Jupai revenues down 35%

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Private equity products have taken a hit, according to the quarterly results of China’s two NYSE-listed wealth managers, Jupai and Noah Holdings.

Shanghai-headquartered wealth management firm Jupai saw its net revenues plunge by 35.1% to RMB 281m ($41.9m) during the first quarter compared to the same period last year, according to its unaudited quarterly results (January-March 2019) released yesterday.

Jupai net revenues for wealth management (RMB m)

 

Q1 2018

Q1 2019

YoY change

One-time commissions

276.43

58.6

-78.8%

Recurring management fees

122.91

192.2

56.4%

Recurring services fees

15.05

16.29

8.2%

Other services fees

18.81

13.9

26.1%

Total

422.22

281.05

-35.1%

Source: Jupai

Net revenues were dragged down by one-time commissions as the aggregate value of financial products distributed by the firm fell to RMB 2.8bn from RMB 10.9bn during the same period last year.

Jupai, which is listed in New York, focuses on distributing wealth management products and providing product advisory services to high net worth individuals in China.

The firm’s AUM was also down to RMB 52.9bn from RMB 54.5bn at the end of Q1 last year.

“Weaker than expected investor confidence amid the unsettled US-China trade conflict contributed to the headwinds we faced in the quarter,” Ni Jianda, the firm’s chairman and CEO, said in the report.

Jupai has also implemented various cost control measures, including trimming its workforce, adjusting its incentive systems and streamlining the business to improve operating efficiency and profitability, Ni said.

According to the report, the firm now has 65 client service centres covering 47 cities in China, down from 73 centres covering 48 cities as of the end of March last year.

Despite the challenges, the firm noted that it will continue with initiatives aimed at growing its real estate equity products.

“We believe real estate is an asset class with relatively lower investment risk compared to other categories such as consumer credit or supply chain management products,” Ni said.

Private equity down

Private equity and secondary market equity fund products had the sharpest drop in terms of value of financial products distributed by Jupai.

Jupai – value of financial products distributed

Value of financial products distributed

Q1 2018

Q1 2019

YoY change

Rmb bn

% of totalRmb bn

% of total

Fixed income products

3.93

36%1.90768%

-51%

Private equity products

6.04

56%0.58621%

-90%

Secondary market equity fund products

0.69

6%0.0522%

-92%

Other products

0.23

2%0.2389%

3%

All products

10.89

100%2.783100%

-74.5%

Source: Jupai

Noah results

Noah Holdings, another New York-listed Chinese wealth manager, also saw a sharp drop in the value of private equity products it sold during the same period, according to its quarterly results released in May. 

Noah Holdings – value of financial products distributed

Value of financial products distributed

Q1 2018

Q1 2019

YOY change

Rmb bn

% of totalRmb bn

% of total

%

Credit products*

13.2

47.6%22.178.80%

67%

Private equity products

6.3

22.6%1.34.80%

-79%

Public securities products

7.9

28.2%3.211.40%

-59%

Other products

0.4

1.6%1.45%

250%

All products

27.8

100.0%28100%

0.7%

Source: Noah Holdings. *Credit products were previously referred to as fixed income products

However, the drop was offset by a jump in fixed income products sold during the period, according to the report.

Unlike Jupai, Noah’s net revenues for its wealth management business (Noah also has an asset management business, Gopher Asset Management), were up 4.9% to RMB 623.4m from RMB 594.2m during the same quarter last year.

Fixed income products have become very popular in the mainland. According to data from Morningstar Direct, bond funds had the most net inflows (excluding money market funds data) from March 2018-March 2019 at RMB 380.14bn, followed by equity funds (RMB 52.28bn).

 

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