Earnings overview for the full year of 2016
|
|
Jupai |
Noah |
|
Net revenues |
$162.4m (+89.5%) |
$362m (+18.6%) |
|
Net profit |
$30m (+35.3%) |
$92.7m (+20.2%) |
Source: Company statements
Jupai’s founder, co-chairman and CEO Tianxiang Hu expected the firm’s net revenues to maintain a high double-digit growth, with net profit margin about 20% over the next few years, he said in a conference call yesterday.
The firm opened an office in Hong Kong last year, which “represents the first step in our international expansion and positions us to capture overseas market opportunities”, he said. Jupai plans to open an office in New York and San Francisco this year, he added.
“This year we will focus more on fund-of-funds, M&A products and overseas investments, which we feature less in the product line-up. We will also expand sales in 12 more cities [in China],” he noted.
Wealth management business 2016 vs 2015
|
|
Jupai |
Noah |
|
Active clients* |
10,218 (+20%) |
12,027 (-4.3%) |
|
Aggregate value of wealth management products distributed by the company |
$6.5bn (+59.4%) |
$15.2bn (+2.4%) |
|
Average transaction value per client |
$0.6m |
$1.26m (+7.1%) |
*”Active clients” refers to registered clients who purchased wealth management products distributed by the firms during the period specified.
For both firms, fixed income products were the most popular in 2016, accounting for about 65% of the total products distributed by value. Fixed income is followed by private equity products (21% for Jupai and 27% for Noah), followed by secondary market equity fund products.
Noah sees A-share recovery
Noah’s chairman and CEO Jingbo Wang said it’s been challenging to get clients to invest in onshore China equity products.
“For A-Share products or local Chinese equities, we want to increase clients’ overall exposure to the sector. We expect continued demand for A-Share related products with the recovery of domestic equity markets,” he said in a conference call also on Tuesday Hong Kong time, according to the transcript on Seeking Alpha.
Noah’s offshore AUM reached $2.5bn at the end of 2016, up 32% from a year ago. “With Noah Hong Kong and Noah US, the two engines for our global presence, our goal is to provide our client with the best-in-breed overseas products,” president Kenny Lam said in the call.
Noah’s CFO Tom Wu also noted that venture capital firm Sequoia’s stake in Noah “will inevitably [be exited] in the next two, three years or so. We’ll be very active exploring an orderly exit on the part of Sequoia”.
Jupai management shakeup
Commenting on the tightening of private equity investment rules in the residential property market in 16 mainland cities, Jupai’s Hu said the higher compliance costs are likely to drive more third-party managers out of the business as they lack scale.
Jupai announced changes in the top management team yesterday.
Hu, whose role changed from executive chairman to co-chairman and CEO, said he will be responsible more on the firm’s daily operations and streamling business development. Jianda Ni, also co-chairman, will be responsible for Jupai’s strategy planning and relationship-building with regulators and shareholders.
