Highest Performances Holdings Co., Ltd.Nasdaq:HPH) Second Quarter 2024 Earnings Conference Call May 30, 2024 at 9:00 PM ET
Corporate Participants
Doris Wu – Financial Reporting Manager, HPH
Yinan Hu – Chief Executive Officer
Yang Yuanfeng – Chief Financial Officer
operator
Ladies and gentlemen, welcome to Highest Performances Holdings Inc.’s first half fiscal year 2024 financial results conference call. (Operator Instructions) For your convenience, today’s conference call is being recorded. The call is also being broadcast live over the Internet and will be available for replay on the company’s website.
Now, I would like to turn the conference over to our first speaker today, Ms. Doris Wu, Manager of Financial Reporting at HPH. Thank you. Please go ahead.
Doris Wu
Thank you. Good morning, everyone. Good evening. Welcome to our fiscal year 2024 first half earnings call. Our semi-annual report on Form 6-K was uploaded today to the U.S. Securities and Exchange Commission’s website and is also available on our investor relations website.
Before we continue, we wish to caution you that today’s discussion contains forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The accuracy of these statements is subject to a number of risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, those described in our filings with the SEC, including our 20-F. We undertake no obligation to update any forward-looking information, except as required by applicable law.
Joining us today are Yinan Hu, our Vice Chairman, Chairman of the Board and Chief Executive Officer, and Yuanfeng Yang, our Chief Financial Officer. Mr. Hu will provide an overview of the company’s recent strategic initiatives and first quarter business performance. That’s halfway through fiscal year 2024. I’ll be joining Mr. Yang in answering your questions after our prepared remarks.
Now I will hand the reins over to Mr. Hu, our Vice Chairman and CEO. Mr. Hu, please begin.
Yinan Hu
(Foreign Language)
Doris Wu
Good evening. Thank you for joining Highest Performances Holdings Inc.’s first half of fiscal 2024 financial results conference call. Today’s conference call will be co-hosted by me and Yang Yuanfeng, our Chief Financial Officer. First, I will explain our recent strategic adjustments and associated initiatives. Next, I will provide a business overview and management outlook for the first half of fiscal 2024, and finally we will open a Q&A session to accept questions from participants.
Hu Yinan
(Foreign Language)
Doris Wu
Let me start by detailing our recent strategic initiatives. We have successfully implemented strategic transformation and upgrading. The acquisition of Fanhua has increased our market capitalization by 2.34 times year-on-year and our net assets by 13 times. Amid the current micro-economic downturn and declining investor risk appetite, we have proactively responded to market changes by implementing a series of strategic initiatives that are in line with our long-term development vision, aiming to maintain solid growth in this complex and ever-changing environment.
Hu Yinan
(Foreign Language)
Doris Wu
Based on our long-term vision and strategic positioning, we completed the share exchange transaction with certain shareholders of Fanhua Inc. at the end of 2023, which resulted in HPH holding a 16.1% equity interest in Fanhua and becoming the controlling shareholder as a result of the financial statement consolidation. As of December 31, 2023, HPH’s total net assets were RMB4.98 billion and its net assets were RMB3.12 billion. HPH’s market capitalization exceeded US$1.5 billion, laying a solid foundation for us to pursue our acquisition strategy.
Hu Yinan
(Foreign Language)
Doris Wu
The company signed a framework agreement with Singapore’s White Group Private Trading Enterprise Limited in February 2024, aiming to leverage White Group’s global fundraising and M&A strengths to accelerate its intelligence and global development strategy and launch a new stage of robust growth. Currently, the company is working closely with White Group and its partners to implement several investment projects.
Hu Yinan
(Foreign Language)
Doris Wu
In the second half, I will provide an overview of our performance in the first half of fiscal 2024. Our core business is the fund retail business. In the first half of fiscal 2024, we strengthened our core business and innovated our fund business. Due to the expansion of our business for institutional investors, the transaction volume and balance of publicly offered fund products for institutional investors increased by 129% and 456%, respectively, year-on-year.
Hu Yinan
(Foreign Language)
Doris Wu
Pu Yi Fund’s retail business has pursued a long-term strategy and adaptive principles that focus on enhancing product selection and sales services, as well as strengthening operations and system support, and has successfully stabilized its customer base and transaction volume even in the midst of major market fluctuations.
Hu Yinan
(Foreign Language)
Doris Wu
The Company continues to diversify its product offering by increasing the number of public fundraising product suppliers it works with from 103 to 107, covering more than 90% of the products currently available on the market.
Hu Yinan
(Foreign Language)
Doris Wu
We have built a multi-account system (with gearing) with functional investment advisory products to enhance clients’ investments, which resulted in a 30% increase in per capita investment amount from RMB 29,500 to RMB 33,500.
Hu Yinan
(Foreign Language)
Doris Wu
We have implemented a tiered management system for financial advisors to facilitate targeted marketing efforts and have stabilized the number of financial advisors at approximately 20,000.
Hu Yinan
(Foreign Language)
Doris Wu
With a focus on digitalization and intelligence exploration, we have further enhanced and upgraded the Puyi Fund platform and the Financial Planner platform. New features such as the Financial Planner dashboard and credit system have been introduced to improve the user experience for both customers and financial advisors.
Hu Yinan
(Foreign Language)
Doris Wu
Our institutional business made great progress by validating our channel model. Equipped with modern systems and capabilities, our one-stop trading platform has strengthened its presence among institutional investors, and our public fund transaction volume exceeded RMB4.8 billion, with outstanding balance reaching RMB2.85 billion, up 1.3 times and 4.6 times year-on-year respectively.
Hu Yinan
(Foreign Language)
Doris Wu
We successfully facilitated cooperation with banks and insurance companies in reaching target customers by implementing external channel resources while ensuring cost control.
Hu Yinan
(Foreign Language)
Doris Wu
The company has established long-term strategic partnerships with major listed banks such as Ping An Bank and Minsheng Bank, with actual investment exceeding RMB 3.1 billion, laying a solid foundation for more financial institution assets, and the transition of custody bank has been completed successfully.
Hu Yinan
(Foreign Language)
Doris Wu
In terms of internal management, we drive cost reduction through efficient management and ensure growth and efficiency through compliant operations. We have established sustainable mechanisms for cost reduction and (invisible) savings. We have reduced administrative and sales expenses by 40.7% year-on-year through adjustments to our marketing strategies. We enforce reductions in working days, etc., through upgrades to payment methods, without compromising management efficiency.
Hu Yinan
(Foreign Language)
Doris Wu
We actively strive to comply with regulations and compliance policies by implementing rigorous compliance training, strengthening compliance discipline and clarifying responsibilities at all levels, and ensure that our business staff, business facilities and internal controls at the head office and all branches are in full compliance with relevant laws and regulations.
Hu Yinan
(Foreign Language)
Doris Wu
Facing economic challenges, we will continue to embrace market changes and implement our strategic plan. By promoting business synergy with Fanhua and expanding our asset management and institutional business, we will continuously enhance our competitiveness and market influence, and provide customers with high-quality and more diversified financial and non-financial services. At the same time, we will promote digitalization and intelligent development to improve service experience and ensure the sustainable growth and long-term development of the company.
Hu Yinan
(Foreign Language)
Doris Wu
We appreciate your attention and support and look forward to sharing our future success together.
Hu Yinan
(Foreign Language)
Doris Wu
Now, it’s time for questions and answers.
Q&A session
operator
Doris Wu
Yes. Thank you very much for joining us on today’s conference call, and please feel free to contact us with any questions you may have. Thank you.
operator
Thank you. The meeting is now over. Thank you for attending today’s presentation. You may now hang up.
