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spk01: And welcome to the NOAA Holdings 1Q 2022 Earnings Conference Call. All participants are 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 this event is being recorded. I would now like to turn the conference over to Jingbo Wang, Chief Executive Officer. Please go ahead.
spk04: Okay, thank you. In today's phone call, I would like to talk about Hongguan's views. I would like to report on the overall performance of the first quarter of 2022 and the development of several major business units. Next, I would like to ask Panqing to introduce the financial information of the quarter. Finally, I would like to ask questions and answers. Since the death of 2022, Luoya and Luoya's customers have all started to avoid risk. Luoya's customers, financiers, and investment managers may have never experienced a complete rise in interest rates, and the multiple factors that overestimate credit. At the beginning of 2022, we realized that the strong wind and wind will always be a challenge. In the first quarter of 2022, we repeated the customer experience. Customers emphasized that no one was trampled when entering the theater, but many people were trampled when they came out. In the first quarter, we suggest that Luoya's customers re-check their asset allocation situation with their families, New year is here. The strategic strategy of Loya for customers is to protect first and then grow. Since the 2008 generation crisis, the long-term量化宽松政策 in the global scope and the abundance of liquidity have caused a huge inflation of risk assets. The asset inflation has penetrated into every corner of the world. The reverse of the量化宽松 政策 has arrived. The increase in interest rates of the United Nations and other countries has opened many rounds. Fast judgment is a kind of partial knowledge based on intuition and simplicity. And delay judgment corresponds to complex knowledge. The problem of China's economy is obviously a complex problem. Delay judgment may be a more wise choice. Overall, China's direction is from attention to efficiency to attention to fairness. Encourage the safety and control of key technologies in the technology industry. Promote the high-quality development of China's future economy. Encourage social funds to invest in more early-stage technology funds to solve the problem of卡脖子 and independent innovation. From the perspective of investor asset allocation, a certain proportion of funds to allocate to early-stage technology funds is a necessary choice to fight currency relaxation and inflation. In the first quarter of 2022, Loya's CIO office gave the main strategic direction of asset allocation, first protect, then grow. On the strategic implementation path, it is recommended that Loya's core customers start from the following four aspects. First, explain the asset allocation situation of themselves and their families, do asset protection and asset isolation, Secondly, it is recommended for domestic public markets to set up multi-strategic absolute revenue funds, mainly from the perspective of protecting assets, reducing fluctuation, and pursuing wealth. Finally, the Shimoku All-Influence Fund is a high-quality client's main asset category of cross-week and guarantee growth. It is recommended to surround the technology theme and strategic configuration. In terms of fund configuration, it is more concerned with early industry funds, white horse funds, and special opportunity funds. These types of assets are from the perspective of long-term asset growth, I want to emphasize that the genes of Loya and Gefei started from private banks. Our customers are high-end individual customers, so our starting point is to understand the needs of customers and protect the safety and profitability of customer family assets as the starting point. From product drive to customer-centered transformation, it has a profound impact on Loya's strategic choice and management model. Finance is a periodic industry, On the agenda of today's conference,
spk02: I would like to talk about the micro view first, and then report on the overall performance of NOAA Holdings in the first quarter of 2022, and the development of main business segments. Then let's invite our CFO, Mr. Ching Pan, to introduce the quarterly financial information, followed by an interactive Q&A. At the beginning of 2022, NOAA and NOAA's clients switched on a risk-off mode. NOAA's clients, relationship managers, and investment managers, they have never experienced a complete multi-sector superposition cycle of continuous hikes in interest rates, credit expansion, aka quantitative easing, liquidity collapse, and massive excess credit. At the beginning of 2022, we realized that in the strong headwind, aviation will be a challenge. In the first quarter of 2022, we talked with relationship managers and clients repeatedly and emphasized that No one was trampled when entering the theater, but many people were trampled when they came out. In the first quarter of 2022, we suggest that NOAA's clients re-examine the asset allocation of themselves and their families, actively rebalance the asset allocation, and make the family asset allocation safer and more effective from the perspective of protection over growth. The ongoing war between Russia and Ukraine is worrying, but as a professional institution of growth management, we suggest that our clients should remain rational. Under this dilemma, the only certainty is that the market will continue to fluctuate. This market environment is not suitable for quotation marks timid from managers and clients. Avoiding risks has become a better choice. At the beginning of the new year, NOAA's strategic allocation strategy to clients is protection first, then growth. Since the subprime mortgage crisis in 2008, The global long-term quantitative easing policy and abundant liquidity have caused the huge inflation of risky assets. Asset inflation has penetrated into every corner of the world. The reversal of quantitative easing policy has come, and the Federal Reserve and other countries have started multiple interest rate increase cycles for asset prices. The shift from quantitative easing to quantitative tightening will be a challenging adjustment, and the rapid withdrawal of liquidity will turn asset inflation into asset deflation. In 2021, many industries in China were subject to stricter supervision and frequent policy changes, which led to fundamental changes in the valuation logic of these industries. And the market feels colder than the actual economic data. Our view is to delay questioning and judgment on China's economy. Quick judgment is a simple and partial cognition based on intuition, while delayed judgment corresponds to complex cognition. The problem of China's economy is obviously a complex problem. Delayed judgment may be a wiser way. On the whole, the direction of China is from paying attention to efficiency to paying attention to fairness. to encourage scientific and technological entrepreneurship, ensure the safety and controllability of key technologies, promote China's high-quality economic development in the future, encourage social funds to enter more early science and technology funds, so as to solve the problem of being seized by the throat and independent innovation. From the perspective of investor asset allocation, allocating a certain portion of their capital to early science and technology funds is an inevitable choice to combat monetary easing and inflation. In the first quarter of 2022, the theme word of asset allocation given by NOAA's CIO office is protection over growth. On the strategy implementation path, we suggest that NOAA's core clients start from the following four aspects. First, Check the asset allocation of themselves and their families and pay attention to asset protection and asset segregation. Secondly, for the domestic public securities market, we recommend allocation to multi-strategy return funds, mainly from the perspective of protecting assets, reducing volatility, and pursuing dividends. Finally, private equity investment fund is the main asset category to cross-cycle and maintain growth for high net worth clients. We suggest a strategic allocation to science and technology and pay more attention to early industry funds, white horse funds, which have experiences to ride through cycles, and special opportunity funds. From the perspective of long-term asset growth, such assets fight against the inevitable long-term monetary inflation by sacrificing liquidity. I would like to emphasize that NOAA and Gopher Asset Management's genes are private banks. and our clients are highly worth individual clients. Therefore, our starting point is to understand client needs and take protecting the safety and profitability of the client's family assets as a starting point. The transformation from product-driven to client-centric has a far-reaching impact on NOAA's strategic choice and management model. Finance is a critical industry. In every financial crisis, large financial companies closed down and their clients' assets shrink significantly. As the operator of NOAA, when we make some key fundamental decisions, the first criterion is to survive and not make fatal mistakes. It is impossible to not make mistakes in investment and asset allocation, but we should reserve time and space for us to correct and tolerate them.
spk04: In the first quarter of 2022, Loya adopted five core business strategies in the face of the extremely complex public relations environment. The first is to completely reduce costs. The second is to use multi-dimensional services and reach out to old customers as the main task. The fourth is to meet the three goals and restore the loss of customers, improve the share of customers' wallets. The third is to fully develop new products to meet the customer's protective needs and the needs after the epidemic. The fourth is to increase the production rate. In 2022, the company's target and Loya's recommended customer families and the same asset allocation strategy of the family to protect the growth of the disaster in advance, with the customer as the center and survival as the bottom line. In this quarter, our shareholder's non-GAAP net profit of RMB3.1 billion decreased by 32% in the same ratio, and increased by 8% in the same ratio, reaching 22% of annual profit guidance. In the first quarter of 2022, the overall sales net income of RMB8 billion in the same ratio decreased by 35%, and decreased by 37% in the same ratio.
spk02: In the first quarter of 2022, facing the extremely complex macro environment, NOAA adopted five core business strategies. First, completely reduce costs. Second, utilize multi-dimensional services and reach old clients as the main task, as well as set up goals to recover lost clients and increase the wallet share of existing clients. Third, make every effort to develop new products to meet the protective needs of clients and their post-pandemic needs. Fourth, maintain high productivity. Sixth, during the epidemic prevention and lockdown period, build good interpersonal relationships among clients, employees, suppliers, governments, and medical institutions. In the first quarter, our operating costs fell sharply. down 33% a year and 57% quarter-on-quarter. The operating margin reached 39.4%, down 1.6% a year and a significant increase of 29% quarter-on-quarter. In 2022, the company's goal is the same as NOAA's allocation strategy for clients and their families, which is protection over growth, client-centric, and survival as the bottom line. In this quarter, The non-GAAP net income attribute to shareholders was RMB $310 million, down 32% year-on-year and up 8% quarter-on-quarter, reaching 22% of the annual guidance. In the first quarter of 2022, NOAA achieved a net revenue of RMB $796 million, down 35% year-on-year and down 37% quarter-on-quarter.
spk04: The net profit of financial products is 151 yuan, with a drop of 45% in the same ratio and a drop of 29% in the same ratio. It is worth mentioning that the net profit of the standardized products is 69% in the same ratio and a drop of 40% in the same ratio. This is mainly due to the fact that we have taken the initiative to reduce the investment of these products. In the first quarter, the net profit of net profit products was 41 billion yuan, mainly based on the CTA strategy and the reverse strategy. The net profit of public funds was 171 billion yuan, mainly from currency and industry deposits. Thank you very much. I want to emphasize that in the first quarter of 2022, For the decline in the size and quantity of related products in the second-tier market, it is a market behavior to protect customer assets and actively adjust the products to be put into the market. In the fourth quarter of 2021 and the first quarter of 2022, the core view of Loya is to reduce the product configuration and placement of customers in the second-tier market, increase the configuration of protective assets, and support the health check of the customer's family assets. The strategy of strategic asset configuration is to protect first and then increase. Protective products Due to the short-term supervision of the first quarter, the size of the client configuration is 700 million. The same ratio dropped by 17, the ratio dropped by 40. But we believe that the size of the client configuration will be improved in the second quarter. In the first quarter of 2022, ROYA continued to promote the strategy of client split management. The number of diamonds and black cards continues to grow, close to 8,300 people. The black card number grew by 31. The number of diamonds and black cards grew by 7.3%. Thank you. Thank you. Thank you.
spk02: The total transaction value of the quarter was RMB 15 billion, down 45% year-on-year and 29% quarter-on-quarter. Among them, it is worth mentioning that the private secondary funds in the standardized products category decreased by 69% year-on-year and 40% quarter-on-quarter, mainly due to our initiative to reduce the launch of such products amid market volatilities. The transaction value of private secondary products was RMB 4 billion, mainly consisted of CTA strategy and reverse strategy. The transaction value of mutual funds was currently $7.1 billion, mainly monetary funds and interbank certificate of deposit funds. For our mutual fund 2B business, we now offer more than 10,000 funds, providing clients with a wider range of private choices. Smile Treasury now serves more than 200 institutional clients in automobile, manufacturing, science and technology, as well as other industries. The transaction value of private equity funds was around 3.2 billion, down 33% young year and up 5% quarter-on-quarter. In terms of international business, we adopted the same strategy to significantly reduce the product launch and allocation in the secondary markets, focusing on the protective strategy and early primary market funds. The net income of the overseas sector was RMB 190 million, down 44% young year and 2.3% quarter-on-quarter, accounting for 24% of the group's total revenues. The overseas transaction value reached the RMB 2.4 billion, a young year decrease of 35% and a quarter-on-quarter increase of 3%, accounting for 16% of the total transaction value of the group. The overseas AUM was $29.1 billion, with a year-on-year increase of 12% and a quarter-on-quarter increase of 3%, accounting for 18% of the group's total AUM. I would like to emphasize again that the decline in the transaction value and AUA of public securities in the secondary market in the first quarter of 2022 is a market behavior of NOAA to protect client assets and actively adjust product launch. In the fourth quarter of 2021 and the first quarter of 2022, NOAA's core view is to reduce the secondary market product allocation and launch, increase the allocation of protective assets, and support the health inspection of clients' family asset portfolios. The strategic asset allocation strategy is protection of growth. Due to the impact of the new short-term regulatory policies, the transaction value of protective assets in the first quarter was earning the $700 million. Down 17% year-on-year and 40% quarter-on-quarter. We believe that the allocation scale of these assets will be improved in the second quarter. In the first quarter of 2022, NOAA continued to adhere to the strategy of promoting the strategy of management of clients. And the number of core clients, Diamond and Blackheart, continued to grow to nearly 8,300, a record high. The number of black card and diamond card clients increased by 31% and 7.3% young year respectively, together representing a 12% growth young year. In 2022, client growth is still one of the most important strategic investment growth goals of NOAA. At the same time, we have also established a project goal to recover lost clients and reactivate dormant clients. Identify clients' core demands and solve their pain points. At the headquarters level, focus on the conversion of those clients from the standardization transformation and take multi-strategy funds as a stabilizer to meet clients' demand of conservative assets. 资产管理板块,2022年第一季度净收入2亿元人民币,同比下降26,环比下降27。
spk04: In the first quarter, the revenue of the income tax and the business tax fell, and the management tax increased by 7.5%, which shows the long-term assets' ability to continue income. The management of the asset management of all assets reached 156.1 billion at the end of last year, and the management of the asset management of private equity reached 1327 billion yuan at the end of last year. The management of the public market fell slightly to 10.4 billion yuan, and the asset structure is healthy as expected. Due to the fall of the Chinese stock market, the Russian-Ukrainian war, the country's macroeconomic economy, and the prevention and control of the Shanghai epidemic, Gefei has carried out cash laundering and job reimbursing on all investment funds and capital projects, and has adopted a more cautious conservative strategy on investment, while strengthening withdrawal management. Gefei's early-stage industry mother fund, the second-hand special opportunity fund, and Gefei's overseas team's actively managed U.S. equity data fund, the U.S. rental apartment real estate fund, all performed well, creating value for customers when the market was in turmoil. In terms of open market, since the end of the first quarter of 2022, Gefei's standardized products have also given steady investment results, of which Gefei's 70M annual revenue is 10.7%, exceeding the same period of standard revenue of 9.7%, The top 30 annual revenue is 11.1%, exceeding 4.5% of the same-season basic revenue. It is worth mentioning that Gefei's financial support exhibition, the目標策略的积极,平衡,稳健, three types of funds, in the first quarter of 2022, continued to run all the relevant figures in the huge fluctuation in the market. Since its establishment, the accumulated revenue has been negative 2.1, negative 1.6, and negative 0.7, which is smaller than the same-season mutual profit 300 and central government 800 figures.
spk02: The net income of the asset management segment in the first quarter of 2022 was RMB 200 million, down 26% year-on-year and down 27% quarter-on-quarter. Among them, one-time commission and performance-based income both decreased, while recurring service fees increased by 75% year-on-year. Reflecting the ability of long-term assets to bring sustainable income. Global AOM increased slightly to RMB 156.1 billion compared with the end of last year, of which private equity increased slightly to RMB 132.7 billion compared with the end of last year. The AOM of public security is slightly reduced to RMB 10.4 billion. The asset structure is healthy and in line with expectations. In the first quarter, in view of the sharp price force of Chinese ADRs, the war between Russia and Ukraine, Chinese domestic microeconomy, and the prevention and lockdown of the epidemic in Shanghai, GoFundMe conducted a cash flow survey and net value evaluation of all primary market funds and its direct investment projects, adopted a more cautious and conservative investment strategy, and strengthened exit management. Gopher's domestic early-stage industry funded funds, special opportunity secondary funds, and Gopher's U.S. team's directly managed American Silicon Valley data funds and American rental apartment real estate funds have performed well on the whole, creating value for clients when market is volatile. For public securities, by the end of the first quarter, Gopher's standardized products have also delivered robust investment performance. Among them, the annual return of Gopher Megatrend Manager of Managers funds was 10.7%, exceeding the benchmark return rate by 9.7% in the same period. The annual return of top 30 funds was 11.1%, exceeding the benchmark yield by 4.5% in the same period. It is worth mentioning that all three types of funds of Gopher's stabilizer target strategy active, balanced, and stable, continued to outperform the relevant indices and amid market fluctuations in the first quarter. Since its establishment, the accumulated returns have been minus 2.1%, minus 1.6%, and minus 0.7%, respectively. And the pullback is far less than that of the CSI 300 and CSI 800 indices in the same period, effectively controlling fluctuations and pullbacks.
spk04: Luoya's headquarters is in Shanghai. From the beginning of March, Shanghai entered a stage of epidemic network blockade to comprehensive blockade. At the beginning of the lockdown, Luoya set up several epidemic crisis management project teams. The group leadership team is responsible for the control and management of the epidemic during the epidemic. The key decision-making team is responsible for the epidemic development implementation adjustment strategy. The epidemic assessment team is responsible for the development implementation assessment of the epidemic in various regions. Provide dynamic input for company decision-making. The epidemic communication team is responsible for HR and organizational development department. to ensure that the company's latest policy is transparent and timely for cadres above level 18 in Luoyang. The emergency handling team for the workers and customers, the government and public funds, etc., and the external ecology, combined with the degree of development of the epidemic in various regions, to develop a corresponding policy to minimize the impact of the epidemic on the company. After the epidemic, the recovery team will work together with the product system, the financial management and international intelligence system, the CIO office and the brand team, and the 1st and 3rd team. According to the epidemic development practice adjustment marketing strategy, it determines the opportunity for new customers to prepare for the growth after the epidemic. In the past 40 days, Luo Yaowei's employees in Shanghai have delivered more than 500 supplies and provided medical and support for infected employees. More than 1,200 supplies have been delivered to core customers and clinical customers in Shanghai. At the same time, we coordinate resources to meet the medical needs of customers. to help customers, employees, and suppliers through this difficult period. In this process, Luoya also provides psychological counseling courses to employees and customers, purchases of various medical supplies, and gives more than a batch of donations to Shanghai Health Commission, hospitals, pharmacies, and communities to fight the epidemic. There are more than 20 Luoya residents who have been stationed in the workplace to ensure the continuity of their company's business and have not returned home. Luoya's efforts for the care of customers, employees, and suppliers, and for the sense of responsibility towards society. With the professional achievement of care and self-sufficiency, Loya will continue to work with customers. Sonia.
spk02: NOAA is headquartered in Shanghai. From the beginning of March, Shanghai has entered a stage from a network lockdown to a complete lockdown. From the start of the lockdown, NOAA has established several academic crisis management project teams, The group management team is responsible for the overall management during the academic decision-making on key matters, real-time adjustment of strategies in response to the development of the academic. The academic situation assessment team will conduct real-time assessment of the academic situation development in various regions and provide insight input for the company's decision-making. The academic communications team is in the charge of HR and organizational development departments to ensure that the latest policies of the company are conveyed to NOAA's management team above level 18 in a transparent and timely manner. The epidemic emergency response team formulate corresponding policies according to the external ecology, such as employees and clients, government and public welfare, and in combination with the development degree of the epidemic in various regions, so as to minimize the impact of the epidemic on companies. The post-academic recovery team is composed of the asset management, wealth management, and NOAA international intelligence, CRO office, marketing team, and frontline NOAA triangle teams to work together to adjust the marketing strategy in real time according to the development of the epidemic, identify opportunities of clients' new needs, and make full preparations for the growth after the epidemic. In the past 40 days, NOAA has delivered more than 500 trips of groceries and medicines to employees in Shanghai, provided medical treatment and support to infected employees, and delivered more than 1,200 trips of supplies to core clients and aged clients in Shanghai. At the same time, NOAA has coordinated resources to meet clients' medical needs and links Gopher's underlying portfolio companies to deliver various groceries and medicines to help clients, employees, and suppliers to go through this difficult period. In this process, NOAA also provided psychological counseling courses for employees and clients, purchased various medical materials, and donated them in batches to Shanghai Health Commission, hospitals, police stations, quarantine centers, community front line, and other places. There are more than 20 NOAA employees who have been stationing in office in order to ensure the continuity of the company's business and have not returned home so far. NOAA's intentions, care for clients, employees, and suppliers, and sense of responsibility for society have been widely praised. With professionalism and empathy, NOAA is devoted to accompanying clients from generation to generation.
spk04: In 2019, the leading product was Loya's core competitiveness. In the second half of 2019, Loya began to drive from product to customer-centered and survive as the bottom line. We believe that only by sincerely focusing on the customer and keeping the customer's interests the same, and establishing the organizational ability of the customer as the center, can we avoid focusing on the scale, on the commission, and on the self. Loya has been in the financial management industry for nearly 18 years and has gone through many economic cycles. We are deeply familiar with financial management. In addition to the ability to allocate assets, it also requires a stronger ability to connect with customers. In the past, the employees of the Chinese financial management industry were unrivaled, and the industry standards were confused. There are some places that are full of falsehoods and misguided customers. Entrepreneurs themselves can't figure it out. So this also requires us, as entrepreneurs in wealth management, to have the highest professional ethics, to take the pursuit of wisdom and wisdom as our own moral responsibility, to be conscious of all the principles of the back of the head and the back of the head, to really establish the responsibility of the client, to take every penny the client gives us as their own parents, save a lifetime to save money for us to take care of, so that we can understand the responsibility of the client. Although in 2020, In the first quarter of 2022, there have been various challenges and pressures in the large environment, but it is also because it is a difficulty that surpasses the recognition of most people. Loya and our customers are deeply connected and further highlighted. We have greatly improved the activity of our customers on our online sharing. The number of viewers on WeLoya ADP has increased by 98%, and the number of viewers has increased by 201%, and the small-scale video meeting activities of customers in the key cities have been widely welcomed. The financial industry has also been able to achieve more than in the past. This is also a warm reflection of the Loya brand. At the same time, we will continue to use healthy financial conditions to continue to invest firmly in customer interface, brand image, and market promotion, and to invest firmly in outstanding foreign talents, and to invest in the future in difficult times. Now, I would like to introduce the specific financial performance of the first quarter of 2022.
spk02: Before 2019, leading products are one of NOAA's core competitiveness. From the second half of 2019, NOAA has implemented a comprehensive transformation from product-driven to client-centric and survival as the bottom line. We firmly believe that only by sincerely taking clients as the center, keeping interests in line with clients, and establishing the organization capacity of client-centricity, Can we avoid being scale-centered, commission-centered, and self-centered? Noah has been engaged in the wealth management industry for nearly 18 years and has experienced many economic cycles. We deeply realize that wealth management requires a strong ability to link with clients in addition to education especially. In the past, the employees in China's wealth management industry were not all professionals. and the industry standards were unclear. Some places were full of specious statements and fallacies that misled clients, and some practitioners themselves could not even understand it. Therefore, as practitioners of wealth management, we must have the highest professional ethics, regard the pursuit of true knowledge and wisdom as our moral responsibility, and consciously put an end to all the decisions that are determined and made by positions, We should really establish the awareness of trustee responsibility, treat every penny given to us by clients as our parents' life savings. Only then can we understand the trustee's responsibility. Although in the first quarter of 2022, we temporarily encountered various challenges and pressures in the microenvironment, it is precisely in the face of a difficulty beyond the combination of most people that NOAA's deep link with our clients is further highlighted. The client activity of our online sharing has increased significantly, with the number of live viewers on the We NOAA app increased by 98% here and there, and the number of viewers increased by 210%. As small-scale video conferences with clients in key cities became widely popular, relationship managers have been able to obtain more and deeper client touch senses than in the past. This is also the warmth and embodiment of NOAA Brand. At the same time, relying on our healthy financial situation, we continue to make firm investments in client interface, brand image, and marketing. Excellent external talent and practice investing in the future in difficult times. Now, let's invite Mr. Ching Pan, CEO of the group, to introduce detailed financial performance of the quarter. Thank you.
spk07: Thanks, Sonia. And thank you, Chairlady, for our group. And hello, dear investors and analysts. Like Chairlady Wang has mentioned, the first quarter of 2022 has been a difficult one amid lingering impacts of the COVID-19 pandemic. as well as uncertainties around the macro environment, policy changes, and geopolitical conflicts. These factors were reflected in the challenging capital market environment overall, with MSCI overseas China down 23%, Shanghai Securities Composite Index down 11%, as well as NASDAQ and S&P 500 down 9% and 5% in the first quarter, respectively. The emergence of negative volatility has started to pressure the equity market since the second half of last year, translating into softened investor sentiment, evidenced by a decline of 74% year over year and 57% quarter over quarter decrease in new issuance of mutual funds during the first quarter of 2022. Nevertheless, NOAA has managed to weather through these challenges with a client-centric mindset continuing to enlarge our black card and diamond card client group, made noticeable progress in our client segmentation strategy, and also achieved an 8% quarter-over-quarter increase in non-debt net income with disciplined OPEX management while remaining committed to essential investments in client and market strategic initiatives. Now let me walk you through more detailed results of the first quarter. As a result of the lackluster performance in equity markets in the first quarter, as well as our adjustments in the secondary product distribution strategy, as mentioned by Chairlady, clients' investment sentiment softened. As a result, one-time commission income was down on the back of the decrease in transaction value from RMB $27 billion in 21 quarter one, the same period last year. to RMB $15 billion in 2022 quarter one. Carrying income, comparing to the first quarter of 2021 record-setting quarter, was also down due to the weak performance of the equity market. As a result, overall net revenue were RMB $796 million for the first quarter, down 35% year-over-year and 37% quarter-over-quarter. One-time commissions declined to RMB 102 million due to lower transaction value amid challenging market conditions. The distribution of onshore life insurance products also slowed down during the quarter as we made necessary adjustments according to Rule 108 published by the China Banking Insurance Regulatory Commission in October 2021. Our team has managed to complete these adjustments in compliance with the new rule in the first quarter and we have resumed distribution of onshore life insurance products to our clients, of which the financial impacts will be reflected in the second quarter results. The stabilizing revenue stream, which is the recurring service fees, remains stable at RMB $484 million, up 1.9% year-over-year, but still down 13.3% quarter-over-quarter, mainly due to NAV adjustments made to public security products Performance-based income was RMB 174 million, flat from the previous quarter. Transaction value was RMB 15 billion for the quarter, down 45% year-over-year and 29% quarter-over-quarter due to a shift to risk-averse sentiments among investors when faced with growing macro policy and geopolitical uncertainties. As a result, public security products, including private secondary products and mutual fund products, decreased significantly. by 34% from the previous quarter. As a wealth management firm and trusted advisor to our clients, we believe that maintaining communications with our clients and guiding them through this challenging and volatile market is the utmost important task for us. And I'm glad to say that we have done an excellent job in that regard. With enlarging our core client group, including our black card and diamond card clients, continues to be the foremost strategic initiative this year. We're happy to see a 12% year-over-year growth in this client group. More specifically, black card clients and diamond card clients grew by 37% and 7%, respectively, from previous year, thanks to the implementation of a more targeted client segmentation strategy and operation enhancements carried out in key cities and regions. Throughout mutual fund platform, Smile Treasury platform, we also made substantial progress in acquiring and engaging corporate and institutional clients. The number of active corporate and institutional clients increased by 33% from the previous quarter. And the mutual fund products that we allocate for corporate institutional clients increased by 88% year over year. Like Chair Lady wants to mention, We believe there's large but underserved market for treasury management service needs among small and medium-sized enterprises, and we will continue to explore this market segment with our SaaS solution platform, as well as leveraging our comprehensive line of product and well-established service network. Income from operations were RMB $314 million during the quarter, up $133 up 137% quarter-over-quarter, but down 38% year-over-year as profit level in the first quarter of 2021 was largely benefited from a record-setting performance-based income. Operating margin was 39%, an improvement from 11% from the previous quarter due to lower compensation costs as well as stringent management on various OPEX T&A expenses. Compensation-related expenses were RMB $358 million, down 39% year-over-year and 51% quarter-over-quarter, as relation managers' commissions decreased or lowered transaction value. Investment income was RMB $25 million, as we recorded a gain from our principal investment in iCapital Network, based on its fair value appreciation. Non-GAAP net income was RMB $313 million, down 32% year-over-year, but up 8% quarter-over-quarter. As for our segmented results, net revenues from wealth management segment was RMB 578 million, down 39% year-over-year, and 40% quarter-over-quarter due to a slowdown in transaction value during the quarter. Net revenues from asset management segment was RMB 201 million, down 26% year-over-year and 27% quarter-of-quarter due to lower performance-based income. Total AUM was RMB 156 billion flat from the end of last year, as the increase in PE AUM was largely offset by NAV adjustment in public security products and continued exits in real estate products. Moving on to balance sheets, We remain in a healthy liquidity position as our current ratio stood at 2.6 times. The debt-to-asset ratio was 23%, with no interest-bearing debt on our book. By the end of the first quarter, we had RMB $3.9 billion in cash. Supported by a strong balance sheet, we were able to continue to provide high-quality services to our clients during this challenging macro condition and lingering impacts from the COVID-19 pandemic. In light of the recent volatile environment, we published our first edition of NOAA's CIO House View Report, aligning our global macro insights and recommendations for our clients to adopt a protection-first and growth strategy for 2022. With the more comprehensive and detailed solution strategy reports that follow through, our relation managers are better equipped with investment solution recommendations catered toward different market scenarios and client profiles when engaging with clients, fully shifting from a product-driven model to a client-centric and solution-driven model. We look forward to pushing ahead our key strategic initiatives and continuing our investments in research capabilities to differentiate our solution-driven asset allocation services. We'll continue to progress on enlarging our institutional client base with a treasury service platform And we believe this will also provide some synergistic opportunities for individual wealth management services in the years to come. And thank you, everyone, for listening. I will now open the floor for questions. Operator?
spk01: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. First question comes from Ethan Wang from CLSA. Please go ahead.
spk05: Hello, everyone. I hope everyone is doing well in Shanghai. I have two questions. The first question is about recovery, because we know, because everyone has seen that the financial product sales in the first quarter of the industry data are certainly not good. But we want to confirm with Mr. Guan that we have seen some relatively obvious recovery situations, especially if it is a different level of customer. Is there any difference in recovery situation? This is my first question. The second question is because the sales situation is not good this year, I have two questions. The first is on the redemption of the asset management products. So we understand that in the first quarter, the whole industry is suffering from product sales. But have we seen any sign of material redemption in the products, especially for different tiers of clients. That's my first question. And second question is on the fee level. Just want to check with the management. When we see the pressure from the fund sales, have we seen the pressure from the fee level when we negotiate with the fund management companies? Thank you.
spk07: Okay, I'll answer that. Okay, Wang, go ahead. I'll answer it simply.
spk04: I think we have a very good strategy to promote our customer base. It started in the fourth quarter last year. So you can see that in the fourth quarter, uh, uh, uh, Taiwan Taiwan Taiwan Taiwan We haven't encountered any pressure from the cash flow. I think the pressure from the cash flow is due to the drop in returns. And the new promises we made to our clients. Because we didn't start preparing for this year. To be more specific, our core strategy for 2020 was to mix stocks. So, in 2021, the mix of stocks didn't perform very well. So, we didn't lose any money. 10% to 12%. But because the effect of doing more stocks is good, like last year, we are an ancient mixed family, which is more or less our most important core. So in general, the satisfaction of customers is still relatively high. If you look at it from a larger perspective, although we have come down in size in a quarter, but our customer satisfaction may be the best in history. Okay.
spk07: I'll translate briefly of what Chairlady has said and supplement some of my input. To your first question, Ethan, and also thank you for asking about Shanghai. We're all doing okay. And for your first question, I think it's actually a strategic reallocation between different strategies in terms of your question regarding whether or not there's large redemption. Since last quarter, we have been pushing forward the protection first kind of strategy for the client allocation strategy. So we did not see a huge outflow or pure outflow, net outflow, if you will, from one fund, but rather a reallocation probably between not only sort of the funds that are shooting for alpha in the market, but to a more balanced type of product like the CPA and mutual strategy especially the multi-strategy kind of products. So we'll see some rebalancing between different strategies. In terms of the fee pressure from the fund providers or fund managers, it really depends on, I guess, the performance of their funds. When they do see a large group of unhappy clients, they probably will experience some pressure on the fee-wise. But in terms of the suppliers that we work with, we have not seen too much of a downward pressure in terms of the fee ratios on these funds. And, you know, we actually started preparation for the shifting strategy of fund supplying, if you will, probably a couple of years ago, moving to more balanced portfolio, especially like the multi-strategy kind of products. and also started exiting from some of the funds, especially the not-only funds, and that is probably part of the reason that we achieved pretty high level of carry income in 2021. But in terms of fee pressure, especially, you know, how we negotiate with our fund suppliers, we haven't seen too much of a change unless the fund is really, you know, performing really poorly. Ethan.
spk05: Product financing. Thank you.
spk01: Thank you. Your next question comes from Anna Zhu from Bank of America Securities. Please go ahead.
spk03: Thank you for giving me the opportunity to ask this question. I also have two questions. The first question is about our insurance sales.
spk02: Just now, the management team mentioned that the insurance sales We saw that last October, the regulation was affected. In February, we should be able to recover the sales through the revision. Could you please explain in more detail why the regulation affected the insurance sales before last year? How did we recover the business through the revision? The second question is because we also saw
spk03: In the past two seasons, the pandemic has been spreading rapidly. Many cities have been closed down. What impact has this had on our business?
spk02: I see that our goal of leading the country this year has not dropped. But in the first season, we also saw that the overall situation is indeed more difficult because of the external environment. How do we So I will briefly translate my questions. I have two questions. The first one is about your insurance sales. You said in the first quarter, your insurance sales were impacted by the regulation issued in October last year. but you already make some rectification and achieve recovery in the second quarter. So could you elaborate a little more how the regulation impacts your insurance business and how are you able to achieve the recovery in the second quarter? And the second question is about COVID's impact on your business. Because we see there are more COVID lockdowns in China since second quarter. So how will it impact your business? And you still want to achieve your four-year net profit guidance. How are you planning to achieve this guidance given the very tough first quarter already? Thank you.
spk04: Thanks.
spk07: The impact on the new insurance regulation was basically there was a very abrupt cutoff on the compliance date, which is December 31st, 2021, that, you know, the previous sale nationwide on the internet was not continuing to be allowed as of January 1st, 2022. And you have to obtain the license in certain cities to be able to actually make that sale. And at that time, we were actually in the middle of the application for that permit. And we obtained the permit actually in the first quarter of 2022. Uh, so it's, uh, it's basically the abrupt cutoff on the rule and regulation sort of caused a pause on the sale for, especially for the first couple of months in the first quarter. And, uh, you know, once we have obtained that permission, I'll be able to do the sale starting from the second quarter. So the financial results, uh, we reflect on that. Uh, and, uh, Yes, I have answered Mr. Wang's insurance part. Emma, is this okay? Yes, thank you. I understand. Then we will continue to answer two other questions. The second question is about the domestic epidemic. Many cities have this lockdown. What impact will it have on our business? Mr. Wang, you can share this. Okay.
spk04: to communicate and organize a lot of online activities. In the last round, we actually promoted the signing of all products online, and so on. In this round, we continue to deepen the online process, especially in the VCPE and the E-Market Fund. So in general, we feel that the impact is still controllable. We also started discussing how to do these global businesses, how to do it in a separate way, etc. Okay.
spk07: So, Emma, basically a quick summary of what Charity has shared. Basically, I think a couple of reasons. One is that Shanghai is obviously more impacted than other cities. So nationwide, we'll still be able to hold client conferences, although at a much smaller scale than the past, but still be able to actually get in touch with clients and As you would imagine that under situations like this, the desire to connect with people actually becomes stronger. So the client actually interacts with us on a more frequent basis. And two is we probably stay more prepared than competitors, if you will, especially from the product distribution, from the online sharing sessions. and especially on the diversity of products as well as services that we'll be able to provide with the clients under different situations that we have, primary, secondary, as well as all kinds of comprehensive services, especially the capability of placing overseas or U.S. dollar products for our clients to actually provide them with more options. So we believe, obviously, we'll bring negative impact, I guess, on the market overall. But at the same time, it also heightened, I guess, the need, you know, especially the anxiety on certain macro situations. The client is actually more willing to listen to, you know, one is, you know, more options in terms of allocation of assets, and two is they were looking forward to have more safety cushions, if you will, on their assets. So I guess obviously there's impact, but we also view that as the opportunity, you know, as we have a very strong balance sheet and also liquidity. This is the reason that we'll continue to make investments in, you know, client interface related as well as the city expansion in market share. So in terms of the guidance, I think that's a very good question. But when we're actually making our budget, And, you know, on the basis of giving out guidance, which is already in the midst of first quarter, we actually anticipated, I guess, a challenging first quarter. So through the guidance of how we achieved the cost level, we did put down our first quarter as probably the most challenging quarter. But still, I guess the situation was a little bit out of expectation. A couple of things. One is actually citywide. quarantine of Shanghai that was not forecasted. And two is really the process of the application for the insurance permit took a little bit longer than we expected. So we're probably a little bit behind of what we originally planned for the first quarter's profit, but it's gaps small enough that we'll be able to catch up in the following quarters. Emma. Emma, did that answer your question?
spk02: Thank you.
spk07: Okay. Thanks.
spk01: Thank you. Your next question comes from Yoyo San from CICC. Please go ahead.
spk03: Okay. Hello, Mr. Wang. Hello, Ms. Pan. Hello, Ms. Sonia. Hello, everyone in Luoya. Thank you very much for giving me the opportunity to ask this question. I am the analyst of the central company, Fan Youyou. And indeed, in such a big market environment, we can see that our overall core black-and-white customer base has actually made a very good growth and created a new high. That is indeed more favorable. I have two main questions here. First of all, the first one is about the point of comparison. As Guan Yicheng mentioned earlier, I would like to ask Guan Yicheng to give us a detailed introduction. For example, the latest developments in the micro-stores and public institutions. If we look at the current situation, what is the contribution to the overall public revenue? The second question is, It is also true that the number of our financiers has dropped. I would like to ask about the reason behind it. In addition, the analyst mentioned that in addition to the overall market environment, including the Shanghai epidemic that started in March and April, I would like to ask if the industry of our financiers has caused a big impact. Especially, is it more likely to have a big impact on the second quarter? I will translate my question. So thanks, management, for taking my question. I am a loyal fan from CICC. It's still very exciting to see the stable growth of our number of co-clients. I have two questions here. The first question is regarding the B business. Would management give us more introduction on the progress of B business, like how much contribution does it have on our mutual transaction value or revenues? And the second question is on the decrease of the number of relationship managers.
spk04: What's the reason behind that?
spk07: Thank you, Yu Yu, for the question. And thanks for the support, by the way. In terms of we're both quarantined in Shanghai. I hope everything is, you and your family are doing okay. In terms of the Smile Treasury, which is the institutional version of our mutual fund platform, we have actually started the campaign officially in the first quarter and made, you know, obviously strategic initiatives and push for that. Reason being is that we're actually seeing a gap in that service that, you know, majority of our clients, probably 60%, 70% of our clients are entrepreneurs. And they have their own enterprises, which is they either lack experience to work with more market-oriented sort of treasury management or money market type of funds, or they actually didn't have enough research ability to actually navigate through the mutual fund market. The reason being is that in the past, the treasury function pretty much served by by the bank's products. And, you know, as the bank's products also shifting towards the NAV based products, it actually lacks the, uh, you know, the attraction in the past and the treasures are forced to actually to squint through, uh, thousands of, uh, sort of, uh, money market funds or mutual fund and NOAA is actually able, uh, to, sort of transform the experience we have on a mutual fund research and capability, and also placing that with a very conveniently designed SaaS-based solution for these institutions. So we actually use that as a strategic opportunity to actually expand this particular gap in terms of service in the market. As we understand, it's not much similar products in the market. And we'll actually be able to actually make pretty good progress. We gained about 250 new clients in the very first quarter. And seeing the latest data, this number is still accelerating. In terms of revenue contribution, it's probably going to take a while to shape up as it will accelerate. But at the same time, the AUM, obviously, in treasury-like funds, doesn't contribute to a lot of revenue right away. But we're pretty confident to see that growth in the following few quarters. Youyou, does that answer your first question?
spk03: Very clear.
spk04: Let me add a little bit. 我觉得这个对于威少斯库对我们来讲是很有意义的,因为诺亚过去是一个to see done的业务,现在核心就是我们开始推进了to be的业务。 Also because of the unique market environment, we have achieved rapid growth in 2B business. Moreover, we have a deep connection with the capital fund, the fund we issued, and the fundamental assets covered by these funds. So we are still confident in this business. We think that at this moment of crisis, in the promotion of this business, is very effective. This year, this year is also one of our key points.
spk07: Yes, because I have two data. This one, we are now in the first quarter of this public product active customers among corporate institutional customers accounted for 170 plus this ratio to increase by 33%. Then this is the first quarter. In fact, we almost started to push in February. campaign. frequent visits. But once we connect with the demand of the enterprise, it opens up a very large potential client group for us.
spk03: Okay, I understand. Thank you, Mr. Pan.
spk07: Youyou, there are two more questions. The first one is the number of financiers. There is a small change in the number of financiers. At the end of the first quarter of 2022, it was still 12.8 billion. So this is actually Okay, I think we still hope to see opportunities in the crisis.
spk04: One is that in the talent section, we have to be firm on changing birds and dragons. In the past, we used to use non-targeted investors. After the transition, we still use stable as the core. Now, we think that we need to improve talent density and reduce relationship thinking. So, it's very important to us in terms of the condition of people. um um foreign uh It also gives us a space where we can recruit good people and they can serve these pure customers. Because in the past, if some financial institutions left, the customers would be taken away. But in this process, because of the epidemic, it is more difficult for everyone to develop new customers. So at this point, we think it is effective. Then the fourth point is about this market. We are online, and then in various ways, from 1,000 people's meeting to 200 people's meeting, to 100 people's meeting, to 20 people's online meeting, to create some scenarios that can interact with our customers, and then be able to restore them through some simple products. Now the overall effect we think is still very good, so we are still full of confidence in the second quarter.
spk07: So first question, first point is that we actually did shift from, I guess, immediately following the transformation in 2019, you know, obviously the priority was to stabilize the team. So the strategy was to retain as much talent as we could. Then we started off, you know, once the transformation has been completed in 2021, We started off our transformation in terms of talent, from talent retention only to talent upgrading. So the mild change in number of relationship managers is really the result of how we've actually been screening the better RMs, and we're trying to hire more. a lot more advanced, or if you will, a lot more experienced and excellent ready-to-manage to the talent roster. So it's really upgrading in the talent perspective. And second point is also, we actually, it's interesting that we're seeing quite a bit of repay training clients, if you will, that during the so-called non-standard type of product era, you know, some clients may probably go to another institution at the same time as it brings with them the professional that serves with them. So now we're seeing quite a bit of repatriation clients because, you know, after all the transformation as well as the market condition, they continue to realize that NOAA has been very transparent at the same time being pretty professional about our product selection and also product recommendations. So with the repatriation of this group of clients, we're also seeing the inflow of the radiation managers.
spk03: Thank you.
spk01: Your next question comes from Peter Zhang from JP Morgan. Please go ahead.
spk06: Okay. Thanks for giving me the opportunity to ask this question. I wish to check with Wendland. Do we have more update on our Hong Kong listing? Thank you.
spk07: Thank you, Peter. You know, obviously, with the pressure that's been placed on the Chinese APIs, especially the so-called pre-delisting prices, no one, you know, similar as other Chinese APIs have been exploring all the necessary options. You know, Hong Kong listing obviously is one of the pretty apparent But at this stage of time, I don't have any liberty to comment on that. Hopefully you understand, Peter. Thank you.
spk01: Thank you. Thanks, Peter. That concludes our question and answer session. I would like to turn the conference back over to your speakers for closing remarks.
spk07: Okay. Thank you. And thank you, everyone, for the investor analysis. And thanks for your time.
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