Hywin Holdings (HYW) CEO Issues 2023 Letter to Shareholders
On behalf of Hywin Holdings Ltd., (HYW) I would like to express our deepest gratitude for your unwavering trust and support. In spite of a challenging macroeconomic environment, further complicated by the pandemic in 2022, with your support and the dedication from all of our staff, Hywin was able to push ahead, finding opportunities and making breakthroughs in this past year.
Results for H1FY2023
In the first half of fiscal year 2023, Hywin recorded net revenue of RMB1.04 billion, up 17.6% year-on-year, with net income increasing by 0.3% to RMB70.58 million. As of December 31, 2022, the total number of clients had reached 146,000, up 8.7% year-on-year, including nearly 37,000 active clients, a year-on-year increase of 3.9%. Repeat investment rate from existing clients had reached 80.5% and remained at the top of the industry throughout the year. At the same time, transaction value of the wealth management business reached RMB40.11 billion, a 6.9% increase over the previous year. Client assets under management (AUM) for the asset management business increased by 114.3% year-on-year to RMB7.01 billion, with Hywin International’s external asset management (EAM) business, also known as discretionary investment for ultra-high-net-worth clients, exceeding RMB5.8 billion in AUM. As for our Hywin Health segment, the number of medical examination visits was 4,936, with an average visit price of RMB2,520, generating revenue of RMB12.44 million. The number of health management service clients totaled 1,178, with an average revenue per client of RMB21,952, which is well above industry average price levels, generating a revenue of RMB25.86 million.
I would attribute Hywin’s achievements in this past year to our unremitting pursuit of professional excellence, the continuous strengthening of our organization, the ongoing diversification of our products and business lines, as well as the implementation of a number of practical measures that helped us adapt to market changes. We announced our new “Wealth + Health” strategy, proactively adjusted our product mix, increased expansion of our overseas businesses, as well as further strengthened our risk management system.
Hywin’s Professional Capabilities
With our professional capabilities being our core competency, Hywin has accurately captured market trends and client needs for the past 17 years to help clients realize long-term value.
For the tenth consecutive year, Hywin has published 14 asset allocation white papers. Our research team is now passionately working with clients to identify opportunities for investment and wealth creation during this time of economic recovery. In addition to these 14 original papers, we have been honored to carry out in-depth research in various fields, such as the private equity investment market, family offices, digital finance, and jointly publish research reports with renown institutions and colleges including VP Bank, Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University, Hong Kong University of Science and Technology, Hurun Report, Fortune, IBM, and others.
On February 20 of this year, Hywin International was elected as Vice Chair of the Hong Kong Limited Partnership Fund Association (HKLPFA). As such, we began to work with regional institutions such as Haitong International, SPDB International, China Life Insurance, CNCB Investment and other members of the Association, to further promote the development of Hong Kong into a leading domicile for global alternatives managers. Hywin International currently holds Securities and Futures Commission of Hong Kong SAR Licenses 1, 4, 5, and 9, as well as insurance brokerage license issued by the Hong Kong Insurance Authority. Hywin International is also one of the “Top Tier Families Offices” recognized by InvestHK.
Hywin International has rapidly expanded our franchise in the global capital markets in this past year. We are proud to announce the successful launch of a principal-protected structured product linked to the FactSet Hywin Global Health Care Index™ (FHGHC) by Hywin Holdings, Leonteq AG, a Swiss fintech company with a leading marketplace for structured investment solutions, and Arta TechFin, a hybrid fintech platform in traditional assets and digital assets. This structured note is the first commercialization of the FactSet Hywin index, which combines an attractive theme with principal protection features. We expect to products like this to become an increasingly popular bedrock of our clients’ portfolios.
Hywin Family Office
This year, we also advanced Hywin’s family office services given the strong market opportunities in both domestic and overseas businesses.
On January 9, 2023, Hywin’s family office team was included in the 7th Asia-Pacific Wealth Forum’s list of Top 50 Family Offices of the Year in China at the 2022 International Private and Family Wealth Management Awards Ceremony. The forum, hosted by the Wealth Management magazine and the think tank Cai Ce, has made these awards a benchmark for excellence in wealth management in the Asia-Pacific region.
As one of the industry’s earliest providers of family office services, in addition to our presence across Mainland China, we seek to explore and expand into overseas markets via Hong Kong as the hub. As one of the first Chinese institutions to offer family office services in Hong Kong, Hywin now sets an example for the industry promoted worldwide by the Hong Kong SAR government.
We also invested significantly in Digital Hywin in this past year. We continued to enhance our data intelligence in order to improve the client experience and operating efficiency. Committed to our digitalization strategy, we continue to invest in research and development (R&D) and sought to apply cutting-edge technology in the wealth management field.
Adhering to the principle of KYN (Know Your Needs) in wealth management, Hywin seeks to develop in-depth insight into client needs and provide a differentiated, multi-dimensional online + offline service experience. In addition, “Allomaster”, our scenario-based sales and marketing system responsive to individual clients’ varied asset allocation needs, also officially went live in 2022. Designed to support relationship managers’ construction of fund portfolios, this system provides fund performance comparisons and post-investment holding analyses that are customized to clients’ personalized asset allocation needs. The “Invest Path” service platform, a specialized platform for institutional client fund trading, supports client needs for professional, secure and speedy investment fund trade execution online. As a result, “Invest Path” enhances our overall liquidity management and risk management capabilities for our clients, and improves efficiency and enables better control of operational risk. Behind “Invest Path” and “Allomaster” lies our HIPA system. Developed and refined by Hywin Technology over several years, HIPA combines a “customer data engine” with AI algorithms which continuously accumulate and analyze client data, empowering multi-scenario asset allocation, and fulfilling clients’ personalized full life-cycle needs.
In addition to the increasingly important role that technology plays in our wealth segment, Hywin Technology is also making inroads in health management.
Since its establishment, Hywin Health has placed digitization and the construction of a digital ecosystem at the core of its strategic planning. Hywin Health has since quickly made progress in its health service model, online service matrix, and digital health profiles, among others. The recent official launch of Hywin Technology’s digital health cloud platform will gradually be rolled out and be implemented across all the company’s health management centers. The cloud platform allows Hywin Health to use digital intelligence tools in our health management offerings, reshaping client journeys and improving the overall client experience. Besides, Hywin Health’s cloud platform will improve the standardization, automation, and objective measurement of our health management service standards. It will strengthen our centralized management of all centers nationwide, as well as centralize data across businesses, clients, and product supply chains nationwide, thereby greatly improving Hywin Health’s operational efficiency going forward.
Technology will be a core pillar of Hywin’s business expansion and innovations going forward. Our technology roadmap will be guided by Hywin’s overall strategy of “Wealth + Health”. Since 2021, Hywin Technology has obtained nearly 30 software copyrights. In 2022, Hywin Technology was officially approved as a national high-tech enterprise. In June 2023, Hywin Technology was certified as a “Specialized, Excellent, Featured and Innovative” Enterprise by the Ministry of Industry and Information Technology and Shanghai Municipal Commission of Economy and Informatization. These achievements serve as a recognition of Hywin’s continuous investment in technological R&D, as well as echo the Chinese government’s overall national strategy.
In June 2022, we appointed Mr. Vincent Chun Hung Chan, a capital markets and investment management veteran, as an Independent Director of Hywin Holdings. With this appointment, Independent Directors hold half of our Board seats. We will continue to optimize the board’s structure to guide the direction of the company and enhance corporate governance.
We also continued to lead the industry in our ESG commitment and championed a range of societal and environmental initiatives after joining the United Nations-supported Principles for Responsible Investment (PRI). In December last year, we released our first Sustainability Report, and Hywin received the 2022 ESG Award for Responsible Practices from a well-known Chinese media The Paper, in recognition of our efforts in creating long-term value for our investors, clients, employees, the industry, the public, and other stakeholders.
The Economic Observer recently launched its 2023 ESG Practice 50·Responsible Listed Companies Award to recognize enterprises that make outstanding contributions in respect of the environment, society, and corporate governance, and encourage more financial institutions and enterprises to actively implement the principles of ESG and promote sustainable development. On June 8, 2023, it was announced that Hywin was one of the winners, in recognition of Hywin’s contributions to sustainable investments.
On May 19, winners of the 2022 Annual Ranking of China’s Most Competitive Wealth Management Institutions in Investment were announced, and Hywin Wealth won No.3 among the “Top 5 2022 Most Competitive Wealth Management Institutions” by ChinaVenture, with the jury commenting that Hywin’s organic growth and momentum were exceptionally resilient in the face of market fluctuations. As the asset allocation needs of high-net-worth individuals in China expand, Hywin will continue its efforts across product diversification, service diversification, and strategy diversification, in order to lay a good foundation for further future growth.
On June 1, 2023, Hywin Holdings was named “Best Wealth Manager of Greater China 2023”. In addition, the Company’s Chief Executive Officer, Madame Wang Dian, was recognized as “Best CEO in Greater China Wealth Management 2023”. This is the third consecutive year that Hywin is named for both awards. Hywin Holdings was the only wealth management institution in China to be named in the list, a further proof of Hywin’s outstanding performance in wealth management segment.
In light of the dynamic nature of China’s wealth management industry, it is essential to gain deep insights into the intrinsic needs of the high-net-worth families and work proactively to win market share.
Guided by our “Wealth + Health” dual platform strategy, Hywin Holdings entered the health management industry in 2022 through the acquisitions of Grand Doctor, Life Infinity, and Sincerity and Compassion Health Management Center, with the strategic goal of creating a new high-end health management paradigm in China. Hywin Health aims to achieve this goal by integrating these three health management institutions’ core competencies, accumulated over a decade of operation, together with the first-class international resources that Hywin has. Hywin Health’s strategy will revolve around high-end medical examination, preventive care, health management, and specialist referrals. In the current phase, we have developed an AI-based health evaluation system and a digital health management platform for our health management business. Through continued refinement of client data from both our medical examination and health management businesses, we also plan to further customize and expand the value-added health management solutions that we offer to clients.
Following a challenging 2022, Hywin overcame challenges and showed strong resilience and growth potential, demonstrating once again our ability to attract and maintain high-net-worth clients. This year 2023 marks the second anniversary of our IPO and our 17th birthday. Hywin looks to unleash more growth potential with innovations, further strengthen our operations, and we are committed to providing high quality services to our clients and creating sustainable growth for our shareholders.
CEO and Director, Hywin Holdings Ltd.