Noah Holdings Limited

Good evening and welcome to the NOAA Holdings 4Q20 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, today's conference is being recorded. I would now like to hand the conference over to Ms. Jingbo Wang, Co-Founder and Chief Executive Officer at NOAA Holdings. Please go ahead.

Thank you. Last but not least, interactive questions. Looking back at the past year, the market has been moving forward like a car. China's financial products supply chain reform continues. Residential assets accelerate the transfer of near-term products, exceeding market expectations. Among them, the size of the new fund increased by 123%, reaching 3.2 trillion yuan. The non-purchasing volume of the market continues to grow, reaching a historical high of 10.99 trillion yuan. Zhe Yin, Zhe Yin, Zhe Yin, Zhe Yin, Zhe Yin Today for the agenda of the conference call, I will first talk about the micro view, then report on NOAA's overall performance in 2020 and the development of our major business sectors.

Our CFO, Mr. Qing Pan, will then introduce the detailed annual financial results, followed by Q&A session. Looking back on the past year, the market has been moving forward faster like a high-speed train. The supply-side reform of China's financial products has continued, and the transfer of household assets to NAV-based products has exceeded market expectations. Among them, the value of the new funds increased by 123%. Thank you very much. and the insurance of equity products is accelerated. Together with the normalization that house are for living in and not for speculative investment. Capital market reform and the return rate of equity funds continue to rise. More and more individual investment behaviors have been replaced by institutional management. It is expected that the securities products in the open market will continue to reach record high in 2021. It has been six quarters since NOAA started the transformation from non-standardized products to standardized products. In 2020, the transaction value of standardized products, the number of active clients, and the performance-based income have all reached the historical high, which are good results we have achieved in the transformation.

In the whole year of 2020, Luoya achieved a sales income of 33.1 billion yuan, which is slightly lower than 2.5 billion yuan, mainly because the standardization of products is relatively low, and is affected by the decline in COVID-19 and international business income. Although Luoya has gained a net loss of 7.5 billion yuan from Gap, the non-Gap economy of the shareholder has reached 11.3 billion yuan, which is 25.3 billion yuan more than expected. The loss of GAAP is 18.3 billion yuan, which is confirmed in the fourth quarter of 2020. In terms of core business data, the net worth of financial products in the financial management section is 947.4 billion yuan, which is 20.6% of the total growth. The net worth of standardized products is 731.4 billion yuan, which is 177.3% of the total growth. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In 2020, NOAA recorded total net revenues of RMB 3.31 billion, dropping slightly by 2.5% a year. The slight decrease in revenue was mainly due to lower take rate of standardized products,

lower revenues from overseas businesses due to the impact from the COVID-19 pandemic. Despite we recorded a gap net loss attributable to shareholders of RMB 745.2 million, non-gap net income attributable to shareholders for the year was RMB 1.13 billion, up 25.3% year-on-year, exceeding our expectations. The gap net loss was due to a one-off equity settlement expense in the amount of RMB 1.8 billion related to the Kamsen Settlement Plan. In terms of our core business data, total transaction value of our wealth management segment was RMB 94.7 billion, up 20.6% year-on-year. The transaction value of standardized products reached RMB 73.1 billion, up 177.3% year-on-year. Among standardized products, the transaction value of secondary market equity funds was RMB 26 billion, up 381.8% year-on-year. The transaction value of mutual funds reached RMB 43.3 billion, up 146.7% year-on-year. For our overseas businesses, net revenue for the year was RMB 730 million, down 22.9% year-on-year. AUM was RMB 24.9 billion, slightly higher than that of the end of 2019, accounting for 16.3% of the total AOM of the group, an increase of 1.7% year-on-year. We believe that in 2021, with the improving global epidemic situation, travel and work restrictions will gradually be lifted, and the demand of clients will bounce back greatly. In 2020, NOAA's Hainan World Client Group continues to expand, with annual active clients including mutual funds of over 39,000, An increase of 11.6% year-on-year and the number of black card clients increased by 11.6%. For the service model of our black card clients, we have started to pilot the NOAA Triangle Model of Professional Division and Collaborative Operations while providing systematic support for relationship managers, solution experts, and operations experts.

Since the end of 2020, the scale of non-financial management has been affected by the continuous issuance of non-tariff products. fell to 1,528 billion yuan. Among them, non-traditional products actively withdrew. The scale nearly dropped to 194 billion yuan. Other actively managed funds, such as Chaoxian Jun, achieved different levels of growth. Among them, the management scale of the public market is 98.5 billion yuan, which is the same as the growth of 6.1 billion yuan. The management scale of private equity is 1,130.3 billion yuan, which is the same as the growth of 7.7 billion yuan. As for the public market, as of the end of 2020, Gefei DaQiShiMOM annual revenue is 17.24% and 10.25% above the same period. Top30 annual revenue is 13.37% and 4.81% above the same period. Gefei continues to promote Baofu, S.Yijin, and Guntou Funds. At the same time, it expanded Gefei's direct sales team. It is particularly worth mentioning that Gefei's US equity team In 2020, due to the impact of the COVID-19 pandemic, the management scale has increased by $1.22 billion to $3.17 billion. In terms of increasing operating efficiency, the annual operating cost of 2020 was $20.5 billion, a 17.3% decline in the same ratio. The long gap operating profit rate was 34.2%, a 7.6% increase in the same ratio. The operating profit rate increased from 27% in 2019 to 38.1% in 2020, and the management efficiency of the company increased significantly. We will continue to invest in the technology system in 2021 For our asset management business, the AOM dropped to RMB 15.3 billion by the end of 2020, affected by the continuous voluntary redemption of non-standardized credit products.

of which non-standardized credit products dropped by RMB 19.4 billion. Other actively managed products have reached different degrees of growth, including 6.1% a year-on-year growth to RMB 9.9 billion in the standardized public securities products and 7.7% a year-on-year growth to RMB 113 billion in private equity products. In terms of public securities, by the end of 2020. The annual return of Gopher trend manager of manager funds was 17.24%, beating benchmark return of the same period by 10.25%. The Gopher top 30 fund achieved annualized return of 13.37%, beating benchmark return of the same period by 4.81%. For private equity, Gopher continued to promote false as funds and co-investment funds while expanding its direct sales team. It is worth mentioning that the AUM of Gopher's Silicon Valley team in the United States increased the U.S. dollar $122 million to U.S. dollar $317 million in 2020, even with the impact of COVID-19. In terms of improving operation efficiency, the operating expenses for the full year were remaining $2.1 billion, down 17.3% year-on-year, Nungat's net margin attributable to shareholders was 34.2%, up 7.6% year-on-year. Operating profit margin increased from 27% in 2019 to 38.1% in 2020. The management efficiency of the company has been greatly improved. The digital transformation of NOAA has achieved great results in the past few quarters, mainly reflected in the improvement of operation efficiency. The 1.0 version of KYC, KYA, KYP digital platform is online to more accurately identify clients, understand products, and match relationship managers. We also upgraded the client interface of FontSmile, built an overseas platform, Inowa, and launched the relationship manager's workstation. In 2021, we will continue to invest in our technology system for the digitalization and intelligence of our business online operations In the front-end client interfaces, the middle-end relationship managers working platform and go-first investment management platform, as well as the back-end management platform, to continuously improve our service quality and efficiency and finally improve our client experience. And quick correction, for our asset management businesses, the AUM dropped to RMB 153 billion by the end of 2020. 2020年,洛牙全面启动组织变革,系统的推进组织领导能力的提升,把洛牙从传统的绿皮火车变成现代的动车组,让洛牙可以不依赖任何独特的个体而存在,建立无生命体的组织,打造组织能力是一个长期持续的过程。

We established eight committees and launched the core of the committee, boldly employing young people to play a key role. These eight committees include the Strategic, Humanities, Business, Technology and Transformation Committee, Product, and Morality Support Committee. The Morality Support Committee has set up the Regulatory and Regulatory Review Committee, the Neurological Committee, and the ESG Continuous Development Committee. The committees have formed a more effective collective decision-making mechanism. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In 2020, NOAA started comprehensive organizational change.

to promote organizational leadership capabilities systematically and transform Lenovo from a traditional green train to a modern version of high-speed EMU electric motor units. It is a long-term and continuous process to free NOAA's existence from any unique individual to establish a company that runs on organizational leadership. We have established eight committees, launched a rotation scheme for core positions, and enabled young people to take on important roles. Eight committees include Strategy Committee, Talent Committee, Operation Committee, Science and Technology and Revolution Committee, Product Committee, Ethics Compliance Committee, including Compliance and Discipline Supervision Committee, Client Interest Committee and ESG Systemability Committee. Each committee has its own responsibilities and together form a more effective collective decision-making mechanism. On organizational talent side, we have launched a two-wheel driving mechanism of position qualifications and performance management to achieve the marketization of our incentive mechanism by matching personnel and positions, weighing of positions, grading by positions, and compensation by grade. Meanwhile, the KPI system runs through and leads to the realization of strategic objectives. The KPI system and our strategic are fully aligned, as we say, all forces through one point, all benefits from one source. NOAA has been working for 15 years in the wealth management and fund distribution industry with strong investment advisory capabilities and professional advantages. We have been revising and piloting our new Relationship Managers Compensation Scheme to upgrade the assessment mechanism to meet the needs of our clients of standardized products. We include the indicators of AUM, client satisfaction, and product coverage ratios into performance appraisal. We believe that our market share will continue to improve in the future with a wealth management industry transformation and funds investment consultancy pilot. In 2020, NOAA set up a new business segment alongside wealth management and asset management and named it NOAA Digital Intelligence. Mr. Chen Jing, The former general manager and co-CEO of Zhongwan Online P&C Insurance joined NOAA Digital Intelligence as CEO. We look forward to building a new intelligent open platform to serve individual financial advisors and becoming a new channel of NOAA's wealth management platform and promoting the 2B business development of the segment using technology.

回顾过去, NOAA从2019年3季度开始放弃了飞镖类过收产品的投放 Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In 2020, Luoya achieved a smooth transformation and better growth in a difficult environment. But at the same time, we are also very aware that it is the storm that has caused the water level to rise. We are just the ducks in the pond. Of course, it is a matter of pride that although we have not surpassed the market, we have finally moved up the ladder and followed the steps of the market. It is a matter of pride that in the past few seasons, the Luoya management team has gone through major crisis projects, financial crisis and epidemic risks. The team has maintained a relatively healthy organizational state, clean and tidy, and gained a new space for growth. The deep thinking struggle of the core team has brought about a change in awareness. New management base ideas began to be gradually established and reached consensus. In 2021, we have four key goals. 1. Customer-centered 2. Digitalized organizational ability construction 3. Organizational change 4. New mobility in position movement Young cadres promote business on new positions. The four points of the new Basic Law and the comprehensive landing of the new Basic Law will stimulate the new position and the new start of the new asset. At the channel end, we want to improve the customer service experience after meeting the customer, and at the product end, we want to understand the customer's needs and the strategy of the head GP and the fund manager to build a deeper strategy to provide a comprehensive service to the supplier. At the investment end, we want to base our investment ability on comprehensive customer needs, design new products, and improve investment ability. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi

In hindsight, NOAA has abandoned the non-standardized private credit products from the third quarter of 2019 and firmly transformed to standardized and net-as-a-value-based products. We proposed the settlement plan for Kensington clients in the second quarter of 2020 and reached settlement with nearly 70% of the clients by the end of the year. By the first quarter of 2021, we have completed the early redemption of most of the non-standardized private credit products in our AOM. Throughout 2020, we took on initiatives of organizational change and matching positions with talents on the changes of product and relationship managers, circling around client-centric and survival as the bottom-line philosophies. Our management team is very happy to see that NOAA has achieved smooth transformation and good growth in the tough environment in 2020. But at the same time, we are aware that the rainstorm has made the water rise. We're just lucky ducks rising with water in the pond. Of course, it is gratifying that although we have not surpassed the market, we're in the process of change, playing light and keeping up with the pace of the market. I'm proud that in the past few quarters, Noah's management team has experienced major crisis projects, financial rectification and epidemic risk, and the team has maintained a relatively healthy organizational state, played lightly, and gained new growth space. The deep thinking of our core team is aligned, which brings about cognitive change. A new management strategy has gradually been established, and we've reached consensus on it. Looking forward to 2021, we have four key objectives. First is client-oriented organizational capacity building enabled by digitalization. Second is organizational change, new momentum generated by post-rotation young executives in new posts to forward our business development. Third, we hope to incentivize our relationship managers by the pilot and implementation of the new compensation scheme. And lastly, the new positioning and new start of GOSA. On wealth management side, we aim to fully upgrade client interface and improve the client service experience. At the product end, we aim to understand the client needs, establish deeper strategies with the leading GPs and fund managers, and provide one-stop comprehensive service for the product suppliers. At the investment end, build investment and research capability. Design new products to improve the investment capability around client demand. At the technology end, complete the KYC, KYA, KYP digital online platform and application, construct digitalized organization capacity to improve the efficiency to understand the client needs more accurately and provide services for clients through digital transformation of all aspects of our operations and management. Digital and intelligent online operations of NOAA will get us closer to high net worth clients and better understand the needs of product suppliers, understand and identify the skill sets of our employees to eventually match the three. Wealth management and asset management are promising industries. NOAA holds a key position in the market with huge growth potential. We believe that the current China's capital market is very close to that of the United States in the late 1970s, when the GDP per capita exceeded US$10,000. However, financial assets only accounted for roughly 30% of the household investable assets in China. The market value held by institutional investors was just 18.5%. There is still a huge space for industry development. In such a great era full of opportunities, We will not be optimists. Our focus is to go further. We look forward to a beautiful 2021.

Thank you, Charity, and thank you, Sonia. Hello, investors and analysts. Good morning. We're very excited to share with you the strong financial results for 2020, delivering a successful transformation in our product offering in the midst of strong stock market performance and favorable primary market environments. Despite that we recorded a net loss of RMB 745.2 million under the US GAAP, we have also achieved a full-year non-GAAP net income of RMB 1.13 billion, up 25% year-over-year. It's an honor to have ongoing support from our clients, partners, and shareholders in the past year. We remain optimistic on the future growth in the wealth and asset management industry and also the group's potential to become a major independent player. I would also like to mention that the GAAP net loss of RMB 745 million for the year was due to a one-off equity settlement expense of close to RMB 1.8 billion related to the Kamsing Settlement Plan. This expense consists of RMB 1.3 billion representing 67.5% of the clients who have settled with us as of December 31st and also RMB 0.5 billion for the rest of the clients who had not yet signed the offer but we anticipate a settlement will be reached in certain way in the future at similar cost. The latter was recorded as a contingent liability from a conservative standpoint after assessing the probability of the occurrence under GAAP. As of December 31, 2020, 100% of the Kamsing-related settlement plan expenses have been booked in 2020. Excluding the settlement expense, non-GAAP net income was RMB $1.1 billion, up 30% year-over-year. Now, please let me walk you through more detailed financial results of the fourth quarter and full year for 2020. Despite the contraction in overseas insurance due to COVID-19 travel ban, and our continuous streamlined efforts on the lending business. Net revenues for the year were RMB 3.3 billion, slightly down year-over-year by 2.5%. But excluding oversea insurance impact, net revenues in 2020 were up 7.2% if we compare apple to apple. One-time commission revenue in 2020 was RMB 800 4.3 million down 13.3 year-over-year, again, due to a decrease in oversea insurance distribution. This oversea insurance contributed about RMB 154 million net revenue in 2020, comparing with RMB 462.2 million in 2019, down by 66.7%. That's a very large drop in oversea insurance revenue. Excluding that part from oversea insurance, one-time commissions were up 40% year-over-year. Recurring service fees and performance-based income were RMB $1.9 billion and RMB $387.4 million, up 4.5% and 244.4% year-over-year, respectively. Specifically, private equity and public securities contributed to 55.7% and 39.2% of the performance-based income respectively, reflecting robust exit activities in the primary market and our product selection capabilities in the secondary market type of product. Other service fees were RMB 194.2 million down 62.3% year-over-year as we continue to reduce our lending product offering. We're restructuring lending and other businesses into a new consolidated business segment, NOAA Digital Intelligence, to offer open platform services to IFAs and to our clients. As one of the main objectives of 2020 strategy, we have achieved a full recovery in the total transaction value. with a total of RMB 94.7 billion, up 20.6% year-over-year. The transaction value of standardized products was RMB 73.1 billion, up 177.3% year-over-year, offsetting the decrease in offering of credit-type products, making a successful transformation. In addition, PE products recorded RMB 17.9 billion of distribution supported by strong primary market and also our strategic relationships with the top GPs in the industry. After six quarters since the transformation of our products offering, we're very happy to see the number of active clients including mutual fund clients increased by 11.6% to almost 40,000 in 2020. The number of black card clients stood at 985 as of December 31st, 2020, also up 11.6% comparing with the same period in 2019. The number of diamond clients who have over 10 million AUM under management reached 4,551, increased by 2.2% comparing to last year. Operating profit was RMB 1.3 billion in 2020, up 37.5% year over year, and operating margin improved from 27% in 2019 to 38% in 2020, as we continue to optimize operating efficiency. Non-GAAP net income attributable to NOAA shareholders was RMB 1.1 billion, up 25.3% year over year, and also beating our previous guidance of RMB 900 to RMB 1 billion by 12%. Net loss attributable to NOAA shareholders was RMB 745.2 million as we incurred a non-cash and one-off share-based settlement expense of RMB 1.8 billion in relation to the Kamsing settlement. As I have previously mentioned, that represented about 67% of the Kamsing holders who had accepted the settlement plan representing approximately in dollar amounts 70.7% of the total outstanding Kamsing fund balances. On the balance sheet side, we'll continue to improve liquidity as our cash balance stood at RMB 5 billion and we continued our efforts in long-term investments we had which decreased by 39% since last year. We recognized contingent liability in the amount of RMB 530 million from the Kamsing Settlement Plan as I previously mentioned for the group who had not accepted or signed the settlement agreement. Accordingly, all of the settlement-related items have been expensed as of December 31, 2020. Our current ratio stood at 3.7, with a debt-to-asset ratio of 22%, which is still very healthy. I'm very confident to say that with a well-capitalized balance sheet, we're well-positioned to invest in new R&D efforts and implement new growth initiatives, which will pave the path. for new year of growth for NOAA. When it comes to quarterly numbers, we have also achieved very good performance. In terms of our fourth quarter financial results, we recorded net revenues of RMB 953.2 million, up 20.9% year-over-year and 11% quarter-over-quarter, supported by strong performance-based income amounting RMB 206 million up 260% year-over-year and 193% quarter-over-quarter. One-time commission was RMB 271.1 million up 70% year-over-year and 39% quarter-over-quarter, driven by strong domestic insurance product sales. Recurring income was RMB 435.9 million down 6.5% year-over-year and 22% quarter-over-quarter. due to the decrease in back-end management fees related to the redemption of credit products. Operating income for the quarter was RMB 335 million, up 165.7% year-over-year, but down 3.4% quarter-over-quarter as a result of increasing offline client events and compensation expenses incurring the quarter. Non-GAAP net income for the quarter was RMB 262.5 million, up about 121% year-over-year, and down 11% quarter-over-quarter. Net loss attributable to NOAA shareholder was RMB 1.6 billion, excluding the one off-campus and share-based settlement expenses. Net income was RMB 255.4 million, up 148.5% year-over-year, and down by 10% quarter-over-quarter. For business segments, net revenues from the wealth management business were RMB 2.4 billion for the year, up 2%, accounting for about 71.6% of total net revenues. And net revenues from the asset management business amounted to RMB 875 million, up 11% year-over-year, a strong performance-based income realization. contributing for about 26.5% of the total revenues. I would like to note that for the guidance side that the non-GAAP net income of RMB 1.2 billion to RMB 1.3 billion guidance for 2021 reflects management's current business outlook as we're excited to see a strong year of financial and operational performance in the past year and are reasonably optimistic about the growth that we will achieve in 2021. As mentioned by Chair Lady Wang, we have made a comprehensive plan to resume growth mode and also investment in the future. The growth from the top line to the number of core clients and most importantly in digitalization and technology. The expansion obviously will require heavy input in talent, client-oriented marketing events as well as tech infrastructure. And we target to maintain a mild growth in the bottom line, but rather speed up our expansion in market share and also advancement in technology. Lastly, I would like to emphasize our commitment to ESG and responsible investment. We have started the process to launching ESG related investment products to serve our sophisticated high net worth clients. and we will update the market accordingly. Thank you again, everyone. And now we'll open the line for questions.

We will now begin the question and answer session. To ask a question, you may press the star, then the one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then two. At this time we will pause momentarily to assemble our roster. Your first question comes from Emma Zhu from Bank of America Securities. Please go ahead.

Hi Emma. There are some questions related to the long-term strategy. Just now, our management team mentioned that the company is now in a growth mode, and there are some plans for revenue, client growth, etc. Then we also proposed the next year's non-GAAP profit growth target in the report. But what I'm more concerned about is whether the company can provide some more basic data guidance, such as the growth of active customer numbers. Because everyone is worried that the number of registrations may fluctuate according to the market situation. And if customers increase, customers' annuality increases, then income and profit growth is a matter of time. So if the company can provide some guidance on the growth of active customer numbers, this is actually very helpful for stabilizing everyone's expectations. The company is for customer growth in 2020 and the growth of regular customer numbers. Is there a guidance? Then we are going to focus on which aspects to increase our number of customers. This is the first question. Then the second question is actually about the use of cash. In fact, this question is also a question that everyone has been concerned about for a long time. Then when it came to the fourth quarter last year, Our current capital has reached 5 billion RMB and accounts for 53% of the total capital. Before the management level, we may have mentioned in various occasions that the company is looking for some possible purchasing opportunities or other investment opportunities. However, comprehensive consideration of all aspects will ensure that the purchasing is able to produce positive co-effectiveness for the company. So maybe I can... briefly translate my questions. So the first question is about the growth plan. So Noah, so management mentioned that Noah is now in growth mode and you already have plans for your top line growth, client growth, et cetera. So could you provide us are the guidance for active client growth in 2021 and for the mid-long term because transaction volume can be volatile due to market volatility. But if a client grows and the number of clients grow and the situation of client increases, the increase of revenue and profit is just a matter of time. So could you provide us more details on your Girl's Plan for Client Number and How Do You Plan to Achieve the Target? And the second question is about the utilization of cash which amounted to around RMB 5 billion by end of 2020 and accounted for 53% of total assets. You've mentioned previously that you may look to use that cash for some M&A or other potential investments. Could you provide some thoughts? What are the potential areas for M&A or investment and what is the logic behind? Thank you.

好,谢谢Emma,很贴心地帮我们翻译了一下。 好,我先简单讲一下,然后请潘青补充。 第一个就是我们现在还是更加清晰地定位要服务高净值和超高净值客户。

In addition to the growth of the number of clients, we are also very concerned about the proportion of each client's wallet. This year, we have changed our basic law. First of all, the client is the client of the company. Then we turned the service black card client into an iron triangle. There is a special client, we call it the relationship manager. There are also solutions, and there are also those responsible for the program and delivery. Three people in a group to serve our core customers. We still see that in the process of promoting the Basic Law, although it is not fully exposed in some four layers, but the quality of the client's will and financial work is greatly improved. The first-tier competitiveness is very high. So this year, we have some three goals, which is to increase the size of our black card and super high-quality clients.

Okay, so I'm going to translate a little bit of the care lady's answer and also have my own input as well. So she just stressed that we have again clarified and cleared our strategy focus to continue to focus on the high net worth individuals and also super high, ultra high net worth individuals. So basically, In addition to the number of clients that we have also actually focused on increasing the quality of services to this type of clients. And also in terms of market share, not only just again on the share number of the client groups as well as the wallet share of the existing client groups. One of the things that we have mentioned in the speech is about new service model that we have been implementing for the past year. that started the implementation in the last few months basically will have a so-called triangle service model to our clients as compared to a single point of contact in the past only through the relation manager. Now we have basically three elements in the service. One is the AR, which is the account representative, will be supported by one or two, one or more solution representative who actually has the expertise in the product and services that fit our clients need as well as the FR which is basically the service representatives so that our clients actually have a full scope of better client experiences under this new service model. We have seen the passion from the frontline individuals who actually also realized through this model that it actually increased the service capacity to our clients even for the so-called elite relation managers basically will expand their capacity to serve more clients and get more higher client wallet share. But in addition to that, Emma, as you have asked about what strategy we have, we do actually clearly set a very clear number of increase in the core client groups for 2021. I'm a little bit reluctant to give guidance on that as it depends actually on quite a few different factors, so I don't want this to be misleading. But I can tell you that it will be a pretty major growth and will be a clear focus in terms of continue to grow and increase that type of core group of clients. Like you said, it will greatly improve the adhesiveness of our client relationships. So that's the answer for the first question. In terms of the use of cash, Emma, I understand our focus on that. So basically, one of the information that we have disclosed in the 6K, as you can see that we have used part of the proceeds to repurchase our stock for 100 million US dollars. Basically, we have... completed that repurchase by end of February or March. And in terms of opportunities we've been looking at for the acquisitions, I think we have been very actively looking. And when it comes to actually financial type of institutions, either domestically or overseas, as you would imagine that we're being very careful in terms of performing due diligence or figuring out what is the right synergy before actually proceed. So obviously it's very difficult to promise that we will acquire or buy anything. But I guess one of the things I'm confident to say that it remains in the arsenal of the strategy that when we're looking at to expand certain capabilities or service or technology, or asset management always remains one of the targets that we're continuous to look at. Emma, does that answer your question?

Thank you. Thank you, Emma.

Thank you. Once again, if you have a question, please press star then 1. Your next question comes from Ann Bu from CICC. Please go ahead.

Hello, I'm Puhan from China. Thank you for the opportunity to ask me this question. I have a question about the number of financial institutions. We see that the number of financial institutions is decreasing. I would like to ask about the future of the financial group's growth plan. We see our number of the relationship managers was stable quarter on quarter while slightly decreased year on year. And could you please give us more color on the future growth plan of our relationship managers? and also more introduction on the structures under our Triangle Service Model. Thanks.

I think this is a very good question. First of all, our financial numbers will grow significantly using the Iron Triangle method. And the efficiency will be better than in the past. Because we often share with 1,200 financiers, that is, our elite financiers, first of all, the loss rate is very low, close to zero. But it is also three or four hundred. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi So that's a very good question, very insightful actually. In terms of the 1,200 RM that we have currently,

We believe that actually the new triangle mode will continue to be able to help us grow the talent pool of the RM. As you would imagine that the service mode have been sort of switched from a single man army into actually a more coordinated group of individuals that will be able to serve our clients. So basically the more experienced elite RM will be assisted with probably solution experts as well as the fulfillment representative, basically the service type of RM. And this particular mechanism actually will enable the younger professionals to actually come into the industry and have an opportunity to learn beside the elite RM, which we actually have a very low turnover ratio, to actually be able to provide more a full comprehensive service to our clients. So we believe that the number of RM actually will continue to see an accelerated growth in terms of relation managers when we are implementing this triangle mode. Especially that in terms of cities that will be more or less into a more coordinated operational unit rather than a single point of contact through the RM to serve the client in the past.

This concludes our question and answer session. I would now like to turn the conference back over to Mr. Pan for closing remarks.

Okay. And thank you, investor and analyst, for your time. I'm very happy, excited to share the strong performance for the full year with you. And obviously, if you have more detailed questions, we have arranged one-on-one sessions later on, so we'll talk to you later. Thank you very much.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.