Good day, ladies and gentlemen. Welcome to Noah Holdings Limited Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in listen-only mode. Following management’s prepared remarks, there will be a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded. After the U.S. market closed on Wednesday, Noah issued a press release announcing its second quarter 2019 financial results, which is available on the company's IR website at http://ir.noahgroup.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 future operating results and expansion of its business. Please refer to the risk factors inherent in the company's businesses and that may have been filed with the SEC. Actual results may differ materially from any forward-looking statements that company makes today. Noah Holdings Limited does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under the applicable law. The results announced today are unaudited and subject to adjustments 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 GAAP and non-GAAP financial results can be found in the earnings press release posted on the company's website. Today, the call will be hosted by Wang Jingbo, Chairlady and CEO, Mr. Zhao Yi, Group President, Shang Chuang, CFO and Grant Pan, Group Deputy CFO of Gopher Management Partner. With that, I would like to hand the call over to Mr. Zhao Yi, Noah Group’s President.

[Foreign Language] Thank you, operator. For today’s agenda, I will first briefly summarize Noah’s overall performance for the second quarter and the first half of 2019 as well as the divestment of our segment. Chairlady Wang will then provide her current views on the company product and strategies and updates on the Camsing incident. Our CFO Shang will then follow with a detailed discussion of Noah’s second quarter financial performance. We will conclude the call with question-and-answer session. [Foreign Language] Now I would like to share with you the financial and operating results we have achieved. [Foreign Language] In the first half of 2019, Noah generated net revenues of RMB1.76 billion up 3.2% year-over-year and non-GAAP net income of RMB570 million up 13.2% year-over-year. In terms of profit margins, non-GAAP net margin in the first half of 2019 reached 32.2% up 140 basis points year-over-year maintaining at a healthy level. [Foreign Language] By business segments, we distributed RMB52.4 billion worth of total products in the first half of 2019 for our wealth management segment. Although the transaction value in the first half of the year fell by 7.8% year-over-year, product mix and the product strategy evolution have achieved the initial positive results with a significant increase of standardized products. Specifically, in the second quarter, the distribution of standard products such as bank bonds and mutual funds increased 89.7% quarter-over-quarter as of the end of the second quarter, the number of relationship managers was 1,428 74.5% year-over-year, while the number of Elite Relationship Manager increased by 20.8% demonstrating further optimized structure. The turnover rate of Elite relationship managers maintain at a low level of 1.4% with respect to the clients in the second quarter, the number of active clients increased by 31.9% year-over-year with accumulation of clients investments with us. The…

[Foreign Language] Thank you, Zhao Yi. The most significant macro-economic risk that China is currently facing are Sino-U.S. trade relations externally and the debt burden domestically. The key cause of debt reform in China are to dismantle implicit guarantees and promote financial supply side reforms. As these reforms are gradually implemented, they are profoundly affecting Noah’s core wealth management and asset management businesses. As we have observed previously, China’s wealth management and asset management industries have encountered some structural contradiction. First, implicit guarantees have seriously distorted the market oriented development in China. Without the elimination of implicit guarantees, it is difficult to sell the bad money drives out good money problem. Second, more and more financial consumers suffered losses amidst removal of implicit guarantees in the future industry which cause tremendous pressure on the government to maintain social stability and created uncertainties with respect to regulatory policies and orientation, third the size of assets held by China’s high net worth clients has been rapidly increasing but we’re seeing clients developing more conservative expectations as a result of China’s accelerated economic downturn. We believe it will take some time for portfolio and based products to be fully accepted by clients. [Foreign Language] Fortunately for the past 15 years since Noah started this business in 2005, based on our understanding of the industries, we have never been involved in any capital full businesses, products either distributed by Noah or actively managed by Gopher are all operated independently of each other and held in escrow by third-party and reputable custodian banks or institutions without any duration mismatch, highly leveraged financing, or implicit guarantee et cetera. Therefore, Noah has been able to stay away from pervasive risks that were spread over different products or asset classes even during several rounds of economic downturns or…

Thank you, Chairlady and hello everyone. We had a solid quarter with renewed market volatility which we believe demonstrates the resilience of our business. For the second quarter, net revenues were RMB871.6 million up 9.3% year-over-year driven by a strong increase in one-time commissions and other service fees. Non-GAAP net income was RMB263.4 million, up 6.4% year-over-year and margin was healthy at around 30%. For the first half of 2019, we realized non-GAAP net income of RMB568 million, up 13.2% over the same period last year. Our wealth management business has weaker transaction value of around RMB24.4 billion, but the overall product mix was much more diversified with private equity and Public Security contributing more than 55% of the total. Net revenues were RMB625.6 million, up 12.4% year-over-year, resulting from higher effective one-time commission rates of 1.2%. Gopher Asset Management achieved strong AUM growth. One of the most significant drivers was the segment, total assets under management was RMB180.8 billion, or $26.3 billion at the end of the second quarter up 11.9% year-over-year and 5.7% quarter-over-quarter. Net revenues of the asset management segment were RMB171.1 million, a decline of 12.5% year-over-year. As a result of lower performance based income this quarter, we think performance based income will be a key component of total revenues going forward as we continue to strengthen our investment capabilities and realize more investment gains on behalf of our clients. It is worthwhile to know that close to 60% of our total AUM has performance classes. Now turning to our lending and other businesses segments, net revenues were RMB74.9 million, up 64.1% year-over-year, making up less than 10% of total group revenue, income from operations for this segment were RMB35.2 million. Operating profit for the second quarter was RMB251.9 million, up 13.9% year-over-year. We continue to…

Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Martin Ma with Nomura.

Hi Martin.

Hi, management. So let me first ask a question in Chinese and then will translate into English.

Okay, thank you.

[Foreign Language] Thank you for taking our question. And my first question is about is about the different is about overseas strategy. We have seen that from the second quarter reports that the revenue from Mainland, China increased by only 1% but overseas business increased by 39% and we want to understand what is your future pricing in terms of overseas business expansion and what is kind of -- what is your key focus in terms of products and the clients. And the second question is about lending and other segment. We have seen that Noah organization decreased by 12.5% year-over-year but the revenue from that segment increased by 54%. So what is the main reason for that difference? Thank you.

[Foreign Language] So I will answer question number one. So our current offshore business is primarily in Hong Kong and we have expanded in regions such as the U.S., Singapore, Canada and Australia. Over the years, we have seen very strong demand and needs from our clients in terms of global diversification and our expansion in offshore business is meeting this demand. [Foreign Language] Yes, so in terms of the product side for the offshore market is a very much more mature market and compared to emerging market and our clients are primarily overseas Chinese and the product we’re focusing on a more standardized and more established ones. [Foreign Language] And in addition, expanding Gopher’s active management capabilities and products is also a very strong focus and as mentioned earlier, we saw very good growth on this regard and we’re focusing on fund of funds business both in terms of private equity as well as public securities. [Foreign Language] Yes and I will answer the second question. So the question is regarding our lending and other businesses and yes for the second quarter, new transaction on new lending was slightly down year-over-year. But revenue was up 64% and this is due to the fact that there's quite a bit of reoccurring revenue or reoccurring service fees for the lending business because it is the servicing agent for previously originated loans that it has sold to third parties.

Okay, thank you. And the next question comes from Katherine Lei with JPMorgan.

Hi Katherine.

Hi, Shang. I have two questions. So first question is on the overseas business because Madam Wang has mentioned Hong Kong is a key hub for your Overseas Development, with the latest developments in Hong Kong? Have you seen any slowdown in product purchase by clients in the 3Q? So this is the first thing, second thing is surrounding the Camsing incidents. So I would like to know like because by media, so there were like the parties which were helping the investigation, I mean are being arrested there were not only the counterparties. So I would want to know like what is your assessment or the legal teams assessments on if Noah will need to resume like if Noah will have any risk of like also being held accountable to compensate part of clients loss if any in this incident? Yes, so this is my primary two questions.

Okay. If you give me a minute or two to translate for the benefit of wider team one second. [Foreign Language] So the first question is regarding our Hong Kong business in the third quarter, as mentioned earlier in my remarks, I think ongoing geopolitical tensions in lot of places is one of the risk to our business. In the third quarters for Hong Kong, we did see slower interest from clients because often times clients would visit Hong Kong office but travel has been lot subdued in the third quarter. And for the second question, Madam Wang will answer that question.

[Foreign Language]

Yes, so the Camsing incident is still under criminal investigation, a lot of the information is kept confidential by the police authorities. So I think it’s difficult for us to really assess what will be the various outcome for the various parties involved.

[Foreign Language]

So as mentioned, I think the police are working very hard on the overall case, we as a victim, we are assisting the investigation. But in terms of information provided to from the police to us in terms of the progress is very limited. So like a lot of research analysts on the call, we have been actively monitoring the media report to assess some of the latest updates.

[Foreign Language]

So it has been reported on a lot of various media that the overall Camsing incident is very large scale fraud and we had been very highly concealed in terms of the misconduct and has affected a lot of large e-commerce platform as well as financial institutions. And so we are actively monitoring the various updates whether from the media or from the official authorities.

Okay, thank you. And the next question comes from George Cai with JPMorgan.

Hi George.

Hi, Shang. Thank you for taking my question. I have two questions. The first one is regarding our wealth management sales in the third quarter. So we noted that the sales has dropped quarter-over-quarter mainly driven by the credit product. So two questions here, why is there a drop in credit products and there is a surge in public security products. Is it because of the effort of transferring some of our non-standardized credit products into the standardized one and then second, we noted a pick-up in private equity products, could you share with us more color on that and the potential outlook in the second half of 2019 and then my second question is on fee rates. So we noted that recurring fee rates in second quarter has dropped by 4% year-over-year and then if we look at the growth basis of our recurring fee rate of asset management business by adding up both the income from asset management and wealth management, the fee base seem to drop year-over-year. So could you share with us the fee rate trend going forward? Thank you very much.

Sure. Again if you give me a minute or two, I will translate your two questions for the wider team.

Sure, thank you.

[Foreign Language]

Yes, so now I want to comment on the first question. So I think you accurately identified, I think we have been since the beginning of this year actively transferring our private credit business into more public securities. We think that it is a better strategic decision in terms of managing and risk. So I think that is one of the reason that you saw the transaction value for public security in the second quarter to go up quite meaningfully and if we continue to implement and execute this strategy, we expect that it will continue to demonstrate good growth. At the same time, I would like to slightly comment that for public securities, on the credit side at least, for bond funds, the management fee or reoccurring fee would be slightly lower than private credit funds but we think that it is again still a better strategic decision to pursue public securities, bond fund assets, protect, better protect our clients in the current operating environment. Now in terms of private equity, yes I think overall private equity fund raising in China continues to be difficult. But I think we had some success in the second quarter because we have very strong long-term relationship with very key asset managers and this momentum we have seen it continue in the third quarter. Now on the second question is regarding the reoccurring fee, so reoccurring fee year-over-year slightly lower, this is because for the middle of last year primarily the second and third quarter, there were couple of products with higher reoccurring fee that mature. And some of the reoccurring fee was a bit more back-ended. Now the overall Gopher asset managed product, blended growth management fee is about 68 basis points, it has been fairly stable over the last two quarters. I think there are two factors that play here and you know one is as we strengthen our investment capability and do more direct investment on the private equity and real estate side, I think that will be a positive for overall blended management fee rates. But on the flip side as Madam Wang mentioned as we transfer our private credit business into public security bond fund, the management fee rate will be slightly lower. So I think it really will depend how our bond mix layout over the next one or two years. But I want to comment that achieving a blended growth management fee rate of around 67 to 68 basis points is actually a very good metric compared to other asset managers globally. Operator?

Yes, thank you. At this time, I would like to return the floor to management for any closing comments.

No closing comments, thank you everyone for attending our second quarter earnings call. Thank you very much.

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