Noah Holdings Limited, a leading wealth management service provider focusing on distributing wealth management products to the high net worth population in China, today announced its unaudited financial results for the first quarter of 2013.
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FIRST QUARTER 2013 FINANCIAL HIGHLIGHTS
Net revenues in the first quarter of 2013 were US$32.6 million, a 94.3% increase from the corresponding period in 2012.
Income from operations in the first quarter of 2013 was US$11.9 million, a 352.1% increase from the corresponding period in 2012.
Net income attributable to Noah shareholders in the first quarter of 2013 was US$9.6 million, a 251.6% increase from the corresponding period in 2012. Non-GAAP[1] net income attributable to Noah shareholders in the first quarter of 2013 was US$10.7 million, a 193.8% increase from the corresponding period in 2012.
Net income per basic and diluted ADS in the first quarter of 2013 were US$0.18 and US$0.17, respectively. Non-GAAP net income per diluted ADS in the first quarter of 2013 was US$0.19.
FIRST QUARTER 2013 OPERATIONAL HIGHLIGHTS
Total number of registered clients[2] as of March 31, 2013 increased by 42.9% year-over-year to 42,590; this figure includes 40,915 registered individual clients, 1,558 registered enterprise clients and 117 wholesale clients that have entered into cooperation agreements with the Company.
Active clients[3] during the first quarter of 2013 were 1,778, an 86.8% increase from the corresponding period in 2012. The aggregate value of wealth management products distributed by the Company during the first quarter of 2013 was RMB8.7 billion (approximately US$1.4 billion)[4], a 63.1% increase from the corresponding period in 2012. Of this aggregate value, fixed income products accounted for 74.9%, private equity fund products accounted for 18.8%, and other products, including mutual fund products, private securities investment funds and investment-linked insurance products, accounted for 6.3%. The average transaction value per client[5] in the first quarter of 2013 was RMB4.9 million (approximately US$0.8 million), a 12.7% decrease from the corresponding period in 2012, primarily due to changes in product mix as clients purchased mutual fund products, which the Company started distributing since the second quarter of 2012, and more fixed income products. Both product categories have lower minimum investment amount than private equity fund products.
Coverage network as of March 31, 2013 included 56 branches, down from 57 branches as of December 31, 2012 and 60 branches as of March 31, 2012. The number of relationship managers decreased to 452 as of March 31, 2013, down from 459 as of December 31, 2012 and 580 as of March 31, 2012. Since June 30, 2012, the Company started to streamline its operations by closing four branches and adjusting the number of relationship managers.
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By GlobalDataNoah’s Non-GAAP financial measures are its corresponding GAAP financial measures as adjusted by excluding the effects of all forms of share-based compensation.
[2]
"Total number of registered clients" includes clients registered with Noah Upright (Shanghai) Fund Investment Consulting Co., Ltd., Noah’s mutual fund distribution business, which began operations in the second quarter of 2012.
[3]
"Active clients" refers to those registered clients who purchased wealth management products distributed by Noah during any given period. Active clients include clients who have purchased mutual fund products that were distributed since the second quarter of 2012.
[4]
The amount in RMB was translated into U.S. dollars using the average rate for the period as set forth in the H.10 statistical release of the Federal Reserve Board.
[5]
"Average transaction value per client" refers to the average value of wealth management products distributed by Noah that are purchased by active clients during a given period.
Ms. Jingbo Wang, Co-founder, Chairwoman of the Board of Directors and Chief Executive Officer, commented, "It was a record quarter for the company, with historical highs set for nearly all operating metrics. These results are reflections of structural improvements and strategic initiatives we have been making since the first half of 2012 in organizational structure, management, and product innovation." Ms. Wang continued, "I am also pleased that all of our business units, including our mutual business and our Hong Kong business, continued to make meaningful progress this quarter. In addition, we were able to continue to grow our asset management business."
Mr. Tom Wu, Chief Financial Officer, said, "It was a robust quarter. We were able to improve key financial metrics with strong revenue growth driven by broad client engagement in total transaction value and number of active clients, which led to improved profitability and record quarterly earnings. We are committed to delivering profitable and quality growth for our shareholders."
FIRST QUARTER 2013 FINANCIAL RESULTS
Net Revenues
Net revenues for the first quarter of 2013 were US$32.6 million, a 94.3% increase from the corresponding period in 2012, due to increases in both one-time commission revenues and recurring service fees for the first quarter of 2013.
Net revenues from one-time commissions for the first quarter of 2013 were US$15.4 million, a 68.1% increase from the corresponding period in 2012. The year-over-year increase for the first quarter of 2013 was mainly due to an increase in transaction value and, to a lesser extent, an increase in average commission rate.
Net revenues from recurring service fees for the first quarter of 2013 were US$16.4 million, a 115.2% increase from the corresponding period in 2012. The year-over-year increase was mainly due to the cumulative effect of private equity funds previously distributed by the Company and an increase in assets under management by the Company since the second half of 2012.
Operating Margin
Operating margin for the first quarter of 2013 was 36.4%, as compared to 15.7% for the corresponding period in 2012. The year-over-year increase for the first quarter of 2013 was driven by growth of net revenues exceeding those in operating cost and expenses.
Operating cost and expenses for the first quarter of 2013, including cost of revenues, selling expenses, G&A expenses and other operating income, were US$20.7 million, a 46.5% increase from the corresponding period in 2012.
Cost of revenues for the first quarter of 2013 totaled US$6.0 million, a 55.9% increase from the corresponding period in 2012. The year-over-year increase for the first quarter of 2013 was primarily due to an increase in compensation expenses paid to relationship managers as a result of the increase in transaction value.
Selling expenses for the first quarter of 2013 were US$7.9 million, a 29.2% increase from the corresponding period in 2012. Selling expenses as a percentage of net revenues for the first quarter of 2013 was 24.3%, as compared to 36.5% for the corresponding period in 2012. The year-over-year increases for the first quarter of 2013 was primarily due to increases in employee compensations and share-based compensations as the Company strengthened its selling and marketing functions.
G&A expenses for the first quarter of 2013 were US$6.8 million, a 61.8% increase from the corresponding period in 2012. G&A expenses as a percentage of net revenues for the first quarter of 2013 was 20.9%, as compared to 25.2% for the corresponding period in 2012. The year-over-year increases for the first quarter of 2013 was primarily due to increases in personnel expenses, professional consulting fees and rental expenses.
Other operating income for the first quarter of 2013 was US$31.0 thousand, as compared to US$52.8 thousand for the corresponding period in 2012. Other operating income is government subsidies received in the PRC from local governments for general corporate purposes.
Income Tax Expenses
Income tax expenses for the first quarter of 2013 were US$3.9 million, a 278.1% increase from the corresponding period in 2012. The year-over-year increase for the first quarter of 2013 was due to an increase in taxable income.
Net Income
Net income for the first quarter of 2013 was US$9.8 million, a 257.3% increase from the corresponding period in 2012. Net margin for the first quarter of 2013 was 30.0%, as compared to 16.3% for the corresponding period in 2012. Non-GAAP net margin for the first quarter of 2013 was 33.4%, as compared to 21.8% for the corresponding period in 2012.
Net income attributable to Noah shareholders for the first quarter of 2013 was US$9.6 million, a 251.6% increase from the corresponding period in 2012. Net income per basic and diluted ADS for the first quarter of 2013 were US$0.18 and US$0.17, respectively, as compared to US$0.05 and US$0.05 for the corresponding period in 2012.
Non-GAAP net income attributable to Noah shareholders for the first quarter of 2013 was US$10.7 million, a 193.8% increase from the corresponding period in 2012. Non-GAAP net income per diluted ADS for the first quarter of 2013 was US$0.19, as compared to US$0.06 for the corresponding period in 2012.
Balance Sheet and Cash Flow
As of March 31, 2013, the Company had US$120.8 million in cash and cash equivalents, an increase of US$1.2 million from US$119.6 million as of December 31, 2012. In the first quarter of 2013, the Company generated US$6.6 million in its operating activities, received US$14.8 million from maturing fixed income product investments, invested US$14.8 million in fixed income products and US$8.0 million in equity affiliates, and used US$1.2 million to acquire property and equipment. In the first quarter of 2013, the Company used US$2.9 million to repurchase American Depositary Shares ("ADSs") and received US$5.5 million from third-party minority investments in PRC affiliated entities of the Company.
On May 22, 2012, the Company’s Board of Directors (the "Board") authorized a share repurchase program of up to US$30 million worth of its issued and outstanding ADSs over the course of one year. As of March 31, 2013, the Company has repurchased 2,101,877 ADSs for approximately US$11.4 million, inclusive of transaction charges.
ANNOUNCEMENT OF A NEW SHARE REPURCHASE PROGRAM
The Company also announced today that the Board has approved a new share repurchase program, effective on May 22, 2013, which authorizes the Company to repurchase up to US$30 million worth of its issued and outstanding ADSs over the course of one year. The proposed share repurchase may be made on the open market at prevailing market prices pursuant to Rule 10b5-1 and/or Rule 10b-18, in privately negotiated transactions, in block trades or otherwise from time to time depending on market conditions and in accordance with applicable rules and regulations. The Board will review the share repurchase program periodically, and may authorize adjustments of its terms and size.
2013 FORECAST
The Company estimates that non-GAAP net income attributable to Noah shareholders for the full year 2013 is expected to be in a range of US$33.0 million and US$37.0 million, representing a year-over-year increase in the range of 23.0% and 37.9%. This estimate reflects management’s current business outlook and is subject to change
