh graduates to strengthen our team. The outlook for 2025 includes expanding the team to meet our strategic goals, with a focus on client acquisition and relationship management.

Q: How are you addressing the competitive insurance market in Hong Kong? A: The insurance market in Hong Kong is highly competitive, but we maintain compliance with regulatory requirements and do not engage in commission kickbacks. We focus on providing comprehensive asset allocation advisory, with insurance as a tool for portfolio safety. We are working with insurance firms to offer competitive products and expect the market to stabilize with new regulatory measures.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.