Hywin Holdings Ltd.

Q2 2023 Earnings Conference Call


spk00: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Highwind Holdings' second half and fiscal year 2023 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 will make forward-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 fiscal year 2023. 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 your financial results of second half and fiscal year 2023 on the company's IR website at ir.highwindwealth.com. I will now turn the call over to Director and CEO of Highwind Holdings, Madam Wang Dian. Madam Wang, please proceed.
spk01: Hello, investors and analysts. Hello, everyone. Welcome to the annual and full-year performance presentation of H&K's 2023 financial year. In today's conference, I will first review the performance of H&K's 2023 financial year. After that, Mr. Lewei, the chief financial officer of H&K, will introduce the financial data of the second half of 2023 and the whole year.
spk05: Hello, everyone, and welcome to the Hyman Holdings earnings call for the second half and full year of fiscal year 2023. On today's call, I will review the results first and provide updates regarding the significant progress 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 financial performance.
spk01: In the past year, the world and China have gradually recovered from the pandemic. Although the economy is gradually warming up, the market is still looking for a direction in a big wave. The mood of the market has also shown a positive and negative attitude. For this reason, Hainan has maintained strategic stability. to address the wave and actively attack, continuously optimize the center of business, actively grasp the trend, promote health management, asset management, and accelerated development of overseas business. 2023 is the first year of the double-wheel drive strategy of sea silver wealth plus health. The company's net income reached 20.9 billion yuan, which is 7.7% of the total growth.
spk05: During this past fiscal year, both the global and the Chinese economies have shifted from a tumultuous pandemic period towards a phase of moderate recovery. However, while there are significant post-COVID rebounds in many areas, The overall markets in China have remained in flux, grappling with ongoing volatilities and uncertainties, and a muted investment sentiment overall. Amidst these challenges, Hiwin has taken a proactive approach, and we quickly adapted our strategy to respond to the changing market environment, and we rapidly advanced our businesses in health management, asset management, and overseas businesses. In fiscal year 2023, the inaugural year of our wealth plus health dual platform strategy, Hywind achieved remarkable net revenues of 2.09 billion RMB, representing 7.7% year-on-year growth. Our strong business performance in traditional wealth management products served as a foundation while we actively developed new avenues and new ventures to drive growth and diversify our revenues. 财富业务上,我们顺应了政策和市场的变化,也针对后疫情时代高精致客户多元稳健的配置需求,增加了资产支持类产品,保障类产品和全权委托类产品的比重。
spk01: These products with high risk-resistant, profit-saving, and cross-weekly characteristics can be said to have received customer recognition. At the same time, the health industry, as the company's second growth curve, also showed a fast-growing trend in the first year of launch, contributing nearly 90 million RMB of revenue, which is more than 200 times the growth, and has also become an important catcher in our service customer's full-life cycle. and further enhance the customer's trust and dependence on the Hainin platform. Since Hainin was launched, it has been actively promoting the diversification of business, increasing the asset configuration of customers around the world, as well as improving the health industry. These strategic moves have already constituted the stability of Hainin's growth and performance in the period of fluctuation. Next, let's take a look at the performance of each version.
spk05: In our wealth management business, we have adeptly responded to market shifts in this period by increasing our product focus on asset-backed products, protection products, as well as discretionary products to meet our high-net-worth clients' demands for both diversification as well as stability in this post-pandemic period. These products, characterized by their strong resilience during a time of volatility and uncertainties, offer our clients stable returns and the ability to withstand market cycles. Meanwhile, our health management business has now emerged as a second growth driver and demonstrated rapid growth in its inaugural year. generating net revenues of nearly 90 million RMB, which is more than 20 times year-on-year growth, our health business is starting to play an increasing role for expanding our client trust and loyalty in us and providing clients with more comprehensive services across their pro-life cycle. Since Hywind's IPO, we have taken proactive steps to diversify our business mix expand global asset allocation for clients, and make a successful entry into the health management industry. These strategic initiatives serve both as new growth catalysts as well as performance stabilizers, particularly during cyclical market downturns. Next, let's take a look at the performance of each segment.
spk01: In the financial management sector, due to the expansion of the gap between China and the U.S. in fiscal year 2023, as well as the fluctuation of large-scale assets, the assets and investment sectors of the domestic financial market are under great pressure. In this regard, we have also actively adjusted the structure of the products. Based on the market trend and the needs of the customers, we have made appropriate improvements to the categories and proportions of the products based on the abundance of products. As a whole, the size of the new asset allocation of the wealth management version is 726.3 billion RMB, which is 9% lower than before. Among them, the allocation of asset support products is 665.9 billion RMB, which is 5.8% lower than before, and has also achieved a size optimization.
spk05: In the world management segment during fiscal year 2023, the domestic financial market faced challenges from both the supply side where asset quality and asset performance was weak, as well as on the demand side where investor sentiment was soft. In addition, there was increasing competition from US dollar assets given high interest rate differentials. As a result, this was reflected in the changes in our product mix during this period. Overall, the transaction value in the wealth management segment totaled 72.6 billion RMB, a 9% year-on-year decline, amongst which at-the-back products accounted for 66.6 billion RMB, representing a 5.8% year-on-year decrease as we were more selective with our products in this period. On the other hand, our insurance business made great advances, achieving a remarkable 262% year-on-year growth in the transaction value of international insurance products, reaching 460 million RMB. 在资产管理板块,客户资产管理规模同比增长了90.8%,达到85.5亿元人民币。
spk01: It is worth mentioning that 82% of AOMs are from non-Chinese customers. This also reflects the previous year position of our asset management business, global customers and global configuration. In the second quarter of this year, we also based on the new characteristics of global capital flow, for the Middle East and Indian markets, we also increased the recruitment of professional teams to further expand the overseas customer base. As the flagship of the marine asset management business, the EAM business of Hainan International has also achieved outstanding results. The asset management scale has reached $10.2 billion, with a growth of 72.6%. The EAM business is an active asset management model that is a driving force to cover the global asset market. In the asset management segment,
spk05: Total asset under management AUM increased by 90.8% year-on-year, reaching 8.5 billion RMB. Notably, 82% of the AUM was contributed by clients acquired outside of mainland China. The global nature of our client base and their investing activities is a reflection of the success of our global strategy. In the second quarter of this calendar year, we recruited a team to target Middle East and South Asian clients, further expanding our global client coverage and tapping into new sources of wealth. Highwind International's EAM external asset management business model is the flagship product of our asset management segment and has achieved exceptional success with AUM reaching $1 billion in fiscal year 2023, representing a year-on-year growth of 72.6%. The EAM business model is a sophisticated asset management business model combining intellect-driven active management, multi-asset class investing, as well as global booking and global execution. Hywind's EAM business is highly regarded by our ultra-high-net-worth clients in Asia Pacific. The high standards set by Hywind's EAM business can also act as a catalyst and in turn help us coach the advisory skills and client servicing skills of all of Hyland's relationship managers. 海银国际的行业地位也广受认可,是香港特区政府认可的香港五大家族办公室之一,也是香港有限合伙基金业协会的副会长单位。
spk01: In addition, as a breakthrough in the technology-driven asset management business, Hainin Control Group has also joined the Swiss financial technology company Lianda and the mixed financial technology platform Yucheng Tech. In 2023, they jointly launched the Hainin Global Trends series theme ticket, allowing investors to participate in the six major investment channels around the world in a way that guarantees capital. The development and landing of this series of products has once again demonstrated Haiyin's strong investment capability, product design capability, and risk management capability. It has also played a certain role in improving the profitability of asset management business, anti-vibration, and the adherence of customers. The good performance of our asset management business also shows that Haiyin's investment management capability and product construction capability The competitive overseas market has taken its place. In the next step, we will also promote it to a wider range and a wider range of overseas customers, in order to improve customers' annual income and expand their income spectrum.
spk05: As a fully owned subsidiary of Highwind Holdings, Highwind International is recognized by the Hong Kong SAR government as one of the top five family offices and holds the vice chair of the Hong Kong Limited Partnership Fund Association. In addition, as an example of Highwind's foray into technology-driven asset management, In 2023, we successfully launched the global megatrend series of principal protected notes in partnership with Leontech AG, a Swiss fintech company, and Otta Techfin, a hybrid fintech platform in Hong Kong. This product series can help investors participate in six distinct and sustainable investment themes while enjoying the peace of mind of principal protection. This innovative and proprietary product series, once again, demonstrated Hywind's expertise in product R&D and risk management and helped us enhance the profitability, counter-cyclicality, and stickiness of our client AUM. The success of Hyland's asset management business in an international market that is dominated by global incumbents is a strong endorsement of our investment management expertise and product know-how. We plan to expand this business and deepen our penetration with a wider client base going forward.
spk01: From the customer's data, by June 30, 2023, our total number of customers has reached 15.3 million, an increase of 8.2% in total. The number of active customers is close to 4.7 million, an increase of 6.5% in total. The customer's net payment configuration rate has reached 82%. These data also show that in the fluctuating market, the high-end people have maintained a higher trust in Hainan's brand, and the Hainan financial team has a stronger recognition and dependence, and the Hainan brand has a higher age. It is worth mentioning that among our ultra-high-end customers, 36% are overseas. This also shows that Hainan's customer acquisition ability and customer service ability have been successfully utilized in different regions of the market. At the same time, we also insist on broadening the elite of the industry, actively building a financial team, and strengthening our coverage and penetration in the national and key areas of the financial center. As of June 30, 2023, the total number of financial experts is 1,749, with a 3.1% increase. We covered 91 major cities and 185 wealth centers, which is the annual growth. Based on this, we also greatly expanded the health industry. This is not only beneficial to the infrastructure of the wealth industry, but also to the rehabilitation and development of the wealth industry.
spk05: As of June 30th, 2023, our total client base reached 153,000, reflecting a 8.2% year-on-year increase. Of those, nearly 47,000 were active, up 6.5%. The repeat investment rate amongst our clients stood at 82%. These statistics underscore the trust that high-net-worth individuals place in HiWIN. their strong trust in our relationship managers, and their strong loyalty to our investment platform, even in the face of market challenges. Within our ultra high net worth clients here, 36% are domiciled outside of mainland China, which demonstrates HiWin's client acquisition and client servicing capabilities in both domestic and international markets. Meanwhile, we remain committed to attracting top tier talents, actively growing our relationship managers team and enhancing the footprint of our world servicing centers across key regions in China. As of June 30th, 2023, our total number of relationship managers reached 1,749, a 3.1 increase year-on-year. We have successfully expanded our reach to cover 91 cities, key cities, with a robust network of 185 world-surfacing centers reflecting sustained growth from the previous year. With this foundation, we seek to vigorously develop our health management business as well and unlock the synergies between the infrastructure and client base of our wealth business and the expansion of client proposition and client engagement driven by our health business.
spk01: In 2020, Haiyin Health achieved a revenue of 87,840,000 RMB. The revenue of its medical business achieved 2346.3 million RMB. The service price of the medical examination is 2,904 yuan. The income of the health management is 64,378,000 yuan. The income of the guest army is 22,613 yuan. This is higher than that of the same industry. This also proves that we provide a guest army position for a high-quality group of people. According to research, among the non-financial needs of high-quality people, medical and health services have a very high proportion, especially with the aging of the rich class of China. High-end health management has become the starting point. In this track, the requirements for professionalism, privacy and experience are very high. At present, the Chinese market has a double challenge of the shortage of supply and demand resources and the shortage of large-scale service providers. Since the establishment of Hainan Health, we have effectively integrated the advantageous resources of the five professional health care institutions in Hainan, and have also introduced advanced health management technology, equipment, and service models such as the United States, Germany, and Japan. We have also formed an integrated health management industry with an online health management platform and a one-stop health management service for 200 million businesses.
spk05: In fiscal year 2023, Highwind Health recorded net revenues of 87.8 million RMB, amongst which the health screening segment accounted for 23.4 million RMB, with an average revenue per visit of 2,904 RMB. while the health management segment accounted for 64.4 million RMB with an average revenue per client of 22,613 RMB. Our premium pricing in health management reflects our premium positioning in providing high-end medical screening and high-end medical management, health management services for high-net-worth individuals. Industry research data shows that medical and health services is one of the largest categories of non-financial services demanded by high network individuals. As the affluent population in China continues to grow and age, demand for high-end health management services is becoming increasingly critical. Yet this market segment is currently underserved as it requires a high level of expertise, privacy, access to global solutions, as well as top-notch client experience. Since the launch of Hyland Health, we have been integrating our five professional health management clinics into our daily operations and expanded their advanced health management technologies, hardware, service models from developed markets including the United States, Germany, and Japan. Our vision is to further build out our online health management platform and our offline one-stop health management services as two strategic levers in one ecosystem in order for us to grow and further monetize on our high net worth client base.
spk01: In addition, we also focus on customer digital health documents as the strategic focus of the marine health digitalization strategy. Surrounded by digital health documents, we have established a digital health cloud platform, and also realized the centralized management and sharing of information such as all institutions, businesses, customers, products, supply chains, and so on. We have quickly achieved an accumulation of 1.1 million pieces of health data assets. We have also achieved a unified plan and unified management system development for health businesses across the country. At the same time, we have also used digitalized technology such as VR detection and AI health evaluation to achieve seamless integration of online and offline services. We have also improved the customer experience and created a digitalized service experience that penetrates the customer's lifetime cycle. Currently, we are accelerating the national layout of health businesses. In addition to Beijing, Shanghai, Chengdu, and Chongqing, we will move to more first-tier cities. We will continue to participate in the health field and hot spots in various ways, including self-development, acquisition, and financing. We will further improve the advantage of marine health.
spk05: One of our core digital strategies is the digitization of our clients' health management records. We have built out a digital health cloud platform to achieve centralized management and protection of client data, as well as digital management of our products and supply chain. We have accumulated over 110,000 health data assets to support a centralized planning and management of our businesses. At the same time, we also began to utilize digital technologies such as VR stores and AI health assessment to improve our seamless online plus offline client experience. Going forward, we are fully dedicated to further expanding the growth of our health management business. leveraging our five health management clinics in Beijing, Shanghai, Chengdu, and Chongqing. We plan to establish additional presence in other first-tier or second-tier cities in China. We seek to grow our healthcare offerings and expand into new markets, which may include organic build-outs, acquisitions, investments, joint ventures, or other growth avenues.
spk01: Haiying's investment in digital technology is not only reflected in health management. In terms of wealth management, we use customer demand as the center, and we also create a service platform for HIPA smart asset management system and X-Bink big data to provide a large asset management program for investors, predict the increase in wealth value and investment risks, As of today, the system has generated more than 1.5 million service opportunities, and has also generated more than 1,000 asset configuration recommendations to help financiers meet and understand the needs of their clients in advance. In addition, our fund trading platform, Jihui Tong, has improved the efficiency and service quality of our clients' transactions. Currently, the rate of online transactions of institutional customers has reached 99%. The opening time has been increased from two days to 30 minutes. The transaction time has been increased from one day to three minutes. This can be said to greatly improve the efficiency of institutional customers' investment. In addition to the energy-saving business, our digitalization is also designed to break down the data of finance and business, and create a compact organization of business, money, and people as one. to reduce the cost of working, improve the efficiency of operation, and realize that the whole line is on the process, and the decision is on the strategy. Since then, we have accumulated 31 software rights, and Haiying Technology under the control of the government has also been recognized as a high-tech enterprise in the country, and has been selected as the list of top small and medium-sized enterprises in Shanghai in 2023. The research and development skills have also been highly recognized by senior institutions.
spk05: Hywind's investment in digital technology is embedded in not only the health management segment, but also our wealth management business. We take a client-centric approach and created HIPAA, intelligent asset allocation system, and the X-Link Big Data service platform. These platforms enhance our asset allocation consultation, risk management, and client processes. We provide investors with personalized asset allocation solutions by anticipating client needs and giving clients insightful guidance. Moreover, our dedicated fund trading platform, InvestPath, is specialized for institutional clients, which improves trading efficiency and ensuring high-quality execution experience. With the use of technology, our online transaction rate for institutional clients has now reached 99%, and account opening processing now takes 30 minutes instead of previously two days. And transaction execution now takes three minutes instead of previously one day, thereby greatly enhancing our efficiency for institutional clients. In addition to leveraging technology to empower products and services, our digital technologies today also underlie how we run our businesses. Digitizing our operations and processes has helped us become a more agile organization, reducing operating efficiencies and promoting scientific, data-driven decision-making across the firm. To date, we have obtained over 30 software copyrights, and our subsidiary, Highwind Technologies, has recently gained official recognition as a national high-tech enterprise and has been named on the list of specialized, refined, distinctive, and innovative small-medium enterprises in Shanghai.
spk01: Haiyin's rigorous business management, excellent platform capability, and high-quality customer reputation have been recognized by the market, and have brought a lot of honor. On June 1, Haiyin Control Group won the World Private Bank and Financial Management Industry Famous Media Welfare Association's Best Financial Management Organization Award in 2023. Haiying Hongguo is also the only Chinese company to enter the list, and it is a financial management institution that retains the award. On August 12, the 2023 China Asset Management Year, which was organized by the Economic Report of the 21st Century, won the title of the first financial management company of the 2023 China Asset Management Gold Medal. On June 8th, the ESG 50 Responsibility Award of the year of 2023 was presented by the Economic Observation Report. The results of the selection were revealed. Oceanic Control Group, based on its outstanding performance in the ESG field, was able to win the list. This is a recognition that the industry continues to develop for Oceanic Control Group. On May 19th, the first list of 2022 was released online. China's top five list of the most competitive wealth management institutions in 2022 is the third.
spk05: Hywind's corporate governance, institutional platform, and client reputations have been widely recognized in the industry, earning us numerous awards and accolades. On June 1st this year, Hywind Holdings was named the Best Wealth Manager of Greater China 2023 by Wealth Briefing Asia. This is the third consecutive year that Hywind has been named for this award. On August 12th this year, Highwind Wealth was honored as an Outstanding Wealth Manager at the 2023 China Asset Management Annual Conference and China Asset Management Golden Shell Awards hosted by the 21st Century Business Herald. On June 8th this year, at the 2023 ESG Practice 50 Responsible Listed Companies Award of the Economic Observer, Hywin Holdings was recognized for our ESG contributions. Hywin is recognized as one of the few industry leaders who pioneered and championed ESG values in our industry. On May 19th, Highland Wells won number three amongst the top five 2022 most competitive wealth management institutions by China Venture. Highland's dual platform strategy and notable advances in digital transformation were recognized. 通关2023财年是海银的变革之年,转型之年。
spk01: especially in the face of rapid changes in the market and industry, we have also timely developed a two-wheel drive strategy, and also made active adjustments to the product structure and business model, so as to achieve an increase in the number of documents at the income end. It represents the network payment configuration rate of the customer year-on-year. It has been maintained at 82% of the high level. The financial expert's professional investment ability is on a new level. The digitized genes have penetrated into our various business processes and service systems. These reforms and changes have maintained the toughness of the current performance for the company, and have increased the potential for future growth. It also allows us to be well prepared before the next wave of waves arrives. So we are full of confidence in the future of Hainan. We are even more confident in the future of wealth management. Thank you, everyone.
spk05: In closing, as we concluded fiscal year 2023, it was a year of change and transformation for Hainan. We made proactive adjustments to our product mix and our business strategy in response to market changes. We achieved steady revenue growth. And we are proud of our client stickiness as our clients stayed with us during the market downturns as demonstrated in our client repeat investment rate at 82% this year. We strengthened our core platform capabilities and we incentivized our relationship managers to upgrade their skill sets and further expanded the use of technology across our businesses and processes. The resilience of our performance this year, once again, give us the confidence to grow and position ourselves for future market cycles and market opportunities. We stay optimistic about Hyland's future, just as we are excited with the enormous potential of China's wealth management industry going forward. Thank you, Madam Wang, and thank you all for joining us today. Before we begin our detailed financial discussions, please note that unless otherwise stated, all financial numbers presented today are in remedy terms, while comparisons are made on a year-over-year basis. I will now present our financial results for the second half and fiscal year 2023 and the June 30th. In the six months ended June 30, 2023, our total net revenues were $1.1 billion, down 0.5%. Total net revenues for the full fiscal year was $2.1 billion, up 7.7%. Looking at our revenue breakdown, revenue for our wealth management segment was $1.9 billion for the full fiscal year, up 2.6%. The year-on-year growth was primarily driven by strong sales performance of other financial products, which increased to more than threefold to $302.1 million, mainly attributed to surging insurance demand post-COVID. We adjusted our product offering strategy in the face of market volatility and uncertainties to emphasize more on protection and wealth preservation. We also reduced the supply of our traditional asset-backed wealth management products during this period, as we were more selective on the credit quality of fixed income products. NAV-based products also declined as a result of weak overall Chinese equities markets. Revenue from private market investment products declined by 10.4% to $1.6 billion, while revenue from public market investment products increased by 45% to $20.5 million. Revenue from our asset management segment for the full fiscal year was $32.6 million, up 67%. Asset management continues to contribute high growth to our revenues, mainly due to increases in client asset under management, AUM. We maintained our leadership in EAM in Hong Kong where client AUM increased by 72% to 1.0 billion US dollars. Taiwan held segment revenue and net losses for the full fiscal year was 87.8 million and minus 112.8 million respectively. High-end health revenue grew rapidly this year as we focused on integration and capacity ramp-up post-acquisitions this year. We may seek to make additional investments in high-end health going forward in order to expand our high-end health footprint while we also focus on further tightening our cost control to improve net losses at individual high-end health clinics. On the cost and expense side, Total operating costs and expenses for the full fiscal year was $1.9 billion, up 17%. Compensation and benefits increased 10% to $1.2 billion, which is in line with the increases in the number of relationship managers and increases in the transaction value of overseas insurance products. Health-related costs was $74.5 million. Sales and marketing expenses increased only slightly by 2% to $318 million. General and administrative expenses increased 24.9% to $302.2 million, primarily due to increased personnel and infrastructure expenses in technology, as well as new expenses related to the health management segment. Our income from operations for the full year was $197.4 million, down 39%. Reported net income for the full fiscal year was $100.3 million, down 49%. Our earnings per ADS for the full fiscal year was $4.64 per ADS on a basic basis and $4.48 per ADS on a diluted basis. As of June 30th, 2023, we had $945.9 million in cash and cash equivalents and restricted cash on hand. We believe our strong cash flow generation together with our strong balance sheet has provided us with significant opportunities for further growth and further value creation going forward. Thank you, everyone. This concludes our prepared remarks for today. And operator, we are now ready to take questions.
spk00: Thank you very much. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Today's first question comes from Tang Ma. Please pardon me. Today's first question comes from Sandy Meza with Evaluate Research. Please go ahead. Pardon me. Today's first question comes from Teng Ma with Harmalan's Capital. Please go ahead.
spk04: Hi. Hello. Can you hear me? Yeah. Hi. Yeah. Thank you for taking my question. I have one question. What stage is the current diversification strategy in?
spk02: Let me answer this question.
spk01: Currently, the multi-faceted development of Hainan is reflected in many aspects. First of all, it is the multi-faceted product. We have been investing in private equity, private securities, public funds, and international insurance companies in the market, and we have maintained a close product cooperation relationship. Although we have reduced the recommendation of private securities and new assets in 2023, But in fact, we know that to a certain extent, it also helps customers to achieve risk regulations. Recently, the bottom of the market has become clearer and clearer. So we started to increase the product configuration of this type. And we are also making flexible adjustments according to the market trend. In addition, we are more concerned about the liquidity of the project and the focus on high-tech enterprise projects because of the limited performance of the secondary market and the tightening of IPO. In the second half of 2023, we will also enter the year of fiscal year 2024. This is also a fiscal year that is not affected by the COVID-19. We are still optimistic about China's investment in power and equity. Therefore, the proportion of asset allocation in this part will be significantly improved. This is also in line with our strategy of diversification. So what I just talked about is, first of all, the diversification of products. The second is the diversification of the domain. We are now in line with the domestic market. With the financial market in the United States of America, Hong Kong, as our overseas asset configuration bridge, we select high-quality products for our customers all over the world. Such high-quality products also greatly optimize and enrich our customers' asset configuration capabilities and improve their risk-resistant capabilities. Thirdly, I would like to talk about the diversity of the service system. We are currently developing a health management business. This can be said that our company is in the red sea of competition. It is a blue sea of high-end health management and high-end wealth management. We say that the new generation of entrepreneurs and their families have gradually come together. The new generation and the current middle class are mostly over 40 years old. Therefore, family health has become an important topic for entrepreneurs and their families. So Hainan will rely on the extension of the financial customer service to quickly enter the market of health management to complete the development of horizontal diversity. I think this will also play a major role in the growth of our company's future performance.
spk05: Thank you. Thank you. So thank you, Marlin, for your question. This is Lawrence here. I'll translate for Man Wong and add some perspectives from my own as well. So your question on diversification, I think our view on diversification, Madam Wong mentioned at least three dimensions where we think of our diversification strategies. The first dimension is the product dimension. On the NAD-based products, obviously this is a direction for us. But there are, you know, these are asset, NAV-based products, these are asset classes that tend to be pro-cyclical, right, not counter-cyclical. So we have to look at the market condition in deciding our strategies around specific products. On the private secondaries or mutual fund products, We were, in this past year, we were cautious, right, given the ongoing market volatilities and market conditions. But we now, increasingly, we now see opportunities as the market may seek to bottom. For longer duration private equity, in view of the overall compression in the IPO market, The strategy for us is to focus, our strategy is to focus on top managers or large promising opportunities, especially in high-tech sectors that are in line with national directions. For asset-backed traditional wealth management products, our strategy is to continue to stay flexible and continue to be optimistic, but this is where risk management and credit quality is very key. So we will also continue to introduce more fixed income plus or fixed income like wealth management products that will further diversify our asset-backed product offerings as well. So as we approach the end of the year and start thinking about 2024, overall we feel that we may be positioned, we are positioned for a rebound in NAV-based products if the market conditions support that. That's the first dimension which is on products. The second dimension that Madam Wang was explaining was our geographical diversification. Taiwan is very deeply rooted in mainland China. Perhaps differently than some of our competitors, we will continue to be committed to and continue to invest and grow in the mainland. But at the same time, we are very fortunate that we have built a very strong international operation today based in Hong Kong. So our Hong Kong arm will... Our Hong Kong arm has... historically has operated fairly independently and follows international best practices. We are therefore unique in the sense that we have very strong offerings both domestically as well as in Hong Kong and will continue to do so in serving our clients onshore as well as offshore wealth management needs. The third dimension that Madam Wong pointed to was our business segments. We announced our Wealth Plus Health strategy as our overall future direction. We know firsthand that high-net-worth entrepreneurs in China have large unmet needs in respect of health management. So that is a trillion-dollar industry opportunity for us, a once-in-a-decade opportunity in our view. And we are also aware that there is a generational succession industry opportunity. in China's wealth management industry as the first generation of wealthy families in China pass on their wealth to their second generation. This also is a once-in-a-decade opportunity for us in our view. So yes, we view our diversification strategy and pathway to encompass all of these elements above. Thank you. Next question, please.
spk00: Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. The next question is from Mr. Zhou, investor. Please go ahead. 您好,我要问一下海银怎么评价地产行业下行对于经纪和公司经营的影响。
spk01: Hello. The real estate industry plays a significant role in economic growth. Directly and indirectly, it has affected more than 30% of GDP. After the development of the real estate industry, it will once again enter a stable period. In other words, the industry will return to its original source. Especially, we have seen that since this year, the country has released such as 1st-tier cities, 21 cities, urban-central village renovation plans, and so on. In fact, they all want to promote the development of the real estate industry in the direction of health. For Hanyi, no matter which asset it is, our main task is to use the professional to make asset configuration for our customers. In addition, from a business model, Haiyin is always standing in the perspective of customers, deeply understanding the needs of customers, and it is combined with our professional research and analysis capabilities to push through our professional configuration, including risk control, and such comprehensive services. Thank you, Mr. Zhou. I'll translate for Ma'am Wong. So Ma'am Wong pointed to the fact that the real estate industry plays a very significant role in driving the overall economy in China.
spk05: Statistics show that the real estate sector accounts for more than 30% in GDP directly and indirectly. China went through a booming development phase with real estate, and then there was a frosty bubble phase with real estate. Our view is that the recent dislocations in the real estate industry is actually a necessary process and a part of the sector's overall deleveraging process. And after that, we are going to see a more stable and more sensible real estate industry landscape overall. That said, we also noted a number of stimulus or relaxation policies in the sector which we think are supportive of the investment environment in this space. For example, interest rate cuts, relaxation of first-time homebuyer benefits, urban village upgrade in 21 cities, et cetera, all of these policies are aimed at improving the demand and supply balance in the physical sector. So for us, Hiwin, real estate-backed wealth management products is only one of the many asset-backed products that we distribute. The specific products or asset classes that we introduce to our product pipeline on a week-to-week, month-to-month basis is a very dynamic process where we take into account market factors, our house views, as well as investor, client demand. And we want to emphasize that, unlike other players, We don't take risk positions ourselves in the products that we distribute. And we did not try to make money by making leveraged bets on distressed assets, for example, trying to flip them in the past. So we don't have this kind of risk exposure that some players in the market are having right now. which generally tend to be exposed when there is a market downturn like today. So it is important and Ma'am Wong reiterated that we stay very focused in our wealth management business and we are very clear that we will continue to keep our business model and revenue model very simple and focused. Thank you. Next question please.
spk00: Thank you. The next question comes from Mr. Wang with Dahou Investment. Please go ahead.
spk03: OK.
spk01: Okay, let me answer your question. We know that in the past year, many factors such as the economy have been affected. In fact, the investment bias of customers has also changed. Overall, it has turned to the style of safe and secure. But in general, the business of Hainan has not been affected very much. This is because, in fact, we, according to the changes in the market, have also moved the needs of our customers in time. I think this is quite critical. And we have also conducted professional investment judgment. We have constructed a more careful and safe asset configuration for our customers. Especially this year, we also see that the country's economic stimulation is constantly increasing. In particular, the country has also set up a so-called Civil Economic Development Bureau. In fact, this will further stimulate the vitality of the civil economy. Why is it so? In fact, a considerable part of the customer service of Hainan is a civil entrepreneur. In fact, in the process of the entire economy, they are also constantly looking for opportunities to develop in the form of new ones. For the future, what Hainan has to do is definitely more responsible and use our professional wealth management and health management to help them seize the opportunity to regain their vitality and create greater wealth.
spk05: Thank you, Mr. Wang. I'll translate for Ma'am Wang. So we did see some market shifts as well as investor sentiment and aspect changed in the past year, as you pointed out. But for us, Hiwin, we were not impacted to a large extent. We believe that's because of several reasons. First, Hiwin has been very proactive in our client dialogue, our client expectation management, and giving our clients professional advice and insights. So all of these are actually very important elements in our daily business as an independent wealth manager in keeping our clients' trust and keeping our clients focused, especially in the face of a tough market like today's. The second is Hyven has been very proactive, as I had previously pointed to, with our product strategy. Basically, our goal is to offer a full shelf of products for all weathers, whether it's rainy or sunny. We're distributing the right products to the right clients. As I mentioned in the prepared remarks, we did emphasize more on stable products in this period, for example, whether it is fixed income or principal protected notes or insurance, et cetera. All of these help us and our clients in this current market environment. As you mentioned about the Chinese economy, we actually stay optimistic, perhaps cautiously optimistic as well, on China. We noticed that there are recently numerous policy support measures that have been announced this year so far. It is especially clear to us that the government's policy direction is back to supporting stability and growth in the Chinese economy, especially in the property sector, for example, as well as stimulating consumption in the Chinese economy. We also know that under NDRC, National Development and Reform Commission, which is under the State Council, announced that it is setting up a new China private economy bureau. Once again, very, very clear signal to us that the top Chinese regulators are focused and they want to bring back an environment that is conducive to the private sector and private-sector entrepreneurism. A lot of private clients are Chinese private-sector entrepreneurs themselves, and I think these actions from the top will help restore confidence in the economy. Thank you.
spk03: Thank you, Director Chen. My second question is,
spk01: Generally speaking, in public hospitals, we are similar in terms of health care. But in fact, it is more focused on the advanced equipment, including the high-end service, as well as the patient-to-patient patience of the experts. This aspect is very important. Of course, there is also the environment. We all know that high-end customers are very sensitive So you can see that the price is quite high. And in the actual operation process, the effect is also good. This also shows that in this whole, everyone is particularly considerate of health, experience-oriented services, high-end services, this demand is still there. So I just talked about some of the differences we experienced in the operation process. I don't know if that can satisfy you.
spk05: Okay, thank you, Mr. Wang. I'll translate for Madam Wang. So you're right in pointing out that we do have higher average prices in respect of our medical exam services. The medical examination services that we provide at Highland Health is very different than those that are offered by, say, public hospitals, while the specific items may be the same, right? You may be checking out the same things, but the overall experience is very different in several aspects. Number one is the equipment that we use. We insist on using top-notch equipment that we acquire domestically or globally. And the second is services. We put a lot of emphasis on services. That includes, for example, the time and the consultation that our doctors will give to the clients, the one-on-one personal touch. the personal approach that our doctors give to our clients is very important. Madam Wong also pointed to the environment, which we believe is also very important to the client experience. It's important to emphasize that the Hyland Health approach is to really treat our clients holistically. It is not just a a one-time sort of consultation and be done, right? It's really a personalized and customized approach, servicing approach that we take. And lastly, Ma'am Wong's view is that the fact that we were able to command a higher average price in this segment demonstrates that there indeed is a strong demand within the high-net-worth population for a higher-end
spk00: services in medical examination as well as in health management thank you thank you any more questions as there are no further questions at this time this concludes our conference call you may now disconnect your line thank you for your participation

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