Hello, everyone. And welcome to Jupai's earnings conference call for the fourth quarter and full year ending December 31, 2020.

Leading the call today is Mr. Jianda Ni, our Chairman and CEO who will review the highlights for the fourth quarter and full year 2020.

I will then discuss our financial results. We will then open the call to questions, at which time, our CFO, Ms.

Min Liu, will also be available. Before we continue, I refer you to our safe harbor statement in the earnings press release, which applies to this call as we will make forward-looking statements.

Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I will now turn the call over to Mr.

Jianda Ni, our Chairman and CEO and I will interpret his remarks for you.

[Foreign Language]

Thank you, Eddie. And welcome, everyone, to today's conference call.

[Foreign Language]

Throughout 2020, COVID-19 has brought long-term changes to China's overall economy and the wealth management industry. Jupai has been proactive in responding to the challenges brought by pandemic and changing market demands, leveraging our advantages in-sourcing products and experience in the wealth management industry.

[Foreign Language]

We were pleased to see Jupai's bottom line continue to improve, turning profitable for the quarter. This is largely due to our effective cost control measures, which helped reduce operating costs and expenses by 45.1% on a year-over-year basis.

Net loss attributable to ordinary shareholders in 2020 also significantly narrowed compared to the same period of last year.

[Foreign Language]

In 2020, Jupai continued to optimize our product offerings, and we were pleased to see our distribution of secondary market products increased to RMB 1.17 billion for the full year 2020 compared to RMB 290 million in 2019.

[Foreign Language]

As investors maintain a cautious mode in the phase of the COVID-19 pandemic situation overseas and the uncertainties of the overall economy recovery, we remain confident in the long-term prosperity of Chinese wealth management industry.

[Foreign Language]

We will continue to realize our potential by improving customer experience, creating stable and high-quality products for investors and implementing ongoing cost control measures to support margin improvement.

[Foreign Language]

I will now turn the call over to Eddie to go through the financial results for the fourth quarter and full year of 2020. Thank you.

Thank you, Ni-Zong. We were encouraged by our return to profitability in the fourth quarter of 2020.

Jupai's effective cost control measures continue to drive margin improvement as evidenced by the decrease of total operating costs by 45.1% on a year-over-year basis. In 2021, we will continue to improve our productivity while optimizing overall customer experience.

Now I will walk you through our financial highlights for the fourth quarter and full year 2020. Net revenues for the fourth quarter of 2020 were RMB 98.0 million, a 28.4% decrease from the corresponding period in 2019, primarily due to decreases in onetime commissions and recurring management fees.

Net revenues were RMB 388.2 million for the full year 2020, a decrease of 50.6% from 2019. Operating costs and expenses for the fourth quarter of 2020, RMB 91.4 million, a decrease of 45.1% from the corresponding period in 2019.

For the full year 2020, operating costs and expenses were RMB 422.6 million, a decrease of 54.2% from 2019. Operating margin for the fourth quarter of 2020 was 6.8% as compared to minus 21.5% for the corresponding period in 2019.

For the full year 2020 operating margin was minus 8.9% compared to minus 17.4% for 2019. Net income attributable to ordinary shareholders for the fourth quarter of 2020 was RMB 2.0 million as compared to net loss attributable to ordinary shareholders of RMB 30.2 million from the corresponding period in 2019.

For the full year 2020, net loss attributable to ordinary shareholders was RMB 31.4 million as compared to RMB 164.7 million in 2019. Net margin attributable to ordinary shareholders for the fourth quarter of 2020 were 2.0% as compared to minus 22.0% from the corresponding period in 2019.

For the full year 2020, net margin attributable to ordinary shareholders was minus 8.1% compared to minus 21.0% in 2019. Net income attributable to ordinary shareholders per basic and diluted, ADS for the fourth quarter of 2020 was RMB 0.06 and RMB 0.06, respectively, as compared to net loss attributable to ordinary shareholders per basic and diluted ADS of RMB 0.90 and RMB 0.90, respectively, from the corresponding period in 2019.

For the full year 2020, net loss attributable to ordinary shareholders per basic and diluted ADS with RMB 0.94 and RMB 0.94, respectively, as compared to RMB 4.90 and RMB 4.90, respectively, in 2019. We announced up to USD 10 million share repurchase plan in February 2020.

And as part of the plan, we have repurchased 539,142 ADS at a total cost of U.S. dollar 741,554 as of March 9, 2021, inclusive transaction charges.

Looking at our balance sheet and cash flow. As of December 31, 2020, the company had RMB 657.2 million in cash, cash equivalents and restricted cash as compared to RMB 712.3 million as of December 31, 2019.

Net cash provided by operating activities during the fourth quarter of 2020 was RMB 18.7 million as compared to RMB 47.0 million from the corresponding period in 2019. For the full year 2020, net cash used in operating activities was RMB 15.6 million as compared to RMB 224.6 million in 2019.

That concludes our prepared remarks. I will now turn the call back to the operator to begin the Q&A session.

Operator?

Hi, this is Yu Huali from UBS. Thank you for giving me the opportunity to ask questions.

I actually have two questions. The first one is we can see that Jupai's bottom line improved and turned profitable in the fourth quarter of 2020.

May I ask what the factors contribute to the performance of Jupai's in the first quarter? And my second question is can you give us more color on the development prospects of Jupai and the whole industry in 2021?

[Foreign Language]

Thanks for your question. In the fourth quarter, we saw further recovery in China's overall economy, benefiting from the highly effective COVID-19 control measures and resumption of production and business.

China's GDP for the first time exceeded RMB 100 trillion in 2020 with an overall annual growth of 2.3%, and an increase of 6.5% in the fourth quarter on a year-over-year basis. However, on a global scale, there are still uncertainties about the economic recovery due to the pandemic situation thus, high net worth individuals have remained cautious in their investment activity.

For the fourth quarter, Jupai's aggregate value of wealth management product distributed decreased compared to the third quarter.

[Foreign Language]

Jupai's implementation of cost control matters has yielded strong results. At the end of the fourth quarter, the total staff count at Jupai was reduced to around 580 from 2,500 at the beginning of 2018.

Meanwhile, we continue to enhance our tenant training strategy to increased average less management product value of distributed per adviser. In our sales network, we reduced the scale of our sales network to 31 offices covering 30 cities from 72 offices covering 46 cities at the beginning of 2018.

Our operating costs and expenses were down by 45.1% on a year-over-year basis in the fourth quarter. We were pleased to see that we have turned profitable this quarter with net income attributable to ordinary shareholders of RMB 1.99 million compared to a net loss attributable to ordinary shareholders of RMB 30.15 million in the same period last year and a net loss attributable to ordinary shareholders of RMB 2.97 million in the third quarter.

Also, net loss attributable to ordinary shareholders in 2020 was also significantly narrower compared to the same period of last year.

[Foreign Language]

In response to the change in market demand, Jupai continued to upgrade our product selection in 2020, leveraging our advantages in-sourcing products and experience in the wealth management industry. Secondary market products as a proportion of the equity value of wealth management products distributed increased to 18% in 2020 from 3% in 2019.

[Foreign Language]

COVID-19 has brought long-term changes to the overall economy and the wealth management industry in 2020. Jupai has been proactive in responding to the challenges grow by pandemic and changing market demands.

First, we implanted our asset transparent system strategy and continue to carry out a series of transparent inspections where we invite qualified investors from our real estate partners to jointly visit potential and invested projects in order to let investors further understand the projects through their objective observation and in-depth communication with Jupai's advisers throughout the project selection process. Secondly, we held more than 100 live stream shows and off-line activities in 2020, which many excellent industry analysts joined us to discuss the long-term trends of the industry and attract market dynamics throughout the year.

In addition, we continue to develop our technology platform to support financial product innovation, process reengineering and service offerings. We also launched paperless treating and contactless processes to improve efficiency and included mutual fund sales and services into our adviser work scope.

In 2020, with the gradual recovery of the domestic and overseas market, we will strengthen our equipment and career development system to attract more talent in the wealth and asset management industry. We are confident that Jupai's aggregate value of wealth management product distributed will increase in the first quarter of 2021 compared to the fourth quarter of 2020.

[Foreign Language]

In 2020, due to the pandemic, the real estate market experienced a shutdown in the first quarter, a gradual recovery in the second and third quarter and tightening government controls in the fourth quarter. According to the National Bureau of Statistics, investment in real estate development in 2020 increased by 7.0% on a year-over-year basis, 0.2% higher than that from January to November.

At the same time, in order to improve the resilience of the financial system and promote a healthier and more steady development of the real estate market, the financial regulatory authorities implemented serious measures around real estate financing designed to satisfy people's desire to enjoy better [22:55].

[Foreign Language]

In terms of private equity investments, the market gradually recovered in the fourth quarter and have almost returned to pre-pandemic levels. Several Jupai's invested enterprises have successfully listed on the stock market, China's Asia market, NASDAQ and the New York Stock Exchange, including the auto operated AE Holdings and JD Health.

In 2020, 26 issuers listed on the stock market were underlying assets in Jupai's private equity fund. We have continued to increase the supply of high-quality products in the secondary market to meet investor demand.

[Foreign Language]

Okay. Thank you, Yu Huali.

I will answer the second question. The global and Chinese economic outlook in 2021 is expected to continue to improve with the approval and the promotion of COVID-19 vaccines.

However, there are still uncertainties due to the pandemic situation overseas. Jupai real focus on a few key strategies in 2021 for further development.

We will work on improving customer experience continue to develop the company's product system and continue to focus on the secondary market. Now I will discuss these three strategic directions in detail.

[Foreign Language]

First, the company's frontline employees will focus on improving customer experience with help and support from our frontline health, mid and back staff. Improving customer experience is a new strategic goal for the company's development in 2021, building upon our asset transparency system strategy.

In 2020, Jupai has launched VIP exclusive events and invited key customers to communicate with our management. At the same time, we will focus on the strategic value of financial technology empowerment, optimize user experience and create an accurate user profile or more personalized marketing solutions in the future.

[Foreign Language]

Secondly, in terms of product offering, Jupai will continue to develop the company's product systems, including deepening our portfolio of real estate projects and broadening our equity overseas market and secondary market horizontally in order to provide high-quality products and services to customers. To be more specific, we will continue to leverage our traditional advantages in the real estate industry to select better opportunities under the guidance of the national strategy of Homes for living, not for speculation and the stability control and we realize industry deadlines.

We expect to find more opportunities to provide excellent products and create greater value for investors in the real estate industry.

[Foreign Language]

Jupai's secondary market products saw rapid growth in 2020 and the future investment potential of the secondary market is very high. Our secondary market products as a proportion of the equity value of wealth management product distributed increased to RMB 1.17 billion in 2020 compared to RMB 290 million in 2019.

In 2021, we will continue to focus on the secondary market and select high-quality partners to offer better options for investors. At the same time, we also plan to provide more mutual funds and other asset allocation services going up.

[Foreign Language]

In 2020, we have faced the challenges grow by the pandemic to Jupai and China's wealth management industry. Jupai has worked to realize its potential, actively adapt to market changes and create stable and high-quality products for investors.

In 2021, we will continue to work hard to make Jupai one of the top wealth management and asset management brands for high net worth individuals in China. Than you, Yu Huali.

This concludes today's call. If you have any follow-up questions, please get in contact with us.

Thank you.