Jupai results (US dollars)
| Q2 | Y-O-Y | 1H | Y-O-Y | |
| Net revenue | 67m | 1.6% | 132.5m |
8.9% |
|
Net income |
13.3m | -21.9% | 30.8m |
0.3% |
Source: Jupai
Looking at second quarter results, the total number of active clients who purchased a product at least once was 3765, compared to 4167 from the previous quarter. In addition, the value of wealth management products distributed was down 21% year-on-year to RMB 9.7bn ($1.42bn).
CEO Ni Jianda said in the earnings conference call that he believed investors have turned conservative under the government’s deleveraging plan and tightened scrutiny over the financial sector.
He estimates the negative impact will continue to affect the industry over the next couple of quarters.
“We view the industry-wide transition as an opportunity to lay a solid foundation for Jupai’s long-term growth. [We intend to] strengthen our team, expand our product offerings, and enhance our risk control systems,” he said.
Moreover, China’s recently loosened monetary policy slightly improved investor sentiment. But it may take a longer time for the benefits to be reflected in the firm’s financial results, Ni said.
Turning to the first half view, one-time commissions were up 20.2% to RMB 558.7m due to an increase in the firm’s fees, which rose to 2.9% in the second quarter of 2018, from 2.5% in the first quarter and from 2% from a year back.
As mainland property developers receive less funding opportunities from the commercial banks, they are more willing to pay higher costs to obtain credit. The situation is beneficial to Jupai, which invests in private equity funds that loan to real-estate companies, Ni said.
Fee increases
In terms of recurring fees, they also increased year-on-year 51.4% to RMB 244.6m in the first half.
However, the firm’s other income fell year-on-year due to low earnings derived from interest and investment.
In terms of product type, the firm continues to scale down the percentage of fixed income products distributed to wealth management clients.
In 2017, wealth management products distributed by Jupai were predominantly fixed income products. However, the firm has shifted to distributing more private equity products, Ni told FSA previously.
Around RMB 14bn of client assets or 68% of the aggregate assets was invested in private equity products during the first half 2018. During the same period in 2017, the category took up only 15% on assets in terms of products distributed to clients.
Year-to-date to 30 June, the firm operated 76 client centres covering 48 cities in China and its total AUM was RMB 56.7bn, up 18.1% year-on-year.
Despite the flat first half net income, Jupai maintains its earlier forecast that annual net income for full year 2018 will be in the range of RMB 532.3m to RMB 573.3m, which represents a year-on-year increase of 30%-40%.
