Performance review

3Q24 results are basically in line with our expectations

Noah's 3Q24 net revenue was -8.8% YoY/+11% month-on-month to 0.68 billion yuan, and non-GAAP net profit -35% YoY/+42% month-on-month to 0.15 billion yuan, in line with our expectations. 1-3Q24's total net revenue was -22% to 1.95 billion yuan, and non-GAAP net profit was -47% to 0.42 billion yuan YoY.

Development trends

Revenue from overseas insurance fund-raising has increased steadily, and distribution of domestic insurance and open market products has been hampered. Net income from 3Q24 wealth management -15% YoY /month-on-month +12% to 0.47 billion yuan, including: -12% YoY/+28% to 0.18 billion yuan, corresponding to a decrease in domestic insurance product distribution but an increase in overseas insurance fund-raising revenue; -10% YoY /month-on-month +6% to 0.25 billion yuan; the year-on-year decline was mainly due to a decrease in the scale of asset management in mainland China, putting pressure on management fees for private equity and private equity products; performance compensation -66%/-33% month-on-month to 3.02 million yuan Million yuan, mainly due to the decline in domestic private equity fund product performance rewards.

The total volume raised by the 3Q24 Wealth Management Division remained flat at -35% YoY to 14.5 billion yuan. The year-on-year decline in the scale of publicly raised products was the main drag. Among them, the size of private equity securities and public fund products was -37%/-42% year over year; in addition, the size of private equity products was +54% YoY/-3% YoY to 10.7 billion yuan.

The sharp increase in performance rewards for overseas private equity products has driven positive growth in asset management business revenue. Net revenue from 3Q24 asset management was +9.2% YoY/+8.6% month-on-month to 0.21 billion yuan, of which: management fees were -19% YoY/-11% month-on-month to 0.15 billion yuan, mainly a decrease in management fees for RMB private equity products, and performance compensation +1031% YoY/+148% month-on-month to 58.1 million yuan, mainly a significant increase in performance compensation income from overseas private equity products. At 3Q24, Gefei AUM averaged -3% to 150.1 billion yuan, of which private equity fell slightly to 130.1 billion yuan, open market products -19%/-5% month-on-month to 9.9 billion yuan, real estate -13% YoY/-5% month-on-month to 5.5 billion yuan; Gefield AUM's Chinese and overseas size was +11% to 5.1 billion US dollars, accounting for +3ppt to 24.4%.

The company's positioning and target customers are clear, and overseas expansion has paid off. The company adheres to the strategic direction of refining the country and expanding the international market, and targets customers such as individuals and enterprises going overseas, new immigrants, and old overseas immigrants.

3Q24's international business revenue contributed 0.38 billion yuan, +38.9% y/month-on-month +35.3%, accounting for 55%. AUM and AUA for overseas investment products were +16%/+6% year-on-year, respectively. Additionally, the company has opened a new office in Japan this quarter and is actively evaluating other potential market opportunities such as Canada, Australia, Southeast Asia, and Europe. The total number of overseas financial planners in the 3Q24 company was +89.6% YoY/+29.2% month-on-month to 146. International registered customers were +20.9% YoY, with active customers +37.4% YoY.

Profit forecasting and valuation

Profitability remained essentially unchanged for 24/25. The company is currently trading at 9.6x/7.9x 2024e/25e P/E; considering the company's leading position in the racetrack industry and shareholder return mechanism to boost investor confidence, the target price was raised 46% to $15, corresponding to 10x 2025e P/E and 28% upward space; maintaining an industry performance rating.

risks

Overseas expansion fell short of expectations, capital markets fluctuated sharply, and customer growth fell short of expectations.