Noah Holdings Limited

Good day and welcome to the NOAA Holdings Third Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Melo Shi, Senior Director and Head of Global Capital Markets Group. Please go ahead.

Thank you, operator. Good morning and welcome to NOAA's third quarter 2024 earnings conference call. Joining me today on the call today are Ms. Wang Jingbo, our co-founder and chairlady, Mr. Dander Yin, our co-founder, director, and CEO, and Mr. Grant Pan, our CFO. Mr. Ng will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. They will all be available to take your questions in the Q&A session that follows. Before we begin, I'd like to gently remind everyone that we'll be hosting a corporate open day in Hong Kong on the afternoon of December 6th. The event will host analysts and investors and feature today's executive management team, as well as others, who will offer insights into the wealth management needs of our target client base, discuss global investment allocation strategies, and showcase the progress we have made with our competitive global investment product offerings and comprehensive service matrix. Events registration is required to attend in person. A link to register was included in the press release announcing the event we issued last week. The event can also be viewed live via webcast or replay on our IR website. Please feel free to reach out to our IR team should you have any questions about how to register or watch the event online. In addition, please note that the discussion today will contain forward-looking statements that are subject to risk and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risk and on subsidies included but not limited to, those outlined in our public filings with the ICC and Hong Kong Stock Exchange. NOAA does not undertake any obligation to update any forward-looking statements, except as required under applicable law. With that, I would like to pass the call over to Mr. Zander Yin. Please go ahead.

Thank you, Melo. Good morning, investors and analysts of NOAA. Today's call meeting agenda, I will continue the way of last quarter, to report on the three quarters' performance in the international and domestic sectors, and share with you our international and domestic business development strategy. As I mentioned last quarter, we will continue to promote the strategy of growing domestic and expanding international. In the domestic sector, we have completely placed the client managers in different positions. Among them, the fund sales version is through the Luo Ya Zhengxing Fund Sales Company. The future core strategy is to focus on exploring the online-based service business model. Use RMB資產配置全球資產. The insurance economy version is through Luo Ya Rongyao Insurance Company. The future is mainly based on the development direction of the five-storied economy. The financial management version is through Gefei Financial Management. The future is mainly focused on the withdrawal of the first-class market and the management of cross-border products in the second-class market. is a asset management brand. Glory is a comprehensive business brand that protects inheritance and trust. At the same time, we are accelerating the pace of global market expansion. In Southeast Asia, Japan, Canada, the United States, Europe, etc., we will continue to launch our wealth management services. The three types of customers will be our key service targets. The first type is high-quality families and enterprises that are new and ready to go out to sea. Thank you, and good morning or evening to everyone. Similar to last quarter, we'll share our financial results by domestic and international segments.

followed by an overview of our growth strategy for both. As noted on last quarter's call, we're actively pursuing the strategy of refining the domestic market while expanding internationally. Domestically, we're strategically deploying sales personnel to specific independent and licensed business units. We're leveraging NOAA upright fund distribution, whose core strategy is to focus on developing an online-first business model complemented by offline services to allocate RMB assets globally. In the insurance brokerage segment, lower insurance brokerage is focusing on building a commission-only agency team. In the asset management segment, gold for asset management is focused on managing exits in the primary market and cross-border products in the secondary market. At the group level, We are establishing a dedicated business development team to engage more effectively with high network clients through investor education and cross-industry partnerships. The evolving regulatory environment requires us to adjust each business unit to adopt a distinct service model to ensure compliance and improve operational efficiency. Globally, we launched new brands to serve overseas Mandarin speaking clients this year. including our wealth management arm, ARC Private Wealth, asset management arm, Olive Asset Management, and global insurance trust and comprehensive services arm, Lowery Family Heritage. At the same time, we are accelerating our expansion into global markets by gradually rolling out our wealth management services, targeting key markets such as Southeast Asia, Japan, Canada, the United States, and Europe. We target three client segments, high net worth families and companies that recently relocated overseas or are preparing to do so. Secondly, Mandarin speaking individuals or businesses who have immigrated abroad for less than five years. Thirdly, Mandarin speaking settled immigrants who have resided overseas for a prolonged period of time. Our strategy focuses squarely addressing the diverse needs of these client segments by offering a tailored range of products and services.

Our overseas revenue has also increased by 35.5%. This quarter, we will continue to focus on business B.U. to update the performance and operation of investors in all conditions. Our CFO, Mr. Pan Qing, will provide a more detailed overview of the overall financial performance of the group. First, let's talk about international business. We have improved the product certification of new service customers, improved the ability of online service customers, At the same time, we launched different types of products and combinations for new and old overseas immigrants and companies. During the three-week period, the international business income contributed 3.8 billion yuan, which increased by 28.9% in the same ratio and increased by 35.3% in the same ratio. The growth mainly stemmed from the addition of overseas investment products AUA and AUM, which achieved 5.7% and 16% in the same ratio. the growth of overseas insurance products. ARK is our wealth management brand. We use Hong Kong, Singapore, and the United States as international bookings centers. In Southeast Asia, Japan, Canada, and other regions, we serve a large number of customers and expand to local new customers, Chinese customers. At the end of the third quarter of 2024, we, the direct sales team of KhanOlive, already have 146 financial institutions overseas, with a growth of 89.6%. with an increase of 29.2%. The overseas AUA, which includes retail products, has reached $86.9 billion, with an increase of 5.7%. Since the end of the third quarter, the number of registered customers in ARK has exceeded 17,200, with an increase of 20.9%. Of which, the number of opening in Hong Kong has reached 17,038, 同比增长19.8%新加坡开户数达735人同比增长168.2%美国累计服务客户数量超过1000人客户以全权委托的方式在ARK进行资产管理的客户数量达到1012人同比增长55% iARK是我们的在线财管的服务的一个单元包含货币基金证券交易等业务在三季度实现总收入787万 The same growth rate is 190.7%. At the same time, after we launched the iARC app in Singapore, the ability to serve local customers has also improved. It is expected that this year we can achieve the balance of profit and loss in Singapore. During the third quarter of 2024, the number of active and high-quality customers overseas reached 3,139. The same growth rate is 37.4%. The total revenue amount reached $11.1 billion, with a growth of 15.8%. Among them, the number of active customers of the U.S. public fund reached 2,691 people, with a growth of 53.1%. The revenue size reached $4.9 billion, with a growth of 83.7%. In terms of B-end customers and institutional customers, the revenue size of overseas products reached $88 million, with a growth of 57.1%.

Turn into our financials for the quarter. Total revenues will earn the $689 million, a decrease of 8.8% year-on-year, an increase of 11% sequentially, primarily due to a 32.6% year-on-year decrease in revenues from mainland China, which was partially offset. by a 28.9% increase in revenues from overseas. Revenues from overseas increased 35.3% sequentially as well. Similar to last quarter, I will use each business unit as the primary framework for updating investors on their performance and operations. Following my remarks, our CFO, Mr. Grant Pan, will provide an analysis of our overall financial performance. Internationally, we continue to enhance our product matrix to better serve our clients and improve our online service capabilities. During the quarter, we launched several products tailored to the three key client segments I mentioned earlier. During the third quarter, net revenues from overseas were RMB $377 million, an increase of 28.9% year-on-year and 35.3% sequentially. accounting for over 50% of the group revenue for the first time, primarily due to an increase in revenues from offshore investment products, while US dollar AUA and AUM increased by 5.7% and 16% year-over-year, respectively, as well as increased distribution of overseas insurance products. Hong Kong, Singapore, and the United States have been designated as the primary overseas booking centers for ARC Wealth. These booking centers not only serve existing clients, but also facilitate engagements with new clients in Southeast Asia, Japan, Canada, and other regions. As of the third quarter, we had 146 overseas relationship managers, including the direct sales team from Allis Ad Management. an increase of 89.6% year-on-year and 29.2% sequentially. Overseas AUA, including third-party distributed products, reached US$8.7 billion, a 5.7% year-on-year increase. As of the third quarter, ARQ's private wealth total registered clients exceeded 17,200, an increase of 20.9% year-on-year. the number of accounts opened in Hong Kong reached 17,038, an increase of 19.8% year-on-year. In Singapore, we had 735 accounts, a substantial increase of 168.2% year-on-year. In the U.S., we have served over 1,000 clients cumulatively. Additionally, the number of discretionary investment clients reached 1,012, an increase of 55% year-on-year. iARC is our online wealth management platform that offers money market mutual funds and securities trading. During the quarter, it generated revenue of $8 million, an increase of 190.7% year-on-year. Following the launch of iARC app in Singapore, our service capabilities for Singapore local clients improved significantly. We expect NOAA Singapore to reach the work even point by the end of the year. During the third quarter, the number of overseas active clients reached 3,139, an increase of 37.4% year-on-year. Total transaction value during the same period was US dollar $1.1 billion, an increase of 15.8% year-on-year. The number of active clients in US dollar mutual fund products reached 2,691, an increase of 53.1% year-on-year, with the transaction value of mutual funds reaching US$494 million, an increase of 83.7% year-on-year. Overseas transaction value for corporate and institutional clients reached US$88 million in the third quarter, an increase of 57.1% year-on-year, while the AUA reached US$213 million, an increase of 70.4% year-on-year.

In terms of asset management, our new brand, Olive Asset Management, provides overseas active management and selection of other types of investment products and public fund products. During the three seasons, the number of US dollars for the first-tier products reached US$1.5 billion, which is roughly 46.7% of the total. The second-tier products, such as hedge funds, Thank you. Olive takes the initiative to manage overseas AUM products, reaching $56.3 billion, with a growth of 16%. The share of AUA has also risen from 22.8% to 26.3%. AUM from overseas private equity and other first-class market funds has reached $42.7 billion, with a growth of 19%. In terms of comprehensive services for high-quality customers and families, we launched the Glory brand, providing customers with comprehensive solutions such as identity planning, global insurance, trust, etc. The version achieves a total income of 140 million yuan in the third quarter, with a net growth of 42.4% and a return growth of 44.1%. Glory is also actively exploring new business models, such as expanding the construction of a team of five-star managers. 20 foreign institutions have established a new customer transition model. At present, there has been a certain progress. In terms of 5G, more than 30 5G self-employed managers have been recruited. As of now, more than one-third of the managers have a share of the company. In terms of foreign institutions, there has also been a breakthrough from 0 to 1. For one-off institutions, professional service institutions, and food and drink institutions, there are three types of channels. On the international asset management front, we launched our new asset management arm, Olive Asset Management, to provide clients with actively and externally managed overseas alternative investment products, as well as mutual fund products.

During the third quarter, transaction value of U.S. dollar private equity products reached U.S. dollar 152 million, a significant increase of 46.7% year-on-year. Transaction value of U.S. dollar private secondary products, including hedge funds, structured products, and term deposits, reached U.S. dollar 395 million. Excluding term deposits, the transaction value of hedge funds and structured products, reached US$93 million, the highest since 2023, up 21.5% year-on-year and 17.1% sequentially as we continue to enhance our public market product matrix. As of the end of the quarter, AUM for overseas products reached US$5.6 billion, a 16% year-on-year increase and accounting for 26.3% of the total AUM, compared to 22.8% during the same period last year. AUM for overseas private equity and other primary market funds reached US dollar $4.3 billion, a 19% year-on-year increase. To provide comprehensive services for Hanover families overseas, we launched the Glory Family Heritage brand, which offers identity planning, global insurance, trust services, and other integrated solutions. This segment generated total revenue of RMB 145 million in the third quarter, an increase of 42.4% year-on-year and 44.1% sequentially. Glory is actively exploring new business models as well. We are expanding our team of licensed commission-only agents and establishing new client referral models for external agency channels. where we have already made significant progress. We recruited over 30 commission-only agents during the quarter, with more than one-third already contributing revenue. Regarding external agency channels, we have achieved a breakthrough from zero to one. We are targeting three types of institutions with a range of value-add services and professional capabilities for their clients, including cross-industry institutions, professional service agencies, and licensed financial institutions. To date, we have signed contracts with 19 external institutions, which have already begun to contribute to revenue. We have also gained valuable insights from this model and will focus on its further developments moving forward.

In terms of domestic market, we continue to go around a strategic direction. First of all, it is a comprehensive agreement to effectively reduce costs. The fourth is to choose products that can protect customers' interests for a long time, adhere to investment education, and maintain deep communication with customers. During the three-week period, domestic business income contributed 3.1 billion yuan, down 32.6%, and down 8.8%. Mainly, new business is less, and the management fee income and domestic insurance income of RMB investment products and domestic insurance product income have been reduced. NOEA's fund sales company, The products are public funds and private securities and other products in the public market. The total income of the third quarter is 1.1 billion yuan, down by 21.7%. During the third quarter, the total income of the RMB public fund is 51.9 billion yuan, down by 60% and up by 70.4%. The total income of the RMB private securities fund is 7.9 billion yuan, down by 55.1% and up by 35.7%. This is mainly due to our product strategy adjustment. As for non-financial assets, In the third quarter, the total income of 1.8 billion yuan was achieved, and the price dropped by 17.3%. In the first quarter market, Gefei's investment team continues to focus on the withdrawal of mass assets. As of 2024, the withdrawal of assets in the first quarter market of more than 60 billion yuan has been achieved. In terms of strategy, it is to strengthen the daily supervision and management of the subsidiary fund and the project, and to seek a diversified withdrawal path to strengthen the share of the underlying assets in order to achieve the improvement of DPI. On the other hand, the investment team is actively expanding the purchasing market, through asset acquisition or S-基金的交易等方式,寻求退出的一个机会。二级市场,隔非资产管理的私募基金产品,主要是聚焦用人民币资产,通过境内跨境的ETF,获取全球市场的Beta收益。该产品系列,三季度期间,完成了近1亿元基金的一个募集的规模。国内荣耀保险经济的业务,三季度实现总收入862万, The main reason is that this year, at the same time, we are adjusting the sales team and the direction of the product. The sales team focuses on developing an unbiased economy, and the product focuses on the direction of healthcare and pension. At present, it seems that the new sales team will need a period of time before there will be a start-up. As mentioned above, we are already on the way to making China a major international country. In the process of establishing a global Chinese customer service system, we have seen Domestically, we remain committed to our refining operations approach. We are ensuring compliance to effectively reduce costs and are focused on selecting products

that can safeguard clients' interest in the long term, emphasizing investor education and foster deep engagement with our clients. In the third quarter, net revenues from mainland China contributed RMB 312 million, a decrease of 32.6% year-on-year and 8.8% sequentially. This was primarily due to limited new business activities and decreases in recurring service fees from RMB investment products and revenues from domestic insurance products. NOAA Upright, which offers mutual funds and private secondary products, generated total revenues of RMB 108 million in the third quarter, a decrease of 21.7% year-on-year. During the third quarter, the transaction value for RMB mutual funds reached RMB 5.2 billion, a decrease of 60% year-on-year, but an increase of 4% sequentially. Transaction value of RMB private secondary products amounted to RMB $786 million, a decrease of 55% year-on-year and 35.7% sequentially. These changes were primarily due to adjustments in our product strategy. Gopher Asset Management achieved total revenue of $181 million in the third quarter, a decline of 17.3% year-on-year. In the primary market, Gopher's investment team continues to focus on exits for existing investments. Timing successfully achieved over RMB $6 billion in the primary market exits so far in 2024. Strategically, we are enhancing daily supervision and management of our portfolio funds and projects, exploring diverse exit strategies, and improving dividend payouts from the underlying assets to improve DPI, Additionally, the investment team is proactively expanding the buyer's market by pursuing exit opportunities through asset acquisitions or secondary fund transactions. In the secondary market, private secondary products managed by Golfer primarily focus on deploying RMB to invest in onshore cross-border ETFs with the goal of capturing beta returns from the global market. This product series generated transaction value of nearly 100 million RMB during the quarter. Total revenue from lower insurance brokerage onshore during the quarter was RMB 9 million, a decline of 89.9% year-on-year. The decrease was primarily due to adjustments made to the sales team and product selection strategy. We're also establishing a commission-only agent model in terms of product selections. The focus is on medical and retirement-related services. With the new sales team structure and new product mix, we expect this business to take a bit longer to ramp up. In summary, through our strategy of refining the domestic market while expanding internationally, we are making significant progress. As we establish a global client service model, we are seeing significant demand for overseas services among overseas Mandarin-speaking clients. Our new vision is to become the preferred wealth management platform for global Mandarin speaking investors. I would now like to turn the call over to Grant to go over financial results in more detail. Thank you.

Thanks, Melo. And thank you, Xander. And greetings to everyone joining us today. Globally, the three major U.S. stock indices reached historical highs in 2024. with the NASDAQ composite up 25% this year and 80% since the end of 2022. Our clients have benefited from a forward-looking global CIO house view, which began recommending clients allocate funds to QD products, especially linked to U.S. equity, in 2022. We believe the overseas wealth management needs of clients remain adequately addressed. Therefore, we'll continue to actively expand our international businesses by increasing the number of local branches, strengthening our local relationship manager teams, and enhancing our online services capabilities to improve the quality of offerings. Now let's get into the details of our financials. I'm very pleased to report that our third quarter results have regained positive trends. with net revenue reaching RMB 684 million. While this is still weaker, 8.8% compared to the same period last year, it does reflect an 11% increase sequentially compared to last quarter, despite significant market pressures. This increase is mainly driven by the growth of our overseas businesses. Overseas net revenue in the third quarter reached RMB 377 million, a year-over-year increase of 28.9%, accounting for 55.1% of total revenue. Specifically, revenue from U.S. dollar-nominated investment products reached RMB 191 million, up 42.5% year-over-year, and 40% growth sequentially. Revenue from overseas insurance products was RMB 145 million, up 42.4% year-over-year, and 44 growth sequentially. Revenue from U.S. dollar liquidity products increased significantly by 190% year-over-year, an impressive growth from online wealth management on IR platform. These figures underscore the strong performance of the overseas business this quarter. By revenue type, one-time commissions increased significantly by 28.5% quarter-over-quarter, primarily due to the recovery in overseas insurance. Recurring service fees declined 13.8% year-over-year and were reverted flat sequentially, mainly due to the aging industry. of RMB-denominated AUA and AUM. In contrast, revenue from overseas investment products continues to grow as we expand our international presence. Performance-based income was notably stronger this quarter, reaching RMB 61 million, primarily driven by the successful exits of certain U.S. dollar PE products. Our total transaction values in the third quarter was RMB 14.3 billion. As of the end of this quarter, U.S. dollar denominated transaction values increased 15.8% year-over-year to U.S. dollar 1.1 billion. As a proportion of total transactions, U.S. dollar denominated products are growing and now account for 54.6% of total transaction value. compared to 31% during the same period last year. As expectations of the Federal Reserve rate have strengthened, we have observed a continuous trend of clients shifting from liquidated products to investment opportunities. In the third quarter, the transaction value for U.S. dollar alternative investment products, which includes private equity, private securities, and private credit products, increased significantly by 36% year-over-year and a 6.1% sequential growth to U.S. dollar 245 million. As a proportion of total transaction value and total U.S. dollar transaction values, alternative investment products increased to 12% and 22% respectively. We're pleased to see these products increasingly contribute to our ongoing management fee revenues. At the end of the third quarter, our U.S. dollar AUM grew significantly by 16% year-over-year and 1.6% sequentially to U.S. dollar 5.6 billion, with the U.S. dollar denominated AUA growing by 5.7% year-over-year and 1.9% sequentially to U.S. dollar 8.7 billion. This reflects our ability to capture a larger share of clients' U.S. dollar wallets for investment products. Moving on to the income statement, our ongoing cost control initiatives continue to yield positive results. Total operating costs and expenses for the quarter were RMB $443 million, a decrease of 11.6% year-over-year, and an 8.1% decrease sequentially. Compensation benefits decreased by 22.7% year-over-year as we further improved human capital efficiency by reducing overhead costs, with the proportion of middle back office down now below 50% of total headcount. Selling expenses and general administrative expenses declined significantly by 26.1% year over year. Government subsidies, notably, are expected to decrease this year, with only RMB 37 million received year to date. Despite the reduction in government subsidies, operating profit for the quarter remained consistent when compared to the same period last year and saw a notable sequential recovery of 80% to RMB $241 million. Our operating margin has come back to 35%. We also know that net income this quarter was impacted by certain factors, including the decrease in interest income on the RMB 1 billion dividend payout from substantial payout earlier this year, the decline in domestic interest rates, and the reallocation of some cash to short-term investments. Additionally, the U.S. dollar's depreciation against RMB during the quarter led to a foreign exchange loss of RMB $44 million. Obviously, the future appreciation of the U.S. dollar, if any, is expected to mitigate this impact. Tax expenses were notably higher during the quarter, primarily attributable to the withholding taxes on dividends payout. That being said, our non-GAAP net income still increased independently on a sequential basis, to RMB $150 million. As of the end of the third quarter, our year-to-date net income has reached RMB $418 million. In terms of clients, as Xander mentioned, we maintained a stable total of 9,420 diamond and black card clients at the end of this quarter. Meanwhile, our overseas client base continues to show robust growth with more than 17,000 overseas registered clients, up 20.9% year-over-year and 3% sequentially. The total number of overseas diamond black card clients rose to 1,556. Overseas active clients also reached 3,139, a 37.4% increase year-over-year. Turning to our balance sheet, where our cash and cash equivalents by the strict classification decreased to RMB 3.4 billion this quarter due to the RMB 1 billion dividend payout earlier this year. We maintain a robust liquidity position taken into consideration of short-term investments and long-term investments with some reclassification. Our total cash reserves totaled around RMB $4.8 billion, essentially unchanged from the previous quarter if we exclude impact from the RMB $1 billion dividend payout. Our current ratio has improved to 4.4 times, and the debt-to-asset ratio has dropped 14.9%, with no interest-bearing debt. At the end of August, we also announced a US dollar 15 million share request program and are pleased to see the subsequent rebound in our stock price. However, despite this rebound, we still believe our stock remains undervalued and doesn't truly reflect the growth prospects, robust balance sheet positions, and cash reserves. It also fails to capture a special bond with Mandarin-speaking high-net-worth investors around the world. We plan to carry out the repurchase program at appropriate times once the trade window opens, reaffirming our commitment to delivering value to our shareholders. In conclusion, 2024 is a year of significant transformation for NOAA in every aspect, as we actively deploy a more customer-centric sales model and deepen our international expansion efforts. Transformation is embedded in our corporate DNA and has been a key driver of our growth. Recognize this journey will be very challenging. And we're confident that these strategic initiatives are not just about weathering the storm. They're about unlocking new horizons for long-term development and growth. Once again, thank you all for your request and your support. We'll now open the floor for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Chi Yao with Morgan Stanley. Please go ahead.

Hi. Good morning. Thanks for taking my question. This is Chi Yao. I'm from Morgan Stanley. I got a question. Obviously, we are observing quite some excitement on the equity market since September. So a lot of the momentum, we think, very much retail-driven. So we're just wondering to what extent, as a wealth management provider, NOAA can participate in this rising sentiment of the equity market and how does that impact our revenue and profitability? So relating to that, how is NOAA advising the clients on the after-hour fishing site in this environment? Thank you.

Okay, thank you, Chi-Yao. Yes, it's mainly about the policy and the changes in the entire market environment of China's A-class stock market in recent years, as well as a change in the mood of our customers, as well as a change in the opinion of our customer asset configuration. At the same time, it has an impact on our revenue and profit financial statements.

Yes, this has no impact on financial statements for the time being. There is a series of policies of the Chinese government that really have a big impact on customers' emotions.

or in the market, you can see that the activity has increased. In the past, customers may not have enough confidence in the second-tier market in China. The policy of the third-tier market has increased the activity of customers, at least in terms of their attention and activity. But we can still see that we are using renminbi assets to match global assets for globalization. This is a very important point. Although the domestic policy is in place, will it be able to effectively change the basics after the policy is in place? We still need time to verify this part. Because from the financial management perspective, it is not a short-term opportunity, but more importantly, it is a long-term document configuration. So in this respect, our CIO House In terms of the point of view, it is actually more consistent. There is a comprehensive configuration, including our company's strategy, which is the same. It matches our behavior. In terms of the product, we have indeed made some improvements and adjustments to the policy. The main thing is to continue to insist on QDI and QDLP products. So thank you, Xiao, for the question.

With regard to the financial performances, obviously, the major policy was rollout at the end of September. So our third quarter financial results were largely not impacted by the recent policy changes and the rebound in the stock market. In terms of the client sentiment, we're seeing more activities among our offshore Mainland China clients, definitely. In the past, we have seen that the investment sentiment and confidence among our clients towards A-share markets was very low or very weak. But at least right now, we're seeing a rebound in trading activities and interest. But from a house view, CIO house view perspective, we still strongly believe to advise clients to use their RMB assets to invest in global beta returns, which is still one of the most important asset allocation advice that we give to clients because we think that the policy still needs time to be implemented and the fundamentals or the economic fundamentals still need time to show whether we'll be improved. And since we're a wealth management company, we are not a trading-driven strategy. Rather, we are more taking a long-term asset allocation view. Therefore, we haven't really changed our CIO how-to. But that being said, we still have enhanced our product shelf on the R&D side, although we're still advocating to advise clients using QDI and QDLP products to invest globally. We have definitely introduced some of the RMD exposure products as well recently.

Thank you.

As a reminder, if you would like to ask a question, please press star then one to enter the question queue. Your next question comes from Peter Chong with JPMorgan. Please go ahead.

Thank you for giving me the opportunity to ask a question. I am Peter Chong from Morgan. My first question is about the international strategy we are implementing. In the past, our domestic income has always been suppressed, but the international income has improved, and the management has also mentioned that our total income in the third quarter has improved significantly. I want to ask, in the future, is our income already entering a turning point? Can we maintain a stable state of improvement in the future? What do you think about domestic and foreign income? This is the first question. Then the second question, I still want to ask the previous one, which is the previous one. An investor's question is, uh, uh, our four seasons. I want to ask us, is this to see, to see if you have seen some investors, that is, on our side, that is, the financial, the financial, that is, the sales. I bought more products. For example, their investors mainly buy which products are not some. uh thanks management for giving me this opportunity to ask a question i have this is peter john from jp morgan i have two questions so my first question is we have been doing this refining domestic operation and expanding international strategy. And I think during the past few reporting quarter, our domestic revenue has been under pressure while overseas revenue have been improving and the total revenue have improved sequentially in third quarter. I'm just wondering, can we say that we have past this period where NOAA's value has been under pressure and going forward, our revenue trend can be stably improving and domestic and international, what do you think will be the largest or most important driver for our revenue outlook in the next, say, one year or so? And my second question is a follow-up question to the earlier question. I'm just wondering, have we observed any trend in customer behavior or activity? Like, what products are clients mostly purchasing in fourth quarter after this big stimulus in mainland China. And with this improving climate sentiment, can we see that the revenue trend in fourth quarter can be improved sequentially from third quarter? I will stop here. Thank you.

Thank you, Peter. And I think it's probably a little bit yes or no to your question. Maybe it's a little bit too early to say that revenue growth trend has come into a turning point. As we know, the market has been changing drastically, especially after the election. But I guess it's safe to say the structure of our growth probably has come into shape that more resources and more expansion efforts are going into the international expansion. So in terms of accumulation of U.S. dollar denominated investment opportunities, probably it's going to be more dominant in the future periods. But, you know, especially with the recurring management fees and carry on the structure, both sides probably will not stay the same or identical to the last quarter. But obviously, we're hoping that we'll be able to accelerate the transformation, but at the same time also remain very patient so that we don't deviate from the overall strategy. So I'll let Xander take the question about the A-share market.

I'd like to add a little more about the A-share market. SPEAKER 1 I think we should Yes, because we have invested more resources in international business. And indeed, the strategic direction of the company is also on the international level. Therefore, we expect that the income of international business in the future should maintain a continuous growth. If we look at it from a turning point or from a development trend, because we are building infrastructure and sales personnel on international business, in fact, the construction of sales team is also continuously evolving. Therefore, I think In the future, it may be stronger than it is now in terms of growth. It can have a more basic support. Regarding the investor's mood, in China, it is hard to judge the effect of the policy in China or the continuity of the policy. But it is true that the investors gave us a very important window opportunity, which is that the investors are more willing so that we can interact with them, especially in the first-tier market. In the second-tier market, our clients have a lot of private funds, securities funds, public funds, etc. In this key window period, we have more one-to-one programming and asset configuration, This is a great opportunity. We have been in close contact with our customers recently. The most important part of this communication process is to adhere to our concept of long-term configuration for our customers. We call it building a safe store, stabilizing the basic plate, and raising the price point. In this process, we look at the customer as a whole. Building a safe store means that through insurance, to protect our customers. Basically, we are focusing on low-risk, high-flow products and some long-term beta strategies. In general, we are seeing a rise in global AI opportunities overseas. So, in terms of our strategy, we insist on providing our customers with long-term data. And in the process, gradually guide customers to be able to make a good asset protection from a long-term perspective. So behind this strategy, it actually reflects that we can provide different services and characteristics to each BU around the customer center. In this case, in fact, if it comes from business, it is indeed related to our own sales the team's service mode and sales mode. In fact, it is more focused on the different needs of the customers, to meet their needs through different BUs. I think this is also a transition period for us, or a adjustment period. Our sales mode is also changing. Thank you. Thank you, Peter, for the question.

I think Grant pretty much answered the first part of the question. And regarding your second point of question, as a follow-on to the first question, so I think our overall view is that it's still quite difficult to see the effectiveness of the recent policies and also the continuation of these policies and to really make a decision on whether this is short-term or mid-term and long-term driven. But we are seeing a trend among our clients or investors that they have been increasingly willing to communicate with us more. So I think at this critical point, this time window, we have the privilege of the more opportunities to engage with clients on one-on-one meetings, providing more asset allocation advice and insights, and also to, I guess, to drive more client transaction and also help them to reshape their portfolio allocation. So we still continue to provide long-term asset allocations and basically in three different perspectives. So first is to provide a safety net, which includes the different protection and inheritance tools for our clients globally. And secondly is the, we call it cash management or cash flow portfolio that provides different liquidity and long-term inflation protections investment tools. And thirdly is to pursue growth strategy through, you know, private equity, venture capital, and also AI-related investment opportunities. So also in this process, we need our different business units to provide each of their featured products and services. and through a client-centric mindset. But as we mentioned before, this is pretty much a new sales model, and we're still undergoing our transition period. It has been a few quarters, but we're still trying trying to work out the best way to improve efficiency under this new model. And we believe that as we gradually figure out the new sales model, you know, it will be reflected in our future financial performance.

Peter? Oh, thank you. Thank you, Mangun, for the explanation. Really helpful.

Thank you for the question too.

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

Thank you all again for participating in our third quarter earnings call. And just another gentle reminder that we will be hosting our annual corporate open day in Hong Kong on December 6th. So please don't hesitate to register or contact our investor relations team for further details. Thank you again.

For those of you in the States, happy Thanksgiving. Happy Thanksgiving.

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