Noah Holdings Limited

Hi, good morning, everyone, and welcome to NOAA's fourth quarter and year-end conference call. I'm Melo Xi, Director of Investor Relations at NOAA Group. The presenters joining us today are Ms. Wang Jingbo, our co-founder, chairlady, and CEO, and Mr. Graham Pan, our CFO. Before we start, we would like to kindly remind you that during today's call, we may make forward-looking statements based on our current expectation of the business. Please keep in mind that these statements are subject to risks and uncertainties that may cause NOAA's actual results to differ from these statements. We do not undertake any duty to update these statements. For discussion of some of the risks that could affect results, please see the Safe Harbor Statement section of our 6-K filing. We also refer to certain non-GAAP measures and you will find reconciliations in our 6K report made available on the financial report section of NOAA's investor relations website. Also please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any NOAA or NOAA affiliated products. This call is copyrighted material of NOAA and may not be duplicated without consent. Also, we will appreciate for you to change your display name to first and last name plus your institution name. With that, I would like to welcome our chair lady and CEO, Ms. Wang Jingbo. Chair lady, hand it to you now.

Today's phone conference agenda, I would like to first talk about Hongguan's views and Luoyao's international progress. I would like to report on Luoyao's overall performance in 2022 and the development of several major business segments. First, I would like to introduce annual financial information, and lastly, interactive questions. 2022 is a very complex year for the global Hongguan environment, and it is also destined to be an unusual year. In the beginning of 2022, we did not fully predict the complex situation that occurred throughout the year. From the beginning of the first quarter, the Shanghai lockdown began in March, and almost the entire year of the United States, the market hardship and the complex situation in 2022 exceeded our expectations. It can also be said that in 2022, we witnessed the investment confidence of the most serious customers in the past few decades. China, China, China, China, China, China, China, China Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi The COVID-19 pandemic has caused the global supply chain to suffer serious losses in the past three years. The global economy has suffered the most serious inflation in decades due to the impact of the land conflict on the general price of goods. In order to prevent inflation, the global central bank, which represents the United States and the United Nations, has quickly adopted the fastest-growing measures in the past 40 years, such as the reduction of volume and the rise of risk-free interest rates. Zhe Yin, Qing Pan, Sunia Han, Weiguo Wu, Hong Li, Wing Shan Ng

For the agenda of today's conference call, I'd like to start by discussing the macroeconomic landscape and update on our globalization strategy, then report on NOAA's overall performance and the development of various business segments in 2022. Mr. Pan will then present the financial information for the year and conclude with the Q&A session. Year 2022 was an extraordinary year with an extremely complex global macroeconomic environment. The extreme market gyrations caused by the Russian and Ukraine conflict during the first quarter, Shanghai lockdown during the second, and the rapid Fed rate hike spanning almost the entire year has by far exceeded our expectations. In other words, we have seen the most drastic drop in investor confidence and Zhe Yan. Turning to the global market, since the subprime financial crisis in 2008, prolonged quantitative easing and abundant liquidities have led to a significant level of global asset inflation. With global supply chains severely disrupted over the past three years by the raging pandemic, coupled with the impact of surging commodity prices due to geopolitical conflicts, we have seen the most acute global inflation in decades. In order to tame inflation, the world's major central banks, led by the US Federal Reserve, moved quickly to raise interest rates at the fastest pace in almost 40 years. The sudden quantitative tightening measures and escalating risk-free rate of return led to huge losses in risk assets, with both equity and bond markets experiencing their worst year since 2008. The significant shift in investor sentiment led to a decrease in preference for high-yield products and an increase in demand for assets with lower volatilities and higher liquidities. As a wealth and asset management firm focusing on serving global Chinese high net worth clients, NOAA's mission is to understand and gain insight into the ever-changing needs of our clients.

In the CIO report released in early 2022, Loya based on the precedence of the macroeconomic and capital market judgment in 2022, raised a large-scale asset allocation proposal that protects and increases assets first. It is recommended that customers do a good job of protecting and isolating assets through wealth management tools, and that they use multi-strategic absolute profit funds and private equity funds to reduce asset fluctuations and achieve wealth growth across the cycle. have effectively helped customers to keep their wealth safe in a turbulent financial market environment. We clearly feel that the asset allocation concept of the Chinese wealth community has undergone a fundamental change. Safety and protection have become their first demand. The demand for global asset allocation has also increased with time. Weia International opened its office in Hong Kong in 2012 and gradually opened its business in the US, Singapore, Canada, Australia and other international markets. The overseas market has experienced a 10-year accumulation. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi At the end of 2022, the number of overseas customers in Luoyang has increased by 8.4%. The total net income of overseas customers in the whole year is 8.3 billion yuan. The total net income of the whole group has increased from 23.5% in 2021 to 26.7%. The total net income of overseas customers in the fourth quarter has increased by 32.2%.

In the CIO report published at the beginning of 2022, based on our assessment of the macroeconomic and capital market environment, we propose our clients to adopt a protection before growth asset allocation strategy, advising them to protect and diversify their portfolios using various wealth management tools against the upcoming uncertainties. We recommended our clients to increase their allocations in absolute return-oriented multi-strategy funds and private equity funds in order to reduce asset volatility and capture cross-cycle growth opportunities, which effectively helped our clients to protect their wealth in turbulent capital market environments. We have become increasingly aware that the concept and understanding of wealth management through the lens of Chinese hand-to-worth individuals is undergoing fundamental changes, with safety and security becoming the number one demand. The need for globalized allocation also increased. Since the opening of the Hong Kong office in 2012, the graduate and graduate establishments in foreign markets, including the US, Singapore, Canada, and Australia, NOAA International has accumulated a decade of experience and capabilities in the overseas segment. In the past, we served our overseas Chinese clients with our overseas staff, which mainly consisted of investment, product selection, operation, and middle and back office professionals. In 2022, we further reshaped NOAA's international capabilities by building an international wealth management team based in the overseas market, creating new overseas products in order to better serve the asset allocation needs of Chinese high net worth individuals living abroad on top of the capabilities and system we have already built in the past. By the end of 2022, NOAA's international clients increased The overseas segment generated net revenues of RMB 828 million for the year, accounting for 26.7% of the group's revenue, an increase from 23.5% in 2021, with this figure further increasing to 32.2% in the fourth quarter.

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 Zhe Yin, Jingbo Wu, Hong Li, Wing Shan Ng, Melo Xi Zhe Yin, Jingbo 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 2022年通过聚焦不同的客户群体,给出不同的解决方案,我们还认证了超过3000名潜在的赚黑客户,通过存量客户的转介照,全年实现了超过1000名黄金等级以上的新客户获取,以专业成就关爱之心,允许客户的信任一直是洛阳人奋斗的源泉。

In 2022, the company delivered solid financial performance by proactively adjusting our business strategy, achieving an annual net revenues of RMB 3.1 billion and non-GAAP net income of RMB 1 billion, meeting the annual non-GAAP earnings guidance. Operating income margin improved to 35.1% from 27.9%, driven by more efficient cost management and less travel activities due to COVID lockdowns. While the management segment reported annual net revenues of RMB 2.2 billion, down 31.1% year-over-year, primarily due to clients leaning more towards products with higher liquidity such as money market funds and fixed-term deposits, leading to a decline in one-time commissions. Transaction value was RMB 70.3 billion for the year, down 27.7% year over year. In 2022, with significant volatilities in the global public markets, with the MSCI World Index down 17.8%, the S&P 500 Index down 18.7%, and the MSCI China Index down 21.2%. NOAA's strategy was to capture and maintain clients' water share and help clients preserve their wealth instead of trying to chase higher revenues and profits through pushing products with higher risk profiles. Mutual fund transaction value increased by 16% year over year, driven by the launch of our small treasury SaaS platform, specifically targeting corporate and institutional clients' treasury management needs. In the past, corporate treasury management for mid and small enterprises lacked specialized and systematic services. Capitalizing on NOAA's existing mutual fund platform and asset allocation capabilities, We have offered services to more than 4,500 small-sized corporate and institutional clients who opened accounts and transacted through Smile Treasury platform during the year. In terms of clients, the number of diamond and black card clients reached 9,689, an increase of 18.2% year-over-year, with a 22.2% increase in black card clients in particular. Growing our core client base has always been a key strategic objective. Over the past year, we have effectively enhanced our client experience by improving our client interface and branding, improving our clients' reward system, and enhancing the integrity of our clients' asset allocation through the introduction of a star rating system. Furthermore, we recovered over 1,000 lost or dormant accounts, and after the Kamsing incident in 2019, many lost clients have started to turn back to us. In 2022, through better client segmentation strategies and personalized asset allocation devices, we recognized over 3,000 potential diamond and blackguard clients during the year. Through referrals of our existing clients, we gained over 1,000 new clients that became gold level or above. Winning clients' trust through care and professionalism has always been the source of NOAA success.

Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi The size of overseas asset management reached 325.4 billion yuan, which is 14.7% higher than before. It benefits from the development and acquisition of real estate, private equity, and fixed income products managed by Gefei Real Estate, which is actively managed abroad. In terms of real estate, the U.S. real estate investment team is focused on developing and investing in real estate rental apartments. The investment performance of the previous two funds and the investment fund has been excellent and has achieved the withdrawal of two projects. have achieved better results in the third quarter of 2022. In terms of private equity, the U.S. equity investment team is focused on risk investment in the technology industry, has invested in many technology-based unicorn enterprises, and has made a breakthrough. In 2022, the fourth quarter of the fund was completed. We believe that the current economic cycle is close to the end of the year, which provides a very rare opportunity for VC and PE funds to enter. In the fourth quarter of 2022, we also launched the VC Fourth Fund, managed by the Gui Gu Group, to further improve the layout of Gefei's overseas market ecosystem. In terms of fixed income products, as the U.S. dollar income rate brought by the U.S. dollar stock market continues to rise, our product team developed and launched U.S. dollar cash management products. and Zhe Yan, Zhe Yan, Zhe Yan

As a management segment, recorded net revenues of RMB 835 million, down 19.9% year-over-year, primarily due to a 66% decline in performance-based income caused by capital market volatility and limited exit opportunities in the primary market. through our subsidiary, Gopher Asset Management, AUM reached RMB 157.1 billion by the end of 2022, up 0.7% year over year. On the other hand, the overseas AUM reached RMB 32.5 billion up 14.7% year-over-year thanks to the successful fundraisings of Gover's actively managed overseas real estate and private equity funds, as well as the launch of U.S. dollar cash management and fixed income products. The U.S. real estate investment team, focusing on multifamily residential development investments, have achieved excellent investment performances on the first two series of funds and the separate account, with two successful and profitable exits. They launched Series 3 fundraising in the second half of 2022. The Silicon Valley early-stage tech-focused investment team has achieved multiple profitable exits for LPs through investing in a number of unicorn companies. They launched their Series 4 fundraising during the second half of 2022 as well. We believe that the current economic cycle, which is close to bottoming out, provides a very rare entry opportunity for VC and PE funds. As a result, we have also launched a VC fund of funds managed by our Silicon Valley team as well in Q4 2022, aiming to further enhance Gopher's ecosystem in the overseas market. In terms of cash management and fixed income products, as U.S. dollar yields continue to rise due to the Fed's rate hike, our product team developed and launched our U.S. dollar cash management and fixed income products in a timely manner, effectively increasing our clients' share of overseas wallets with NOAA. By year-end, overseas AUA grew by 25.2% year-on-year, accounting for 21.6% of the total AUA, comparing to 16.3% at the end of 2021.

In terms of sustainable development, Luo Ya has released a report on sustainable development for many years from the beginning of 2014, starting from self-improvement and promoting industry development. We have also defined the standards of supply chain ESG management. At the first supply chain supply chain conference in Luo Ya, ESG supply chain supply chain has reached a 100% signing rate, and more supply chain partners have joined hands to create a sustainable ecological circle. Luo Ya has cooperated with supply chain organizations for many years, and Luya Fangzhou. Since 2014, Luya Xingziling has accumulated 38.7 million trees in the Alasan region, with a total area of 8,287 mu, with an area of about 3.8 square kilometers. The 7,000 tons of coal will help restore the local desert ecosystem and slow down the desertification process, while also recruiting local farmers.

In terms of ESG, NOAA has been voluntarily publishing sustainability reports since 2014. We also formulated and initiated the Supply Chain ESG Management Guidelines and received 100% of the signatories of the ESG Letter of Acknowledgement for Suppliers at NOAA's very first supplier conference, bringing awareness to our supplier partners to better create a sustainable ecosystem. NOAA has cooperated with non-profit organizations for many years in projects such as 100 Million Saxo Trees and NOAA's Arc. Since 2014, NOAA's Heart Forest has planted over 387,000 Saxo Trees in the Auxerre region in China, covering over 8,000 acres of land, achieving about 3.8 square kilometers of sand stabilization, and 7,000 tons of carbon stabilization, helping restore the local desert system and slow down desertification while increasing local herders' income.

另外我也高兴地宣布公司已经于2022年12月23日成功完成了与香港联交所的主要上市地位转化, 成为第一家同时在美国和香港双重主要上市的中国财富管理公司, 同时也完全化解了中概股的潜在退市风险。 Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi

I am also pleased to announce that the company has successfully completed the conversion to primary listing status on the Hong Kong Stock Exchange on December 23, 2022, becoming the first Chinese wealth management company to have dual primary listing status in both the US and Hong Kong, also completely eliminating the potential delisting risk of ADR stocks. At our board meeting earlier this month, the board has approved an annual dividend plan to pay out 17.5% of non-GAAP net income of RMB $1 billion for 2022. The final dividend proposal will be evaluated at the upcoming AGM in mid-June. We're committed to creating value for our shareholders in a stable and sustainable manner through a long-term cash dividend plan.

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 today's year 2023, the company that the client needs has basically achieved. The establishment of these underlying thinking frameworks determines the CLO view of Luo Ya. The core values ​​of the client's asset configuration program are different from that of other wealth management institutions. We strive to become a wealth management company with a wide range of high-end clients all over the world. This is a huge space for growth, but it also requires us to keep our original intentions at all times and strive to achieve them. Reaching common sense and consensus, which are scarce qualities to possess, is often time-consuming and costly. In 2022, some common senses and consensus are beginning to unite.

Successful wealth management and investment returns are the reflection of correct perceptions of the future. Bridging the gap between perception and reality requires the fine tuning of decision-making skills. The probability of making the right decision is positively correlated with one's understanding of the world. Today in 2023, The consensus of clients' needs has been mostly clear. The foundation of this thought process framework is what shapes NOAA's CIO House View, our advice on client allocation solutions, and our core values, which distinguish NOAA from other wealth management institutions. We are committed to becoming a leading name by capturing at least 1% of the market share in the wealth management industry for Chinese handover clients around the world, a goal that has tremendous room for growth but also requires us to always maintain our founding principle and work hard towards achieving it. Finally, we hope that the pain of 2022 will become the gain of 2023. Now I'd like to pass to our CFO, Mr. Pan, to give you a detailed walkthrough of this year's results. Thank you all.

Thanks, Melo, and thank you, Chairlady. Welcome, investors, analysts. Looking back at 2022, it's obviously undoubtedly a challenging year. The United States Federal Reserve has raised interest rates by a cumulative 425 pips to 4.4% as of the end of last year. The rapidest hike in decades, coupled with geopolitical conflicts and the ongoing increasing global inflation rate from 4.7% to 8.8%, creating volatility in both the equity and bond markets. Consequently, the MSCI World Index, S&P 500, and MSCI China Index have all dropped 18%, 19%, and 21% throughout the year, respectively. In China, the prolonged COVID-19 restrictions during almost the entire year of 2022 greatly affected economic activities. China Effective Lockdown Index, a third-party index that measures the level of COVID-related restrictions reaching highest level twice since 2020. The Chinese household saving rate climbed significantly from 30% pre-COVID up to 37% by end of that year, while the Chinese Consumer Confidence Index hit a decade-low Capital market activities and investors' sentiments also became more conservative, evidenced by a 50% year-over-year decrease in new issuance of mutual funds across the board. Meanwhile, NOAA has been investing to improve our research capabilities to counter this adversity, and our Seattle office published the Investment Outlook for 2022 at the beginning of last year. Recommending the strategy of preservation before growth to our clients. Looking back at the capital market fluctuations, our recommendation helped preserve clients' assets and our dedication and efforts on enhancing investment abilities paid off. As a result, although 2022 was a tough year, we still achieved an increase in number of core clients up 18% year-over-year. That's Diamond and Blackheart client. And overseas AUM also increased by 15% year-over-year. Due to stricter cost management measures and higher operational efficiency, NOS operating margin grew from 27.9% to 35.1%. On top of that, we have met our annual non-GAAP net income profit guidance, absorbing the impact of an unexpected and unfavorable outcome of legal proceeding towards the end of last year. Now, please let me walk you through the detailed financial results of the year and the fourth quarter. Four-year net revenues were RMB 3.1 billion, down 28% year-over-year, primarily due to the decrease in on-time commissions and performance-based income. One-time commissions fell by 46% year-over-year to RMB 678 million due to lower transaction values and the change in product mix, partially as a result of our proactive direction away from public security-based products in the face of volatile market conditions last year that usually bear high-tech rates for that type of product. Performance-based income fell by 61% year-over-year to RMB 308 million, as expected in the face of the bumpy capital market environment. Recurring service fees remained relatively stable at RMB 1.9 billion, down 9%. Operating costs and expenses were RMB 2 billion, decreased 35% year-over-year. Due to lower relationship manager compensation expenses as transaction values decreased, combined with lower selling and G&A expenses resulting from a decrease in traveling and offline client activities, both affected by COVID-19 restrictions. Correspondingly, annual operating income margin increased 7.2% year-over-year to 35.1%. With regard to non-operating results, we incurred a one-off contingent expense of RMB 99 million due to the provision of legal proceeding related to one of our subsidiaries that we disclosed on December 12, 2022. We believe that the associated first instance ruling was reached based on incomplete factual information and have already initiated an appealing process and intend to vigorously defend against the civil claim from the plaintiff. Equity in earnings of affiliates decreased 71% year over year, attributed to the downward yields of fund funds that we manage and invest in as the general partner of our fund manager. In spite of non-operating costs, our non-GAAP net income of RMB1 billion still achieved annual non-GAAP net income profit at guidance with its margin up to 32.5%. Growth in core clients, diamond and black card clients, still remains as our top strategic priority throughout the year. Benefiting from our continuous strategic investments, expanding our core client group, diamond and black card clients grew to 9,689, an 18% year-over-year increase overall, among which the number of black card clients increased by 22% year-over-year. We also have an innovative program to recognize potential diamond and black card clients and grant trial benefits in advance for a limited period of time to attract new clients, which enabled us to identify over 3,000 high potential core client leads. Our total active clients during the year was 35,877, down 16% year-over-year. Due to the transformation to standardized products starting from 2019, we have also been making efforts on reactivating dormant accounts and retrieving lost accounts. As of December 2022, reactivated and retrieved accounts amounted to more than 1,000. At the same time, we have gained significant growth in a new tier of clients, i.e., corporate and institutional clients. We launched the Smile Treasury platform to facilitate corporate and institutional clients' treasury management efforts. With over 4,500 new corporate and institutional clients, we have opened accounts and transacted with us in 2022. With respect to transaction value, we distributed RMB 70.3 billion of products during the year, down 28% year over year, among which mutual funds were RMB 43.1 billion, up 16% year over year, thanks to the aforementioned increase in corporate and institutional clients. Private Secondary Products, RMB $13.1 billion, down 65% year-over-year as we proactively decreased allocation and distribution of equity-linked public market products due to heightened market volatility. In terms of segmented results, full-year net revenues from wealth management business were RMB $2.2 billion, down 31% due to the decrease in transaction value, accounting for 71% of total net revenues of the group. Revenues from asset management business were RMB $834 million, down 20% due to a decrease in performance-based income from private equity fund products, accounting for 27% of total net revenues of the group. Gophers AUM was RMB 157.1 billion as of the end of the year, slightly higher than last year due to an increase in private equity AUM. As mentioned by Chair Lady, we have started to establish our international wealth management team with relationship managers based in overseas markets catering to our overseas clients' asset allocation needs. Our overseas AUM grew 15% year-over-year and 7% quarter-over-quarter, contributed by the successful fundraising activities of Gopher's Real Estate Investment Team and Venture Capital Investment Team in the States. and the launch of US dollar cash management and fixed income products. Besides, we have also been cooperating with nine of the top 25 international private equity GPs and look forward to expanding that list. Overall, full year overseen net revenue was RMB 828 million, accounting for 27% of total net revenue compared to 24% in the year before. When it comes to our fourth quarter results, net revenues were RMB 882 million, down 30% year over year, and recovered quickly by 29% from the quarter three. One-time commissions were RMB 269 million, down 44% year over year, but up 170% quarter over quarter due to increase in insurance distributions. Recurring service fees were RMB 472 million, down 15% year-over-year, but slightly increased 4% quarter-over-quarter, mainly due to the service fees generated from liquidating certain credit products with higher fee rates during the corresponding period in last year. Performance-based income was RMB 80 million, down 54% year-over-year due to decrease in carrying from public security products and private equity fund products. But it was up 191% quarter-over-quarter due to exits generated from some of the private equity funds products in this quarter. Total operating costs and expenses were RMB 662 million, down 41% year over year, but up 46% quarter over quarter, mainly due to increased expenses related to offline activities after COVID-19 restrictions were lifted, as well as increased relationship manager compensations, performance fee compensations in the quarter. On top of that, operating income was RMB 220 million, up 66% year-over-year, but down 5% quarter-over-quarter. Quarterly non-GAAP net income was RMB 149 million, down 49% year-over-year, but 22% quarter-over-quarter increase due to one-time contingent expenses. Regarding the balance sheet, our cash increased to RMB 4.4 billion and total assets stood at RMB 11.8 billion as of December 2022. The current ratio was 3.3 multiple and debt to asset ratio was 19.5% with no interest bearing debt, implying a very healthy and strong liquidity position and balance sheet. Supported by a healthy balance sheet and continuous strong cash flow generating capabilities, pursuant to the dividend policy announced on August 10, 2022, the annual dividends to be declared and distributed for year 2022 will be 17.5% of the group's non-GAAP net income of 2022. approximately amounting to RMB 176.5 million, implicating US dollar 40 cents per ADS and Hong Kong dollars 6.25 per share, equals to two ADS, subject to final approval of our AGM on June 12, 2023 this year. We look forward to providing stable and sustainable returns to the shareholders with the growth of our business. Looking back to 2022, obviously great challenges stemmed from global macroeconomic uncertainties and domestic difficulties, including the zero carbon limitation. We're glad that we completed the secondary listing on the main board of Hong Kong Stock Exchange. And within the same year, with the effort of the team, also completed voluntary conversion to primary listing in Hong Kong within the same year. due to the regulations of Hong Kong Stock Exchange, by the way, would also like to kindly inform investors that NOAA will not be able to publish annual non-GAAP net income profit guidance going forward. Looking forward to 2023, we'll continue to invest talents and resources into expanding our global footprint and improving our client service experience and quality. At the same time, we'll also be mindful of both cost controls and growth initiatives. Again, we sincerely appreciate all shareholders for ongoing trust and support and strive to create long-term value for clients and shareholders. Thank you everyone for listening. And I will now open the floor for questions. Thank you. Thank you, Grant.

So if you have a question, please kindly press the raise hand button in Zoom. And now I believe we have Helen from UBS. So moderator, could you please turn on her microphone? Thank you.

Can you hear me?

Hello, Helen. Good morning.

Thank you. I'm Helen from UBS. I have two questions for Mr. Wang. The first one is about the sales of insurance products. Since the fourth quarter of 2021, insurance products seem to be an important driving force in the income tax. From the fourth quarter of 2021 to 2022, what is the sales coverage rate of insurance products for existing customers? In this year or next year, will the insurance sales still be able to maintain a relatively high increase? In the fourth quarter, I calculated that the total collection fee rate is about 80 bps down. It looks like the insurance sales are not as good as before. If the insurance sales continue to decline, what product strategies can the company use to make up for the decline in insurance revenue? For this year's collection fee, from the two aspects of increase and product structure, The second question is about Gopher AUM. Last year, the capital market was not very good, but we saw that AUM was still growing. I noticed that in 2015-2016, there were a lot of PE products in the estimated volume of NOEA that year. This part of the product is about to expire this year or next year. How do we see the impact of this part of the product to expire for AUM? Okay, let me translate my question. This is Helen from UBS. Two questions, if I may. One, for insurance product distribution, since the fourth quarter 2021, the growth momentum was very strong. Insurance product seemed to be the key driver for one-time commission fee. It's been five quarters since the fourth quarter of 2021. So what's the insurance product penetration rate for existing clients? Do you think the strong growth momentum could persist this year and next year? If not, what types of product or services may bridge the revenue gap? And could you please give us more color on transaction value outlook this year, both in terms of growth outlook and product mix? My second question is on Gopher AUM. I noticed that back to 2015 to 2016, Private equity products were a major driver for transaction value. And this product may enter the redemption period very soon, I guess. So what's the impact on Gopher AUM? Will Gopher AUM decline in the next one to two years? And what's Gopher's product strategy this year and in the coming two to three years? Thank you.

Okay, I'll answer it briefly, and Pan Qing can add to it. I think our perspective on thinking is not exactly the same. I think in an environment that is more complex in terms of urban planning and geopolitics, all the needs of our products are based on the needs of our customers. We put in what our customers need. 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 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 are also very important choices for us. At Gefei, we are actively expanding our multi-strategic fund, which is the second-tier market. First, we have established an investment system and investment team, so that we can bring value to our customers through the multi-strategic fund, the absolute return, and the central market strategy. In terms of overseas, our first priority is to actively support overseas Chinese customers. Our second priority is to actively promote our global VC fund, from wood-level to square-head to root-head to straight-head. We are quite confident in this regard. In terms of overseas, we are also actively promoting our past short-term version. In the 2G public market, the product is very large, but our own sales are not very good. We are also improving our short-term version in this regard. Please, Pan, can you add some data?

Thank you, Helen. I'll supplement some data points and also do a quick summary of what Chairlady has mentioned. So I guess we do look at this allocation of product mix from a slightly different angle that basically we don't necessarily just voluntarily put out a product mix or recommendation to our clients without understanding the client's need. So, you know, throughout 2022, the sentiment of the entire market is actually preservation and risk averse. So the demand from insurance products actually grew across the board in the market. You know, we're not manufacturing any insurance products. So basically just having an insurance brokerage and responsible for picking the right product for clients. So as mentioned by Chairlady, the coverage of penetration rate, especially in the Diamond Black Card client group, is relatively low. 21% for overseeing insurance products and 24% for the domestic one. And the contribution to the total revenue by insurance related revenue for 2022 is about 77%, slightly higher than 60% in 2021 as well. So we still believe that there is still abundant room to grow in terms of insurance products if the client still considers that insurance product becoming a very fundamental and important layer of the asset allocation strategy. In terms of Gophers AUM, domestically we believe that Our funded funds portfolio will benefit greatly from the registration scheme Asia Stock Market that provide more exiting opportunities for these portfolio companies to become IPO companies and provide better exiting routes for this type of funds. and in terms of the secondary market public security products within Gopher, we actually also invest heavily into the R&D team. We have a team of about 40 people focused on the macro and also micro researches on different kinds of stocks and strategies for multiple strategy sort of fund. and for overseas we are investing heavily both in budget and talents actually for 2023 to make sure that we'll be able to meet the demand for our clients especially for the overseas allocation of more products towards public market type of products that in the past The market probably provides a lot of volume, but we weren't able to provide too much on the U.S. dollar-denominated public markets, and we're assembling a team to focus on that selection, and I believe that we'll be able to provide more on that type of products. Helen, back to you.

Thank you. Crystal clear.

Thank you. Thank you, Helen. I believe we have Chi Yao from Morgan Stanley also raise his hand. Operator, please. Hello, Chi Yao.

早上好。 Hi, Mel. 早上好。 欢迎上,早上好。 我是这个Morgan Stanley的Chi Yao. 我有两个问题想请教。 第一个是这个我们看到去年4Q的时候, 股票和固收市场都出现了比较大的一个波动, 特别是固收市场。 Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In 2022, the entire market was in turmoil, including a decline in the entire trading volume and a change in the structure. But at the same time, we maintained a very stable growth of core customers. So I would like to ask the management to make a judgment on the structure of customer demand in 2023. More importantly, under this structure of demand, do we see more opportunities to convert this stable customer growth into a growth of revenue for us in Norway? Let me translate. The first question is the market volatility we've seen in the fourth quarter of 2022 and in both equity and a fixed income market. So I was wondering how does the reaction from NOAA's clients in the fourth quarter and what actual reaction NOAA has been taking to stabilize the AUM in fourth quarter last year? And second question is the outlook for 2023 in terms of the client demand and the revenue opportunity for NOAA. Thank you.

I'd like to start with a rough idea, and then ask Pan Qing to talk about it. I think the customer needs that we see, the first protection, then growth, the return to safety and isolation, this is definitely not something that started with Q4. Basically, since 2020, In the last year's Q1, we have made a CIO view and pushed customers to design in this direction. So we have divided it into two parts in China. In China, the demand for RMB customers actually covers the entire year. It's all monetary funds and fixed funds. Fixed funds also have monetary funds. In overseas, with the US-US trade agreement, the global risk-free return has grown a lot. We also promote our main strategy, which is to take advantage of the larger and larger proportion of customers' wallets. So we are in this overseas currency fund, deposit, which is the deposit that is fully entrusted, which is the full investment, which also locks a lot of customers' wallets. This is a situation we see. We think that in a more complicated red-light environment, we must do it in a smooth way, rather than pushing some products that we don't even believe in. We think it's very important. So you can also see that last year, we had a lot of products that were sold out because of the fall. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi We believe that in 2023, the overall customer base will still be focused on security and global configuration. But this year, we have actually divided our domestic customers into overseas Chinese customers. This is a new direction for us. I think growth is in several directions. In the past, we were around the stock of customers. Okay, good.

So thanks, Trieu. I think those are great questions. And also we want to stress that the strategy in terms of recommending our clients to preserve first, then pursue growth opportunities didn't start In quarter four last year actually we published the CR report in the first quarter when we sensed a very highly volatile market of the entire year. So actually a majority of the allocation as we just mentioned in the market actually and also consistently are highly liquid products, including money market funds, including the US dollar denominated deposit type of funds towards the end of last year when the Fed actually raised the interest rate very quickly. In terms of overseas, we have about over 1.1 billion U.S. dollars AUM for clients to put their money in the actual deposit type of products. And we're seeing actually a very good increase in the fourth quarter alone. That's about 1.6 billion raised in that single quarter. And, you know, in the face of very complex market situation, NOA actually never push sell any products that we don't even believe in. So we still try to recommend the more conservative and safe strategy for our clients to actually place on. We're actually seeing a huge influx of repatriating clients last year. As mentioned in the press release, we're seeing probably around 1,000 clients either reactivated from long-time dormant accounts or repatriated back to NOAA from other platforms. I believe that clients are very impressed with NOAA's strategy that we actually didn't have any exposure You know AUM or AUA to real estate type of products to you know the non-standard credit products and we have a very clean and light AUM for our clients. In 2023, we continue to hold a very conservative view, especially for our clients. But probably we will more emphasize on the provision of supply of overseas assets for our clients to carry out the global allocation strategy. And we're putting a lot of effort, also budget actually, in developing our overseas businesses. We believe that the opening up of new tier or new group of clients overseas, you know, the high net worth Chinese individuals overseas will actually provide very strong growth driving factors behind the incremental revenue in 2023, if you will. Thank you, Trieu.

Thank you, management. That's very clear.

Thanks. Thank you, JL. We also have Peter from JPMorgan. Operator, please turn on Peter's microphone. Thanks.

Thank you for the opportunity to ask me a question. I have two questions here. The first is about the trend of the fourth quarter. We see that our fourth quarter financial sales and various AOMs have improved significantly. Then this trend is also better than the trend of the fourth quarter industry. We want to know the reason behind it. Is it because we compare the private sector of banks to products or strategies? Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Do you provide AT1 products issued by banks to customers? What are your strategies when facing overseas risks? Let me translate. Noah's WM sells and Goofy's AUM beat Bank's AUM in fourth quarter. How does Noah differentiate from leading banks in China when it comes to strategy and product? In 2023, there is talk of release of asset saving in China. How do you think Noah will benefit from this trend, if any? The second question is about we do expect more spillover rates from SVB and the CS81 write-down, and 2023 is going to be volatile. Then how does NOAA position for this? Does NOAA offer investment products like 81 issued by banks to your clients? Thank you.

Okay, thank you. I'll answer first. First of all, we don't have any AT1 credit cards for our customers. So it's still relatively safe. But I think the reason why we don't have any is because we're still too small overseas. 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, Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi These are our growth points. This is my opinion. We have clients and products. We need to think about how we can reach our clients through our platform. So we have to spend some time and some costs. For example, our offline teams overseas, our online teams, our online experience, and the channels of the foreign ministry, and the direct sales of Gefei, etc. are all our organization's construction that we are very concerned about. This is the development of overseas business that I want to talk about. In China, we mainly need to be more harmonious and focus on big cities. For example, like Beishan, Guangshan, and Shenhui, we will work together to improve our financial team. But for the layout of the wall line in the past, Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi

Yeah, thanks, Peter. Great questions again. Yeah, we actually don't have, didn't have any AT1 or CoCoFund related products to our clients. I guess part of the reason is because we're still relatively small in terms of providing U.S. dollar and offshore products for clients. Like I've mentioned in the past that we focused on pretty much product maintenance capabilities in the overseas offices. In the U.S., we have two investment teams in Hong Kong, pretty much mid-back office for the U.S. dollar asset management. And in 2023, you can probably look at as, you know, year zero for our oversee piece of business and plan to actually really increase the number of relation managers in Hong Kong to probably 100, compared to what we have is about 20. Professionals and for Singapore team is from zero basically from scratch to 20 and we're in the process of actively hiring talents in those two places and also looking at opportunities potentially to be able to actually access to local market to serve the you know Chinese nationals in those nations including in the US and probably other popular destinations where Chinese immigrants are, you know, conventionally will go and work. In terms of wealth management, for the past eight months, folks pretty much on U.S. dollar products and also spend quite a bit of time and investment to establish global insurance platform. And we're moving on to the primary market and secondary market products, both denominated in the U.S. dollars. and just to supplement on the numbers when you mentioned that the growth in the fourth quarter, I think still benefited greatly from products that we have in the Silicon Valley. We raised about more than a billion US dollars in the fourth quarter alone that actually fit the client's need for more exposure to a deeper and probably more stronger markets in terms of overseas products. And the focus for 2023 is to expand the interfaces where we can reach out to our clients in different ways, including, for example, institutional client sales group, the online platform, and also including direct sales or direct distribution from gopher manager, especially the screening of the global products and to be able to actually put them into a portfolio for our clients. And in terms of domestic development strategy, we focus on continue to heighten investment in both branding talents in large cities, first tier cities. But in terms of the probably third, fourth tier cities, we used to have network and branch offices we're looking at to consolidate. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi High net worth individuals will probably gradually move to the nearby big cities for better life quality. So we also want to make sure that our service team is also there to be able to serve our clients. Peter, back to you.

Maybe I add one more question about the investment sentiment. So in 2023, do you see improvement in household investment segment in your clients? And how does this compare to the 2022 or 2021 level?

What do you think about the mood of customers compared to 2021?

I just wanted to add that the overall feeling of our four seasons may be a little better than that of our peers. I think it's better than being proud. We are still continuing to reach out to customers, reach out to high-quality activities. Our cost has also risen in the fourth quarter of last year. But we also opened a lot of customer communications and instructions in Singapore and Hong Kong. I think this is still very helpful in the process of market turbulence.

I understand, thank you.

Yes, we just last week, this week and this week, in Hong Kong, we also held a event. These overseas customers, there were more than 600 people who came to Hong Kong. They all flew from all over the world. Then we had some communication with them. We think it's very meaningful. Emotions, customers' emotions, I think in general, they are more pessimistic. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi

I think just to supplement, obviously, in the fourth quarter, we benefited quite a bit of, I guess, heightened interaction with the clients. We actually held a pretty big client conference in Singapore towards the end of December. Actually, before the official open up of China market last year, About 300 clients flew over to Singapore and also we held a very large conference last week in Hong Kong and about 600 clients came over. and join our conferences and we're providing views from different GPs, our own GP and also economists just to share the outlook of the capital market to our clients. So we're able to actually interact, I guess, at a better quality and better interaction frequency with the clients. And in terms of sentiment, we actually published a white paper with PwC for 2022 high net worth individual sentiment index. This first year we're doing this white paper, and I think it's actually a great way for us to understand what people are thinking, especially the very unique group high net worth individuals in China, mostly actually our private business owners and entrepreneurs. You know, it seems that obviously, you know, after the reopening up, I alleviated quite a bit. But I think that the overall sentiment towards investment and wealth management as allocation will continue to be conservative, you know, towards RMB type of products. But we think that they probably will continue to look to further diversify their asset allocation across the board. are also in the product mix. Peter. Thank you. Very clear.

Thank you.

Thank you, Peter. We have no further questions from the audience. So with that, we would like to conclude this quarter and year-end earnings call. For our most updated financial reports, please refer to the financial statements section within our investor relations website. So thank you all for listening. Thank you very much.