Good day, and welcome to the Noah Holdings Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Melo Xi, Director of Investor Relations.

Thank you, operator. Good morning, and welcome to Noah's 2023 Fourth Quarter Earnings Call. Joining me on this call today are Ms. Wang Jingbo, our Co-Founder and Chairlady; Mr. Zhe Yin, our Co-Founder, Director and CEO; and Mr. Grant Pan, our CFO. Ms. Wang will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financials and operating results. They will all be available to take your questions in the Q&A session that follows. Before we begin, please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties and may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include, but not limited to, those outlined in our public filings with the SEC and the Hong Kong Stock Exchange. Noah does not undertake any obligation to update any forward-looking statements except as required on the applicable law. In addition, today's call will include discussions of certain non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in our earnings release. Lastly, this call should not be interpreted as a solicitation to sell or purchase any interest in any Noah or Noah-affiliated products. Please also be aware that a link to a live webcast with presentation materials is available on our Investor Relations website. With that, I would like to pass the call over to Ms. Wang. Please go ahead.

[Foreign Language]

I'd like to begin today's call by sharing some recent thoughts on the industry and macroeconomic landscape before I review our performance for the fourth quarter and full year and dive into our strategy going forward. Over the past year, the Chinese wealth management industry faced considerable challenges. Fundamental shifts are taking place across the sector that require a different strategy and approach to asset allocation for management speaking high-net worth individuals. Noah's relentless focus on client needs spearheaded our transition from a product-focused model to a solution-driven approach over the past year, ensured our ability to increase the resilience of clients' portfolios in a challenging market environment. Our proactive decisions to prematurely exit the domestic real estate in 2016 and nonstandardized single counterparty private credit products in 2019 earned a significant trust from clients. Our semiannual CIO house view and CCI model continued to reflect our strategic foresight over the past 3 years, which resonated strongly with clients. We adopted a 3-pronged strategic approach to navigate this challenging market environment over the past year. Firstly, we're laser focused on ensuring our resilience and adaptivity through economic downturns. Secondly, we are actively accumulating strength to emerge as a leader in the forthcoming recovery. And finally, prioritizing the development of our core capabilities to position us for future growth when opportunities arise. Noah is a company built on both pragmatism and ambition, allowing us to drive a careful balance between 4, 5-year position and seizing new opportunities. By enhancing operational efficiency, retaining top talent, strategically calling cuts while simultaneously investing in new international markets, channels, technologies and the development of global product and service metrics, we are ideally positioned to help clients traverse this market. Over the past year, we strengthened our full suite of wealth management products and services for Mandarin-speaking clients globally. One key focus has been expanding our ability to offer clients alternative investments on a global basis. We're also seeing global fund managers increasingly focusing on underserved private wealth channels to fill primary markets fund raising. As a leading private wealth manager, recognized our expertise in alternative investments and extensive network of Mandarin-speaking professional investors, this trend presents enormous opportunities for Noah. Going forward, we'll be amplifying these strategic global investments. This includes: expanding our service network, bolstering investment research capabilities, and significantly enhancing product selection and technological infrastructure. These investments will solidify our foundation as a leader, enabling us to meet growing demand among clients for globally diversified wealth and asset management services.

[Foreign Language]

Looking at our financials for the year, Noah generated total revenues of RMB 3.3 billion, an increase of 6% year-on-year. Our domestic business contributed RMB 1.9 billion, an increase of 18.1% year-on-year, and accounting for 56.8% of the total [Technical Difficulty]. Within revenue from our domestic business, revenue generated by legacy distributed products was RMB 1.4 billion, accounted -- accounting for 73.9% of the domestic revenue. Our overseas business generated RMB 1.4 billion, a significant increase of 73% year-on-year, driving overseas revenue contribution from 26.5% of the total net revenues last year to 43.2% this year. Of revenue generated from new business and products in 2023, our overseas and domestic business accounted for 68.1% and 31.9%, respectively. Breaking it down by segments. Our Wealth Management business generated RMB 2.5 billion in 2023, an increase of 13.1% from last year. Within Wealth Management, domestic business contributed RMB 1.4 billion, a decrease of 11.7% from last year, which was primarily composed of RMB 0.9 billion in revenue generated by legacy distributed products, accounting for 67.7% of the domestic wealth management revenue. Our overseas business contributed RMB 1.1 billion, a 71.3% increase year-on-year. Our Asset Management business generated RMB 769 million revenue during the year, a decrease of 8.4% from last year. Within Asset Management, our domestic business generated RMB 469 million, a decrease of 30.3% from last year, which was primarily composed of RMB 467 million in revenue generated by legacy distributed products, accounting for 99.4% of the domestic asset management revenue. Our overseas business contributed RMB 299 million, an increase of 80% year-on-year, driven primarily by growth in overseas AUA and AUM. On the comprehensive services side, revenue from domestic insurance products increased by 1.6% in 2023, of which, 88.9% was generated by new businesses. Revenue from overseas insurance, trust and other comprehensive services surged 301.5% from last year. In tandem, the number of active overseas clients for comprehensive services also grew by 376.3% year-on-year. Over the past year, we continue to make upgrades to our technology stack, aimed at improving client experience globally. We are working with leading insurers to streamline our underwriting process across markets globally. We were the first broker in Hong Kong to launch a fully online underwriting process and allow clients the option to make insurance premium payments through our Hong Kong nominee account, which was a significant enhancement for client experience. Operating profit for the year came in at RMB 1.1 billion, with an operating profit margin of 33.3%.

[Foreign Language]

Looking at our domestic wealth management business, we continue to carry on the strategy to focus on first tier and core cities in China. Through our ongoing organizational restructuring, we decreased the number of offices we have from 77 to 44 by the end of the year, and further relocated resources to 18 core cities as of now. As of the end of 2023, the number of domestic relationship managers decreased by 7.6% year-over-year and 12.6% sequentially to 1,163. On the domestic wealth management front, our primary focus has been on strengthening the service capabilities of our relationship managers and enhancing the user experience of technological upgrades to our staff, allowing us to continuously generate new leads from ongoing client services. The small treasury platform for corporate and institutional clients we launched in 2022 now serves nearly 6,000 clients, a 28.9% increase from last year. Over the past year, the number of active clients served increased by 73.7% year-over-year with average client AUA exceeding RMB 600,000. Turning over to fees. Our Wealth Management business continued to expand its presence as more relationship managers are brought on board in Hong Kong and Singapore. As of the end of 2023, we had 89 relationship managers onboarded, an increase of 15.6% sequentially. We are committed to further expanding our international RM team, targeting a headcount of 200 by the end of 2024. As of the end of 2023, we had over 14,900 overseas clients, reflecting a 14.2% increase from last year. The number of clients who purchased our cash management products reached 3,093, a sequential increase of 19.1%, while the number of discretionary investment clients reached 803, an increase of 23% sequentially.

[Foreign Language]

We continue to expand the product offer through our overseas wealth management app, providing an expanded array of solutions for clients, businesses and agencies. The number of overseas active high net worth clients reached 4,629 in 2023, a significant 38% increase from last year. Total transaction value during the same period reached USD 3.3 billion, up 83.4% year-on-year. The number of active clients for our U.S. dollar mutual fund products reached 3,130, up 72% year-on-year with transaction value of USD 1.2 billion, up 110.1% from last year. On the 2B side, we have successfully onboarded more than 230 overseas corporate and institutional clients, which resulted in transaction value of overseas mutual funds, reaching approximately USD 200 million. On the 2 agency side, our overseas online wealth management business began trial operations in late 2023, aiming and empower EAM and family offices, clients with the SaaS platform integrated with our full suite of products. As of today, we have signed 9 agency clients with a long-term target of serving 300 EAMs and family office in overseas markets.

[Foreign Language]

In terms of asset management, Gopher's total AUM was RMB 154.6 billion in 2023, a decrease of 1.6% year-on-year. RMB AUM decreased by 4.8% from last year to RMB 118.6 billion. This was primarily driven by exits from RMB private equity assets and decline in the net asset value of some RMB public market products. Internationally, we continue to enhance our global investment product metrics. Overseas AUM reached USD 5.1 billion in 2023, an increase of 7.6% from last year, driving from an increase in its contribution to total AUM from 20.7% to 23.3%. Overseas AUA, which includes distributed products, reached USD 8.4 billion, an increase of 10.2% year-on-year. Beyond traditional PE and VC products, we have gradually expanded our alternative offerings to include infrastructure, GP stake, PE secondary and private credit products to provide a more comprehensive product matrix. We also recently launched the Series 4 of our actively managed U.S. dollar, U.S. real estate funds, focusing on development opportunities in the suburban rental apartments in the U.S. subarea. This fund is well positioned as an upstream player within the institutional real estate value chain. As of the end of 2023, AUM for overseas private equity and other primary market funds reached USD 4 billion, an increase of 4.7% year-on-year. Turning to public markets. We intensified the screening coverage and inclusion of top hedge fund managers globally. We have launched 10 of the global top 50 hedge fund products, with 10 more in the due diligence process. While enhancing the diversity of fund managers and product strategies, we are simultaneously expanding to include structured products with principal protection mechanisms. In 2023, the transaction value of overseas public markets and structured products reached USD 180 million, an increase of 95.9% from last year.

[Foreign Language]

Lastly, we announced a change to our leadership structure last year by separating the roles of Chairperson and CEO. Mr. Zhe Yin was the appointed CEO, while I will retain my position as Chairwoman of the Board. This decision will enhance corporate governance, organizational efficiency, promote collective decision making, and facilitate Noah's succession plan, and generate opportunities for Noah's deep bench of management talent. As a co-founder, Zhe Yin has been part of Noah's journey since beginning. He played a pivotal role in building Gopher Asset Management and possesses a deep understanding of Noah's operations and our client-centric company culture. I'll firmly support Zhe Yin in his new role while continuing to steer Noah's overall strategy and be responsible for Board management and corporate governance. Please also kindly note that our CEO, Zhe Yin and CFO grant, will be reporting quarterly results starting from last quarter. I will still take part in the Q&A session. I would now like to turn the call over to Grant to go over our financial results in more detail. Before opening the call to Q&A, where Zhe Yin and myself will also participate. Thank you, everyone.

Thank you, Melo. Thanks, Chairlady. And I'm sure most investors are already very familiar with Mr. Zhe Yin, and we welcome him to join our future earnings releases and also meetings and calls with our investors. 2023 was a challenging year for China's wealth management industry. China's post-pandemic economic recovery proved to be a little slower than initially anticipated as housing and local government debt problems remained widespread and persistent, driving domestic capital markets and growth. The performances of China's domestic market share, Asia market and Hong Kong stock market also took some heavy adjustments, impacting the issuance of new investment products domestically. The new issuance of mutual fund products, for example, in the domestic market fell 22.7% throughout the year. On a contrast, in 2023, the Dow Jones industry average index rose by 13.7% with S&P 500 Index and MSCI World Equity index of over 20%. On the alternative side, global fund managers are increasingly focusing on the underserved private wealth channels to fuel primary market fundraising. According to McKinsey, as of June 30, 2023, the total AUM in private markets reached USD 13.1 trillion, growing nearly 20% per annum since 2018. The sharp divergences in economic and capital market conditions between onshore and offshore markets have created considerable challenges for high net worth clients or demands for global asset security and diversification. Insurance products and other defensive-driven strategies continues to grow. As a leading wealth management company recognized for its expertise in alternative investments and extensive network of Chinese professional investors, these trends directly in line with our strategic transaction -- transition from a product-based to a solution-based offering and our ongoing investment in overseas products and services. In this context, we delivered solid financial results, and our business has proven again to be resilient and adaptive in…

[Operator Instructions] The first question today comes from Helen Li with UBS.

[Foreign Language] So this is Helen from UBS. Two questions, if I may. First, the number of covered cities declined to 44, and RMs declined 11% in the fourth quarter. Is it because of loss of RM from the bench closure? Or are you laying off RMs? And what's your future plan for the onshore business in terms of RMs? And my second question. At last year's open day, you talked about structural product and hedge fund products, which could be a driver for onetime commissions going forward. What's the penetration rate of this product? And what's your product strategy this year? And what's the business outlook for 2024?

Thank you, Helen. I think I will take the first question. [Foreign Language] So to your first question, Helen, it's -- I guess, it's probably a result of both. One is obviously the consolidation of networks. Obviously, some of the Relation Managers choose to not leave the smaller city and work in the hub city. So there's still a little bit of a commute between the hub city and their original city. So there's some natural loss, but it actually doesn't account for too much of the decrease. And 2 is really obviously the optimization. We are increasingly improving the threshold in terms of assessment efficiency of these RMs. So naturally, for the RMs, they have to reach a higher threshold, if you will, to be continuing to remain in the team. But we're actually actively adjusting the structure obviously with heavier investments on the global side over CRMs. We're probably also emphasizing on the overall comprehensive capabilities of the skill set of the RMs. [Foreign Language]

[Foreign Language]

Yes. Grant, so I will take the translation for Zhe Yin. So in terms of the optimization of our domestic network, we always adhere to the strategy of following the footstep of our clients. And over the past few years, we have noticed the trend of high net worth individual clients to relocate from lower-tier cities where they basically accumulated their first bucket of goals to core cities and first-tier cities -- and as our strategy follows them. And also, on the other hand, given the current challenging macroeconomic condition, we need to concentrate and reallocate our core strength and resources to improve operational efficiency. Therefore, in the fourth quarter last year, we basically limited some of the underperforming RMs and professionals. So this is quite different from our expansion strategy in the past. So now we are more focusing on allocating our key strength and resources to the individuals with high performance. And in fact, the top performers over the past year, basically their KPI and the AUM or transaction value per head has increased more than 30% over the past year.

[Foreign Language]

So in conclusion, in the past few quarters, we have rather focused on consolidating our domestic network. So you can probably see that the speed of the RM headcounts domestically, the decrease of the headcount is actually slower than the decrease of the number of cities we consolidated, which means we are currently still under further evaluation for our workforce. So in terms of your second question, on the penetration rate for hedge fund products, structured products and cash management products. So we're not seeing that the penetration rate for hedge fund and structured product is still very low. However, in the first quarter this year, in 2024, the penetration rate for structured products, especially with the principal protection mechanism, has been increasing. And we are also seeing the potential of clients whose wallet with us is currently in cash management-related products. As the interest rates starting to -- or is expected to trend down in the future, we see the opportunity to convert these wallet shares into other alternative investment products, including hedge fund and structured products. Helen?

Very clear. [Foreign Language]

[Operator Instructions] The next question comes from Peter Zhang with JPMorgan.

[Foreign Language] My first question is about the dividend. I wish to check with the management what's the rationale behind on the special dividend payment for this year. And given that we still have a very strong cash balance on our balance sheet, looking ahead, do we have any share buyback plan or other, say, long-term shareholder return plan. And my second question is about investment income in the other income in our P&L. There's a RMB 54 million investment losses in fourth quarter due to investment losses. I wish to understand what is the rationale behind? And what are the underlying investments?

Thank you, Peter. I'll take the first question, and Wang and Zhe Yin will jump in as needed. So for the special dividend, after ample discussions with our investors, and we have basically passed on the message to the Board, we'll continue to anticipate strong cash flows from our future operations. And by -- after carefully evaluating the capital need for global expansions and really not any, I guess, clear target for heavy capital utilization, we believe that it's the right time to return to our shareholders with heavier ratio in terms of special dividend in the form of special dividend. I guess with the depression on Chinese ADS share price, mostly actually not too much associated with the fundamentals. We don't believe stock repurchase actually add too much value at this point. We obviously will not exclude that option going forward. But for this year, we'll prioritize on the cash dividend payout in the form of special dividend. [Foreign Language] Our minority -- adjustment on the valuation is pretty much on par with the market... [Foreign Language]

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Grant Pan for any closing remarks.

Thank you very much for our shareholders and analysts for your continued trust and support. And this will conclude today's earnings release. And if you have further questions, we have arranged one-on-one sessions. We'll be very happy to share more insights with you. Thank you.

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