SHANGHAI, April 24,
2024 /PRNewswire/ --
Dear Shareholders:
On behalf of the Board of Directors and the management team of
Noah, we would like to express our sincere gratitude to our
shareholders for their unwavering support. Global markets
experienced significant turbulence across various key asset classes
while also grappling with tight credit conditions and ongoing
geopolitical instability in 2023. This difficult environment gave
rise to sharp divergences in economic conditions and interest rate
environments between onshore and offshore markets, creating
considerable challenges for Chinese high-net-worth individuals
("HNWI") making asset allocation decisions.
China's post-pandemic economic
recovery proved to be slower than initially anticipated, dragging
domestic equity capital markets along with it. A sluggish real
estate market coupled with defaults on associated private credit
products issued by certain wealth management and trust companies,
has resulted in HNWIs adopting a much more cautious approach when
compared to previous years. Overseas, central banks continued their
battle against inflation driven by supply chain disruptions as the
U.S. Federal Reserve's 'higher for longer' rates put significant
pressure on risk assets across the board. Accordingly, the primary
market has seen a slowdown in exits and institutional fundraising
activities. However, advancements in AI and other technological
breakthroughs promise to drive wealth creation in the next
Kondratieff wave. Recognizing this potential, global fund managers
are increasingly focusing on under-served private wealth channels
to fuel primary market fundraising. As a leading private wealth
manager recognized for its expertise in alternative investments and
an extensive network of Chinese professional investors, this trend
presents enormous opportunities for Noah.
Noah demonstrated its strategic foresight and adaptability in
navigating this challenging market environment throughout the year
by successfully transitioning from a product-focused model to a
solutions-driven approach. This strategic shift has allowed us to
assist clients in building portfolios that are resilient in the
face of challenging market cycles. Our proactive decision to
prematurely exit Chinese residential and commercial real estate
starting in 2016 and fully exit non-standardized
single-counterparty private credit products in 2019 has earned us
significant trust from existing and prospective clients. Our
semi-annual CIO house view and CCI model reflect our latest asset
allocation advice and combine them with our full suite of wealth
management products and services. This strategic approach has
further resonated with clients during recent market volatility. As
other firms grapple with the fallout from the real estate crisis
and private credit defaults, client confidence in our ability to
protect their wealth has only strengthened. This strategic
foresight highlights our core "customer-centricity and bottom-line
resilience" values and robust credentials as a leader in the global
wealth management industry for Mandarin-speaking HNWIs.
Catering to the unique wealth management needs of
Mandarin-speaking HNWIs around the world
The changing market landscape of the wealth management industry
in China presents us with both
challenges and opportunities. Mandarin-speaking clients have
increasingly been targeted by various private banks across
Asia over the past few years.
These clients have historically never experienced traditional
market cycles before or adopted mature wealth management and
investment strategies. Through experience and education, their
approach to markets is maturing as they increasingly acquire a more
sophisticated international perspective. Having served these
clients for decades onshore, we have earned their long-term trust
and acquired a deep understanding of their backgrounds and needs
which uniquely positions us to guide them as they expand their
horizons overseas. Combining our personalized service model and
expanding portfolio of global products provides us with a
significant competitive advantage to attract this demographic.
Domestically, we have observed a shift in risk tolerance amongst
our clients which requires them to make strategic adjustments to
their portfolios as the pace of exits from primary market funds
slows. In response, we optimized the structure of product
distribution and focused resources on the management of exit
strategies, all while maintaining regular communication with
clients to ensure they understand every step that is being taken in
anticipation of a market recovery. Going forward, we will continue
to invest in our capabilities globally, including the establishment
of a robust international network, refining our research
capabilities to identify the best investment opportunities, and
integrating cutting-edge technologies. Through these strategic
investments, we are solidifying our position as the leading wealth
and asset management partner for Mandarin-speaking HNWIs
worldwide.
In 2023, we conducted in-person portfolio reviews with clients
both in Hong Kong and overseas,
revealing a noticeable shift in their wealth management needs
through our interactions. Many of these clients are successful
entrepreneurs that have begun prioritizing asset liquidity,
security, and global diversification as they expand their
businesses and settle down overseas. This is a noticeable shift
from their historical focus on specific products and returns and
requires comprehensive wealth management solutions and a deep
understanding of their specific needs. These priorities directly
align with our 'holistic solutions' approach.
We focused on strengthening our ability to offer comprehensive
wealth management solutions to clients globally over the past year.
One of our key priorities was to refine Noah's global alternative
asset product matrix. We are seeing top global private equity
fund managers increasingly focus on private wealth channels for
fundraising with retail investor-friendly products and liquidity
features to attract capital. The composition of our client base and
expertise in alternative investments positions us as the ideal
partner for global asset managers. This unique combination allows
us to leverage our strengths and assist clients in strategically
allocating assets, driving growth in our AUM globally.
We followed client demand in 2023 and made significant progress
in expanding our international private banking presence. As of the
end of 2023, we have onboarded 89 overseas relationship managers
and are targeting a headcount of 200 by the end of 2024 and over
300 by 2025. The highly skilled professional team we are building
will better serve client needs and deepen our share of their USD
asset allocation while at the same time increasing our profile and
competitiveness among local Mandarin-speaking HNWIs globally. As a
result, we expect to grow Assets Under Advisory (AUA) from
US$8 billion to US$20 billion by 2026.
Evolving our offerings
In 2023, we successfully transitioned our service model from
product-focused to a solutions-driven approach which will enhance
our overseas business and improve the resilience of client
portfolios. As part of this transition, we launched our CATS
asset allocation solution in 2023: Cash and liquidity
management, Alternative global secondary market products,
Trans-cycle global private market products, and
Security and Succession-planning focused wealth
preservation solutions. Recognizing the high interest rate
environment, we developed and launched USD cash management, private
credit, private infrastructure, hedge fund solutions, and
structured product offerings to allow our clients to capitalize on
these opportunities. We also took advantage of the depressed
valuations in private markets as an entry point to launch new
buyout, PE secondary, and early-stage VC funds. Finally, with
geopolitical friction top-of-mind for Chinese investors, we
continued to build out our global insurance product network and
trust services for succession planning and asset segregation.
As we look ahead to 2024, there are differing views in the
market on how interest rate movements will play out. This could
make for a volatile trading environment, presenting opportunities
for hedge funds to generate alpha returns. Furthermore, as the
risk-free rate trends downwards, equities are expected to look more
attractive as the year goes on. However, geopolitical risk will
persist with several key economies holding elections in 2024 and
international conflicts looking likely to persist. As a result,
demand for asset security and diversification, insurance products
and other defensive-driven strategies, and multi-regional wealth
management services is expected to remain high among clients.
Investing in Noah
Throughout the year, we continued to enhance our capabilities
globally to maintain our core competitive advantages. This included
building out our team of experienced relationship managers,
developing an expanded portfolio of products, strengthening
research capabilities, and developing and integrating cutting-edge
technologies.
Global talent acquisition was a major focus for us over the past
year. Noah's global team is now evenly split between core domestic
employees, locally recruited overseas employees, and fresh
graduates from leading universities globally. We are
carefully balancing fresh new perspectives and insights from
recently onboarded experienced professionals with our historical
team to drive our global expansion and preserve our company
culture.
Extensive research was conducted to identify overseas markets
with high concentrations of wealthy Chinese-speaking investors and
adopted a capital-light approach to establishing a presence in key
localities without major upfront investment. In 2023, we officially
launched our office in Los Angeles
and are in the final stages of rolling out new service offerings in
the UAE. Looking ahead, we are assembling a task force of
experienced professionals to explore markets globally with
significant potential including Japan, Southeast
Asia, Europe, Australia, and Canada.
We continued to make upgrades throughout our technology stack
aimed at improving the client experience globally and maximizing
internal efficiency. In 2023, we added cash management solutions,
hedge funds and structured products to iNoah One Account, our
comprehensive global wealth management solution. On the domestic
front, we gave clients access to one-click CCI portfolio reports
enabling them to instantly tap into our extensive in-house research
resources and product recommendations. We also enhanced our CRM
system which generated significant time savings for relationship
managers. We were the first broker in Hong Kong to launch a fully online
underwriting process that offers insurance premiums payments
through our Hong Kong nominee
account, a significant enhancement for our insurance services. We
are also working with a global insurer to streamline our
underwriting processes across Hong
Kong, Singapore, and
Bermuda, which is expected to
maximize client service efficiency.
Our efforts to improve our offerings have been widely recognized
by the industry. Noah was named "Best Wealth Manager for HNWIs" and
"Best Wealth Manager for Overseas Asset Management" by Asiamoney in
2023. Noah also received the award for "Best Independent Wealth
Manager – China" at Asian Private
Banker's 13th Awards for Distinction. In addition, iFast
recognized Noah as the "Best Wealth Management Platform –
Investments and Digital Innovation" in 2023.
Noah's next chapter
As we embark upon the next stage of our journey, we are pleased
to announce a change to our leadership structure, demonstrating our
commitment to global corporate governance best practices and
operating in the best interest of our shareholders. The roles of
chairperson and CEO were separated with Mr. Zhe Yin appointed to serve as CEO, and
Ms. Jingbo Wang retaining her position as Chairwoman
of the Board. This decision will enhance organizational efficiency,
promote collective decision-making, and generate opportunities for
Noah's deep bench of management talent.
As a co-founder, Mr. Yin has been a part of Noah's journey since
the beginning. He played a pivotal role in building Gopher Asset
Management and possesses a deep understanding of Noah's operations
and our client-focused company culture. Ms. Wang will support Mr.
Yin in his new role while continuing to steer Noah's overall
strategy. In addition to her responsibilities for board management
and corporate governance, Ms. Wang will devote more time to leading
Noah's human capital management and strategic initiatives.
Our globalization strategy hinges on fostering a world-class
talent pool. We are actively recruiting seasoned professionals with
international experience and diverse financial industry
expertise and investing heavily in developing our current
team, empowering them to contribute more meaningfully to our global
expansion. This strategy necessitates significant engagement
overseas from key management, often requiring extended periods
abroad to build new businesses and develop markets. To support key
personnel as they execute these initiatives, incentivize their
long-term commitment, and align their interests with our success,
we are enhancing their compensation structure with efficient
long-term oriented equity incentives.
As we enter this new era of governance at Noah, creating value
for shareholders remains our top priority. We will continue
pursuing our international expansion plans by investing in our
technological infrastructure, client services, and product
partnerships, while maintaining our fundamental commitment to
client data security and privacy protection. Our capital-light
approach, solid and sustainable ability to generate revenues and
profit, and robust balance sheet allow us to return cash to
shareholders through a recurring capital management and shareholder
return program and increase return on equity for investors. For the
year 2023, subject to shareholder approval at the AGM, the Board
has approved an annual dividend of RMB509.0
million (USD71.7 million),
representing 50% of full year 2023 non-GAAP net income attributable
to Noah shareholders. Aside from the annual recurring capital
allocation budget, subject to shareholder approval at the AGM, the
Board has also approved a special dividend of RMB509.0 million (or USD71.7 million), equivalent to 50% of our
non-GAAP net income for 2023, to further enhance shareholder return
and return on equity. Altogether, our combined shareholder return
for 2023 will amount to RMB 1.0
billion (or USD143.4 million),
equivalent to 100% of our annual non-GAAP net income, and will
provide an attractive cash yield of 21.2% to investors based on our
current market capitalization[1]. We are also committed
to creating long-term value for our shareholders through sustained
dividends and other forms of capital allocation program in the long
run.
We would like to extend sincere thanks to our clients,
shareholders, and all other stakeholders for their steadfast
support over the past year. We look forward to creating value for
our shareholdings by executing on our strategy and capitalizing on
the growth opportunities in the global wealth management sector for
Mandarin-speaking HNWIs in the year to come.
Sincerely,
Ms. Jingbo
Wang
Chairwoman of the Board
Mr. Zhe
Yin
Chief Executive Officer
[1]
Based on Noah's NYSE closing stock price of US$10.12 on March 26,
2024 (before FY23 result release).
|
ABOUT NOAH HOLDINGS LIMITED
Noah Holdings Limited (NYSE: NOAH and HKEX: 6686) is a leading
and pioneer wealth management service provider offering
comprehensive one-stop advisory services on global investment and
asset allocation primarily for Mandarin-speaking high-net-worth
investors. In 2023, Noah distributed RMB74.1
billion (US$10.4 billion) of
investment products. Through Gopher Asset Management, Noah had
assets under management of RMB154.6
billion (US$21.8 billion) as
of December 31, 2023.
Noah's wealth management business primarily distributes private
equity, private secondary, mutual funds, and other products
denominated in RMB and other currencies. Noah's network covers
major cities in mainland China, as
well as Hong Kong (China), Taiwan (China), New
York, Silicon Valley, Singapore, and Los
Angeles. A total number of 1,252 relationship managers
across 44 cities provide customized financial solutions for clients
through this network and meet their investment needs. The Company's
wealth management business had 455,827 registered clients as of
December 31, 2023. Through Gopher
Asset Management, Noah manages private equity, public securities,
real estate, multi-strategy, and other investments denominated in
Renminbi and other currencies. Noah also provides other
services.
For more information, please visit Noah at
ir.noahgroup.com.
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. 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 reports to shareholders, in announcements, circulars or
other publications made on the website of The Stock Exchange of
Hong Kong Limited (the "Hong Kong Stock Exchange"), 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. These statements include, but are not limited to,
estimates regarding the sufficiency of Noah's cash and cash
equivalents and liquidity risk. 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; investment risks
associated with investment products distributed to Noah's
investors, including the risk of default by counterparties or loss
of value due to market or business conditions or misconduct by
counterparties; 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 globally and 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 and the Hong Kong Stock
Exchange. 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.
Contacts:
Noah Holdings Limited
Melo Xi
Tel: +86-21-8035-8292
ir@noahgroup.com
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SOURCE Noah Holdings Limited