This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Highway and Heritage Limited's second half and full year of fiscal 2022 earnings conference call. At this time, all participants are in a listen-only mode. Before we start, I refer you to the safe harbor statement in the company's earnings release, which also applies to the conference call today, as our management makes bold-looking statements. On the call today are the company's director and CEO, Madam Wang Dian, and CFO, Mr. Lawrence Locke. Madam Wang will review the company's performance for the second half and full year of fiscal 2022. Mr. Locke will translate for Madam Wang. Then Mr. Locke will discuss the financials. We will be hosting a question and answer session after the management's prepared remarks. You may refer to our financial results of second half and full year of fiscal 2022 on the company's IR website at ir.highwindswealth.com. I'll now turn the call over to the director and CEO of Highwind Holdings, Madam Wang Dian. Madam Wang, please proceed.
spk00: Hello, investors and shareholder partners. Hi, everyone. Welcome to the Highwind Holdings earnings call.
spk08: for the second half and full year fiscal 2022. On today's call, I will review our full year results and provide updates regarding the significant progress that we have achieved across each of the company's main business segments. After that, I will turn the call over to Mr. Lawrence Locke, our Chief Financial Officer, to provide greater details on the company's second half and full year fiscal 2022 financial performance.
spk00: Looking back at the year 2022, we are under a lot of pressure from the economic environment and the market. In terms of the international market, the global climate wave, as well as the escalation of the land conflict, have further increased the difficulty in maintaining and increasing assets. In terms of the domestic market, although the economy has been resilient in the first half of the year, the market is still facing three types of pressure, the need to shrink, supply impact, and expected weakness. In a complex environment, the market fluctuates, and it is also an opportunity to bring real-time challenges to the wealth management industry and entrepreneurs. Especially for Haiyin, we have been established for 17 years, and we are also the first pioneer, builder and promoter of the Chinese wealth management industry. We have successfully experienced more than two rounds of economic cycle with our customers. Not only are we good at grasping trends, but we are also good at following trends. And based on this, we also built a mature long-term asset configuration solution for our customers. In helping them create long-term value, we also realized our own rapid and stable development.
spk08: To sum up Cisco Year 2022, we faced and overcame multiple challenges in the macro economy and the market environment. Globally, rising interest rates and geopolitical conflicts presented significant challenges to asset allocation and wealth preservation. In China, although the economy showed some resilience in the midst of COVID, we still faced significant challenges from weak consumer demand, supply-side shocks, and depressed sentiments. Market volatilities and macro uncertainties presented challenges, but also opportunities to wealth managers like us. As a pioneer and promoter for China's wealth management industry, Haiwen has navigated multiple economic cycles in the past 17 years, and we are trusted by our clients for how we anticipate and position for megatrends. We leveraged our insights to guide clients on asset allocation and long-term investing, creating long-term value for our clients while delivering high-quality growth for the company at the same time.
spk00: In 2022, Hainan's various indicators have also achieved poor performance. First is revenue and profit. Hainan has achieved double growth in net income and net profit. Net income increased by 5.9% last year, reaching RMB19.4 billion. Net profit increased by 13.6% last year, reaching RMB2.36 billion. In fiscal year 2022, we have performed well across
spk08: most major metrics, including revenues and profitability. Our net revenues increased 5.9% year on year to 1.94 billion RMB, while net income grew 13.6% to 236 million RMB. Our operating income increased 16% to 327 million RMB, and operating income margin rose to 16.8%. The growth of net revenues and net income were a testament to our excellent governance, agile strategy, responsive product platform, and robust processes, which led to efficiency gains throughout the organization and ensured balanced and sustainable growth.
spk00: Next, let's take a closer look at the performance of the company's wealth management platform. In 2022, the new asset allocation scale of the wealth management section reached 7.98 billion RMB, which is 1.3% higher than before. The recommended allocation scale of asset support categories is 70.7 billion RMB, which is the same as in 2021. Separately, the allocation scale of long-term asset support categories is 30.2% lower than before, which is 3.2 billion RMB. In the short term, the size of the product configuration in asset configuration has increased by 57.5% to RMB 38.6 billion. We have fully adapted the policy and changes in the market, and have also flexibly adjusted the structure of the product for the risk bias and demand of customers to create the most suitable asset configuration program for customers. As an important product category in the company's diversification strategy, The products of SEMU have increased by 98% and reached 33.7 billion yuan. SEMU stock rights and creative products have increased by 111.8% and reached 14.9 billion yuan, which has also reached our strategic expectations. The rapid development of multi-purpose business also reflects the customer's recognition and love for our products and services. At the same time, it also reflects the ability of the high-quality managers and project discovery investment research capability and professional service capability. In the future, we will continue to optimize the proportion of the bottom-level asset configuration while stabilizing the asset knowledge product configuration scale, and enhance the blockage, asset ban and risk control of the product. We will also focus on the integration strategy and the FOF strategy of the product for private credit-related products. through the continuous transformation of the investment group to bring the customer the investment income of the document. For the private equity products, we will insist on focusing on the head management, and through direct investment and the combination of the group fund, to surround the three major panels such as carbon neutral, high-end manufacturing, medical health, etc., to help customers capture the opportunity and popularity of the upgrade of the Chinese industrial structure.
spk08: Okay, now let's go over the performance of the wealth management business segments. In fiscal year 2022, client transaction value increased 1.3% year-on-year to 79.8 billion RMB. Amongst that, the transaction value from asset-backed products remained at similar level from last year at 70.7 billion RMB. Notably, long tenor asset-backed products decreased 30.2% to 32 billion RMB, while short tenor asset-backed products increased 57.5% to 38.6 billion RMB. This duration rotation is an example where updates in our house view and our investment research drove changes in our product strategy and our model portfolios, and it was echoed by shifts in client appetite. As two of the priority growth areas in our diversification drive, the transaction values in private securities fund products jumped by 98% year-on-year to 3.37 billion RMB. and the transaction values in private equity VC products rose by 111.8% in the same period to 1.49 billion RMB. The growth momentum in these two categories met our targets. The increased diversification of our business volumes reflected our clients' trust in our products and services. and was an endorsement of our ability to select high-performing asset managers and deliver advice that is backed by strong research. Going forward, we seek to maintain our leadership in asset-backed products while maintaining a strong risk management and product lifecycle management. For private securities fund products, we continue to pay attention to hybrid strategies and thought strategies, and we seek to improve risk returns for clients through continuous active portfolio management. For private equity VC products, we seek to further our collaboration with flagship GPs and use a combination of direct investment as well as LP deployment to capture long-term alpha in areas where we believe have massive long-term potentials in China. For example, in carbon neutral, high-end manufacturing, and healthcare sectors.
spk00: Our asset management business performance is also outstanding. In 2022, our asset management size increased by 120.5%, reaching RMB 44.8 billion. Among them, EM business has made rapid development, which also proves that Hainan is at the top of the list of the most picky Asian ultra-high quality customers. It is worth mentioning that more than 90% of EM customers are investing in the way of full commission. This also shows that Hainan's initiative management ability has also been recognized by the market. Haiyin's opening fund business is also continuing to develop steadily. For example, our global Haiyin Global P&E Fund was established in October 2020. Currently, AUM has exceeded US$30 million, bringing 39% of the total investment return to customers. On July 1st this year, Haiyin and its leading financial services and index providers In fiscal 2022, our asset management business delivered outstanding results.
spk08: AUM assets under management increased by 120.5% to 4.48 billion RMB. In particular, our EAM business achieved strong growth, cementing our strong competitive positioning in the battle for Asia's most demanding ultra-high net worth clients. It is also worth mentioning that more than 90% of our EAM clients are on discretionary mandates, We believe this is a ringing endorsement of Hiwin's investment management expertise. Our Cayman Funds business also continued to grow. For example, the Hiwin Global PE Fund SP has exceeded 30 million RMB in AUM and generated 39% returns since its launch in October 2020. On July 1st this year, HiWin announced our partnership with FactSet, a global provider of integrated financial information index and analytical applications, to launch the FactSet HiWin Global Healthcare Index. This was the first step in our build-out into index products and passive investing, and it will help us accelerate our AUM growth as we present more participation vehicles to our clients.
spk00: Our performance in customer management is also another highlight of this year's performance. As of June 30, 2022, our total number of customers reached 14.1 million, which increased by 10.8% in total. Our active number of customers reached nearly 440,000, which is a historical high, which increased by 15.1% in total. The net payment configuration rate of our customers reached 80.8%, And it has exceeded 75% in three consecutive fiscal years. The average trading volume of SEMU products has also reached RMB 4.68 million. The above data also shows that in this fluctuating market environment, customers are more inclined to have the ability to select products like Haiyin, the ability to assign assets, and the professional organization with the ability to serve. that can bring them even more than expected long-term investment returns and excellent increased service and experience. In addition, we also have a group of high-quality customers. They are in line with the typical image characteristics of high-quality and ultra-high-quality customers. They have a huge potential in terms of investment scale and investment experience. This is also a basis for us to continue to expand the portfolio of customers in the future and optimize the asset configuration of customers.
spk08: In fiscal 2022, we also recorded a higher level of client activities. By June 30th, our total client number reached 141,000, rising 10.8% year on year. In the same period, the number of active clients stood at approximately 44,000, increasing 15.1%, and also a record high. Importantly, Repeat investment rates from our existing clients was 80.8%, exceeding the 75% mark for the third year running. Our average ticket size for private market products rose to 4.68 million RMB. These metrics once again underline a key observation. In a volatile world, clients tend to gravitate towards leading wealth managers like Hiwin, who can offer excellent product selection, robust portfolio construction, and superior advice and services. Clients ultimately trust and will stay with advisors who can deliver long-term investment returns and value-added services that meet and exceed their expectations. These data points also show that Hywind's clients fit the classic profiles for high net worth and ultra-high net worth individuals with great potentials to be unlocked in terms of business volume growth, as well as product spectrum expansion. We believe our client wallet share will continuously expand as a result.
spk00: We are also aware of the human resources and network point layout. We have grasped the opportunity to make a precise impact and achieve a growth in size and quality. As of June 30, 2022, the total number of our financiers is 1,696, which is 7.1% higher than before. The financial capacity of our financiers is 4,940,000 RMB, which continues to lead the industry. As of June 30, 2022, we covered 88 key cities and 178 financial centers, which is called the increase in the number of young people. We took advantage of the challenging market environment to expand our talent base and footprint opportunistically and cost-effectively.
spk08: By June 30th, our relationship managers had count totaled 1,696, increasing 7.1% year-on-year. We also continued to lead the industry on the metric of transaction values per relationship manager at 49.4 million RMB. By June 30th, we had 178 world-surfacing centers across 88 cities, a moderate increase on both counts. we sharpened our focus on the most productive regions with the highest density of high network population, namely Yangtze River Delta, Pearl River Delta, Bohai, Economic Rim, and the Midwest. As COVID will gradually ease in China, we will further leverage our physical presence and deepen our reach in these priority geographies.
spk00: Haiyun has been significantly effective in the construction of the brand and in the energy-saving aspect. We are continuously creating energy-saving capabilities and digitalizing them for energy-saving. This year, we have launched a long-term smart asset configuration system, UPayTong. It can help financiers to know the financial configuration of their clients online at any time, and adjust the configuration strategy flexibly according to the client's needs and the customized configuration plan. Haiyin Control Group continues to improve company governance. In June this year, we appointed a well-known expert in the capital market, Mr. Chen Zhenghong, to serve as the independent chairman. He is responsible for the trust and humility of all shareholders. Currently, the independent chairman has taken up half of the board of directors. We will continue to optimize the structure of the board of directors to play an important role in the governance and strategic decisions of the board of directors. We have also completed the upgrade of the immediate organization, and established three ecological circles with product projection, customer management, and business performance as the core, to fully promote decision-making efficiency implementation, and promote business development to improve customer experience. We also actively carry out ESG, focusing on social justice and environmental protection. In May of this year, Haiyin has officially become and is responsible for the signing of the investment principle organization PRI. Currently, the concept of sustainable development has also become an important criterion for the company to create value and drive change. Here, I am also very honored to report to you, analysts and investors, that Haiyin Co., Ltd. has already three times linked the world private banks and the well-known wealth management media Wealth Green for Asia, the best wealth management institution in the Central China region in 2022. And I myself have already three times become the best CEO of the financial management industry in the Great Central China Region in 2022. What we are most proud of is that Haiyin is the only headquarters in mainland China.
spk08: We continued to make progress in the build-out of our operations platform with research and digitization as two primary enablers. This year, we launched our AI-powered asset allocation engine, Asset Compass, which helps relationship managers track and analyze client situations and generate customized client portfolios and rebalancing strategies. We also continued to upgrade our corporate governance and uphold our fiduciary duties to shareholders. In June, we appointed Mr. Chen Zhongheng, Vincent, a seasoned capital markets guru, as an independent director of Highwind Holdings. With this appointment, independent directors now hold half of our board seats. We will continue to strengthen our board going forward and enhance our corporate governance. We also completed the transformation to a more nimble organizational structure which is underpinned by three cross-departmental eco-spheres, namely products and research, clients and services, and enable and empower. This has led to more efficient decision-making, sharper focus on growth, and ultimately better client experience. We also continue to lead the industry in ESG commitment and champion a range of societal and environmental initiatives. In May, Hywin joined the United Nations Supported Principles for Responsible Investment, PRI. Sustainability has now become one of our guiding principles in our strategy-making and continuous innovation. Also, I am happy to report that Hywin Holdings has been voted the best wealth manager of Greater China by Wealth Briefing Asia for the third year running, with Madam Wang Dian recognized As the best CEO in Greater China Wealth Management, also for the third time, Hiwin remains the only firm headquartered in Mainland China ever to win these award series.
spk00: In the long-term companionship and service of high-end customers, we also deeply motive the needs of our customers. As an important measure against uncertain risks, wealth management and medical and health management are also more and more highly valued by high-end customers. China's high-end medical health management market is now in a blue sea, accompanied by a The demand for customer health management is increasing day by day, and the market is also facing a huge development potential. In addition, the asset price of the epidemic era is low, so Hainan chose to choose this best time to enter the high-end health management field. For this, Hainan's full-fledged subsidiary company, Hainan Health Management Limited Co., Ltd., has acquired the majority of shares of Da Yisheng Medical Stock Limited Co., Ltd. and Beijing Meili Sansheng Technology Limited Co., Ltd. Through the acquisition of leading medical health management institutions in the industry, Haiyin has already had many high-end physical therapy and health management service centers located in Beijing, Shanghai, and Chongqing. Haiyin Health's business also has mature and advanced medical health management and service experience, as well as domestic and foreign medical technology equipment experts and service resources. In particular, we include high-end physical examinations, private doctors, chronic disease management, and a full-scale health service system with major disease prevention. In this way, we can better satisfy customers based on the health needs of the whole life cycle. So Hainan's health business will also be conducive to the development of Hainan's wealth main business. Health management has become an important component of the company's high-quality customer service system. We will provide customers with comprehensive, stable, high-quality medical and health services to help financiers better establish close contact with customers, and further implement customer-centered services, so that customers and their families can accompany them for a long time. And Haiyin's excellent network layout and strong financial team will also
spk08: As the trusted advisor for our clients, we have accumulated deep insights across the full agenda of a typical high net worth family. We have validated our conviction that wealth management and health management are both top priorities for clients in this changing world. Therefore, it is natural and timely that Hiwin has now officially launched our wealth plus health dual proposition for our clients. This means that we are now establishing a health management franchise as our second ecosystem to enrich client relationships and unlock value from our client base. Powered by surging client demand, the health management market in China has tremendous revenue potentials, but remains under-penetrated and under-competed. Meanwhile, in spite of COVID, we saw an opportune window for us to enter the market as high quality operating assets became available in the market at a reasonable valuation. In this context, Highwind Health Management Company Limited, a wholly owned subsidiary under Highwind Holdings, has recently acquired the controlling stakes in Grand Doctor Medical Company Limited and Beijing iLife3 Technology Company Limited, also known as Life Infinity. Through these transactions, Hiwin acquired a strong operating backbone for our health management business with health screening facilities and health management clinics in Beijing, Shanghai, and Chongqing. Also, by integrating the acquired assets, global resource pool, and global resource pool into the Hywin Health ecosystem. We're now well-placed to start rolling out products and services to clients across a full health and wellness spectrum. For example, health screening, family doctors, chronic disease management, rejuvenation solutions, as well as preventive programs for major diseases. This, once again, echoes Hywin's vision and strategy of serving our high network clients across their full life cycles. We believe that as we integrate Highwind Health into our client servicing matrix, it will create substantial synergies with our wealth management business. Adding more multi-faceted and differentiated health management offerings can also help our relationship managers establish more client touchpoints with client families strengthen client relationships, as well as create more meaningful client engagement opportunities. Meanwhile, the pan-China footprint and the large sales force that we have in our wealth management business will become a powerful catchment area and delivery medium for our health management business. As a result, we believe we will benefit Taiwan financially as well.
spk00: After 17 years of development, we have gained more than 140,000 customers' trust and support by developing professional, sharp, independent, and long-term value. Now we have gradually realized the diversification of income across fields, not only in the field of financial products, but also in the field of health management. Through the growth of the economic cycle, we will continue to improve operating efficiency and improve the connection and loyalty of customers through health management services. This will be the driving force for the continued profit growth of Hainan. In the past two financial years since Hainan was founded, we have accumulated a net profit of 4.4 billion yuan and are constantly creating a new high in annual net profit. We know better than ever that this achievement is not easy. It also includes the firm support of customers, employees, and partners. In the future, we will strive to be proud of the capital market, and will do our best to create long-term value returns for shareholders. We will continue to polish our business capabilities, create long-term investment value for customers, and manage a healthy life ahead of life.
spk08: I would attribute the success that Taiwan achieved in the past 17 years to our vision, our prudence, our independent thinking, and the tireless pursuit of value which have won the trust of our 140,000 clients. Today, our business scope and revenue mix are gradually expanding. our presence in the financial services market continues to strengthen and deepen. Our entry to health management will give us another leg for growth. We have demonstrated our abilities to navigate through market cycles, deliver continuous efficiency gains, and maintain client loyalty. We are now confident that our new wealth plus health value proposition will further enrich our client engagement and deliver earnings growth for the long term. Over the past two fiscal years since our IPO, we have achieved a combined net income of more than 440 million RMB in total. This year, we have set another year of record profitability. These achievements are encouraging, but also humbling. The support from our clients, employees, and partners is the ultimate fountain of our success. We are privileged to be trusted the trusted advisor for our clients' wealth and health. So we aspire to become the premier wealth management and health management brand in China, creating sustainable value for our clients as well as shareholders. Thank you Madam Wang and thank you everybody for joining us today. Before we begin our detailed financial discussion, please note that unless otherwise stated, all financial numbers presented or in remedy terms, while comparisons are made on a year-over-year basis. And I will now present our financial results for the second half and fiscal year 2022, ended June 30th. In the six months ended June 30th, our total net revenues were $1.1 billion, up 9.9%. Total revenue for the full fiscal year was $1.9 million, up 5.9%. Looking at our revenue breakdown, revenue for our wealth management segment was $1.9 billion for the full fiscal year, up 5.8%. The strong growth in our wealth management services was primarily due to the increase in transaction value of private market investment products. Revenue from our asset management segment for the full fiscal year was $19.5 million, up 30.3%. This continued strong growth in our asset management revenue was driven by an increase of assets under management. On the cost and expenses side, total operating costs and expenses for the six months were $823 million, up 3.5%. For the full fiscal year, total operating costs and expenses were $1.6 billion, up 4.0%. In terms of cost breakdown, compensation and benefits for the full fiscal year increased 5.1% to $1.05 billion. Our sales and marketing expenses for the full fiscal year decreased 4.6% to $312 million, and our general and administrative expenses increased 20.4% to $242 million. We have demonstrated cost structure improvement this year given our overall cost and expenses as a percentage of revenue decreased to 83.2% compared to 84.6% in the previous fiscal year. We seek to continue in improving our operating efficiency as we scale up. Our income from operations in the six months was $238 million, up 39.6%. For the full fiscal year, our income from operations was $327 million, up 16%. Our reported net income for the full fiscal year was $236 million, up 13.6%. Our earnings per ADS for the full fiscal year was 8.42 per ADS on a basic basis and 8.14 per ADS on diluted basis. It is encouraging that our resilient business model delivers healthy and solid operating and financial growth despite market turbulence in this period. Our balance sheet also remains strong. As of June 30th, 2022, we had $660 million in cash and cash equivalents and restricted cash on hand. As such, we continue to maintain very healthy liquidity ratios. We acquired controlling stakes in Beijing iLife3 Technology Company Limited, also known as Life Infinity, in August 2022, which is a leading integrated health management service provider in China. Together with the acquisition of Grand Doctor Medical Company Limited, we're now ready to roll out our health management business and seek to further unlock value from our enormous high net worth client franchise. Looking forward to our next fiscal year, we seek to scale up our operations with a continuous focus on serving the full lifecycle wealth management needs and health management needs of our high net worth clients. We believe we have plenty of opportunities ahead for us to drive organic growth in order to create greater value to our shareholders. Thank you, everyone. This concludes our prepared remarks for today. And operator, we're now ready to take questions.
spk03: Thank you. We will now begin the question and answer session.
spk04: To ask a question, you will need to press star 11 on your telephone. Please stand by while we compile the Q&A roster. Once again, to ask a question, please press star 11 on your telephone. Our first question comes from the line of Sandy Mehta from Evaluate Research. Sandy, your line is open. Please ask your question.
spk01: Yes. Thank you. Thank you so much. Congratulations on the solid result in terms of earnings and client metrics. I have two questions. First, for the two healthcare acquisitions, Grand Doctor and iLife360, Can you give us a little bit more commentary on how this will enhance your growth rate and add to your earnings?
spk07: Sure, Sandy. Let me just translate for Madam Wong for one quick minute. Madam Wang would answer this question on our health care strategy.
spk08: Thank you, Sandy.
spk00: Thank you for your question. We believe that for health, in the next five years, our Chinese health industry, especially the high-end medical health industry, will experience a particularly rapid growth. Even though we are currently there are a lot of entrepreneurs or institutions in the health management track, but there are not many institutions that can really meet the high-end people's health needs. Our current acquisition of this life club and the doctor, there are a lot of entrepreneurs or institutions in the track, but there are not many institutions that can really meet the high-end people's health needs. Our current acquisition of this life club and the doctor, has been in this industry for many years. It can be said that it is also one of the two best high-end health management services in China. During this many years of operation, they have also accumulated high-quality medical resources, mature operating models, and professional health management experience. Hanyin Health, through the integration of the core advantage business of these two institutions, We believe that in the future, we can solve the needs of customers for deep medical examination, disease prevention, treatment, and recovery in a one-stop high-end health management. We say that because Haiyin has been in the wealth management industry for many years, so we know our customers very well. Especially in the past few years of the epidemic, everyone has a consensus on health and high-quality life. While many of our customers are practicing wealth growth, we also hope that their own and family health can be ensured. We have always said that wealth and health are inseparable. Therefore, we believe that through our efforts in the future, Haiyun Health will not only become the top choice for high-quality customers in Haiyun for health management, It will also be able to become a company that has a good reputation in our industry. Therefore, through our hard work, we can realize the value of this company to society and shareholders.
spk08: Sandy, let me translate for Madam Wang. I think we've got quite a few points here. First of all, I think if you look at the health management industry in China itself, we see massive opportunities for growth, especially in the high-end health management area. We can't claim that we're the only practitioner in this business, or the two acquisitions being the only practitioners. But I think what we observed was that there really aren't enough, really, there's insufficient penetration and insufficient good players in this market. That is what we observed. that can truly meet the needs of the high-net-worth population in China. And that's the thinking behind our acquisitions of Life Infinity and GrandDoctor, as they are already leading high-end health management service providers in their respective cities. They have their own high-quality healthcare resources they have established products, they have also an established operating platform, and they have their own respective solid client base, which we believe are all scarce assets in the high-end health management business. So by integrating these two acquisitions into our ecosystem, our strategy, for Highwayman Health is to establish a one-stop, high-end health management platform that can integrate a number of offerings into our product platform. And these products could include, for example, in-depth physical screening, disease prevention, chronic disease management, et cetera, et cetera. So a number of health and wellness products and services that we will be offering to our clients. And another point that Madam Wong made was that we have been, so far, successful in the health management side of things. And we know our clients very well, therefore. We understand their needs. And we understand their needs of their families to a large extent as well. So we know that there is this unmet need that we can fulfill, and there is therefore, we believe, a very strong cross-selling opportunity for us. And our goal is to, once again, very quickly ramp up our health business so that we will be a trusted advisor and provider, not only for their for our clients' wealth management needs, but also their health management needs. I hope this answers your question, Sandy.
spk04: Thank you. Our next question comes from the line of Edward Nee from UBS. Please ask your question, Edward.
spk05: Hello, this is Edward from UBS. Yes, so my question is, in the context of high inflation combined with low interest rates, how high an average client's asset allocation preference shifts here?
spk06: Okay, thank you. Thanks, Edward.
spk08: Yes, okay, I think I got your question. Your question is on high inflation. with low interest rate in the overall market environment right now. And sorry, your question is, how has client preferences for investment shifted? Is that, if I got your question right?
spk05: Yes, correct.
spk08: Okay, got it. I think I'll answer this question. Yeah, okay. Thank you for your question. I think you're right in pointing out that right now we have a environment, we're talking about China having somewhat high inflation but combined with also relatively low interest rate. I think it's interesting that we have this environment in China and therefore our clients, our high network clients in China are very interested therefore in seeking asset-backed products that can provide stable returns with relatively lower risk. And I think that's actually reflected in our financial results, as you saw. Volume in our asset-backed products as a whole had been fairly stable, and that's a reflection of client demand. So that's one point. Two is, I think in the face of greater uncertainties in the market though, since we talked about asset-backed products, client preferences for these products have, however, shifted towards shorter duration. I think you saw that shift in our financial reports just now as well. And then I think the third thing that I would say is that, as you pointed out, China is actually cutting rates right now. We're one of the very few, in fact, maybe we're the only major economies in the world that is on an easing cycle, whereas the rest of the world is on a tightening path, raising interest rates. Our clients are actually therefore conscious of hedging their currency risk therefore. You know, as such, our clients have shown strong interest in understanding and, you know, knowing more about, you know, offshore products. And that's what, you know, Highway Hong Kong is here for, right, to serve our clients in their offshore needs. Highway Hong Kong is, you know, we believe Highway Hong Kong will continue to be a high growth area for us. And Highwind Hong Kong offers a wide spectrum of products, all the way from long-duration private equity funds to US-denominated equities funds to global real estate income funds, for example. And we believe that Highwind Hong Kong would create a strong complement for our clients to gain exposure globally, in addition to their portfolios in the domestic market. I hope this answers your question. Next question, please.
spk04: And next question comes from the line of Alison Chow. Alison, your line is open. Please ask your question.
spk02: Good evening. This is Alison from Colvin Asset Management. Thanks for taking my question and congratulations on the full year results. So my question is that Asia market has been seeing turbulences since the beginning of the year. How the company identify competitive fund managers and screen quality products in this environment? Thank you.
spk08: Okay, I think I'll answer this question. Thank you, Alison. Yeah, thank you for pointing out that I think there is quite a bit of market volatilities and uncertainties in the global market as well as the Asia market. since the beginning of this year. I think we are very pleased and fortunate that our results continue to be resilient and strong, although we believe that our results would have been even better had the market been a strong bull market. I think one data point maybe I can offer is I asked my team to do a data poll and You know, the data that I saw was, you know, 70% of our private secondaries, you know, fund products that we distributed, you know, since the beginning of this year, had actually achieved positive returns this year, right, 70%. I think the, you know, I think that's not bad, given the market environment. But the key, you know, is retention. you know, I believe is really selecting the right strategy for the right market. And, you know, on the point of strategy, right, you know, law only, right, for example, it's really only one of the strategies for our private market secondaries products that we distribute, right, or enhanced index. I think that that was popular. But, you know, there are other strategies that we distributed this year, right, and our clients can choose from. For example, structured products, structured strategies, long-short strategies, hatched strategies, FOF, CTA, et cetera. So I think, again, we believe it's, to some extent, selecting and distributing the right products in the right market. And then I think the last point is, I think if the market comes back for the rest of the year, we will have to very quickly adjust our product strategy to focus, for example, on more long-only and enhanced index products. So it goes back to our point on agility of our product strategy, which I believe is the key in this product category as far as the secondaries fund products are concerned. And then maybe one last point is I think historically we had some success with working with some of the smaller but perhaps lesser known fund managers who could deliver our performance. I think we will continue to seek out these asset managers as well, the so-called dark horse asset managers. But I think we had some success in that direction historically as well. Hope this answers your question. Next question, please.
spk04: All right. Thank you very much for all your questions. Now, we have reached the end of the question and answer session. I'll now turn the call back to the management team for closing remarks.
spk08: Okay. Thank you. Thank you again for joining us today. If you have any further questions, please do feel free to reach out to us. through our IR website or to us directly. We look forward to speaking with all of you in our next call. Thank you. Have a good day.
spk04: Thank you. This concludes today's conference call. You may now disconnect your line. Thank you.
Disclaimer