Noah Holdings Limited (NOAH) Earnings Call Transcript & Summary

Hi. Good morning, everyone, and welcome to Noah's Fourth Quarter and Year-end Conference Call. I'm Melo Xi, Director of Investor Relations in Noah Group. The presenter today -- joining us today are Ms. Wang Jingbo, our Co-Founder, Chairlady and CEO; and Mr. Qing Pan, our CFO. Before we start, we would like to kindly remind you that during today's call, we may make forward-looking statements based on our current expectation of the business. Please keep in mind that these statements are subject to risks and uncertainties that may cause Noah's actual results to differ from these statements. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the safe harbor statement section of our 6-K filing. We also refer to certain non-GAAP measures, and you will find reconciliations in our -- the 6-K report made available on the Financial Reports section of Noah's Investor Relations website. Also, please note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Noah or Noah-affiliated products. This call is copyrighted material of Noah and may not be duplicated without consent. Also, we will appreciate for you to change your display name to first and last name plus your institution name. With that, I would like to welcome our Chairlady and CEO, Ms. Wang Jingbo. Chairlady, handing to you now.

[Foreign Language]

[Interpreted] For the agenda of today's conference call, I'd like to start by discussing the macroeconomic landscape and update on our globalization strategy then report on Noah's overall performance and the development of various business segments in 2022. Mr. Pan will then present the financial information for the year and conclude with the Q&A session. Year 2022 was an extraordinary year with an extremely complex global macroeconomic environment. The extreme market gyrations caused by the Russian and Ukraine conflict during the first quarter, Shanghai lockdown during the second, and the rapid fed rate hike spanning almost the entire year has far exceeded our expectations. In other words, we have seen the most drastic drop in investor conference -- confidence in decades. Domestically, the Chinese lockdown index reached its highest level twice since the first outbreak of COVID-19 in 2020. Stricter lockdown severely restricted economic activities with the household savings rate reaching its highest level since the beginning of the outbreak and consumer confidence hitting rock bottom. Turning to the global market. Since the subprime financial crisis in 2008, prolonged qualitative easing and abundant liquidities have led to a significant level of global asset inflation. With global supply chain severely disrupted over the past 3 years by the raging pandemic, coupled with the impact of surge in commodity prices due to geopolitical conflicts, we have seen the most acute global inflation in decades. In order to tame the inflation, the world's major central banks, led by the U.S. Federal Reserve, moved quickly to raise interest rate at the fastest pace in almost 40 years. The sudden quantitative tightening measures and escalating risk free rate of return led to huge losses in risk assets with both equity and bond markets experiencing their worst year since 2008. The significant shift in investor segment led to a decrease in preference for high-yield products and an increase in demand for assets with lower volatilities and higher liquidity. As a wealth and asset management firm focusing on serving global Chinese [ network of ] clients, Noah's mission is to understand and gain insight into the ever-changing needs of our clients.

[Foreign Language]

[Interpreted] In the CIO report published at the beginning of 2022, based on our assessment of the macroeconomic and capital market environment, we propose our clients to adopt a protection-before-growth asset allocation strategy, advising them to protect and diversify their portfolios using various wealth management tools against the upcoming uncertainties. We recommend our clients to increase their allocations in absolute return-oriented, multi-strategy funds and private equity funds in order to reduce asset volatility and capture cross-cycle growth opportunities, which effectively helped our clients to protect their wealth in turbulent capital market environment. We have become increasingly aware that the concept and the understanding of wealth management through the lens of Chinese high-net worth individuals -- is undergoing fundamental changes with safety and security becoming the #1 demand. The need for global asset allocation also increased. Since the opening of the Hong Kong office in 2012, and gradual establishments in foreign markets, including the U.S., Singapore, Canada and Australia, Noah International has accumulated a decade of experience and capabilities in the overseas segment. In the past, we serve our overseas Chinese clients with our overseas staff, which mainly consisted of investment, product selection, operation and middle and back office professionals. In 2022, we further reshaped Noah's international capabilities by building an international wealth management team based in the overseas market, creating new overseas products in order to better serve the asset allocation needs of Chinese high-net worth individuals living abroad on top of the capabilities and systems we have already built in the past. By the end of 2022, Noah's international clients increased 8.4% year-over-year. The overseas segment generated net revenues of RMB 828 million for the year, accounting for 26.7% of the group's revenue, an increase from 23.5% in 2021, with this figure further increasing to 32.2% in the fourth quarter.

[Foreign Language]

[Interpreted] In 2022, the company delivered solid financial performance by proactively adjusting our business strategy. Achieving our annual net revenues of RMB 3.1 billion and non-GAAP net income of RMB 1 billion, meeting the annual non-GAAP earnings guidance, operating income margin improved to 35.1% from 27.9%, driven by more efficient cost management and less travel activities due to COVID lockdowns. Wealth Management segment reported net annual net revenues of RMB 2.2 billion, down 31.1% year-over-year, primarily due to clients leaning towards -- leaning more towards products with higher liquidity, such as money market funds and fixed income -- fixed-term deposits, leading to a decline in onetime commissions. Transaction value was RMB 70.3 billion for the year, down 27.7% year-over-year. In 2022, with significant volatilities in the global public markets, with the MSCI World Index down 17.8%, the S&P 500 Index down 18.7% and the MSCI China Index down 21.2%. Noah's strategy was to capture and maintain clients' wallet share and help clients preserve their wealth instead of trying to chase higher revenues and profits through pushing products with higher risk profiles. Mutual fund transaction value increased by 16% year-over-year, driven by the launch of our Smile Treasury SaaS platform, specifically targeting corporate and institutional clients' treasury management needs. In the past, corporate treasury management from mid and small enterprises like specialized and systematic services. Capitalizing on Noah's existing mutual fund platform and asset allocation capabilities, we have offered services to more than 5,000 -- 4,500 mid to small-sized corporate and institutional clients who opened accounts and transacted through Smile Treasury platform during the year. In terms of clients, the number of Diamond and Black Card clients reached 9,689, an increase of 18.2% year-over-year with a 22.2% increase in Black Card clients, in particular. Growing our core client base has always been a key strategic objective. Over the past year, we have effectively enhanced our client experience by improving our client interface and branding, improving our clients' reward system and enhancing the integrity of our clients' asset allocation through the introduction of a star rating system. Furthermore, we recovered over 1,000 lost or dormant accounts. And after the Camsing Incident in 2019, many lost clients have started to turn back to us. In 2022, through better client segmentation strategies and personalized asset allocation advices, we recognize over 3,000 potential Diamond and Black Card clients during the year. Through referrals of our existing clients, we gained over 1,000 new clients that became gold-level or above. Winning client's trust through care and professionalism has always been the source of Noah success.

[Foreign Language]

[Interpreted] Asset Management segment recorded net revenues of RMB 835 million, down 19.9% year-over-year, primarily due to a 66% decline in performance-based income caused by capital market volatility and limit exit opportunities in the primary market. Through our subsidiary, Gopher Asset Management, AUM reached RMB 157.1 billion by the end of 2022, up 0.7% year-over-year. On the other hand, the overseas AUM reached RMB 32.5 billion, up 14.7% year-over-year, thanks to the successful fundraising of Gopher's actively managed overseas real estate and private equity funds as well as the launch of our U.S. dollar cash management and fixed income products. The U.S. real estate investment team, focusing on multifamily residential development investments, have achieved excellent investment performances on the first 2 series of funds on separate account with 2 successful and profitable exits. They launched Series 3 fund raising in the second half of 2022. The Silicon Valley early-stage, tech-focused investment team has achieved multiple profitable exits for LPs through investing in a number of unicorn companies. They launched their Series 4 fund raising during the second half of 2022 as well. We believe that the current economic cycle, which is close to bottoming out, provides a very rare entry opportunity for VC and PE funds. As a result, we have also launched the VC fund of funds managed by our Silicon Valley team as well in Q4 2022, aiming to further enhance Gopher's ecosystem in the overseas market. In terms of cash management and fixed income products, as U.S. dollar yields continue to rise due to the Fed's rate hike, our product team developed and launched our U.S. dollar cash management and fixed income products in a timely manner, effectively increasing our client's share of overseas wallets with Noah. By year-end, overseas AUA grew by 25.2% year-on-year, accounting for total 21.6% of the total AUA, comparing to 16.3% at the end of 2021.

[Foreign Language]

[Interpreted] In terms of ESG, Noah has been voluntarily publishing sustainability report since 2014. We also formulated and initiated the supply chain ESG management guidelines and receive 100% of the signatories of the ESG letter of acknowledgment for suppliers at Noah's very first supplier conference, bringing awareness to our supplier partners to better create a sustainable ecosystem. Noah has cooperated with nonprofit organizations for many years in projects such as 100 million Saxauls trees and Noah's Ark. Since 2014, Noah's Heart Forest has planted over 387,000 Saxauls trees in Alxa region in China, covering over 8,000 acres of land, achieving about 3.8% -- 3.8 square kilometers of sand stabilization and 7,000 tons of carbon stabilization, helping restore the local desert system and slowdown desertification while increasing local herders income.

[Foreign Language]

[Interpreted] I'm also pleased to announce that the company has successfully completed the conversion to primary listing status on the Hong Kong Stock Exchange on December 23, 2022, becoming the first Chinese wealth management company to have dual primary listing status in both the U.S. and Hong Kong, also completely eliminating the potential delisting risk of ADR stocks. At our Board meeting earlier this month, the Board has approved the annual dividend plan to pay out 17.5% of non-GAAP net income of RMB 1 billion for 2022. The final dividend proposal will be evaluated at the upcoming AGM in mid-June. We are committed to creating value for our shareholders in a stable and sustainable manner through a long-term cash dividend plan.

[Foreign Language]

[Interpreted] Reaching common sense and consensus, which are scarce qualities to possess, is oftentimes consuming and costly. In 2022, some common sensors and consensus are beginning to ignite. Successful wealth management and investment returns are the reflection of correct perceptions of the future. Bridging the gap between perception and reality requires the fine-tuning of decision-making skills. The probability of making the right decision is positively correlated with one's understanding of the world. Today, in 2023, the consensus of clients need has been mostly clear. The foundation of this top process framework is what shapes Noah CIL enhanced view, our advices on client allocation solutions and our core values, which distinguish Noah from other wealth management institutions. We are committed to becoming a leading name by capturing at least 1% of the market share in the wealth management industry for Chinese high-net worth clients around the world, a goal that has tremendous room for growth, but also requires us to always maintain our founding principle and work hard towards achieving it. Finally, we hope that the pain of 2022 will become the gain of 2023. Now I'd like to pass to our CFO, Mr. Pan, to give you a detailed walk-through of this year's results. Thank you all.

Thanks, Melo, and thank you, Chairlady. Welcome, investors and analysts. Looking back at 2022 as obviously, undoubtedly a challenging year. The United States Federal Reserve has raised interest rates by cumulative 425 bps to 4.4% as of the end of last year, the rapidest hike in decades, coupled with geopolitic conflicts and ongoing increasing global inflation rate from 4.7% to 8.8%, creating volatilities in both the equity and bond markets. Consequently, the MSCI World Index, S&P 500 and MSCI China Index have all dropped 18%, 19% and 21% throughout the year, respectively. In China, the prolonged COVID-19 restrictions during almost the entire year of 2022 greatly affected economic activities. With the China Effective Lockdown Index, a third-party index that measures the level of COVID-related restrictions, reaching highest level wise, since 2020. The Chinese household saving rate climbed significantly from 30% pre-COVID up to 37% by end of that year, with Chinese consumer confidence index at a decade low. Capital market activities and investor sentiments also became more conservative, evidenced by a 50% year-over-year decrease in new issuance of mutual funds across the; board. Meanwhile, Noah has been investing to improve our research capabilities to counter this adversity, and our COO office published the investment outlook for 2022 at the beginning of the last year, recommending the strategy of preservation before growth to our clients. Looking back at the capital market fluctuations, our recommendation helped preserve client assets and our dedication and efforts on enhancing investment abilities paid off. As a result, although 2022 was a tough year, we still achieved an increase in number of core clients up 18% year-over-year, that's Diamond and Black Card line. And overseas AUM also increased by 15% year-over-year. Due to stricter cost management measures and higher operational efficiency, Noah's operating margin grew from 27.9% to 35.1%. On top of that, we have met our annual non-GAAP net income profit guidance, absorbing the impact of an unexpected and unfavorable outcome of legal proceedings towards the end of last year. Now please let me walk you through the detailed financial results of the year and the fourth quarter. Full year net revenues were RMB 3.1 billion, down 28% year-over-year, primarily due to the decrease in onetime commissions and performance-based income. Onetime commissions fell by 46% year-over-year to RMB 678 million due to lower transaction values and the change in product mix partially as a result of our proactive direction away from public security-based products in the face of volatile market conditions last year that usually bear high take rates for that type of product. Performance-based income fell by 61% year-over-year to RMB 308 million, as expected in the face of the bumpy capital market environment. Recurring service fees remained relatively stable at RMB 1.9 billion, down 9%. Operating costs and expenses were RMB 2 billion, decreased 35% year-over-year, due to lower relationship manager compensation expenses as transaction values decreased, combined with lower selling and G&A expenses resulting from a decrease in traveling and offline client activities, both affected by COVID-19 restrictions. Corresponding annual operating income margin increased 7.2% year-over-year to 35.1%. With regard to nonoperating results, we incurred a one-off contingent expense of RMB 99 million due to the provision of legal proceeding related to one of our subsidiaries that we disclosed on December 12, 2022. We believe that the associated first instance ruling was reached based on incomplete factor information and have already initiated appealing process and intend to vigorously defend against the civil claim from the plaintiff. Equity and earnings of affiliates decreased 71% year-over-year attributed to the downward yield of fund of funds that we manage and invest in as the general partner or manager. In spite of nonoperating costs, our non-GAAP net income of RMB 1 billion still achieved annual non-GAAP net income profit guidance with its margin up to 32.5%. Growth in core clients, Diamond and Black Card clients, still remains as a top strategic priority throughout the year, benefiting from our continuous strategic investments, expanding our core client group, Diamond and Black Card clients grew to 9,689, an 18% year-over-year increase overall, among which the number of Black Card clients increased by 22% year-over-year. We also have an innovative program to recognize potential Diamond and Black Card clients, and grand trial benefits invest for a limited period of time to attract new clients, which enabled us to identify over 3,000 high-potential core client needs. Our total active clients during the year was 35,877, down 16% year-over-year due to the transformation to standardized products starting from 2019. We have also been making efforts on reactivating dormant accounts and retrieving lost accounts. As of December 2022, reactivated and retrieved accounts amounted to more than 1,000. At the same time, we have gained significant growth in a new tier of clients, i.e., corporate and institutional clients. We launched the Smile Treasury platform to facilitate corporate institutional client strategy management efforts with over 4,500 new corporate and institutional clients who have opened accounts and transacted with us in 2022. With respect to transaction value, we distributed RMB 70.3 billion of products during the year, down 28% year-over-year, among which mutual funds were RMB 43.1 billion, up 16% year-over-year, thanks to the aforementioned increase in corporate and extension of clients. Albeit secondary products were RMB 13.1 billion, down 65% year-over-year as we proactively decreased allocation and distribution of equity-linked public market products due to heightened market volatilities. In terms of segmented results, full year net revenues from Wealth Management business were RMB 2.2 billion, down 31% due to the decrease in transaction value accounting for 71% of total net revenues for the group. The revenues from asset management business were RMB 834 million, down 20% due to a decrease in performance-based income from private equity fund products, accounting for 27% of total net revenues of the group. Gopher's AUM was RMB 157.1 billion as of the end of the year, slightly higher than last year due to increase in private equity. As mentioned by Chairlady, we have started to establish our international wealth management team with relation managers based in overseas markets catering to our overseas class asset allocation needs. Our overseas AUM grew 15% year-over-year and 7% quarter-over-quarter contributed by the successful fundraising activities of Gopher's real estate investment team and venture capital investment team in the States and the launch of U.S. dollar cash management and fixed income products. Besides, we have also been cooperating with 9 of the top 25 international private equity, GPs and look forward to expanding that list. Overall, full year overseas net revenue was RMB 828 million, accounting for 27% of total net revenue compared to 24% in the year before. When it comes to our fourth quarter results, net revenues were RMB 882 million, down 30% year-over-year and recovered quickly by 29% from the quarter 3. Onetime commissions were RMB 269 million, down 44% year-over-year, but up 170% quarter-over-quarter due to increase in insurance distributions. Recurring service fees were RMB 472 million, down 15% year-over-year but slightly increased 4% quarter-over-quarter, mainly due to the service fees generated from liquidity and certain credit products with higher fee rates during the corresponding period in last year. Performance-based income was RMB 80 million, down 54% year-over-year due to a decrease in carrying from public security products and private equity fund products. [ Builds up ] 191% quarter-over-quarter due to exits generated from some of the private equity funds products in this quarter. Total operating costs and expenses were RMB 662 million, down 41% year-over-year, but up 46% quarter-over-quarter, mainly due to increased expenses related to off-line client activities after COVID-19 restrictions were lifted as well as increased relationship manager compensation, performance fee compensations in the quarter. On top of that, operating income were RMB 220 million, up 66% year-over-year, but down 5% quarter-over-quarter. Quarterly non-GAAP net income was RMB 149 million, down 49% year-over-year -- or 22% quarter-over-quarter increase due to onetime contingent expenses. Regarding the balance sheet, our cash increased to RMB 4.4 billion and total assets stood at RMB 11.8 billion as of December 2022. The current ratio was 3.3 multiple, and debt-to-asset ratio was 19.5%, with no interest-bearing debt, implying a very healthy and strong liquidity position and balance sheet. Supported by a healthy balance sheet and continued strong cash flow generating capabilities pursuant to the dividend policy announced on August 10, 2022, the annual dividends to be declared and distributed for year 2022 will be 17.5% of the group's non-GAAP net income of 2022, approximately amounting to RMB 176.5 million, implicating USD 0.40 per ADS and HKD 6.25 per share equals to 2 ADS, subject to final approval of our AGM on June 12, 2023, this year. We look forward to providing stable and sustainable returns to the shareholders with the growth of our business. Looking back to 2022, obviously, great challenges stemmed from global macroeconomic uncertainties and domestic difficulties, including 0 carbon limitations. [ Overall ], that we completed the secondary listing on the main board of Hong Kong Stock Exchange. And within the same year, with the effort of the team also completed, voluntary conversion to primary listing in Hong Kong within the same year. Due to the regulations of Hong Kong Stock Exchange, by the way, I would also like to kindly inform investors that Noah would not be able to publish annual non-GAAP net income profit guidance going forward. Looking forward to 2023, we'll continue to invest talents and resources into expanding our global footprint and improving our client service experience and quality. At the same time, we'll also be mindful of both cost controls and growth initiatives. Again, we sincerely appreciate all shareholders for ongoing trust and support and strive to create long-term value for clients and shareholders. And thank you, everyone, for listening. And I will now open the floor for questions. Thank you.

Thank you, Grant. [Operator Instructions] And now I believe we have Helen from UBS.

[Foreign Language] Okay. Let me translate my question. This is Helen from UBS. Two questions, if I may. One, for insurance product distribution, since the fourth quarter 2021, the growth momentum was very strong. Insurance products seemed to be the key driver for onetime commission fee. It's been 5 quarters since the fourth quarter of 2021. So what's the insurance product penetration rate for existing clients? Do you think the strong growth momentum could persist this year and next year? If not, what types of product or services may bridge the revenue gap? And could you please give us more color on transaction value outlook this year, both in terms of growth outlook and product mix? My second question is on Gopher AUM. I noticed that back to 2015 to 2016, private equity products were a major driver for transaction value. And this product may enter the redemption period very soon, I guess. So what's the impact on Gopher AUM? Will Gopher AUM decline in the next 1 to 2 years? And what's Gopher's product strategy this year in the coming 2 to 3 years?

[Foreign Language]

Thank you, Helen. I'll supplement some data points and also do a quick summary of what Chairlady has mentioned. So I guess, when you look at this allocation of product mix from a slightly different angle that basically, we don't necessarily just voluntarily put out a product mix or recommendation to our clients without understanding the clients' need. So throughout 2022, the sentiment of the entire market is actually preservation and risk averse. So the demand from insurance products actually grew throughout the board in the market. We are not manufacturing any insurance products. So basically just having an insurance brokerage and are responsible for taking the right products for our clients. So as mentioned by Chairlady, the coverage of penetration rate, especially in the Diamond, Black Card line group, is relatively low, 21% for overseas insurance products and 24% for the domestic one. And the contribution with the total revenue by interest-related revenue for 2022 is about 77%, slightly higher than 60% in 2021 as well. So we still believe that still abundant room to grow in terms of insurance products if the client still considers that insurance product becoming a very fundamental, important layer of the asset allocation strategy. In terms of Gopher's AUM, domestically, we believe that our fund of funds portfolio will benefit greatly from the registration scheme, Asia stock market, that provide more exciting opportunities for these portfolio companies to become IPO companies and provide better exiting routes for this type of funds. And in terms of the secondary market, public security products within Gopher, we actually also invest heavily into our R&D team. We have a team of about 40 people focused on the macro and also micro researches on different kind of stocks and strategies for multiple strategy sort of fund. And for overseas, we are investing heavily both in budget and talent actually for 2023 to make sure that we'll be able to meet the demand for our clients, especially for the overseas allocation of more products, more public market type of products that, in the past, the market probably provides a lot of volume, but we weren't able to provide too much on the U.S. dollar-denominated public markets, and we're assembling a team to focus on that selection, and I believe that we'll be able to provide more on that type of products for our clients. Helen, back to you.

Thank you, Helen. I believe we have Chiyao from Morgan Stanley.

[Foreign Language] Let me translate. The first question is the market volatility, we've seen in the fourth quarter of 2022 and in both equity and fixed income markets. So I was wondering what -- how does the reaction from Noah's clients in the fourth quarter? And what reaction Noah has been taking to stabilize the AUM in the fourth quarter last year? And second question is on the outlook for 2023 in terms of the client demand and the revenue opportunity for Noah.

[Foreign Language]

So thanks, Chiyao. I think those are great questions. And also, we want to stress that the strategy in terms of recommending our clients to preserve first then pursue growth opportunities didn't start in quarter 4 actually. Actually, we published the [ CSR ] report in the first quarter when we sensed a very highly volatile market of the entire year. So actually, a majority of the allocation, as we just mentioned in the market actually and also consistently our client strategy are highly liquid products, including money market funds, including the U.S. dollar-denominated deposit type of funds towards the end of last year when the Fed actually raised the interest rate very quickly. In terms of overseas, we have about over USD 1.1 billion AUM for clients to put their money in the actual deposit type of products. And we're seeing actually very good increase in the fourth quarter alone. That's about 1.6 billion raised in that single quarter. And in the face of a very complex market situation, Noah actually never pushed out any products that we don't even believe in. So we still try to recommend the more conservative and safe strategy for our clients to actually place on. We're actually seeing a huge influx of repatriating clients last year. As mentioned in the press release, we're seeing probably around 1,000 clients either reactivated from longtime dormant accounts or repatriate back to Noah from other platforms. I believe that clients are very impressed with Noah's strategy that we actually didn't have any exposure in our AUM or AUA to real estate type of products to the nonstandard credit products. And we have a very clean and light AUM for our clients. In 2023, we continue to hold a very conservative view, especially for our clients, but probably we'll more emphasize on the provision and supply of overseas assets for our clients to carry out the global allocation strategy, and we're putting a lot of effort also budget actually in developing our overseas businesses. We believe that the opening up of new tier or new group of clients overseas, the high net worth Chinese individuals overseas will actually provide very strong growth driving factors behind the incremental revenue in 2023, if you will. Thank you, Chiyao.

Thank you, Chiyao. We also have Peter from JPMorgan.

[Foreign Language] Let me translate. [ As far ] WM sales and Gopher's AUM [ beat 8 banks' ] AUM in fourth quarter. How does Noah differentiate from leading banks in China when it comes to strategy and product? In 2023, there is talk of release of excess savings in China. How do you think Noah will benefit from the trend, if any? The second question is about do you expect more spillover risk from SCB and the CS AT1 writedown? And 2023 is going to be volatile. Then how does Noah position for this? Does Noah offer investment products like AT1 issued by banks to your clients?

[Foreign Language]

Thanks, Peter. Great questions again. Yes, we actually don't have -- didn't have any AT1 or [ coupon bond-related ] products to our clients. I guess part of the reason is because we're still relatively small in terms of providing U.S. dollar and offshore products for clients. Like we've mentioned in the past that we focus on pretty much product maintenance capabilities in overseas offices. In the U.S., we have 2 investment teams. In Hong Kong, pretty much mid back office for the U.S. dollar asset management. And in 2023, you can probably look at a year 0 for our overseas piece of business, and we plan to actually really increase the number of relationship managers in Hong Kong to probably 100 compared to what we have is about 20 professionals. And for Singapore team is from 0 basically from scratch to 20, and we're in the process of actively hiring talent in those 2 places and also looking at opportunities potentially to be able to actually access to local market to serve the Chinese nationals in those nations, including in the U.S. and probably other popular destinations where Chinese immigrants are -- conventionally will go and work. In terms of wealth management, for the past 8 months, folks pretty much on U.S. dollar products and also spend quite a bit of time and investment to establish global insurance platform, and we're moving on to the primary market and secondary market products, both denominated in the U.S. dollars. And just to supplement on the numbers when you mentioned that the growth in the fourth quarter, I think, still benefited greatly from products that we have in the Silicon Valley. We raised about more than USD 1 billion in the fourth quarter alone that actually fit the clients' need for more exposure to a deeper and probably more stronger markets in terms of -- for overseas products. And the focus for 2023 is to expand the interfaces where we can reach out to our clients in different ways, including, for example, institutional client sales group, the online platform and also including direct sales, our direct distribution from Gopher manager, especially the screening of the global products and to be able to actually put them into a portfolio for our clients. And in terms of domestic development strategy, we focus on continue to heighten investment in both branding talents in large cities, first-tier cities. But in terms of the probably third, fourth tier cities, we used to have network and branch offices that we're looking at to consolidate these offices into the nearby hub cities. One is to obviously control the cost efficiency; and two is actually to ensure that we'll provide better quality service to our clients as you would probably understand that majority of the high-net worth individuals will probably gradually move to the nearby big cities for better life quality. So we also want to make sure that our service team is also there to be able to serve our clients. Peter, back to you.

Maybe I'll add 1 more question about the investment sentiment. So in 2023, do you see improvement in household investment segment in your clients? And how does this compare to the 2022 or 2021 level?

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Yes. So Peter, I think just to supplement, obviously, in the fourth quarter, we benefited quite a bit of, I guess, heightened interaction with our clients. We actually held a pretty big client conference in Singapore towards end of December. Actually, before the official open up of China market last year, about 300 clients flew over to Singapore. And also we held a very large conference last week in Hong Kong, and about 600 clients came over and joined the conferences. And we're providing views from different GPs, our own GP and also economics, just to share the outlook of the capital market to our clients. So we're able to actually interact, I guess, at a better quality and better interaction frequency with the clients. And in terms of the sentiment, we actually published a white paper with PwC for 2022 high net with individual sentiment index. This is the first year we're doing this white paper. And I think it's actually a great way for us to understand what people are thinking, especially the very unique group of high-net worth individuals in China, mostly actually are private business owners and entrepreneurs. It seems that, obviously, after the reopening up, alleviated quite a bit, but I think the overall sentiment towards investment in wealth management or asset allocation will continue to be conservative towards RMB type of products. But we think that they probably were looking -- continue to look to further diversifying their asset allocation across the board and also in the product mix. Peter?

Thank you, Peter. We have no more -- we have no further questions from the audience. So with that, we would like to conclude this quarter and year-end earnings call. For our most updated financial reports, please refer to the financial statements section within our Investor Relations website. So thank you all for listening and have a great day.

Thank you very much.

Thank you. Bye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]