Noah Holdings Ltd

NYSE:NOAH

Earnings Call Transcript 2023-Q2

[Operator]

Good day, and welcome to the Noah Holdings Second Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Melo Xi, Director of Investor Relations. Please go ahead.

[Melo Xi, Director, IR]

Thank you, operator. Good morning, and welcome to Noah's 2023 Second Quarter Earnings Call. I'm Melo Xi Director of Investor Relations at Noah Group. The presenters joining us today are Ms. Wang Jingbo, our Co-Founder, Chairlady and CEO; and Mr. Grant Pan, our CFO.

Before we start, we would like to kindly remind you that during today's call, we may make forward-looking statements based on our current expectations of the business. Please keep in mind that these statements are subject to risks and uncertainties that may cause Noahs' actual results to differ from these statements. We do not undertake any duty to update these statements. For a discussion of some of the key risks that could affect results, please see the Safe Harbor statement section of our 6-K filing. We'll also refer to certain non-GAAP measures, and you will find reconciliations in our 6-K report made available on the Financial Reports section of Noah's Investor Relations website.

Also, please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Noah or Noah-affiliated products. This call is copyrighted material of Noah and may not be duplicated without consent. 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 welcome our Chairlady and CEO, Ms. Wang Jingbo. Chairlady, handing to you now. Thanks.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Melo Xi, Director, IR]

Thank you, Chairlady. For the agenda of today's conference call, I'd like to start with my thoughts on the macroeconomy and the wealth management industry. Noah's progress in our global expansion plan, and then a report on the overall performance of the first half of the year and the development of our business units. Then Mr. Grant Pan, our Group CFO, will present the financial information, followed by a Q&A session.

In the second quarter of 2023, we observed that the geopolitical conflicts and global economic slowdown has replaced inflation as the top concerns for Chinese high net worth investors, and they are taking account of these considerations, when actively adjusting their asset allocation strategies. At the same time, due to the innovations and breakthroughs in AI technology driven by ChatGPT, high net worth clients who are familiar with primary market investments, such as venture capital, are also hoping to take part in this new round of technology advancement cycle, and the investment opportunities that comes along the way.

A diversified asset allocation strategy in terms of geography and asset classes becomes increasingly important amid heightened level of macroeconomic uncertainties. We recommend Noah's high net worth clients to review their portfolios, starting with running through [Technical Difficulty], ensuring sufficient allocation in the [indiscernible] portion, coupled with multi-strategy investments to capture cross-cycle growth opportunities, achieving an antifragile strategic and tactical asset allocation.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Melo Xi, Director, IR]

We are also aware of the recent payment default by certain wealth management companies and trust product platforms under non-standardized private credit products. I would like to point out that Noah, since establishment in 2003, has been sticking to our founding principles and the common practices of the financial services industry for 20 years. From the inception of our company, we have insisted on the segregation of client's capital, maintaining separate custodian accounts for our asset management products, no leverage funding for clients, no products with maturity mismatches and no cross-border front movement transaction. Together with our continued devotion to investing in research capabilities, such principles not only establish us as a pioneer in terms of compliance and vision, but also bolster our capacity to navigate economic headwinds and shield our clients' hard earned capital through professional asset allocation advisories.

Thanks to our continued devotion to strengthen our investment research capabilities, coupled with our management's forward-looking macroeconomic judgments. In 2016, we started to wind down our exposure in residential property assets. We have fully exited this asset class, and among the clients who invested in this type of products, 98.7% were profitable. After the Camsing incident in 2019, we also started to wind down and fully exited non-standardized private credit exposure or so-called trust products.

During this exit process, although we experienced short-term hardships and lost some of our clients and employees along the way, we have successfully completed the standardization transformation in 2021, nonetheless, which was proven to have effectively safeguarded our clients' wealth, amidst recent challenges faced by this asset class. Chairlady?

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Melo Xi, Director, IR]

In terms of financial performance, the company recorded overall net revenues of RMB 1.7 billion in the first half of 2023, up 13.8% year-on-year. Domestic business contributed RMB 1.0 billion, accounted for 59.2%, down 13.4% year-on-year. With our continued investment in distribution, product selection and comprehensive services, overseas business contributed RMB 714.9 million, up 104.1% year-on-year, and increased its share of the group revenue to 40.8% from 22.6% last year.

By segment, Wealth Management segment contributed RMB 1.3 billion, up 22.5% year-on-year. The domestic portion contributed RMB 769.9 million, down slightly by 4.3% year-on-year, while due to the expansion of overseas product offerings and comprehensive services income. Overseas portion contributed RMB 566.8 million, up 96.4% year-on-year.

Asset Management segment contributed RMB 389.9 million, down 5.4% year-on-year. Domestic portion contributed RMB 241.9 million, down 31.2% year-on-year, while overseas portion contributed RMB 148.1 million, up 140.3% year-on-year, mainly due to the increase in overseas AUM. In terms of comprehensive services, wealth preservation and inheritance remain the most concerned wealth management needs among high net worth clients and families. In the first half of this year, revenues contributed by domestic insurance brokerage business, grew 54.6% year-on-year. Overseas insurance, family trust and other comprehensive services grew by 380.8% year-on-year, with the number of active clients in this segment increasing over 6x, thanks to the growth of operations in Hong Kong and Singapore offices.

For the first half, we achieved operating profit of group of RMB 628.3 million, with an operating margin of 36.0%. For our domestic wealth management business, with the migration of domestic high net worth clients to Tier 1 and central hub cities as well as more supply of talent, we continue our strategy to focus on and expand our presence in China's Tier 1 and central hub cities, by increasing the recruitment of top-tier talent, enhancing the asset allocation capabilities and service qualities of our relationship managers, strengthening investment and research capabilities, and providing customized asset allocation solutions to our clients, with the help of our CCI model. By the end of the quarter, the number of domestic RMs stood at 1,319, up 5.1% year-on-year and 1.5% quarter-on-quarter.

In terms of domestic online Wealth Management, through continuous investment in technology infrastructure, we have effectively integrated our clients' portfolio report with CCI allocation tools, which provides recommendations for clients 4 types of wallets, namely liquidity management, growth investments, protection inheritance and [indiscernible] portfolio.

During the first half, transaction value of mutual funds exceeded RMB 22 billion, up 14% year-on-year, while the transaction value of private secondary products exceeded RMB 8.5 billion, up 33.6% year-on-year. In terms of corporate and institutional clients, the small treasury platform, which was launched in 2022, has successfully attracted nearly 6,000 clients on board. During the first half, active clients increased by 73.7% year-on-year, with an average client AUA of nearly RMB 600,000. Chairlady?

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Melo Xi, Director, IR]

On the international wealth management side, we continue to implement our private banker recruitment program in Hong Kong and Singapore. By the end of the quarter, we had 66 relationship managers in Hong Kong and Singapore, up 100% quarter-on-quarter. We're also in the press process of setting up client service stations in Los Angeles and Dubai, which should be completed in the second half of 2023, to better serve the global wealth management needs of Chinese clients around the world.

As of second quarter of 2023, Noah International had more than 13,600 international clients, where the number of clients in Hong Kong and Singapore grew by 12.8% and 185.2% year-on-year, respectively. Clients AUM with Noah under discretionary investment basis, reached USD 262 million, up 20.4% quarter-on-quarter. And the cumulative number of clients for these products reached 471, up 44% quarter-on-quarter.

In terms of international online wealth management, we successfully launched our Noah [One account] platform, an integrated account solution that provides multi-domain and multi-asset class allocation for Noah's overseas clients. We also successfully connected 9 systematically important banks globally, through our nominee accounts, effectively reducing the time and cost of opening and managing separate bank accounts for our global clients.

Active clients for overseas mutual funds reached 1,956 people, a significant increase of 465.3% year-on-year. Transaction value reached USD 609 million, an increase of more than 700% year-on-year. International Smile Treasury business also began to show significant progress, and so far has successfully attracted more than 170 overseas corporate and institutional clients. The transaction value of the first half reached over USD 73 million, an increase of 193.5%.

On the asset management side, Gopher's total AUM was RMB 156.9 billion, up 0.9% year-on-year.

Meanwhile, Gopher has established 3 strategic client groups based in Shanghai, Hong Kong and Singapore, with team members coming from diverse backgrounds, including investment banking, consulting, buy-side and sell-side investment research and family offices. This not only enables Gopher to cooperate with domestic and international wealth management teams, to provide exclusive, diversified and customized asset allocation services. for strategic level clients, but also to actively explore opportunities in expanding overseas institutional and family office clients, by leveraging Gopher's diversified, actively managed products at home and abroad.

In the first half of 2023, Gophers actively managed target strategy product team dynamically deployed high volatility strategies to enhance portfolio returns, while balancing pullback and volatilities, to maximize long-term returns. During the first half, its active investment product achieved 4% annualized return, annualized volatility of 6.3% and Sharpe ratio of 0.4. Its balanced investment product achieved an 8% annualized return, 5.6% annualized volatility and a Sharpe ratio of 1.2%. Lastly, a stable investment product, achieved a 9% annualized return, 2.1% annualized volatility and a Sharpe ratio of 3.6%.

Overseas AUM of Gopher International active managed products reached USD 4.7 billion, equivalent to RMB 34.3 billion, up 15.8% year-on-year and its proportion of the Group's total AUM also increased to 21.8%. In 2023, we strengthened screening, coverage and launching of top-tier global hedge fund managers, as well as the introduction of U.S. dollar structured products, effectively completed our overseas product matrix. Chairlady?

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Melo Xi, Director, IR]

In terms of ESG, we continue to promote the integration of investment products with ESG concepts. Since the end of 2022, Gopher has launched an ESG public market product, in cooperation with brilliant asset management, which integrates ESG evaluation framework into fundamental quantitative strategy. Maximizing long-term investment returns amid the state's effort to promote the development of various segments of key ESG initiatives, such as carbon neutrality. As of July, we have cumulatively raised nearly RMB 100 million for this product, with a cumulative return of over 14%, outperforming the CSI 300 benchmark index over the same period.

In summary, Noah's long-term success as an independent wealth management firm lies in this adherence to our core strategy of client-centric survival of the bottom line, as well as respecting the common senses of the financial services industry.

Our 3 complementary business segments, including wealth management, asset management and comprehensive services, not only enable us to fully meet the needs of a diverse range of clients, including individuals, institutions and family offices, but also brings a greater degree of inherent stability and balance to our business.

Next, I would like to ask CFO, Grant Pan, to present the financial performance in detail. Thank you all.

[Grant Pan, CFO]

Thanks Melo. Thank you, Chairlady and hello investors and analysts. With lifting of travel restrictions, the second quarter saw a steady recovery on track and a contribution of contact-related activities, to economic growth also expanded, as evidenced by a 5.5% year-over-year increase in GDP in the first half of the year. Despite more active domestic economic activities, the recovery is still at early stage and being confronted with uncertainties due to a slowing global economy, and rising geopolitical concerns.

The investment sentiments for high net worth individuals, still remains at a conservative sign, as they continue to seek out safe havens and wealth preservation. Our dedicated focus and client focus strategy has paid off, and strong financial numbers showing that we're aligning client's best interest with the wealth management advisors provided by us.

For the 6 months ended June 30, 2023, our net revenues increased by 13.8% year-over-year to RMB 1.7 billion, of which 30.2% came from insurance income, as we have executed our CIO house view on wealth preservation and bottom line focused asset allocation strategy. Together with our continued investment in talent capital, global research capabilities and broadened coverage network of top-tier global asset managers, net revenues from overseas business experienced a rise by 104.1% year-over-year, accounting for 41% of the Group's total net revenue.

In the meantime, we're committed to demonstrating the progress in building client channels, resulting in a 13.1% increase in a number of core diamond and black card clients. Within active clients, overseas active clients reached almost 2,000, an increase of 140% year-over-year.

Top line wise, it's encouraging to witness a rather solid recovery in net revenues, mainly driven by expanding distribution of protection-oriented products and the growth in our international business. We increased the distribution share of insurance products, both onshore and offshore, as evidenced by the quarterly onetime commission fees, increased by 95% year-over-year and 130% quarter-over-quarter to RMB 400 million, the highest single quarter since 2022.

In the first half of the year, onetime commission fees amounted to RMB 580 million, up 87.8% year-over-year. We expect a gradual recovery investment sentiment in the second half of the year, which may lead to a rebound in growth-oriented investment products. In addition, we have a robust pipeline of client events in overseas markets, which will lead to increased opportunities, to the distribution of offshore investment and insurance products, to overseas Chinese high net worth individual clients.

The stabilizing income stream, recurring service fees was RMB 921 million in the first half of the year, largely stable compared to the first half of last year. Performance-based income was RMB 111 million, down 44% year-over-year, due to the relatively muted exit environment. Other service fee income in the first half of the year was RMB 133 million, up 62.8% year-over-year, resulting from more value-added services provided to our clients.

Benefiting from our effective cost efficiency strategy implemented in G&A and selling expenses, the first half of 2023 achieved an operating profit of RMB 628 million and a healthy operating margin of 36%, down 1.4% and 5.5%, respectively, from the corresponding period of last year. This was mainly due to the low base of 2022 under strict restrictions on traveling and client activities, as well as higher government subsidies during COVID. Our strategy is to be cautious on our overhead expenses. We're still able to invest our resources into client interfaces and international talent acquisitions and operations.

The transaction value in the second quarter was RMB 18.4 billion, up almost 10% year-over-year and an aggregate transaction value of RMB 35.2 billion, as of the 6 months ended. In tandem with the expansion of global footprint, overseas transaction value reached USD 1.5 billion for the 6 months ended, equivalent to RMB 10.5 billion, up 162% year-over-year, primarily owing to the introduction of discretionary investment and cash management products that have successfully [Technical Difficulty] increased 764.5% year-over-year to nearly USD 4.8 billion, equivalent to [ RMB 33.5 billion ].

In terms of transaction value in RMB products, our continuous efforts to expand our client base, including both individual and institutional clients, resulted in a 32.2% quarter-over-quarter increase in the transaction value, including both individual and institutional clients, resulted in a 32.2% quarter-over-quarter increase in the transaction value of mutual funds, while we maintain a cautious approach of fundraising and investment allocation in other investment products, especially in private equity. That being said, we'll continue to closely monitor the space for attractive opportunities, especially in the technology sector, as China's economic recovery continues.

From the perspective of our segmented results in the first half of 2023, net revenues from wealth management were RMB 1.3 billion, accounting for 76.3% of total net revenues. Asset Management net revenues were RMB 0.4 billion, accounting for 22.3% of total net revenues.

Internationally, we're able to effectively assist our clients in safeguarding their wealth in volatile capital markets, thanks to our forward-looking assessment [indiscernible] the macroeconomy and advice to clients and wealth presentation in this environment. Dedication to global expansion of fueled growth in overseas AUM, with a 15.8% year-over-year increase to USD 4.7 billion as of June 30, 2023. Primarily attributable to our expanded array of offerings, including structured products, mutual fund distribution and private secondary products.

Turning to the balance sheet; we have maintained a healthy liquidity position, with a current ratio at 3.2x. The gearing ratio is 19.8%, and we have RMB 4.7 billion in cash to further execute our globalization plan.

At the end of June, we voluntarily requested S&P Global to withdraw its credit rating coverage, which stood at BBB- with a stable outlook according to S&P, given our current capital structure needs and no need to raise debt financing in the foreseeable future. In addition, the Board has approved a 1 to 10 share split proposal for Hong Kong traded shares, in order to lower the investment barrier and increase the trading liquidity of the subdivided Hong Kong shares. Our ABS price traded on the New York Stock Exchange will not be affected, and the conversion rate between Hong Kong shares and ADS will be 5 to 1 after the subdivision takes effect. This plan will be subject to shareholder approval through an extraordinary general meeting, which is expected to take place on October 26, 2023, Hong Kong time.

In conclusion, our performance in the first half of the year has delivered steady growth in revenues and positive progress for our international expansion strategy. Looking ahead to the second half of 2023, we're optimistic that China will continue to produce growth opportunities and are confident that investor sentiment, consumer confidence and consumption will gradually, but steadily improve. Against this backdrop, we're confident that we can better assist our domestic clients optimize their asset allocation strategy and provide more advanced client experiences.

On the overseas side, as geopolitical conflicts and financial environment become more unstable, tightening conditions are still seen as top concerns for high net worth individuals across the globe. Not only is their demand for global asset allocation service increasing, but their need to enter global markets, as some entrepreneurs, is also on the rise, resulting in a faster wealth accumulation effect for our clients in the coming years. We have always evolved our strategy structure and footprint to adapt to changing trends.

With more offices and international talent recruitment, we believe this innovation will enable us to attract high net worth [Technical Difficulty] and support, and we remain committed to creating diversified offerings and long-term value for clients and shareholders.

Thank you for your time, and we will now open the floor for questions.

[Operator]

[Operator Instructions] Our first question comes from YuYu Fan with CICC.

[Unidentified Analyst]

[Foreign Language]

Okay, I will translate my question. This is [YuYu Fan] from CICC. I have 2 questions here. The first one is regarding the recent risk event faced by the Wealth Management [indiscernible]. So what's the impact on the whole industry, and also on Noah? The second question is about our coverage network. As we can see, the cities we covered decreased this calendar year, so what's our future plan for the domestic cities lay out? That's my question.

[Grant Pan, CFO]

[Foreign Language]

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Grant Pan, CFO]

So I think I will give you a little translation and also supplement from me. Clearly, the stock, it's actually expected to be better. It's probably a matter of time in terms of how the asset is consisted of mostly real property exposure, as well as some of the FD or low-price A stocks, very heavy investments and also some -- probably, we think, sort of pseudo capital pool. That's in history, we never had any corporations with their companies. And I believe it's also a very, I guess, historical moment in terms of investor education for this industry. As Warren Buffett has once said, things that are not going to last, is going to disappear, it's just a matter of time.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Grant Pan, CFO]

So our strategy has always been evolving around the whereabouts of our clients. So as we first started in this industry, obviously, many of them are entrepreneurs in probably [ fourth tier ] cities 20 years ago. But I guess, as of now, 2023, most of them have already moved into first-tier cities. And I believe we actually have better talent supplies and probably closer in terms of physical distance to our clients. That's why we're focusing our resources in the top cities in China. And that way, we'll be able to be more efficient and also consolidate our resources in this top city.

[Operator]

Our next question comes from Chiyao Huang with Morgan Stanley.

[Chiyao Huang, Morgan Stanley]

[Foreign Language]

My first question is regarding the management outlook on the PBC investment and exit condition in China, as well as the outlook for the [indiscernible] and product sales in the future, considering the IT environment domestically and offshore. And second question is on the plan for the cash balance that Noah has, which is quite sizable. And is there any -- wondering if there's any investment plan, or any plan to further enhance shareholder returns?

[Grant Pan, CFO]

Okay. I'll have Chairlady to answer the first question. I'll take the second question in terms of balance sheet capital.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Grant Pan, CFO]

So as you know that if you're familiar with Noah, obviously, we have been in this industry [indiscernible] actually rather early stage, and the peak actually distribution placement PBC came in the year 2017. So I guess we're still pretty confident in terms of how the portfolio companies are performing. Obviously, people need a better, a longer patience in terms of exiting. But as long as you're holding on to the good companies, we believe things will get on the brighter side, in terms of exiting conditions.

Another thing is, we actually have -- did a batch of exiting in the year, span of between 2020 and 2021, where the market conditions were performing relatively well and realized carry income for both the company as well as the clients.

We did a quick survey -- historical statistics, if you will, for the past historical investments for clients. As we mentioned on the call, that the products relating to real properties, actually 98% investors, clients have benefit, have made the profit on the exit. In terms of VCP existing clients, probably also over 90% are at least profitable in terms of their investment costs. So we're optimistic, although prudently optimistic about the future of the VCP industry. We continue to probably move a little earlier stage in terms of VCP and focusing on technology-based companies.

So that's for the VCP question, Chiyao. And in terms of the cash on the balance sheet, obviously, we plan and consciously maintain a very strong liquidity position. Although the balance sheet under accounting principle shows $4.7 billion. We actually do have another around $300 million to $400 million in short-term investments.

So the total capital and liquidity position is around $5 billion cash. I think one plan -- one part of our plan is obviously to continue to support our international expansion, which obviously have a pretty high demand on capital. And the second time, we're also debating to continue to increase probably dividend distributions in the future, as we want to make sure that we bring better returns to our clients.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Grant Pan, CFO]

I think one other interesting fact to -- I guess, to supplement is that, we do put together a dedicated team to work on the exiting of our portfolio companies. And we're noticing interesting trends, where probably in the past, the founders of these portfolio companies are not -- are a little bit reluctant to give cash back to the shareholders, as they continue growing. But we believe we are noticing a trend that more and more of them are willing to actually distributing cash and capital back to the shareholders. If the IPO is -- the timing of their IPOs are uncertain, they're willing to giving a little bit more capital back to shareholders, just like what Noah is doing.

[Operator]

[Operator Instructions] The next question comes from Peter Zhang with JP Morgan.

[Peter Zhang, JP Morgan]

[Foreign Language]

Let me do the translation. My first question is regarding the mutual fund manager fee cut. We noticed that major mutual fund in China has been cutting their management fees since July, we wish to understand what's the potential impact to Noah? My second question is regarding the second half outlook. We noticed that in second quarter, insurance business contributes a large portion of the revenue. And with the -- we noticed that a major insurer in China has been stopped, selling the 3.5% guarantee insurance product. We wish to understand what will be the trend in second half or insurance-related business or your revenue trend?

[Grant Pan, CFO]

Okay. Thank you, Peter. I'll take the first question. Mutual fund is actually a very important tool for us to attract new capital from clients or maintain their wallet share between products. So although, obviously, it's -- we're seeing this trend of downward pressure on mutual fund fees, but the actual contribution of revenue from mutual funds to our group net revenue is actually at a pretty small percentage. The total distribution fee, plus the management fee to the contribution of the net revenue actually, is less than 5%.

So the impact of our 2023 net revenue of the fee downgrading, is not going to be more than RMB 3 million. Even if we annualize that, it will be less than RMB 10 million. So I guess the direct financial impact on group's net revenue is rather limited, but we'll continue to use mutual fund and continue to expand the distribution placement as a good way to attract new capital, and also, I guess, maintenance of the existing capital claims.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Grant Pan, CFO]

We also think it's probably going to be helpful for high net worth individuals to attract new orders because some of the mega Internet platforms for mutual fund probably has reached its peak in terms of distribution and maintenance and mutual funds. And many platforms actually, clients may have concentrated portfolio that probably will experience some significant or at least some major losses, because of the concentration. But now with [IC mode] in terms of mutual from placements, and also we believe that high net worth individuals are getting more and more sensitive to the fees associated with the mutual funds. So IT model, as well as lower transaction costs and [indiscernible] costs, will help them to actually put more investments or transferring more investment from traditional private hedge funds or private equity into more standard and lower-cost mutual funds.

In terms of the future, I guess, for the second half of the year, we know that insurance holders from domestic contributed quite a bit of revenue, honestly, to the entire industry for the first half. But I guess, for the second half of the year, we'll continue to advise our clients based on our CIO view, probably still on a pretty conservative side, and overseas insurance products [Technical Difficulty] also diversified investment product portfolios will continue to consist of a large part of the transaction value of second half.

[Wang Jingbo, Co-Founder, Chairlady and CEO]

[Foreign Language]

[Grant Pan, CFO]

So also in the past, insurance distribution probably is very helpful supplement in total solution to our clients. But mostly in the past, it's either product-driven or campaign-driven like, which you have mentioned 3.5% domestic insurance. But we have been building -- putting together a lot of infrastructure and platform around insurance as a total solution to our clients, and also diversify the client types from purely individual base, to probably more enterprise base, and we'll continue to build that into one of our primary solution to our clients. And I guess the way we actually conduct insurance business, is a little different from purely agency-based insurance type of institutions, as we do put insurance product strategy as part of the total solution to our clients.

[Operator]

As we have no further questions, this concludes the question-and-answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may all now disconnect.

[Grant Pan, CFO]

Thank you all for listening.