Jingbo Wang - CEO and Chairman Kenny Lam - Noah’s Group President Ching Tao - CFO

Su Li Chen - CICC Matthew Lawson - Morgan Stanley Sam Dubinsky - Carlson Capital David Lee - BM Harmony Fund Kelly Lewis - Harmony Fund

Good day, ladies and gentlemen. Welcome to Noah Holdings Limited Second 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 second quarter 2015 financial results, which is available on the company's IR website at ir.noahwm.com. This call is also being live 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 used 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. Please go ahead.

[Foreign Language] 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 second 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. We’re please just continued the momentum from a first quarter to deliver strong results in the second quarter with top-line and bottom-line both in line with our expense. Net revenues in the second quarter of 2015 were $93.2 million, a 30.4% increased from the corresponding period in 2014 and a 29.8% increase from the first quarter of 2014. On the bottom line, non-GAAP net income was $30.9 million, a 25.4% increase from the corresponding period in 2014 and a 37.4% from the last quarter. In terms of our core businesses, we distributed RMB36.5 billion of wealth management products during the second quarter representing a 100.8% increase year-over-year and a 48.5% 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 quarter two increased by 34.8% year-over-year to 81,939. And total active clients reached 6,101 a 72.4% increase from the corresponding period in 2014. Noah has always been focused on improving our core competitiveness in the total wealth management industry. Regardless of whether it’s a full market or their market, we’re committed to enhancing our open global platform investing heavily in our asset management team, developing our new Internet finance business and improving our mid and back-office information systems over the long-term. Recently Chinese equity market have experienced and indicate volatility and I have consistent principals of long-term investing and value investing have again been proved to be both effective and necessary. None of our secondary market products except for ITO products a leveraged. When selecting and recommending secondary market fund managers, we always emphasize the impotence of asset allocation. As a result, we’ve talked our client protect their assets and minimize losses from this round of market volatility. Later, Ms. Wang will share information about our product mix as well as investment strategy. And as additional wealth management business, we continue to develop our online and offline network this year. by the end of the second quarter, we have a 112 offices covering 64 cities, we also expanded our team of relationship managers from 834 at the end of the first quarter 953 at the end of the second. Our team of top performing relationship managers also continues to expand to 316 which accounts for 33.2% of all relationship managers. We believe high net worth clients continue to demand one-to-one service. We provide services to white-colored clients through our internet finance platform. We are continuing to provide professional training to our relationship managers and invest in marketing equities to expand our client base and increase productivity. In our wealth management business, there are two areas that we are focused on over the mid to long term. First we are focus on leveraging our new family office in discretionary portfolio management services to deep in client relationships and significantly enhance the capabilities of our relationship managers. Second, we are committed to significantly improving the transaction platform for clients and relationship managers so that more open, faster and more convenient. Our family office business has bring us rapidly growing demand from active global asset allocation. In July 2015, we announced cooperation with McKinley Capital Management to enable and know what to do more family office solutions with global asset allocation capabilities for our clients. In addition, we also announced strategic cooperation with UPB one of Europe’s largest private banks in asset managers, this will enable us to build and expand our global capabilities in research and product design. Now, I’d like to provide an update on Gopher Asset Management. Established as a multi-boutique investment firm, Gopher asset has continuously expanded its investment in 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 and continues to innovate. As of June 30, 2015 Gopher assets had RMB64.4 billion assets under management, a 36.2% increase from the end of the second quarter of 2014. In terms of asset categories real estate funds, and real estate fund-of-funds accounted for RMB30.1 billion, private equity fund-of-funds accounted for RMB22 billion and secondary market fund-of-funds accounted for RMB9.2 billion and other fund-of-funds accounted for another RMB3.1 billion. Gopher Asset Management specializes in private equity and venture capital fund-of-funds, real-estate fund-of-funds, and secondary market fund-of-funds and intended credit products denominated both in RMB and U.S. dollars. As I have mentioned previously, there are a lot of synergies in the financial industry. During on Gopher strong foundation and leadership in real estate PE in secondary market products and an in tandem with our continuous investments and talent our manager of manger fund business has continue to develop, we’re making direct investments in some projects. In addition to our core wealth management services, we have always taken a client-centric food service approach. This includes working with our clients to facilitate a high quality lifestyle and good health. For example, in the first half of 2015, Enoch Education arranged a series of event to increase customer loyalty, including overseas education program and private advisory board programs for around 1500 people. In the second half of the year, we hope to provide even better education services to your clients, will launch more investment in education program. In Mainland in Hong Kong, we can also provide high-end insurance services including high-end medical insurance, critical illness, term life and so on. Noah’s Trust company in Hong Kong is Mainland China’s only wealth management organization to serve a family trust office overseas and provide the full suite of family trust services. We are people driven with long term view and we’re dedicated to fulfilling in according our corporate social responsibilities. We recently released the first edition of Noah’s sustainable development report, we hope to be -- we hoped more of our stakeholders would be able to prepare to understand Noah’s dedication to corporate social responsibility and creating sustainable economic environment to end social values. Lastly, I’d like to discuss some of our mid-impact office developments in the first quarter of 2015. We focus on developing our mid and back office platform in two areas. First we develop a fore looking and efficient mid back office platform that can service to growth of our business. Second, we are building the capabilities of each business segment to enable faster and more accurate execution. The development of our corporate systems, CRM, the finance system and so on, are all progressing on schedule, and some of the systems will be launched later this year. For example we are already starting to see the benefits of our matrix management systems, which is improving our ability to implement policies and module operations. In the second quarter of 2015, in terms of average income generated per employee; the average per capita productivity of the group's mid and back office function increased by 12.6% year-on-year. This demonstrates that our operational efficiency has now been adversely affected by the firm's expansion. Now we will turn over the call to Ms. Jingbo Wang, Chairman and CEO of Noah to give an update on the development of our global open architecture product platform, our product strategy for the second half of the year, progress in instance finance and other strategic initiatives

[Non-English] Thank you, Kenny. Noah has grown to be a wealth management firm with outstanding asset management capabilities that serves Chinese clients around the world. Over the past 10 years we have continuously improve our core capabilities from research, to product selection, to asset management capabilities. In addition we have focused on effective investor education and communication. In times of rare, systemic volatility in the secondary markets, we are pleased that we have maintained our long-term approach protecting client assets to appropriate asset allocation and stand through to and principles of long-term investing and value investing. This has helped us maintain strong high quality relationships with our clients. [Foreign Language] On our first quarter earnings call we clearly stated that we will strengthen our monitoring of risks. Currently there are many irrational elements in the market, we believe that wealth management should transition from product driven to asset allocation driven. Later at our PE investment summit held in Shanghai at the end of May which attracted over 1,000 high network clients, we stated that we would reduce exposure to secondary markets and recommended that investor transition related funds to IPO funds. [Foreign Language] At the end of the second quarter we saw irrational activity in panic in the domestic capital market. After this baptism of fire, investors, practitioners and regulators have greater respect for the market. We believe that this will help the domestic asset management industry mature. The wealth management market in China will mature from individual investors buying shares to individuals buying fund products. Noah's high network clients have already transitioned from financial product selections to comprehensive asset allocation and we believe that discretionary portfolio management would become more and more popular among ultrahigh network clients. We’ve continued to build our full competitive advantages in wealth management based on this trend. [Foreign Language] Our first product allocation changed significantly in the second quarter compared with the first quarter. The core elements of our approach in the second quarter were; number one, in terms of the open market, we continue to transition from a boutique model to a platform model, which enables our clients to purchase secondary market fund products through Noah’s online platform. We selected the best value funds and recommended them to our client. We increased IPO fund products and reduced allocation to secondary market products. We do not offer any secondary market financing or any leverage secondary market products. [Foreign Language] Number two, we continue to promote primary market and cost cycle products, especially private equity funds. The aggregated value of new private equity funds in the second quarter, reach RMB9.9 billion and 85.3% increased year-on-year and 83.5% from last quarter. Number three, we enhanced our supply chain finance products and developed fixed income product such real estate investment products with high quality counterparties. We also continued to improve the quality of fixed income products and counterparties. Number four, we strengthen the development of our overseas product platform and continue to invest resources in the ongoing education of the client base and relationship management team, to drive expansion of our overseas asset allocation business. Number five, we also looked at asset categories that aren’t that closely related to the capital market and we will expand our coverage in promotion of these types of products. We are confident that we will see the results of these initiatives soon. From our history, it is clear that we are not a Company that significantly impacted by cyclical volatility. On the one hand in bull market, it is relatively difficult for us to meet investment expectations and may results in a slight reduction in our market share. However, after the global financial crisis in 2008 we had extremely positive development and we regained all of the market share that we lost during the bull market, and grew into the market leader. We are seeing a similar trend in this ground of volatility. [Foreign Language] The recent market volatility has also increased, has helped our finance and relationship managers mature. In the second quarter we distributed RMB9.9 billion in the primary market PEBC products. We distributed to RMB20.9 billion of secondary market products in the second quarter of which IPO fund products were RMB8.2 billion. Since the second quarter of 2014, our asset allocation related products have become increasingly popular with our clients. And in the second quarter of 2015, we saw a growth of 1234.1% year-on-year, and 325.5% quarter-over-quarter. International asset allocation also grew 500% year-on-year. We note 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 just like outstanding overseas asset. In the second quarter Noah Hong Kong distributed products in aggregate value of RMB3 billion. As of the end of the second quarter, overseas cumulative assets under management reached more than RMB8.5 billion, of 303.3% increase year-on-year, and 39.2% increase from last quarter. The capability of Noah’s overseas asset management team also continues to improve. The asset types of our overseas fund-to-funds in US dollars are also gradually expanding from BCP fund-to-funds to hedge fund-to-funds then to real estate fund-to-funds. Our partners include funds from well-renowned asset management companies such Sequoia, TPG, Carlyle and KKR, as well as the new outstanding asset managers. [Foreign Language] We are continually emphasizing the importance of asset allocation in wealth management and this concept is being accepted by more and more of our high network clients. This recent increase in systemic risk has helped our clients recognize its importance even more. We are organizing a series of investor education sessions in forums to help our clients better understand asset allocation strategies to take count of cycles and geographic asset category and currency exposure. Now I’d like to share an update on our developments in the internet finance based during the second quarter. Noah’s Yuan Gong Bao platform, our online private banking platform targeting white-collar professionals, is developing rapidly. In the second quarter, the transaction value on the platform reached RMB3.4 billion, a 56.5% increase from the first quarter. The average transaction value per client was approximately RMB120,000 and the proportion of repeat clients was 56.6%. Yuan Gong Bao continues to innovate with the introduction of mutual fund sales, collateralized loan products, loans to employees, crowd funding and other functions. This will help us bring financial product, collateralized loans, and independent client transfers online and facilitate a closed loop for online transactions of all our products and services. We are very pleased to see such rapid development over a very short period of time. Yuan Gong Bao is fully aligned with Noah’s fundamental values. It is designed to leverage advances in technology in the Internet to offer white-collar professionals, private banking services and service their integrated financial service platform. [Foreign Language] Finally, I would like to briefly talk about our understanding of the capital market. The core of successful capital market is the efficient allocation of capital. This helps to cultivate great businesses. The basis to capital markets to efficiently allocate capital is to maintain the financing functions of IPOs and delisting. The next level of the capital allocation system is to refinancing in M&A market. On this point, we believe the IPO market will be reopened very soon, once the domestic capital market has stabilized and the number of leading companies will list in China. There will be more opportunities in the primary market and the secondary market will also experience long-term healthy development. We will continue to adhere to the principals of value investing, long-term investing and appropriate asset allocation. After this round of market volatility; investors, market players, and regulators will become more mature and we believe the market will develop more sustainably. We are confident that the wealth management and asset management industry will finally have bright future. [Foreign Language] On the Internet banking front, regulators recently announced the guidelines on promoting the healthy development of Internet finance. This document clearly defines the scope of Internet finance as a business for the first time. Most importantly it definitively supports the development of Internet finance, while emphasizing the nature of risks management and standardized operations. While the Internet technology has significantly improved the efficiency of financing, we’ve also seen that Internet finance has to some extend accelerated the stock market crash. As many people in the Internet finance industry lack experience in the finance industry and have relatively limited understanding of financial risks, we believe that Internet finance companies that have significant investment and an integrated team with experience in the finance and Internet industries such as Yuan Gong Bao will demonstrate their competitive advantages in the future. Appropriate investment principles, disciplined investments and processes as well as a solid sense of value are the foundations of long-term success of financial institution. We are consistently emphasizing self-loaning, reflection and growth through every risks and crisis to make ourselves the best rather than expecting a better market. Now I will turn the call over to our CFO Ching Tao, to review our financials. Thank you.

Thank you, Chairmen Wang and hello everyone. To make the best use of everyone’s time, I’ll give a high level overview of our Q2 results and then open up the call for questions. As Kenny and Jingbo Wang noted Q2 was another solid quarter. Net revenues increased 30.4% year-over-year to $93.2 million and Q2 non-GAAP net income grew 25.4% year-over-year to U.S. $30.9 million, both of which are largely in line with our expectations. We distributed approximately $5.9 billion or RMB36.5 billion worth of growth management products during the quarter, more than double the figure from a year ago. In July an abrupt regulatory policy change in China lead to the suspension of new IPOs. As a result we terminated and subsequently refunded $1.3 billion or approximately RMB8.2 billion of IPO fund products to our clients in July. Excluding that refund the aggregate value wealth management product during the second quarter of 2015 was $4.6 billion or approximately RMB28.3 billion which represents a 55.6% increase from the corresponding period in 2014. There is a breakdown of operating metrics in our wealth management business at the back of the earnings release. Excluding the impact of the refunds related to IPO products in July, the weighted average onetime commission rate for the second quarter of 2015 was 0.78% compared to 0.8% in the same period last year and 0.82% in the first quarter of this year. The minor fluctuations in the commission rate are due to shifts in our product mix. Recurrent revenues were $40.1 million accounting for 43% of net revenue in Q2 2015 compared to $37.9 million in Q2 of 2014 or 53% of net revenue. The decline in recurring revenues as a percentage of net revenues is primarily due to a change in product mix and our wealth management business and the change in the composition of asset types in our asset management business. Going forward we still expect recurring revenues to account for about 50% of net revenues in the long-term. Our Internet finance business delivered impressive revenue growth with revenues increasing 90% sequentially to $2.8 million in the second quarter of 2015. We are pleased with the way the segment is growing and we will continue to invest as we expect it to become an increasingly important part of the Noah offering in the long-term. We received $15.6 million in performance based income during the second quarter related to secondary market products. Our internal estimates for performance based income or carry -- [indiscernible] are built into our full year guidance. We recognize performance based income when the cash inflow can be reasonably assured. And now on to profitability. Operating margin in Q2 was 33.5% compared to 39.6% a year ago. The decline is primarily attributable to ongoing investments in our internet finance business. Non-GAAP net margin was 33.2% compared to 34.5% a year ago. Our balance sheet remains very healthy. At the end of Q2 we had approximately $410.9 million cash, short-term investments, and long-term investments; an increase of about $31.8 million from the previous quarter. We have posted positive operating cash flow in the second quarter of $16.9 million. Accounts receivable turnover was 61 day within the reasonable range of our average AR turnover day. Finally I would like to reiterate our net profit guidance for 2015. We expect non-GAAP net income to be between $90 million and $95 million for the full year 2015. The midpoint of this range represents year-over-year growth of about 20%. This growth rate reflects the strong fundamental and steady profitability in our core businesses. With that Chairman Wang, Kenny and I would be happy to take any questions.

Thank you. We will now begin the question and answer session. [Operator Instructions] The first question comes from Su Li Chen [ph] with CICC.

[Foreign Language] Let me just translate this for the audience, it is actually an English call, so let me just briefly just go over the question. The first question is about our internet finance business. So the question was the increase in the investment that was actually more than the expectation and what is our forecast of the internet finance business given that we’re investing more quickly than before? That's a first question. Second question overall is about our secondary market products, the volume and how we are paying our relationship manager as well as what kind of commission we’re getting given that we have an increase in terms of our RM compensation in the second quarter. So I’ll let Wang to answer and I will translate now.

[Foreign Language] The internet finance, this is something that we like a lot. We think we give something that is very unique in the market, which is a internet finance platform for private banking focused on the white-collars. This is a segment that is not well-covered in market. And it is also that something that we do, so it's quite unique. In terms of when we expect profit from this particular platform, we think that we want to continue to invest, given tremendous revenue growth this quarter. We see the trend in terms of momentum is continuing to be strong and so we will continue to be invest, and so we will continue to invest. We can easily turn into profit this if we want to. But we think that investing in this platform is actually a future for Noah. [Foreign Language] So let me just briefly summarize what chairman Wang said. Basically into the secondary market products, a good part of the secondary market product as we reported is around RMB8.2 billion, was actually returned to clients as a result of the abrupt change in the policies of the IPO launch in China. We believe that actually shift to the secondary market products in terms of fund-to-fund is sold as IPO funds. It's actually helping the clients in this volatile market, because basically these funds would have actually gone to Asia if not for these funds. So we were actually helping to protect the client assets. These client assets were actually returned, most of that due to decline during this volatile market. We are still focused very much in a medium to long-term investing for our client. So in terms of RM incentives, we are quite unique in the market. We’re probably the only one in the market were by the commission across products are all the same, so we don’t promote any particular product. And as a result the RMs are not incentivized to promote any particular product except for the client's interest. And Wang have actually mentioned quite a few funds and I will just summarize quite quickly that we actually managed fund-of-fund with core fund. Our performance is actually now still top at in the market. IR fund is now above 20% and even performance of our secondary market product, our fund-of-fund market product actually is still in a positive territory compared to many in the market that is now actually deep in the red. So in terms of clients trust enough, I think we’ve actually increased our trust substantially over the last few months and you can see that in our performance of the fund that we manage as well as how we have actually recommend the products and through the way that we approach our RM centers.

I want to just know really quickly that in our 6k in our earnings release page 12 we breakup relationship manager compensation, so RM compensation as percentage of net revenues 25%, we feel that is a suitable range and actually that puts us at the mid to low end of the market for our competitors. So overall our compensation as percentage of net revenues is very-very reasonable, we’re continuing to monitor its growth, but it's a very reasonable range. [Foreign Language]

Thank you. The next question comes from Matthew Lawson with Morgan Stanley. Please go ahead.

Hi thanks for taking my call. I got on the conference call a little late, so if this question was already answered then I apologize for asking it. With the pull back in Noah stock in the announcement of up to $50 million share repurchase program, I was wondering if any of those shares been purchased yet, or what the plans are going forward regarding that announcement?

We announced the intention to do a share repurchase program about to 50 million, I believe it is on the July 8th, we’re still currently in the blackout period, the trading window opens on Thursday on the 6th, so we have not executed any share repurchase yet.

Thank you. The next question comes from Sam Dubinsky with Carlson Capital. Please go ahead.

Yes, thanks for taking my questions. In the press release there were lot of footnotes regarding the 1.3 billion in proceeds that need to be refunded to customers from the cancel IPOs. Just to be clear, did you adjust the revenue and EPS in Q2 to factor in the IPO cancellations or will there need to be adjustments to Q3 earnings as well as other refunds occurred in July?

We adjusted revenues, so we didn’t, we booked zero revenue from that because we refunded.

Okay. Great and then the IPO proceeds that you return, just to be clear, did those IPOs already pricing trade in the public markets or at least it can be failed to public?

This was a fund that was looking for IPO allocations, IPO type products and so we dismantled and on round terminated the fund products.

Did client lose money in that fund like was it trading or was it pre-trading?

No, clients did not lose money.

Okay. I want to try to figure out is just a way maybe Mr. Wang or may be Tao the things working in China, just trying to figure out you are not obligate to meet the customers whole, are you if there is a loss or government mandate?

Right we are not obligated to make customers whole, so we bear no financial or legal liability the risk we bear is reputational for selling these products. So we take that very seriously, so that's why what I actually say as soon as the CSRC change this policy we reacted very quickly and terminated unwind fund and return all of the principal to investors and clients did not lose money.

Add one more point, actually in the market you see in China that we are few that I should return to the money to client in IPO fund there are a few actually, because we’re not obligate to do that, we believe that actually right and our values is long term business our client so we decided that we should return that the client.

Okay. Great and could you go into more detail in the performance sheet that you generate in Q2, is that how should think about that going forward?

As I mentioned, we will recognize performance based income when the cash flow is very reasonably assured. So in that sense, we don't really do accruals on a forward basis and don't really projects for, but I did mention that we have a reasonable conservative estimate for that in our guidance. I can’t comment on the run-rate, because there is extreme volatility in the performance based income quarter-over-quarter, we have recognized the performance based income at the end of every quarter. For PEZP products we only recognize income on revenue upon cash settlement termination in the fund. For secondary market products, we recognize to carry when the cash inflow can be reasonably assured. So there is very little adjustments for example to secondary market product performance based income -- right downs. Yes?

And then on the Aon go for, could you maybe discuss how much of that was new funds raise versus performance and how do we think about that in Q3?

I think -- continuing to grow very well. We disclosed the details in the 6K and we are continuing to see new fund and products come out for Q3.

Okay. And my last question just relates to your management, relation managers increased quarter-over-quarter, how should we model OpEx going forward with the higher relation managers, is Q2 the baseline or does it fluctuate with sales?

Q2 is a little bit I would say on the high side but overall I would comment that going back to my earlier comment RM compensation as a percentage of net revenues is riding in the 22% to 25% range. We feel that very suitable trend and we are actively monitoring that number. That actually puts us at the mid to low end of overall RM competition compared to our competitors. So we feel it’s very appropriate. We are continuing to grow the RMP, but the focus is on RM productivity meaning they are gaining greater share of wallet.

So let me answer that. RM number now is 953, we expect that number to increase slightly over the next half year. We want to make sure that we have enough of a quality relationship management based from next year's growth. So lot of a RM actually go into training before they really become trained advisors. And we do not expect that to fluctuate a lot and definitely the number of RMs are not dependent on the type of products and the volume we sale and we are planning for a bit of a longer term. So you see that RM numbers are quite steady as we expect that number to increase both by end of the year but it would definitely not decline.

Thank you. The next question comes from David Lee with BM Harmony Fund. Please go ahead.

Thanks for taking my questions. As you mentioned like Chinese regulators are now producing guidelines on internet finance industry and now the regulators are curbing internet payments. And it's also expected like online payments there is going to be a limit on the early amount so RMB5,000. I was wondering how might that effect Noah's internet finance - as there is more regulations, would that have a big impact on your news going forward?

So I will ask Jingbo Wang and translate in English.

[Foreign Language]

So let just translate and you should also be aware that we actually have a payment company within Noah that actually connects directly to The People Bank of China and as a result all of our payment actually done in a close look and the new directive on the cap on the RMB5,000 actually does not effect at all. The policy that was the consulted now is really not related to transactions of our kind, it's really related to digital wallet whereby the transfer in digital wallet is within RMB5,000, but for what we do in -- which is a direct transfer between the banks, given that we actually have our own payment capabilities and own payment companies we are not affected by that directive. Operator Thank you. The next question comes from Kelly Lewis, Harmony Funds Please go ahead.

[Foreign Language] So let me try to say what the question is, it is really around price point about PE fund, we also issue and distribute a lot of PE funds over the second quarter. The pricing of these products may be at a high-end, if we price it at a high-end in the second quarter, would it be affected as we exit?

[Foreign Language] So the three points: one is we are actually in this market are able to have a lot more bargaining power in terms of selecting the right PE managers, given that we start actually our PE fund distribution business and PE fund business are actually quite thoroughly we started in 2008, we’ve seen many cycle. So in terms of just selecting the best managers we were able, in this market particularly to find the best managers. In a fact that we’ve been looking for fight in a robust way and some of the managers that we see we believe that actually are not up to the par and we haven't actually distributing their products, so actually lower they bought in so that point one. Point two is actually many of our products is actually long term. And many of the PE and VC products are actually 10 to 12 year in duration, so it’s quite long in cycle. We believe that these are -- these parts of service we’ll see sort of cycle and we’re not be affected by a lot of [indiscernible] in the market. Third actually in this market actually we work in the secondary market, we were selling products, we were selling the shares of the company we’ve invested in, so we capture lot of the upside of the market in the second quarter, we weren’t buying actively in this market. So in terms of performance we’re actually quite -- we perform quite well given the -- at the height of the market, we were summing the queries of these invested companies. [Foreign Language] So the second question was really around the listing of Jupi. We think that, we don’t see a lot of competition from Jupi and they have a very different approach to products, they’re heavily focused on real estate and actually particularly in the third and four tier cities. So we don’t subscribe to that philosophy and we don’t currently see a lot of competition in the market from them. [Foreign Language]

Thank you. [Operator Instructions]. There are no further questions. That concludes the Q&A session. I would like to turn the conference back to management for closing remarks.

Well, thank you all for the time. And please continue to spend questions to our IR team if you have any follow-up after this call. I appreciate it.