Noah Holdings Ltd (NOAH) 2014 Q4 法說會逐字稿

[Chinese] Thank you, operator, and thank you, all, for joining us today. With me today are Ms. Ching Tao, our CFO; and Mr. Kenny Lam, our newly appointed Group President. For the last 3 years, Mr. Lam has provided strategic advice to Noah in his role as a global partner of McKinsey. In the future, Mr. Lam will mainly focus on operations and management as well as strategic execution, and I will spend more time on business development, product innovation and key strategy development. We are confident that with the combined efforts of the management team, Noah will enter another period of high growth.

Chinese Today, I will first review our performance in 2014, then Mr. Lam will introduce himself and discuss Noah's strategy for 2015. Lastly, Ms. Ching Tao will discuss the details of our fourth quarter financial results and 2015 guidance. We will be happy to take any questions at the end of our prepared remarks.

Chinese Over the past 2 years, Noah has evolved from a distributor of financial products into a comprehensive financial platform with wealth and asset management capabilities. And in 2014, we also launched our internet finance business. To more clearly illustrate our performance, from this quarter on, we will disclose our financial information by business segment.

Chinese We finished 2014 with a strong fourth quarter. The value of wealth management products distributed in the fourth quarter was RMB 11.83 billion. Revenue reached USD 63.27 million, a year-over-year increase of 39.2%; and operating profit reached USD 17.83 million, representing 34.2% growth year-over-year. In 2014, we distributed RMB 63.37 billion or USD 10.3 billion worth of financial products to 9,010 clients, an increase of 42.4% compared to 2013. And our total registered clients reached 70,557.

Net revenue for 2014 was USD 247.9 million, an increase of 51.3% compared to 2013. Group operating profit reached USD 89.68 million, an increase of 48.1% from the previous year. The combined operating profit of our wealth and asset management businesses was USD 99.85 million representing an increase of 64.8% from 2013, and we exceeded our guidance by delivering non-GAAP net income of USD 77.7 million, an increase of 37.1% from 2013.

Chinese We significantly increased the scale of our wealth management business as we continue to evaluate our clients' needs and develop our own proprietary products. Our guidance-beating performance in 2014 reflects our efforts to strengthen regional operations and management, increase regional profitability, enhance top-performing relationship manager teams and increase the average output of our team members.

Chinese As of December 31, 2014, we have 94 branch offices in 63 cities and we continue to increase our market penetration. We also continued to do a good job at retaining our talent, and the turnover rate of our relationship managers and branch office general managers remained at less than 3%. And we compressed the training program for our relationship manager from 2 years to 1 year. As the number of clients and scale of assets under management continues to increase, we continue to look at ways to enhance customer service, including capping the number of clients that relationship managers serve at different levels.

Chinese In 2014, Noah has already established itself as a provider of a comprehensive set of financial services in the eyes of our clients, and the core competitiveness of our relationship managers has shifted from the distribution of financial products to asset allocation and fully authorized integrated financial planning.

Chinese In terms of asset categories, Noah's product offerings are more and more diverse and international. The proportion of USD hedge fund, fund of funds, multi-strategy hedge funds and investment funds, high-performing sunshine private equity products and quant fund of funds have increased significantly. With the increasing rate of initial public offerings in China, clients who have invested in private equity products at Noah have begun to reap rewards. This, in turn, has greatly increased enthusiasm for cross-cycle private equity products. We are also seeing increasing interest in private equity, private equity fund of funds, secondary funds and overseas asset allocation.

Chinese In 2015, we will continue to expand our product offerings. In terms of asset allocation, the proportion of the private equity products and secondary market, sunshine private equity funds, hedge funds and international funds will continue to increase. Noah's products center is positioned as a global product platform, covering 8 major regions in China, as well as the global market through our Hong Kong team. Noah's products center and research department will continue to monitor market trends and lock in access to excellent fund managers with superior assets for our clients.

Chinese As the wealth management market in China continues to develop, the demand for allocation into international assets continues to increase. 56% of high-net-worth clients in China, with more than RMB 100 million of assets available to invest, have international investments. To meet this demand, Noah Hong Kong has established a product platform to provide clients with a compressive set of financial offerings including fixed income, secondary market, private equity, real estate funds, cash management, trust, insurance and more.

In October 2014, Noah Ark Holdings in Hong Kong successfully acquired an overseas family trust license and began providing Noah clients with a more comprehensive set of wealth management services including family trust and tax planning. In 2014, USD-denominated products accounted for 5% of total transaction value, and we believe that the proportion of USD products will increase in 2015.

Chinese Through our internet finance platform, Yuan Gong Bao, which provides financial products and services to white-collar professionals, Noah has already expanded our clients from high-net-worth clients to high-net-worth families, institutions and other white-collar professionals. As our business has grown, we have expanded our coverage of global products and improved our ability to build new channels and innovate. In 2014, we also took great strides in building our IT system, our international platform and enhancing our risk control system. Mr. Lam will talk more about this shortly.

Chinese Turning to our asset management services. By the end of 2014, Gopher Asset Management's assets under management had reached RMB 49.73 billion or USD 8.1 billion, an increase of 62% compared to 2013.

Chinese We continue to diversify the asset portfolio of Gopher Asset Management as the proportion of real estate related products decreasing from 66% in the third quarter to 62% in the fourth quarter. Private equity products increased from 18% in the third quarter to 21% in the fourth quarter, and public equity and other products increased from 16% to 17%.

Gopher Asset Management focuses on fund of funds in private equity, real estate, hedge funds, credit products and the family office business; and we leveraged our Hong Kong office to provide investment opportunities in both renminbi and USD. Gopher's PE and VE fund of funds is invested in about 30 of the top domestic private equity funds and is the largest private equity fund of funds in China.

In recent successful domestic IPOs, Gopher's private equity fund of funds has received public praise and is expected to reap solid returns for investors. This is a testament to our rigorous screening process in selecting excellent fund managers as well as our strong investment managers.

Chinese In addition to our leading position in traditional residential real estate, Gopher Asset Management has also strategically expanded in 3 other major areas of real estate, including office buildings, retail property and international property. In the fourth quarter of 2014, Gopher Asset Management also proves its competitive advantage in open market products, where we currently focus on asset allocation, selection and quantification. With this as our core investment strategy, we provide investors with a comprehensive asset allocation services.

Currently, our issued products and services include hedge funds fund of funds, fixed income fund of funds, quant fund of funds, customized manager of managers services and more. Gopher's Asset Management's performance has garnered increasing praise and attention from institutional investors, and insurance companies are starting to allocate capital into Gopher Asset Management products.

In the fourth quarter, we merged our new brands, Nord Institution, which focuses on institutional clients into our asset management business. Nord Institution will provide institutional clients with more professional and customized products and services. In the fourth quarter, institutional clients contributed 28% of total transaction value, or about RMB 3.3 billion. At the same time, we have established strategic relationships with well-known enterprises in China, which will support our business development and pave the way for further cooperation in the future.

Chinese According to the Asset Management Association of China, at the end of 2014, there were 7,358 registered private equity fund managers in China managing 9,156 private equity funds, with total assets of RMB 2.38 trillion. We recognize the huge potential in the Chinese asset management industry and think that Gopher Asset Management is well positioned to become the industry's leading fund of funds and MLM asset management company. In 2015, Gopher Asset Management will improve its performance in both asset management scale and investment performance, and will provide diversified asset allocation and wealth management services to its customers.

Chinese Next, I will share with you our layout of comprehensive financial services and development. Noah Glory Insurance Agency limited has been developing well. Its primary products include high-end medical insurance, general accident insurance, aviation accident insurance, serious and terminal illness insurance and whole life insurance. Our individual life insurance product line is essentially completely developed. The high-end medical insurance, serious and terminal illness insurance and term-life insurance have become our 3 major products. Our large insurance policy, such as whole life insurance, have also performed well. By the end of 2014, over 10,000 registered clients have purchased various insurance products through Noah Glory Insurance Agency.

Chinese Enoch Education, the high-end education brand that Noah invested in, has gradually become the first choice of high-net-worth clients in this category. By selecting and customizing global high-end education, it has established a comprehensive international curriculum. By the end of 2014, around 500 Noah registered clients and families have taken part in its customized courses, focusing on private equity investment, hedge funds, inheritance of family wealth and more.

Chinese By the end of the fourth quarter, our micro-lending business have provided short-term financing to over 371 customers, with total loans extended -- exceeding RMB 1.43 billion. The average loan maturity was 43 days and the average loan amount was RMB 2.9 million, all of which were asset-backed loans. In 2015, as the number of our Internet finance platform clients and the scale of our business continues to grow, we plan to put our entire off-line micro-lending business online.

Turning to internet finance, our newly launched financial service platform, Yuan Gong Bao, which is designed for white collar professionals in China, grew significantly in the fourth quarter. By the end of 2014, Yuan Gong Bao have established cooperative relationships with 205 enterprises in China with cumulative online sales reaching RMB 1.4 billion and generating a 32% compound monthly growth rate. The average customer order value was RMB 150,000.

Chinese Positioned as the private bank of white collar professionals, Yuan Gong Bao has started to become the main online wealth management platform for white collar professionals. In 2015, the platform's O2O model grew quickly due to an increasing number of clients and returning clients. Its outstanding performance also attracted a number of high-quality strategic investors and we will complete our first round of strategic financing in the near future. Yuan Gong Bao offers high-end financial services to white-collar professionals, including wealth management products, insurance products, educational programs and employee benefit programs into specific client groups.

All of our online products are rigorously screened based on the qualifications of the management team, the management team's professionalism, the risk control structure of the product and the rate of return. Yuan Gong Bao helps further expand our customer base with its potential high-net-worth clients of the future and enables them to experience Noah's products and service.

Aside from Yuan Gong Bao, Noah has launched VIPlending in 2014 to build an Internet financing platform for high-net-worth clients and provided transaction service platform for those clients with financing and investing needs. We believe the internet finance market is still in its initial stages and has great potential. Through launching a whole range of complementary Internet finance initiatives, Noah will grab the opportunities and improve our market position.

Chinese Lastly, I would like to talk about the development of China's financial and regulatory environment. As asset management enters a new era in China, asset management policies are becoming more open, especially for private equity management. The regulatory environment is also becoming more standardized.

As a market pioneer, we understand our responsibility in setting codes of conduct for the industry. And in 2014, we implemented a qualification evaluation system for relationship managers to increase their professionalism and business compliance. Gopher Asset Management continuously improves its internal processes and qualified investor management.

That concludes my prepared remarks on our 2014 performance. I will now turn the call over to Mr. Lam so he can introduce himself and discuss our strategy and management direction in 2015. Thank you.

Kenny Lam;President^ Thank you. Thank you, Ms. Wang. Hello, everyone. I would like to begin by briefly introducing myself.

Before joining Noah, I was a global partner at McKinsey and was with McKinsey for 14 years. I was McKinsey's head of private banking and wealth management and also co-led their financial services practice for Asia. Noah was actually a McKinsey client. I have served Noah and Ms. Wang for 3 years, and worked closely with Noah's management for 3 years.

Based on my experience in the sector, I'm very confident that the wealth and asset management industry in China will continue to witness strong growth in the coming decade. Noah has established a leading position in this market. I'd like to thank the board and Ms. Wang for giving me the opportunity to play a role in Noah's development. I look forward to working closely with Chairman Wang and the management team to help build Noah not only to be a leader now, but also for the longer term.

In recent years, Noah has tailored solutions to client needs to, both domestically and abroad, by offering a diversified set of products and services. While maintaining an asset-light operation, we've established an end-to-end business model that covers product design, asset allocation to client servicing. We've expanded our offerings without compromising the quality of our products and services.

2015 is the beginning of our next 10 years. In 2015, we will focus on building a sustainable platform that will support our tremendous growth over the next decade. We'll focus on 3 areas: first, sustainably increasing the capabilities of mid- and back office; second, developing new growth engines; third, continued talent cultivation. I'll go over one by one now.

First, in terms of substantially increasing the capabilities of our mid- and back office, we'll invest resources in our asset management systems and our functional systems. We'll also continue to accelerate development of our IT platform. We'll invest heavily in building our client database so that we can more effectively address client needs. We have one of the most in-depth understanding of Chinese entrepreneurial clients, and we want to systemically leverage that.

For our wealth management and asset management business, I've always believed that risk management is at the core of what we do. Last year, we continued to build our risk management systems and capabilities. In 2015, we will build a more comprehensive risk and compliance system, as well as independent compliance department in line with the regulatory requirement for our asset management business.

In terms of our growth engines, we basically will focus on a few that will be core drivers of our new revenue growth. First is internet finance. Second is discretionary management. Third is our global platform amongst the key growth initiatives for 2015, beyond our traditional business and wealth and asset management.

For our Internet finance business, we've had a great launch with our Yuan Gong Bao product, which is the first Chinese, first pure-online private banking for white collar professionals. We'll continue to accelerate its growth in 2015.

In the wealth management business, we expect discretionary management to play a significant role in our wealth management business. It plays to our strengths as a high-net-worth service provider. We'll continue with solid growth in that business.

For our global platform, we will actively look for organic and inorganic opportunity to expand in Hong Kong and the U.S. In terms of talent cultivation, talent is at the core of what we do. In 2015, we will develop a talent by enhancing our incentive mechanism, implementing a new promotion scheme and providing training for all wealth and professional certifications. By developing the asset allocation skills and professionalism of our relationship managers and the asset management professionals, we're working to cultivate the first generation of real private bankers in China.

We're very optimistic about the future of asset and wealth management in China. Based on recent research, there are about 2.3 million high-net-worth families with an average of $3.7 million in financial assets in China. In the next 5 to 10 years, we expect to see an enormous growth in demand for wealth management services from Chinese white collar workers, high-net-worth individuals and families, as well as institutional clients.

As one of the leading wealth and asset management experts in China. Noah has established a unique and comprehensive financial service model covering wealth, asset management and targeted Internet finance. The management team and I are very confident that the next decade will be an excellent one for Noah, and we're building Noah for the longer term.

Now I'll turn the call to our CFO, Ching Tao, to review our financials. Thank you.

Ching Tao;Chief Financial Officer^ Thank you, Chairman Wong and Kenny. And hello, everyone. In the interest of making the best use of everyone's time, rather than reading through the financials that are disclosed in our release, I will give a high-level overview and highlight a few areas before we go into the Q&A.

Firstly, you'll notice that this quarter, we begun breaking down our financials into 3 business segments: wealth management, asset management and internet finance. We think this better reflects the overall shape of our more diversified business model, and will continue reporting this way from now on.

As for our fourth quarter performance, we're pleased to have ended the year with another steady quarter, both on the top and bottom lines. Q4 net revenue increased just under 40% year-on-year, and full year revenue grew 51% to USD 247.9 million. On the bottom line, non-GAAP net income grew 37% to $77.7 million for the full year, surpassing our prior guidance.

Our wealth management business was the dominant source of revenue in the fourth quarter of 2014, generating 80% of total revenues. Asset-management generated 18% and the Internet finance business generated around 2%.

Our continued efforts to diversify our product mix in the wealth management business were well reflected by our fourth quarter results. Of the $1.9 billion of wealth management products that we distributed during the quarter, fixed income products represented 63% compared to 84% in Q4 of 2013.

Private equity products grew to 19% of total quarterly transaction value, up from 11% a year ago, and equity linked and other products contributed 18% compared to 5% a year ago. You can find the breakdown of the operating metrics of our wealth management business in the table at the back of our earnings release.

Our effective commission rate for Q4 was 1.08%, compared to 1.06% in the same period last year. It is also worth highlighting that recurring revenues accounted for 53% of net revenues in Q4. This is a good reflection of the sustainability of our business model and as our asset management business continues to grow, you can expect recurring revenues to remain at a relatively elevated level, likely above 50%, for the year 2015. We continue to see recurring revenues as an important tool to ensure revenue visibility and stability.

Before I go on to discuss our profitability, I want to briefly touch on the increase in related-party revenues in Q4, which represented 42% of the total net revenues this quarter. The increase was primarily due to an increasing product distributed that are managed by our own asset-management arm, Gopher, as we mentioned earlier. Our asset management business has been growing significantly and had about $8.1 billion in assets under management compared to $7.6 billion just 1 quarter previously.

Turning briefly to our Internet finance business, we're pleased to see continued momentum in this business, with fourth quarter revenues of USD 1.2 million and full year revenues of USD 2.7 million. We are still very much in investment phase of this business but we believe it will be an integral component of our integrated offering in the future and we're confident about the long-term prospects.

Now I'd like to discuss profitability. Operating margin in Q4 was 28.2% compared with 29.2% a year ago. The decline was primarily due to an increase in HR and IT infrastructure expenses, as we continue to develop our Internet finance business and other value-added services. These investments should help us capture additional scale in our businesses and improve our margin profile over the long term.

Non-GAAP net margin was 24.5% compared to 32% a year ago. The decrease was due to utilization of a tax loss carry forward in 2013. So our operating net margins were similar in 2013. Non-GAAP net income was USD 15.5 million in Q4 and $77.7 million for the full year.

Our balance sheet remains very solid and liquid. As of the end of Q4, we had approximately $314 million in cash, short-term and long-term investments, which is an increase of about $17.9 million from the previous quarter. Our business once again has generated positive operating cash flow in Q4 of $40 million mainly as a result of disciplined accounts receivable collection. Accounts receivable turnover of about 60 days was in line with our long-term average, reflecting the continued stability in our operating efficiency as our business grows in scale.

As Chairman Wang and Kenny mentioned in their remarks, we plan to continue expanding our businesses in wealth management, asset management, Internet finance, with potential investments in or acquisition of complementary businesses and related licenses. Our aim is to build a more comprehensive financial platform that will allow us to further expand our customer base, diversify revenues, increase customer stickiness and improve the customer experience.

With the need for these investments in mind, the Board of Directors have opted not to issue an annual cash dividend for the year 2014. We believe these investments are the most prudent use of our cash at this point in time and will generate greater value for shareholders in the long term.

Finally, I would like to comment on our guidance range for 2015. With continued profitability in our wealth and asset-management businesses, as well as significant revenue and customer base growth, we are expecting from our newly established Internet finance business, we expect non-GAAP net income to be between USD 90 million to USD 95 million for the full year 2015. The midpoint of this range represents year-over-year growth of about 20%.

This growth rate reflects the strong fundamentals in our business on the one hand and continued investment in our new business lines, primarily Internet finance, on the other. So with that, Chairman Wang, Kenny and I would be happy to take any questions.

Our first question comes from Matthew Larson of Morgan Stanley.

You were discussing about the growth prospects because of the increasing amount of high-net-worth families and what have you, going forward, which would be fertile ground for growth for your firm. What about the notion that the mainland equity markets -- of course, the other Asian markets are becoming more active and more buoyant, do you see that, that could be a tailwind for your business going forward?

[Chinese] Actually, as Ms. Wang mentioned in her remarks, the raising of the Asian market in China definitely will help us to become more diversified in terms of product mix. Actually in the beginning of the year 2015, we have already start to see the changes. The proportion of secondary market products has already contributed more in terms of our overall transaction value.

Our next question comes from Ella Ji of Oppenheimer.

This is Fiona in for Ella. And I have a question, it's sort of a high-level question. So now that you have made the transition to a full financial group covering various of your business lines. So can management comment on the current competitive landscape in China? And what do you think is your competitive edge?

Kenny Lam;President^ Maybe I'll answer for Ms. Wang. This is Kenny here. The competition indeed has intensified over the course of the year, or last, where we see a new set of players coming in including Internet finance players, third-party independent players, insurers, trust companies and banks. Now I think we basically have 3 core competitive advantage that we think we'll continue to invest in. One is we continue to invest a lot in product development and service development. I think that's an area that is hard to replicate by our competitors. We currently have about 100 professionals just looking at product manufacturing and selecting proper investment products for our clients. And that's something that a lot of the distributive products can't replicate. So that's one area. Second is our network. We currently have one of the largest coverage of high-net-worth clients in China, with over 60 cities and 90 -- over 90 branch offices across China. That's something that is hard to replicate and not easy to build in the short term. So we continue to invest in that. The branch offices that we have across China not only sells investment products, it actually sells a range of investments and high-net-worth services. So that's the second advantage that we have. The third that we have now is that we actually have a diversified platform. So both on asset management that is through our own subsidiary, Gopher Asset Management, as well as our internet finance platform, we actually have a broad set of platform that covers not only private banking for high-net-worth clients, but also asset management for institutional investors as well as Yuan Gong Bao platform, which covers white collar professionals. So that broad platform will help us build sustainably for the next 10 years.

All right, Kenny, that's very helpful. And my second question is that, so now there is this concern over macro slowdown overall. So I was just wondering if that's the case, what type of products do you think will be more suitable or more like welcomed by your clients?

[Chinese] Actually, we've seen the overall Chinese economy from 2 different prospects. The traditional industries, such as import and export, has actually showed quite a slowing down in the recent years. But for the newly emerging industries, such as Internet, medical service and environmental, we have seen those industries start to grow quite dramatically. For a lot of the PE and VC funds that are -- that we introduced to our customers, they invest in those emerging new industries and they already have good returns. So I think, going forward, we'll be kind of like saying, be conservative but also be optimistic in the future.

Kenny Lam;President^ Maybe I'll also add to that. I think what Ms. Wang is saying is in our product development, we're also shifting our focus to new industries such as medical, new media, as well as quite a few other industries that we think are going to be substantially growing in China, particularly in -- also in the environmental development in China. So we think that, in terms of product development, that's an area that we also want to shift our focus to, to other industries that we think are going to be the growth engine for China.

Our next question comes from [Ellen Du] of Citi.

[Chinese] There are actually 3 questions for the management. First, [Lijuan] would like the management to comment further about expansion of the internet finance business and also the institutional clients base and how the internet finance business will impact our margin in year 2015. The second question is regarding about the real estate proportion in the AUM in the assets under management in year 2015. And also, the third question is regarding about the most current status regarding about the Jingtai case that we announced in the August of 2014. So we will answer one by one then.

[Chinese]

Kenny Lam;President^ Great. I'll translate what Ms. Wang just talked about. So on the first question about Internet finance and institutional clients. On institutional clients, we've actually built a team that is now sitting in Gopher Asset Management. We believe that organizational change is actually a good one. Currently, the team is led by a former [Ping Yan] executive, who worked tremendously on a institutional client base. On Internet finance, as I mentioned in my remarks and also in Chairman Wang's remarks, the Internet finance platform is actually quite targeted and growing tremendously. We are China's first app-based Internet private banking for white collars. We continue to invest in building ancillary services for this platform where we will have a payment service, we also have a secured lending platform, as well as connected with our relationship manager of physical platform, so an O2O platform. The whole point of that is not just to be in Internet finance, but to build a business that will become the feeder for our high-net-worth business. So we're focusing on white collars and affluent kinds now. But these are clients that in the next 5, 10 years will become our private banking clients as well. So this -- the Yuan Gong Bao Internet finance platform, growing at around 30% per month now, is going to be a great feeder for our future private banking business. On Gopher Asset Management, which is our asset-management subsidiary, we want to be a multi-boutique asset manager and want to be the Top 2 in China across the categories that we play in. And currently, we're focusing on a few key categories: private equity, private equity fund of fund, real estate across all different type of asset classes, hedge funds and secondary market, as well as certain type of credit asset classes. And the way we built it is beyond just focusing on those asset classes and becoming #1 or 2 in China. We are also good in operational experience. So recently, we've actually taken over a office building in Huangpu. We're actually operating directly. So we want to build operational experience as well. We've invested in around 40 funds in about 600 companies now, and so we continue to build our team. We want to be the Blackstone of China, where we will be a leader in multi-asset, multi-boutique firms. So that's our Gopher Asset Management subsidiary. In terms of the event that happened in August last year, we're actually -- everything is actually proceeding on schedule. We fully expect to recover principal and expected return on time for our investors. So everything is actually on schedule in terms of that particular incident in August 2014.

Our next question comes from [Jung Li] of Trilogy Partners.

[Chinese]

Ching Tao;Chief Financial Officer^ [Chinese] So this is Ching, I will reply to the first and the third question, and Kenny will reply to the second. The first question was regarding our margins for 2015, what trend do we expect to see. The third question relates to average transaction value per client for wealth management business, in the fourth quarter it dropped. And then the second question is regarding our continued investments in Internet finance and new businesses. So first of all, regarding our margins, we're seeing some margin compression, which started last year. And I believe there will be some reasonable amount that may continue this year as we continue to invest in the scale of our businesses. As you've heard, wealth management, asset management, Internet finance are in their infancy in China and we expect that fundamentals, macro wise, in terms of high-net-worth individuals and also enterprises and corporate needing these types of services to be pretty huge. Our market share is fairly low. So we are currently, in the next couple of years, investing in building scale for these new businesses; and also, correspondingly, in the middle and back office strength and infrastructure to support these scales. What we really don't want to do is to lose the market opportunity. So we're focused on grabbing the market opportunity and building market share. And over the long term, I expect that will allow us to have some margin expansion. But in the initial stages, we may see some margin compression. In terms of average transaction value per client. That's a client from third quarter to the fourth quarter due to the product mix. As we distributed relatively more fixed income and also equity, equity-linked products, the average transaction value fell a little bit. So transaction value will tend to have some volatility on a quarter-over-quarter basis due to the product mix per quarter. So in any particular quarter, for example, if we do more alternative-related investments, PE/VC funds, the average buying is much higher at RMB 10 million per product. So that will automatically pull up the average.

Kenny Lam;President^ Okay, great. I'll take the second question. I just want to highlight one thing before I talk about the investment. The operating margin for our core business in wealth management traditional business actually have improved substantially. And so that's why I think in this quarter's announcement, we will provide numbers by segment as we think our businesses are in different stages in development. Our core business has improved substantially. I think the fourth quarter 2014 operating margin is 40.4% compared to 27.8% in the same period of 2013. So it has improved substantially in our core business. In terms of investment, I think Tao Ching is absolutely right. This year is about both growth and investment. As we've mentioned, we will invest substantially in our rapidly expanding Internet finance business, which is a very targeted business for white collar professionals in private banking. We'll also grow substantially our asset management capability, and so that's an area that we want to invest in. On our core business, we will invest substantially in building corporate platform for operations and IT. And those are 3 areas that we want to continue to invest. So overall, group margin may continue to decline due to those investments, but we'll actually look at our businesses very separately. And in our core business, in our traditional business, wealth management, we expect the margin to be stable or improving just like we've done actually in this quarter, where we've seen a substantial improvement on margin for the traditional businesses.

Thank you, everyone, for joining us. We're looking forward to updating you of our first quarter 2015 results in a few months ahead. Thank you.

Kenny Lam;President^ Great. Thank you.

Ching Tao;Chief Financial Officer^ Thank you.