Noah Holdings Limited Announces Unaudited Financial Results for the Second Quarter of 2020

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SHANGHAI, Aug. 25, 2020 /PRNewswire/ — Noah Holdings Limited (“Noah” or the “Company”) (NYSE: NOAH), a leading wealth and asset management service provider in China with a focus on global investment and asset allocation services for high net worth individuals and enterprises, today announced its unaudited financial results for the second quarter of 2020.

SECOND QUARTER 2020 FINANCIAL HIGHLIGHTS

  • Net revenues for the second quarter of 2020 were RMB747.4 million (US$105.8 million), a 0.2% increase from the first quarter of 2020, while a 14.2% decrease from the corresponding period in 2019.

 

(RMB millions,

except percentages)

Q2 2019

Q2 2020

YoY Change

Wealth management

625.6

542.8

(13.2%)

Asset management

171.1

181.6

6.1%

Lending and other businesses

74.9

23.0

(69.3%)

Total net revenues

871.6

747.4

(14.2%)

 

  • Income from operations for the second quarter of 2020 was RMB319.5 million (US$45.2 million), a 24.7% increase from the first quarter of 2020, and a 26.9% increase from the corresponding period in 2019.

 

(RMB millions,

except percentages)

Q2 2019

Q2 2020

YoY Change

Wealth management

129.9

196.6

51.3%

Asset management

86.8

100.8

16.1%

Lending and other businesses

35.2

22.1

(36.9%)

Total income from operations

251.9

319.5

26.9%

 

  • Net income attributable to Noah shareholders for the second quarter of 2020 was RMB299.6 million (US$42.4 million), a 23.3% increase from the first quarter of 2020, and a 19.8% increase from the corresponding period in 2019.
  • Non-GAAP[1] net income attributable to Noah shareholders for the second quarter of 2020 was RMB307.2 million (US$43.5 million), a 20.1% increase from the first quarter of 2020, and a 16.7% increase from the corresponding period in 2019.

SECOND QUARTER 2020 OPERATIONAL UPDATES

Wealth Management Business

The Company offers financial products and provides value-added services to high net worth clients in China and overseas for its wealth management business. Noah primarily distributes private equity, public securities, credit and other products denominated in RMB and other currencies.

  • Total number of registered clients as of June 30, 2020 was 332,157, a 17.1% increase from June 30, 2019, and a 3.4% increase from March 31, 2020.
  • Total number of active clients[2] which excluded mutual fund clients during the second quarter of 2020 was 3,367, a 42.8% decrease from June 30, 2019, and a 17.4% decrease from the first quarter of 2020, as we are continuing in the transition of offering more online mutual fund products to our clients. Counting in mutual funds clients, the total number of clients who transacted with us during the second quarter of 2020 was 14,703, a 48.7% increase from the second quarter of 2019, and a 12.6% decrease from the first quarter of 2020.
  • Aggregate value of financial products distributed during the second quarter of 2020 was RMB21.4 billion (US$3.0 billion), a 12.0% decrease from the second quarter of 2019, and a 7.8% decrease from the first quarter of 2020.

 

Three months ended June 30,

2019

2020

Product type

(RMB in billions, except percentages)

Credit products

9.8

40.0%

0.2

1.1%

Private equity products

7.7

31.5%

2.5

11.9%

Public securities  products

6.0

24.7%

18.0

83.8%

Other products

0.9

3.8%

0.7

3.2%

All products

24.4

100.0%

21.4

100.0%

 

  • Coverage network in mainland China included 264 service centers covering 78 cities as of June 30, 2020, compared with 306 service centers covering 83 cities as of June 30, 2019 and 292 service centers covering 78 cities as of March 31, 2020. The decrease in the number of service centers and cities is primarily a result of consolidation of duplicate service centers in order to optimize costs and expenses.
  • Number of relationship managers was 1,196 as of June 30, 2020, a 16.2% decrease from June 30, 2019, and a 2.0% decrease from March 31, 2020, primarily as a result of the Company’s efforts to streamline operational human resources. The turnover rate of core “elite” relationship managers was 1.4%, compared with 1.0% as of March 31, 2020.

Asset Management Business

The Company’s asset management business is conducted through Gopher Asset Management Co., Ltd. (“Gopher Asset Management”), a leading alternative multi-asset manager in China with overseas offices in Hong Kong, the United States and Canada. Gopher Asset Management develops and manages assets ranging from private equity, real estate, public securities, credit to multi-strategy investments denominated in Renminbi and other currencies. 

  • Total assets under management as of June 30, 2020 were RMB159.4 billion (US$22.6 billion), a 1.4% decrease from March 31, 2020 and an 11.8% decrease from June 30, 2019.

 

Investment type

As of 
March 31, 
2020


Growth


Distribution/ 
Redemption

As of
June 30, 
2020

(RMB billions, except percentages)

Private equity

105.7

65.4%

2.1

0.1

107.7

67.6%

Credit

19.9

12.3%

0.1

5.9

14.1

8.9%

Real estate

18.2

11.3%

0.7

1.6

17.3

10.8%

Public securities[3]

9.2

5.7%

3.2

0.6

11.8

7.4%

Multi-strategies

8.7

5.3%

0.2

0.4

8.5

5.3%

All Investments

161.7

100.0%

6.3

8.6

159.4

100.0%

 

Lending and Other Businesses

The Company’s lending business utilizes an advanced risk-management system to assess and facilitate short-term loans to high quality borrowers, often secured with collateral. The total amount of loans originated during the second quarter of 2020 was RMB0.1 billion, compared with RMB2.8 billion for the corresponding period of 2019, due to the ongoing impact of COVID-19, and our voluntary reduction of loan origination. Other businesses include an online financial advisory platform.

Ms. Jingbo Wang, co-founder and CEO of Noah, said, “We are very pleased to report strong results for the second quarter of 2020: our Non-GAAP net income rose 20.1% from the first quarter, representing a second highest record since our listing on the NYSE; our operating margin increased to 42.7% due to improved operation efficiency and higher performance income in connection with an increased number of successful primary market exits and a booming A-share market. The transaction value of public securities accounted for 83.8% of the total volume this quarter, demonstrating our continued commitment to distributing more standardized products to our clients. In this quarter, the outstanding amount of onshore mutual funds distributed on our mobile APP Fund Smile exceeded RMB10 billion, and our parallel offshore mutual fund mobile APP iNoah was launched, which jointly form the formation of Noah’s global mutual funds platform. We are confident that the momentum we’ve seen in the past four quarters since our transformation will continue.” 

SECOND QUARTER 2020 FINANCIAL RESULTS

Net Revenues

Net revenues for the second quarter of 2020 were RMB747.4 million (US$105.8 million), a 14.2% decrease from the corresponding period in 2019, primarily driven by decreased one-time commissions and other service fees, partially offset by increased recurring service fees and performance-based income.

  • Wealth Management Business
    Net revenues from one-time commissions for the second quarter of 2020 were RMB126.0 million (US$17.8 million), a 57.0% decrease from the corresponding period in 2019, primarily due to the decrease of transaction value as well as the distribution of lower one-time commission rates products.
    Net revenues from recurring service fees for the second quarter of 2020 were RMB310.3 million (US$43.9 million), a 15.5% increase from the corresponding period in 2019, mainly due to the service fees recognized upon liquidation of certain credit products with higher fee rates.
    Net revenues from performance-based income for the second quarter of 2020 were RMB74.5 million (US$10.5 million), a 3,671.9% increase from the corresponding period of 2019, primarily due to a significant increase in performance-based income from public securities products as well as certain private equity products.
    Net revenues from other service fees for the second quarter of 2020 were RMB32.0 million (US$4.5 million), a 48.1% decrease from the corresponding period in 2019, primarily due to less value-added services Noah offers to its high net worth clients during the COVID-19 epidemic.
  • Asset Management Business
    Net revenues from recurring service fees for the second quarter of 2020 were RMB164.0 million (US$23.2 million), relatively flat compared with the corresponding period in 2019.
    Net revenues from performance-based income for the second quarter of 2020 were RMB16.1 million (US$2.3 million), a 184.9% increase from the corresponding period in 2019, primarily due to an increase in performance-based income from private equity products.
  • Lending and Other Businesses
    Net revenues for the second quarter of 2020 were RMB23.0 million (US$3.3 million), a 69.3% decrease from the corresponding period in 2019. The decrease was primarily due to reduced loan origination since the second half of 2019 as well as the ongoing impact of COVID-19.

Operating Costs and Expenses

Operating costs and expenses for the second quarter of 2020 were RMB427.9 million (US$60.6 million), a 30.9% decrease from the corresponding period in 2019. Operating costs and expenses primarily consisted of compensation and benefits of RMB330.8 million (US$46.8 million), selling expenses of RMB62.6 million (US$8.9 million), general and administrative expenses of RMB68.5 million (US$9.7 million), provision of credit losses of RMB1.9 million (US$0.3 million) and other operating expenses of RMB20.7 million (US$2.9 million).

  • Operating costs and expenses for the wealth management business for the second quarter of 2020 were RMB346.2 million (US$49.0 million), a 30.2% decrease from the corresponding period in 2019, primarily due to a decrease in compensation and benefits and credit losses.
  • Operating costs and expenses for the asset management business for the second quarter of 2020 were RMB80.9 million (US$11.4 million), a 4.0% decrease from the corresponding period in 2019, primarily due to a decrease in compensation and benefits and credit losses.
  • Operating costs and expenses for the lending and other businesses for the second quarter of 2020 were RMB0.8 million (US$0.1 million), a 97.9% decrease from the corresponding period in 2019, primarily due to an increase in government grants in the amount of RMB14.6 million (US$2.1 million) .

Operating Margin

Operating margin for the second quarter of 2020 was 42.7%, increased from 28.9% for the corresponding period in 2019.

  • Operating margin for the wealth management business for the second quarter of 2020 was 36.2%, compared with 20.8% for the corresponding period in 2019.
  • Operating margin for the asset management business for the second quarter of 2020 was 55.5%, compared with 50.8% for the corresponding period in 2019.
  • Income from operation for the lending and other businesses for the second quarter of 2020 was RMB22.1 million (US$3.1 million), compared with an operating income of RMB35.2 million for the corresponding period in 2019.

Investment Income

Investment income for the second quarter of 2020 was RMB4.7 million (US$0.7 million), compared with RMB11.8 million for the corresponding period in 2019.

Income Tax Expenses

Income tax expenses for the second quarter of 2020 were RMB77.8 million (US$11.0 million), a 15.1% increase from the corresponding period in 2019, primarily due to higher taxable income. 

Income from Equity in Affiliates

Income from equity in affiliates for the second quarter of 2020 was RMB40.7 million (US$5.8 million), a 41.2% increase from the corresponding period in 2019, primarily due to the increase of net income of the funds of funds we manage and invest in as the general partner or manager.

Net Income

  • Net Income
    Net income for the second quarter of 2020 was RMB301.9 million (US$42.7 million), an 18.7% increase from the corresponding period in 2019.
    Net margin for the second quarter of 2020 was 40.4%, up from 29.2% for the corresponding period in 2019.
    Net income attributable to Noah shareholders for the second quarter of 2020 was RMB299.6 million (US$42.4 million), a 19.8% increase from the corresponding period in 2019.
    Net margin attributable to Noah shareholders for the second quarter of 2020 was 40.1%, up from 28.7% for the corresponding period in 2019.
    Net income attributable to Noah shareholders per basic and diluted ADS for the second quarter of 2020 was RMB4.86 (US$0.69) and RMB4.84 (US$0.69), respectively, up from RMB4.09 and RMB4.04 respectively, for the corresponding period in 2019.
  • Non-GAAP Net Income Attributable to Noah Shareholders
    Non-GAAP net income attributable to Noah shareholders for the second quarter of 2020 was RMB307.2 million (US$43.5 million), a 16.7% increase from the corresponding period in 2019.
    Non-GAAP net margin attributable to Noah shareholders for the second quarter of 2020 was 41.1%, compared with 30.2% for the corresponding period in 2019.
    Non-GAAP net income attributable to Noah shareholders per diluted ADS for the second quarter of 2020 was RMB4.96 (US$0.70), up from RMB4.25 for the corresponding period in 2019.

Balance Sheet and Cash Flow

As of June 30, 2020, the Company had RMB4,170.7 million (US$590.3 million) in cash and cash equivalents, compared with RMB4,045.8 million as of March 31, 2020 and RMB2,873.7 million as of June 30, 2019.

Net cash outflow from the Company’s operating activities during the second quarter of 2020 was RMB9.6 million (US$1.4 million), primarily due to payment of employee annual bonuses and annual tax filing in the second quarter.

Net cash inflow from the Company’s investing activities during the second quarter of 2020 was RMB130.8 million (US$18.5 million), primarily due to disposal of various investments in the second quarter.

Net cash inflow from the Company’s financing activities was RMB2.2 million (US$0.3 million) in the second quarter of 2020, primarily due to proceeds from issuance of ordinary shares upon exercise of stock options.

UPDATE ON CREDIT FUNDS

As the Company previously disclosed on July 8, 2019, August 29, 2019 and April 24, 2020, in connection with certain credit funds managed by an affiliate of Gopher Asset Management (“Gopher”) providing supply chain financing involving companies related to Camsing International Holding Limited (“Camsing”), it is suspected that fraud has been committed by third parties related to those financings. A criminal investigation in China is ongoing, and Gopher is assisting PRC government authorities in their investigation, as well as pursuing all available actions, including filing civil litigations against the relevant parties, to protect investors (“Investor(s)”) of the credit funds involved in Camsing incidents (“Camsing Products”) who have outstanding economic interests in such products and to recover their assets. 

Furthermore, in order to share the growth of the Company with the Investors, to prevent distraction or diversion of its management resources from existing or potential claims, as well as to protect the best interests of its shareholders, the Company has decided to propose a settlement offer to the Investors.

Under the settlement plan, each Investor will be granted a certain number of restricted share units (“RSUs”) of the Company, typically over a period of up to ten years, the vesting of which is subject to certain conditions and a schedule not exceeding fifteen years.  An investor accepting the offer shall agree to give up all his or her outstanding legal rights associated with Camsing Products and irrevocably release the Company and all its affiliated entities and individuals from any and all claims, known or unknown, that relate to the Camsing Products.  Upon vesting of the RSUs, the Investor will receive Class A ordinary shares of the Company. On August 24, 2020, this settlement plan was approved by the board of directors (the “Board”) of the Company and a total number of new Class A ordinary shares not exceeding 1.6% of the share capital of the Company has been authorized to be issued each year for a consecutive ten years.

As of the date hereof, there are only claims initiated in China by several Investors against Gopher or its affiliates. These claims are at early stages and their impact on the Company remains unclear.

[1] Noah’s Non-GAAP financial measures are its corresponding GAAP financial measures excluding the effects of all forms of share-based compensation, fair value changes of equity securities (unrealized), adjustment for sale of equity securities and net of relevant tax impact, if any. See “Reconciliation of GAAP to Non-GAAP Results” at the end of this press release.
[2]  “Active clients” for a given period refers to registered high net worth clients who purchase financial products distributed or provided by Noah during that given period, excluding clients who transacted on our online mutual fund platform.
[3] The asset distribution/redemption of public securities also includes market appreciation or depreciation.

 

2020 FORECAST

The Company revises its non-GAAP net income attributable to Noah shareholders for the full year 2020 from the range of RMB800 million to RMB900 million, to the range of RMB900 million to RMB1billion. The revision is based on stronger than expected transaction value and performance income of public securities, improved operation efficiency and optimistic business estimation of the second half of 2020, despite the impact on overseas new insurance transactions from COVID-19 travel bans. This estimate reflects management’s current business outlook and is subject to change.

CONFERENCE CALL

Senior management will host a combined English and Chinese language conference call to discuss the Company’s second quarter 2020 unaudited financial results and recent business activities.

The conference call may be accessed with the following details:

Conference call details

Date/Time:

 

Monday, August 24, 2020 at 8:00 p.m., U.S. Eastern Time

Tuesday, August 25, 2020 at 8:00 a.m., Hong Kong Time

Dial in details:

– United States Toll Free

+1-866-311-7654

– Mainland China Toll Free

4001-201-203

– Hong Kong Toll Free

800-905-945

– Hong Kong Local Toll

+852-301-84992

– International

+1-412-317-5227

Conference Title:

Noah Holdings 2Q20 Earnings Conference Call

Participant Password:

Noah Holdings Limited

A telephone replay will be available starting one hour after the end of the conference call until August 31, 2020 at +1-877-344-7529 (US Toll Free) or +1-412-317-0088 (International Toll). The replay access code is 10146791.

A live and archived webcast of the conference call will be available at Noah’s investor relations website under the News & Events section at ir.noahgroup.com.

DISCUSSION OF NON-GAAP MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company’s earnings release contains non-GAAP financial measures excluding the effects of all forms of share-based compensation, fair value changes of equity investments (unrealized), adjustment for sale of equity securities and net of tax impact, if any. See “Reconciliation of GAAP to Non-GAAP Results” at the end of this press release.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measures used by the Company may be prepared differently from and, therefore, may not be comparable to similarly titled measures used by other companies.

When evaluating the Company’s operating performance in the periods presented, management reviewed the foregoing non-GAAP net income attributable to Noah shareholders and per diluted ADS and non-GAAP net margin attributable to Noah shareholders to supplement U.S. GAAP financial data. As such, the Company’s management believes that the presentation of the non-GAAP financial measures provides important supplemental information to investors regarding financial and business trends relating to its results of operations in a manner consistent with that used by management.

ABOUT NOAH HOLDINGS LIMITED

Noah Holdings Limited (NYSE: NOAH) is a leading wealth and asset management service provider in China with a focus on high net worth individuals. In the first half of 2020, Noah distributed RMB44.6 billion (US$6.3 billion) of financial products. Through Gopher Asset Management, Noah had assets under management of RMB159.4 billion (US$22.6 billion) as of June 30, 2020.

Noah’s wealth management business primarily distributes private equity, public securities, credit and insurance products denominated in RMB and other currencies. Noah delivers customized financial solutions to clients through a network of 1,196 relationship managers across 264 service centers in 78 cities in mainland China, and serves the international investment needs of its clients through offices in Hong Kong, Taiwan, United States, Canada, Australia and Singapore. The Company’s wealth management business had 332,157 registered clients as of June 30, 2020. As a leading alternative multi-asset manager in China, Gopher Asset Management manages private equity, real estate, public securities, credit and multi-strategy investments denominated in Renminbi and other currencies. The Company also provides lending services and other businesses.

For more information, please visit Noah at ir.noahgroup.com.

FOREIGN CURRENCY TRANSLATION

In this announcement, the unaudited financial results for the second quarter of 2020 ended June 30, 2020 are stated in RMB. This announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB7.0651 to US$1.00, the effective noon buying rate for June 30, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board.

SAFE HARBOR STATEMENT

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the outlook for 2020 and quotations from management in this announcement, as well as Noah’s strategic and operational plans, contain forward-looking statements. Noah may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Noah’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause Noah’s actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: its goals and strategies; its future business development, financial condition and results of operations; the expected growth of the wealth management and asset management market in China and internationally; its expectations regarding demand for and market acceptance of the products it distributes; its expectations regarding keeping and strengthening its relationships with key clients; relevant government policies and regulations relating to its industries; its ability to attract and retain qualified employees; its ability to stay abreast of market trends and technological advances; its plans to invest in research and development to enhance its product choices and service offerings; competition in its industries in China and internationally; general economic and business conditions in China; and its ability to effectively protect its intellectual property rights and not to infringe on the intellectual property rights of others. Further information regarding these and other risks is included in Noah’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 20-F. All information provided in this press release and in the attachments is as of the date of this press release, and Noah does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under the applicable law.

 

— FINANCIAL AND OPERATIONAL TABLES FOLLOW —

 

 

Noah Holdings Limited

Condensed Consolidated Balance Sheets

(unaudited)

As of

March 31,

June 30, 

June 30, 

2020

2020

2020

RMB’000

RMB’000

USD’000

Assets

Current assets:

Cash and cash equivalents

4,045,796

4,170,704

590,325

Restricted cash

6,583

4,098

580

Short-term investments

97,863

61,151

8,655

Accounts receivable, net

297,493

334,411

47,333

Loans receivable, net

620,905

619,811

87,729

Amounts due from related parties

757,278

766,189

108,447

Other current assets 

196,857

199,908

28,295

Total current assets 

6,022,775

6,156,272

871,364

Long-term investments, net

837,449

836,442

118,391

Investment in affiliates

1,325,649

1,291,255

182,765

Property and equipment, net

271,574

262,648

37,175

Operating lease right-of-use assets, net

337,405

343,925

48,679

Deferred tax assets

167,254

164,749

23,319

Other non-current assets 

126,369

148,590

21,029

Total Assets

9,088,475

9,203,881

1,302,722

Liabilities and Equity

Current liabilities:

Accrued payroll and welfare expenses 

644,420

461,530

65,325

Income tax payable

101,630

77,381

10,953

Deferred revenues

141,228

163,608

23,157

Other current liabilities

369,847

351,690

49,778

Total current liabilities

1,257,125

1,054,209

149,213

Operating lease liabilities, non-current

344,078

346,241

49,007

Deferred tax liabilities

56,804

56,480

7,994

Other non-current liabilities

2,787

3,526

499

Total Liabilities 

1,660,794

1,460,456

206,713

Equity

7,427,681

7,743,425

1,096,009

Total Liabilities and Equity

9,088,475

9,203,881

1,302,722

 

 

Noah Holdings Limited

Condensed Consolidated Income Statements

(In RMB’000, except for USD data, per ADS data and percentages)

(unaudited)

Three months ended 

June 30,

June 30,

June 30,

Change

2019

2020

2020

Revenues:

RMB’000

RMB’000

USD’000

Revenues from others:

One-time commissions

193,937

117,085

16,572

(39.6%)

Recurring service fees

131,164

152,253

21,550

16.10%

Performance-based income

2,051

57,206

8,097

2689.20%

Other service fees

139,940

56,197

7,954

(59.8%)

Total revenues from others

467,092

382,741

54,173

(18.1%)

Revenues from funds Gopher 
   manages:

One-time commissions

101,104

10,431

1,476

(89.7%)

Recurring service fees

303,578

324,174

45,884

6.80%

Performance-based income

5,610

33,766

4,779

501.90%

Total revenues from funds Gopher
   manages

410,292

368,371

52,139

(10.2%)

Total revenues

877,384

751,112

106,312

(14.4%)

Less: VAT related surcharges 

(5,786)

(3,674)

(520)

(36.5%)

Net revenues

871,598

747,438

105,792

(14.2%)

Operating costs and expenses:

  Compensation and benefits

Relationship managers

(175,898)

(113,044)

(16,000)

(35.7%)

Others

(261,604)

(217,805)

(30,828)

(16.7%)

  Total compensation and benefits

(437,502)

(330,849)

(46,828)

(24.4%)

  Selling expenses

(79,557)

(62,622)

(8,864)

(21.3%)

  General and administrative expenses

(47,742)

(68,502)

(9,696)

43.5%

  Provision for credit losses

(36,461)

(1,897)

(269)

(94.8%)

  Other operating expenses 

(51,063)

(20,715)

(2,932)

(59.4%)

  Government grants 

32,587

56,651

8,018

73.8%

Total operating costs and expenses 

(619,738)

(427,934)

(60,571)

(30.9%)

Income from operations 

251,860

319,504

45,221

26.9%

Other income:

  Interest income 

29,225

10,530

1,490

(64.0%)

  Investment income 

11,847

4,711

667

(60.2%)

  Other income 

310

4,298

608

1286.5%

Total other income

41,382

19,539

2,765

(52.8%)

Income before taxes and income from
  equity in affiliates

293,242

339,043

47,986

15.6%

Income tax expense

(67,622)

(77,810)

(11,013)

15.1%

Income from equity in affiliates

28,829

40,693

5,760

41.2%

Net income

254,449

301,926

42,733

18.7%

Less: net income attributable to non-
  controlling interests

4,266

2,285

323

(46.4%)

Net income attributable to Noah
  shareholders 

250,183

299,641

42,410

19.8%

Income per ADS, basic

4.09

4.86

0.69

18.8%

Income per ADS, diluted

4.04

4.84

0.69

19.8%

Margin analysis:

Operating margin

28.9%

42.7%

42.7%

Net margin

29.2%

40.4%

40.4%

Weighted average ADS equivalent[1]:

Basic

61,211,098

61,661,522

61,661,522

Diluted

61,966,245

61,921,913

61,921,913

ADS equivalent outstanding at end of
period

61,259,417

61,698,055

61,698,055

[1] Assumes all outstanding ordinary shares are represented by ADSs. Each ordinary share represents two ADSs.

 

 

Noah Holdings Limited

Condensed Consolidated Income Statements

(In RMB’000, except for USD data, per ADS data and percentages)

(unaudited)

Six months ended 

June 30,

June 30,

June 30,

Change

2019

2020

2020

Revenues:

RMB’000

RMB’000

USD’000

Revenues from others:

One-time commissions

410,580

324,270

45,897

(21.0%)

Recurring service fees

263,640

300,710

42,563

14.1%

Performance-based income

3,145

71,824

10,166

2,183.8%

Other service fees

285,317

122,805

17,382

(57.0%)

Total revenues from others

962,682

819,609

116,008

(14.9%)

Revenues from funds Gopher
      manages:

One-time commissions

209,012

15,180

2,149

(92.7%)

Recurring service fees

591,734

627,624

88,834

6.1%

Performance-based income

9,368

38,941

5,512

315.7%

Total revenues from funds
      Gopher manages

810,114

681,745

96,495

(15.8%)

Total revenues

1,772,796

1,501,354

212,503

(15.3%)

Less: VAT related surcharges 

(11,314)

(7,799)

(1,104)

(31.1%)

Net revenues

1,761,482

1,493,555

211,399

(15.2%)

Operating costs and expenses:

Compensation and benefits

Relationship managers

(343,166)

(283,096)

(40,070)

(17.5%)

Others

(498,641)

(412,592)

(58,399)

(17.3%)

Total compensation and
       benefits

 

(841,807)

 

(695,688)

 

(98,469)

 

(17.4%)

Selling expenses

(170,013)

(107,162)

(15,168)

(37.0%)

General and administrative
       expenses 

 

(106,743)

 

(132,187)

 

(18,710)

 

23.8%

Provision for credit losses

(36,010)

(4,706)

(666)

(86.9%)

Other operating expenses 

(101,891)

(53,332)

(7,549)

(47.7%)

Government grants 

49,367

75,286

10,656

52.5%

Total operating costs and
    expenses 

 

(1,207,097)

 

(917,789)

 

(129,906)

 

(24.0%)

Income from operations 

554,385

575,766

81,493

3.9%

Other income:

Interest income 

52,348

32,700

4,628

(37.5%)

Interest expenses

(430)

N.A.

Investment income 

37,510

22,277

3,153

(40.6%)

Other expense (income)

(1,618)

5,156

730

N.A.

Total other income

87,810

60,133

8,511

(31.5%)

Income before taxes and
   income from equity in affiliates

642,195

635,899

90,004

(1.0%)

Income tax expense

(147,114)

(146,086)

(20,677)

(0.7%)

   Income from equity in affiliates

46,952

55,769

7,894

18.8%

Net income

542,033

545,582

77,221

0.7%

Less: net income attributable to
   non-controlling interests

 

7,273

 

2,916

 

413

 

(59.9%)

Net income attributable to
   Noah shareholders 

534,760

542,666

76,808

1.5%

Income per ADS, basic

8.78

8.80

1.25

0.2%

Income per ADS, diluted

8.65

8.76

1.24

1.3%

 

Margin analysis:

Operating margin

31.5%

38.6%

38.6%

Net margin

30.8%

36.5%

36.5%

 

Weighted average ADS
   equivalent[1]:

Basic

60,892,670

61,640,688

61,640,688

Diluted

61,933,765

61,949,755

61,949,755

ADS equivalent outstanding at
   end of period

61,259,417

61,698,055

61,698,055

[1] Assumes all outstanding ordinary shares are represented by ADSs. Each ordinary share represents two ADSs.

 

 

Noah Holdings Limited

Condensed Comprehensive Income Statements

(unaudited)

Three months ended 

June 30,

June 30,

June 30,

Change

2019

2020

2020

RMB’000

RMB’000

USD’000

Net income

254,449

301,926

42,733

18.7%

Other comprehensive income, net of tax:

     Foreign currency translation adjustments

54,495

(7,160)

(1,013)

N.A.

     Fair value fluctuation of available for sale
         Investment (after tax)

2,339

110

(66.9%)

775

Comprehensive income

311,283

295,541

41,830

(5.1%)

    Less: Comprehensive income attributable 
to non-controlling interests

4,199

2,326

329

(44.6%)

Comprehensive income attributable to
    Noah shareholders

307,084

293,215

41,501

(4.5%)

 

 

Noah Holdings Limited

Condensed Comprehensive Income Statements

(unaudited)

Six months ended

June 30,

June 30,

June 30,

Change

2019

2020

2020

RMB’000

RMB’000

USD’000

Net income

542,033

545,582

77,221

0.7%

Other comprehensive income, net of tax:

    Foreign currency translation adjustments

23,637

30,159

4,269

27.6%

    Fair value fluctuation of available for sale
        Investment (after tax)

2,387

771

109

(67.7%)

Comprehensive income

568,057

576,512

81,599

1.5%

    Less: Comprehensive income attributable 
to non-controlling interests

7,416

2,952

418

(60.2%)

Comprehensive income attributable to
    Noah shareholders

560,641

573,560

81,181

2.3%

 

 

Noah Holdings Limited

Supplemental Information 

(unaudited) 

As of 

June 30, 

June 30, 

Change

2019

2020

Number of registered clients 

283,655

332,157

17.1%

Number of relationship managers 

1,428

1,196

(16.2%)

Number of cities in mainland China under coverage 

83

78

(6.0%)

Three months ended 

June 30,

June 30, 

Change

2019

2020

(in millions of RMB, except number of active clients and
percentages)

Number of active clients[4]

5,882

3,367

(42.8%)

Number of active clients including mutual fund clients

9,888

14,703

48.7%

Transaction value: 

Credit products 

9,750

232

(97.6%)

Private equity products 

7,658

2,551

(66.7%)

Public securities products

6,021

17,971

198.5%

Other products

934

689

(26.2%)

Total transaction value

24,363

21,443

(12.0%)

[4] “Active clients” for a given period refers to registered high net worth clients who purchase financial products
distributed or provided by Noah during that given period, excluding clients who transacted on our online
mutual fund platform.

 

 

Noah Holdings Limited 

Segment Condensed Income Statements 

(unaudited)

Three months ended June 30, 2020

Wealth 
Management
Business

Asset 
Management
Business

Lending and Other 
Businesses

Total

RMB’000

RMB’000

RMB’000

RMB’000

Revenues:

Revenues from others

One-time commissions

116,719

366

117,085

Recurring service fees

151,607

646

152,253

Performance-based income

57,206

57,206

Other service fees

32,163

627

23,407

56,197

Total revenues from others

357,695

1,639

23,407

382,741

Revenues from funds Gopher
     manages

One-time commissions

9,860

571

10,431

Recurring service fees

160,202

163,972

324,174

Performance-based income

17,613

16,153

33,766

Total revenues from funds
     Gopher manages

187,675

180,696

368,371

Total revenues

545,370

182,335

23,407

751,112

Less: VAT related surcharges 

(2,560)

(693)

(421)

(3,674)

Net revenues

542,810

181,642

22,986

747,438

Operating costs and expenses:

Compensation and benefits

Relationship managers

(113,044)

(113,044)

Others

(129,238)

(70,395)

(18,172)

(217,805)

Total compensation and
     benefits

(242,282)

(70,395)

(18,172)

(330,849)

Selling expenses

(49,302)

(8,407)

(4,913)

(62,622)

General and administrative
     expenses 

 

(51,735)

 

(12,994)

 

(3,773)

 

(68,502)

Provision for credit losses

(1,897)

(1,897)

Other operating expenses

(17,796)

(1,614)

(1,305)

(20,715)

Government grants 

14,868

12,549

29,234

56,651

Total operating costs and 
          expenses 

 

(346,247)

 

(80,861)

 

(826)

 

(427,934)

Income from operations

196,563

100,781

22,160

319,504

 

 

Noah Holdings Limited

Segment Condensed Income Statements

 (unaudited)

         Three months ended June 30, 2019

Wealth
Management

 Business

Asset
Management

Business

Lending and
Other
Businesses

Total

RMB’000

RMB’000

RMB’000

RMB’000

Revenues:

Revenues from others

One-time commissions

193,567

370

193,937

Recurring service fees

129,698

1,466

131,164

Performance-based income

1,984

67

2,051

Other service fees

62,032

1,193

76,715

139,940

Total revenues from others

387,281

3,096

76,715

467,092

Revenues from funds Gopher manages

One-time commissions

101,104

101,104

Recurring service fees

140,316

163,262

303,578

Performance-based income

5,610

5,610

Total revenues from funds Gopher
      manages 

241,420

168,872

410,292

Total revenues

628,701

171,968

76,715

877,384

Less: VAT related surcharges

(3,070)

(877)

(1,839)

(5,786)

Net revenues

625,631

171,091

74,876

871,598

Operating costs and expenses:

Compensation and benefits

Relationship managers

(175,851)

(47)

(175,898)

Others

(162,491)

(72,697)

(26,416)

(261,604)

Total compensation and benefits

(338,342)

(72,697)

(26,463)

(437,502)

Selling expenses

(70,838)

(4,344)

(4,375)

(79,557)

General and administrative
  expenses

 

(31,834)

 

(11,143)

 

(4,765)

 

(47,742)

Provision for credit losses

(31,402)

(2,635)

(2,424)

(36,461)

Other operating expenses

(32,179)

(2,575)

(16,309)

(51,063)

Government grants

8,821

9,144

14,622

32,587

Total operating costs and expenses

(495,774)

(84,250)

(39,714)

(619,738)

Income from operations

129,857

86,841

35,162

251,860

 

 

Noah Holdings Limited

Supplement Revenue Information by Geography

(unaudited)

Three months ended June 30, 2020

Wealth 
Management
Business

Asset 
Management
Business

Lending 
and Other
Businesses

Total

RMB’000

RMB’000

RMB’000

RMB’000

Revenues:

Mainland China

392,284

150,489

23,407

566,180

Hong Kong

121,176

28,052

149,228

Others

31,910

3,794

35,704

Total revenues

545,370

182,335

23,407

751,112

 

Three months ended June 30, 2019

Wealth 
Management
Business

Asset 
Management
Business

Lending 
and Other
Businesses

Total

RMB’000

RMB’000

RMB’000

RMB’000

Revenues:

Mainland China

420,540

145,992

76,715

643,247

Hong Kong

178,002

23,705

201,707

Others

30,159

2,271

32,430

Total revenues

628,701

171,968

76,715

877,384

 

 

Noah Holdings Limited

Reconciliation of GAAP to Non-GAAP Results 

(In RMB, except for per ADS data and percentages) 

(unaudited) [5]

Three months ended 

June 30, 

June 30, 

Change 

2019

2020

RMB’000

RMB’000

Net income attributable to Noah shareholders

250,183

299,641

19.8%

Adjustment for share-based compensation

22,994

18,106

(21.3%)

Less: gains from fair value changes of equity securities
        (unrealized)

 

10,775

 

2,316

 

(78.5%)

Add: gains from sales of equity securities (realized)

4,951

N.A.

Less: tax effect of adjustments

3,977

8,200

106.2%

Adjusted net income attributable to Noah shareholders 
        (non-GAAP)

263,376

307,231

16.7%

 

Net margin attributable to Noah shareholders

 

28.7%

 

40.1%

Non-GAAP net margin attributable to Noah shareholders

30.2%

41.1%

Net income attributable to Noah shareholders per ADS,
         diluted

4.04

4.84

19.8%

Non-GAAP net income attributable to Noah shareholders
         per ADS, diluted

4.25

4.96

16.7%

[5] Noah’s Non-GAAP financial measures are its corresponding GAAP financial measures excluding the
effects of all forms of share-based compensation, fair value changes of equity securities (unrealized),
adjustment for sale of equity securities and net of tax impact, if any.

 

 

Noah Holdings Limited

Reconciliation of GAAP to Non-GAAP Results 

(In RMB, except for per ADS data and percentages) 

(unaudited) 

Six months ended 

June 30, 

June 30, 

Change 

2019

2020

RMB’000

RMB’000

Net income attributable to Noah shareholders

534,760

542,666

1.5%

Adjustment for share-based compensation

52,610

36,397

(30.8%)

Less: gains from fair value changes of equity securities
         (unrealized)

 

19,517

 

8,399

(57.0%)

Add: gains from sales of equity securities (realized)

9,836

N.A.

Less: tax effect of adjustments

9,691

7,548

(22.1%)

Adjusted net income attributable to Noah shareholders
         (non-GAAP)

567,998

563,116

(0.9%)

 

Net margin attributable to Noah shareholders

 

30.4%

 

36.3%

Non-GAAP net margin attributable to Noah shareholders

32.2%

37.7%

Net income attributable to Noah shareholders per ADS,
         diluted

8.65

8.76

1.3%

Non-GAAP net income attributable to Noah shareholders
         per ADS, diluted

9.18

9.09

(1.0%)

 

 

Related Links :

http://www.noahwm.com

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