Market Overview

Jupai Reports Full Year 2019 Results

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SHANGHAI, March 13, 2020 /PRNewswire/ -- Jupai Holdings Limited ("Jupai" or the "Company") (NYSE:JP), a leading third-party wealth management service provider, focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China, today announced its unaudited financial results for the full year ended December 31, 2019.

FULL YEAR 2019 FINANCIAL HIGHLIGHTS

  • Net revenues for the full year 2019 were RMB785.9 million (US$[1]112.9 million), a decrease of 40.5% from 2018.

(RMB '000, except percentages)

FY 2018


FY 2018 %


FY 2019


FY 2019 %


YoY Change %

One-time commissions

737,482


55.7%


318,854


40.5%


-56.8%

Recurring management fees

435,523


33.0%


338,647


43.1%


-22.2%

Recurring service fees

64,345


4.9%


114,542


14.6%


78.0%

Other service fees

84,394


6.4%


13,904


1.8%


-83.5%

Total net revenues

1,321,744


100.0%


785,947


100.0%


-40.5%

  • Loss from operations for the full year 2019 was RMB136.7 million (US$19.6 million), a decrease of 14.5% from 2018.
  • Net loss attributable to ordinary shareholders for the full year 2019 was RMB164.7 million (US$23.7 million), a decrease of 57.5% from 2018.
  • Non-GAAP[2] net loss attributable to ordinary shareholders for the full year 2019 was RMB154.5 million (US$22.2 million), compared to non-GAAP net income attributable to ordinary shareholders of RMB13.0 million in 2018.

FULL YEAR 2019 OPERATIONAL UPDATES 

  • Total number of active clients[3] for the full year 2019 was 2,973.
  • The aggregate value of wealth management products distributed by the Company for the full year 2019 was RMB9.8 billion (US$1.4 billion), a 67.5% decrease from 2018.

Wealth management products distributed by the Company - breakdown by product type


Twelve months ended


December 31, 2018


December 31, 2019

Product type

(RMB in millions, except percentages)

Fixed income products

8,560

28%


7,219

73%

Private equity products

19,038

63%


1,526

16%

Secondary market equity fund products

1,129

4%


291

3%

Other products

1,546

5%


791

8%

All products

30,273

100%


9,827

100%

  • Jupai's coverage network as of December 31, 2019 included 51 client centers covering 43 cities, as compared to 76 client centers covering 50 cities as of December 31, 2018.
  • Total assets under management[4] as of December 31, 2019 were RMB41.8 billion (US$6.0 billion), a 26.3% decrease from December 31, 2018.

Assets under management – breakdown by product type


As of


December 31, 2018


December 31, 2019

Product type

(RMB in millions, except percentages)

Fixed income products

19,846

35%


13,455

32%

Private equity products

34,033

60%


26,294

63%

Secondary market equity fund products

1,658

3%


929

2%

Other products

1,215

2%


1,147

3%

All products

56,752

100%


41,825

100%

 

[1] The U.S. dollars (US$) amounts disclosed in this press release, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the reader. The conversion of Renminbi (RMB) into U.S. dollars (US$) in this press release is based on the noon buying rate on December 31, 2019, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System, which was RMB6.9618 to US$1.00. The percentages stated in this press release are calculated based on the Renminbi amounts.

[2] Jupai's non-GAAP financial measures are derived from adjusting the corresponding GAAP financial measures by excluding the effects of share-based compensation, amortization of intangible assets resulted from business acquisitions, impairment loss of investment in affiliates and impairment loss of goodwill in the periods presented.

[3] "Active clients" for a given period refers to clients who purchase wealth management products distributed by Jupai at least once during that given period.

[4] "Assets under management" or "AUM" of Jupai refers to the amount of capital contributions made by investors to the funds managed by the Company, for which the Company is entitled to receive management fees. The amount of AUM of Jupai is recorded and carried based on the historical cost of the contributed assets instead of fair market value of assets for almost all AUM of Jupai. For assets denominated in currencies other than Renminbi, the AUM are translated into Renminbi upon their contribution, without interim value adjustments solely due to changes in foreign exchange rates. As a result, Jupai's management fees for almost all its AUM are calculated based on the historical cost balance of the AUM.

"Our bottom-line performance showed further improvement over the fourth quarter of 2019, as our cost control measures continued to take effect," said Mr. Jianda Ni, Jupai's chairman of the board and chief executive officer. "However, our top-line performance for this quarter remained under pressure due to industry-wide headwinds. Although we started to see certain loosening of regulatory restrictions on privately-offered funds during the quarter, demand for wealth management products stayed weak as investors remain cautious on the overall market outlook for 2020."

"Looking forward, we expect the market environment to be negatively affected by the coronavirus outbreak in the first quarter. We remain confident, however, in the long-term outlook for Jupai and for the overall wealth management industry, which has been reflected in our announcement of a US$10 million share repurchase program in late February. Jupai remains dedicated to executing on our core strategies of further strengthening our cost control efforts and increasing our operating efficiency, enhancing our product portfolio with differentiated products, and optimizing our risk control system and improving project transparency. We will also continue to seek potential growth opportunities from overseas business."

Ms. Min Liu, Jupai's chief financial officer, said, "Jupai achieved another sequential decline in operating expenses in the fourth quarter of 2019, thanks to our continuous efforts in implementing cost control measures. Specifically, cost of revenues declined by 14% and G&A expenses were down by 33%. We expect to be able to further reduce costs in the coming quarters as we continue to enhance operating efficiencies."

FULL YEAR 2019 FINANCIAL RESULTS

Net Revenues

Net revenues for the full year 2019 were RMB785.9 million (US$112.9 million), a 40.5% decrease from 2018, primarily due to decreases in one-time commissions, recurring management fees and other service fees.

  • Net revenues from one-time commissions for the full year 2019 were RMB318.9 million (US$45.8 million), a 56.8% decrease from 2018, 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 2019 were RMB338.6 million (US$48.6 million), a 22.2% decrease from 2018, primarily due to the decrease in the value of assets under management. RMB156.9 million (US$22.0 million) and RMB61.6 million carried interest was recognized as part of Jupai's recurring management fees for the full year 2019 and 2018, respectively.
  • Net revenues from recurring service fees for the full year 2019 were RMB114.5 million (US$16.5 million), a 78.0% increase from 2018, primarily because the Company provided ongoing services to more product suppliers. The Company recognized RMB2.1 million (US$0.3 million) and RMB0.3 million variable performance fees for the full year 2019 and 2018, respectively.
  • Net revenues from other service fees for the full year 2019 were RMB13.9 million (US$2.0 million), an 83.5% decrease from 2018, primarily due to a decrease in sub-advisory fees collected from other companies.

Operating Costs and Expenses

Operating costs and expenses for the full year 2019 were RMB922.6 million (US$132.5 million), a decrease of 37.7% from 2018.

  • Cost of revenues for the full year 2019 was RMB481.7 million (US$69.2 million), a decrease of 29.6% from 2018, primarily due to decreased compensation to wealth management advisors and client managers, as a result of the decrease in the aggregate value of wealth management products distributed by the Company and cost control measures the Company undertook.
  • Selling expenses for the full year 2019 were RMB206.8 million (US$29.7 million), a decrease of 31.8% from 2018, primarily due to the decrease in marketing and promotion expenses as a result of cost control.
  • General and administrative expenses for the full year 2019 were RMB265.5 million (US$38.1 million), a decrease of 3.4% from 2018.
  • Other operating income (government subsidies) received by the Company for the full year 2019 was RMB31.4 million (US$4.5 million), a decrease of 35.5% from 2018. Government subsidies were recorded when received, with their availability and amount dependent upon government policies.

Operating margin for the full year 2019 was -17.4%, compared to -12.1% in 2018.

Income tax expenses for the full year 2019 were RMB52.9 million (US$7.6 million), a 59.2% decrease from 2018, primarily due to a decrease in taxable income.

Net Income

- Net Income

  • Net loss attributable to ordinary shareholders for the full year 2019 was RMB164.7 million (US$23.7 million), a 57.5% decrease from 2018.
  • Net margin attributable to ordinary shareholders for the full year 2019 was -21.0%, compared to -29.3% in 2018.
  • Net loss attributable to ordinary shareholders per basic and diluted American depositary share ("ADS") for the full year 2019 was RMB4.90 (US$0.70) and RMB4.90 (US$0.70), respectively, as compared to RMB11.60 and RMB11.60, respectively, in 2018.

- Non-GAAP Net Income

  • Non-GAAP net loss attributable to ordinary shareholders for the full year 2019 was RMB154.5 million (US$22.2 million), as compared to non-GAAP net income attributable to ordinary shareholders of RMB13.0 million in 2018.
  • Non-GAAP net margin attributable to ordinary shareholders for the full year 2019 was -19.7%, as compared to 1.0% in 2018.
  • Non-GAAP net loss attributable to ordinary shareholders per diluted ADS for the full year 2019 was RMB4.60 (US$0.66), as compared to non-GAAP net income attributable to ordinary shareholders per diluted ADS of RMB0.37 in 2018.

Balance Sheet and Cash Flow

As of December 31, 2019, the Company had RMB712.3 million (US$102.3 million) in cash, cash equivalents and restricted cash, compared to RMB1,302.6 million as of December 31, 2018.

Net cash used in operating activities for the full year 2019 was RMB224.6 million (US$32.3 million).

Net cash used in investing activities for the full year 2019 was RMB365.7 million (US$52.5 million).

Net cash provided by financing activities for the full year 2019 was RMB29.6 thousand (US$4.3 thousand).

CONFERENCE CALL

Jupai's management will host an earnings conference call on March 13, 2020 at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

U.S./International:

 +1-845-675-0437 or +1-866-519-4004

Hong Kong:

 +852-3018-6771 or 800-906-601

Mainland China:

 400-620-8038 or 800-819-0121

Singapore:

+65-6713-5090

Passcode:

7177755

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until March 21, 2020:

U.S./International:

+1-855-452-5696

Hong Kong:

800-963-117

Mainland China:

400-632-2162

Singapore:

800-616-2305

Passcode:

7177755

Additionally, a live and archived webcast will be available at http://jupai.investorroom.com.

DISCUSSION OF RECENTLY ADOPTED ACCOUNTING STANDARD

Starting from January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use ("ROU") assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. The Company also elected the package of practical expedients, which among other things, does not require reassessment of lease classification.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES

In addition to disclosing financial results prepared in accordance with U.S. GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of all forms of share-based compensation and amortization of intangible assets related to acquisition, impairment loss of investment in affiliates and impairment loss of goodwill in the periods presented. The reconciliation of these non-GAAP financial measures to the nearest GAAP measures as set forth in the table captioned "Reconciliation of GAAP to Non-GAAP Results" below.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with U.S. GAAP. The financial results reported in accordance with U.S. GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measure used by the Company may be prepared differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

When evaluating the Company's operating performance in the periods presented, management reviewed non-GAAP net income results reflecting adjustments to exclude the impacts of share-based compensation, amortization of intangible assets related to acquisition, impairment loss of investment in affiliates and impairment loss of goodwill in the periods presented, to supplement U.S. GAAP financial data. As such, the Company believes that the presentation of the non-GAAP net income attributable to ordinary shareholders, non-GAAP net income attributable to ordinary shares per diluted ADS and non-GAAP net margin attributable to ordinary shareholders provides important supplemental information to investors regarding financial and business trends relating to the Company's financial condition and results of operations in a manner consistent with that used by management. Pursuant to U.S. GAAP, the Company recognized significant amounts of expenses for the restricted shares, share options and amortization of intangible assets related to acquisition, impairment loss of investment in affiliates and impairment loss of goodwill in the periods presented. The Company utilized the non-GAAP financial results to make financial results comparable period to period and to better understand its historical business operations.

ABOUT JUPAI HOLDINGS LIMITED

Jupai Holdings Limited ("Jupai") (NYSE:JP) is a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China. Jupai's comprehensive and personalized client service and broad range of carefully selected third-party and self-developed products have made it a trusted brand among its clients. Jupai maintains extensive and targeted coverage of China's high-net-worth population.

For more information, please visit http://jupai.investorroom.com.

SAFE HARBOR STATEMENT

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Jupai's strategic and operational plans, contain forward-looking statements. Jupai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Jupai's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the goals and strategies of the Company and the Company's ability to manage its growth and implement its business strategies; future business development, financial condition and results of operations of the Company; condition of the wealth management market in China and internationally; the demand for and market acceptance of the products the Company distributes; the Company's ability to maintain and further grow its active high-net-worth client base and maintain or increase the amount of investment by clients; developments in relevant government policies and regulations relating to the Company's industry and the Company's ability to comply with those policies and regulations; the Company's ability to attract and retain quality employees; the Company's ability to adapt to potential uncertainties in China's real estate industry and stay abreast of market trends and technological advances; the results of the Company's investments in research and development to enhance its product choices and service offerings; general economic and business conditions in China; and the Company's ability to protect its reputation and enhance its brand recognition. Further information regarding these and other risks is included in Jupai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and Jupai does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under applicable law.

- FINANCIAL AND OPERATIONAL TABLES FOLLOW -

Jupai Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

(In RMB, except for USD data)



As of


December 31,


December 31,


December 31,


2018


2019


2019


RMB


RMB


USD

Assets






Current assets:






Cash and cash equivalents

1,298,565,042


711,205,698


102,158,306

Restricted cash

4,000,000


1,100,000


158,005

Short-term investments

4,723,612


-


-

Accounts receivable

39,633,035


-


-

Other receivables

20,493,145


14,125,535


2,029,006

Amounts due from related parties

199,331,694


95,193,003


13,673,619

Other current assets

15,320,791


4,984,541


715,985

Total current assets

1,582,067,319


826,608,777


118,734,921

Long-term investments

58,950,000


228,950,000


32,886,610

Investment in affiliates

67,262,431


107,541,000


15,447,298

Amounts due from related parties — non-current

48,626,353


229,117,743


32,910,705

Property and equipment, net

36,267,042


27,834,760


3,998,213

Intangible assets, net

58,124,608


38,250,479


5,494,338

Goodwill

297,031


-


-

Other non-current assets

27,914,021


17,886,020


2,569,166

Right-of-use assets

-


68,950,101


9,904,062

Deferred tax assets

100,985,228


4,608,063


661,907

Total Assets

1,980,494,033


1,549,746,943


222,607,220







Liabilities and Equity






Current liabilities:






Accrued payroll and welfare expenses

116,653,658


58,318,063


8,376,866

Income tax payable

227,537,993


82,800,208


11,893,506

Other tax payable

43,009,523


695,081


99,842

Amounts due to related parties — current

31,105,111


19,439,664


2,792,333

Deferred revenue from related parties

111,720,785


42,053,959


6,040,673

Deferred revenue

18,949,097


35,674,503


5,124,322

Other current liabilities

39,929,945


78,201,072


11,232,881

Total current liabilities

588,906,112


317,182,550


45,560,423

Deferred revenue — non-current from related parties

22,096,306


4,917,845


706,404

Deferred revenue — non-current

2,144,593


311,651


44,766

Operating Lease Liabilities — non-current

-


28,518,789


4,096,468

Deferred tax liabilities

198,187


-


-

Total Liabilities

613,345,198


350,930,835


50,408,061

Equity

1,367,148,835


1,198,816,108


172,199,159

Total Liabilities and Total Shareholders' Equity

1,980,494,033


1,549,746,943


222,607,220

 

 

Jupai Holdings Limited

Unaudited Condensed Consolidated Income Statements

(In RMB, except for USD data and ADS data)



Twelve months ended


December 31,


December 31,


December 31,


2018


2019


2019


RMB


RMB


USD

Revenues






Third party revenues

335,246,612


387,870,253


55,714,076

Related party revenues

990,820,793


402,889,899


57,871,513

Total revenues

1,326,067,405


790,760,152


113,585,589

Taxes and surcharges

(4,323,742)


(4,812,940)


(691,336)

Net revenues

1,321,743,663


785,947,212


112,894,253







Operating costs and expenses:






Cost of revenues

(684,558,659)


(481,746,067)


(69,198,493)

Selling expenses

(303,170,575)


(206,777,405)


(29,701,716)

General and administrative expenses

(274,782,664)


(265,527,496)


(38,140,638)

Impairment loss of goodwill

(267,917,575)


-


-

Other operating income — government subsidies

48,742,897


31,429,802


4,514,609

Total operating cost and expenses

(1,481,686,576)


(922,621,166)


(132,526,238)

Loss from operations

(159,942,913)


(136,673,954)


(19,631,985)







Gain from deconsolidation of subsidiaries

561,528


-


-

Interest income

3,990,096


6,136,600


881,467

Investment (loss) income

(292,384)


12,627,142


1,813,775

Other income

4,227,896


3,409,000


489,673

Total other income

8,487,136


22,172,742


3,184,915

Loss before taxes and loss from equity in affiliates

(151,455,777)


(114,501,212)


(16,447,070)

Income tax expense

(129,855,367)


(52,944,639)


(7,605,021)

Loss from equity in affiliates

(113,486,155)


(5,015,063)


(720,369)

Net loss

(394,797,299)


(172,460,914)


(24,772,460)

Net loss attributable to non-controlling interests

7,053,281


7,774,839


1,116,786

Net loss attributable to ordinary shareholders

(387,744,018)


(164,686,075)


(23,655,674)







Net loss per ADS:






Basic

(11.60)


(4.90)


(0.70)

Diluted

(11.60)


(4.90)


(0.70)

Weighted average number of ADSs used in computation:






Basic

33,413,485


33,615,983


33,615,983

Diluted

33,413,485


33,615,983


33,615,983

 

 

Jupai Holdings Limited

Unaudited Condensed Comprehensive Income Statements

(In RMB, except for USD data)



Twelve months ended


December 31,


December 31,


December 31,


2018


2019


2019


RMB


RMB


USD

Net loss 

(394,797,299)


(172,460,914)


(24,772,460)

Other comprehensive loss, net of tax:






Change in cumulative foreign currency translation adjustment

12,501,586


(3,245,903)


(466,245)

Other comprehensive income

12,501,586


(3,245,903)


(466,245)

Comprehensive loss

(382,295,713)


(175,706,817)


(25,238,705)

Less: Comprehensive loss attributable to non-controlling interests

(6,934,658)


(7,748,689)


(1,113,029)

Comprehensive loss attributable to ordinary shareholders

(375,361,055)


(167,958,128)


(24,125,676)

 

 

Jupai Holdings Limited

Reconciliation of GAAP to Non-GAAP Results

(In RMB, except for ADS data and percentages)



Twelve months ended


December 31,


December 31,


2018


2019


RMB


RMB

Net margin attributable to ordinary shareholders

-29.3%


-21.0%

Adjusted net margin attributable to ordinary shareholders (non-GAAP)

1.0%


-19.7%





Net loss attributable to ordinary shareholders

(387,744,018)


(164,686,075)

Adjustment for share-based compensation (net of tax effect of nil for both years ended
December 31, 2018 and 2019)

18,108,942


9,583,596

Adjustment for amortization of intangible assets related to acquisition (net of tax effect of 
RMB4,642,486 and RMB196,316 for years ended December 31, 2018 and 2019,
respectively)

13,927,456


588,954

Adjustment for impairment loss of investment in affiliates (net of tax effect of nil for both
years ended December 31, 2018 and 2019)

100,756,194


-

Adjustment for impairment loss of goodwill (net of tax effect of nil for both years ended
December 31, 2018 and 2019)

267,917,575


-

Adjusted net income (loss) attributable to ordinary shareholders (non-GAAP)

12,966,149


(154,513,525)





Net loss attributable to ordinary shareholders per ADS, diluted

(11.60)


(4.90)

Adjusted net income (loss) attributable to ordinary shareholders per ADS, diluted (non-GAAP)

0.37


(4.60)





Weighted average number of ADSs used in computation:




Diluted

35,035,842


33,615,983

 

 

Cision View original content:http://www.prnewswire.com/news-releases/jupai-reports-full-year-2019-results-301022823.html

SOURCE Jupai Holdings Limited

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