Noah Holdings Limited (NYSE: NOAH) Downgraded to Neutral by JP Morgan

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Noah Holdings Limited (NYSE:NOAH) stock fell 2.66% (As on Nov 26, 10:46:42 AM UTC-4, Source: Google Finance) after JP Morgan downgraded the previous rating for Noah Holdings Ltd from Overweight to Neutral. Noah Holdings earned $0.65 in the third quarter, compared to $0.71 in the year-ago quarter. At the moment, the stock has a 52-week-high of $52.77 and a 52-week-low of $29.41.

Meanwhile, for the third quarter of 2021, the company’s income from operations were RMB228.9 million, down 31.8% quarter-over-quarter and 34.1% year-over-year, with an operating margin of 25.2%. The decline in operating margin was mainly due to increased efforts in talent acquisitions and retentions, continued investments in IT infrastructure, increased marketing activities, including depreciation, amortization expenses related to our newly acquired headquarter, as well as the preplanned execution of our yearly strategic investment budget. Non-GAAP net income for the quarter was RMB284.2 million and RMB1.08 billion for the first three quarters. Transaction values during the quarter was RMB24.1 billion, down 3.7% quarter-over-quarter and 16.4% year-over-year, mainly due to the overall performance in the secondary markets, and the seasonality nature of the primary market fundraising activities.

Moreover, by segment, net revenues from the wealth management business was RMB653.6 million, up 4.5% quarter-over-quarter and 4.1% year-over-year, which contributed to 72% of total net revenues. Net revenues from the asset management business amounted to RMB241.4 million, down 5.8% quarter-over-quarter, but up 8.5% year-over-year. Total AUM increased marginally from the previous quarter to RMB156.1 billion, as the growth in PE AUM was partially offset by redemptions of real estate-related investments. Net revenues derived from overseas business was RMB250.4 million, up 10% quarter-over-quarter and 58.5% year-over-year, mainly contributed by carry income realized by successful exits in the U.S. dollar investment products the company place for the clients. The company had cash balance of RMB2.8 billion by end of this quarter, as well as improved debt-to-asset ratio of 22%, with no interest-bearing debt. In the third quarter of 2021, Noah achieved a net revenues of RMB910 million, an increase of 5.8% year-on-year, of which the recurring service fees reached RMB570 million due to the snowball effect of the scale of the assets on advisory. In the third quarter of 2021, the total number of active clients, including mutual fund-only clients increased by 3.7% year-on-year and 4.8% quarter-on-quarter. The number of conventional active clients increased by 25.5% year-on-year.

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