Noah Holdings Limited

Good day and welcome to the NOAA Holdings Limited fourth quarter and full year 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. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Dorian Hsu. Please go ahead.

Dorian Hsu Thank you, Rocco, and good morning and welcome to NOAA Holdings' 4th Watson Full Year 2025 Earnings Conference Call. Joining me on the call today are Ms. Noa Wen, Co-Founder and Chairlady, Mr. Sander Ying, the Co-Founder, Director and CEO, and Mr. Grant Pang, the CFO. Mr. Ying will begin with an overview of our recent business highlights and strategic development followed by Mr. Pang, who will review our financial and operational results. After management's prepared remarks, we will open the call for questions. Before we begin, please note that today's discussion will contain forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially from those expressed in such statements. Potential risks and uncertainties include but are not limited to those described in our public filings with the U.S. Security and Exchange Commission and the Hong Kong Stock Exchange. NORA undertakes no obligation to update any forward-looking statements except as required by law. Without further ado, I would now turn the call over to Mr. Yin. Please go ahead. Thank you.

Thank you. Dear investors and analysts, good morning. NORA has been established for 21 years. In a market environment that is constantly changing and repurchasing, our strategic direction is much clearer. We focus on serving customers of high and ultra-high quality in China, and provide long-term financial management services in different judicial areas through local holding institutions. More importantly, we are making a key change. From financial management institutions that focus on product sales, a comprehensive platform that focuses on asset configuration, global architecture, and AI systems. In 2025, this change will begin to be reflected in the results of the business. This is not only a step-by-step business adjustment, but also a resumption of the fundamentals of the business model.

Good day to everyone and thank you for joining us today. 2026 marks the 21st year since NOAA was established. In a market environment defined by continuous evolution and restructuring, our strategic direction has never been clearer. We remain firmly focused on serving global Chinese high net worth and ultra high net worth clients, operating through licensed local entities to provide compliance, long-term wealth management services across multiple jurisdictions. More importantly, we are completing a critical transformation evolving from a wealth management institution primarily driven by product sales into a comprehensive platform centered on asset allocation, global structuring, and AI systems. In 2025, this transformation began to yield tangible operating results. This is not merely a temporary business adjustment, but a fundamental reconstruction of our operating model.

Looking back at the year 2025, the company's overall business has shown a relatively clear feature. While the profit and loss ability continues to improve, the income structure is still in the process of adjustment. The total annual net income of RMB 26 billion is equal to the basic balance. The net profit is RMB 7.77 billion, which is 22.5% increase. The net profit rate has increased to 29.8%. However, Non-GAAP net profit is RMB 6.12 billion, which is the same as 11.2% growth. If we exclude the impact of non-management factors, the non-GAAP net profit after adjustment is about RMB 7.53 billion. What is more important at this stage is not the absolute scale of profit, but the improvement of the profit structure. Profit growth mainly comes from the optimization of the cost structure, the improvement of operating efficiency, and the continuous transformation of income to investment-related businesses. For NOAA, 2025 represents an important milestone. Looking at our full-year results, a clear theme emerged.

The quality of our profitability is improving at a faster pace than the stabilization of our revenue structure. For the full year, net revenues were 2.6 billion renminbi, broadly flat year over year. However, operating profit was 777 million renminbi, up 22.5% year over year, with operating margin improving to 29.8% and non-GAAP net income increasing 11.2% year over year to 612 million renminbi. Excluding the impact of non-operating items, adjusted non-GAAP net income with approximately 753 million renminbi. What matters most at this stage is not the absolute scale of our profitability, but the improving underlying structure. This profit growth was not driven by one-off factors, but by optimized cost structures, enhanced operating efficiency, and the ongoing shift in revenue mixed toward investment-related businesses. This reflects how our profitability is shifting from cyclical volatility towards structural stability. This is a quantitative change, not simply quantitative growth.

从业务层面看,境内与境外的节奏不同,但方向是一致的。 投资能力正在成为增长的主要引擎。 在境外,ARK财富管理板块2025年实现净收入5.5亿元,同比下降18.8%。 mainly affected by the drop in insurance sales revenue. At the same time, the foreign AUA reached $94.9 billion, which increased by 8.6%. The U.S. private second-tier products' annual revenue increased by 3 times, reaching $9.6 billion. The number of foreign registered customers is close to 20,000, which increased by 13.2%. Of which, the number of active customers exceeded 6,200, which increased by 12.4%. Olive, a foreign asset management brand, The company achieved a sales breakthrough through a new channel.

From a business perspective, while our domestic and overseas business segments are moving at different paces, they are pulling in the same direction. Investment capabilities are becoming the primary growth engine. Net revenues from our overseas wealth management business were 550 million renminbi in 2025, down 18.8% year over year, mainly due to a decline in insurance product distribution revenues. However, overseas AUA grew to 9.5 billion U.S. dollars of 8.6% year over year. Notably, transaction value of U.S. dollars denominated private secondary products tripled year over year to 960 million U.S. dollars. The number of overseas registered clients approached 20,000 of 13.2% year over year, of which active clients exceeded 6,200 of 12.4% year over year. Net revenues from Olive, the overseas asset management system, were 550 million renminbi for the full year, up 26.3% year-over-year, mainly driven by higher management fees resulting from AUM growth. Overseas AUM reached $6.1 billion of nearly 4% year-over-year, accounting for 30% of total AUM. Net revenues from Glory Family Heritage Our integrated services business were 180 million renminbi for the full year, up 28.8% year-over-year. Despite a highly competitive market environment, we achieved breakthroughs in sales through new channels.

In China, the A-currency market's gradual recovery has led to improvement in business performance. The volume of RMB private equity products continues to grow. Part of it is due to the decrease in RMB private equity product management fees. NOAA-funded fund sales in 2025 achieved a net income of 5.7 billion yuan, which increased by 15.9% in the same year. Renminbi SEMU 2-level products' total annual revenue reached 112 billion yuan, which increased by 107.2% in the same year. Gefei asset management units achieved a net income of 6.9 billion yuan in the same year, which decreased by 10.3% in the same year, mainly due to the decline in the management fee due to the reduction of Renminbi SEMU equity products. In the market, Gefei achieved a withdrawal and allocation of $51 billion of private equity assets in 2025. In the glory insurance economic version, according to a specific rhythm of transformation, the total annual income of 19 million yuan was reduced by 56.5%. The income change is in line with the strategic transformation that is being carried out. Overall, the company's business center is continuing to focus on investment ability and asset allocation ability. This trend has begun to be reflected in business data. 也正基于这一长期的愿景,我们在过去几年对公司的整体结构进行了系统性的重建。 Domestically, sustained recovery in the A-share market helped improve our performance.

RMB-denominated private secondary products maintained growth momentum from the second quarter onwards, which helped partially offset the impact of declining management fees from maturing RMB-denominated private equity products. NOAA Uprights, our domestic public securities business, recorded net revenues of 570 million renminbi in 2025, up 15.9% year-over-year with transaction value for RMB-denominated private secondary products reaching 11.2 billion renminbi of 107.2% year-over-year. Gopher, our domestic asset management business, recorded net revenues of 690 million renminbi for the full year, down 10.3% year over year, mainly due to lower management fees resulting from maturing RMB-denominated private equity products. In the primary market, Gopher completed 5 billion renminbi of private equity asset exits and distributions in 2025. Glory, our domestic insurance business, recorded net revenues of 19 million renminbi for the full year, down 56.5% year-over-year. The decline in revenue was expected and aligned with our plans and ongoing strategic transformation. Overall, our performance clearly shows a business shifting toward investment and asset allocation capabilities. It is this long-term vision that has systematically rebuilt our overall structure over the past few years.

In the past few years, We have not completed the expansion of the business, but the reconstruction of the structure. Today's NOEA is forming a three-level global wealth management operating system composed of three core platforms, and running under a unified business framework. ARC is a customer entry and execution platform to obtain relevant license plates in Hong Kong, Singapore and the United States, and to carry out business within the framework of local supervision. ARK takes care of account management, transaction execution, product distribution, and AI financial service functions, providing continuous, clear, and consistent service experience for global customers. OLIV is a company's investment and asset management platform, covering Hong Kong, the United States, Singapore, Japan, and Canada. It has a global asset selection, multi-area fund establishment and management, and long-term asset allocation capability. It is an important basis for the company's long-term value creation and income stability. What we have accomplished is not simply business expansion but a fundamental reconstruction of our operating model

Today, we are building a global wealth management operational system composed of three core platforms, all operating under a unified management framework. ARC serves as the client onboarding and execution platform. With licenses in Hong Kong, Singapore, and the United States, it operates compliantly within local regulatory frameworks. ARC is responsible for account management, trade execution, product distribution, and AI wealth advisory services. providing clients globally with a consistent, seamless, and compliant experience. All is served as our investment and asset management platform across Hong Kong, the United States, Singapore, Japan, and Canada. It has the capabilities to source global assets, establish and manage funds across multiple jurisdictions, and execute long-term asset allocation strategies. It is a key foundational piece for our long-term value creation and revenue stability. GLORY serves as our asset structuring and risk management platform, covering major markets including China, Hong Kong, Singapore, and the United States. It offers insurance, trust, and identity planning services that deliver risk isolation and asset protection through structuring solutions and supports the long-term transfer of family wealth.

The three-layer core platform is our cross-legal legal framework. The structure is the core of the four Booking Centers. Shanghai, as the entry point for domestic customers' RMB assets, is subject to positive fund sales and non-financial management. In Hong Kong, it is subject to cross-border connection and provides securities and insurance services. It is an important bridge connecting China and the world. Singapore is the center of our overseas assets and family structure. It is also an important key area of ASF management. The U.S. is the engine of our VCPE and capital markets, especially in the field of investment in the field of technology. It is the key part of promoting future growth and innovation. It is important to emphasize that all the bookings centers are run by local companies with independent management. They run their business under their own supervision framework. Cross-regional cooperation is mainly limited to research and information support, and does not involve direct business in the judicial area. This strict regulatory boundary

Supporting these three core platforms is our cross-jurisdiction compliance architecture, anchored by our four major booking centers. Shanghai serves as the domestic client onboarding hub for RMB asset allocation, NOAA Upright Fund distribution, and gopher asset management. Hong Kong functions as the cross-border connector for securities and insurance. serving as the bridge between China and global markets. Singapore is our center for overseas asset allocation and family structuring, and our primary pilot region for AI wealth management. The United States serves as a key hub for our VC, P, and capital markets activities. In particular, our investment capabilities in the technology sector are an important contributor to future revenue growth and innovation. I want to emphasize that all booking centers are independently operated by locally licensed entities and conduct business within their respective regulatory frameworks. Cross-regional collaboration is primarily limited to research and information support with no direct cross-jurisdiction business activities. This strict compliance boundary is the institutional foundation for our steady growth.

In 2025, our investment in AI will gradually emerge From a long-term perspective, AI not only brings about an increase in operating efficiency, but also a resumption of the way of operation. AI has been involved in key parts such as client access, content generation, and operating process. We have formed a new human-machine cooperation operating model in some areas. This indicates that NOAA is in the stage of single-dependent manpower expansion, transition to system-support scale, and service quality synchronization.

It gradually becomes more visible in our operating... So, headcount declined by 11% year-over-year, while revenue remains stable, reflecting improving operational efficiency. Over the long term, AI brings much more than improved operational efficiency. It is also reconstructing how we operate. By embedding AI into key areas such as client engagement, content generation, and operational processes, we have established a new human-machine collaborative operational-driven model in certain regions. This reflects our transition away from headcount expansion to systems that drive both scale and service quality.

Looking forward to 2026, we will remain cautious and pay close attention to the clear strategic direction. The income may still be affected by structural adjustments, but investment-related income ratio will continue to improve. Profit rate is expected to remain stable or gradually improve. AI ability will also prove from efficiency improvement to a larger range of business. We are still in the process of transformation, but the logic of long-term business model is more solid than ever before. If we look at the core of this transformation from the fundamental point of view, it is not a change in product form, nor is it an expansion of service boundaries, but rather a repetition of a fundamental increase in drive logic. In the past, the industry relied more on the drive of the individual's ability to finance. Today, we are building a core with asset configuration capability, a human-machine co-operative model that amplifies the professional ability of the global platform through AI to finance. 2025 is the starting point of this model. Thank you everyone. Next, I will give the time to our CFO, Pan Qing, to introduce you to more detailed financial performance.

Looking ahead to 2026, we will remain prudent but highly focused on our clear strategic direction. While revenue may still fluctuate due to structural adjustments, the proportion of investment-related income is expected to rise with profit margins remaining stable or improving gradually. Furthermore, our AI capabilities will evolve beyond system efficiency gains and scale into broader operational validations. We are still in the midst of our transformation, but the logic behind our long-term operational model is stronger than ever. At its core, this transformation is not about changing product form or expanding services. It's about fundamentally reconstructing what drives our growth. Historically, our industry has relied heavily on the individual capabilities of relationship managers. Today, we are building a human-machine collaborative operational-driven model centered on asset allocation, where AI empowers relationship managers and our global platforms, amplifying their capabilities. 2025 marks the starting point of this model and where it began to gradually reflect in our operating results. The transformation is ongoing, but our strategic direction is firmly set. We will continue to execute this long-term strategy prudently and compliantly. Thank you. I will now hand the time over to CFO Graham to review our financial performance in more detail.

Thank you, Xander. And good morning, everyone, for the comprehensive strategic overview, and good day to everyone that joined us today. I would like to focus on two key financial messages. First, 2025 delivered strong operating profit growth and structural margin expansion, driven by a clear shift in our revenue mix. Investment-related income increased significantly during the year, while we deliberately reduced our reliance on insurance-related revenue. This reflects our continued transition toward a more investment-led business model with improving earnings quality and great margin resilience. Second, the Board has approved our dividend proposal including a special dividend bringing total payout to 100% of full-year non-GAAP net income for the third consecutive year. This reinforces the consistency and visibility of our shareholder return policy. Together, these developments underscore our transition toward a more investment-driven, globally diversified, and resilient operating model. For the full year 2025, Net revenue was RMB 2.6 billion, broadly stable year-over-year. Operating profit increased to RMB 777 million, representing growth of 22.5%. Operating margin expanded to 29.8%, compared with 24.4% in the prior year. Non-GAAP net income reached RMB 612 million, up 11.2% year-over-year. This improvement was primarily driven by structural cost optimization and enhanced operating efficiency, rather than short-term factors. In the fourth quarter, revenue was RMB 733 million, up 12.5% year-over-year. Operating profit reached RMB 258 million, representing a significant increase of 87.3%, and operating margin expanded further to 35.2%. This reflects strong operating leverage as performance-based income starting to materialize, supported by a more scalable and disciplined operating structure. During the year, we continued to optimize our revenue structure. Investment product commissions increased by 79.7% year-over-year. and performance-based income rose by 78%. At the same time, overseas revenue contribution increased to 49% of total net revenue. This shift toward investment-driven and globally diversified revenue streams has enhanced earnings quality and supported structure of margin expansion. To provide a clearer view of our core performances, I would like to address two non-operational items that affected our reported fourth quarter GAAP results. First, under income from equity in affiliates, we recorded a loss of approximately RMB 120 million. This was primarily driven by mark-to-market accounting adjustments related to share price volatility of a specific listed investment. It's important to emphasize that this represents accounting reflection of market movements and does not impact our core wealth management operations. Second, regarding the legacy campus and credit fund arrangements, several cases reached procedural milestones this quarter as certain clients opted for arbitration. In line with our prudent financial policy, we recognize contingent expenses of approximately RMB 50 million. Total provisions now stand at RMB 505 million. representing about 63% of the unsettled principal. Based on current benchmarks and the progress of these cases, we believe the existing provision level is appropriate and covers a substantial portion of the potential exposure. Based on the information currently available, we do not anticipate significant additional provisions. If we exclude these two non-operational items, adjusted full-year non-capita income would have been approximately RMB 753 million, which we believe more accurately reflects our underlying operational efficiency. In terms of balance sheet, as of December 31st, 2025, cash and short-term investments totaled RMB 5.0 billion. The asset liability ratio stood at 15%, and the company carries no interest-bearing debt. Our current ratio was 4.5 times. This debt-free structure provides strong financial flexibility and reinforces the resilience of balance sheet. From a financial perspective, our AI strategy is centered on productivity enhancement rather than heavy capital expansion. We are already seeing measurable results in our cost structure. In 2025, total headcount decreased by 11%. year-over-year, when their revenue remained stable at RMB 2.6 billion. This indicates a meaningful increase in output per capita. AI-driven tools now support a substantial portion of client engagement, automated reporting, and routine workflow tasks that previously required a lot of manual intervention. In our view, AI functions as a structural efficiency multiplier. It enables us to scale global operations when maintaining disciplined cost control and consistent service quality. As of year end, shareholders' equity stood at about RMB 9.9 billion. At our current market capitalization, the company is trading at roughly 0.57 times book value, with operating return on equity close to 8%. When market valuation may fluctuate, our focus remains on building long-term intrinsic value through disciplined execution and continued global expansion. A strong cash position and operating cash flow provide both confidence and flexibility to deliver attractive and sustainable shareholder returns across market cycles. Driven by a solid performance and healthy liquidity position, the Board has approved a total dividend of RMB 612 million, equal to 100% of 2025 non-GAAP net income. This consists of 50% regular dividend and a 50% special dividend. Subject to shareholder approval at the 2026 AGM, this will mark our third consecutive year of full payout. At current market prices, the implied dividend yield is approximately 11%. including the RMB 50 million in share repurchase completed in 2025, total cash return yield reaches approximately 12%. This payout is fully supported by our core operations and strong balance sheet. It represents approximately about 80% operating profit and is covered multiple times by RMB 5.0 billion in cash and short-term investments. In short, we're rewarding shareholders for their trust when maintaining a fortress balance sheet that supports our continued global growth. In summary, revenue remained resilient throughout the year as we executed a deliberate shift toward more investment-driven income streams. At the same time, operating profit delivered strong double-digit growth supported by structural margin expansion and continued improvements in efficiency. Our AI initiatives are now translating into tangible productivity gains, strengthening our operating leverage and scalability. And our industry-leading capital return policy, highlighted by 100% payout and the introduction of special dividends, also reflect both operational strength and confidence in the sustainability of our model. So with these foundations firmly in place, NOAA has emerged leaner, more efficient, and structurally stronger remain fully committed to disciplined execution and the creation of sustainable long-term shareholder value. Thank you. And we will now open the floor for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. To answer your question, please press star then 2. Once again, that's star then 1 if you have a question. And today's first question comes from Helen Lee at UBS. Please go ahead.

Thank you for giving me the opportunity to ask this question. I'm Helen, a flight attendant at UBS. I have two questions. The first one is related to the risk of foreign trade. Recently, we have seen some risk events in the U.S. foreign trade market. From the perspective of Norway, how many foreign trade products are on sale? Have you seen a large-scale return of customers? The current risk is due to the impact of AI. We noticed that Noya has a fund in Guigu. How big is the long-term capital of Noya as a GP? How much of the assets are from software companies? What do we think of the long-term capital risks? My second question is about the deposit fee. We see that it is actually a significant decline in detail. If we look at the total amount of products, both domestic and foreign insurance products have a significant decline. How do you see the future? This is the first quarter of the year, and it's the first year of the year. Will insurance products still be more stable? There have been some big recalls in the capital market recently. So do we see an increase in customer demand? Is there a decrease in the demand for investment products? And is this a strategy of our current CIO to recommend this product? Why don't I translate it? I have two questions. The first question is on private credit. How much in third-party private credit products has NOAA distributed today? Have you seen any client redemption in this area? How do you assess the overall risk profile of this product? One area of concern in the private credit market has been potential disruptions from AI. Given that a meaningful portion of the underlying portfolio companies are software firms, NOAA maintains an investment team in Silicon Valley. As a teacher, how much direct investment or co-investment does NOAA currently have in the private credit space? What percentage of the underlying assets are software companies, and what percentage of those could potentially be vulnerable to AI-driven disruptions, and how do you view the risk in this segment? My second question is on transaction value and one-time commissions. In the fourth quarter, one-time commissions declined sharply year-on-year. Looking more closely at transaction value, both domestic and overseas insurance product sales weakened significantly. How do you see the runway trend heading into 26? Under the recent capital market pullback, how has client sentiment towards investment products evolved? Are clients adopting a risk-off stance and reducing their allocation to investment products? And finally, what's the current health view in terms of the investment strategy for the minor future cities?

Mr. Allen, let me answer. Indeed, in the recent market, 有点波动起伏。 然后我们在硅谷的投资的话, 主要是以VC和早期的创业投资基金为主的项目, 没有我们自己管理的私募信贷的产品。 我们在私募信贷的一些产品的话, 都是以一些大牌的海外的金融机构, 像Blackstone, KKR这种类型的, Let me do the translation here.

First of all, we must emphasize that the company doesn't run any or only own any assets that is related to the product that Helen just mentioned. So what we've been doing at Silicon Valley is mainly invested with or partnered with some key major name that's their PE product or in some VC fund, and that's why we don't see a much impact of our business because when we review the AUA here, those assets are only representing a low single-digit amount, all of our AUA. The company has been concerned on the related asset class at a very early stage. That's why we have been advising our clients to have a property position in a very early stage.

The second one is about the drop in revenue. In fact, we have always been concerned about a comprehensive configuration for customers, rather than a simple one-off configuration. In the past few years, the income of insurance products is relatively high. In the past few years, we have also seen that we have turned to a healthier way in terms of structure. For customers, in fact, we have already had a relatively sufficient demand for insurance coverage for old customers. At the same time, For us, there is also a new client that is continuously assigned to the business. From the financial management point of view, the core is to help the client make a stable structure. So we have always said that the triangle of the pyramid is to help the client make a structure. And for Glory, the definition is to help the client make a structure service in a global environment. For the client, what we feel is that the client must show emotion. And regarding the second question on the commission, so because we must emphasize that being in the wealth management business, we are not a

single product sales recent business, but we've been trying to provide a safe and structural services for our clients. So yes, we do see the drop in insurance sales, but we also believe that because a lot of our existing clients, they have already had enough coverage from insurance products. And that's why when we've been reviewing our business in under glory, what we've been emphasizing that we are providing a global solution to our clients, but not just selling single insurance products. And regarding the investment incentive among our clients, we don't see any drop in demand. We understand that there's risk in the market. However, we actually see clients still have a very high interest in investing their wealth, particularly in AI-related products.

So we will still keep an eye on that and do the right advice to the client. Thank you. HBS received 9.3% return on loan. All of its contract terms, the normal execution is actually 5%. This was already explained when it was on sale. If it exceeded the line of application, then it would return 5% of the issued shares. Then BlackRock took it and said, then I will apply, I will get 5%. But this time, at the same time, it got a return of 7.9%. Then they chose to invest $400 million in liquidity to complete all the digital applications. So how do we look at this problem? First of all, in the past, these funds were institutionalized. Then through the method of semi-liquidity, it began to be retailized. Like Blackstone, there are 20% retail customers. I think the post-epidemic of retail is beginning to appear. But we are very experienced, because we have encountered such problems in China. The impact of AI on the lending side of the market is real. There are also some effects of infection in the industry, including the rise of geopolitics. But in general, I think it's still in a normal range. It's completely under the contract. It's not a complete panic in the market. On the other hand, our exposure is not very big. But we are very experienced in facing retail customers in China. So we started on March 6th. We started to let our IAM operate under this framework. For example, what kind of customer do we have to talk to? We sorted out the customer's time slot. For the eye band, the time slot accounts for more than 30% of the overall workload. And it has funding needs in the short term. We started to communicate with it to redeem it. They listened to our suggestions. All of them are easy to redeem and get a good profit. There are also some medium-risk customers whose market share is relatively moderate, but they feel that they need liquidity. Six months need liquidity. We will also recommend that you can redeem. At present, everything is very smooth. There are some blind bags that are part of its long-term configuration. The market share ratio is very low. We think this customer's mood is very stable. We need to communicate with him about the market rather than the panic redeeming. Thank you, Chair Lady. So what we wanted to emphasize that is NOAA, the company has established for many years and we have.

substantial experience in handling different types of economic cycles. So, for the recent situation where we're talking about this PE RISC that endorsed this alternative investment product related to social media access, we can use an example from Blackstone and the product. We look at it as Under all the normal criteria, the return should be 5%, but now it's over 93%. We have seen this situation in mainland China before. That's why we've been taking early position to advise our clients. on their risk appetite, whether they would prefer to have a more mid-term risk appetite or they are more risk-reserved, that we've been taking advice in an earlier stage. So since the beginning of this month, we've been advising our RM to talk to different clients dependent on their asset allocations and also their risk appetite, and we believe that Our clients' experience is still a very prudent situation, and we don't see any panic sell at the moment.

The focus is on Chinese people around the world. We understand the Chinese Chinese family, especially those who come from overseas, very well. They have some special vulnerability, because they are in the process of setting up global assets. Therefore, their flexibility in terms of funds is generally higher than that of high-end customers, including their cross-border immigration, their life plans, and their overseas purchases. Therefore, we are very strict when it comes to this type of customer combination in the market.

And as we mentioned about our experiences within the mainland market, also one of our advantage or strength is that we know Chinese high numbers and these families' characteristics and what they are vulnerable to and how they would like to treat the investment portfolio. And that's why we've been strictly choosing or strictly been allocating which PE we should go to. And that's why from the very beginning, the company's been providing a rather more suitable to what our clients need when selling these types of products.

I would like to talk about whether insurance will continue to increase income. I think this is also a misunderstanding. In fact, in the past, Loya was driven by product sales. Insurance is good to sell, investment is good to sell, and the market sells investment. But in fact, we have the most important change today. We have formed three versions of Arc, Olive, and Glory overseas. I think the question you may want to ask is, which is the important growth engine for Loya in the future? But from our point of view, what we want to express is that these three parts have formed an ecosystem of our wealth management. It is not a single competition, but after a few years, it has formed a complete model for us. ARK is responsible for the connection, execution, transaction and opening of customers. and OLLIWOOD is responsible for assets and returns. And GLORY is our long-term financial management structure and long-term insurance plan. So now, our communication with our customers and RM is not about what products we sell, but we use different platforms, uh, In the past, we couldn't do it. Now with AI, we can do it for thousands of clients. If the client's investment exposure is relatively large, and he hasn't completed the basic structure, we will recommend him to do the basic structure. If he has completed the basic structure, we will not force him to do insurance anymore, but really help him to do the global asset configuration. Then we will be more confident and confident.

So regarding your second question about our sales in insurance products, I think we do admit that in the past the companies are more product-driven selling company, which when the investment product is very welcoming or the insurance product is very welcoming, then it becomes the key drive of the company's growth. However, what we want to emphasize is today we have formed our global three-layer system. As what CEO mentioned in his speech, that we have asked Olive and Glory, we are forming this platform, the ecosystem, being a wealth management company, that we are providing total solutions. So now it's not about what to sell, but about how to help our clients to do the wealth management. So we are now providing plans. For example, if they have enough protection from insurance product, then what we may do is more about could be the identity planning, could be providing trust services. So it's about wealth management being as a whole. And with the support of AI, we firmly believe that we now have a very firm structure and is more enabled to perform better being a wealth management company. which that's why a simple answer is hard to just direct answer, say what level of insurance product will be a lead or not. It is not the focus anymore.

Hello.

Thank you. Our next question. Our next question today comes from Calvin Leong with Citi. Please go ahead.

Wait a minute, Jim. I have two questions. First is about AI. Can you please share our future strategy and investment in AI? We estimate the future of AI can be achieved in some business or financial indicators. The second question is about shareholder feedback. Thanks for taking my questions, and this is Kevin from Citi. My first question is about AI. Can management share a strategy and investment on AI going forward, and how would this be reflected in NOAA's operating of financial metrics? And my second question is on shareholder return. No one maintained a high payout ratio in 2025. And looking ahead, what is the plan and considerations on payout ratio and share buyback? Thanks.

Okay, let me answer. First of all, I think Loya is definitely fully embracing AI. But I don't want to make everyone feel that everyone is talking about AI and think this is politically correct. We have our core AI strategy. I think the first one is in sales. We used to be driven by a complete RM. So analysts may talk about how many RMs there are in Luoya, and how many sizes RM can do to represent our growth. But I think today this model is really broken. Luoya has an AI-reduced RM. Now you can see at the same time, for example, we are in Singapore, Hong Kong, and then we are in Shanghai, we have established an AI financial management department. These AI financial management departments, they are completely through a systematic AI method to cover our customers in thousands of faces. In Singapore, we have tested nearly This nine-month period has achieved very good results. In the past five years, that is, in 2025, Singapore's AUM has grown three times after we used AI. And our manpower has greatly decreased. Maybe today we are in Singapore, we no longer want to say how many RM we want to hire. This is a core point, and we can be very confident. The most important thing is that the services that AI and R&M deliver to customers are far superior to human R&M, and the speed is also far superior. At the same time, in Hong Kong, Singapore and Shanghai, we have also built our so-called AI plus Ecological Expansion Department. We started to pay more attention to whether we can work with EAM, Multi-Family, and then connect with them to provide them with a system. They can also become an external group of RM. For example, in Glory, Last year, we worked on insurance, trust, and identity planning. We also worked with independent financial advisors to achieve better results. This is what AI has brought to us. I think AI has already made a direct income contribution to the company. But it may not be so obvious. I think it is mainly reflected on the efficiency level, which is the improvement of human efficiency. and the full coverage of customers. Today, it may be said that Luoya has accumulated 400,000 high-profile Chinese customers in the past 20 years. In the past, it was unimaginable for us to fully cover them, but today we can be very confident. We may not have fully activated it. Many customers have lost money. In the past, there were many setbacks, but today we can fully cover them. So I think short-term is an improvement in efficiency. In the long term, there may be opportunities to turn into an improvement in customer growth and income. Secondly, in addition to this, In terms of R&D, I think it's about opening up the client's account, entering the account, and complying with the rules. Complying with the rules in different judicial areas can be implemented through AI to make it more efficient. This is also what we are doing in the process, how we can open up the client's account, enter the account, AI Strategy Lab We are still very confident about the full commissioning of our customers. I think what we have achieved today is that we have fully covered the basic facilities of AI. We have a system called Load Chart. 100% of our employees can interact with them on it. Secondly, we have an AI agent at the customer's end, and they can ask questions about stocks, and understand their knowledge. We have already started this. At the customer's end, the customer's AUM and his asset configuration strategy are completely based on AI. We are more cautious about this, mainly based on the safety and risk of the data of the customer. But if the customer is authorized, we can do it completely physically.

Let me do a translation here. So we must emphasize that we embrace AI not because this is the propaganda that is the trend currently, but it's really about how it's been able to enhance the efficiency of the company. So in the past, our analysts, when they review our business model, they may use a method to count how many RMs we hire and then just do a multiple and believe that that is a growth engine. However, under the AI-enhanced system, we believe that right now, it's not about how many people we hide. Take Singapore offices, for example. We've been adopting this AI method for nine months now. What we see is that our human resources have dropped, but at the same time, AUM has increased by three times in the past nine months. It's about efficiency. It's about quality that we've been able to deliver to our clients. And apart from that, with the AI in mind, we may also able to further develop our business by reaching to the EAM on the multi-family office business, so that we've been able to provide a system to work with this independent third-party channel, just like what we've done with Underglory with hired different commission-based broker to do the insurance business since second quarter last year. And to answer your question, maybe currently it's not about if we've been able to use a financial indicator to show the efficiency or a really quantitative return from using AI. However, we believe that one key factor you can look at is how many clients we've been able to cover. The company has a record of over 400,000 clients on our record. We may not have been able to cover all of them in the past, but with the help of AI, that has enhanced our efficiency. We believe that this is a very good opportunity that we've been able to talk to all our potential clients, or who should be our clients on our list again. But we must emphasize that the company is still very cautious about clients' So when doing investment planning suggestions we would be rather more prudent because we don't want to have any kinds of privacy issues in been a concern to the company. So at the moment, we would say it's more about efficiency, but I would say the company with the not chart that internally all our employees can use, and also the AIRM, that is the translator for CEO just now, that are already providing service to internally and externally to clients that we have already seen the efficiency that AI has been bringing to the company.

We also promoted this year, how to get AI to support us. We require that every client must use AI, and we require them to choose 100 clients that can make them go to heaven. Other clients must be assigned to AI. I think during this process, you can see that our AI They may not be able to choose 100, maybe 50 to 70, but we ask them to do it from the product-driven customer service method to the customer management method, which is to manage each customer deeply through AI. We believe that as long as it does the right thing in the process, and then it can deliver better quality services to customers, our R&D capacity will be greatly improved. If RM can increase, it means that its revenue will grow. If RM's revenue can double, then I believe that our business will also grow. But we may have a smaller future, not to say that we will be the sole owner. It may not be for the sake of wealth, but RM's performance will grow five times. Maybe its revenue can grow four times. At the same time, the fall will be more delicate. Then we answer your question just now, we have more confidence in profits. We are doing it in a deeper and more quality way. Obviously, we have been repurchasing our stock. We have announced this year that we will continue to promote it. I think Loya has been operating for more than 20 years. We are more familiar with the business model. The financial industry is closer to money, so we can make good profits and return to our shareholders.

And what we've been now promoting is a program called RM100. About this program is that we ask our RM to handpick around 100 clients they would like us to serve intensively. And for the rest of clients, supposedly on their book, then they have to hand it out to our AI Wealth Management Department, which the core believe behind this, we hope that through the support of AI, we can enhance quality. And which the RMs, when they have handpicked their client, they can better serve his own clientele. And that ultimately is about their income can be increased. And ultimately, that drives our profit in the future. And to your question about buyback and dividend and shareholder returns. because we have confidence in driving our future growth, and also we know the financial industry very well, and we also know how to best allocate our resources. And that's why the company believes that we have a very high confidence in continuing to return or to reward our shareholders.

I just want to add a piece of information that we actually have Since the repurchase program, we have repurchased about 4.3 percent of the total shares outstanding. And obviously, we have been very disciplined in terms of execution of dividend policy. I believe that with adding this year's dividend to the accumulated dividend out, the numbers already crossed the $2 billion threshold. So that's actually a very impressive return, I guess not just in Chinese ADR, but probably on many of the listed companies. So we're actually giving out about $1.32 per ADS this year. So that's something, you know, as Chair Lady just mentioned, that we're pretty confident that we'll be able to generate the same level of cash flow and continue to reward our shareholders.

Thank you.

And our next question today comes from Peter Zong with J.P. Morgan. Please go ahead.

Peter, please give me a chance to ask a question. I am Peter Zhang from Mokong Dapeng. I have two questions. The first one is that our income has been greatly contributed by the performance fee in the fourth quarter. I would like to ask the management to explain the main driving factors behind it. Then, if we look at it in 2026, what will be the continuation of this income? The second question is, because our first quarter is almost over, I would like to ask the manager to introduce the business trends of our first quarter, including the investment situation of customers, the sales situation of our financial products, and the income comparison of our first quarter. . . Thanks for giving me the opportunity to ask questions. This is Peter Zhang from JPMorgan. I have two questions. First is we noticed that the first quarter revenue was mainly supported by the strong performance fee. We wish to understand what's the drivers behind and can this revenue segment be sustainable into 2026? Secondly, given which management can help to describe what's the quality-of-play operating trend for NOAA, including client activity, client investment behavior, wealth management, part of sales volume, as well as revenue trend. The market has been quite volatile in first quarter. We wish to understand whether this has any implication on your equity in affiliate income items.

Thank you. Okay. The second part is that our second-tier market last year was relatively continuous. But for the predictability and continuity of carry, in fact, in the past, we have not been able to predict accurately what kind of situation it is. But from the structure of our business, we set up long-term VCPE investment and second-tier market investment business. In the future, there will be more and more carry business development every year. But at the same time, we also pay great attention to Let me do a simple translation first.

Honestly, it's hard to precisely predict the trend in the future. However, we must emphasize that it's about the structural. We've been focusing in investing in PE in previous years and believe that with this structure, we've been promoting investment products. This should bring carry to the company in the future for long-term growth. And for your second question regarding in equity in affiliates, yes, we do still see some pressure during Q1. However, we must emphasize that this is only a non-operational impact. So it shouldn't be really affecting the cash flow or our operation. And for Q1 operation, if Grant would like to.

Sure. I just want to add a little bit more on the carry. I think Peter particularly mentioned about the Q4 carry income. Two-thirds of the carry actually came from an exit from the U.S. dollar denominated fund in Silicon Valley, and the rest actually came from the domestic products, from the RMB private hedge fund. So I guess that's a pretty balanced return, but obviously, as Xander just mentioned, it's quite difficult to forecast particular timing of carry, but we are seeing that you know, the AUM accumulated rather good opportunities for continuous return performance fees, hopefully. And, yeah, I think for the first quarter, you know, obviously cannot share too much information about the first quarter actual operations, but we're seeing, I guess, at least the stabilization of client sentiment toward investments. And two is obviously in terms of the tension, I guess, especially in the Middle East, people are a little bit more risk averse and they tend to actually put items or investments in more liquidity position and more diversified portfolio. And that's exactly our point of view that we're trying to market to our clients, diversify across asset classes and also regions. Peter, can we get your question?

Thank you. This is very helpful. Thank you.

Thank you. And our next question comes from Yiming Tang with CICC. Please go ahead.

Good morning. Can you hear me?

Yes, please.

Thank you for the opportunity to ask this question. I would like to ask two questions. The first one is that we see that the company's momentum, including the increase in operating profit since this year, is relatively obvious. I would like to ask about the reason and how to turn to the subsequent cost control ability. The second question is that the momentum for joint venture investment losses is not large. We can see that the fluctuation between the seasons is also relatively obvious. My first question is that I noticed a meaningful increase in operating margins. Could management provide some color on the notable increase in our operating margin? Moving forward, how do you view our capacity to maintain effective cost ? And my second question is, What are the primary drivers behind the significant widening of investment losses from equity in affiliates in the fourth quarter?

Thank you. I want to just give a little highlight on the operational margin. Obviously, one is as a result of continuing optimization in terms of cost of you know, obviously human resources related in terms of salary and bonuses, especially mid-backoffice streamlining, as we just discussed, the utilization of AI as well as the continuing streamlining processes. So as a result of the reduction of headcounts, you know, the total actual cost related to staffing decreased about 10%. with the help of obviously carry income, we're seeing a pretty healthy margin. And 30% is actually the operational margin we always try to aim for. So that will continue to be reflected down strategy in 2026. And also in terms of your question on the affiliated equity performances, we're obviously seeing a lot of pressure in the fourth quarter, but hopefully we'll be able to stabilize in the first quarter.

Thank you. That concludes our question and answer session. I'd like to turn the conference back over to the company for any closing remarks.

Thank you. And thank you, everyone, for joining us today. And if you have further questions about the company, please feel free to reach out to the IR team here. And have a good day, everyone.

Thank you.

Thank you. That concludes today's conference call, and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.