Noah Holdings Limited

Good day, and welcome to the NOAA Holdings Limited first quarter 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Doreen Chiu, Investor Relations. Please go ahead.

Thank you, and welcome and good morning, everyone, to NOAA's first quarter of 2026 earnings conference call. Joining me on the call today are Ms. Wong Ting-Po, the co-founder and chairlady, Mr. Sander Yin, the co-founder, director, and CEO, and also Mr. Grant Pang, 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 section that follows. Please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties. That may cause actual results that worry materially from those in our forward-looking statements. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC and the Hong Kong Stock Exchange. NOAA does not undertake any obligation to update any forward-looking statements except as required under applicable law. With that, I would like to pass the call over to Mr. Yin. Please go ahead.

Good morning, investors, analysts, and friends. Thank you for attending NOAA's first quarter of the first quarter of the year. The transition pace into June of 2026 is clearer than in the past. In the first quarter, we observed three clear trends. First, profit structure continues to improve. Our operating profit rate has reached the high point of the third quarter in recent years. Second, domestic business is returning to investment and supply. Active customers and supply scale realize a double-edged sword. Third, overseas business continues to advance according to our initiative to adjust the strategy of income structure. the globalized and AI-driven new business model is gradually being formed. Before we go into more detail, I would like to share two globalized milestone cups that we have achieved in this quarter. The Japanese office officially started operation on May 4. At the same time, our US brokerage dealer brand has completed the final approval process. The core key team will also officially join in June. Investors and analysts, and thank you for joining NOAA Holdings' first quarter 2026 earnings conference call.

As we start 2026, the pace of NOAA's transformation has become clearer than ever before. In the first quarter, we observed three increasingly visible trends. First, our profitability structure continues to improve, with operating margin reaching one of the highest quarterly levels in recent years. Second, our domestic business is regaining momentum in core investment and asset allocation, with both active clients and transaction value achieving double digit growth. Third, our overseas business continues to advance in line with our strategy of proactively adjusting our revenue mix, while a new operating model driven by globalization and AI gradually takes shape. Before going into a more detailed review, I would like to share two milestones in our global footprint that we recently achieved. Our Japan office officially commenced operations on May 4th, and our U.S. broker-dealer license has completed the final approval process. with key team members set to officially join in June. These two developments mean that our network is entering a new phase, moving from license deployment to operational execution. Next, I would like to share our progress from four perspectives, financial performance, domestic business, overseas business, and AI strategy.

In the first quarter, we achieved a net income of RMB 6.26 billion, which increased by 1.8% and decreased by 14.7%. The decline mainly comes from the further reduction of insurance business contributions, as well as the normal decline in the stage after the general confirmation of the annual end of the overseas private equity product profit income. In terms of profits, we have achieved a steady execution in the cost discipline, organization, and cost control. The operating profit reached RMB2.36 billion, which increased by 27.1% in the same ratio. The operating profit rate is 37.8%, is one of the highest operating profit rates of the third quarter in recent years. Nungat's net profit is RMB1.34 billion. What needs to be explained is that the high profit rate of this quarter is due to the further release of business structure optimization and organizational efficiency. We expect that the annual operating profit rate will remain in the healthy range of more than 30%. There will naturally be fluctuations between the quarters due to the product structure and the fee rhythm. This quarter also marked the year since NOEAS was launched.

Porter, we recorded net revenues of RMB $626 million, up 1.8% year-over-year and down 14.7% quarter-over-quarter. The sequential decline was mainly due to a further decrease in contribution from the insurance business. as well as a seasonal decrease in performance fee income from overseas private equity products following concentrated year-end recognition. However, on the profit side, benefiting from our disciplined execution in cost control, organizational streamlining, and expense management. Operating profit reached RMB $236 million, up 27.1% year-over-year. Operating margin was 37.8%, marking one of the highest quarterly levels in recent years. None gap net income was RMB $134 million. It is important to note that this quarter's strong margin performance benefited from continued optimization in our business mix and further release of additional organizational efficiency. We expect full year operating margin to remain in a healthy range above 30%, although quarter to quarter fluctuations are natural due to product mix and expense timing. This quarter also marked our 62nd consecutive quarter of non-GAAP profitability since listing. This is the discipline we have maintained across multiple market cycles.

集团第一季度活跃客户达到10742人,同比增长21.8% 募集量达到人民币233亿元,高于上年同期的161亿元 定位方面,人民币公募产品交易规模99亿 This series of changes shows that By re-focusing resources on products with long-term value and investment capabilities, the business quality of the industry is improving. At the same time, we are also more clear about the strategic direction of the industry in the future. In the industry, we will continue to focus on the construction of the second-tier market and asset allocation capabilities, focusing on public funds, private second-tier markets, AI-driven customer management, and the ability to develop fund sales platforms to continue to improve our business. Last quarter, our active clients reached 10,742, up 21.8% year-over-year.

Transaction value reached RMB 23.3 billion, compared with RMB 16.1 billion in the same period last year. In our domestic business, transaction value of RMB-denominated mutual fund products reached RMB $9.9 billion, up 131% year-over-year, while transaction value from RMB-denominated private secondary products reached RMB $5.3 billion, up 61% year-over-year. NOAA Upright recorded net revenues of RMB $208 million up 63% year over year, mainly driven by a doubling in public fund transaction volume as a result of structural opportunities in the A-share market, together with a rapid recovery in RMB-denominated private secondary fundraising. This series of changes shows that when we refocus our resources on products and investment capabilities with genuine long-term value, the operating performance of our domestic business improves structurally. At the same time, we have become even clearer about the strategic direction of our domestic business going forward. For our domestic business, we will continue to focus on the secondary market and building our asset allocation capabilities, with key priorities including public mutual funds, private secondary market products, AI-driven client operations, and NOAA Upright's fund distribution platform capabilities. We will continue to drive the enhancement of our operations in these areas, We believe the domestic wealth management industry is gradually moving away from the past stage, which was driven by real estate and non-standardized products, and returning to a true long-term era centered on investment, research, and asset allocation.

也指3月31日,海外注册客户达20,373人,同比增长11.9%, 海外AUA为96亿美元,同比增长约5.9%, This quarter, U.S. dollar products accounted for 11.5 billion U.S. dollars, which is the same as the same period last year. Overseas customers are still steadily accumulating on the basis of assets. The pace of income structure adjustment is consistent with our judgment in the third quarter of last year at the press conference. In the past few years, NOEA has continued to deploy around the core areas of Chinese people around the world, including Hong Kong, Singapore, Japan, Canada, Europe, Australia, and the U.S. market. 我们越来越清晰地看到,全球华人客户正在进入一个新的阶段,他们的资产,家庭,身份,教育与下一代的规划正在越来越全球化。 而过去,跨多个司法辖区,跨语言,跨待机服务的全球华人的家族,是一种高度依赖个人经验,很难规模化复制的业务。 This is why we believe that one of the most important long-term positions of NOIA in the future is not only a financial management institution, but also a global financial management platform that serves Chinese high-end families around the world.

As of March 31st, overseas registered clients reached 20,373 of 11.9% year-over-year. Overseas AUA was 9.6 billion U.S. dollars, up approximately 5.9% year-over-year. Transaction value of U.S. dollar-denominated products was 1.15 billion U.S. dollars for the quarter, broadly flat year-over-year. Our overseas client base and AUA continue to grow steadily, and the pace of our revenue mix adjustment is consistent with the view we shared during our third quarter earnings call last year. Over the past few years, we have continued to build our presence across key regions, serving global Chinese clients, including Hong Kong, Singapore, Japan, Canada, Europe, Australia, and the United States. What we are seeing more clearly is that global Chinese clients are entering a new stage. Their assets, families, identities, education, and next-generation planning are becoming increasingly globalized. In the past, serving global Chinese families across multiple jurisdictions, languages, and generations was a business that relied heavily on individual experience and was extremely difficult to scale or replicate. For the first time, AI makes it possible for this kind of service to be globally coordinated in a systematized, platformized, and scalable framework. This is why we believe one of our most important long-term positions is not only to be a wealth management institution, but also becoming a global wealth management platform, serving Chinese high-net-worth families around the world.

财富管理行业过去20年的增长的逻辑是清晰但线性的。 多一个理财师,多一份创收,多一组客户的关系,多一份资产的规模。 这个逻辑在过去行之有效,但也意味着行业扩张, We estimate that AI is changing this model fundamentally. It is not a tool to increase efficiency, but to redefine the structure of the front desk of the financial management industry. In the past, the financial management industry mainly relied on a single R&M drive. Today, we are gradually forming a new model with three front desk drives. The first is R&M, which is supported by AI. R&M is still the most important long-term companion in customer relations. But AI is significantly improving R&M's customer coverage capabilities, content capabilities, configuration capabilities, and cross-sector service capabilities. R&M will focus more on deep customer management in the future, rather than repetitive process work. The second is the Financial Management Department of AI. This is a new front-end team that we are focusing on. The Financial Management Department of AI does not rely on the expansion of traditional high number, but through AI-driven customer operation, content service, configuration support, and global coordination, to provide a broader customer demand with a lighter organizational structure. Singapore is the first complete trial market in this mode. In the past one quarter, the AUA in the Singapore region has increased by 192%, with an average of 8.5 times the original rate. This means that our first verification Without helping to expand the number of RMs, AI can increase the capacity of single-person service, the breadth and professionalism of the configuration, to a higher level. Third, AI is the ecosystem development department. We believe that the future wealth management industry will not only belong to the RM system within large institutions. More and more independent wealth consultants, family offices, and external specialized institutions need a global asset supply chain We believe that the future will be a new growth engine for NOEA in the future. And the future competition in the financial management industry will no longer be about who has more financiers. Over the past two decades, the logic to drive growth in the wealth management industry was clear but linear.

One more relationship manager meant more revenue. One more client relationship meant more assets. This logic worked well in the past, but it also meant that the industry's expansion was structurally constrained by labor costs and overall management of the organization. Our view is that AI is fundamentally changing this equation. It is not simply adding another efficiency tool. It is redefining the front office structure of the wealth management industry. In the past, wealth management was primarily driven by a single RM model. Today, we are gradually forming a new model driven by the collaboration of three front office engines. First, AI-enhanced relationship managers. RMs remain the most important long-term driver of strong client relationships. But AI is significantly enhancing their ability to cover clients. In the future, RMs will focus more on deep client engagement rather than repetitive process work. Second, AI Wealth Management Department. This is a new type of front office team that we are actively building. The AI Wealth Management Department does not rely on traditional headcount expansion. Instead, it uses AI to drive client operations, content services, allocation support, and global collaboration, enabling a lighter organizational structure to serve broader client needs. Singapore is the first fully developed testing ground for this model. Over the past quarter, AUA in Singapore grew by approximately 192% year over year, and revenue generation per capita reached 8.5 times. This is the first validation that, without materially expanding the number of relationship managers, AI can elevate individual service capacity, breadth of coverage, and professionalism of asset allocation by an order of magnitude. Third, AI plus ecosystem expansion We believe the future of wealth management will not belong only to the internal RM systems of large institutions. More and more independent financial advisors, family offices, and external professional firms need a platform that can provide a global asset supply chain, an AI workbench, a compliance foundation, global execution capabilities, and brand credibility. We are gradually building this ecosystem. We believe these three engines will together form our growth drivers going forward. And the future competitive landscape of the wealth management industry will no longer be defined simply by who has more RMs, but by who has stronger AI capabilities, who has a more complete global compliance network, who has deeper customer context data, and who has more replicable platform-based service capabilities. This is our most important strategic vision for 2025 to 2026.

围绕这个判断,我们已经实质性地推进了三个层次的工作。 第一个层次是组织效率的释放。 去年,我们在净收入基本稳定的前提下,整体员工人数较2024年下降约11%。 今年第一季度员工人数环比进一步减少约3%。 Behind this is the gradual infiltration of customer interaction, content generation, operation process, and other key parts, so that the same amount of income can be carried out by more sophisticated organizations. This is the first direct evidence that we AI invested in and obtained. The second layer is the productization of genetic ability. The NOA AI RM platform has officially appeared in the third quarter of last year, covering customer research, matching suggestion generation, service records, content output, and other core scenarios. and at the 4D Booking Center in China. AI is not just a background tool, but a partner in the financial world. The third level is also the most important, which is the reconstruction of the business model itself. For NOEA, AI is not a PPT concept. It has begun to become a new business system that can truly create business results and acquire the ability to replicate the world. Supporting the operation of AI capabilities is the foundation of our global platform. ARC Finance, Olivewood Management, and Glowray's three major global platforms are responsible for the execution of customers and accounts, management of assets, and insurance penetration and transfer services, as well as the foundation of the integration of Shanghai, Hong Kong, Singapore, and the US 4G Booking Center. Based on this strategic vision, we have made substantive progress at three levels.

First level, enhancing organizational efficiency. Last year, while maintaining stable net revenues, our total headcount declined by approximately 11% compared with 2024. In the first quarter of this year, headcount further declined by approximately 3% quarter over quarter. Behind this is the gradual embedding of AI into key areas such as client interaction, content generation, and operational processes, enabling the same revenue scale to be supported by a more streamlined organization. This is the first direct evidence of returns on our AI investments. Second level, productization of operating capabilities. Our AI RM platform officially went live in the third quarter of last year. It covers client research, generation of allocation recommendations, service record keeping, and content output, and is being integrated in parallel across our four booking centers. AI is no longer just a back office tool. It is becoming a collaborative partner for our RMs. Third level, reconstruction of the operating model itself. AI is not a PowerPoint concept for our organization. It has already become a new operating system that can generate real business results and has the potential to be replicated globally. Supporting these AI capabilities is the global platform foundation we have already built. Our three global platforms, Arc, Olive, and Glory, support client and account execution, asset management, and insurance, trust, and inheritance services. and our four booking centers in Shanghai, Hong Kong, Singapore, and the United States together form our compliance and execution infrastructure. Going forward, our long-term AI build-out will continue to advance across four dimensions, clients, relationship managers, products, and governance.

Our work will be based on the three main priorities that the Chairman of the Board of Directors will promote year-on-year. First, to expand the basis of overseas customers. Second, to promote the further growth of global asset configuration business. Third, to continue to optimize the structure of olive management business income. At the same time, we will continue to deepen the application of AI in the core business process, and gradually expand the global co-operative ability in the nuclear framework. As of March 31, the company holds a cash, cash-related business and short-term investment of RMB 5.1.3 billion to maintain the structure of the zero-waste bond's healthy asset bond table. The Board of Directors has suggested that the shareholders' meeting be submitted in 2025 according to the 100% non-GAAP interest rate development of stocks and special stocks. It will be implemented after the review of the shareholders' meeting on June 11. This will continue NOIA's 100% non-GAAP net profit as a standard shareholder return policy framework for the third consecutive year. We will continue to invest in globalization and AI capabilities under the premise of maintaining financial discipline. We are still in the process of transformation. The short-term pressure point is transparent, but the logic of the long-term business model is becoming clearer than the past. The B record is not the end. It is more like NOIA's new business model The remainder of 2026

Our work will continue to focus on the three priority areas clearly set out by our chairlady in her 2025 letter to shareholders. First, expanding our overseas client base. Second, further growing our global asset allocation capabilities. Third, continue to optimize the revenue structure of Olive, our asset management business. And lastly, deepen AI applications in our core operating processes. and gradually expand global collaboration capabilities within a compliant framework. As of March 31st, we held RMB $5.13 billion in cash, cash equivalents, and short-term investment, maintained a healthy balance sheet with zero interest-bearing debt. The Board announced a dividend proposal for approval at our shareholders' meeting, including a special dividend that brings the total payout to 100% of full-year 2025 non-GAAP net income. Subject to approval at the June 11th meeting, the plan will be implemented. This would extend our shareholder return framework for a third consecutive year based on 100% of non-GAAP net income. We will continue to invest in globalization and building AI capabilities while maintaining financial discipline. We are still in the midst of our transformation. The short-term pressure points are visible, but the logic of our long-term operating model is becoming clearer than ever before. The first quarter is not the destination. It is more like a starting point where our new operating model is beginning to be validated. We are evolving from a traditional wealth management institution into an AI-driven global platform serving Chinese families around the world. This process will not happen overnight, but our direction is becoming increasingly clear. Thank you. I will now hand the time over to CFO Grant to review our financial performance in greater detail.

Thank you, Xander, and good day to everyone joining us. The first quarter of 2026 marked a solid start to the year and continued progress on transition toward a more investment-led and quality-driven global wealth management platform. I would like to highlight three key messages. First, while total revenue remained stable, the quality of a revenue mix improved meaningfully. driven by strong growth in investment-related fundraising fees and performance-based income. Second, disciplined cost management and structural efficiency initiatives delivered substantial operating leverage. Operating profit increased significantly and operating margin expanded further. Third, reported net income was affected by non-operational volatility This mainly reflected mark-to-market accounting adjustments on a specific list of investments recorded under income from equity affiliates. Excluding that specific mark-to-market impact, non-GAAP net income would have reached RMB 216 million, up 28% year-over-year. For the first quarter, total net revenue was RMB 626 million, up 1.8% year-over-year. This stability was achieved despite a deliberate 49.9% reduction in insurance-related revenue as we continued to optimize our business mix. One-time commissions were RMB 113 million, up 5.9% quarter over quarter. Within this, commissions from newly raised investment products increased to RMB 53 million, up 46.1%. year-over-year, and 41.6% quarter-over-quarter. Recurring management fees were RMB 379 million, down 3.4% year-over-year, and 2.5% quarter-over-quarter. Performance-based income reached RMB 100 million, up 253% year-over-year, primarily driven by strong realization from RMB-denominated private secondary products Overall, the quarter further demonstrates our continued shift toward a higher quality investment-led revenue structure. Our lean operating model continues to deliver measurable financial results, with AI increasingly serving as the structural driver of efficiency. Total operating costs and expenses declined to RMB $389 million, down 9.2% year-over-year, and 18.1% quarter-over-quarter. As of the end of the quarter, group headcount was 1,726, down 10.4%, leading personnel costs to decline 12.2% year-over-year to RMB 267 million. This reflects productivity gains rather than business contraction. Our AI strategy focuses on improving output per capita and operational efficiency, AI-driven tools now support client engagement, automated reporting, suitability processes, and routine workflows that previously required manual intervention. This enables us to scale global operations when maintaining disciplined cost control and service quality. SG&A were IMB 103 million down 10.8% year-over-year and 35.1% quarter-over-quarter. Total operating cost expenses were $389 million down 18.1% compared to last quarter. As a result, operating profit increased to RMB $236 million, up 27.1% year-over-year. Operating margin therefore expanded to 37.8% compared with 30.3% in the first quarter of last year. Excluding government subsidies, operating profit was RMB $236 million, up 33.7%. These results highlight the stability of our platform and financial benefits of our structure optimization. Below the operating line, investment, interest, and other income totaled RMB $19 million. Interest income remained RMB $32 million. Investment income was negative RMB 2 million. Foreign exchange loss was RMB 6 million. And contingent expenses was RMB 3 million. Share of losses from equity affiliates was RMB 65 million. As a result, non-GAAP net income attributable to NOAA was RMB 134 million with a margin of 21.4%. Total transaction values reached RMB 23.3 billion, up 44.8% year-over-year, and 37.5% quarter-over-quarter. U.S. dollar denominated private secondary products reached U.S. dollar 293 million, up 161% year-over-year, when RMB denominated private secondary products reached RMB 5.3 billion, up 61% year-over-year. This fund raising momentum directly supported the growth in investment-related commissions and reinforced our strategy. As of the end of the quarter, Group AUM was RMB 140.2 billion and AUA was RMB 233.5 billion. Total AUM and AUA at the group level declined, yet our U.S. dollar denominator base continued to grow. Overseas AUM reached US$6.2 billion, up 5%, and overseas AUA reached US$9.6 billion, up almost 6% year-over-year. Total Diamond and Black Card clients reached 9,029. Overseas Diamond and Black Card clients reached 1,781, up 3.8% quarter-over-quarter, reflecting continued traction in overseas markets. Our balance sheet remains strong and highly liquid. As of the end of the quarter, cash and cash equivalents were RMB 4.3 billion and short-term investments were RMB 834 million. Total assets were RMB 11.6 billion and total liabilities were RMB 4.7 billion. Our asset liability ratio remained low at 14.5%. and our current ratio was 4.8 times, providing ample flexibility for growth and shareholder returns. We believe our current market valuation does not fully reflect the strength of our balance sheet, the resilience of core earnings, and the scalability of our operating model. With shareholders' equity of about RMB 9.9 billion, the company is trading at roughly 0.5 times book value. when delivering an annualized return on equity of approximately 5.4%. In our view, this does not adequately reflect our intrinsic value of long-term earnings potential. And since the beginning of 2020, we have repurchased 2 million ADFs for approximately US dollar $20 million, representing about 2.7% of outstanding shares. And since launching the program, shareholder Return in 2024, we have cumulatively repurchased 3 million ADS for US dollar $35 million, plus we have declared to distribute 100% of our non-GAAP income as dividends for the third consecutive year. These actions reflect management's confidence in the company's intrinsic value and our commitment to enhancing long-term shareholder returns. So in summary, the first quarter reflects disciplined execution of our strategic transition. Revenue quality improved, operating leverage strengthened, and AI-driven productivity gains continued to enhance structure efficiency. When reported earnings were influenced by non-operational volatility, the underlying trajectory of our core business continues to improve. With a Fortress balance sheet, a leaner and more scalable operating platform, and continued capital returns through share repurchases, we believe the company remains fundamentally undervalued relative to its intrinsic strength and long-term earnings potential. So we remain fully committed to disciplined execution, prudent capital allocation, and sustainable long-term value creation. Thank you, everyone. And we'll now open the floor for questions.

And operator, please open the floor for questions.

Thank you. We will now begin the question and answer session. To ask a question, please press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Your first question today comes from Calvin Lung from Citi. Please go ahead.

Hello, can you hear me? Yes. Thank you for giving me the opportunity to ask a question. I am Calvin from Huaji. I have a question about domestic supervision. Quickly translate my question. Thanks for taking this, and this is Kevin Lang from Citi. Last Friday, China tightened the regulations on cross-border brokerage businesses. What is management's view on the evolving regulatory landscape on this front, and what is the potential impact to NOAA's domestic market business? Considering a few offshore brokers were fined by regulators regarding their unauthorized brokerage businesses, what does management take on the compliance risk in domestic market going forward? Thank you.

Okay, thank you. Let me answer this first. We are also concerned about this news. This is a news in the industry. This is actually an old news. In fact, many years ago, there were regulations on this aspect. But this is just a further strengthening of the rule of law under the rule of law. For NOEA, we have always insisted on a rule of law. All our customers, all come from overseas bank accounts. Accounts of any institution under the Hong Kong Banking Administration. The process of our opening KYC is very strict. So there is no illegal opening. For NOEA, the scale of our brokerage business itself is not very large. The entire base of the company and a very small share of income. This will have a great impact. Regarding the domestic supervision requirements that you mentioned, we have been paying attention to it. For NOEA, we insist on and will continue to do so in all judicial areas. So, at present, we are also very concerned about the impact of this policy. But regarding NOEA's impact on the business model, we actually think that the impact is very, very small.

Let me do the translation. The CEO, we confirm that the company has paid attention to this news. However, we have to emphasize that this is not exactly a news happening, but more like a reinforcement of an existing rules that has been introduced to the market a couple of years ago. However, we would like to emphasize that the company has been always complied to legal requirement under different jurisdiction. And particularly for the overseas account that's been opened, it's all under the complied requirement under, say, for example, in Hong Kong would be all the KYC requirements and all that. And also about the money transfer into this investment account is from legitimate financial institute operated under HKMA's regulation. that all the money transferred in the investment account is from those validated financial institutions. But having said that, the security business, the revenue contribution to the company is rather small. So all in all, we don't see any impact, or basically with no much impact to NOAA for our business model. And we must once again think that all of our operations under different jurisdiction has been always complied to the legal requirement.

I would like to add that first of all, we are very concerned about this news. So after it came out, we also did a complete self-examination based on the latest system released by the SSC. I think that in the past, we have done a lot of basic work. In Hong Kong, Singapore, the United States, Chinese family around the world Chinese family around the world Chinese family around the world The chairlady further supplemented on the answers.

The company's been paying huge attention to these newly executed rules and situation. And we've been immediately reviewed our internal procedure according to the SFC requirements. And we are very comfortable to say that we fully comply with the legal requirements. And that is not only in Hong Kong, but across Singapore, USA, all of our booking centers. So slightly different from these securities online platforms, what we serve is the global Chinese high net worth. So it's slightly different from the business model. And having said that, security business is only contributing less than 1% to our total revenue. And we further emphasize, again, all the money transferred to the investment account are from overseas banks. non-zero of the money transferred into the investment account is from China Bank. So she's slightly optimistic that maybe this could be a chance for NOAA because we have been always compliant to regulations.

还有补充一个细节就是我们的运营和科技团队 So IARC, which is our app for security trading in the company, and all the operational system and also the technical supporting systems are all placed in overseas companies.

market and overseas like in Hong Kong. And also for IARC, we have zero employees that basically refer to IARC in the domestic market.

So again, we are fully compliant to the requirement of SFC and CSRC.

And further, the company is already reviewing the referral requirement for the business from domestic to overseas according to the legal requirement.

Kelvin, I hope that answers your question.

Thank you. Your next question comes from Peter Chang from JP Morgan.

Please go ahead. China China China China Thanks for giving me the opportunity to ask this question. Peter Zhang from JPMorgan, and I have two questions. First is, I would notice that WealthMan product transaction volume has pick up sequentially in first quarter, which is a really good trend. We are wondering what's the operating trend in second quarter. Do we see continual strong investment sentiment in our equitable clients and how the clients demand for domestic and overseas products, investment products? Secondly, my question is on the cost side. We have a really good cost control in first quarter. I'm wondering whether Benjamin can share what's the full year guidance for our HECON growth and operating expense trend.

Thank you. Thank you, Peter. I'll answer the first question about the future trend of the product. I think this is a good question. I'll divide it into two parts. One is domestic and the other is overseas. In domestic, is really dependent on the continuous performance of the capital market. In this industry, the market is indeed relatively hot. Customers come back with confidence. Compared to the previous year, we saw that in the last two years, last year and this year's first quarter, the emotions and scale of customers' investment in the entire second-tier market are rising. But in fact, we have also done a very important job in China, which is to emphasize asset configuration. It is not simply following the hot spots of the market, which one is easy to sell and which one is for sale. Instead, we emphasize a multidimensional asset configuration for customers. We emphasize a combination of customers, a combination of overall revenue. So we have been continuously helping customers in the last year and this year to do program asset configuration analysis. And this year, we have benefited from AIR, the completeness of asset configuration for customers, the stability of the warehouse and the process of adjusting the warehouse, we have done a lot of work. The customers have also started to gradually understand our concept of configuration, and gradually play a role of stabilizer. In other words, on the one hand, the market continues to be relatively good, but on the other hand, in fact, in the domestic business model, we are also moving towards the real configuration direction, and we have indeed obtained better results. Then overseas, I think we have The biggest market is AI, right? This is indeed a hot topic. And last year, we also saw the reports of CIOs in the past few years. In fact, it has been emphasizing the new trend brought by AI in the process of this age. That is to say, we are in the product selection and product configuration of the customer. It is based on the logic of AI. For example, AI infrastructure. AI-driven market assets, big indexes, structured products, and so on. Therefore, it is because of the drive of the CIO report that our customers start to recognize the CIO report and gradually complete the asset adjustment, that is, more layout on AI. Therefore, we can see that the product of this quarter is still performing well. What is more important is that we continue to see the breadth and depth covered by the global product managers on the global audio asset management platform, especially on the depth covered by the U.S. product team. Indeed, we have seen a lot of high-quality assets. I think the core of the wealth management industry is two pieces. One piece is the product, and the other is the customer. The product captures the big trend and direction, so that customers can understand and take action. This will create a continuous and good effect. In addition, in the whole process, in addition to being able to allow, as mentioned earlier, AI to be able to identify the entire information of the customer and match the customer with the product, we have done a lot of work on that. That is to say, many products are not, must be as widespread as in the past to promote, but more precisely to find the right customer and explain to him in depth. The customer's efficiency in the sales scale of the product has also been greatly improved.

Yes, thank you, CEO. So back to Peter's question. I appreciate for what he's asked. So we will want to answer the question divided into two parts, which is the domestic market and also the overseas market. We must admit that for investment sentiment, a lot of time is affected by the entire market situation. And that's why we've been seeing that in 2025 and 2026 until now, the investment sentiment has been a lot improved compared to two years ago. However, what we've been really doing is not just, I mean, getting business according to the market situation. So what we've been doing is really try to promote the idea that we've been helping clients to do the wealth management, which is to diverse their asset into different classes and different products so that they can have a better portfolio. and that we have been seeing the progress in the domestic market. And for overseas market, one of the things about being a wealth management company is the ability to getting the good product. And according to the CIO report and also in the current market condition, AI has been a very important idea for investment idea and that's why we have different products that is AI related from infrastructure to AI company. And that we've been doing that and also again promote the same idea of helping clients to do their wealth allocation for a better portfolio. And that we believe that with all this good quality pollen on hand, we should see a better sales allocations as a result. And we must also emphasize that in terms of the selling abilities, that now we've been using AI to support the company or the RM to do the client's risk analysis. So we've been promoting products according to the client's needs. That is more specified in some of during the mass promotion like in the past, which again, we believe that we should enhance the efficiency of our selling and ultimately the selling results for the company.

Let me add something. I think the analysts need to understand us and see that Luoya is still a long-term company. From 2022, we proposed to protect and then grow. Indeed, our insurance is relatively large. In fact, our customers are basically in one of the most important key moments in our opinion, they are all equipped with insurance. Then in 2023, we started to talk about the passive sea of Chinese private enterprises. In fact, now you also I think you can all feel it. In 2025, we basically started to look at AI. In the beginning of 2020, our core strategy was AI infrastructure. I think when we put these views of our CIO together, the most important thing is to protect the client's assets, complete the configuration and growth of client assets. This is why when the market gets better, our scale will rise. I think it's the same for the future. From the listing in 2010 to the 62nd quarter, we have completed a close profit. I think it's the customers who will use their real money to vote. So I have been in the industry for so many years. I think the growth of the market from A stock is still because of the narrative of AI. In the past, Luoya mainly did the first-class market as the core. We actually did not do so well with debt. Let me tell you a little detail. We have sent out a lot of VC, PE funds, which are all related to technology, and they are also the most top-notch. In the past, this WeChat group was called Weiquan Group. Last year, it was changed to Value Investment Group. We can see that our customers have earned a lot of money in Luoya. So we are also very confident in the sharing of our future carry. In the overseas market, since we set the pace of the market to guide customers more clearly, whether it's in the second or first-tier markets, customers will have better returns. So we are full of confidence. But now, to be honest, the market value of Luoya is really too low. We are basically lying flat, mainly relying on wind and red. So we don't care. Our core is very simple, which is to protect customers' assets, so that customers can make money and they can follow us for a long time. 我们是真正的变成了一个财富管理 就是对客户的 当然我们不重视市值也是不对的 但是我也没办法主导分析师对我们的看法 这是董事长一个羞耻手法 对 所以我们是非常稳健的 我看到有一些互联网券商 做得都非常好了 但是他可能 There are very few indicators that show the proportion of customers making money here. Every year, we measure the proportion of all Loya's customers making money in each section. This is a very important indicator to test. So I think we can't answer your question just now. What do you think about the future scale? Because we have been in this industry for more than 30 years, and we still have a lot to learn. But we are still full of confidence. Because as Buffett said, short-term is gambling, and long-term is weightlifting.

So when we review history of NOAA, we've been talking about to protect our client asset before growing in 2022. And in 2023, it's about all these pricing entity in China that is going overseas market. And since last year, we talked about AI. And for this year, we emphasized in AI infrastructure product. What we've been demonstrating here is we are a real wealth management company. What we are doing is about how to make sure our clients' assets can be well protected and ultimately have growth. And I mean, different from a lot of our friendly, not exactly competitors, but our peers, then I would say we always reveal how much profit our clients made every year. And that has been a very key KPI for the staff here. So, I mean, in a simple way saying that the company couldn't control a lot of things like the market cap or if the size of the company can grow drastically. However, if we look at what we've been doing with our clients, when we look at within profitability for offers 62 conservative quarters. When we've been looking at all these right decisions in the past in history, we are confident that we've been able to keep up with the company and ultimately will be seen by the market.

So I'll take Peter's second question. We actually don't have a set agenda or set target for frontline teams, obviously, although we see, you know, a declining of number of items, but that's really driven by performance. So as you can see, we're still achieving a much higher fundraising volume because of the higher quality and high efficiency. So we don't expect to have, I would say, intentional shrinking of the frontline team. We want to make sure, obviously, they're fully occupied and able to generate enough volume as, you know, as CEO and Chair Lady just mentioned, there might be opportunity given the current policy situation. At the same time, obviously, we are targeting mid-back office efficiency, especially with the tool of AI. We believe that many positions in the past that, you know, basically being performed by pure labor or pure hands are now being at least consolidated, merged into fewer positions. So that actually leads to significant, I would say, optimization in mid-backoff structure. But in the meantime, I think from the standpoint of whole year, although we don't expect to see huge expansion or growth in headcounts, we are going to see some key fulfillment in key markets worldwide. Although just a couple of people. And obviously, we'll continue to invest in AI and technology. Peter?

Thank you. Very clear. Okay.

Thank you.

Once again, if you would like to ask a question, please press star, then one, and wait for your name to be announced. Your next question comes from Yingying Tang from CICC.

Please go ahead. And just now, the manager introduced the new business from taking pictures to entering the business landing stage. So how should we look forward to the growth of the new business in the future? And then my second question is about AI. Just now, the manager also mentioned that the AI Financial Management Department in Singapore has achieved a higher number of creative capabilities and customer efficiency. So I would like to ask the manager, I will translate my questions. This is Yiming from CICC. I have two questions. First is transaction value active client members and RM numbers for overseas business declined. Could you please talk about the reasons? You mentioned overseas business has moved from a licensed setup to formal operation. What's the growth outlook for this segment going forward? And my second question is about AI. The AI Wealth Management Department in Singapore has delivered much stronger revenue generation and client service efficiency. Could you please talk about how AI helped RM, develop their business.

Thank you. Okay, thank you, Ying. Let me answer the first question first. Regarding overseas business, in fact, if we compare, we are growing. But if we compare, it's a little bit different. In fact, it's also related to the market and structure. I think our business is relatively stable in terms of overseas business growth. But on the other hand, in fact, we do focus on High value is the service and penetration angle of our black card plus half diamond customers. This is also related to AI. In the era of AI, we have done a lot of data and CM system structure data and non-structure data organization in the past few years. AI era allows us to identify these customers more quickly and efficiently. and then match our product structure. So we see that we put high quality resources, such as some product resources, actually put more high quality customers on it, so that they can get a better service here. In the previous quarter, we also disclosed that we launched a bonus called NOBAY. NOBAY actually measures our customers' comprehensive contribution to NOA in the past. It is a very important indicator. Now that we have Norbea, we can offer high-quality resources to our high-quality customers. I think in the future, we will stick to this strategy. Identify our high-value customers, customers who continue to contribute to us, and then let our high-quality products and resources in the market be distributed to them, so that they can get a longer-term investment and sharing of products.

So about your question about overseas business performance, we do see that sequential drop in first quarter. However, when we look at the year-on-year, we do see a growth as reflected. We believe that that is a normal performance across different quarters, various changes. And about how AI has been enhancing our R&Ms, So I guess we've been slightly touched base on the current way of doing business. We are now trying to be more focused and more accurate in picking products to certain clients. So we've been able to distinguish a higher level of clients so that we'll be more efficient in terms of suggesting products to our clients and allocating the resources that we have on hand. And also we have introduced the North Bay rewarding system since late last year. And that is more like a rewarding system. We've been providing certain rewards to our clients. That, again, would be focused on higher quality clients. And that, as a whole, means that our selling methodology could be better allocated in terms of our resources.

The overseas Booking Center license, this quarter, we got the American Book Dealer license. In the first place, it expanded our future business development as one of the four major Booking Center regions in the United States. In fact, in Hong Kong, we are basically fully licensed, able to cover and support all our business. In Singapore, we also have a license under MIS. We are also applying for our private license. We can do more for our customers, like full-time commissioning. So overseas bookings centers are also pursuing our big strategy, four big bookings centers, to form a global network to serve our Chinese customers. Then the US license is also able to As you may be aware, we've been basically fully licensed in Hong Kong.

And in Singapore, we have different types of licenses under the regulatory of MAS. And we're currently applying for the asset management license as well. So back to your question about the U.S. market's Broking Center license. And again, it's one of the important steps to complete the development of, we are having a very important strategic booking centers for the company. And after the license being granted, we are now working on the details of reapplying business in that market. And that we believe is gonna be a very

important strategic move for the company. All of its customers can use AI to guide them on how to manage and analyze their customers, and how to match the product. The second one is called the AI Finance Management Department. So today, if RM leaves or RM decreases, it's good for us because our customers can go back to the AI Finance Management Department to serve them. It's through operation to serve these customers. The new customers are mainly introduced. So it's completely like this. It can be said to be a The third one is AI plus the Ministry of Finance and Management, which is AI ecology. There are a lot of, for example, this non-commercial one. He will give us some introductions. Then we also use AI methods to serve these customers. We basically went through this process in Singapore. It can also be said that Singapore's market is difficult to do, because it is relatively small. Of course, there are also many high-quality customers, and the world's market is taking it as a focus. But if you really want to find this kind of high-quality RMS, it's very difficult and the cost is very high. But when we started to use the AI method, our business has grown four or five times. And the quality of the service has also increased significantly. We are still very confident in the growth of local customers. Covering the entire Southeast Asia through Singapore. From our experience in Singapore, we are also retreating back to our Hong Kong, the United States, In China, it is indeed a change, a change in our business model. Of course, because we have more RMB in China, so it will be slower. Of course, the AI model is not the same. This is also something that cannot be crossed. But in Singapore and the United States, we can use AI methods to do it. The chairlady now doing a public presentation.

not an announcement, but a suggestion to all our analysts, when you are doing the analysis of the company, maybe no longer we should use the RM as the indicator, or number of RMs as the indicator, the company's business size in the future. But what we've been trying to suggest that because of the enhancement of AI, so all the human RMs have been supported in the first hand, And secondly, we have built up the AI plus work management department. As in the CEO's presentation, we've talked about how these AI plus work management been able to do or to support to take care of our clients, but without enhancing more human resources on that. And also, what we've been further developing is the AI plus ecosystem. That is more like a referral business to cooperate with different types of professional individuals in the market. That should help us to get clients under the AI plus wealth management system. So using Singapore as an example, yes, Singapore is not an easy market. It's small but competitive. And it's really difficult to hide the right RM. The cost would be very high. And that's why we've been using AI as a testament when we started in this market. And we have found out that we have been getting very good results from that market. And that, as mentioned, we have 191% growth in AUA in the third quarter. And that's why we've been going forward to try to apply the same system into different overseas markets as well. I mean, ultimately, we would like to apply that in the domestic market, too. However, some limitation of the historical structure and also because of the different AI systems, that may be slower. However, we should expect that the AI application to different overseas markets should be bringing results to the company in the near future. Is there any more questions?

Thank you. There are no further questions at this time. This concludes our question and answer session. I would now like to turn the conference back over for any closing remarks.

Thank you. Thank you, everyone, for joining us today, and please feel free to reach out to the IRL team for any further questions. Thank you very much.

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