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Jupai reports sharp drop in 2019

Last year was the second consecutive year of losses for the NYSE-listed Chinese wealth manager, which also reported a plunge in net revenue due to "industry-wide headwinds".

Jupai Holdings reported net revenues of RMB 785.9m ($112.9m) for the full year of 2019, compared to RMB 1.32bn in 2018 – a 40.5% drop, according to the firm’s unaudited financial results, released last Friday.

Net loss attributable to ordinary shareholders for the full year 2019 was RMB 164.7m compared to a net loss of RMB 387.7m for the same period the previous year.

In terms of fourth quarter results, net revenue was RMB 137m, down 25% compared with the third quarter of 2019.

“The [revenue] drop is primarily because of decreases in one-time commissions, recurring management fees and other service fees,” the firm noted in the financial results.

“Our top-line performance for this [fourth] quarter remained under pressure due to industry-wide headwinds,” said Jianda Ni, chairman of the board and chief executive officer in an analyst conference call last Friday.

“Although we started to see certain loosening of regulatory restrictions on privately-offered funds during the fourth quarter, demand for wealth management products stayed weak as investors remain cautious on the overall market outlook for 2020,” Ni added.

After the firm reported reported a net loss of RMB 387.7 in 2018, it took steps to cut operational costs.

“By the end of 2019, the total staff count at Jupai has reduced from 2,500 at the beginning of 2018 to about 900 currently. In terms of sales network, we also reduced from 72 offices covering 46 cities at the beginning of 2018 to 51 offices covering 43 cities by the end of 2019,” Ni noted.

“Backed by our effective cost reduction efforts, we were able to further narrow net loss attributable to ordinary shareholders of RMB 30m in the fourth quarter as compared to RMB48m in the third quarter.

Min Liu, chief financial officer, said in Q4 the cost of revenues declined by 14% and general and administrative expenses were down by 33%.

“We expect to be able to further reduce costs in the coming quarters as we continue to enhance operating efficiencies,” she added.

The CEO also sounded the alarm for first quarter results, saying he expects the market environment to be negatively affected by the coronavirus outbreak.

“For the first quarter of 2020, as various industries have been responding to the government’s multiple epidemic prevention measures and a temporary shutdown or reduced the scale of their business, we believe a slowdown in macroeconomic growth is inevitable.

“Additionally, given the current development trend of overseas epidemics, we expect investors’ confidence to stay weak, making Jupai’s business environment even more challenging in the first quarter of 2020.”

Jupai tries to emerge from two years of losses

2018 2019
Net revenues 1.32bn 785.9m
Net loss attributable to ordinary shareholders (387.7m) (164.7m)
Source: Jupai. In RMB

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