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Jupai Reports First Quarter 2017 Results

2017-05-08 18:20
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SHANGHAI, May 8, 2017 /PRNewswire/ -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE: JP), a leading third-party wealth management service provider, focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China, today announced its unaudited financial results for the first quarter ended March 31, 2017.

Effective July 1, 2016, Jupai changed its reporting currency from the U.S. dollars to Renminbi. The aligning of the reporting currency with the underlying operations better reflects the Company's results of operations for each period, and reduces the impact that the increased volatility of the Renminbi to U.S. dollars exchange rate will have on the Company's reported operating results. In this announcement, the unaudited financial results for the first quarter ended March 31, 2017, are stated in Renminbi. This release contains translations of certain Renminbi amounts into U.S. dollars for convenience. Prior period financial results have been recast into the new reporting currency.

FIRST QUARTER 2017 FINANCIAL HIGHLIGHTS

  • Net revenues in the first quarter of 2017 were RMB368.7 million (US[1]$53.6 million), a 64.6% increase from the corresponding period in 2016.

(RMB '000, except percentages)

Q1 2016


Q1 2016 %


Q1 2017


Q1 2017 %


YoY Change %

One-time commissions

154,974


69.1%


234,759


63.7%


51.5%

Recurring management fees

36,632


16.4%


67,617


18.3%


84.6%

Recurring service fees

32,404


14.5%


26,225


7.1%


-19.1%

Other service fees

-


-


40,139


10.9%


100.0%

Total net revenues

224,010


100.0%


368,740


100.0%


64.6%

  • Income from operations in the first quarter of 2017 was RMB125.3 million (US$18.2 million), a 299.3% increase from the corresponding period in 2016.
  • Net income attributable to ordinary shareholders in the first quarter of 2017 was RMB90.7 million (US$13.2 million), a 242.3% increase from the corresponding period in 2016.
  • Non-GAAP[2] net income attributable to ordinary shareholders in the first quarter of 2017 was RMB101.2 million (US$14.7 million), a 190.2% increase from the corresponding period in 2016.

[1] The U.S. dollars (US$) amounts disclosed in this press release, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the reader. The conversion of Renminbi (RMB) into U.S. dollars (US$) in this press release is based on the noon buying rate on March 31, 2017, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB6.8832 to US$1.00. The percentages stated in this press release are calculated based on the Renminbi amounts.

[2] Jupai's non-GAAP financial measures are derived from adjusting the corresponding GAAP financial measures by excluding the effects of share-based compensation and amortization of intangible assets resulted from business acquisitions.

FIRST QUARTER 2017 OPERATIONAL UPDATES 

  • Total number of active clients[3] during the first quarter of 2017 was 4,192.
  • The aggregate value of wealth management products distributed by the Company during the first quarter of 2017 was RMB14.2 billion (US$2.1 billion), a 31.1% increase from the corresponding period in 2016.

Wealth management products distributed by the Company - breakdown by product type


Three months ended



March 31, 2016


March 31, 2017

Product type

(RMB in millions, except percentages)

Fixed income products

5,203

48%


11,218

79%

Private equity products

4,059

37%


2,332

16%

Secondary market equity fund products

1,262

12%


20

1%

Other products

308

3%


628

4%

All products

10,832

100%


14,198

100%

  • Jupai's coverage network as of March 31, 2017 included 72 client centers covering 44 cities, up from 58 client centers covering 35 cities, as of March 31, 2016.
  • Total assets under management[4] as of March 31, 2017 were RMB43.1 billion (US$6.3 billion), a 19.2% increase from December 31, 2016 and a 101.0% increase from March 31, 2016.

Assets under management – breakdown by product type


As of


March 31, 2016


March 31, 2017

Product type

(RMB in millions, except percentages)

Fixed income products

8,627

40%


22,856

53%

Private equity products

10,870

51%


16,774

39%

Secondary market equity fund products

1,464

7%


2,997

7%

Other products

475

2%


451

1%

All products

21,436

100%


43,078

100%

 

[3] "Active clients" for a given period refers to clients who purchase wealth management products distributed by Jupai at least once during that given period.

[4] "Assets under management" by Jupai refers to the amount of capital contributions made by the investors to the fund without adjustment for any gain or loss from investment.

"We delivered a set of solid results for the first quarter of 2017, with continued rapid growth on both our top and bottom lines," said Mr. Jianda Ni, Jupai's co-chairman of the board and chief executive officer. "Our net revenues for the quarter reached another record high of RMB368.7 million, up 64.6% year-on-year, and our net income attributable to ordinary shareholders rose by an impressive 242.3% year-on-year to RMB90.7 million."

Mr. Ni continued, "Our in-depth industry knowledge and big data analytics capabilities through our relationships with E-House, a leading real estate service company, and CRIC, a top real estate information database, enable us to identify quality underlying assets and offer fixed-income products with attractive risk-return profiles, a crucial advantage as investors in China have become more conservative over the past quarters. In the first quarter of 2017, we increased the aggregate value of products distributed by us to RMB14.2 billion, a 31.1% increase year-on-year. Additionally, our total assets under management increased to RMB43.1 billion as of March 31, 2017, a 101.0% increase year-on-year."

Mr. Tianxiang Hu, Jupai's co-chairman of the board, said, "Looking forward, as we further strengthen our core competence within the fixed income product category, we will look to further expand our product range in order to better meet investors' asset allocation needs. While we have adopted a prudent approach towards overseas expansion, we will continue to look for appropriate opportunities to build our business outside of China."

Ms. Min Liu, Jupai's chief financial officer, said, "We continued to perform strongly in the first quarter of 2017, with our net revenues substantially surpassing management guidance. Our operating margin for the quarter rose to 34%, up from 14% in the same period last year, as we implemented effective cost control measures. We remain confident about the outlook for our bottom line, as we further enhance our operating efficiency, optimize revenue structure, and expand our business scale."

FIRST QUARTER 2017 FINANCIAL RESULTS

Net Revenues

Net revenues for the first quarter of 2017 were RMB368.7 million (US$53.6 million), a 64.6% increase from the corresponding period in 2016, primarily due to increases in one-time commissions, recurring management fees and other service fees.

  • Net revenues from one-time commissions for the first quarter of 2017 were RMB234.8 million (US$34.1 million), a 51.5% increase from the corresponding period in 2016, primarily as a result of an increase in the aggregate value of wealth management products distributed by the Company and changes in product mix.
  • Net revenues from recurring management fees for the first quarter of 2017 were RMB67.6 million (US$9.8 million), an 84.6% increase from the corresponding period in 2016. The Company recognized RMB1.7 million (US$0.2 million) and RMB3.5 million carried interest in the first quarter of 2017 and 2016, respectively.
  • Net revenues from recurring service fees for the first quarter of 2017 were RMB26.2 million (US$3.8 million), a 19.1% decrease from the corresponding period in 2016, primarily because the Company provided ongoing services to fewer product suppliers. The Company recognized RMB1.4 million (US$0.2 million) and RMB3.9 million variable performance fees in the first quarter of 2017 and 2016, respectively.
  • Net revenues from other service fees for the first quarter of 2017 were RMB40.1 million (US$5.8 million), which mainly included sub-advisory fees collected from other companies.

Operating Costs and Expenses

Operating costs and expenses for the first quarter of 2017 were RMB243.5 million (US$35.4 million), an increase of 26.4% from the corresponding period in 2016.

  • Cost of revenues for the first quarter of 2017 was RMB134.8 million (US$19.6 million), a 20.9% increase from the corresponding period in 2016, primarily due to increases in the number of wealth management advisors and client managers and their average compensation.
  • Selling expenses for the first quarter of 2017 were RMB59.5 million (US$8.6 million), a 13.6% increase from the corresponding period in 2016, primarily due to increases in marketing, advertising and brand promotion expenses.
  • G&A expenses for the first quarter of 2017 were RMB52.6 million (US$7.6 million), a 65.0% increase from the corresponding period in 2016, mainly due to increases in both the numbers of managerial and administrative personnel and their average compensation as well as increases in rental and office supply expenses.
  • Other operating income (government subsidies) received by the Company in the first quarter of 2017 was RMB 3.4 million (US$0.5 million), an 8.1% increase from the corresponding period in 2016.

Operating margin for the first quarter of 2017 was 34.0%, compared to 14.0% for the corresponding period in 2016.

Income tax expenses for the first quarter of 2017 were RMB29.6 million (US$4.3 million), a 237.4% increase from the corresponding period in 2016. The increase was primarily due to an increase in taxable income.

Net Income

  • Net Income
    • Net income attributable to ordinary shareholders for the first quarter of 2017 was RMB90.7 million (US$13.2 million), a 242.3% increase from the corresponding period in 2016.
    • Net margin attributable to ordinary shareholders for the first quarter of 2017 was 24.6%, as compared to 11.8% for the corresponding period in 2016.
    • Net income attributable to ordinary shareholders per basic and diluted American depositary share ("ADS") for the first quarter of 2017 was RMB2.81 (US$0.41) and RMB2.69 (US$0.39), respectively, as compared to RMB0.83 and RMB0.80, respectively, for the corresponding period in 2016.
  • Non-GAAP Net Income
    • Non-GAAP net income attributable to ordinary shareholders for the first quarter of 2017 was RMB101.2 million (US$14.7 million), a 190.2% increase from the corresponding period in 2016.
    • Non-GAAP net margin attributable to ordinary shareholders for the first quarter of 2017 was 27.4%, as compared to 15.6% for the corresponding period in 2016.
    • Non-GAAP net income attributable to ordinary shareholders per diluted ADS for the first quarter of 2017 was RMB3.00 (US$0.44), as compared to RMB1.05 for the corresponding period in 2016.

Balance Sheet and Cash Flow

As of March 31, 2017, the Company had RMB1,208.9 million (US$175.6 million) in cash and cash equivalents, compared to RMB1,123.2 million as of December 31, 2016.

Net cash provided by operating activities during the first quarter of 2017 was RMB220.3 million (US$32.0 million).

Net cash used in investing activities during the first quarter of 2017 was RMB14.6 million (US$2.1 million).

Net cash used in financing activities during the first quarter of 2017 was RMB120.0 million (US$17.4 million).

BUSINESS OUTLOOK

The Company estimates that its net revenues for the second quarter of 2017 will be in the range of RMB367 million to RMB392 million, an increase of 50% to 60% compared to the same period in 2016. This forecast reflects the Company's current and preliminary view, which is subject to change.

CONFERENCE CALL

Jupai's management will host an earnings conference call on May 8, 2017 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

U.S./International:

+1-855-298-3404 or +1-631-514-2526

Hong Kong:

800-905-927 or +852-5808-3202

Mainland China:

400-120-0539

Singapore

800-616-3222 or +65-3157-9230

Passcode:

2773057

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until May 15, 2017:

U.S./International:

+1-866-846-0868

Hong Kong:

800-966-697

Mainland China:

400-184-2240

Singapore

800-616-2127

Passcode:

2773057

Additionally, a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation and amortization of intangible assets related to acquisition. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented, management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation and amortization of intangible assets related to acquisition to supplement U.S. GAAP financial data. As such, the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders, non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP, the Company recognized significant amounts of expenses for the restricted shares and share options, and amortization of intangible assets related to acquisition in the periods presented. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE: JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population. 

For more information, please visit http://jupai.investorroom.com.

SAFE HARBOR STATEMENT

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Jupai's strategic and operational plans, contain forward-looking statements. Jupai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Jupai's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development, financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; the result of the integration of E-House Capital into the Company; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Jupai does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under applicable law.

Contacts:

Jupai Holdings Limited
Harry He
Director of Investor Relations
Jupai Holdings Limited
Phone: +86 (21) 6026 9129
Email: ir@jpinvestment.cn

Philip Lisio
The Foote Group
Phone: +86 (10) 8429 9544
Email: Jupai-IR@thefootegroup.com

— FINANCIAL AND OPERATIONAL TABLES FOLLOW —

Jupai Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

(In RMB)




As of


December 31,


March 31,


March 31,


2016


2017


2017


RMB


RMB


USD

Assets






Current assets:






Cash and cash equivalents

1,123,166,156


1,208,941,438


175,636,541

Short-term investments

25,210,000


25,178,000


3,657,892

Accounts receivable

52,111,944


24,968,646


3,627,476

Other receivables

71,064,287


53,399,199


7,757,903

Amounts due from related parties

133,560,483


125,328,343


18,207,860

Deferred tax assets — current[5]

55,791,373


-


-

Investments at cost method — current

-


5,200,000


755,463

Other current assets

12,551,186


12,738,675


1,850,691

Total current assets

1,473,455,429


1,455,754,301


211,493,826

Investments at cost method — non-current

70,450,000


68,250,000


9,915,446

Investment in affiliates

85,830,444


79,519,466


11,552,689

Advanced payment for acquisition

77,560,000


77,560,000


11,268,015

Property and equipment, net

37,199,812


39,651,702


5,760,649

Intangible assets

83,072,545


82,734,130


12,019,719

Goodwill

277,752,765


276,241,624


40,132,731

Long-term prepayment

6,261,152


8,701,430


1,264,155

Other non-current assets

7,977,534


17,787,829


2,584,238

Deferred tax assets — non-current

8,494,738


64,286,111


9,339,569

Total Assets

2,128,054,419


2,170,486,593


315,331,037







Liabilities and Equity






Current liabilities:






Accrued payroll and welfare expenses

101,864,007


94,623,680


13,747,048

Income tax payable

138,131,812


147,188,945


21,383,796

Other tax payable

58,189,283


57,891,990


8,410,621

Dividend payable

10,160,503


-


-

Amounts due to related parties-current

6,118,678


5,606,900


814,578

Deferred revenue from related parties

121,644,250


170,907,371


24,829,639

Deferred revenues

36,432,195


36,174,153


5,255,427

Other current liabilities

10,397,008


9,198,047


1,336,304

Total current liabilities

482,937,736


521,591,086


75,777,413

Deferred revenue — non-current from related parties

75,413,617


99,338,586


14,432,036

Deferred revenue — non-current

5,677,905


2,392,513


347,587

Non-current uncertain tax position liabilities

5,938,816


-


-

Deferred tax liabilities— non-current

9,815,595


8,566,873


1,244,606

Total Liabilities

579,783,669


631,889,058


91,801,642

Equity

1,548,270,750


1,538,597,535


223,529,395

Total Liabilities and Total Shareholders' Equity

2,128,054,419


2,170,486,593


315,331,037







[5] Jupai adopted ASU 2015-17 and therefore, deferred tax assets and liabilities are classified as non-current assets and liabilities starting 2017.
Prior balances were not retrospectively adjusted.

 

Jupai Holdings Limited

Unaudited Condensed Consolidated Income Statements

(In RMB, except for ADS data, per ADS data and percentages)





Three months ended



March 31,


March 31,


March 31,


YoY


2016


2017


2017


Change %


RMB


RMB


USD



Revenues








Third party revenues

85,918,313


101,873,393


14,800,295


18.6%

Related party revenues

140,719,449


268,841,531


39,057,638


91.0%

Total revenues

226,637,762


370,714,924


53,857,933


63.6%

Business taxes and related surcharges

(2,628,257)


(1,974,544)


(286,864)


-24.9%

Net revenues

224,009,505


368,740,380


53,571,069


64.6%









Operating costs and expenses:








Cost of revenues

(111,493,031)


(134,752,532)


(19,577,018)


20.9%

Selling expenses

(52,414,816)


(59,519,090)


(8,647,009)


13.6%

General and administrative expenses

(31,883,479)


(52,621,880)


(7,644,973)


65.0%

Other operating income — government subsidies

3,151,462


3,408,212


495,149


8.1%

Total operating cost and expenses

(192,639,864)


(243,485,290)


(35,373,851)


26.4%

Income from operations

31,369,641


125,255,090


18,197,218


299.3%









Interest income

708,155


7,503,409


1,090,105


959.6%

Investment income

3,159,792


2,041,799


296,635


-35.4%

Other loss

298,453


23,223


3,374


-92.2%

Total other income

4,166,400


9,568,431


1,390,114


129.7%

Income before taxes and income from equity in affiliates

35,536,041


134,823,521


19,587,332


279.4%

Income tax expense

(8,782,286)


(29,635,028)


(4,305,415)


237.4%

(Loss) from equity in affiliates

(253,461)


(5,716,843)


(830,550)


2,155.5%

Net income

26,500,294


99,471,650


14,451,367


275.4%

Net income attributable to non-controlling interests

(7,410)


(8,778,757)


(1,275,389)


118,371.8%

Net income attributable to ordinary shareholders

26,492,884


90,692,893


13,175,978


242.3%









Net income per ADS:








Basic

0.83


2.81


0.41


238.6%

Diluted

0.80


2.69


0.39


236.3%

Weighted average number of ADSs used in computation:








Basic

31,941,938


32,303,977


32,303,977



Diluted

33,238,901


33,732,924


33,732,924



 

Jupai Holdings Limited

Unaudited Condensed Comprehensive Income Statements

(In RMB)





Three months ended



March 31,


March 31,


March 31,


Change


2016


2017


2017




RMB


RMB


USD



Net income

26,500,294


99,471,650


14,451,367


275%

Other comprehensive income, net of tax:








Change in cumulative foreign currency translation adjustment

(3,907,463)


(6,186,464)


(898,777)


58%

Other comprehensive income

(3,907,463)


(6,186,464)


(898,777)


58%

Comprehensive income

22,592,831


93,285,186


13,552,590


313%

Less: Comprehensive income attributable to non-controlling interests

7,410


8,778,757


1,275,389


118,372%

Comprehensive income attributable to ordinary shareholders

22,585,421


84,506,429


12,277,201


274%

 

Jupai Holdings Limited

Reconciliation of GAAP to Non-GAAP Results

(In RMB, except for ADS data and percentages)





Three months ended



March 31,


March 31,


Change


2016


2017




RMB


RMB



Net margin attributable to ordinary shareholders

11.8%


24.6%



Adjusted net margin attributable to ordinary shareholders (non-GAAP)

15.6%


27.4%









Net income attributable to ordinary shareholders

26,492,884


90,692,893


242.3%

Adjustment for share-based compensation

5,002,496


6,886,881


37.7%

Adjustment for amortization of intangible assets related to acquisition

3,366,836


3,595,958


6.8%

Adjusted net income attributable to ordinary shares(non-GAAP)

34,862,216


101,175,732


190.2%







Net income attributable to ordinary shares per ADS, diluted

0.80


2.69


236.3%

Adjusted net income attributable to ordinary shares per ADS, diluted (non-GAAP)

1.05


3.00


185.7%







Weighted average number of ADSs used in computation:






Diluted

33,238,901


33,732,924


1.5%

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/jupai-reports-first-quarter-2017-results-300453020.html

Source: Jupai Holdings Limited

Related stocks: NYSE:JP

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