Noah Holdings Limited

Good morning, everyone, and welcome to NOAA's 2023 first quarter earnings 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. I'd also like to inform you that we're currently live from our new headquarters, NOAA Wealth Center, located in Hongqiao, Shanghai. 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 expectations 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 discussions of some of the risks that could affect results, please see the Safe Harder Statement section of our 6-K filing. will also refer to certain non-GAAP measures and you'll 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 any interest in any NOAA or NOAA-affiliated products. This call is copyrighted material of NOAA and may not be duplicated with our consent. With that, I would like to welcome our Chairlady and CEO, Ms. Wang Jingbo, Chairlady Han Yingjun.

Hello, everyone. Today is the first part of the phone call meeting. I would like to first talk about the thinking of Hongguan, and the internationalization of Longya, and report on the overall performance of the first quarter and the development of several major U5 units. Next, I would like to ask Pan Qing to introduce the financial information for this quarter, and finally, the interactive questions. China, China, China, China and Zhe Yin. China Market After three years of epidemic control, with the release of control restrictions and the opening of borders, we believe that China's economy will return to the path of growth. But economic recovery takes time. We see that although the consumption of tourism, catering, and other industries is declining, the sales of cars, real estate, home appliances, and other large-scale products are still declining. This indirectly reflects the cautious attitude of the residents to the growth of income. We believe that China's wealth management and asset management industries, which are dominated by capital market products, will encounter some challenges. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In 2019-2022, after three years of organizational change, Weiguo has formed three more mature product BUs, namely Gefei, Weixiao, Yongyao, Baoxian, and Xintuo. The three product lines are divided into international and domestic organization structures and relatively independent operations. In 2022, Weiguo began to actively build overseas sales capabilities and overseas online customer service capabilities, achieving better progress.

For the agenda of today's conference call, I'd like to first talk about the macroeconomic environment, known as global expansion progress, and then report on the overall performance of the first quarter, as well as our various business segments. Then, Grant Pan, our group CFO, will present the financial information for the quarter. And lastly, we'll end with a Q&A session. After an extremely complex macro environment in 2022, the macro challenges still persist in 2023. Heightened interest rate levels and a tight credit environment in the US not only limited the recovery in economic activities, but also significantly impacted the stability of the European and financial systems. The loss of depositor confidence in small and medium-sized banks and regional banks spiraled into an accelerated withdrawal of savings and bank rents, also causing shareholders of these banks suffering significant losses. While US regulators provided timely protection for client deposit in these banks, the restoration of investor confidence in the capital markets was inevitably delayed again. In the Chinese market, after three years of pandemic control, we believe the Chinese economy will get back to trajectory for growth, as COVID restrictions were lifted and borders opened. However, it will take time for the economy to recover, and we see that while consumption in sectors such as tourism, restaurants are picking up, Sales of big-item tickets such as real estate, automobiles, and home appliances are still weak, which indirectly reflects the cautious attitude of consumers towards future income growth expectations. We believe that China's wealth management and asset management industry, which is dominated by capital markets products, will encounter great challenges as the bank deposit portion of consumers' financial assets might be held longer. and China's wealth management industry will shift back to bank dominance. On the bright side, we believe the rising savings rates also provides growth opportunities for diverse investment products in the future, benefiting distinguished independent wealth managers like us. As overseas inflation and U.S. dollar interest rates remain high, we have seen a substantial increase in overseas Chinese demand for global asset allocation. As an independent wealth manager, NOAA's overseas offices in Hong Kong, Singapore, and the U.S. have become substantially more attractive to overseas Chinese Hannaworth clients as they can offer a more diversified range of global wealth management products. From 2019 to 2022, after three years of organizational reforms, NOAA has internally formed three established product business units, namely Gopher Asset Management, Fun Smile, and NOAA Glory, which provide insurance, family trust, and other value-add services. Each of these product BU's has relatively independent domestic and international operations. Starting in 2022, NOAA has also begun to actively build overseas direct sales capabilities and online client service interfaces to better serve global Chinese investors.

During the first quarter of 2023, NOAA's total net income of 8 billion yuan increased by 1% and fell by 8.9%. The domestic business contributed 4.9 billion yuan, accounting for 60.3% and fell by 20.2% and 19% respectively. 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 The demand for insurance for high-end customers is still high. During the first quarter, domestic insurance economic business sales increased by 241% in the same ratio, and the number of clients in the same order increased by more than 6 times. In terms of overseas insurance economic business and overseas trust, in the first quarter, overseas insurance sales increased by 179.8% in the same ratio and increased by 2.9%. The number of clients in the same order increased by 234.1% in the same ratio and increased by 31.7% in the same ratio. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi

During the first quarter of 2023, the company recorded overall net revenues of RMB 803 million, up 1% year-on-year and down 8.9% quarter-on-quarter. Domestic business contributed RMB 488 million, accounting for 60.3%. down 20.2% year-on-year and 19% quarter-on-quarter, while the overseas business segment contributed RMB 321 million, up 68.4% year-on-year and 13% quarter-on-quarter, an increase to 39.7% of the total revenue from 23.8% from the comparable period last year. With the gradual improvement of NOAA's overseas setup, we hope that the contribution of overseas revenue can reach more than 50% of the whole group in the next three to five years. And thanks to better cost management, the operating margin for the first quarter was 34.7% and the operating profit was RMB 279 million, an increase of an increase of 26.9% quarter-on-quarter. By segment, the wealth management segment contributed RMB 589 million, up 1.5% year-on-year and down 9.4% quarter-on-quarter. The domestic portion contributed RMB 351 million, down 17.5% year-on-year and 20.7% quarter-on-quarter, while the overseas portion contributed RMB 238 million, up 50.7% year-on-year and 14.8% quarter-on-quarter, thanks to the growth of overseas product transaction value and insurance distributions. The asset management segment contributed RMB 206 million, up 2.3% year-on-year and down 8.1% quarter-on-quarter. The domestic portion contributed RMB 123 million, down 26.7% and 16.6% year-on-year and quarter-on-quarter respectively, while the overseas portion contributed RMB 83 million, up 138.8% year-on-year and 8.2% quarter-on-quarter. This was mainly due to the growth in the scale of overseas AOM and the increase in carrying overseas private equity assets in the first quarter. On the protection and preservation side, the demand for insurance product allocation from high net worth individuals remained high. During the first quarter, domestic insurance brokerage business generated 241% year-on-year growth in revenue and the number of active clients increased more than six times year-over-year. For our overseas insurance brokerage business and overseas family trust services, during the first quarter, overseas insurance revenue increased 179.8% year-on-year and 2.9% quarter-on-quarter, and the number of active clients also increased 234.1% year-on-year and 31.7% quarter-on-quarter. Our overseas family trust team has provided family trust services to a total of 473 overseas Chinese families at the end of the quarter, an increase of 8.2% compared to the end of 2022. Evidently, in an environment where capital market volatility continues and uncertainty in the macro environment has yet to subside, there's still a lot of unmet demand for asset allocation security from Chinese clients around the world.

The core strategy of our financial management business in China is to focus on middle-sized cities to grow and strengthen. The first-tier cities have richer talent resources and innovative environments, and better children's education options. As high-end domestic customers move to first-tier cities, Lu'an is also reducing the number of network points in domestic cities to further reduce the cost-effectiveness and invest resources into core cities. As of the first quarter, the number of domestic financial institutions is 1299, with a 3.2% rise in return. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In terms of international financial management, we will further expand the network and the number and quality of private banks. As of the end of the first quarter, the financial management team in Hong Kong and Singapore has already had 28 customer managers. The goal is to reach 100 private bankers by the end of 2023, and 20 private bankers in Singapore. As of the first quarter of 2023, the number of open customers in Hong Kong and Singapore has achieved a growth of 13.1% and 77.6% respectively. The AUM volume of customers and full-time leasing methods in Roya for asset management has reached $2.3 billion, a 33.2% growth ratio. The total number of customers reached 327 people, with a return growth of 79.7%. The number of domestic members in Luoya increased by 13.2%, reaching 13,427 people. The number of active customers in the first quarter reached 1,763 people, with a return growth of 35.3%. In 2023, we will focus on helping private bankers in the international financial sector to make customer transactions fully online and more efficiently provide product combination suggestions and program services to customers. The number of active customers of Luoya's international financial institutions has reached 1,409 in the first quarter of the year, which is a significant increase of 537.5%, and the estimated scale has reached $3.4 billion. Based on the same significant increase, 10.4% of growth has been achieved. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In Gefei's asset segment, Gefei's asset management total remains at 1575.9 billion yuan, which is 0.9% of the total growth. Gefei's initiative management of the financial support product target strategy has maintained the product risk baseline in the extreme environment in 2022. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo has a good value for technology and VC investment. Coffey's overseas Fondofang 1G market products have achieved 7.5% of the same growth in 1G, reaching $39.4 billion. Our plan is to continue to improve the coverage of global top managers, expand the cooperation network, and upgrade the KYP technology system to better provide overseas investment products to Chinese customers around the world.

For our domestic wealth management business, our core strategy is to focus on upsizing and strengthening central hub cities. Tier one cities have more talent resources and better innovation environments, as well as better education options for children. As domestic high net worth individuals migrate to tier one cities, NOAA is also reducing the number of satellite cities to further reduce costs and increase efficiency, while increasing investments in tier one cities. As of the first quarter, the number of domestic relationship managers was 1,299, a 3.2% increase from the previous quarter. In terms of domestic online channel, we focus on strengthening the empowerment of technology systems and upgrading client experience. By providing a wider array of online product shelf, CCI asset allocation tools and investment strategy reports, as well as a more interactive and informative portfolio interface, transaction value for mutual funds reached RMB 10 billion, an increase of 40.3% year-on-year. In terms of corporate and institutional clients, the Smile Treasury Platform launched in 2022 successfully attracted nearly 5,000 corporate and institutional clients. During the first quarter, the number of active clients of Smile Treasury Platform increased by 325.5% year-on-year, and the overall AUA with us reached RMB 2 billion. On the international wealth management side, we further expanded the number and quality of our branch offices and private bankers. As of the end of the first quarter, NOAA's Hong Kong and Singapore wealth management team had 28 relationship managers with the goal of reaching 100 private bankers in Hong Kong and 20 private bankers in Singapore by the end of the year. As of the first quarter of 2023, the number of clients in Hong Kong and Singapore achieved 13.1% and 77.6% year-on-year growth, respectively. Clients AUM with NOAA on a discretionary investment basis reached US$230 million, up 33.2% year-on-year, and the cumulative number of clients reached up 70.9.7% year-on-year. NOAA's international overall clients grew 13.2% year-on-year to 13,427, and the number of active overseas clients during the quarter reached 1,763 in the quarter, up 35.3% year-on-year. In terms of international online wealth management, in 2023, we will mainly focus on helping overseas private bankers to be able to fully execute their clients' transactions and provide portfolio advice and services to their clients online more efficiently. The number of active clients for overseas mutual funds reached 1,409 in the first quarter, a significant increase of 500 537.5% year-on-year. Transaction value reached US$340 million, an increase of 10.4% quarter-on-quarter on top of a more significant year-on-year increase. The overall Overseas Mutual Fund reached US$970 million, an increase of 588.7% year-on-year. International small treasury business also began to show significant progress and so far has successfully attracted more than 140 overseas corporate and institutional clients. The transaction value for the first quarter reached US$35 million, an increase of 13.4 times. On the asset management side, Gopher's overall AUM was RMB 157.6 billion, up 0.9% year-on-year, among which Gopher's actively managed target strategy products, executed disciplined risk management, and limited pullback during the past year. During this quarter, the investment team made timely investment judgments and its active investment products achieved 12.3% annualized return, annualized volatility of 6.3%, and Sharpe ratio of 1.7 during the quarter. Its balanced investment products achieved 14.9% annualized return, 5.2% annualized volatility, and Sharpe ratio of 2.6. Lastly, the stable investment products reached 7.8% annualized return, 1.9% annualized volatility, and Sharpe ratio of 3.3 times during the quarter. Overseas AUM of Gopher's internationally actively managed products achieved 14.9% year-on-year increase to US$4.9 billion, accounting for 21.2% of the total AUM. In the current interest rate and economic cycle, we see excellent entry opportunities and investment thesis in private credits, private equity buyouts, special opportunities, and PE secondary funds, as well as early-stage technology VC investments. Overseas PE AUM also achieved a 75% year-on-year increase to US$3.9 billion in the first quarter. We also plan to continue to improve our coverage of global top managers and expand our partners network, as well as upgrading our KYP technology system to better provide overseas alternative investment product solutions to our global Chinese clients.

In terms of ESG, Luo Ya released a sustainable development report in the ninth year of the 2023 Luo Ya released a sustainable development report in the ninth year of the 2023 Luo Ya released a sustainable development report in the ninth year of the 2023 Luo Ya released a sustainable development report in the ninth year of the 2023 Luo Ya released a sustainable development report in the ninth year of the 2023 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in the ninth year of the 2020 Luo Ya released a sustainable development report in Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi People's Charity Committee, Transformation Committee, Operating Committee, and Technology Committee formed a collective leadership of the five major committees. In the decision-making organization of various business units, BUs, and areas to establish HST, the decision-making and management of key business goals are basically completed from personal leadership to organizational ability. In this process, although the awareness and decision-making efficiency seem slower, the decision-making quality has greatly improved. Finally, on May 18, 2023, we officially launched the new headquarters of Luo Ya Control Group. Luo Ya Wealth Center is located in the core area of Hongqiao Shuniu, located in Zhongzhou County, Shanghai. The total area of the entire construction group is about 72,000 square meters. With the geographical advantages of Hongqiao Shuniu, Luo Ya can serve Jiangzhe Hu and customers from all over the world through its more convenient service. It can not only meet the growing demand of Japanese customers, but also provide a quality and convenience customer interface for Luoya's global customers. We use customers as the center, and have built the independent building of the new headquarters into the experience center for Luoya customers, and share with Luoya customers around the world. At this moment, Luoya has also grown into a private wealth management company with a unique customer interface. Next, I would like to ask Pan Qing to introduce all the data in detail.

In terms of ESG, 2023 was the ninth year for us to publish a sustainability report to showcase the new developments and achievements of NOAA towards ESG every year. In the past three years, NOAA started to track ESG awareness among Diamond and Blackheart clients and saw the willingness of investing in ESG increase from 35% to 87%. Noah's continuous ESG advocacy and investor education also played a non-negligible role in the progress of clients' greater recognition of ESG concepts. In addition to environmental and sustainability aspects, we have made continuous improvements in the corporate governance level. will have built collective leadership by establishing five major committees at group level, including the strategy committee, talent committee, reform committee, operation committee, and technology committee. We have also established the AT and ST framework in each business unit and region, which is responsible for building and motivating talents, as well as making and managing key business objectives, respectively. thus completing the transformation from individual leadership to organizational capability. In this process, although the management awareness and decision-making efficiency seem to be slower, but the quality of decision-making has been greatly improved. Finally, we have officially opened our brand new headquarters on May 18 this year. Noah Weill Center is located at the core area of Hongqiao Transportation Hub, located in the central axis of Shanghai. The whole complex has a total area of about 72,000 square meters. With the geographical advantage of Hongqiao Transportation Hub, NOAA can service clients from the dollar triangle as well as the whole country and even the world more conveniently. We have made a standalone building of our new headquarters a client-centric experience center for NOAA's global clients, making NOAA a truly private bank with a unique client interface. Next, I would like to ask our CFO, Grant Pan, to present the financials in detail. Thank you.

Thank you, Chair Lady. And good morning, investors and analysts. As mentioned by the Chair Lady, the first quarter of 2023 entails a moderate economic recovery in China, indicated by a 0.5% year-over-year growth in GDP. Market sentiment started to slightly lean away from savings, turning to a mild increase in the demand for investment. Evidence by a 2.2% quarter-over-quarter rate rebound in the issuance value of mutual fund products. Although investors' activities became more active and transaction values in the markets have gone up, sentiments toward relatively higher-risk profile products like private equity products still remain prudent. In the meanwhile, from an international perspective, the US federal reserves have been sticking to a hawkish monetary policy throughout the quarter, accumulatively raising the federal interest rate twice, from 4.5% to 5%, which largely indicated a continuation of the theme from 2022. In addition, the sudden collapse of SVB in March caused the U.S. banking sector in crisis and even had a spillover effect on the global financial industry, which brought concerns to investors about market volatility on top of hiking rates and tightening credit conditions. Staying true to our client-centric strategies, we dedicated to transform these uncertainties into opportunities to generate cross-cycle preservation and growth for our clients' wealth. Coupled with our constant improvement in domestic capabilities and ongoing expansion in the international market, entire client engagement and financial performance weren't hindered by the concurrent complex macro environment. Noah's quarterly transaction value increased by 12% year over year to RMB 16.8 billion, 31.5% of which contributed by overseas products. Reflecting on financials, revenues from oversea business for this quarter increased 68.4% year over year and 13% quarter to quarter to RMB 321 million, taking up 40% of the group's total revenue. Combined with the cost efficiency strategy, NOA achieved a 26.9% quarter-over-quarter increase in operating income to RMB 279 million, implying operating margin of 34.7%. As a result, non-GAAP net income was RMB 240 million, up 60.6% quarter-over-quarter, with the net margin standing at 29.8%. Now please let me share with you the detailed financial results for the first quarter. We recorded quarterly net revenue of RMB 803 million, up 1% year-over-year, but down 8.9% quarter-over-quarter. But notably, our one-time commission fees were up 72.5% year-over-year to RMB 176 million, indicating a quick recovery in investor sentiments regarding products with lower risk profiles, such as insurance products. As our global expansion strategy progresses, the distribution of offshore insurance products took up an increasing share of revenue this quarter, and we believe the expansion of offshore products distribution to our investors residing abroad will have ample room to grow. The stabilizing revenue stream recurring service fees was RMB 474 million in the first quarter of 2023, which takes up 58.8% of total revenues and remains relatively steady from last quarter. Performance-based income was RMB 83 million, flat from the previous quarter, but went down 52% year-over-year due to weaker market performances, especially on security-type products. Quarterly operating income was RMB 279 million, down 11.1% year-over-year, but up 26.9% quarter-over-quarter, implying increase of 9.8% quarter-over-quarter in operating margin due to a 20% quarter-over-quarter decrease in total operating costs and expenses, which has resulted from precise cost efficiency strategy in G&A and selling expenses. Interest income in this quarter was RMB 34 million, up 172.1% year-over-year and 141% quarter-over-quarter, mainly as a result of our US dollar deposits. Consequently, non-GAAP net income was RMB 240 million, down 23.6% year-over-year, but up 60.6% from the last quarter, indicating non-GAAP net margin of 29.8%, which increased 12.9% from last quarter, but decreased 9.6% year-over-year due to the change of the revenue structure, especially in performance fee. Transaction value was RMB 16.8 billion for the quarter, up 12% year over year, but down 6.7% from the previous quarter. Notably, the transaction value of private secondary products increased 6.5% year over year and 27.5% quarter over quarter to RMB 4.3 billion. The transaction value of mutual fund products decreased 18% from last quarter, to RMB 10 billion but increased 40% year-over-year thanks to our continuous effort to enlarge our client base, including both individual and institutional clients, onshore and offshore. Besides, the transaction value of private equity products was RMB 1.3 billion. mainly from USRP products, which went up 3% quarter-over-quarter thanks to the proprietary investment teams of Gopher in New York, real estate investment team, and also Silicon Valley venture capital investment team, as well as enlarged coverage and selection of global top tier products. Since the loosening up of the COVID restriction on both domestic and international traveling, we have been investing heavily to bring back NOAA's famous investment seminars to our clients. The client summit we held in Hangzhou during the first quarter of 2023 attracted more than 1,200 high net worth individuals, clients, and dozens of reputational fund managers in the industry. were invited to provide their latest views on the economy and investment strategies. Additionally, overseas client activities like the investment summit we held in Hong Kong also underpinned the promising progress for NOAA's global expansion plan, with over 600 clients in attendance. The portion of overseas transaction value reached 31.5%, up 15% year-over-year and 3.2% quarter-over-quarter. Overseas AUM also increased about 15% year-over-year and 2.8% quarter-over-quarter to RMB 33.4 billion, taking up 21% of the total AUM. Moreover, Oversea Active Clients went up 35% year-over-year at 1.3, quarter-over-quarter, demonstrating the progress in the establishment of client channels in our Oversea Wealth Management business. As for our segmented results, net revenues from wealth management were RMB 587 million, taking up 73% of total net revenues. Net revenues from asset management net revenues was RMB 205.2 million, taking up about 25.5% of total revenues. Total AUM increased by RMB 445 million from last quarter, sitting at RMB 157.6 billion, primarily due to the increase of the AUM in public securities products thanks to our US dollar cash management offerings. Overseas AUM increased by RMB 919 million this quarter, making up 21.2% of total AUM. Moving on to balance sheet, we remain in a very healthy position in terms of liquidity as our current ratio stand at 3.2 times. The debt to asset ratio was 20.2% with no interest bearing debt. Currently, we have RMB 4.7 billion in cash and we're preparing the dividend payouts as well as executing the other globalization plan. In addition, as mentioned in the previous quarter, we will declare a final dividend of RMB 5.5 yuan per share equivalent to USD 40 per ADS or HKD 6.2 per share, subject to the final approval of the upcoming AGM on June 12, 2023. We look forward to providing stable and sustainable returns to the shareholders with the growth of our business. Wrapping up, our first quarter performance delivered a stable set of underlying results with a positive outlook on our domestic-international dual circulation strategy. We believe that NOAA will be able to tread through the uncertainties and seize the opportunities to expand in the coming years. Again, we sincerely appreciate all shareholders for your ongoing trust and support and strive to create a diversified portfolio and long-term values for our clients and shareholders. Thank you for listening and we'll open the floor for questions. Thank you, Grant.

Dear investors and analysts, if you have any questions, please use the raise hand function from the Zoom webinar. Now, first, we have Helen Li from UBS. Hi, Helen. Hi Helen, morning.

In this quarter, I saw that the number of domestic financiers has increased by 40. I remember the guide we gave before was that the number of domestic financiers has maintained a basic stability. So what is the current plan for the expansion of this domestic financier? In addition, it is a near growth of 40 domestic financiers. How many financiers are corresponding to this financier resignation and new recruitment? This is the first question. The second question is, under the financial management framework, Hong Kong's income contribution is almost doubled. How much of this income is the high-quality customer contribution extended by Hong Kong's local RM? Okay, let me translate my questions. This is Helen from UBS. Two questions if I may. The first is on RM expansion plan. In the first quarter, the number of onshore RM saw a sequential increase of 40. I remember your previous guidance was no increase or slight increase in onshore RM. So is there any change of plan? And for the 40 increase in onshore RM, how many were new joiners and how many RMs have left the firm? The second question is on revenue contribution from Hong Kong business. What proportion of the revenue can be attributable to newly acquired local clients rather than onshore client referrals? Thank you.

Okay, I'll answer first, and then I'll ask Tanjin to explain. First of all, our core focus in China is on large and medium-sized cities. As you can see, because we have seen the growth of our current high-end customers, we have set a 311 city plan for the north of Guangzhou. These 311, 14 cities, all need to achieve a goal of 10 billion. So its finances are growing rapidly in Shanghai, Beijing, Shenzhen, Guangzhou. These are the core and central cities. If we look at it now, there are very few financial institutions that are active in leaving. The main reason is that we can't eliminate or optimize the competitive financial institutions. The main reason is that within five years, we will have to do a large-scale plan. The core is high academic performance and good background planning. I don't have any specific data, but if you need it later, we can find it for you. But the big direction is all according to our plan, which is to shrink and focus on large and medium-sized cities, and then large and medium-sized cities are expanded, and then small and medium-sized cities, we are to keep and rely on good financiers. Basically, it's a concept like this. What is the second question? Let me translate the first one first.

So thanks, Helen. Basically, the change in the domestic items are in compliance, actually, with our strategy domestically. We do have a program called 311. Basically, the 14 cities, the three major cities, which Beijing, Shanghai, Shenzhen, and also 11 or 12 other first-tier cities that we believe are very, very important. for the future market expansion. So for these cities, we actually do have a goal for the average business that's over 10 billion each year within three to five years. So for these cities, we're still expanding and also recruiting actively. As a result, the smaller cities, probably in the Third, fourth tier networks, the branch offices. Some of the RMs that are not operating or performing to the standard of the 311 cities are obviously let go or they choose to leave. But we don't have exact data to track The turnover, but if you need it, we'll be very happy to provide it. But basically the strategy surrounded the domestic market is to continuously to heavily invest into the 311 cities. We actually, as a matter of fact, I just want to supplement, you know, from the budget standpoint, we do set aside a strategic budget to support the hiring, especially the higher talents that probably doesn't fit in the current compensation schemes who actually do have a strategic budget to supplement these cities so they're able to attract the relatively higher tier talents so you will see a number in the in the number of RM and also contributed partially to the plan of big tree that's basically we're trying to attract are relatively younger blood into the team so basically the ones with less than five years experience but with great academic background and to supplement the RM team so that will actually have a team of younger talents that will be able to grow into large and better arms in their future years.

Hong Kong business, including Singapore business, I think we don't have a special division between local and international. All the customers are local R&M, they do their own business. Because they only do their own business, they can make peace. The so-called transition is that domestic financial institutions can't recommend overseas products at all. If this client has overseas needs, he will have a group within the company, and then we will have local IMs in Hong Kong and Singapore to communicate with them and discuss how to make global asset allocation for him overseas. These clients are all clients with accounts overseas or local private services overseas, which is equivalent to making a new positive in Luoya. So I don't think there's a way to answer your question about how much is transferable and how much is local expansion. In our country, as long as it's overseas, 100% of the customers are local expansion. The financial experts in China don't know what products the customers buy, how many products they buy, and what the situation is. It's completely an internal coordination. You can put it that way.

So Helen, to your second question. So basically, we don't typically characterize that as referral or local business. So basically, all the overseas businesses that are rising from the class demand are 100% viewed as locally developed. So basically, the domestic, the domestic RMs When they do realize or their clients actually express to them that they do have overseas assets and they need some help on the allocation of overseas assets, the domestic RM will actually team up with the You know, RMs in Hong Kong and Singapore to continually to focus on figuring out what exactly their allocation is. But I think one fact is for sure that domestic RM is not aware and they will not be able to know what exactly Zhe Yin, Zhe Yin, Zhe Yin The Overseas Private Bank or other institutions. So basically that piece of business will be viewed purely as the overseas allocation.

Okay, thank you, Mr. Wang and Mr. Pan. My first question is, because Hong Kong and Singapore's financial policy this year is to expand to 120 people, do we have a specific number of people in our country?

Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi In a more accurate model, we call it the 5 plus 2 model. For example, 5 ARs plus 2 FRs plus SRs and these product experts that it can call. It knows that in this model, basically the profits of each city, Thank you, Helen.

Next, we have Chi Yao Huang from Morgan Stanley.

There is also a trend like this, including the currency fund and the insurance sales, which will indeed recover significantly. Second, by April, there will be a large-scale growth in banking finance. In our service, high-end customers, their risk variables and asset configuration, let's observe the latest trend of changes. Then, Manager, if you look back, when can we see a more obvious risk variable and their products? So the first question is on the asset allocation of high net worth. Individuals, their risk preference and their preference products. What's the latest trend the management are seeing right now? And the second question is on the revenue and the profit outlook and especially what part is more certain we think will be the most certain drivers this year and what the other parts have some uncertainty this year. Thank you.

I'll answer the first question, and then Pan Qing will answer the second question. In general, we are relatively conservative. We think that in the long term, the global economy is declining or declining. So most customers think that in the next five to ten years, we will have a strong and balanced strategy. In fact, the most important thing is the age of the client. We see that in China, especially in mainland China, these clients who make money become high-quality clients. In the past, they were in the creative stage, so they were relatively diligent. They all hope to have good income. Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi Weiguo Wu, Hong Li, Wing Shan Ng, Melo Xi So they all became more conservative. These customers' basic family assets are all from China, whether it's their business or their wealth. So now we also see that their global asset allocation needs are basically a springboard for development. In the past, even if it was export, Hong Kong and U.S. listed companies, but its configuration is still the core of China. But now their global configuration needs are very clear. But the premise of global configuration will start to consider, for example, their asset structure, trust, their insurance configuration is enough, even their identity planning, global life, etc. These are some of the problems. So we also see that the asset growth in protection is fast, but they are more cautious in investment. Then they are all in We don't know when this trend will change.

Okay so well basically we still are looking at rather uncertain macro outlook so majority of the clients actually take a pretty defensive stance in terms of the investment strategy or you would say bear market minded or balanced minded type of strategy. I think it's one interesting fact to note that the age structure of majority of the high net worth individuals are first generation entrepreneurs or business owners so in the first half of their life you know obviously very aggressive and probably in the attack mode if you will in the investment strategy but now they're getting you know especially the baby boomers that was born between 1962 to 1972 they're looking at the second half of their life so they're taking much more defensive strategy and mindset towards investment and asset allocation strategy If you think about it that a majority of the wealth and asset and investment probably very heavily pro-China in the past and now they're probably looking at a erupting globalization as allocation strategy to diversify the geographic risks. So we're seeing a very clear trend of the increasing allocation probably to the preservation strategy in terms of assets I believe we believe that there's still So that's the answer to your first question, Chiao. and to your second question in terms of revenue and profit for the rest of the year. Obviously, since we're getting primarily listed on the Hong Kong Stock Exchange, we cannot give a revenue or profit guidance. But I think one thing is for sure that from the Expense and cost strategy, even if we're heavily investing on the globalization, we're still actually trying to maintain a relatively consistent profit margin to the past year. So basically, we're seeing more cost efficiency, especially from domestic operations. For example, we're actually heavily concentrated in larger cities, but closing down some of the smaller cities. also letting go some of the low-performing RMs and also using more the NWC, which is the new headquarter, as the marketing scenario instead of paying millions on the hotel rooms, especially for Shanghai and Jiang Zhe Hu provinces. So we'll maintain a relatively steady profit margin, especially from human capital expenses standpoint. And two, we believe that the continuing to strive for, as you see in the first quarter, we actually have a very strong recovery in one time commission, which means that we're still growing the new revenue from larger wallet share on newer clients. That's what we'll maintain. So hopefully, you know, obviously, even During a recovery year that China has a goal for the GDP recovery and increase. So we obviously from the annual budget standpoint are still very growth minded. We're obviously Thank you very much, Guan Yichen.

Thank you, Chi Yao. If you have any other questions, please use the raise hand function in the Zoom webinar. So we have no further questions from the investors and analysts. So thank you all for listening to our earnings release today. And if you have any questions, please don't hesitate to contact the investor relations team at NOAA.

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