Noah Holdings Limited

Good morning, afternoon, and evening, and welcome to the NOAA Holdings Limited Third Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Doreen Chu, Companies Investor Relations. Please go ahead.

Thank you, Jason. Good morning, afternoon, and evening to everyone, and welcome to NOAA's third quarter of 2025 Earnings Conference Call. Joining me today are Ms. Huang Jingbo, our co-founder and chairlady, Mr. Sander Ying, co-founder, director, and CEO, and Mr. Grant Payne, the CFO. Mr. Yin will begin with an overview of our recent business highlights, followed by Mr. Peng, who will discuss our financial and operational results. They will all be available to take your questions in the Q&A session that follows. Please note that the discussion today will contain forward-looking statements that are subject to resisting uncertainty. That may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include but are not limited to those highlighted in our public filings with the SEZ and the Hong Kong Stock Exchange, nor does it 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. Yin, Mr. Yin, please go ahead.

Thanks, Lori. Good afternoon, investors and analysts. Thank you very much for participating in the third quarter of NOEA Control Group in 2025. For NOEA, we have three very clear changes this quarter. The first is that the company's profit and profit rate have clearly improved under the pressure of income. Non-GAAP net profit has increased by more than 50%. The second is that the growth rate of investment-related products has increased further in the increase in new income. The third is that overseas, Good morning to everyone and thank you for joining us today.

During the quarter, we are seeing three very clear trends emerge. First, despite ongoing revenue pressure, our profitability and margins improved significantly, with non-GAAP net income increasing by over 50% year on year. Second, investment products have seen accelerated growth and are accounting for a larger share of new revenue. And lastly, key initiatives including the establishment of four overseas booking centers and the rollout of AI-related projects have transitioned from planning to actual implementation, These three trends give us greater confidence that our transformation strategy is making solid progress.

从财务表现来看,集团第三季度净收入达到6.3亿人民币, 同比率有下降,但环比小幅提升, 实现了两个季度的环比增长。 收入同比下降主要是来自于 境内外的保险业务的持续回来。 至于我们年... In the beginning of the year, the forecast for 2025 to 2026 is the same as the forecast for the income structure adjustment period. What is worth paying attention to is that the group's increased income quality has significantly increased. Investment product income increased from 18% in the same period last year to 28%. In the future, we will continue to promote the increase in investment income. Under such a background, the company still handed out a stable financial report. The third quarter non-GAAP net profit was 2.3 billion yuan.

Financially, net revenues for the third quarter reached Renminbi 633 million, down slightly year-on-year but up sequentially, marking the second consecutive quarter of sequential growth. The year-on-year revenue decline was mainly due to continued softness in both domestic and overseas insurance businesses, in line with our expectations that 2025 to 2026 would be a period of revenue mix adjustment. Notably, our revenue mix continues to improve significantly, driven by growing investment products revenues which accounted for approximately 28% during the quarter, compared to 18% a year ago, a clear improvement compared to the same period last year, and something we will continue to focus on going forward. As a result, our bottom line delivered a solid performance with non-GAAP net income for the third quarter, up more than 50% year-on-year, to RMB 229 million. This brings non-GAAP net income for the first three quarters of 2025 to Renminbi 587 million. A clear reflection of the results are prudent investment strategy and cost controls are delivering.

From the business aspect, the performance of the outside and the inside are different. The overall overall performance of the outside continues to maintain the position of the investment wall insurance. ARK's outside financial management section The third quarter achieved a net income of 1.5 billion RMB. Due to the decline in foreign insurance sales, the share price dropped by 22.7%, but the share price rose by 13%. As of the end of the third quarter, the US dollar's AUA reached 9.3 billion US dollars, and the share price rose by 6.8%. Among them, the US dollar's private second-tier products, the first three quarter's stock price rose by nearly 2.5 times, reaching 6.9 billion US dollars. In addition to OREO, the asset management version In the third quarter, the net income of 1.2 billion RMB was achieved, and the share price rose by 8.6%. This is mainly due to the continued growth of AUM, which led to an increase in the management fee. By the end of the third quarter, the AUM has reached a scale of 5.9 billion US dollars, and the share price rose by 5.3%. Glory Fabric Heritage, the comprehensive service version, in the third quarter, the net income of 0.5 billion RMB was achieved, and the share price rose by 19.8%. While we are focusing on investing in the main line of business, we are also continuing to promote It shows that the second-tier market is strong, and the first-tier market is focusing on withdrawing, and insurance is one of the characteristics of the adjustment period. The market is active in the A-currency market. In the first three seasons, the revenue of the second-tier product of RMB has increased by 206%, and the total revenue is 89.7 RMB. In the third season, the revenue of the second-tier product of RMB has increased by 8.7%. This is a direction-oriented result of our investment ability to drive the growth of AUA. Gefei's capital block achieved a net income of RMB 1.9 billion, which is the same as the growth of 4.9%. It remains stable in the process of pure amount withdrawal. Honor Insurance's economic block achieved a net income of RMB 47.1 billion, which is the same as the drop of 44.8%. It meets the rhythm of our domestic insurance business adjustment and transformation plan. Overall, the balance of domestic and foreign combination adjustment is playing an important role. The investment cycle has become a new growth engine for the whole company.

The performance of our overseas and domestic operations are each following distinct trends. For overseas operations, it has maintained a pattern of strong investment product growth and soft insurance product distribution. Net revenues for Mark, our overseas wealth management business, were Renminbi 146 million in the third quarter, a year on average. due primarily to a decline in revenue contribution from the distribution of insurance products. Sequentially, however, revenues were up 13%, By the end of third quarter, overseas AUA reached US dollar $9.3 billion, up 6.8% year-on-year. Notably, transaction value of US dollar private secondary products in the first three quarters increased nearly 2.5 times year-on-year to US dollar $688 million. Net revenues from Olive, the overseas asset management $118 million in the third quarter, up 8.6%, sequentially, driven primarily by growth in AUM and recurring service fees. By the end of third quarter, overseas AUM was US$5.9 billion, up 5.3% year-on-year. Net revenues from Glory Family Heritage, which provides overseas insurance and comprehensive services, were Renminbi 47 million in the third quarter, up 19.8% year-on-year. While investment services remain our core focus, we shall continue to serve clients with insurance products through our capital-light, commission-only broker model. On the domestic side, we are seeing strong momentum in the secondary market, a continued focus on exits in the primary market, and the insurance segment entering an adjustment phase. For NOAA Upright, our domestic public securities business continued to benefit from a rebound in the A share market. Transaction value for Renminbi denominated private secondary products in the first three quarters grew 206% year on year to Renminbi 8.97 billion. Net revenues from domestic public securities for the third quarter were Renminbi 116 million, up 8.7% year on year and underscoring the strategic direction we are headed in with growing AUA and expanding investment capabilities. Net revenues from domestic asset management Gopher were RMB 189 million in the third quarter, up 4.9% year-on-year as it maintains stable profitability and continues to facilitate exits from existing assets. Net revenues from domestic insurance business, Glory, were RMB 5 million in the third quarter, down 44.8% year-on-year. The pace of the fall in net revenues was in line with our planned pace of consolidation and transformation to domestic insurance business. Overall, the rebalancing of our overseas and domestic operations is making solid progress, with investment product growth increasingly acting as a new growth driver.

In the first three seasons, we also made a key step in the strategy of globalization. In terms of global operation, we plan to steadily promote We will continue to strengthen local business capabilities and team building in Singapore. Hong Kong and Shanghai play a key role in the operation, regulation, and support system. The global operation framework of the corporation is gradually improving, providing important foundations for future cross-region customer service and asset configuration.

In the third quarter, we continue to make solid progress in our overseas expansion with the establishment of a full booking centers which form the foundation of our global operational system. In the United States, we officially obtained a U.S. broker dealer license and will continue to steadily build our business there in accordance with local regulatory requirements. In Singapore, we continue to strengthen our capabilities and build out our team. While in Hong Kong and Shanghai, we continue to serve as a core hub for operations, compliance, and support systems. Our global operations framework is gradually improving, providing an important foundation for future cross-regional client services and asset allocation.

AI is our key direction in the next three to five years. will drive Noya's second growth curve in the future. In the past few months, we have fully launched an AI financial advisor plus an AI operating system logic plan. We conducted initial tests in the customer contact, content generation, background work, and so on. We also launched cross-departmental AI co-operative work scenarios in Singapore. In the latest IARC ACP, we also officially launched AI financial advisor Noya. AI is a disruptive force in wealth management industry with immense future potential and serves as our second strategic growth driver for the future.

Over the past few months, we have begun implementing our AIRM plus AI operations system plan. Initial pilots were launched during the quarter to improve client outreach, content generation, and back-end operations, as well as cross-departmental collaboration in Singapore specifically. In the latest update to our app, we officially launched our AIRM, NOIA, providing clients with deeper engagement and interaction. I want to emphasize, however, AI is not simply a PPT concept for us. It is an institutionalized operational capability. We will continue to develop AI capabilities across the entire value chain in a steady and pragmatic manner.

展望未来,我们将继续围绕三条核心的战略来推进。 第一个是以投资能力为核心,强化产品的筛选,募集和跟头的能力。 提升投资类产品的收入的占比。 to maintain the innovation of the product and form a differential competitive advantage. Second, use AI as the second growth curve, strengthen the construction of AI tools for R&D, operation, and third-party AI, so that AI can truly become the DNA and operating system of the organization. Third, use the world's four big working centers as the basis to build a global co-operative service network, provide consistent wealth management experience for Chinese customers around the world, At the same time, we will continue to insist on stable business and quality growth, and return the business results to shareholders in a better way. We hope to continue to improve the efficiency of capital, optimize the capital structure and strengthen the cash flow, and continue to improve the competitiveness and market share in the global Chinese wealth management market to create returns for shareholders. Thank you. Next, I would like to invite Mr. Pan Qing from CFO to introduce the company's financial performance in detail.

Looking ahead, we remain firmly committed to advancing our three core strategies. First, strengthening our core capabilities in investment product selection, fundraising, and co-investment to increase the proportion of investment products in our revenue mix, drive product innovation, and create a differentiated competitive advantage. Second, establishing AI as our second strategic growth driver by strengthening the development and deployment of AI tools across relationship management, operations, and investment research to firmly embed it into our organizational DNA and operational systems. And lastly, leveraging our four overseas booking centers as the foundation for a globally coordinated service platform that delivers a consistent wealth management experience for global Chinese clients. At the same time, we will continue to maintain prudent operations and drive quality growth, striving to improve shareholder returns. By improving capital efficiency, optimizing cost structure, and strengthening cash flow, we will continuously enhance our competitiveness and market share in the global Chinese wealth management market. Thank you. Now, I'll hand over to our CFO, Grant, to provide a detailed overview of the group's financial performance.

Thank you, Xander, for the comprehensive strategy and market overview. And warm greetings to everyone joining us today. For those of you that are in the United States, happy Thanksgiving and holiday season. I also want to make an introduction of the AIRM NOAA. She actually did the English translation just now, if you have noticed. I'm very pleased to share NOAA's financial performance for the third quarter of 2025. and resource allocation priorities from a financial perspective. During this quarter, we delivered solid profitability supported by prudent investment decisions and disciplined cost management. Non-GAAP net income reached RMB 229 million, up 52.2% year-over-year and 21.2% sequentially, with a margin of 36.2%. The first nine months of 2025 Non-GAAP net income totaled RMB 587 million, a 40.5% increase from the same period last year. This was achieved despite a 7.4% year-over-year decline in total net revenues. For the quarter, as we continue to optimize our revenue structure by emphasizing on investment products, as mentioned by Xander, and consciously reduce dependence on insurance-related Total revenue for the third quarter was RMB 633 million, reflecting a year-over-year decline primarily driven by lower insurance income amid intensified competition in both domestic and overseas insurance markets. Yet, it still recorded modest sequential improvement overall, marking our second consecutive quarter growth. Total transaction value remained high at RMB 17 billion, maintaining the same elevated level as the previous quarter and rising 19.1% year-over-year. RMB-denominated products increased 28.7% year-over-year, while U.S. dollar-denominated products grew 9.6% year-over-year. The strength in investment-led transactions helped offset softness in insurance and domestic management fees, which continue to weigh on overall revenue. One-time commissions related to investment products grew 85.5% year-over-year, supported by stronger client sentiment, expanded range of quality global investment solutions offered to our clients. Overseas net revenues for third quarter remained robust at RMB 311 million, contributing 49.1% of total net revenues. By revenue type, One-time commissions were RMB 159 million, up 2.2% sequentially. For the first three quarters, the transaction value of RMB private secondary products, which surged 206% to RMB 9 billion, and U.S. dollar private secondary products, excluding cash management, climbed 244% to U.S. dollar 688 million. Recurring service fees exceeded expectations, rising 4.7% year-over-year and 3.6% sequentially to RMB $421 million. The increase was supported by higher overseas products management fee contributions and some extensions of domestic PE funds. When domestic exit activities were slower than expected, we do not view this as a structural issue. We acknowledge that recurring income may face some pressure in the near term. We're proactively managing our portfolio and strengthening overseas product fee contributions to mitigate the impact. Performance-based income remained stable from last quarter, stood at RMB 22 million. Our overall operating expenses declined 1.6% sequentially to RMB 461 million. For the first three quarters, it has dropped 6.5% year-over-year, reflecting improved efficiency across the organization. This discipline enabled us to expand our operating margin to 27.6% for the first nine months from 25.5 a year ago, with operating profit reaching RMB 519 million, up 4.6% year-over-year. In the third quarter alone, operating profit was RMB 172 million with a 27.2% margin. Now gap net income rose to RMB 229 million, up 52.2% year-over-year and 21.2% sequentially, reflecting continuing operational strength and solid investment performance. That said, we may encounter a moderation in the fourth quarter as market conditions evolve. As of September 30th, 2025, total assets under management AUM stood at RMB 143.5 billion. US dollar denominated AUM grew 5.3% year over year and 2.6% sequentially to US dollar 5.9 billion while U.S. dollar denominated assets under advisory, the AUA, increased 6.8% year-over-year and 2.0% sequentially to U.S. dollar 9.3 billion. This ongoing expansion in overseas assets highlights NOAA's success in capturing offshore investment demand and strengthening our international footprint. Our overseas client base continues to grow. with registered clients up 13.1% year-over-year and active clients reaching 3,561 by the end of the third quarter. The number of newly acquired golden clients defined as professional investors has reached to over 1,000 by the end of the third quarter, reflecting our ability to attract and retain high-quality clientele. Our balance sheet remains strong and debt-free, As of September 30, 2025, cash and short-term investment totaled RMB 5.0 billion, even after a dividend payout of RMB 550 million. With zero interest-bearing liabilities, we remain significant liquidity and flexibility to support global growth and technology investments. In closing, Even under softer revenue conditions, our disciplined operating model and prudent investment approach delivered solid profitability and margin expansion. With a strong balance sheet, growing global presence and ongoing digital transformation and AI application, we remain confident in NOAA's ability to deliver sustainable growth and create long-term value for all stakeholders. Thank you for your trust and continued support. And we'll now open the floor for questions.

Thank you, Grant.

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 you want to withdraw your question, please press star and then 2. If you would like to state your question in Chinese, you may do so, but then please also restate your question in English. The first question comes from Helen Lee with UBS. Please go ahead.

Can you hear me?

Yes, please go ahead. Helen, we lost you. Is she there?

The next question comes from Peter Zhang with JP Morgan.

Please go ahead. Our management has given a very clear strategy in three aspects, which is to improve the investment product ratio, AI, and the four major booking centers. I have two questions. The first is how should we investors track the progress of these developments? Which data is worth investing in the future? This is the first part of the question. The second part is, do these strategies have any negative impact on us? For example, AI investment will help us reduce costs, and it is said that it is more about improving users' experience, and there is some income potential increase. Regarding the four major booking centers, especially in the United States, uh I have observed that the number of RMB overseas has decreased this quarter, and the number of courage cities in mainland China has also risen. I want to ask what is the reason behind it, because this is a little different from the past trend. I want to understand if our strategy has changed, or is it because of some new progress in the market? We have some slight deviations. Then I will do the translation. uh assistant peter john from jp morgan thanks for a congratulation on the very strong result and uh thanks for giving me the opportunity to ask questions i have two questions uh first is uh meg uh gave very clear guidance on noah's three uh strategy uh um ai on increasing the investment product proportion and on the floor booking center and i have two follow-up questions First is, can we understand what will be the potential financial impact from these strategies? For example, with the adoption of AI, will we see any cost savings on the any improving in revenue. And regarding the Booking Center, particularly on the U.S. Booking Center, we see very strong upfront investment into the 2026 when we fully launch this business. And the second follow-up question is, We also wish to understand from the investor's perspective, is there any matrix we can track on NOAA's progress in this strategy in the, say, coming one or two years? And then my second question is, on the overseas relationship manager and the domestic coverage city. I observed that overseas relationship manager had dropped in the quarter while the domestic coverage city has increased in the quarter. And the trend is a bit different from the trend we have been observing in the, I think, past two years. We wish to understand what's the rationale behind. Is there any major change in our company's strategy, or is this just due to some market or, say, R&M headcount fine-tuning? I will stop here. Thank you.

Okay. Thank you, Peter, and thanks for actually asking a pretty comprehensive question. So, I'll try to take the first question and our vendor will supplement on the second one. So, for the first question, especially on the three significant measurements, especially for the strategy of optimizing revenue structure, I think a couple of things that the investor could track or pay attention to is, one, is the weight of revenue that are coming from investment-related products. We do believe that both revenue and top line will continue to grow, but at the same time, the structure that comes from investment-related products, given the actual expansion on product shelf and how the recovery of sentiment relating to investing from our clients, we believe that that's one of the things obviously we could attract. Secondly, obviously, we want to see a meaningful accumulation on investment-related AUM and AUA as well. Secondly, to your question, I believe our Chairlady Nora could also add on is the AI investment. It's not a small optimization or extracurricular activity in terms of AI investments. We're actually looking to innovate the business model on top of the traditional offline or physical RM team, if you will, by actually adding two teams. One is the AI RM that will continue to activate the existing client group to activate sort of the non-active clients or new clients. We believe that AI actually provide a more structural method and a more tailor-made capability to activate the new client leads and secondly we're actually trying to see if we could you know as no actually do have pretty steps infrastructure in terms of systematic infrastructure as well as the capability offering various products we want to see if we could use with help AI to consolidate or aggregate some of the EAM services that seems to be pretty mature in the overseas market. So basically, in short, we're trying to see if the AI capabilities that we continue to invest in will increase the capability on several fronts. One is obviously client acquisition, new client acquisition, and two is to upgrade the business model in the future. So we have been doing that, especially the design for organization structure this year, and we'll have a strategic investment in AI starting from 2026. To your question on the Booking Center, yes, we will have a little bit of infrastructure construction, obviously, in the U.S. Booking Center, but we already had presence in the U.S. market for the past few years, so many of the teams are actually already out there. Obviously, we'll be adding some of the mid-back office capability for the broker-dealer business, but from the budget standpoint, it's actually not going to be a very significant addition in terms of operating expenses, but basically the necessary infrastructure for the year of 2026. Peter, that's the first question.

Yes, I would like to add a few points to Panqing. Thank you, Peter. Regarding our three strategies, if you look at them carefully, these three are very closely related. The first is that when we return to the investment and investment-based business of AUM, it is also adjusted in the center of our entire business structure. Because in the past few years, the whole market performance has not been very good. So our Chinese customers, their investment is relatively conservative. And it's a protection first. The protection of the customer itself is not enough. But in the past few years, we have clearly seen that the whole market has entered another round of positive circulation, especially on the global market. In other words, the drive of investment business will also strengthen our continuity in the long term. performance of the industry. Although in the process, the adjustment of the financial structure, the adjustment of the income structure will have an impact. For example, we can see in this report, but in the long term, we think this is a very important sustainable strategy. This is like a engine. Then in this second case, AI to drive, it is also aimed at our entire business strategy. In the process of improving performance, or in In the long-term development of investment business, it needs to give customers a better experience. So our AI strategy in this direction is also to strengthen the efficiency and mobility of our entire operation. The third is the world-new Booking Center. In fact, it is also for us to see customers continue to go out of the sea in the global market. After Chinese customers continue to increase their interest in the global market, We will reduce the capability of the infrastructure. So these three are actually a mutual strategy, not an isolated strategy. We hope to use these three strategies to promote the engine of Noya's future development. In some aspects, they have an impact on finance. We are also a relatively stable company. If there is investment, there will certainly be capital spending and some investment in key aspects. But overall, we think that our balance sheet is still very strong and can support the development of this business.

Let me do a quick translation first. So CEO just mentioned for the three strategies, it's actually very correlated. Because the key thing the company is trying to do is to drive the company as an AUM-driven company. So during these structural changes, and we've been trying to more, because in the past few years, the plans are more conservative in terms of investment. that the recent year we've seen that has been changed and has been more active in investment now. So that's why we believe that AUM-driven structure in terms of our revenue is the key engine for the company growth in the near future. And when we're talking about AUM-driven revenue growth, that is why we needed to think about the AI development and also the different booking centers that we've been having in globally. Because for AI investment, it can help to enhance our business efficiency and also it provides better experience to our clients, which we believe that it can further reinforce our momentum in terms of giving clients a better service and our sales performance. And also for Brookings Center, basically it's the same idea. We've been trying our clients to be clean as well because we have seen more global demand in terms of the investment need. And that's why we needed to build up the platform and provide these infrastructures to our clients. And also, yes, it may have a little impact on our capital. unavoidably. But that, we believe that with our strong balance sheet, we've been able to keep a very prudent investment team, but at the same time, been able to support our development.

关于公司海外的业务的战略和我们依然没有变化,我们全球化的战略依然是我们很重要的一个业务的方向。 那么海外的RM呢,因为是在发展过程当中, It looks like the number of people is decreasing. In fact, it is also in the process of our active optimization and adjustment. Because the training of RM personnel is actually time-consuming. At the same time, this is why we want to improve our AIRM ability. If our RM is just a greedy financial advisor, its ability to train is relatively slow, or the number of customers covered is relatively limited. If through AIRM, 那个结合以后啊探机和轨迹的结合以后那给客户的体验以及rm在覆盖客户的人数上面的他就会更有那个容量capacity啊所以这是我们在阶段性的调整我们长期的发展方向依然是还是要加强我们海外的那个那个投入的那大陆市场的话我们呃刚才提到就好像是不是城市有所增加其实我们并没有增加只不过是我们在有些 Thank you.

To your second question, Peter, you emphasized that we didn't change any of our focus on developing our overseas market. When you have seen that they dropped the number of our overseas RM, I would also say that it's more like an active adjustment internally instead of other reasons. It's because to have the right RM, this actually requires a lot of investment and time. And I mean, we will need to have the right RM. And that's also the reason why we've been started to invest in our AI development and try to introduce the AI RM concept. Now, that's Noya that you've just met. It's actually one of the AI RM that we are having. And because when we look at the efficiency, they can actually cover the number of clients will be a lot more. That is what CEO mentioned, the capacity that AIRM could have compared to any human beings. And also, you may have seen the number of cities in domestic markets we cover seems to have increased. But again, that's not exactly the same type of office that we've been having in some of the major cities. Those increases are mainly just at the end plus We would call it more like a clubhouse. It's more for client relationship, and it's for our elite clients' better experience with us. So we wanted to emphasize that our focus on developing overseas markets remains the same. Can you hear me? Yes. Yes.

I would like to briefly add that I think we have benefited from the layout of Guigu in 2016 and 2017. We have more and more, that is, we are actually in the basic facilities of AI, computing chips, and some investment in companies. We feel that we will benefit from it in the future. Now everyone can see that some of the good companies that we started in 16, 17, and 18 have gradually had a window period of listing. and the cost of our entry is relatively low, we feel that we will have a very good return. Because of some of our investments in AI, we have a lot of exchanges with the leading companies in the world. This also promotes our product line. The first is the product line of OLIVE. In the past three years, the layout of product proofing has also received a return. For example, we have a lot of基礎設施層 funds. Customers like it very much and have received a very good return. The second is that our own understanding of AI is relatively mature. So we are promoting private banks. It can be said that it is the industry of wealth management. I personally think it is a revolutionary change. It used to be driven by RM. Now we may drive our customer service from AI and operation. I just talked about it. I think it will greatly improve efficiency in the long term. The quality of improvement and service for customers It should be said that it will also reduce costs It can be said that if a human being's M is subordinated by AI One person can become a service One person can become the talent of three people In addition, we are on the adjustment of this organizational structure We established the financial management department of AI Of course, there are people who can analyze data in this Then there are models that can be made There are also magnetic cards Then we can start from I'm trying to find something that you don't want to do. I'm trying to find something that you don't want In the past, you may see how many RM we have. I think overseas, in fact, we found that the cost of low RM is very high, and the loyalty may not be very good. And the mode of personal drive of RM is actually risky, but we felt that there was no way in the past. Now that we have this AI drive, it can become the real company's asset. So at this point, we are also more confident. We feel that in the future, in overseas Hong Kong, Singapore, and the United States, we may not rely on personal M drive. The third point is that we have also established some ecosystem. For example, in Glory Glory, we have some unrivaled new managers. We are now also starting to try to do some business partners overseas. There is also a good progress in cooperation with EM. This requires us to rebuild our infrastructure more. For example, we must have a working center in a developed region around the world, and we can serve the local Chinese. I think this is very important for the future platform construction. I personally think that after three to five years, the financial management industry will be changed by AI. In fact, it is very important that it will turn from the drive of R&D to the drive of platform operation. We hope we can move forward and speed up. Let me do a very quick translation.

So what our Kelly's been mentioned, we've been started to invest in different types of AI or investment-related fund since 2016. And we've been staying very close to a lot of top-tier high-tech companies. And why we bring this up is because we've been trying to demonstrate where do all this knowledge about AI and technology we've been adopting And, and, uh, for example, uh, investor or analyst could been seen that we've been launching all this type of infrastructure fund and our, all this, uh, uh, all on our brand as well. So, uh, we've been trying to demonstrate that we have a very deep knowledge about AI and that we believe that it's gone. They have a very structural changes to the web management industry in the past. It's more like a RM driven, a human driven model. But we believe that going forward, it's more like an operational-driven model. What is an operational-driven model? We believe it depends on development of AI, which is, for example, we can have an AI wealth management team. It could help people still to do the data analysis, and some people may hold license. But at the end of the day, it's about AI. They've been able to help and enhance human beings' knowledge. about different investment products and their client needs, and so that they can come up and they can cover a lot more clients per person, unlike in the past. And that's what we call this operational driven. And also, when we are developing the overseas market, what we've seen is it's hard to rely on human beings, in the sense that because the cost could be high and also the loyalty or the susceptibility may not be as high or not be that high. And that's why the company believes that using an operation-driven wealth management system is a more efficient way of running this business. And that not only is happening in NOAA, we believe that it's going to be a new development in the entire industry in the coming three to five years' time. But that we've been trying to take advantage, or we've been trying to take a step ahead of the industry. so that the company can be ahead of the industry to adopt this operational-driven model. And to supplement this also, we've been introducing the EAM, or what we call IEF system in the USA, and also we've been hiring this commission-based agency during our insurance products. That said, overall, we are talking about From the company's point of view, it's about building the global platform, the infrastructure for all these operational-driven models being able to deliver good results for the company.

Let me sum up. First of all, in our financial management department, we have an AI assistant for each of our financial management departments to help them recover and improve their financial performance. We believe that in the near future, Maybe one person, one RM can do the work of three RM now, and its efficiency will greatly improve the quality. The key is that the quality of the customer delivery will be greatly improved. Secondly, we have established an AI wealth management department. It is mainly responsible for driving the development of our entire business through operation, including the activation of sleep, the recovery of lost customers, and the life journey of new customers will be more complete. Thirdly, we have established an AI So that's the conclusion.

We believe that with AI, so currently what we are having is that in all of our RMs, they have their own AI assistant. And we believe that that can enhance the capacity to become one people, become three RMs. And more importantly, it's about the new business unit or business line that we've been setting up. So another one would be AI wealth management that we mentioned previously, which is within the AI wealth management team, they've been able to gives better experience to the new clients and also they've been able to help to stick into our client base and try to reconnect with those clients may not be very active in the past few years. And another business side we've been trying to, or we have been developing is also this AI ecosystem team, which is that they've been focusing to serve the EAM business that we've been mentioned and also this commission-based agency that will be supplement the company's development. Peter, can you answer your question?

Any more questions? Very clear. Thank you.

Again, if you have a question, please press star and then one. Our next question comes from Calvin Wang with Citi. Please go ahead.

Can you hear me?

Yes, yes, Kevin.

Thank you for giving me the opportunity to talk about the performance of Noir this quarter. I am Calvin from Citi. I have a question about product sales. Just now, you mentioned that the product of Noir this quarter has maintained a strong growth. In this regard, we are promoting the method of promotion. Thanks for taking this and congrats on the solid premium in third quarter. This is Calvin from Citi, and I have a question on investment product sales, which sustain a robust growth in the quarter. What measures have Snowball taken specifically and looking into fourth quarter? What is our strategy in investment product sales across domestic and overseas markets?

Are there any products that would be our key focus? If you pay attention to the CEL report released in the second half of the year, we made it very clear that there are three types of assets. One is called traditional anti-inflation assets. This includes various kinds of real estate funds or some kind of traditional anti-inflation assets such as gold and other types of traditional anti-inflation assets, such as stocks. The second one is what we specifically mentioned, which is called technology-accelerated assets. So what is this concept? In fact, in such a big AI technology revolution, we must pay attention to the long-term opportunities and challenges that AI has brought to the development of the entire industry. Therefore, we must pay attention to the technology expansion of our customers, and the cost efficiency improvement of technological progress, and these assets related to AI. I think this is our Thank you. Just now, Mr. Wang mentioned that the layout we have in the United States since 2016, the funds or projects that we pay attention to in the field of AI are all our core competitive advantage. So the construction of product lines is what we are constantly improving. From the data, we can see that in the past, we were one level ahead, and we are one level ahead in China. In the second level, the scale is not as good as the first level. In the overseas market, the second level is also stronger. In this quarter, the second level of our second level products, the second level market hedge fund products, also get a better coverage. Therefore, in the entire product line construction, the layout of the CIO report, the layout of the AI-related assets, the layout of the hedge fund in the second level market, including the layout of the first level market traditional strengths, and so on, we are all in the process of promotion. So the RMB is indeed the market performance of the domestic market this year, which is better than the market performance of the A-currency. We are also in the process of grabbing the RMB asset of the customer. But in the long term, we are also maintaining a more basic, decisive, and cautious attitude. So if you may aware that in this company, we have this CIO report.

which has been issued every half year. And during the recent publish, we talked about three types of products that we believe that should be paid more attention to. So for the first type is some fund or investment that has been able to fight inflation, which would be more traditional types of funds, including those property funds or maybe gold or material-related types of funds. And secondly would be more technology-related, which is using technology to fight inflation. For example, these AI that have been mentioned, not only for the company's adopting of the using, but also related type of investment as well. And the first one would be some newly developed This is more like the crypto that we've been paying or we've been advising our clients to pay more attention to. And I mean, as Chair Lady mentioned, luckily we've been connecting with the U.S. product market since 2016. And we have developed a team there to sourcing different types of funds or investment products for our clients. And that's why we've been able to be enhancing our product shell in the past few years. And that's why, starting from the last few years, you may have been able to see, reflecting on our financial performance, instead of just PE funds being able to sell to clients, we have seen a very substantial improvement in selling hedge funds. That is the secondary market, market types of funds that have been able to sell to our clients. And also, really, about the renminbi market, we may have to say that, yes, because of the performance of our Asia market, we have seen a lot of interest in our clients for the renminbi-related products However, the companies do keep a very rather prudent and conservative belief towards the Renminbi type of product. We still believe that our strength or our focus is more on overseas investment products, more particularly these technology-related type, AI-related type products.

If you look at it from our app, you can see that our product line is relatively full. Compared to the past, we have a very large product line. There are many types of customers who can choose. Then this is also around this.

I think I will add from another angle. I think it may be difficult for us to talk about what product we are specifically on. Because this is based on the market. But I want to express that we are in a very strong strategic position. First of all, we focus on the Chinese family around the world. This is our very familiar field. Our blocking center is in Shanghai, Hong Kong, Singapore, and the United States. In other words, in China, we can cover all secondary market products, bonds, stocks, and the first-class market. It used to be our long-term target. Now the technology is better. We have set up these technology companies a long time ago. 所以在未来的退出过程中,如果估值比较好,不管上港股还是A股,我们会受益。 那么在这个香港,我们是ARK,ARK是我们的一个证券的牌照,所以我们可以给客户开户股票,债券,FCM,我们可以完全的覆盖。 新加坡也是一样的。 那我们在这个,我们的ARK主要是帮助我们的客户开户股票,债券和证券类的。 那OLIVE我们覆盖了所有的投资产品,一级市场,二级市场。 And then this debt-related impact fund, we just market what we need, what we do. What about that glory? It's our trust insurance identity planning and tax advice. I don't think there's any company in the world that can cover all the product lines like us. As long as customers need it. So we're not actually saying what we like, but what our customers need, what we do. In the past, actually, insurance was not our specialty, because the people we invest in don't really do insurance. But I think the change in the market has also taught us this skill. But in the process, we also found that investment products may be more important to us than AUM Driven. We adjusted our strategy at the insurance end. We want to establish these RM channels that are not hired by Loya. I think it has also achieved very good results this year. It should be said that Loya has all the At least we understand the service of private banks that Chinese customers need. And for them, the cost is relatively low, and the response is relatively fast and relatively easy. For example, a private bank opening may take six months or even longer. But in our case, we can open the account in two days, and it is also a comprehensive KYC. So our efficiency is better than theirs, and the customer experience is easier. You don't need to pay $5 million to be served. If you pay $15 million, we will start serving you. Since our AI is rich, I am confident that our service quality is even higher than that of private banks. Okay, I will add to that.

Thank you. Thank you, lady. So what she mentioned, experimenting to CEO's answer, is we probably shouldn't just look at particular type of products when we've been answering these questions. It's more about the company's position. It's also about our own DNA, which is we've been able to serve all the global Chinese. We understand them, and we know how to give them better services. And also, it's about the infrastructure that we have. The booking centers, globally, and also The different business units, for example, ARC in Hong Kong, in Singapore, they've been able to provide services for opening accounts, buying equities, buying bond-related products. And also we have Olive, our asset management arm, that's been strong traditionally in PE funds, and we're now introducing Hatch Funds. And also our brand Glory, we've been able to provide trust services or even insurance advice and family planning. So it's about the infrastructure that we've been having and means that we've been always able to meet our clients' needs. So for our example, that's why what we've been keep on saying, we wanted to be an AUM-driven revenue model. That's also why we've been starting to build up the commission-based insurance agency team, because we've been trying to lower the running cost, but at the same time still provide comprehensive services to meet our clients' needs. And I guess that's our advantage of the company. So it's not about picking what products to be sold to the clients, but we've been able to provide whatever our clients need and meet their demand.

我认为就是从2025年以后,我们应该清晰地看到,就是如果我们做华人的话,其实它的需求发生了根本性的改变。 这个财富管理的竞争,我觉得已经从单一的财品线变成了 the ability of cross-region product supply chain integration. For example, in Japan and Canada, we have established our asset management team. In Shanghai, Hong Kong, Singapore, and the United States, our Boking Center has the ability to open accounts. Once, I think the core competitiveness is from the integration of cross-region product supply chain to the AI-driven self-division ability and the activation ability of ecological partners. As for the Chinese, their financial management needs have undergone structural changes. The first is the diversification of living countries. Now you see that high-income Chinese people live in many countries, and their wealth distribution has also begun to globalize, and their language is also speaking Chinese and English. I think it is difficult for small companies to achieve multi-language, multi-regulatory, multi-rental pressure in this area, and our medium-sized companies happen to have such capabilities and have made such a layout. In addition, I think it may also be difficult for us to rely on our own development. We have to rely on some independent financial advisors who serve Chinese people locally. There are some EM, and then there are some multi-family offices. We have to establish some ecological relationships with them to build our infrastructure and our financial product supply chain. This is more competitive for us in the long term.

So Chair Lady Souther explained the strategy. So since – or starting this year, I mean, for – we wanted to focus on the Chinese height network so it's not – no longer completing by providing what type of product, but about we've been able to provide the surfaces. So she emphasized, again, about the RM team that we've been building. the booking center we've been able to have globally, so that we've been able to provide services across different time zones and across different geographical restrictions. And also, when we've been serving this height network, one thing is different. They no longer just are related to one geographical places. They've been speaking different languages, and when we've been entering different markets, we also face the difficulties of regulatory requirements. And that is one of the lowest competitors to edge because if any wealth management company with a smaller scale, that may be a very difficult thing to override. And that's why we've been in the right size to be able to set up our global infrastructure platform. been able to co-operate with local EAM, IAF team so that we've been able to provide global services to any potential high-net-worth Chinese clients that we've been able to reach.

Let me add one more thing. I think that Luoya is now in a very, very strong position in the global Chinese wealth supply chain. We have four bookings centers in Shanghai, Hong Kong, Singapore, and the United States. We have a globalized legal, tax, and regulatory system. We already have more than 60,000 Chinese family customers. And there is a certain size of asset management. Our Olive is responsible for the global product line, investment product line. Glory is insurance, trust, identity planning. ARK is global marketing. We are now combining our IFA with EM's global natural channel ability on our ecosystem system. So I think we are now a very unique institution that focuses on global Chinese wealth management. I have been full of confidence myself since this time.

I guess the chat lady wanted to further share her confidence and happiness. I guess she's very excited and everyone can sense that. We've been able to find the right strategy going forward to develop this company. So again, she emphasizes about the global platform. It's about the different business units that we have already developed and invest in the previous years. And it's also about the new development, like ecosystem and AIRM. Together, we've been able to serve globally and meet all the clients, particularly Chinese high network needs in this global market. So she's very confident and has a very high hope about this development strategy for the company.

Thank you.

And the next question comes from Jin Zhongyan with CICC.

Please go ahead. Thank you. The profit from the company is still relatively large. I would like to ask about the reason for this increase and the trend of 4Q. The second question is that the active number of customers in the third quarter has actually increased significantly. It is a double growth of the same ratio. May I ask what kind of customer behavior we can observe? Thanks for taking my question. My first question is about the investment income and income from equity in affiliates. I see that both These items have significant meaningful contribution to the growth of net profits. I would like to, could you please share the reasons behind and the trend in the fourth quarter? And the second question is about the active clients. I see that the active clients increase both double digits, YYY and QQ. Could you please share what you have observed from the client's behavior, the impact on the financial statements, and the trend in the fourth quarter? Thanks.

好,谢谢。关于投资收益和你说的数字变化,主要其实还是得益于我们过去 Yeah, yeah. . . . Sorry, can you translate?

So about the investment gain that we've been having, so one of the major reasons is due to the previous investment the companies are having, particularly being the GP for some of these PE funds, and we've been seeing some exit in the recent years during the good market, and also we can have a valuation gain for some of the investment as well. And in terms of active plans, we've been able to have a better result because we've been now more focusing on investment products, which for investment products, like insurance, clients may have repeat buying with us. That we've been able to enhance or maintain a rather stronger relationship with them. And that CEO emphasis, that's the reason why we would like to be more focused as an AUM-driven company.

I would like to say that our investment and revenue return is due to the management of some financial strategy funds like Loya in the past. Now looking back at our actual performance, whether it is listed in the U.S. or in Hong Kong, I think we will perform better in the future. As you can see, there may be fluctuations in market-to-market. But in general, because our investments are in a relatively early stage, we feel that there will be better returns and revenue in the future, which is already visible and predictable. I think this also brings us some confidence, which means that we have a long-term view on many issues. Although it may be a little bit of a result in the past few years, but now it's a bit of a down, but now we have seen a very good trend, so we are still very confident.

So Chairman Blayday further explained that that is because one of these, I mean the investment gain that we've been able to have is because the right decision that we've made in the past. So being invested in different types of all these PE funds or also even listed in the USA. We may have some hurdles in the previous year, but that we've been seeing good results. For example, this investment income, that is one of the examples showing that the company's been able to make right decisions in the previous years. And that's also the reason explain why. I mean, when we have good result investment, that is an attraction point to our client that made them more willing to invest with us.

Thank you. Thank you.

And the next question comes from Helen Lee with UBS. Please go ahead.

Can you hear me? I can hear you, Helen. Okay, thank you, Manager Ceng. I have a question about AI. I want to ask how the use of AI can help us in the overseas market to do a talk. Because in this season, we see the number of R&M in the overseas market is decreasing. And Manager Ceng just mentioned that in the future, we may improve the efficiency by using AI. So, does this mean that in the future, in terms of the way we deal with customers, we may be able to shift our focus more to overseas customers, to deepen the investment needs of our existing NOA customers overseas? In addition, in the future, for example, in terms of saving RMB, I have a follow-up question regarding AI application. How will AI support client acquisition in the overseas market? Given the recent decline in overseas relationship managers, does this suggest a strategic shift towards serving existing clients' overseas investment needs rather than focusing on expanding local client acquisition? And is the reduction in headcount primarily affecting B2BET OfficeRM, or does it also affect client facing from OfficeRM? Do you still plan to expand the client facing from OfficeRM team? Previously, the target was to grow the OfficeRM team to 300 in the medium term. With the adoption of AI, has there been any change to this medium term target? Thank you. Let me make it simple. Although I don't want to talk about this issue with UBS, I think this is our core competitiveness. First, we have found a way. Second, I think that Luoya does not lack new customers. We have a lot of ways to reach the Chinese family. I think more importantly, we have improved our quality through AI. That is, how do we get customers to contact us, from a cold line to a warm line, to a hot line, to improve quality through AI. For example, in Singapore, we have contacted some very high-net-worth customers. In the past, we might have had six months, or even a year, and we couldn't keep up. But now we are using AI, and our fastest trading speed is five days. From the time we met him to the content we handed him, to the time he really opened the account and made the payment, it's five days. So this greatly increases our confidence. First, I want to say that we do not lack the ability to promote customers. For example, Luo Ya invested so many VC and PE funds. Then after these entrepreneurs are listed, we can promote him. In the past, we could not serve him. Today, we can use the AI supply method to serve him, to promote him, and to improve our quality of dealing with ourselves. Second, Luo Ya has been doing it for 25 years. It started in 23 years. How many years, Yingzhe? I can't figure it out. 22 years. So answer your question.

The chairman, the chair lady is just joking about that we don't want to share the secret of how we've been able to get clients. But that's more like a joke because ultimately it's about how many clients that we have already been served. We have already served more than 400,000 clients over the last 22 years. And also with all these different types of PE funds that we have invested, we have met a lot of our potential high net worth or going to be high net worth or have become high net worth individuals by their business development. So that the companies are very confident that we have already had the database. But that in the past, one of the difficulty is that if we have the capability or if we are capable to serve these types of clients in a good way. But that with the AI's assistance, we believe that we've been able to deliver better services. and better solutions to all clients. That's why with this kind place that we already have, we've been able to give the right service to them with the assistance of AI. So she also provided one example. We have this client in Singapore. We met him and he became our client. He invest with us only top five days. And that is impossible in the past. It may take more than two months in the past. But now with the assistance of AI, that is providing solutions, explanations, and different types of understanding. And that's the reason why it has enhanced the company's efficiency in getting a potential client.

I would like to add a little more about the application of AI. Although everyone is talking about AI in the entire industry, but in fact, is an AI application of a company good, fast, or not fast, good or not good? In fact, I think there are still many foundations. Of course, we are not saying that NOIA has done so well in the past. In fact, the core is that we are the core point. In the past few years, we have always put the digital transformation in the front. So in the transformation of the pre-epidemic stage, there is a very important basis for digitalization. the entire company's business processes, data processing, cleaning, and so on, have all been completed. So in this round of AI applications, I think there is a very good foundation that can run faster. Otherwise, if you haven't finished this task before, you still have to make up for it. This is also a very important source of confidence for us. In terms of AI applications, I think there is still a lot of room for imagination. Although we have already felt that there are some So the CEO just explained that how AI is affecting the company.

We believe that everyone's talking about AI, every company wanted to use AI, but It's about if they have the basics to be able to really adopt AI. That is because using AI and using AI efficiently is the two different topics that we've been talking about. And why NOAA has been able to have in this competition is because we have adopted digitalization. I mean, in the earlier stage, we have developed the right system. We internally have all these... data analysis, our system build up, even the OA structure and all that. And because of that, we've been able to adopt AI in a faster pace compared to some of our peers. And also, when Helen is asking how AI been able to help the company, CEO's answer was, yes, we have already seen some benefit been arise using AI. but that AI's adoption could be out of our imagination. So the benefit that we've been experiencing could be a lot more in the future. Hi, Helen.

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

Yes, thank you. And thank you very much for joining us today. And if anyone has any further questions, please contact IRC as usual. Thank you very much.

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