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Yintech Investment Holdings Limited (NASDAQ:YIN)
Q3 2019 Earnings Call
Dec 2, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the Q3 2019 Yintech Investment Holdings Limited Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Yvonne Young. Please go ahead, ma'am.

Yvonne Young -- Investor Relations Director

Thank you, and welcome to Yintech third quarter 2019 earnings conference call. Our earnings release was released earlier today and is now available on our IR website.

On the call today from Yintech are Mr. Wenbin Chen, Chairman and CEO; and Mr. Raphael Qian, our CFO; and myself, Investor Relations Director. Mr. Chen will review our business operations and company highlights, followed by Mr. Qian who will go over the financials and the guidance, we will all be available to answer your questions during the Q&A session that follows. Questions can be asked in English or Chinese. If you ask your question in Chinese, please translate into English yourself afterwards, or I may help to do the translation.

Before beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and factors that may cause the actual results to differ materially from those contained in any such statements. Further information regarding potential risks, uncertainties and factors is included in Yintech's filings with the U.S. Securities and Exchange Commission. Yintech does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

During the call today, we will be referring to several non-GAAP financial measures as supplemental measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the U.S. GAAP. For information about these non-GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release.

I will now turn the call over to Mr. Wenbin Chen. Mr. Chen will give his remarks in Mandarin. I would translate for him. Mr. Chen, please.

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Thank you, Yvonne, and hello everyone. Thanks for joining today's call. We are pleased to see the strategy we adopted to leverage the synergies we have viewed among our five core product lines continued to yield positive results and techniques we employ in managing our business under this strategy. In particular, maintaining our structural flexibility in terms of personnel and resources deployments and organizational agility in accordance with market conditions and demand change from our clients, approved to work perfectly well.

[Foreign Speech]

In third quarter, we continue to capitalize on positive market dynamics, especially spot gold trading to make the most for our clients and the company, has positioned us to drive strong business and financial growth.

[Foreign Speech]

We delivered the strongest quarterly results since our business transformation in the second quarter of 2017 in terms of both top line and bottom line growth. Our revenue reached a two-year historical high of RMB501.2 million, an increase of 87.2% year-over-year and 73.4% quarter-over-quarter, mainly driven by strong demand for our core products, its 5% higher than our adjusted high-end guidance of RMB477 million.

Revenues generated from net commissions and fees from our core business, interest income and other revenue reached RMB418 million, up 90.6% year-over-year and 45.8% on a sequential basis and is 4.3% higher than our adjusted high-end guidance of RMB416 million.

[Foreign Speech]

While sustaining our incremental growth, our core business continued to grow our assets, enhanced our efficiency and ultimately drive our earnings-per-share growth, as we look to create long-term shareholder value. To support this outcome, we actively deployed capital, we invested for organic growth across our product upgrade, recruiting technology and return capital to shareholders through share repurchases.

In the third quarter, we delivered over RMB100 million in net income, which was translated to diluted earnings per ADS of RMB1.3 (sic) [RMB1.30], the first time of returning to profitability attributable to our core business growth, since two years ago.

[Foreign Speech]

Now I would like to elaborate increased details of the progress we made in our core business breaking down by business segments and provide updates on our technological advancements, further innovation and R&D progress as well as our organizational structural adjustments and how they support the needs of our evolving business initiatives in the face of the new competition environment.

[Foreign Speech]

Firstly, our commodities services, as we expected in the second quarter's earnings call, since the beginning of the second quarter of this year, the spot gold price has continued to rise steadily. At the end of August, the price of AUTD reached RMB369 per gram, an increase of over 30% from the low point in mid-April, the highest in nearly seven years.

Beginning in the second quarter, we anticipated that the current growth of full [Phonetic] market in gold may continue in the short- to medium-term. As a result, the company has increased the market analysis of expert consultants and investor education for gold products and has guided our clients to take the advantage of the favorable market opportunity to obtain asset [Phonetic] appreciation. Since the second quarter, our trading volume and customer equity have increased dramatically, and trading activity of both -- from both new and existing clients has increased significantly, especially in the third quarter. The trading volume peaks in recent years. In the third quarter, we're adding nearly 4,000 new accounts. Active accounts nearly doubled. Our total customer equity increased by 65% from the previous quarter.

[Foreign Speech]

Better serving our customers, maximizing customer value and helping customers achieve better relative returns are always our strategic goals. To this end, we'll adjust the focus of our product line in different time period according to market conditions, and result, our allocation will also be shifted accordingly. In the third quarter, the company's relatively stable development in the futures commodity business is also an important driving force for the company's overall business growth.

[Foreign Speech]

Our next -- let me introduce another major business segment of our company, the securities services business, which mainly includes securities advisory investor education, overseas brokerage services and asset management business. In the third quarter, this business segment generated a total of RMB134 million in revenue, a slight decrease from the previous quarter and an increase of nearly 60% from the same period last year.

[Foreign Speech]

In terms of our securities advisory and investor education, the scale of our customers has continued to grow rapidly, with nearly 4,000 new clients added for the first time. So far, we have served more than 160,000 clients. At the same time, we'll continue to innovate our products, diversify our product portfolio and adding three new complementary [Phonetic] mutual products in the third quarter.

At the same time, I'm sorry, let me start -- in terms of our asset -- yes we strive to -- at the same time, we continue to make breakthrough in innovations in the form of products and provide fine and occupational experience, we strive to teach professional investment knowledge in easy to understand [Indecipherable] language.

One of our investment [Indecipherable] achieved fruitful results in the third quarter. The Shanghai division debenture which represents -- the Shanghai division represented by its [Indecipherable] won the National Championship of the CCTV Shareholders Finalist. We won 2019 top 10 Financial Video Live Broadcasting Regimen award. In August, we also won the 2019 [Indecipherable] outstanding creator awarded by [Indecipherable] video. In the ongoing customer satisfaction survey conducted every quarter. In the third quarter, our licensed securities advisory company obtained 98.19% customer satisfaction, indicating that customers are -- fully recognized our services.

[Foreign Speech]

In terms of asset management business, [Indecipherable] has launched a total of 14 products, including eight loan-only equity products, three bond products, two competitive mutual products, including a new mutual product [Indecipherable] in the third quarter and one spot product. Our AUM exceeds RMB1.45 billion. In terms of product revenue, it's always our goal to create absolute revenue for our clients.

In the third quarter, our performance continued to be recognized by the industry. We have obtained a total of 11 awards ranking from well-known securities firms and financial media such as Wonder, Galaxy Securities, [Indecipherable] Securities, Private Equity Ranking, Sina Finance, etc., such as the top 10 performance of Wonder, a private equity firm scaled between 1 billion and 2 billion in the first half of 2019. This is the industry's strong recognition of our professional strength.

In the fourth quarter, we plan to launch new competitive products and achieve substantial breakthroughs in institutional channel sales.

[Foreign Speech]

Next, I would like to introduce our technology and R&D achievements.

[Foreign Speech]

In the third quarter in order to cooperate with the transformation and innovation of the business, the technical team makes three efforts in several aspects such as talents onshore loan [Phonetic], program development, system construction and achieved significant results. In terms of products, we have also developed new product or [Indecipherable] existing products across our full product line, including investor education, futures and Gold T+D and overseas brokerage services based on the philosophy of better supporting for the business development, in order to provide customers with more valuable services. At the same time, we have introduced the blockchain technologies to Yintech, which is currently entering the project incubation stage.

In terms of talent onshore loan, we have introduced a large number of high-end talents to some well-known Internet companies such as Abbie [Phonetic] and Tencent which help us for the development for the next evolution of distributed mid-August.

[Foreign Speech]

In terms of organizational structure, we have continued to adjust and optimize the personnel structure in accordance with the company's development strategy, while improving our financials in a dramatic way, we have maintained a scale of 3,000 staff. As a result, the company's operating efficiency and per capita output value have improved significantly. We increased the expansion of technical talent on ratio of middle and back office staff, driving to better serve our clients. Thereby, we reduced the proportion of front-end sales staff, while the total size remained the same. We believe that this has laid a good foundation for the company to achieve its growth goal in 2019 and beyond.

[Foreign Speech]

In addition to investing in business growth, we continue to return excess capital to shareholders in the third quarter. On May 31, 2019, the company announced a new round of stock repurchase plan and the management plans to complete a RMB20 million authorized repurchase plan within the next year. As of the end of the third quarter, we have repurchased a total of 213,200 ADS equivalent to USD1 million.

[Foreign Speech]

Going forward, we remain focused on combining our strategy and execution to better serve our clients. We believe our business and financial strength will position us well and we look to continue to drive growth and to create long-term shareholder value.

[Foreign Speech]

With that, I will now turn -- I will now turn the call over to Mr. Qian, our CFO to discuss our financial results for the third quarter and to provide guidance for the fourth quarter. Mr. Qian, please.

Raphael Qian -- Vice President and Chief Financial Officer

Okay. Hello, everyone. I'm glad to speak with you on today's call. We delivered another quarter of strong business and financial results. If excluding the investment gains and loss which is more volatile, which [Phonetic] market dynamics, we did an apple-to-apple comparison which our core business in Y-o-Y and Q-o-Q basis, we are very happy to report that we delivered the strongest quarterly results in last two years. We grew assets and invested to drive growth, while still delivering operating leverage. As a result, we are pleased with the performance and we will continue to focus on executing our strategy.

Let's now review our Q3 business results in greater depths. We finished the quarter at RMB501.2 million in total revenues, up 73.4% sequentially, driven by the strong demand on our commodities and securities services. If you look at simply the net commissions and fees generated by our five core product lines, which were our primary focus was RMB458.7 million, which translates to an annualized growth rate of 120.5% and 48.4% from the previous quarter. This comprise the 17.9% of commodities and the 29.1% of securities.

Total customer trading volume was RMB1,034 billion, up 154.9% year-over-year and 80.9% from the previous quarter. 98.4% of which was from commodities and the rest was from securities. Effective fee rate from commodities and overseas securities brokerage services for the quarter were 0.032% and 0.08% respectively, within the reasonable range of movement, if you compare Y-o-Y and a Q-o-Q.

Now turning to our expenses. Our expenses are RMB369.3 million, an increase of 22.2% year-over-year and 12.6% from the previous quarter. However, if you compare the growth of revenues from our core business, the advantage of scale was clear to see. As we demonstrated stronger growth in our total net commissions and fees which increased 120.5% year-over-year and 48.4% quarter-over-quarter. In the third quarter, we continued to optimize our business and enhance our bottom line. Our ongoing focus on driving efficiency while managing our spending in disciplined manner enabled us to further improve ratio of expenses, drive operating leverage and ultimately improve earnings. As a result, we are returning to profitability attributable to our core business growth.

Our net income attributable to Yintech for the quarter was RMB98 million compared with net loss of RMB36.6 million in the same quarter last year and the net loss of RMB55 million in the previous quarter. Non-GAAP net income attributable to Yintech for the quarter was RMB105.9 million compared with net loss of RMB22.3 million in the same quarter last year and a net loss of RMB42.1 million in the previous quarter.

Diluted earnings per ADS for the quarter was RMB1.3 (sic) [RMB1.30] compared with diluted loss per ADS of RMB0.52 in the same quarter last year and diluted loss per ADS of RMB0.76 in the previous quarter. Non-GAAP diluted earnings per ADS for the quarter was RMB1.40 compared with non-GAAP diluted loss per ADS of RMB0.32 in the same quarter last year and non-GAAP diluted loss per ADS of RMB0.58 in the previous quarter.

As of September 30, 2019, the company had RMB2,024.5 million in cash and short-term investments compared with RMB1,858.2 million as of June 30, 2019.

Now please turn to--

Yvonne Young -- Investor Relations Director

Yes, Keith, I think we are ready for the Q&A session.

Questions and Answers:

Operator

Yes, thank you. [Operator Instructions] And the first question comes from Hunter Diamond from Diamond Equity Research.

Hunter Diamond -- Diamond Equity Research -- Analyst

Hi. Firstly, congratulations on the very strong results. The market seems to be liking it before the market opens in the U.S. You mentioned blockchain, I'm just wondering what sort of services are you looking to develop on the blockchain, I know it has numerous applications for investment firms. And also are you looking to develop cryptocurrency investment offerings, which I know are very popular in Asia. Bitcoin are they purchasing directly or Bitcoin futures?

Yvonne Young -- Investor Relations Director

Hunter, thank you for the questions. I think the first one is about the blockchain Mr. Chen, introduced in his remarks, what about the second one?

Hunter Diamond -- Diamond Equity Research -- Analyst

So are you looking to develop or is the company thinking about developing Bitcoin either direct purchases or Bitcoin futures as investment products? They're very common in the United States Bitcoin futures or Bitcoin cryptocurrency purchasing for investors?

Yvonne Young -- Investor Relations Director

Okay, I see. [Foreign Speech]

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Thank you for your questions. Let me address your first one about the adoption of the blockchain in our products and services. Well, the major reason for us to adopt the blockchain is that we introduced it to the development and surveys of our entire product development life to ensure that we are fully compliant with the regulatory requirements which is very key for the financial service provider like us. As you know that major of our business are licensed, that means that we are certified by the regulatory authorities for operating and then as well as for our clients, compliance is one of the major concerns from their standpoint as well. So by adopting the blockchain into our products, we are able to serve our clients in the entire product cycle, including from development to the back office service, and it will help us to comply with the authority on one hand, on the other hand, you will keep the transactional record of our clients, and make us more compliant and more trustful by our clients.

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

We will not consider providing the products or services to our clients for [Indecipherable] point which is not our consideration in the short or to the long run. Our focus will also -- will be on our existing five product lines, which is commodities and securities segments.

Hunter Diamond -- Diamond Equity Research -- Analyst

Got it. Perfect. No makes sense. In terms -- my second question would just be, you mentioned the asset management has 14 products with one point -- almost 1.5 billion AUM. I know, real estate products are very popular for wealth management, specifically with high net worth in China. What are the products that you got -- the company is looking to develop or other asset classes? I mean the 14 you have now, do you know sort of what are the areas the company is looking at, is it more real estate or just long equity -- other long equity products? And do you have any idea sort of how many product offerings the company is targeting for the next year?

Yvonne Young -- Investor Relations Director

Okay. Yeah, thank you for your question. Let me translate it for Mr. Chen first.

[Foreign Speech]

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Thank you for your questions. Let me translate. First of all, we are very clear that we will not invest in the real estate products in short to the long run, and we -- our primary focus will be our existing products, including equities market, especially the loan-only equity and bond products as well as competitive mutual hedged products. These are our three major products mate [Phonetic] and we will continue to focus on these areas in the short to the long-anticipated future.

Hunter Diamond -- Diamond Equity Research -- Analyst

Great, perfect. And my last question is just more about the industry. I know customer trading volume went up 154% year-over-year, 80% from the previous quarter. I'm just wondering generally how management views the environment. I know it's been difficult for wealth management and some trading platforms with a lot of economic uncertainty. I'm just wondering is management more optimistic sort of going into the next quarter and over the next year, just the general thoughts on the industry would be great.

Yvonne Young -- Investor Relations Director

Okay. [Foreign Speech]

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Okay, let me translate. Well that's a very good question. You have noticed that a very significant increase in trading volume in the third quarter, which is mainly contributed by the increase of our spot commodity trading. And well, we have seen that two reasons that drives the significant growth or progress in the third quarter; one is the -- as I mentioned in my remarks, the first one is the favorable market conditions and we guided our clients to take favorable off the market conditions to make the most of benefits from this market. And the second one is the improvement of our team and also the overall capabilities enhancement of the team as a result of our years of focused on team building and our professional knowledge that we have developments over the past few years.

Well even with that, we think that, as the overall market conditions both for securities and the commodities as a total doesn't change dramatically. And as you know that the security market is relatively flattish compared to the past -- compared to the last quarter and we don't see any significant positive sign that the markets will turn very positive in the third quarter and also in the coming maybe next quarter. Well, the commodity market, they were bullish, as I said before. So if you put together of both the commodities and securities market better, as a whole, we doesn't see as a dramatical favorable change or the market conditions are much favorable to us. So the major driver for the business growth in the third quarter was really the second one, I just now mentioned, which is the overall enhancement of our capabilities and our professional activity. And we anticipated that in the next coming year, we will continue to develop our abilities in this area and we think that will continue to help us to drive growth -- greater growth in our business.

Hunter Diamond -- Diamond Equity Research -- Analyst

Great, perfect. That was very useful information. And that's all I have in terms of questions. I'll let other people use the line and ask any questions they have on the company, but again congratulations on the very strong results.

Yvonne Young -- Investor Relations Director

Thank you.

Operator

Thank you. And the next question comes from [Indecipherable] Research.

Unidentified Participant

[Foreign Speech]

So congratulations. Very robust performance this quarter. And so I have two questions here. First one, it's about the guidance of fourth quarter, and so could you give us some color on the -- how the changes are in the fourth quarter compared to the third quarter. And also could you give some guidance into the first quarter of 2020?

[Foreign Speech]

So the second question is about how the management is planning to convert tradable accounts into the active account and we see the bullet trading volume are growing in the third quarter, and we would like to know the reoccurrence or sustainability of the fourth quarter and the -- or the first quarter of the next year? Thank you.

Yvonne Young -- Investor Relations Director

[Foreign Speech]

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

[Foreign Speech]

Luis [Phonetic]. Is that OK. Does it answer your question or -- and then I would translate?

Unidentified Participant

Yes I think so. And also or how about the first quarter of next year?

[Foreign Speech]

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Well, for the benefit of our English speakers and audience, I will translate the answer to the first question first. Well we guided for well -- our guidance for the fourth quarter of 2019 is RMB400 million, right. RMB400 million to RMB420 million, and we expect the investment loss will be between RMB1 million to RMB2 million -- RMB10 million to RMB20 million. Well, this guidance -- the reason for this guidance is that, for the first one, because of the Golden Week in China, as you may know, that which is from October 1 to October 7, and clients are not able to trade during these holidays. So which will directly affect our total revenues generated from net commissions and fees.

And in terms of investment loss for the fourth quarter, as you can see that Asian market and also as we just now mentioned, that's not anticipated to turn very strong in the fourth quarter. So we expect a very flat investment gains and loss in the fourth quarter relatively to the third quarter. So well that's -- those are the major reasons for relatively soft fourth quarter guidance.

And then about the '20 -- the first quarter of 2020 guidance for the revenues. Well, what we can see at the moment is that we expect we will generate a very -- a stronger year of 2020 as compared to 2019. But it's very difficult to buy the Q1 revenue at this moment, mainly because same like Q3, we are facing the Chinese holidays which is the Chinese New Year during festival. So that will have a direct negative impact on our trading volumes. As a result, you will -- negative impact of our revenues in the first quarter.

And then Mr. Chen will answer the second question.

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Okay. Well, the major reason to drive the strong demand of the gold -- spot gold trading is that the momentum of the -- and also that the market is still the atom of the spot gold market. So as you can see that starting from the second quarter until the third quarter or even some periods in the fourth quarter, the gold price remained high, even the historical high and we see that investors are -- even some ideal investors, they are activated for trading again and this also attracted new investors to play the game. So these are the two major reasons there for us to book a very strong trading volume and then the revenues in the third quarter. And looking forward through the fourth quarter and 2020 and even beyond, we see that in the short term, the cost of the spike in spot price and also the media exposure to this business, the investors are expected to continue to trade this product even though the gold price has maintained a relatively low level in the fourth quarter compared to the third quarter, but investor is still the atom in trading these products were activated. So we expect this situation will maintain or will continue in the fourth quarter and will project in the short period -- short to middle period. So we don't affect that to have a very dramatic impact, a negative dramatic impact to our business in the short run. So this will still be a major contributor to our business.

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Well, for the second point, I'd like to stress that is in the middle to the long run, we believe that the gold price will still maintain in a relatively good level because that the gold price has a negative correlation with the macro environment, which means that well as you can see that the global political and economic situation are still full of uncertainties and that this will drive more people investing in the gold price products in order to maintain your asset appreciation. So we think that under the backdrop of this negative market environment, both politically and economically and investors will invest more in the gold price and driving the price higher. So we think that, in summary, the volatility of the gold price in the short to the long run will help our business. We will continue to take advantage from this overall positive long-term trend in the spot gold market.

Unidentified Participant

[Foreign Speech]

So my last one, it's about fee income. So based on your business line and you are mostly, you have two parts; one is brokerage fee and other is management fee. So these two fees is different and we would like to know how the management fee contributor from AUM to the total fee income? Thank you.

Yvonne Young -- Investor Relations Director

[Foreign Speech]

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Unidentified Participant

Thank you.

Yvonne Young -- Investor Relations Director

Okay. Well, let me translate. Well in terms of our asset management business, while the fees coming -- generated from this business are mainly from two sources. The first one is that [Indecipherable] our asset management company manage our unit cash. As you can see that we have a total of RMB2 billion cash, including the short-term investments, a very big portion of that is managed by our own asset management and this has the characteristics of low risk and we are looking for the stable returns for these investments. So that has relatively much low risk and guaranteed return for the company for the long-term development. So that's why you see that, in this quarter, that generated RMB20 million revenues for us.

And then the second portion is coming from the external investment from the external investors. Well, these are in a very, very nascent stage, it's a quite a new business, I would say, is in incubation stage, that accounts for well, does not account for a very significant portion of our revenues or you can just ignore its contribution at the moment, because we started this business for just a year and a half. So that takes a lot of efforts for this business to take off and to contribute meaningfully to our top line and the bottom line.

Well, so if you look at our business, we primarily focus on five product lines, including spot gold commodities services, futures commodities services, our securities advisory services and overseas brokerage services. So these four product lines will be the major contributor to our revenues at present and in the visible future. So these are the second point I would like to clarify. And the third one, I want to mention is that our growth plan for our asset management business, well, in terms of our own investment, as I just now mentioned, we'll continue to look for stable returns for this business at low risk level. So this will continue to be our strategy and [Indecipherable] will continue to manage a very important portion of our cash, and we don't expect a big change to this strategy in the foreseeable future.

And then in terms of the second one, revenues from the external investors, I would like to share with you that, my perspective in the future of China asset management industry, we believe that this has very positive mid to long-term trends for the Chinese individual investors to have the professional fund manager to manage their investment and this will be the trend we are anticipating to see and we expect this business will experience a high growth rate in the long-term trend. So that's why we invested in this business at early stage and we expect it will benefit from this positive market trends in the long run.

And then the third one is that we are also looking strategically on merger and acquisitions. So we are looking at the opportunity to acquire a company which have a third-party sales license. Well, as you know, that it's very difficult to obtain the license part by ourselves and because of the high entry barrier and so we are looking at potentially the acquisitions and to some company who have already held the license. And we think that, as I just now mentioned, we believe that shift of the Chinese investors from individual investors to professional institutional investors and eventually we will have more a larger base of investors to invest in the asset management. Well, we are lack of this capabilities, but if we see license of the third-party sales, we are able to have a broader range of investors to invest in these areas, which are also has a very positive prospect as we can anticipate.

Unidentified Participant

Thank you. Very good. Thank you.

Operator

Thank you. And the next question comes from [Indecipherable], a Private Investor.

Yvonne Young -- Investor Relations Director

Okay. go ahead

Unidentified Participant

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Well, the next -- let me translate into English for the benefit of our English-speaking audience. Well the question is about our strategies for our -- focus for our five products into 2020. Which product lines we think our primary focus and how we deploy our resources according to this strategy in 2020?

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

[Foreign Speech]

Yvonne Young -- Investor Relations Director

Well, as I introduced at the beginning of my remarks of this call is that one of the key abilities of our company and also our strategy is that we are able to swiftly adjust our products -- our focus among the five production lines. Well, in 2019, we believe that we have developed these capabilities in the five production lines and it had become quite mature business as compared to 2017, which is still at the beginning of restart up and this is the first point.

The second point is that we think in 2020, since we have obtained these capabilities in the five product lines and we have accumulated the knowledge we present that will enable us to take off in 2020 and maintain an even greater growth in 2020. This was the second point.

The third one is that if you look at our per capita contribution, as I introduced in the third quarter, even though our business has increased significantly, our total employees does not increase at all, we still maintained the same level of the second quarter. And in 2020 even with the higher growth we anticipated, we expect that our total staff will still remain at the present level. So that means we will increase the per capita contribution from our employees.

And then, well, if you look at how we structure our product lines and how we manage this -- our focus from these five product lines. I'd like to share with you that maintaining the structure flexibility and agility is -- continue to be our primary focus. So we think that we are able to quickly adjust our focus among these five product lines, when the opportunities comes for one or two product lines, the same like in the third quarter, when we anticipated gold price, we will maintain in the high level we have deployed our resources and capacity into these product lines and the same will be in 2020. We will adjust according to the market dynamics and to take the most benefit from these positive market trends to help our customers to gain the greater returns from this positive market dynamics. We think that with -- over the past two years, we have obtained these capabilities and will continue to develop these capabilities that will allow us to grasp the higher growth opportunities in the coming years, as we anticipated. James, does that answer your question?

Unidentified Participant

Yes, that's very helpful.

Operator

Thank you. And we do have a question from Vivian Zhang with Diamond Equity Research.

Yvonne Young -- Investor Relations Director

Thank you, everyone. Thank you for joining today's conference call. And if you have any further questions or anyone who are not able to ask questions during this one-hour time period, please feel free to reach out to me. We will be very happy to answer your concerns to answer your question or address your concerns. Thank you. Operator, if no further questions, we may now disconnect.

Operator

[Operator Closing Remarks]

Duration: 79 minutes

Call participants:

Yvonne Young -- Investor Relations Director

Wenbin Chen -- Co-Founder, Chairman and Chief Executive Officer

Raphael Qian -- Vice President and Chief Financial Officer

Hunter Diamond -- Diamond Equity Research -- Analyst

Unidentified Participant

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