Jupai Holdings Limited (NYSE:JP) Q4 2018 Earnings Conference Call - Final Transcript

Thank you. The question-and-answer session of this conference call will start in a moment. (Operator Instructions)

Our first question comes from the line of Haifeng Cao of UBS. Please go ahead.

Hi Haifeng.

Thank you for the -- hi. Good evening. And thank you for the opportunity. I have two questions, actually.

Sure.

Firstly, the wealth management industry in China has been under lots of pressure over the past few quarters. I wonder what is the management's take on the outlook for the overall industry and Jupai in 2019?

And secondly, Jupai incurred large impairment loss of goodwill in 2018. And could you provide more color about the impairment loss -- losses. And do you foresee some further impairment going forward? That's my two questions. Thanks.

Sure. Thank you, Haifeng.

Let me do a translation for the Chairman. Okay. We will be with you shortly.

(Foreign Language)

Haifeng, the Chairman will answer your first question first. And I will do a translation for the benefits of other audience.

The year 2018 was a very challenging one for both of our wealth management industry and Jupai with many unexpected changes. In terms of overall industry environment, the macro economic policies had placed more emphasis on pursuing better quality and structure of economic growth, a transition from the past macro policies which were chasing -- which were simply chasing GDP growth. The related financial deleverage has caused the market worry about the possibility of potential slowdown in economic growth. Moreover, as a result of the expanding US-China trade conflict, there has been rising uncertainty in global economic -- economic outlook.

(Foreign Language)

On the other hand, the tightening of the regulatory requirements continued, leading to a stricter product approval process by the government authorities and a prolonged product registration timeframe. The consequently decreased supply of wealth and asset management products had forced the wealth management companies to adjust their product strategies and business model and driven those players that have failed to comply with the latest government requirements out of the market.

(Foreign Language)

In addition, the real estate market in Tier 1 and Tier 2 cities has been weak over the past six months eroding the confidence of investors in real estate-related investments. These macro factors mentioned above had made the investors become extremely cautious which then negatively influenced Jupai's operating results in 2018.

(Foreign Language)

Looking into 2019, we remain cautiously optimistic about overall economic outlook. Although, the domestic economy remains lukewarm in the first quarter of 2019, we saw the government introduced various stimulus policies to support private enterprises, especially SMEs, to enhance economic growth. Recently, the NBRC has also loosened up restrictions on household registration in larger cities. Moreover, the domestic equity market has also shown signs of recovery since the beginning of this year, which we believe along with the policy initiated, will help restore investor confidence and gradually increased appetite for wealth management products.

(Foreign Language)

More specifically for Jupai, we remain confident about our outlook in