Noah Holdings: Seizing Global Wealth Opportunities in an Undervalued Play

Noah Holdings Limited (NYSE: NOAH) has quietly transformed into a global wealth management powerhouse, leveraging its strategic shift toward overseas markets and operational efficiency gains to build a resilient growth engine. Despite lingering domestic headwinds, the company's international expansion and cost discipline position it as an undervalued opportunity in an underappreciated sector. Here's why investors should take notice now.

The Overseas Growth Engine

Noah's pivot to international markets is no longer a side project—it's now the bedrock of its revenue streams. As of Q1 2025, overseas operations contributed nearly 50% of total net revenues, reaching RMB304.2 million (US$41.9 million). This milestone reflects a deliberate strategy to serve Chinese high-net-worth individuals (HNWIs) globally. Active overseas clients surged 23.3% year-on-year to 3,384 in Q1 2025, while overseas assets under management (AUM) hit RMB42.7 billion (US$5.9 billion)—a 14.8% annual increase driven by Olive Asset Management's success in USD-denominated private equity and multi-strategy products.

Operational Efficiency: Fueling Margins, Igniting Profitability

The real magic lies in Noah's ability to cut costs while scaling its overseas business. In Q1 2025, income from operations surged 53.1% year-on-year to RMB186 million, fueled by a 21.8% reduction in compensation costs. Overseas wealth management alone saw an eye-popping 1,129.6% jump in operational income to RMB58.1 million, thanks to trimmed expenses and higher client activity. Operating margins expanded to 30.3%, up from 18.7% in 2024, signaling a structural shift toward profitability.

This efficiency is no accident. Noah has streamlined its domestic footprint—reducing coverage cities from 18 to 11—while investing in overseas talent. The number of international relationship managers jumped 44% year-on-year to 131, ensuring client-centric service in hubs like Singapore and Silicon Valley.

Why the Stock is Undervalued

Despite these strides, Noah's stock trades at a steep discount to its growth trajectory. At current levels, it's priced at just 7.5x forward P/E, far below peers like China AMC (12x) and ICBC Wealth (10x). This disconnect stems from two factors:

1. Domestic Drag: Weakness in China's insurance and mutual fund markets continues to weigh on results. Domestic insurance revenues plunged 65.6% year-on-year in Q1 2025.
2. Market Myopia: Investors overlook Noah's transformation into a global wealth manager. The focus remains on legacy domestic struggles, not the 50% revenue contribution from overseas.

Yet the data tells a different story. Overseas segments now deliver 35.2% higher operating income sequentially, and the company's RMB4.08 billion cash reserves provide ample liquidity to fund growth. With non-GAAP net income up 4.7% year-on-year, Noah is proving that efficiency and diversification can offset domestic volatility.

Key Catalysts for a Turnaround

• Market Share Gains: Noah's 25% rise in overseas private equity sales highlights its edge in high-margin, growth-oriented products.
• Geographic Diversification: Expansion into Japan and Europe (via partnerships) could further lift AUM and client counts.
• Share Repurchases: A US$50 million buyback program initiated in 2024 signals management's confidence in undervaluation.

The Bottom Line: A Buy at These Levels

Noah Holdings is a rare gem in the wealth management space—combining a global growth story with disciplined cost management. While domestic challenges remain, the company's overseas dominance, improving margins, and undervalued stock price create a compelling risk-reward profile. Investors ignoring the shift to international markets are missing a key pillar of Noah's future.

Act now before the market catches on. With a P/E ratio at half its peers and a 14.8% annual overseas AUM growth run rate, Noah could be poised for a valuation reset. This is a buy for long-term wealth builders and opportunistic investors alike.

Data as of May 26, 2025. Past performance does not guarantee future results.