Jingbo Wang - Co-founder, Chairman and Chief Executive Officer Ching Tao - Chief Financial Officer Kenny Lam - Group President

Ellen Tu - BICC Ella Ji - Oppenheimer David Lee - BM Capital Chao Chen - Citi China

Good day, ladies and gentlemen. Welcome to Noah Holdings Limited First Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, there will be a Q&A session. During the Q&A session, we ask that you please limit yourselves to two questions and one follow-up. If you would like to ask additional questions, you may reenter the queue to do so. As a reminder, this conference is being recorded. After the close of the U.S. market on Monday, Noah issued a press release announcing its first quarter 2015 financial results, which is available on the company's IR webpage at noahwm.investorroom.com. This call is also being webcast and will be available for replay purposes on the company's website. I would like to call your attention to the Safe Harbor statements in connection with today's call. The company will make forward-looking statements, including those with respect to expected future operating results and expansion of its business. Please refer to the risk factors inherent in the company's business and that have been filed with the SEC. Actual results may be materially different from any forward-looking statements the company makes today. Noah Holdings Limited does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under the applicable law. The results announced today are unaudited and subject to adjustments in connection with the completion of the company's audit. Additionally, certain non-GAAP measures will be issued in our financial discussion. A reconciliation of GAAP and non-GAAP financial results can be found in the earnings press release posted on the company's website. I would now like to hand the call over to Ms. Jingbo Wang, Chairman and CEO of Noah. She will be speaking in Chinese and her remarks will be translated into English. Thank you. And please go ahead.

[Interpreted] Thank you, operator and thank you all for joining us. With me today are Mr. Kenny Lam, Noah’s Group President and Ms. Ching Tao, Noah’s CFO. Mr. Lam will start by providing a brief overview of our financial highlights for the first quarter of 2015 and will walk you through the performance of our core wealth and asset management businesses. After that I will provide an update on the progress we are making to develop the global open architecture product platform as well as progress with our new internet finance business. I will also review our strategic initiatives to establish an integrated financial services platform to support the sustainable growth of the company. Lastly, Ching will provide further insights into our financials and reiterate our 2015 guidance. We will be happy to take any questions at the end of our prepared remarks. Now I’ll turn the call to Mr. Lam.

Thank you, Chairman Wang. What we’ll do is we’ll do mine and Chairman Wang’s both in Chinese and English. And in Tao Ching’s section in the Q&A will mostly be in English. [Interpreted] Thank you, Chairman Wang. We are pleased to have delivered strong results in the first quarter of 2015 with top and bottom lines both in line of our expectations. Net revenues were $71.8 million, a 43% increase from the corresponding period in 2014 and a 14% increase from the fourth quarter of 2014. On the bottom line, non-GAAP net income was $22.5 million and a 24% increase from the corresponding period in 2014 and a 45% increase from the fourth quarter of 2014. In terms of our core businesses, we distributed $3.9 billion of wealth management products during the first quarter representing a 64% increase year-over-year and a 108% increase quarter-over-quarter. Our total registered client into active client base also increased at an encouraging rate. Total registered clients as of the end of Q1 increased by 35% year-over-year to 74,895. And total active clients reached 5,275 a 62% increase from the corresponding period in 2014. In the first quarter, there was a substantial change in the product mix. The transaction value of PE and VC products distributed increased by 108% compared with the same period of the prior year and 139% compared to the last quarter. Secondary market product distributed increased by 622% year-over-year and 97% quarter-over-quarter. We started distribution of asset allocation related products since the second quarter of 2014. In the first quarter of 2015, asset allocation related products increased by 1,312% compared with the last quarter. Our clients asset allocation to international asset classes increased by 761% compared with the same period of the prior year and 2,062% compared to the last quarter. Over the same period, the proportion of fixed income products with real-estate as underlying assets dropped to 42% of the total transaction value. Due to the changes in product mix, our revenue model has gradually transitioned from one-hand commission to recurring service fees and performance based occurred income. I believe this fully reflects our ability to understand and evolve quickly with the market and our team’s execution probability. One of the drivers of our wealth management business is our national network of relationship managers. In the first quarter we increased our market penetration as our network grew to 104 offices covering 64 cities up to 94 offices covering 63 cities from the end of last year. Our relationship managers also increased from 779 to 834 over the same period. Our team of top performing relationship managers continues to expand and accounts for 34% in total relationship managers. The fact that our revenue grew faster than the relationship managers’ number and branch offices, reflect improvement in the productivity of our relationship managers and the success of our initiative to expand offline coverage while simultaneously developing the internet finance business. In the first quarter, the productivity of our relationship managers increased by 26% compared to a year ago. The productivity of our top performing relationship managers is 7.8 times that productivity of other relationship managers. The turnover rate of our relationship manager is 7.5% in the first quarter, 32% lower than the corresponding period, turnover rate for our top performing RM is close to zero, the lowest in the industry. Our mid-to-long term strategy for the wealth management business is focused on two key areas. First, leveraging our new family office and discretionary portfolio management services to deepen customer relationships and significantly enhance the capabilities of our relationship managers. Second, significantly improving the transaction platform for our customers and relationship managers so that it’s more open faster and convenient. Our efforts to our family office and discretionary portfolio management services are also progressing very well. The average transaction value for these high-client relationships is RMB53 million, equivalent to $8.5 million. We’re very optimistic about the outlook for discretionary portfolio management for family office clients. We have already set up the middle and back office process and investment capacity to support an open barrier. We’re also developing a next generation O2O platform for our wealth management business. This will enable customers and relationship managers to interact on a common platform much more simply, efficiently and safely. We continue to enhance our engagement with our clients via Noah’s education subsidiary Enoch Education. By selecting and customizing global high-end education, we formed a comprehensive international curriculum up to the end of first quarter of 2015 over 1,200 clients attended courses in Enoch Education. Through these courses, our clients understand the values and investment philosophies of Noah better. Now, I’d like to provide an update on Gopher Asset Management, established as a multi-boutique investment firm, Gopher asset has continually building its investment and asset management capabilities. It is now one of the most prominent players in terms of venture capital and private equity fund-of-funds in China. Its brand is widely recognized in the market. As of March 31, 2015, Gopher’s asset had $9.4 billion asset under management, a 54% increase in the first quarter of 2014 and 19% increase from the end of 2014. In terms of asset categories, real-estate funds and real-estate fund-of-funds accounted for $5.6 billion, private equity fund-of-funds accounted for $2.4 billion and secondary market fund-of-funds accounted for $0.7 billion and other fund-of-funds accounted for another $0.7 billion. Gopher Asset Management specializes in private equity and venture capital fund-of-funds, real-estate fund-of-funds, hedge funds and intended credit products denominated in both RMB and U.S. dollars. It is worth highlighting that these fund products have generated very strong investment returns, this is a reflection of our rigorous approach to screening and selecting fund managers and strong management skills. With our improvement in talent cultivation, our fund-of-funds strategy is developing into manager-of-manager funds as well as co-investment and direct investment in some projects. We’re very confident that Gopher’s asset under management will continue to increase. The transformation of our risk management team has been largely completed. This team is already playing a key role in managing our product flow and operational risk. It is worth mentioning that due to the ongoing efforts of our risk management team and see [ph] traditional organizations the principle of older clients involved in the Jingtai case has been recovered and distributed. We’re now unable to disclose further details while the litigation is still ongoing. Now I would turn the call to Chairman Wang to give an update on the development of our global open product platform, progress on internet finance and other strategic initiatives.

[Interpreted]. Thank you, Kenny. Noah was founded with the vision of becoming a wealth management company with outstanding asset management capabilities that serves Chinese people all over the world. Over the past few years, this vision has inspired us to continuously meet customer needs and constantly expanded growth. Thanks to Kenny joining Noah, I have a lot more time and energy to focus on building Noah’s global open architecture product platform and developing our internet finance platform. Our product center which is positioned as a global open architecture product platform covers eight regions across China as well as global markets through our team in Hong Kong. Currently we have over 50 employees in our Hong Kong team. At the same time we are also focused on expanding our customer services by building professional care subsidiaries. For example, leveraging a specialized loan company to provide customers with collateralized loans to meet short-term liquidity needs or using an insurance brokerage, the insurance needs of our customers or using overseas trust and overseas insurance brokers to provide trust and insurance services to our family office clients. In the first quarter, the local people’s mind has changed very quickly. We see the trend of previous alternative products transitioning into standardized wealth management products. Regarding secondary market products, we started the transition from our boutique select model to a platform model. First the research team and product team create a pool of products and provide our customers with a platform to choose secondary market product they prefer. At the same time, our research department will closely monitor, investigate and report on managers of large funds on regular basis. Based on our internal research, we would choose some funds for large-scale distribution. The new platform plus our new screening model will effectively improve our coverage and enhance our risk control. We are also increasingly focused on risk. Currently there are many irrational elements in the market. We believe that wealth management should start with products and then consider asset allocation. Hence we’re striving to promote asset allocation on our service platform. In the first quarter of 2015, asset allocation products increased by 1,312% quarter-over-quarter. We believe that as the market rationalizes particularly when the market declines, this type of products will protect customer’s wealth and receive greater recognition. At the same time, we understand that real-estate related products will continue to remain a component of our client’s asset allocation. To meet this demand, we will collaborate with large high-quality real-estate developers and enhance our risk management and asset investment capabilities. We will embrace new real-estate finance models which we have developed through the integration of the real-estate and internet businesses, as well as the continuous innovation of our sales model. This will enable us to meet the fixed income product needs of our customers. The current strong stock market drives the IPO market. Noah launched the VCP fund-of-fund business in 2007 from private equity funds to developing Gopher assets fund-of-funds. As of March 31, 2015, we distributed and managed over $9 billion of private equity products. Due to the impressive performance of these funds, we believe that customer satisfaction will continue to increase. This will enhance Noah’s leadership in the BCNP space, which in turn will boost them on for our secondary market and private equity products and further improve customer loyalty. Last quarter we noticed that a growing proportion of high network clients are increasing their overseas asset allocation. Noah Hong Kong’s product platform provides Chinese clients with many opportunities to select outstanding overseas assets. In the first quarter, Noah Hong Kong distributed products with an aggregate value of $500 million which is even more than the total products distributed in full year 2014. The total number of registered clients increased from 802 in 2014 to 1,960 in the first quarter of 2015, representing an increase of 144%. As of the end of the quarter, overseas cumulative AUM reached more than $1 billion, an increase of 508% year-over-year. The ability of our overseas asset management team also continues to improve, in the first quarter overseas funds-of-funds including funds from world renowned asset management companies such as Blackstone, Carlyle and KKR. At the same time we will also be partnering leading international private banks and fund managers to leverage their experience, train our relationship managers and provide product to our clients. Aside from investment products, Noah Glory Insurance Agency’s team continues to develop new innovative products. We already have completed our product lines, which includes high-end medical insurance, general accident insurance, aviation accident insurance, critical illness insurance and whole life insurance. Insurance has already become a standard consideration for Noah’s high-end clients. By the end of the first quarter we had sold over 10,000 insurance policies. By establishing a global open architecture product platform and understanding the trends and developments facing the asset management industry, we will maintain our ability to continuously innovate and gain deep industry insights. Now, I’ll share an update on our developments in the internet finance space during the first quarter. Noah’s Yuan Gong Bao platform, our online private banking platform targeting white-collar professionals is rapidly developing. In the first quarter, the transaction value on the platform reached $347 million. This is $0.57 increase from the $228 million of products that were distributed in the full-year 2014. The average transaction value per client was about $17,000, and the proportionate repeat customers, was 52%. Going forward we plan to combine our VIP lending and Yuan Gong Bao platforms. This will help us to bring financial product, collateralized loans and independent customer transfers online, thereby forming a close loop for online transactions. Noah’s team has reached internet experience by combining the advantages of Noah’s financial products in the community of employees from the platform, Yuan Gong Bao rapidly gained recognition in the internet finance market. Sequoia Capital China completed a capital injection into this platform in the first quarter. The capital from this investment will be used to improve the development of Yuan Gong Bao and raised funds, insurance and other integrated financial products have been gradually released online. Yuan Gong Bao is positioned as the private bank of white-collar professionals and the average investment per person is over RMB100,000. We believe that Yuan Gong Bao has the potential to become the platform of choice for white-collar investors. According to a recent study by Wang Tai on the monthly transaction of similar platforms, Yuan Gong Bao is already the third ranked platform in China. Due to Yuan Gong Bao’s superior financial products and good user experience, it has been extremely well received and it has been promoted at many well-known Chinese companies. In the first quarter, enterprise clients increased by 56%. Lastly, I would like to briefly touch on the overall financial environment and regulatory changes. The wealth management and asset management industries are gaining more and more attention from the government and regulators. As China’s economy transitions, financial liberalization will play an important role in efficient allocation of capital. This is a good opportunity for Noah to develop but it also means that we need to implement stricter standards in risk control and compliance. This year the Chinese government’s support of internet finance innovation is even clearer. We believe that with the ongoing standardization of regulatory oversight, we will be able to demonstrate our advantages in product selection, asset management, rigorous risk controls and back-office operations. We will also continue to drive our efforts in investor education to help our customers understand the nature and risks of financial products. Noah is a learning organization. We’re still early in the process of building our company. In the new internet era, we strive to integrate learning and progress so that we can drive the evolution of our business model. Our core strengths and values will enable us to continually optimize our business so that our customers and our shareholders can see and benefit from our growth. Now, I will turn the call over to our CFO, Ching Tao, to review our financials. Thank you.

Thank you, Kenny and Wang and hello everyone. To make use of everyone’s time, rather than reading through the financials that are disclosed in our release I will give a high level overview of our Q1 results and highlight a few areas before we go into the Q&A. We are pleased to have started the year with a steady top and bottom line performance. Q1 net revenues increased 43% year-over-year to $71.8 million. And Q1 non-GAAP net income grew 24% year-over-year to $22.5 million, both largely in line with management’s expectations. We distributed approximately $3.9 billion worth of wealth management products during the quarter representing a 64% increase year-over-year and continue to diversify our product mix as Kenny mentioned earlier in the call. You can find a break-down of the operating metrics of our wealth management business in a table at the back of our earnings release. The effective commission rate for the first quarter of 2015 was 0.82% compared to 0.77% in the same period last year and 1.08% in the fourth quarter of 2014. The sequential reduction in the effective commission rates was primarily due to changes in the product mix. Some fluctuation in the quarterly commission rate is also related to the volatility of the underlying market and it’s still within a very healthy range. Recurring revenues was $34.7 million accounting for 51% of net revenues in Q1 2015 compared to $30.9 million in Q1 of 2014 or 65% of net revenues. The decrease in recurring revenues as a percentage of total was primarily due to the increase of one-time commission revenue along with a significant increase in total transaction value quarter-over-quarter and an increase of performance based income as well as revenues from other - from the internet finance business. While we believe this trend has steady growth and management fees has not changed. We expect recurring revenues to make up roughly 50% of net revenues on an ongoing basis and see recurring revenues as an important tool to ensure revenue visibility and stability. We’re pleased to see continued momentum in our internet finance business where first quarter revenues reached $1.5 million compared to $0.4 million in Q1 of 2014. While we’re still in the investment phase of this business segment we’re very confident about the outlook and believe it will be an integral component of our comprehensive platform and service offering and an important growth driver for Noah in the future. We also received $4.2 million in performance based income during the first quarter of 2015 related to secondary market products. With the continuously increasing secondary market products and private equity products, we expect performance based income will have a bigger impact in our total revenue in the future. And now on to profitability. Our operating margin in Q1 was 31.7% compared to 41.2% a year ago. The decline is primarily attributable to the fact that no government subsidies were received in the first quarter of 2015, and also due to our investments in building up our internet finance business in other key areas. We recognize government subsidies upon the receipt or all conditions of the receipt has been satisfied. So we typically experienced some quarter-to-quarter volatility. But on a year-over-year basis these tend to be smoothed up. Non-GAAP net margin was 31.3% compared to 36.0% a year ago. Our balance sheet remains very healthy. At the end of Q1 we had approximately $379 million in cash short-term investments and long-term investments, an increase of about $65 million from the previous quarter. We used approximately $8 million in operating cash during the first quarter primarily to pay annual bonuses in the first quarter. Cash inflow from financing activities for the first quarter was $71.9 million mainly due to the issuance of an $80 million convertible note in February. Accounts receivable turnover of about 61 days is within a reasonable range of our AR turnover days. Finally, I would like to reiterate our net profit guidance for 2015. We expect non-GAAP net income to be between $90 million to $95 million for the full year of 2015. The mid-point of this range represents year-over-year growth of about 20%. This growth rate reflects the strong fundamentals and steady profitability in our core businesses including wealth and asset management on the one hand and also continued investments in our new businesses primarily in internet finance on the other. With that, Chairman Wang, Kenny and I would be happy to take any questions. Operator?

[Operator Instructions]. Your first question comes from Ellen Tu [ph] from BICC. Please go ahead.

[Foreign Language]

I think the first question is really around the middle and back office and how we are entailing you best in the middle and back office, and what’s the impact is likely going to be on the financial side? I’ll answer the strategy on the middle and back office. And then the impact on the financial side, I’ll let Tao Ching to answer. The second set of question is really around our product structure, was it really related to two sets of questions, one is around the mix between international and domestic asset allocation and second is really on our asset allocation products, what the impact is likely going to be going forward. Within the second set of questions I think there is a set of questions around our carried interest and our performance base fee, based on secondary market. I think I will first answer the first set of questions and then let Wang to answer the second set of questions. [Foreign Language]. And I’m just going to answer the question first, also in English as well. So, we’re basically focusing on a major transformation of our systems this year. We’re focusing on two main areas, one; is actually on the core system transformation where we’re changing our ERP system as well as our functional system like CRM, HR and finance. And that will actually have an impact not only for this year but also we expect the systems would be helpful for our growth in the next three or five years. The second part of our, on operation and transformation is that, we’re now turning into a group management matrix organization whereby the group will now basically set our policies for the main businesses, the wealth management, the asset management and the internet finance business. So, each of the businesses, wealth management, asset management and internet finance will basically develop the more capabilities in each function. In that way we’ll be longer efficient in the group and we also developed a lot more capability at the business level.

[Foreign Language].

Okay, well, let me translate summarize what Chairman Wang actually just said. I think on Gopher Asset Management, we’re still progressing towards the multi-boutique asset management firm. Most of our asset classes are still focused on funds. I think particularly for VCP we’re actually developing quite an even brand in China where not only positioning would now be in a lot of client loyalty. And on that particular asset class we would do a lot of co-investment to recon this and be at the class to do, and mostly fund-of-funds. Overseas platform we expect it be currently around, like you said around 10%, I think we’re expecting it to be around 20% to 30% of the split within our total asset allocation, particularly Chairman Wang mentioned on real-estate, we expect it to be a substantial proportion of our asset management asset allocation. We expect that within real-estate, we currently have a long-lore that is share based than debt based. And so, the way that we’ve screened, we’ve actually improved substantially. So we expect this to still continue to grow despite the volatility in the market, with leading asset classes actually a based on with management approach, it’s still a very good asset class, the approach is different. But we believe it will still be the asset class.

[Foreign Language].

So, basically in our financial projection we never forecast carry interest but our revenue now is shifting away from one-time commission to more that’s it more carried income and performance, carried income as well as recurring management fee. But this shift will reflect our business model we’re also making our revenue a lot more stable. As I said, I think the carried income is something that we don’t castle in our projection we tend to be a lot more conservative.

And this is Ching Tao, I can tell that we’re expecting to spend anywhere from RMB80 million to maybe even RMB100 million on our IT systems this year. As Kenny mentioned too improve the ERP CRM, HR and for example we’re upgrading to Oracle for the finance system, RMB.

In RMB, so Tao Ching mentioned was in RMB so around RMB80 million to RMB100 million which is around $15 million. And lastly, I would like to extend, we can extend the call I bit, I know that we are going but the business is right now is quite broad. And so we could extend the call a bit to take more questions.

[Operator Instructions]. Your next question, Ella Ji from Oppenheimer. Please go ahead.

[Foreign Language]. My second question is relating to your overall spending level innovation to the IT related spending, especially the sales and marketing as well as headcount. What is your plan for the full year? And also, especially regarding the internet finance segment, I noticed that the compensation spending is slightly down quarter-over-quarter. I wonder if you can also explain that. Thank you.

[Foreign Language].

So, let me just summarize on what Chairman Wang actually said. I think we are in select products moving to what we call it platform approach where we would screen in public mutual fund type products, secondary market products to be put on a platform to be sold. Now, within that we would still select and recommend a certain type of products for our clients. This is how we will be approaching for the non-alternative products. For talent products we maintain our protocol of highly selective product approach whereby we will spend lot of time selecting and screening the managers and putting things up on the shelf real high. So this is the broad approach. The idea behind is that we believe the client needs are evolving and therefore there is a stronger need for us to put more products in the current market, in mutual fund areas where that we want to make available on the platform. But in alternative products we maintain our selection approach it would still be highly selected by our product team. Limited, and to your second question, which is really around our investments in people and marketing expenses. We expect that we will continue to invest in people this year whereby we will increase our headcount still substantially. We believe that across businesses we’re still growing at around anywhere between 20% to 40%, in this market talent is the most important thing and therefore with our brand name and our position in market, we’ve been able to attract good talent, we want to maintain that trajectory this year, so we’ll continue to invest in growing our employee base. And therefore the people cost would continue to see rise relatively faster than previous years, that’s one. Secondly, in terms of marketing and service, we’re still very selective in how we spend our money in terms of marketing. Currently Noah still maintains a principle that we want to be selective in terms of how we advertise and how we connect with our clients, it is still a very high-end client base business. And therefore we’re not going to do broad-based, broad-media advertising, we’re still very selective. At the same time, we want to be lot more talkative. We do want to spend money in the right media. I’ll let Tao Ching answer a bit about the cost.

[Foreign Language].

We basically combine our VIP lending and Yuan Gong Bao platform together and that actually helps it to be a lot more effective at finance. And then we were now approaching the end of our official time that we can extend the call for another 15 minutes to take more questions.

Okay, sorry, let me just translate my answer just now into English for those of you who don’t understand Chinese. So, I was just saying a couple of things. First of all, with respect to selling and general administrative expenses, there has been an increase by segment in the internet finance segment mainly because we’re still building scale there and we find that to be appropriate. Overall, we expect our operating margins to continue to suffer a bit as we continue to build scale across all of our businesses. Also, I was mentioning for headcount, 2013 year-end headcount was approximately 1,300 employees, 2014 year-end was approximately 1,900 employees. As of the end of March, we’re a tad over 2,000 employees, about 2,020 to 2,025 or so. So, as Kenny mentioned, we’re going to continue to invest in talent in the team but we won’t be doubling every two years like in the past. And then lastly on Ella’s question regarding the drop in employee related expenses for the internet finance segment, at the end of last year we combined several internet finance teams into one larger team, so it was a Yuan Gong Bao team, the VIP lending team and also the micro-lending business. And so, on a segment basis, the internet finance team has shrunk headcount a little bit. And with that, I think we still have time to take a few more questions.

Yes. We have one more question from Julie Lu with Panther [ph] China Funds. Please go ahead.

[Foreign Language].

The first question is really around when would - when are we going to stop investing in IT or how long would the investment be on IT fund? The second question is really around incentives for our key management and how that’s going to help on a long-term growth of the business? [Foreign Language]. So, in terms of IT systems, we expect that we will finish the implementation of a core transaction system by the end of the year. And then, some of the core functional systems to be also completed by the end of the year or first quarter 2016, so, we expect that the core transformation in related investments would actually be done by the end of the year or first quarter of 2016. As I said, I think this is, the whole point is to make sure that we have a proper system to help us for the next three to five years because we expect growth to be continuous in the next three to five years.

[Foreign Language].

So, let me just summarize what Chairman Wang said, in terms of compensation for our senior management. Basically there are three components, one is, a cash base bonus, one is a share incentive scheme and the third is employee fund that we invest in our new businesses. So, on the first part, on cash base, on the base RV and bonus, we actually mark-to-market and look at the corresponding market compensation to make sure that our segments are actually paid based on market rate. So that’s the cash proportion. On top of that, we also intend to buy space on share and options across segments. Last year I think we did about 80 to 90 segments actually received share based compensation that is the second component. The third component is we actually had created an employee fund that invest in our new businesses, and these funds were actually open to our executives at relatively low share price for many of our businesses, for example Yuan Gong Bao and eventually we’ll also have other subsidiaries that are open to this one.

[Foreign Language].

So, the best incentive is actually not monetary, and the best incentive is actually the culture of the firm as well as the belief that we’re still at the very beginning of our growth off the distance. So that’s how we’ve been driving the stability of our management team.

[Foreign Language]. So, just to summarize again for IT expenditures between expenses and also CapEx which we will capitalize over a period of time, we expect to invest close to RMB100 million in the next 15 months or so to upgrade our systems.

Thank you. Your next question comes from David Lee with BM Capital. Please go ahead.

[Foreign Language].

The question was actually, given the growth of the Asia market, our performance team have carried interest in the secondary products as well as S&P products is actually performing very well. If the markets were all substantial, if there is a current, and the question was a catastrophic situation in our Asian market, what would the impact be on our business? I think that one we’ll let Chairman Wang answer.

[Foreign Language].

So, let me just quickly summarize what Chairman Wang said. I think overall we are probably the only wealth manager in China to have experienced a few product market volatility, right, we started in 2004, in ‘05 the market was around 998 points, I think it grew to 6,000 points in ‘07 and dropped back to 1,600 points. We’ve actually been through a few cycles within our history in the last 11 years. I think two main thing that we maintain, one is we are, we maintain a very sane and clear approach to asset allocation. Our aim is to ensure that to protect our client assets while we grow the assets. So therefore in many parts, for example, secondary market, we may not be the best performing in the market, but we also expect let’s say in five years time, we hope the client growth 5% per year while clients investing in other finance may actually lose their money completely. In VCPE for example, we’re actually are heavily selecting our managers. We’ve actually grown in our skill as well as our influence in the market. And therefore we’re really going to actually select managers quite heavily. So, the first point we want to make is that we’ve actually seen the cycles. The second point is that we’ve actually been able to maintain a very sane approach through Chairman Wang’s leadership. The last point we want to make is that we actually a lot of time in client education, I think this point was briefly made in my remarks. Enoch education, a Noah subsidiary is focused just on our client’s education and investment. So we actually have strategic alliance with Stanford, Wharton and Yale. And all of these programs are tailored towards investment philosophies and how to invest. This is also a culture of Noah, whereby we spend a lot of time educating our clients to ensure that they understand the risk they’re taking and how to allocate asset. And that’s why last year we have about 1,200 clients that have participated in our programs. We expect that number to grow tremendously this year through the programs we have with Stanford, Wharton and Yale.

Thank you. Your next question comes from Chao Chen with Citi China. Please go ahead.

[Foreign Language].

Okay. Why don’t we take maybe one more question? No more question?

Okay, great. Okay, so, thank you everyone for the time today. And look forward to our next call. Thank you. Bye-bye.