Maase Inc. (MAAS) Q2 2024 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to Highest Performances Holdings Inc.'s First Half of Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] For your information, today's conference call is being recorded. This conference call is also being broadcast live over the Internet and will be available for replay purposes on the company's website. I would like to now turn the meeting over to your first speaker today, Ms. Doris Wu, HPH Manager of Financial Reporting department. Thank you. Please go ahead.

Thank you. Good morning and good evening, everyone. Welcome to our earnings conference call for the first half of the fiscal year 2024. Our half year report on Form 6-K has been uploaded to the website of U.S. Securities and Exchange Commission earlier today and is also available on our IR website. Before we continue, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. The accuracy of these statements may be impacted by 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 not limited to, those outlined in our filings with the SEC, including our 20-F. We do not undertake any obligation to update the forward-looking information, except as required under the applicable laws. Joining us today, are our Vice Chairman, Chairman of the Board, and Chief Executive Officer, Mr. Yinan Hu; and Chief Financial Officer, Mrs. Yuanfen Yang. Mr. Hu will walk you through our recent strategic initiatives and business overview of the first half of the fiscal year 2024. And together with Ms. Yang, we'll answer your question after the prepared remarks. Now, I will turn the call over to our Vice Chairman and CEO, Mr. Hu. Mr. Hu, you may begin.

[Foreign Language]

Good evening and thank you for joining us on the Highest Performances Holdings Inc.'s earnings conference call for the first half of the fiscal year 2024. Today, the conference call will be co-hosted by me and our Chief financial Officer, Mrs. Yuanfen Yang. For starters, I will walk you through the company's recent strategic adjustments and corresponding initiatives. Then we will give a business overview for the first half of the fiscal year 2024 and the management overlook, and we will have a Q&A section at the end to take questions from participants.

[Foreign Language]

Firstly, I will elaborate on the company's recent strategic initiatives. We have implemented strategic transformation and upgrades successfully. Acquisitions with Fanhua have led to 2.34 year-on-year increase in total market value and 13-fold in net assets. Amidst the current microeconomic downturn and diminished risk appetite among investors, we have proactively responded to market changes by implementing a series of strategic initiatives aligned with the company's long-term development vision, aiming to sustain solid growth in this complex and evolving environment.

[Foreign Language]

Based on the company's long-term vision and strategic positioning, at the end of 2023, we completed an exchange transaction with certain shareholders of Fanhua Inc., following which HPH holds 16.1% of Fanhua's equity interest, becoming a controlling shareholder as a result of the financial statement consolidation. As of December 31, 2023, HPH total net assets amounted to RMB 4.98 billion with net asset of RMB 3.12 billion. HPH total market value exceeded USD 1.5 billion, laying a solid foundation for the company to pursue its acquisition strategy.

[Foreign Language]

In February 2024, the company signed a framework agreement with Singapore White Group Private Trading Enterprise Limited, aiming to leveraging White Group's strength in financing and M&A on a global scale to accelerate its intelligence and global development strategies, and to initiate a new phase of strong growth. We are currently working closely with White Group and its partners on implementing several investment projects.

[Foreign Language]

In the second part, I will give an overlook of the company's business performance for the first half of the fiscal year 2024. Our core business is fund retail business. In the first half of the fiscal year 2024, we have solidifying our core business and seeking innovation in fund business. Institution business expansion resulted in 129% and 456% year-on-year increase in the transaction value and outstanding balance of the public raised fund product by institutional clients, respectively.

[Foreign Language]

For our Puyi Fund retail business, we pursue a long-term strategy and suitability principle focusing on enhancing product selection and marketing service, and strengthening operations and system support. Despite significant market fluctuations, we have successfully stabilized both our customer base and business volume.

[Foreign Language]

We have continued to diversify our product offerings by increasing the number of public raised fund product suppliers that we collaborate with from 103 to 107, covering over 90% of the products currently available in the market.

[Foreign Language]

We have built a multi-account system with functional investment advisory product to enhance clients' investment [ with gearing ], resulting in a 30% increase in per capita investment, amounting from RMB 29,500 to RMB 33,500.

[Foreign Language]

We implement a tiered management system for financial advisors, facilitating targeted marketing efforts, which help us stabilize the number of our financial advisors at approximately 20,000.

[Foreign Language]

We further enhanced and upgraded Puyi Fund platform and Financial Planner platform with a focus on digitalization and intelligence exploration. New features like Financial Planner dashboards and credit systems has been introduced to elevate the users' experience for both customers and financial advisors.

[Foreign Language]

Our institutional business achieved a significant breakthrough with channel models validated. Our one-stop trading platform equipped with up-to-date systems and functionalities has gained presence amongst institutions, resulting in transaction value of public raised fund of over RMB 4.8 billion with outstanding balance of RMB 2.85 billion, representing a 1.3x and 4.6x increase year-on-year, respectively.

[Foreign Language]

We successfully introduced external channel resources while ensuring cost control to facilitate cooperation in reaching the target clients of banks and insurance companies.

[Foreign Language]

Custodian bank transition has been successfully completed as we have established long-term strategic partnerships with large listed banks such as Ping An and Minsheng banks with actual investment amount exceeding RMB 3.1 billion, laying a solid foundation for more financial institution assets.

[Foreign Language]

For internal management, efficient management drives cost reduction and compliance operations ensure growth and efficiency. We have established a sustainable mechanism for cost reduction and [indiscernible] savings. The company has reduced management and sales expense by 40.7% year-on-year through marketing strategies adjustment. Upgraded payment method will force an office day reduction and so on, without compromising management efficiency.

[Foreign Language]

We have taken an active role in complying with the regulation and compliance policy by providing strict compliance training, enhancing -- enforcing compliance discipline, clarifying responsibility at all levels to ensure that the business staff, business facilities, and internal controls of our headquarters and all branches fully comply with relevant laws and regulations.

[Foreign Language]

Faced with economic challenges, we will continue to embrace market changes with a steady stand and execute our strategic plans. By fostering business synergy with Fanhua and expanding our wealth management and institutional business, we will continuously enhance the company's competitive edge and market influence, providing customers with high-quality and more diverse financial and non-financial service. Meanwhile, we will persist in driving digitization and intelligent development to improve service experience, ensuring sustainable growth and long-term development of the company.

[Foreign Language]

We appreciate your attention and support and look forward to jointly witnessing the future success of the company.

[Foreign Language]

Now, the floor opens for the Q&A section.

Okay. Thank you very much for attending today's conference call. If you have any questions, feel free to contact us anytime. Thank you.

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