Good day and welcome to the Noah Holdings Limited Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Jingbo Wang. Please go ahead, sir.

Thank you. 2020 is a new beginning after 30 years of development. Shanghai has developed into an international financial center that specializes in Renminbi-oriented asset allocation. Currently, more than 50% of the Renminbi assets held by overseas market entities are here, making the city an open Renminbi asset allocation business. This year 2020 also marks Noah's 15th year of Inception and Noah Holdings' 10th Listing Anniversary on the New York Stock Exchange. Noah was founded in Shanghai. We're still headquartered here. We're grateful for this great city's development and its support for us as a firm. It has been five quarters since the Camsing incident last year and our transformative shift from single-counterparty private credit products into standardized products. We thank our team for their efforts and the market for its support. Today, I feel honored to report our satisfactory achievements in the third quarter to our shareholders and analysts. Both the transaction value of standardized products and the number of active clients reached a record high. Clients' confidence has been restored, and team morale is good. It is evident that our strategic transformation has reached a successful milestone. I would like to briefly discuss our Holdings overall performance in the third quarter of 2020, the development of our major business segments, the growth targets, as well as investment strategy. Then, I would like to share my opinions on the macro and regulatory landscape. Then Grant will present the financial results for the third quarter, followed by a Q&A session. Starting from the third quarter of 2019, Noah seized the offering of non-standardized single-counterparty private credit products, accelerated the redemption of these products, and transformed to full scale public securities products. After five quarters of transformation, with the strong support of our clients and the continuous efforts of our team, transaction value for the quarter reached RMB28.8 billion, up 168.3% year-on-year and 34.2% quarter-on-quarter, marking one of the highest quarters for transaction value in the past 15 years. Among which the transaction value of standardized products reached RMB20.8 billion this quarter, up 18% year-on-year and up 16% quarter-on-quarter, a historical high. The transaction value of onshore and offshore mutual funds reached RMB14.1 billion, up 206.3% year-on-year and up 18.6% quarter-on-quarter. We have established close partnerships with 18 out of the 20 mutual funds in China. For secondary market equity funds, we raised RMB6.3 billion, which grew nearly ten-fold year-on-year and up 25.6% quarter-on-quarter. We also maintained our leading position in private equity products this quarter, with a transaction value of RMB7.2 billion, up 107.7% year-on-year and up 183.1% quarter-on-quarter. It is worth mentioning that our focus as secondary fund Series 5 received commitments of RMB1.5 billion in the quarter and has become our clients' preferred featured products in terms of both scalability and performance. In the third quarter of 2020, Noah achieved net revenues of RMB859.1 million, up 14.9% quarter-on-quarter and achieved a non-GAAP net income attributable to shareholders of RMB301 million, maintaining the record high level of last quarter. Overseas revenue was still soft due to COVID-19 but was offset by the increased onshore revenue. We're confident in meeting our full year non-GAAP net income guidance. Due to the impact from the pandemic, the net revenue of our overseas business has achieved RMB158 million, down 30.2% year-on-year and down 14.6% quarter-on-quarter, accounting for 18.4% of the Group's total net revenues. In the third quarter of 2020, the number of active clients inclusive of mutual funds clients rose to 20,509, up 105.9% year-on-year and up 39.5% quarter-on-quarter, reflecting the restoration of clients' confidence. Specifically, there were 17,536 onshore and offshore active mutual funds clients, up 167.6% year-on-year and up 42.1% quarter-on-quarter. Moreover, as of the end of September 2020, there were 944 Black Card clients, up 7.9% year-on-year and up 4.9% quarter-on-quarter. As of September 30th, the turnover rate of elite relationship managers remained at the industry's lowest level of 2.3%. In an effort to upgrade the model of relationship managers serving clients, we have transformed the single relationship manager service model into a teamwork-based Iron Triangle model, ensuring that there is a dedicated team providing services to our Diamond and Black Card core clients, continuously improving our service quality and operational efficiency. At the 2021 Group Strategy Meeting held in October, the company as a whole established a client-centric growth strategy to further improve client service experience and to better reach and serve our high net worth clients. We have also implemented a new talent strategy to continuously recruit and invest in new talents and relationship managers. For asset management, as of September 2020, Grofers' AUM stood at RMB155.7 billion, driven by continued voluntary early redemption of single-counterparty credit funds, down 11.8% year-on-year and down 2.3% quarter-on-quarter. The share of private equity (PE) and public security funding total year-end increased by 10.3% and 1.6% year-on-year, respectively. Overseas AUM was RMB25.5 billion, accounting for 16.4% of the total AUM, a slight increase from the previous quarter. According to the new regulations on mutual fund distribution, Grofers has started establishing a direct GP sales system to provide support for its direct sales management of various fund managers. Grofers is expected to further expand its PE fund size in the future, as the size of Grofers fund expands we will continue to promote our economic collaborations with leading DPTE partners. The reform of the Chinese capital markets, including the Sci-Tech Innovation Board and the registration-based IPO system, will play a long-term role in improving the performance of leading primary market funds, consequently benefiting Noah’s clients. In addition to the continuous development of PE funds, Grofers will also improve the R&D and investment research to focus on creating value for our clients. Expanding the area of PE funds is a key strategy to provide differentiated investment solutions for our high and ultra high net worth clients by focusing on generating absolute returns for them through multi-strategy funds. The scale of Grofers' target return multi-strategy funds increased 571.4% year-on-year in 2020. In terms of company management in 2020, we have initiated a comprehensive business transformation by digitalizing Noah’s 15-year long industry knowledge and offline operations experience to improve the position and efficiency of our daily operations. We are committed to focusing on KYC, Know Your Clients; KYA, Know Your Agents; and KYP, Know Your Products, in order to digitally understand client needs, identify the ability and type of relationship managers, as well as label fund products in order to accurately match the three. Digitalizing our compound strategy based on KYC, KYA, and KYP is also our top focus. 2020 is a turning point for the wealth management industry in China. China's wealth management industry has bid farewell to the area based on implicit guarantees and entered into a new stage of standardized NAV based assets, testing the all-round capabilities of financial institutions. We believe that in the new era of transparency and fair competition, the industry will evolve a little bit faster after adjustment. Institutions that survive the transformation will capture higher market share as a result. China's personal and healthcare savings have reached RMB100 trillion. The overall AUM of private banks has reached RMB14 trillion. There are more than 800,000 high net worth private bank clients. Yet, 80% of the total investable assets still remain in savings accounts or have not been managed by wealth managers. This deep and broad market competitive landscape is still fragmented and we expect the market consolidation and the formation of major players in the industry to be completed around 2025. Meanwhile, an industry transformation will be preliminarily completed through digitalization of operation capacities and industry research-based investment capacities. Noah is currently at a turning point, a key turning point. We need to build a process-oriented company with a clearer organizational structure and methodology, conduct a digital transformation to make information more accessible and transparent. Use KYC, KYA, and KYP to improve the quality of the services offered by relationship managers to clients, accuracy and efficiency are the two key words. Looking ahead to 2021, we have proposed to achieve high-quality growth in the future based on digitalization and set challenging goals in key dimensions, including high net worth client base, AUM, transaction value, and revenue targets. We plan to invest no less than 3% of the annual total net revenues in the R&D of client user interface and technology respectively. As we celebrated our 15th Inception Anniversary and 10th Listing Anniversary on the New York Stock Exchange on November 10, 2020, we raised the theme of One Vision, One Heart, and One Motto. Noah's four founders, more than 100 core management, and 15 Black Card clients departed from Changyang, part of the Gobi to walk along the road that the legendary monk Xuanzang of the Tang Dynasty had covered to rewind Noah's founding journey once more. It's clear to us that this is a journey of exploration and refinements for the brave. It is also a tough growing process in which both the teams and individuals need to work hard and challenge ourselves. Noah’s staff and clients spent two days walking 66 kilometers in the Gobi Desert, resembling Noah's determination to start a new undertaking. That journey represented one promising company with an endless future having united one group of hard workers in order to pursue one new dream from one new beginning. During the challenging journey to the Gobi Desert, everybody deeply understood the spirit of Gobi. It didn't matter where we came from or how strong we were, but that we were all determined to challenge everything and win victory, and take action to go all out and work hard. At a recap camp meeting on the Gobi journey, the four founders of Noah, myself, Yi Zhao, Zhe Yin, and Boquan He decided to let go of our titles as founders and reinvent ourselves collectively by being elected again. Today, we have also announced a share buyback plan approved by the Board of Directors. Based on our competency in the company's development and long-term value, we have been granted permission to issue a two-year maximum US$100 million share buyback plan. We thank the shareholders for your patience and support. Now, let's welcome our CFO, Grant Pan, to present the third quarter financial results.

Thank you, Chairlady, and thank you, Sonia for translating. Hello everyone. We're very excited to share with you the stellar financial results for the third quarter of 2020, marking a very successful transformation arising from resumed client trust and confidence in the economic outlook. I'm also very happy to report that we are ahead of schedule to deliver the full year non-GAAP net income guidance amidst a very volatile and challenging environment this year. Net revenues for the third quarter of 2020 were RMB859 million, up 2% year-over-year and 15% quarter-over-quarter. Non-GAAP net income for the quarter was RMB301 million, marking a total year-to-date non-GAAP net income of 2020 of RMB864.2 million, achieving 96% of the full year guidance. By revenue contribution, we achieved one-time commission revenue in the amount of RMB194.8 million, compared with RMB150 million in the same quarter last year, up almost 30% and 53.5% quarter-over-quarter. Considering this growth was achieved with very little contribution from overseas insurance due to the COVID-19 situation, we're very happy to see the full recovery of our ability to provide the right product to our clients. As mentioned by Chairlady Wang, it is surely encouraging for us to see the record number of active clients reaching 20,509 this quarter, up 105.9% year-over-year and almost 40% quarter-over-quarter. The growth was fueled by increased activities in both conventional products and mutual funds distributions. We believe this indicates restored client confidence and is a sign of resumed rapid business growth. Total transaction values of financial products distributed during this quarter were RMB28.8 billion, an increase of 122% from a year ago. Among which RMB20.8 billion were public security products or standardized products, also a record high for this category since listing. After five quarters of transformation, public security products have fully replaced non-standardized single-counterparty credit funds and became the number one one-time commission contributor. At the same time, PE products, Noah's specialty, also had good distribution momentum, recording RMB7.2 billion, a 107.7% increase supported by leading GP products, as well as Grofers' own PE secondary fund, which recorded RMB1.5 billion of fundraising. The recurring service fees in the third quarter were RMB560 million, up to 8% year-over-year and 18% quarter-over-quarter, contributing to 65.2% of total revenues. The growth of our accumulated distributed products, as well as the high quality of assets under management, continued to provide strong revenue streams. Another key attribute of the growth was back-ended management fees arising from the accelerated redemption of the credit products. Total performance-based income for the third quarter of 2020 was RMB70.5 million, compared to RMB42.4 million for the same period last year, up to 66% year-over-year. The main drivers for strong performance-based income were private equity products, as well as private security funds placed for our clients, demonstrating our increasing capabilities in product selection and investments. Operating profit for this quarter was RMB347.2 million, up 48.2% year-over-year and 8.7% quarter-over-quarter. Operating margin stood at 40.4% even with decreased government subsidies. Total compensation cost was down by 8.2% year-over-year this quarter but up by 9.6% quarter-over-quarter due to relationship managers' commissions arising from increased distribution values, as well as continued recruitment of senior executives and relationship managers. By segment, net revenues from the wealth management business were RMB627.7 million, up 15.7% and 15.6% quarter-over-quarter, contributing to over 73% of total net revenues. The net revenues from the asset management business amounted to RMB222.4 million, down 7.5% year-over-year but up 22.4% quarter-over-quarter. Our lending and other businesses continue to contract as we are now in the process of restructuring that segment to form a digital and technology-powered wealth management ecosystem, with new channels, new platforms, and new products, including the new comprehensive service called NOAH Digital Intelligence on the backdrop of the evolving regulation, as well as industry digitalization. On the balance sheet side, as of September 30, 2020, the company had RMB1.6 billion in cash and cash equivalents, improved from RMB1.2 billion in the last quarter. We'll continue to maintain a very healthy financial position with no interest-bearing debt on our book, and our healthy cash flows also allow us to announce a two-year up to US$100 million share buyback plan today, which reflects our continued confidence in our business and China's wealth management and asset management industry in the future. As Chairlady mentioned, we just celebrated our 10th Listing Anniversary on the New York Stock Exchange, and we believe this quarter’s strong performance marks just the beginning of the next exciting chapter for Noah. I'm very proud that as a firm, we have demonstrated resilience in facing such a major strategy shift and significant environmental pressures of 2020 by continuously delivering strong financial results quarter-by-quarter in all key metrics, including topline net revenues, bottom line distribution values, as well as the number of active clients. Looking ahead, as a member of the management team, on top of continuously managing healthy profit margins and cash flows, I'm also dedicated to investments in areas where we can develop our strategic capabilities for the long-term, especially in technology to enhance customer experience, as well as strategic investments that will help our client-centric digitalization of operations and growth targets. Now we open the floor for questions. Thank you.

And our first question will come from Ethan Wang with CLSA. Please go ahead.

Thank you, and good morning, management. I have two questions. The first is on our full year guidance. Just wondering if our full year guidance is too conservative because based on our first three quarter results, it seems like we can increase our full year guidance a bit and so we are going to have, say, in the fourth quarter revenue, if we think about like a reasonable growth from last year then your guidance should be higher. How should we think about that? That's my first question. And the second question is on the regulations and two parts; can you guys update on the latest development of fund advisory licenses? And the second is on the internet deposits because it seems like regulators have recently tightened their grip in this area, so this affects our business down the road and what's our latest trend for our departed business? Thank you.

Hi, Ethan. Can you repeat the last half of your question about the internet deposit?

Sure. It seems that regulators have recently tightened our internet deposit, PBOC, Financial Credit Report went out to state some irregularities in this area. So this affects our business because previously we were selling with plans to go through this system. Does this affect our plan?

Sure, Ethan. Thank you for your question. I'll take the first question and Chairlady Wang will address the second. For the first question, I believe when we actually gave the full year financial guidance at the beginning of the year, obviously, the outlook for 2020 was quite uncertain. We believe that we made a reasonable estimate; I wouldn’t say it's overly conservative. I believe at that time, it was still pretty challenging, looking at the road ahead of us, especially knowing that the gate to Hong Kong wouldn’t be opening very soon. So we’ll be missing a pretty big chunk of revenue from overseas insurance. So, we don’t believe that target was set too overly conservative. And we're very lucky to see a very strong financial performance in the third quarter, but we remain cautious for the rest of the year. As you know, in the industry, we do experience some sort of seasonality in the fourth quarter, due to the holiday season, as well as the fund uses for institutions. So we’ll still maintain the same guidance, although we’re very confident that we'll be able to at least get to the very high end of that range, possibly exceeding that particular guidance. So I'll let Chairlady Wang take the second question.

We had a strong financial performance in the third quarter, but we are cautious about the rest of the year. As you know, the industry typically experiences some seasonality in the fourth quarter because of the holiday season and institutional fund uses. Therefore, we will maintain our guidance, though we are optimistic that we can reach the high end of that range, possibly even exceeding it. I will now pass it over to Chairlady Wang for the second question.

We remain cautious for the rest of the year. As you know, the industry experiences some seasonality in the fourth quarter due to the holiday season and institutional fund usage. We will maintain the same guidance, but we are confident that we will reach the high end of that range, possibly exceeding it. I'll let Chairlady Wang address the second question.

And our next question will come from Xue Yuan with CICC. Please go ahead.

Thank you.

We'll continue to provide the same guidance, though we are very confident that we will reach the high end of that range, and possibly exceed it. I'll now turn it over to Chairlady Wang for the next question.

We will maintain the same guidance, although we are very confident that we will at least reach the very high end of that range, possibly exceeding that guidance. I will now let Chairlady Wang address the second question.

We are very confident that we can achieve at least the high end of that range, and possibly exceed that guidance. I will now pass it over to Chairlady Wang for the second question.

We are very confident that we'll be able to at least reach the high end of that range, and we may even exceed that guidance. Now, I will hand it over to Chairlady Wang for the second question.

I'll let Chairlady Wang address the second question.

Our next question will come from Daphne Poon. Please go ahead.

Hi. Good morning, management. Thanks for taking my questions. I want to first congratulate you on the strong result. So I have three questions. The first is regarding your Grofers management fee. We saw that the management fee has been picking up quite consistently in the past few quarters. So in the latest quarter by our calculation, it is about 92 basis points. So I was just wondering if there's any particular drivers behind this and whether management sees this as a sustainable trend? The second is also regarding Grofers. We noted that the AUM for the purpose of clarity from the Grofers, the growth has been also muted in the past few quarters. So I was just wondering what the reason behind this and what's the outlook there, and also if management can share the outlook on the overall Grofers AUM, like when you expect a turnaround, maybe sometime even next year? And lastly, I was just wondering if there's any update on the Camsing payments in terms of your client acceptance so far? Thank you.

Thank you, Daphne. Let me answer the question first.

Given the performance from Grofers, growth has been somewhat limited over the last few quarters. I would like to understand the reasons for this and what the future looks like, particularly the projected turnaround for Grofers' AUM. Do you foresee any improvements possibly next year? Additionally, could you provide an update on the Camsing payments regarding client acceptance? Thank you.

Thank you, Daphne. Let me answer the question first.

Okay. Thank you. Sorry, can I just clarify that the 50% to 60% is just for segment management or total number of clients?

The total number of clients usually aligns with the revenue. It's estimated at around 50% to 60% of the dollar value on the conservative side. If we're feeling optimistic, it could be closer to 70% to 80%. We'll find out.

Okay. Got it. Thank you.

Okay. Thanks, Daphne.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Grant Pan for any closing remarks. Please go ahead.

Okay. So, thank you shareholders and analysts. I'm very excited to be able to deliver these results for you and we'll have, obviously, one-on-one calls afterwards so we could probably talk a little bit more in detail. So see you in a bit.

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