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Noah takes down 2019 guidance

The Camsing scandal and the ongoing Hong Kong protests cast a shadow over the wealth management firm's 2019 forecast.

For Q2, the NYSE-listed Chinese wealth manager reported RMB 250.2m ($36.4m) in net income attributable to shareholders, a 39% rise from the corresponding period in 2018.

But Yi Zhao, group president, said in a quarterly results conference call today that Noah is facing a stringent macro-economic situation in 2019, with the downturn of China’s credit cycle coinciding with geo-political tensions.

“This has led to short-term headwinds in our business,” said Zhao said.

Officials mentioned on the conference call that full year guidance is revised downward “in consideration of the macro-economic conditions in China, ongoing geo-political tensions, as well as the expected short-term impact resulting from the Camsing incident.

“The company estimates that non-GAAP net income attributable to Noah shareholders for the full year 2019 will be in the range of RMB 1bn to RMB 1.1bn.”

Previous guidance was in the range of RMB 1.13bn-1.18bn, according to a firm statement.

Noah issued a statement that said RMB 3.4bn in securities, sold by its subsidiary Shanghai Gopher Asset Management for supply chain financing for Camsing International, are in danger of default.

According to a report in Caixin, the securities were allegedly backed by falsified transactions and accounts receivable with business partners including JD.com.

In July, Noah reported Hong Kong-listed Camsing International to regulators and filed a lawsuit.

“At present, the criminal investigation by the public security organisation in China is still ongoing. According to the media reports, the police have arrested a number of suspects. The Camsing incident appears to be a carefully-planned fraud, involving many large e-commerce platforms and financial institutions,” said Jingbo Wang, chief executive officer, on the conference call.

Noah’s wealth clients are chiefly from mainland China and officials also expressed concern over the months of protests in Hong Kong.

“Many clients are worried about the investment in the region because of the protests,” said Zhao, the group president.

 

Noah’s wealth management division (RMB)

Q2 2018 Q2 2019 YTY change
Net revenues 556.5m 625.6m 12.4%
Income from operations 135.7m 129.9m -4.3%
Source: Noah

Part of the Bonhill Group.