Noah Holdings Ltd. ( NOAH Quick Quote NOAH - Free Report) reported second-quarter 2020 net income attributable to shareholders of $42.4 million, which represents a rise of 16.4% from the prior-year quarter number.
Results benefited from a fall in expenses. However, a decline in assets under management (AUM) and lower revenues were undermining factors.
Revenues Decrease, Expenses Fall
Net revenues declined 16.7% year over year to $105.8 million. The fall can be primarily attributed to one-time commissions and other service fees, partially offset by increased recurring service fees and performance-based income.
Operating margin came in at 42.7% compared with 27.7% in the year-ago quarter.
Total operating expenses declined 32.9% to $60.6 million due to a fall in almost all the components.
As of Jun 30, 2020, total AUM was $22.6 billion, down from $26.3 billion recorded in the prior-year quarter. Outflows in private equity and public securities slightly affected AUM.
Decent Balance Sheet Position
As of Jun 30, 2020, Noah Holdings had $590.3 million in cash and cash equivalents, up from $571.4 million as of Mar 31, 2020. Notably, the company had $1.3 billion of total assets, up from $1.28 billion in the previous quarter.
Total equity as of Jun 30, 2020, was $1.1 billion, up from $1.05 billion as of Mar 31, 2020.
The company expects net income attributable to shareholders (non-GAAP basis) for 2020 between RMB900 million to RMB1billion, up from the previously mentioned RMB800 million to RMB900 million. Stronger-than-expected transaction value and performance income of public securities, improved operation efficiency, and optimistic business estimation of the second half of 2020 led to the rise in estimates.
Noah Holdings’ second-quarter results reflect benefits from prudent expense management. Also, the company’s restructuring strategies are expected to result in improved performance. Nevertheless, net outflows are a major concern.
Noah Holdings currently carries a Zacks Rank #3 (Hold). You can see
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