Noah Holdings Limited (NYSE:NOAH) Q3 2023 Earnings Call Transcript

Noah Holdings Limited (NYSE:NOAH) Q3 2023 Earnings Call Transcript November 30, 2023

Operator: Good day and welcome to Noah Holdings Third Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I’d like to turn the conference over to Melo Xi, Investor Relations Director, please go ahead.

Melo Xi: Thank you, operator, and good morning, and welcome to Noah’s 2023 third quarters earnings call. Joining me on this call today are Ms. Wang Jingbo, our Co-Founder, Chairlady and CEO; and Mr. Grant Pan, our CFO. Ms. Wang will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. They will both be available to take your questions in the Q&A session that follows. I would like to generally remind you that we just held our annual Investor Day on November 14 in Hong Kong, where Noah’s executive management team provided an in-depth review of the business and laid out our strategic priorities for the future. The presentations and the panel discussions focus on our resilient standardized product offering, overseas expansion plans, solution driven advisory services, global product leadership, as well as the client service strategies.

A full replay of the event and presentation materials can be found on our Investor Relations website, which I encourage all of you to watch. Before we begin, please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC and the Hong Kong Stock Exchange. Noah does not undertake any obligation to update any forward-looking statements, except as required under applicable law. In addition, today’s call will include discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release.

Lastly, this call should not be interpreted as a solicitation to sell or purchase the interest in any Noah or Noah affiliated products. Please also be aware that the link to a live webcast with presentation materials is available on our Investor Relations website. With that, I would like to pass the call to Ms. Wang. Please go ahead.

Jingbo Wang: Thank you all for joining us. I would like to begin today’s call by sharing some recent insights gleaned from the face to face interactions I had with Noah Clients and my thoughts on the state of the wealth management industry. After that, I’ll cover the recent progress in our overseas business, provide a comprehensive overview of our third quarter performance and go over some updates from our business segments. Over the past two months, we have held numerous annual meetings with over 1200 domestic clients at our new headquarters in Shanghai, where we offer each of them an asset allocation assessment paired with strategic advice tailored to their unique circumstances. Subsequently, in Singapore and Hong Kong, we held meetings with over 150 and over 800 international black card clients, respectively, allowing us to gain valuable insights into their needs while promoting Noah International’s product and service offerings.

Our close discussions revealed an encouraging evolution in the wealth management needs of Noah’s high network clients. In particular, there has been a noticeable shift and focus from specific products and returns to a broader array of considerations encompassing asset security, enterprise and family succession plans, and global strategic asset allocation. This transition is particularly pronounced among Noah’s international clients reflecting their journey from product-centric to asset allocation driven wealth management needs. Over the past two to three years, Noah has overhauled its offering transitioning from a product driven to a solution driven approach. In our international wealth management segment, we rollout the CCI model comprising of the Chief Investment Office, Client Strategy Office, and Investment and Product Solution Office, through the CCI model, which directly align our macro health views with the client demand to build product and solutions and improve relationship manager service standards and client satisfaction, Noah international wealth management’s product offering and services matrix provides high network clients with our four global account allocation schemes embedded in our technology infrastructure, significantly enhancing the ability of Noah’s relationship managers to provide asset allocation advice and continuity of service.

We believe to achieve success, wealth and asset management firms must have a solid track record, offer a diverse product portfolio, maintain efficient sales channels and built high quality AUM base. At Noah, we recognized the pivotal role of talent and focused on cultivating a strong team through a long term talent screening and development system. We also believe it’s crucial to have a mission, vision, and values that resonate with our clients. Our organizational and technological architecture underscores our commitment to providing high quality client centric services with client satisfaction serving as the cornerstone of our long term relationships, Noah remains dedicated to serving high network Chinese clients globally. Leveraging Hong Kong as a hub, we have begun building teams of relationship managers in key locations such as Singapore, Europe and the United States to cater to Chinese clients’ comprehensive asset allocation needs.

As the international wealth management team continues to mature, we’re confident that we’ll sustain our growth and expand our reach to serve a growing number of clients globally. Now turning to our financial performance for the first three quarters of 2023, we generated total revenues of RMB2.5 billion, a year-on-year increase of 11.9%. The domestic business contributed RMB1.5 billion and year-on-year decrease of 11.6%, accounting for 59.9% of the total net revenues. The growing client demand for global asset allocation coupled with Noah’s ongoing investments in channels, products and comprehensive services propelled overseas revenues to RMB1 billion, a year-on-year increase of 85.1% accounting for 40.1% of revenue, up from 24.3% in the previous year.

Breaking it down by segment, wealth management contributed RMB1.9 billion, a significant year-on-year increase of 20.9%. The domestic wealth management business contributed RMB1.1 billion, a slight year-on-year decrease of 0.2%. The overseas wealth management business contributed RMB784 million a year-on-year increase of 72.3% as it benefits from the growth in overseas transaction value and comprehensive services income. The asset management segment contributed RMB582 million, a year-on-year decrease of 5.4%. The domestic asset management business contributed RMB358 million, a year-on-year decline of 31.8%, while the overseas business contributed RMB223 million a year-on-year increase of 150.3% primarily driven by the growth of our overseas AUA and AUM.

On the comprehensive services front, we continue to see robust demand for wealth protection and inherited solutions from high net worth clients. Our domestic insurance brokerage business achieved a remarkable year-on-year growth of 63.4% in the first three quarters of 2023. Meanwhile, revenues from overseas insurance, trust and other comprehensive services surged 381.8% year-on-year. The number of active overseas insurance clients increased more than fourfold in year-on-year in Q3. Over the past quarters, we have increased our investments in digitalizing our insurance and comprehensive services program. Our technology team has begun integrating our systems with insurance companies worldwide making us the first company in Hong Kong market to offer fully digital insurance applications and premium payments to Noah’s nominee accounts.

This has made insurance application a significantly more efficient experience for our clients, while enhancing our ability to provide high quality fulfillment services. For the first three quarters of 2023, operating profit is due at RMB877 million with an operating profit margin of 35.2%. Our domestic wealth management strategy continues to focus on first year and other highly populated cities in China. We have also implemented organizational structure adjustments to ensure business compliance. As of the end of the third quarter, the number of domestic relationship managers increased by 6.7% year-on-year and 0.9% quarter-on-quarter to 1,331. Our domestic wealth management funds, we have continuously invested in technology infrastructure, rolling now functions such as CCI portfolio report in one click.

The asset allocation review through our mobile app. This enhances the client experience while generating new business leads within the fulfillment service process. In the first three quarters, the transaction value of mutual funds exceeded RMB36.9 billion, a year-on-year increase of 19.3%. The transaction value of private secondary products exceeded RMB14.2 billion, a substantial year-on-year increase of 46.2%. In terms of corporate and institutional clients, the Smile Treasury Platform launched in 2022 has successfully onboarded nearly 6,000 clients in the first nine months of 2023, active clients increased by 73.7% year-on-year with an average client AUA exceeding RMB600,000. On the international wealth management side, we continue to recruit private bankers in Hong Kong and Singapore.

As of the end of the third quarter we had 77 relationship managers in Hong Kong and Singapore, up 37.5% quarter-on-quarter as we make steady progress towards our annual recruitment goal of 120 overseas relationship managers. Additionally, in the third of 2023, we opened a client service center in Los Angeles, relaunched our US insurance products and continued setting up our Dubai office to better serve the wealth management needs of Chinese clients around the world. As of the third quarter of 2023, Noah International had more than 14,200 international clients with the number of clients in Hong Kong and Singapore growing by 12.8% and 315.2% year-on-year, respectively. Cash management product AUM reached US$570 million reflecting a quarter-on-quarter increase of 14.4% with the number of active clients in Q3 increasing by 30.3% quarter-on-quarter and the number of cumulative clients reaching 2,598, up 3.5% quarter -on-quarter.

Clients AUA with no discretionary investment basis reached US$300 million up 15.1% quarter-on-quarter with the active clients during the quarter increasing 48.5% quarter-on-quarter and cumulative number of clients hitting 653, up 38.6% quarter-on-quarter. In terms of international online wealth management, we continue to expand the product offerings on our wealth management app, expanding the client service categories to provide different solutions to individual clients, institutions and in particular agency clients which we have made significant progress during the quarter. In Q3, the number of overall active overseas clients increased by 78.6% year-on-year and 14.6% quarter-on-quarter to 2,284. Overseas transaction value reached US$957 million reflecting a year-on-year increase of 106.9% quarter-on-quarter and quarter-on-quarter increase of 22.9%.

The number of active clients in the U.S. dollar mutual funds reached 1,758 reflecting a year-on-year increase of 105.6% with transaction value reaching US$269 million up 59% year-on-year. As of the end of Q3, we have successfully attracted more than 210 overseas corporate and institutional clients. The transaction value of overseas mutual funds reached over US$120 million year-to-date. In addition, the international online wealth management business began trial operations for its two agent business, which drives the development of EAMs and multifamily offices, leveraging SaaS platform and Noah’s comprehensive product offering. Our objective is to develop diverse sales channels and targeting the goal of serving 300 overseas EAMs and multifamily offices.

In terms of asset management, Gopher’s total AUM was RMB154.9 billion, representing a year-on-year decrease of 0.9% driven by the continued excess of RMB private equity funds and decrease in NAV of some public market security products. As of the end of the third quarter, Q3, RMB AUM decreased by 5% year-on-year reaching RMB119.4 billion. Third quarter of 2023 was categorized by significant volatility in public markets with the Shanghai Composite Index and Shenzhen Component Index falling by 4.1% and 9.4%, respectively. Gopher’s actively managed target strategy product team remains committed to balancing drawdown volatility and maximizing long term yields. As of the end of the third quarter, annualized returns for active investment products was negative 1.6% with the volatility of 6% and the sharp ratio of negative 0.5%.

The balanced investment products generated an annualized return of 3.1% with volatility of 5.7% and a sharp ratio of 0.3. Stable investment products generated annualized return of 8.2% with volatility of 2.1% and a sharp ratio of 3.2%. Internationally, we are fully committed to enhancing our global investment product matrix. The overseas AUM of actively managed products reached US$4.9 billion reflecting a year-on-year increase of 13.4% and its proportion of group’s total AUM also increased to 22.9%. In the primary market, beyond traditional TVC products, we have gradually launched infrastructure, GPs stake, private credit, secondary funds resulting in a more comprehensive product matrix. Narrowing the domestic strategy, our ESG strategy deployed across the Silicon Valley VC ecosystem focused on fundraising from the top GPs first, followed by investing as an LP through a funnel fund with a goal to ultimately establishing a long cooperative relationships with GPs to secure core investment opportunities, we expect to deploy our DSC strategy across a wider spectrum of product segments in the future.

As of the end of Q3, overseas PE AUM reached US$3.8 billion reflecting a year-on-year increase of 5.7%. In public markets, we have intensified our screening and coverage of top hedge fund managers worldwide, 10 of the top 50 hedge fund managers globally have been on boarded with nine more in the due-diligence process. Our offering encompasses a diverse range of strategies including long, neutral, hedging, trend following and multi strategy. At the same time, our investment team is developing new actively managed products such as fund of hedge funds and discretionary investment products. In terms of our ESG efforts, Noah’s management places premium on promoting effective corporate governance and organizational decision making mechanisms, we employ a committee based operation and collective leadership decision making progress across our business units to ensure that Noah remains a dynamic organization and an industry leader.

We maintain our strong focus on data security as well and prioritize in the confidentiality and security of client information. We have established separate domestic and foreign data centers governed by stringent client data usage audit mechanism to create a robust firewall between domestic and foreign data and ensure that we safeguard client privacy at all times. In conclusion, as an independent wealth management institution, Noah’s core competitive advantage stems from its profound client insights and strong track record. We are firmly committed to investing in the digital capabilities and infrastructure needed for our relationship managers to grow the business and provide the best client experience. We pride ourselves in providing high quality asset allocation solutions rooted in prudent research based house views.

While acknowledging the significant role of technology, we recognize that the human touch, trust and personalized relationship remains indefensible, particularly in meeting the complex needs of Noah’s high net worth clients. Our core competencies are centered on creating real and long term client value, encapsulated in the essence of client metrics with the survival as to the bottom line. We firmly believe that only by helping our clients thrive can we succeed as a business and thereby creating enduring value for our shareholders. Finally, a note on our updated shareholder return policy. Noah’s Board of Directors recently approved the plan to allocate upto 50% of company’s annual non-GAAP net profit towards dividends and share repurchases.

In this strategic decision underscores management’s confidence in the company’s stable operations and long-term growth potential. I’ll now hand over to Mr. Grant Pan for a detailed overview of our third quarter financial results. Thank you, everyone.

Qing Pan: Thank you, Melo. And thank you, Chairlady, for walking us through the quarter three operations, and good morning, investors, analysts, and good evening. For today’s presentation, I’d like to start by sharing the latest insight of our client’s profile and how Noah’s strategy has been adapting to meet their needs in order to drive the growth of the business. According to a recent survey, more than half the clients were engaged in the past, in export oriented manufacturing, trade or internet industries with very deep, foreign currency assets already, including cash, equity and stock options. Age wise, most of black card and diamond cart clients are in their mid-50s or even 60s. They predominantly reside in China’s major metropolitan centers, echoing our recent strategy of consolidating operations in key cities.

In terms of their wealth management objectives, we’re seeing two key shifts in investments, appetite taken place from our expanse base. China’s first generation entrepreneurs continue to be the primary decision makers within their families and are seeking more balanced and security driven allocation strategies for their wealth. This is marked by distinct shifts along we are aggressively seeking high returns on investment in the past to a focus on wealth protection. Definitely, many of our clients are now entering a new phase of globalization in business and also capital. Not only is there personal demand for global asset allocation service increasing, but the enterprise side need to enter global markets as entrepreneurs is also growing. This will lead to an accelerated wealth accumulation effect for our high net worth of clients in the coming years.

According to a survey, 70% of the clients demand global asset allocation. And as a result, the ability to provide global solutions is a key requirement for wealth management firms. With years of in-depth experience in building a business in the high net worth wealth management industry, we now possess a deep understanding of our clients and is capable of providing comprehensive solutions for their globalization needs. Our results for the first three quarters of 2023, which featured solid revenue growth driven by insurance product sales and robust expansion in our overseas business demonstrated how we’re successfully leading client demand in both situations. Furthermore, our healthy financial position ensures we are well positioned to further expand with close to RMB5 billion in cash balance sheet, a healthy debt to asset ratio and zero interest bearing debt on the balance sheet.

Crucially, we also have a very clean AUA, free from any legacy domestic private credit or residential real estate exposures. In addition, we have a deep bench of talents across our key functions, product investments, sales teams, both domestically and globally. These factors give us confidence that Noah is ideally positioned to meet the ever evolving needs of Mandarin speaking high net worth individuals in the next phase of China’s globalization. With that, let’s get into the details of our quarter three financial performance. In the third quarter, our top line continued to see robust year-over-year growth with net revenues reaching RMB750 million, close to 10% increase compared to the same period last year. Additionally, our third quarters are relatively quiet due to seasonality as our sales and marketing teams prepare for the [rate] (ph) opening season at the beginning of the fourth quarter, net revenues for the first three quarters of 2023 increased by 12.5% year-over-year to RMB2.5 billion, mainly driven by the 90% year-over-year growth of one time commission fees, which amounted to RMB780 million.

Insurance products contributed 94% of total one time commission fees in quarter three and have emerged as important component of our revenue structure. This can be attributed to the more defensive positioning being adopted by our clients with an emphasis of safeguarding assets and wealth in light of ongoing market volatility and geopolitical factors. We believe the trend of clients’ increasing allocation towards protection driven products will continue for the near future. That being said, we’ll continue to strengthen our overseas alternative product offerings, including global primary market and hedge fund solutions to provide clients with more balanced solutions that can deliver long term return, while minimizing volatilities and risks. Overseas net revenues accounted for 39% of total net revenues during the Q3, a figure we anticipate will continue to grow going forward.

Notably, we officially opened our Los Angeles office in the third quarter, which will provide client service interface for local clients in the United States, expanding our US insurance business and promote our investment business. Additionally, we have an exciting lineup of events planned for our clients including a flagship annual conference exclusively for esteemed black card clients. In addition, we recently began establishing a dedicated product selection team based in New York City, specifically focusing on US hedge fund managers. We expect overseas revenue contribution to increase further as we continue to expand our global footprint. Recurring service fees, which are a key stabilizer in our revenue mix were RMB1.4 billion year-to-date, a slightly decrease of 3.2% year-over-year due to a decrease in our AUM as we continue to exit RMB investments.

Performance based income was RMB125 million in the first nine months of 2023, down 45% year-over-year. This decline can be attributed to the relatively low valuation of assets resulting from a high yield environment. That being said, our Silicon Valley team we’re still able to achieve exits in this tough market, contributing to the performance based income for this year. Other service fee income in the first nine months of the year was RMB205 million up 37.2% year-over-year, primarily due to more value added services provided to our clients. Operating profit for third quarter was RMB250 million up 7.4% year-over-year and down 28% quarter-over-quarter. Operating profit margin for the third quarter remained largely stable year-over-year at 33.2%.

Our compensation and operating expenses decreased by 15% quarter-over-quarter, but increased by 10% year-over-year, mainly due to the high phased effect created by COVID lockdown in 2022, which curtailed both marketing activity and business travel as well as the increase in international travel this year in support of our global expansion. In addition, we incurred a number of one-time expenses related to the relocation to the Shanghai headquarter and the consolidation of our domestic network, among others, amounting to RMB40 million. Over the long term, however, we’d expect to reduce annual cost savings by RMB50 million. Government subsidies for the quarter were RMB105.3 million, a sharp increase of 141% year-over-year, but flat on a year-to-date basis due to the delay in distribution of government subsidies across various regions this year.

Non-GAAP profit for Q3 was RMB232 million, up 21.8% year-over-year and RMB785 million year-to-date, down 8.7% year-over-year due to a soft first quarter earlier this year. Transaction values reached RMB22.3 billion in the Q3, representing a strong increase of 24% year-over-year and 21% quarter-over-quarter. By region, the total domestic transaction value in the first three quarters of 2023 was RMB15.3 billion, up 4.5% year-over-year and 20% quarter-over-quarter. The total overseas transaction value was US$957 million, up 106.9% year-over-year and 22.10% quarter-over-quarter. The increase in transaction value was primarily driven by mutual funds and overseas private secondary products, thanks to the introduction of US dollar cash management and structured products.

In the Q3, mutual funds contributed RMB14.9 billion in transaction value, up 28.1% year-over-year. The total transaction value for overseas private secondary products was USD530 million in the third quarter, up 17 times year-over-year, 65% quarter-over-quarter, driven mainly by strong demand for discretionary investment products and structured products. Going forward, we expect to increase the share of global investment products and foster the growth of overseas AUM. As of September 30, our overseas AUM grew 13.4% year-over-year to US$4.9 billion. Turning to the results of each segment in the first nine months. Net revenues from wealth management were RMB1.9 billion and net revenues from asset management were RMB0.6 billion accounting for 75% and 23% of total revenues, respectively.

As at the end of the quarter, we had 7,461 diamond card clients and 2,250 black card. The total number of diamond and black card clients were 9,711, up 0.3% quarter-over-quarter and down 0.7% year-over-year rather flat. The number of active clients of quarter three was 9,489, down 58% year-over-year, primarily due to individual clients adopted a rather conservative approach towards RMB public securities product. In light of 4.1% and 9.2% pull up in Shanghai Securities Compositive Index and Shenzhen Securities Competitive Index, respectively, during the third quarter. That being said, transaction value during the quarter was not negatively impacted by this as our corporate and institutional clients continue to transact with us. On the other hand, overseas active clients increased close to 80% year-over-year to 2,284 as we continue to build up our overseas distribution channels with 77 overseas RMs by end of this quarter.

Turning to the balance sheet. Our debt to asset ratio and current ratio improved sequentially. We have maintained a very healthy liquidity position with our current ratio at 3.5 times and our debt to asset ratio at 18.4% with zero interest bearing debt. We have RMB5.0 billion in cash and cash equivalents providing ample resources to support our global expansion plans, we also saw a decrease in accounts receivable in quarter three, primarily with accelerated collection of domestic insurance commissions. The Board has always placed shareholder return and capital management efficiency as a priority based on strong and clean balance sheet and strong liquidity position and after considering the necessary investments associated with our global expansion plan, the Board has authorized new shareholder return policy where we will allocate up to 50% of total annual non-GAAP net income attributable to shareholders to corporate actions budgets to be used for purposes including dividends and share repurchases.

Under this new policy, we will allocate no less than 35% of its annual non-GAAP net income attributable to shareholders towards dividends subject to various factors. The final dividend payout ratio for fiscal year 2023 and still in timing of any share repurchase program will be determined at the company’s fourth quarter board meeting in March 2024 and announced thereafter. To sum up, we remain optimistic for the high net worth individual wealth management industry. The third quarter showcase our ability and the resilience to drive robust revenue growth and generate strong cash flow given a relatively quiet market environment. Looking ahead, with a robust balance sheet and nearly RMB5 billion in cash and cash equivalents, ample liquidity and the standardized product offering and AUA, we’re well positioned to fuel future growth and execute our strategy as well as increased returns for shareholders.

Our other balance sheet, ‘a clean AUA’ with no legacy private credit or residential real estate exposure has built us a solid reputation as trusted advisor to our clients which we’re leveraging to drive our global expansion as demand for global asset allocation grows. We will continue to scale our international operations following the successful launch of our office in the third quarter are still preparing to commence operations in Dubai and continue to recruit relationship managers in Hong Kong and Singapore and other talents actively. As we continue to execute our growth strategy, we will embrace evolving landscape and maintain our corporate flexibility. In the long term, we’re very confident that our diverse offerings and commitment to globalization will enable us to meet the needs of global client, investors and continue creating value for our shareholders.

Thank you for listening. We’ll now open the floor for questions.

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Q&A Session

Operator: Thank you. We’ll now begin the question and answer session. [Operator Instructions]. First question will be from Helen Lee of UBS. Please go ahead.

Helen Lee: Thanks, management. This is Helen from UBS. I have two questions if I may. First, the gross increase in Gopher AUM was RMB4.7 billion in the third quarter, almost double that of the second quarter, but why did one time commissions from Gopher managed funds decline sharply to RMB32,000? That’s my first question. And second question, in terms of the transaction value mix, I noticed that a proportion of Gopher products increased to 21% in the third quarter. I’m just wondering whether you have any longer term target for the transaction value mix from Gopher products and what are Gopher’s product pipelines for the fourth quarter and into next year? Thank you.

Qing Pan: So, Helen, I’ll explain your first question. So basically, a good chunk of the AUM increase, go for product actually came from US dollar cash management products and some of the discretionary portfolio investments for deposits. So basically, majority of the revenue structure will come from management fees going forward. The same quarter revenue actually doesn’t reflect as we actually don’t charge very high, so called, subscription fee for this type of products.

Jingbo Wang: Thank you, Helen. So, in terms of Gopher international front, we are committed to increase our capabilities in actively managed product space, including primary, secondary public securities, as well as cash management. So, that is kind of more of a long term process. Now, in terms of the third party distributed products versus our actively managed products, we don’t have quite a clear picture in terms of the split yet, but then, going forward, it will be depending on what the client really needs. And also, our investment in increasing our research and investment capabilities in Gopher’s overseas market.

Operator: Thank you, Alan. Next question will be from Peter Chung of JPMorgan. Please go ahead.

Peter Chung: I have two questions. First one is on the wealth management transaction volume. We noticed that the transaction volume increased sequentially in third quarter. We wish to understand what’s the driver behind, is this mainly driven by the transaction of, say, in [Pingtan] (ph) from international client overseas client and management also mentioned that Noah engage with a client in third quarter, what’s the latest client Investment sentiment you’ll get back. This is the first question. Second question, we noticed that on the cost side for the quarter, there’s large contribution from the government subsidiary, which helped you reduce the OpEx in third quarter. We wish to understand what does that represent or what’s the driver behind it. And what’s the, say, the trend going forward? Thank you.

Qing Pan: So, Peter, the first question, the contribution actually mainly came from the US dollar side, which we managed to actually distribute around US$1 billion in the transaction value, which have seen a significant increase about 132% year-over-year. At the same time, we maintained a rather healthy distribution on RMB side, which is attributable to the corporate client transaction institution, client from smart treasury that account for about actually RMB12.9 billion of RMB mutual funds transactions. So both actually added and contributed to a rather healthy transaction values this year. And to your second question, in terms of I’ll leave the client sentiment observation to Chairlady and also, I will share a little bit of my insights as well.

The second question in terms of the government subsidy, the total year-to-date actually remained pretty stable, the first three quarters comparing to last year. But the timing of the grant of the actual cash, the timing usually is, I will say pretty spontaneous based on the government’s fiscal situation. So this year, we happen to receive the subsidies in the Q3, but the total amount actually remained rather stable from the last period of the year.

Jingbo Wang: So, we have held various conferences and annual gala events in the past couple of months, In Shanghai, Singapore and Hong Kong, we have interacted with over 1,000 clients lately. So, what we have witnessed was that, first, overall that the clients have remained rather rational and they are seeking kind of a more balanced solution and diversity in their global asset management or global asset allocation needs. And also, we have witnessed a very obvious shift from focusing on products and rates and returns from the past comparing to know that the clients are more focusing on the comprehensive solutions on their overall wealth management needs, including their family and enterprise inheritance and succession plans.

We have seen that basically the maturity and sophistication of clients have increased, which is a good news for independent wealth managers like Noah. We have spent quite a lot of investor education and building our internal research capabilities. So, now that we kind of are it’s easier for us to reach our consensus with our clients. And, I has also commented that in the past year or so basically, the general market or high network individuals in China in general, not just only Noah’s client, have seen many risk related events in the past, and their demands and needs have become more clear, and more focusing on asset protection and security and more focusing on global macro views, including currency risks and such. So, we’re spending more time to investor education on those front.

Hope that answers your question, Peter.