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Chinese Millionaires Wealth Management

The comments: Noah Holdings(NOAH) is a wealth management company in China with 300 relationship managers in 28 offices, and sales have increased 260% and income jumped 500% over the last year.

Gaskins (Full details on stats on NOAH) notes that the industry is in an embryonic stage because 80% of China's high net worth individuals make their own decisions. However, Noah's providers are independent and not affiliated with banks, which they feel will win the clients trust.

The average transaction value per client went from half a million in 2009 to one million in 2010. Gaskins likes the numbers and thinks it will be a good IPO. The proceeds will be used to set up new offices and update the IT infrastructure.

Bloomberg article:

Millionaire Ranks

The number of millionaires in China climbed 6.1 percent from a year earlier to 875,000, the Shanghai-based Hurun Report, which lists the country’s richest individuals, said in April. China has the second-most billionaires in the world after the U.S., according to Forbes magazine.

Hong Kong home prices more than doubled from a trough in 2003 on a recovering economy, low interest rates, and an influx of mainland Chinese buyers whose travel restrictions to the city have been gradually relaxed. Prior to 2003, home values went through a slump that began shortly after the Asian financial crisis hit in 1997, the height of the previous bubble.

Concerns that housing may become unaffordable for the majority of Hong Kong’s population have forced Chief Executive Donald Tsang’s government to bring in curbs to rein in prices. The measures include stopping offering residency to foreigners who buy property in the city and a plan to build more apartments for first-time property buyers, both of which Tsang unveiled in his Oct. 13 policy address.

Halting the residency eligibility won’t do much to cool Hong Kong prices, said Cusson Leung, a Hong Kong-based analyst at Credit Suisse Group AG. “Most mainlanders invest in Hong Kong through their relatives or their business. I don’t see how changing that will have any meaningful impact.”

The city’s residential property prices will likely gain 30 percent from now until the end of 2011 because a weaker dollar will boost asset inflation, Leung and Joyce Kwock wrote in a Credit Suisse note to clients dated today.

Former Fishing Village

In September, China told commercial banks to stop offering loans to buyers of third homes and extended a 30 percent down- payment requirement to all first-home buyers.

Shenzhen was the first Chinese city to benefit when the country under then-leader Deng Xiaoping opened its doors to foreign investment in the 1970s. Since then it has transformed itself from a small fishing village into a major manufacturing and financial centre for China. It also has the country’s second-busiest container port after Shanghai.

Shenzhen families with residency status in the city are now limited to the purchase of two homes and those without a permit are allowed to buy one if they can show they have paid taxes in the city for at least a year, according to the Sept. 30 government statement.

“The pool of money will always be there and they’re always looking for speculative opportunities,” said Eric Wong, a Hong Kong-based analyst at UBS AG. “If you shut down one possible destination then, naturally, they’ll have to find somewhere else to move into, and there’s a chance more of those funds would flow into Hong Kong.”

To contact the reporters on this story: Kelvin Wong in Hong Kong at

To contact the editor responsible for this story: Andreea Papuc at

My comments:

IBD Investors Business Daily can't wait to have its hands on NOAH

(Noah) Holdings is set to join IBD weekly list next week with its stock jumping over $16+ (16.47) up +0.97

IBD article:

Wealth Management Is Chinese IPO's Niche


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China's economic miracle proves fertile ground for the growth of millionaires. Wealth is growing at almost all levels of that country's economic ladder. But, like everywhere else, the wealthiest need to pay special attention to their portfolios.

Noah Holdings (NYSE:NOAH) — which went public on the NYSE Wednesday — caters to China's growing population of millionaires with wealth-management products. Its menu includes fixed-income, private equity and securities investment products, all targeting high-net-worth individuals.

In its SEC filing, Noah says it's "the leading independent service provider focusing on distributing wealth management products to the high net worth population in China."

"We believe," it continues, "that we have established our brand among China's high net worth population as a symbol of independent, personalized and value-added wealth management services and sophisticated product choices."

Noah Holdings traded 9.3 million shares on its first day. On Tuesday, the company sold 8.4 million American depositary shares for 12 each, better than its estimated range of 9 to 11.

Noah closed Wednesday at 15.99, 33% above its issuing price.

Noah's revenue, just $3.2 million in 2007, leapt to $8.4 million in 2008 and $15 million in 2009. Through the first half of 2010, Noah had logged sales of $13.7 million.

The company earned 7 cents a share last year, compared with a 1-cent loss in 2008. Quarterly profit is still measured in a few pennies per share.

Noah's pretax margin last year came in at 29%.

So what's so special about a wealth-management firm? Is there anything new here?

Yes. As we've seen in a myriad of other stocks from a vast array of industries, China itself is what makes this stock a potential winner.

Everything in China is new, it seems. A slew of superstars from a wide array of Chinese industries have emerged, including wireless providers, carmakers, jewelers, coal miners, travel-reservation Web sites, a maker of corn alcohol and, of course, a wildly successful search engine.

Can Noah make a real landing among China's financial industry? Its profit record so far is scanty, and some key data, such as per-share cash flow, are not yet available. But sales growth suggests the company has a future.

Elsewhere, Chinese solar-power issue Trina Solar (NYSE:TSL) fell 3% in average volume. The stock had been a market star until mid-October.

Trina, now threading around its 10-week moving average, is five weeks into the construction of what may prove to be a new base.