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Will Noah Holdings Ever Become China's Goldman Sachs?

Noah Holdings (NYSE: NOAH  ) will release its quarterly report on Monday, and the Chinese wealth management company has seen its stock soar, quintupling in just the past year. Yet can the company live up to the promise of becoming a premier high-end money manager like Goldman Sachs (NYSE: GS  ) has done in the U.S., or will much larger banking institutions end Noah's dreams of becoming a major player in the world money management industry?

Noah Holdings came public in late 2010 to much fanfare, as the Chinese IPO market was red hot. Over the ensuing years, though, Noah lost three-quarters of its value as China's stock market plunged as its economy cooled. Now, though, prospects for the Chinese market are looking up again, and Noah has finally surpassed its post-IPO highs. What's next for the company in its bid to join Goldman Sachs atop the global financial industry? Let's take an early look at what's been happening with Noah Holdings over the past quarter and what we're likely to see in its report.

Stats on Noah Holdings

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$46.49 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

What's in Noah Holdings' future?
Analysts have gotten more interested in Noah Holdings and its earnings prospects in recent months, boosting full-year earnings projections by about $0.16 per share. The stock has performed impressively, climbing 21% since mid-August.

Noah came into the quarter on what seemed like a positive note, although shareholders didn't take it as well as one might expect. In its second-quarter earnings report, Noah saw revenue and net income more than double from year-ago levels, with the number of clients jumping by 35% and the volume of product distribution doubling. Yet with a new CFO coming aboard, some might have worried about problems that plagued other small Chinese companies in years past.

Since that initial drop, though, Noah's shares have recovered substantially. On several occasions, the company has actually issued press releases refusing to comment on what it perceived as unusual market activity. Yet the obvious conclusion is that as China starts to rebound economically, Noah is using its network of more than 500 relationship managers to drive an emerging upper class into private equity funds, mutual funds, and fixed income products to protect and grow their wealth. That's a similar principle to what Goldman has done globally, having earned the respect of high-end clients even as mainstream opinion of the firm has deteriorated.

Yet Noah is far from the only wealth management firm looking to cash in on the Chinese market. Goldman itself has a private wealth management office in Shanghai, seeking to serve individuals, family offices, and foundations for high-end Chinese nationals. Goldman rival Morgan Stanley (NYSE: MS  ) has also targeted the market, and many other global financial powerhouses have sought their fortunes in the emerging market nation with varying degrees of success.

In the Noah Holdings earnings report, watch to see if the company maintains its steep growth trajectory. Noah has a lot of growing to do to match Goldman, but in the long run, if it stays on track, Noah might give Goldman, Morgan Stanley, and its Chinese competitors a run for their money.

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