Good day ladies and gentlemen. Welcome to the Noah Holdings Limited First Quarter of 2017 Financial Results Conference Call. [Operator Instructions]. After the close of the U.S. market on Monday Noah issued a press release announcing its first quarter of 2017 financial results, which is available on the Company's IR website at ir.noahwm.com. This call is also being webcast live and will be available for replay purposes on the Company's website. I would like to call your attention to the Safe Harbor statements in connection with today's call. The Company will make forward-looking statements including those with respect to expected future operating results and expansion of its businesses. Please refer to the risk factors inherent in the Company's business that have been filed with the SEC. Actual results maybe materially different from any forward-looking statements that the Company makes today. Noah Holdings Limited does not undertake any obligation to update any forward-looking statement as a result of the new information, future events or otherwise except as required under the applicable law. The results announced today are unaudited and subject to adjustments and in connection with the completion of the Company's audit. Additionally certain non-GAAP measures will be used in our financial discussion. A reconciliation of the GAAP and non-GAAP financial results can be found in the earnings press release posted on the Company's website. I would now like to hand the call Kenny Lam, Noah's Group President. Mr. Lam go ahead.

Thank you, Operator. Thank you everyone for participating in today’s earnings conference call. Joining me today are Ms. Jingbo Wang, Noah’s Chairlady and Mr. Shang Chuang, Noah’s CFO. For today’s agenda, I will being by providing a brief overview of the financial highlights for the first quarter of 2017 as well as discussing our core wealth management and asset management businesses. Chairlady, Wang will then provide an update on the product strategy and share her views on the macro environment and industry development. After than Shang will wrap-up our remarks by providing further insights into our first quarter financial performance. Lastly, we will be happy to take any questions you may have. The global macro-environment has remained volatile since the beginning of 2017. On the regulatory front the introduction of a series of new and more stringent PE VC supervisory rules from the second half of 2016 has begun to re-shape China’s wealth management industry. Although it's still rapid expansion, the industry is encountering challenges, arising from greater fluctuations in the financial markets, tighter regulations and the lack of high quality underlying assets. While it may be difficult to navigate these challenging conditions, we believe it will also help the industry mature that would present tremendous opportunities for leading established players to consolidate their leadership position. As the leader in China’s wealth management, and asset management industry today Noah through its diversified portfolio management and rigorous risk control capabilities had focused solely on meeting clients evolving needs by selecting high quality products and building a comprehensive financial service platform, serving clients globally. With these ongoing efforts, we have achieved strong first quarter results. Specifically in the first quarter of 2017, Noah’s wealth management business distributed a total of RMB 32.7 billion financial products up 31.7% year-over-year. As of March 31,…

[Foreign Language] Thank you Kenny. In the first quarter of 2017, various industry developments and regulatory changes took place and created both opportunities and challenges. According to the just release BCG’s report 2017 private banking in China, the size of China’s wealth management market has reached a RMB 120 trillion with about 2.1 million high net worth families. We believe wealth management and asset management is industry in China with enormous market potential driven by multiple macro factors. Firstly, China’s middle class population is expected to reach 700 million by 2020. this huge group will drive the transformation of the Chinese economy towards consumption and service based economy and desire for more sophisticated wealth management services. Secondly China has the highest savings rate in the world. As the Country’s demographic dividend moves to an aged population this trend will fuel the demand for wealth and asset management. Additionally along with the rise of China’s middle class globalization and a further opening of the Chinese economy there are concurrent two way demand both from onshore Chinese clients to allocate assets globally and from the oversees Chinese to invest back in China. We aim to become the top wealth management provider to serve these two key needs for all the Chinese around the world. [Foreign Language] China's macro economy is undergoing rapid changes as it rebalances an slowing economy with a new emergent economy, while we are confident that the new economy will fuel the next stage of growth, the macro environment continues to present challenges in many areas for investors. For example private credit products are confronted with declining returns and increased risk, while the Asian market is at a valuation trough investors need to position themselves more selectively and patiently for investment opportunities. The real estate market has started to…

Thank you, Chairlady Wang, and hello, everyone. Today, I will give an overview of our first quarter 2017 financial results and then open up the call for questions. As Kenny and Chairlady Wang both noted, we are generally pleased with the financial results for the first quarter of 2017 despite various market challenges. Net revenues were RMB 713.2 million in the first quarter up 17.5% year-over-year. Non-GAAP attributable net income guidance of RMB 237.2 million up 10.9% year-over-year. For our wealth management business, we distributed RMB 32.7 billion worth of wealth management products in the first quarter up 31.7% from the same period a year ago. As a result of the growth in transaction value, we received RMB 344.3 million in one time commission revenue, increasing 19.3% from a year ago. We also realized real time revenues of RMB 326.9 million in the first quarter of 2017, up 5.7% from the same period last year. Service fees as a share of total revenues stayed relatively stable at 45%. We received RMB 12.6 million from the performance fees income during the first quarter of 2017, which was mainly contributed by the private equity products we distributed in previous periods. Our Internet financial service business achieved RMB 24.8 million in net revenues in the first quarter, representing a 326.7% increase from the year ago. Operating loss was also reduced by 40.7% year-over-year to RMB 31.1 million. We believe that Internet financial service business will see further improvements in its operational and financial performance going forward. Total operating expense in the first quarter of 2017 were RMB 436.3 million compared with RMB 379.8 million from a year ago. Excluding the influence of government subsidies which vary quarter-by-quarter, operating expenses increased 9.2% year-over-year, slower than revenue growth, which reflects our effective cost control has decided to play a positive role in overall financial performance. For the first quarter, operating income increased 13% year-over-year to RMB 256.8 million and operating margin was 36% compared with 37.4% for the corresponding period in 2016. Non-GAAP net margin attributable to net Noah shareholders for the first quarter was 33.3% compared with 35.2% a year ago, inline with the stable range in recent years. On the balance sheet side, as of March 31, 2017 the Company had RMB 2.6 trillion in cash and cash equivalents, a decrease from RMB 2.98 billion in the previous quarter. This is mainly due to increased cash outflows in investing activities driven by our efforts to enhance our cash management and improve cash efficiency. Finally, I would like to highlight at our performance in the first quarter of 2017, reflects a strong fundamentals and steady profitability in our core businesses, which provides us confidence in achieving our full year 2017, non-GAAP attributable net income guidance RMB 825 million to RMB 860 million. With that, Chairlady Wang, Kenny and myself will be happy to take any questions.

Looks like our first question comes from [indiscernible] from CICC. Please go ahead.

[Foreign Language]

Let me – for the benefit of the audience, I will translate the question first into English and then answer the question. The question is we noted or I noted the transaction value has increased to over RMB 30 billion in the first quarter 2017, but the number of active clients has slightly declined in the quarter. Can you explain what's the reason for these changes? So the changes in these two metrics I think it's primarily because of the product mix. So if you note for the first quarter of 2017, the amount of private equity in terms of percentage of overall transaction value as well as absolute value increased. Now private equity has more of a capacity constraint for top tier GPs. so our strategy is to primarily these resources to existing clients or larger clients. And so that will limit the number of clients that we can serve for that particular quarter. So I think that is the primary reason why you're seeing that transaction value year-over-year increase but active client slightly lower.

I also want to add a points, this is Kenny here, that this maybe seasonal, right. As Shang explained, depending on the product structure, the active clients for a particular quarter may fluctuate a bit. So for this particular quarter, with the private equity being an important part of the product structure, the active clients for that particular quarter is lower, but the per value client is has increased substantially.

Our next question comes from the line of Anurag Rajat of JPMorgan. Please go ahead.

Hi, thanks for taking the question. I have two quick ones, we see a strong pick up, as you mentioned in the average transaction value per client. Do you see that as a sustainable thing or is that going to trend down back to the previous levels? And second the one is I think I might have missed it, but can you give us the overseas AUM once again, please?

Yes, sure, so for the first question, I think it's related to the answer for the previous question. So we're seeing that average transaction value per client go up in the quarter meaningfully. I think there are two reasons for this change one is product mix. Private equity versus other product category has a higher minimum start. The typical minimum start for private equity is anywhere between RMB 10 million to RMB 20 million. Second I think this also reflects our continued effort in terms of deepening time wallet shares so providing various products and services to better engage our clients. So I think in the long term, our goal obviously is to expand higher wallet share. But on a quarter-to- quarter, you'll see some volatility, given the product mix that we actually distribute. In terms of the second question, the second question is related to the AUM for our offshore business. The amount of offshore business that we did where our AUM for at the end of the first quarter. Let me get that one second. RMB 175 billion at the end of the… roughly around $2.5 billion.

Okay thank you.

[Operator Instructions] Our next question one moment it is coming up. It is from Katherine Lei of JPMorgan. Please go ahead.

[Foreign Language]

Yes, for the benefit of the audience, I will translate the question from Katherine of JPMorgan. Thank you for having the Q&A session. I would like to ask about Huishan Dairy. I understand that it's undergoing legal proceedings, but if you can provide to the extent that you can, the latest update regarding the situation? Thank you.

So as may of you may have noticed from the media reports. Last year, we distributed a product which is a credit product, a private credit product to Huishan Dairy with various guarantees and collateral. Now the product had reached the original expected maturity date, but we have extended the product and communicated to you – our client regarding the latest situation. Now as the asset manager for that particular fund, we have taken legal action to freeze the assets of the various guarantors. And based on the amount of assets that we have freezed, given the legal proceedings, we are in the process of retrieving our principal and interest for this particular fund. At the same time, we have been in constant dialogue with our primary regulator which is the SFC on the development of this particular case.

And looks like our next question comes from [indiscernible]. Please go ahead.

Hi, Management thanks for taking my questions. So my question is about the Huishan Dairy case. Just wanted to know your customers, your the client feedback about the case. I mean, both the client that actually bought the product and some other clients that they haven't bought the product, but maybe heard about the story. So I just want to know whether the Company think about the ongoing relationship with your clients or do understand that this is normal and that ratio is still very low or still continuing? Thank you.

I guess perhaps, I’ll put some perspective in terms of the concentration of this particular product. So this product is roughly about RMB 500 million. For the full year 2016, we distributed over RMB 60 billion fixed income product private credit like, a private credit like nature product. So this as a percentage of the overall volume we did last year was very small. And for this particular product, the clients are all sophisticated investor. And so based on our communication with these investors, I think they note the situation, and they have agreed for the extension of the fund to work on the legal proceeding to retrieve the principal and interest. In terms of the clients who in this particular product, I think the overall culture of the primary will be quite open and transparent about the various challenges and the mistake that we may have made over the last 10, 12 years that we have been in business. And I think, we continue to learn and improve ourselves. And I think for both wealth management and asset management industry, I think many of the investors have agreed that experience that you accumulate over time is a valuable asset. And I think, we continue to strive to be better than the day before. I will pause there to see if Madam Wang or Kenny has any further comment to add.

[Foreign Language]

I think Madam would like to add a couple of points. I think regarding to the Huishan Dairy situation. I think there are already negative aspect to it but there's also some positive characteristics to this event. So I think first of all, I think we were quite pleasantly pleased to see that for many of the investors that are involved in this particular product, clients in China are becoming more mature, and I think that is a good development going forward. And also, I think from these types of events, industry participants, the regulators as well as investors have a increased better understanding of risk. And so I would like to also add that clients who bought this particular product, they're all sophisticated investors. So they knew before they invested that this particular product is investing in a credit product for Huishan. And so based on their judgment decided to buy the products. So most of the clients were not caught off the pride. Obviously, there are various clients who are quite worried in the beginning, we continue to communicate with them regarding the actions that we have taken as an asset manager. And so, so far, the clients are quite patient.

[Foreign Language]

So from this event we continue to focus on underlying due diligence and the underlying assets as well as our capability as the asset manager to do restructuring and debt restructuring.

And it looks like we do have a follow-up question. It is coming from [indiscernible]. Please go ahead.

Yeah, I just wanted to thank for the Management’s reply and I just wanted to confirm that I see that the forecast remains. Just wanted to know that this issue would not -- the influence of this page should have – this one is actually minor, and we will still keep the forecasts. Right? Thank you.

Yes, so to answer your question directly, we are maintaining our full year 2017 non- GAAP net income guidance of RMB 825 million to RMB 850 million. This remains unchanged. Also I would like to add for this particular Huishan Dairy event, there is no direct impact to our balance and income statement. As an asset manager for this particular fund product, we are working as hard as we can to help the clients retrieve the principal interest. But it does not – the outcome of this particular rate does not have any direct impact to our balance sheet and income statement. Thank you.

I want to just add three points to what Chairlady Wang and Shang just said. I think first of all, we have to treat it as quite a positive development in terms of industry maturity. It helps clients to understand further the risk of the industry. It also helps us to build further client education. So that is one. Two is it also helps us improve or further refine our risk systems. So I've always said that Noah has been improving on our risk systems for the last 15 years. It's also a continuous process. So I think this incident actually helps us a lot in terms of refining our internal process. Lastly I want to reiterate what Shang just said which is it has no direct impact on a balance sheet and we remain confident in our guidance for the year.

We do have another questions, there is another follow up question from [indiscernible]. Please go ahead.

Thanks for picking my question. If I may I want to know, I want to hear about the competitive environment right now. So what is the your view the biggest competitors in the business right now? I remember Madam Wang once said that she couldn't find any other competitor which is in the same level or same kind of understanding of this industry. So I just want to know whether that may be added to change, or is there any other strong competitor coming in? Thank you

[Foreign Language]

So whether it is in the health management industry or the asset management industry, obviously it is a fast growing industry. Whether in the past now or future, I think they will both continue to be highly competitive.

[Foreign Language]

In terms of impact to us, I think the last two years, particularly 2016 and 2017, with more rollout introduction of regulations for both the wealth management and asset management industry we are seeing a lot of non-healthy competition being weeded out. So this obviously benefits established players like ourselves.

[Foreign Language]

In terms of large financial institutions such as banks and securities, we're also feeling that they are now paying more attention in putting more resources in these two industries.

[Foreign Language]

So Noah, has been in the industry now for 12 years and we have learned quite a lot and accumulated a lot of experiences over the years. My personal observation is that since 2016, these industries are becoming more advanced and more mature. It's not just about telling stories, but it's about demonstrating and further strengthening your competitive energies. And so I think that is what we'll continue to focus on our core businesses both in wealth management and asset management industry.

[Foreign Language]

So as I mentioned in my prepared remarks, I think in the future, ongoing investor education, client selection as well as compliance will be important factors going forward. And so our strategy or our focus is to continue to select the high-quality clients. It's not just about serving every Joe, Dick and Harry, but how do we select the sophisticated client to serve them on our platform better.

[Foreign Language]

So this also applies to the way we expand our relationship manager or sales force. With the background of increasing compliance cost and risk, I think it's very important to expand your relationship manager with quality, i.e., that they better understand client needs. They are able to execute investor education, client selection, and it's not just about adding salespeople to increase your overall transaction value. But how do we help our relationship manager and sales for improved efficiency and do it in a compliant manner. Thank you.

Thank you [Operator Instructions] At this time I am showing no further questions, so this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

So thank you, everyone, for joining our call this morning or this evening, and we hope to speak to you again the next quarter. Thank you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.