Noah Holdings Ltd (NOAH US): Expect a Weak 3Q; Cheap Alone Is Not a Reason to Buy

Noah's share price has declined by 20% over the past three months, versus an 8% decline in the MSCI China Index, due mainly to weaker investment sentiment and uncertainty around mainland investors' offshore investments. We expect 3Q26 results to remain weak, with revenue down 15% y/y and non-GAAP net profit down 56% y/y, reflecting softer one-time commission fees and a sequential moderation in carry fees. Despite the recent share-price correction and increasingly attractive valuation, with Noah trading at 0.3x 2026E P/B and an implied dividend yield of ~19%, we remain Neutral. In our view, attractive valuation alone is not sufficient to turn more constructive given weakening earnings momentum and persistent regulatory uncertainty around mainland clients' offshore investments. We cut our Dec-26 PT to US$8.20 and maintain our Neutral rating on Noah. We would turn more positive if regulatory developments provide greater clarity on mainland clients' ability to invest offshore, reducing unc