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

Apr 23, 2019 • 08:00 am ET

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

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Presentation
Executive
Harry He

estate equity products and overseas products to better meet investors' evolving needs, selecting high quality project counterparties to control risks, and streaming -- and streamlining internal management to optimize costs. We are confident that we will be well positioned to seize opportunities as our market recovers, and we look forward to building Jupai into a leading wealth management and asset management brand in China.

Executive
Jianda Ni

(Foreign Language)

Executive
Harry He

I will now turn the call over to Mr. Harry He, our investor Relations Director, to go through the financials in more detail. Thank you.

Thank you, Jianda. Jupai's operating results in 2018 were under pressure due to severe industry overhead -- industry headwinds. And we saw declines in our revenue and the bottom line results for the full year. In the fourth quarter of 2018, based on our impairment assessment review, we recognized a goodwill impairment loss of $39 million from acquisition of Scepter in 2015, as volatile market environment continue to negatively impact the Company's operations and the business outlook. As we have fully written down the book value of goodwill related to the acquisition of Scepter with approximately RMB0.3 million of goodwill on our balance sheet, we do not expect to incur any additional substantial goodwill impairment losses going forward.

Since the third quarter of 2018, Jupai has adopted various measures to enhance our operating efficiencies, such as personnel optimization, IT system enhancement, business SOP streamlining, and more stringent cost controls. We expect these measures to take effect gradually and have a positive influence on our operating results in the quarters to come.

Now let me walk you through our financial highlights for the full year of 2018.

Net revenue for the full year of 2018 was RMB1,321.7 million, a 22.5% decrease from 2017, primarily due to decreases in both one-time commissions and other service fees. Net revenues from one-time commissions for the full year of 2018 were RMB737.5 million, a 29% decrease from 2017, primarily as a result of a decrease in the aggregate value of wealth management products distributed by the Company. Net revenues from recurring management fees for the full year of 2018 were RMB435.5 million, a 19.8% increase from 2017, primarily due to a increase in the moving average value of assets under management. RMB61.6 million and RMB81.7 million carried interests were recognized as part of Jupai's recurring management fees for the full year of 2018 and '17 respectively. Net revenues from recurring service fees for the full year of 2018 were RMB64.3 million, a 38.7% decrease from 2017, primarily because the Company provided ongoing services to fewer product suppliers. The Company recognized RMB0.3 million and RMB13.8 million variable performance fees for the full year of 2018 and '17 respectively.

Net revenues from other service fees for the full year of 2018 were RMB84.4 million, a 57.5% decrease from 2017, primarily due to a decrease in sub-advisory fees collected from other companies. Starting from 1st of January 2018, the Company adopted Accounting Standards Update 2014-09, Revenue from