Q4 2023 ZTO Express (Cayman) Inc Earnings Call

Operator: Good day and welcome to the ZTO Express. Fiscal Year 2023 Financial, All participants will be in a listening position. If you need assistance, please signal a comfort specialist by pressing the star key followed by Z. That's it for today's presentation. There will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch screen.

Good luck.

Good day and welcome to the GTO Express fourth quarter and fiscal year 2023 financial results announcement conference call.

All participants will be in a listen only mode.

Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.

Operator: For more information, please press star then enter. Please note, this event is I would like to turn the conference over to you. Please go ahead.

Please note this event is being recorded.

I would now like to turn the conference call over to MS. Sophie Lie director of capital markets. Please go ahead ma'am.

Operator: Thank you, operator. Hello everyone, and thank you for joining us today. The company's results and the investor relations presentation were released earlier today and are available on the company's IR website at ir.zto.com. On the call today from ZTO are Mr. Meisong Lai, Chairman and Chief Executive Officer, and Ms. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, and they will both be available to answer your questions during the Q&A session that follows. I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements.

Sophie Li: Thank you operator.

Sophie Li: Hello, everyone and thank you for joining us today, the company's results in the Investor Relations presentation were released earlier today and are available on the company's IR website at IR <unk> com.

Sophie Li: Call today from <unk> are Mr. Mason, Vice Chairman and Chief Executive Officer, and Mr. <unk> <unk>, Chief Financial Officer, Mr. Lai will give a brief overview of the company's business operations and highlights followed by Mr. Yan, who will go through the financials and the guidance.

Sophie Li: They will both be available to answer your questions during the Q&A session that follows.

I remind you that this call may constitute forward looking statements made under the Safe Harbor provisions of the private Securities Litigation Reform Act of 995.

Sophie Li: Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve involved.

Sophie Li: Risks uncertainties and other factors all of which are difficult to predict and many of which are beyond the company's control.

Sophie Li: Which may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements.

Operator: Further information regarding this and other risks, uncertainties, and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. It is now my pleasure to introduce Mr. Meisong Lai. Mr. Lai will read through his prepared remarks in their entirety in Chinese before I translate them for him in English. Hello everyone.

Sophie Li: Other information regarding this and other risks uncertainties and factors is included in the company's filings with the U S Securities and Exchange Commission.

The company does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise except as required under law.

Sophie Li: It is now my pleasure to introduce Mr. Mesa Lai, Mr. Lai will read through his prepared remarks in their entirety in Chinese before I translate for Amy English LLP.

Meisong Lai: Hi, Joe.

Meisong Lai: So any change in the deal hopefully.

Meisong Lai: Thank you for participating in today's telephone conference. In the century of 2023, China's public satisfaction will continue to be ahead of the industry, with business volume reaching 87.11 billion yuan, a 32% increase, 4.8% higher than the average industry. At the same time, we have achieved an adjustment of 22.1 billion yuan. In 2023, the exchange market maintained a positive trend, but price competition, especially in the food sector, was still very fierce. The CCP is actively maintaining a comprehensive network policy.

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Meisong Lai: The cost-effectiveness assistance provided by the digital management and digital operation effectively eliminates the pressure of single-ticket price decline. The level of operating profit has been significantly improved. This is in line with the reasonable control of the management cost structure. President, after the adjustment in 2023, the operating profitability increased from 22.4% last year to 4.3% and reached 26.7%. After the adjustment last year, China and Hong Kong have consistently followed a balanced development of service vehicles, market share, and profit indicators. The purpose of a business is to create value. There is no absolute trend between scale and profit. There is relative equality between them.

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Meisong Lai: In the face of the uncertainty of the big environment in 2023, the changes in consumption structures, and the competitive state of the industry, we pay more attention to the construction of service quality and differentiability. We have re-distributed the sales volume of this business to clean up the loss of capital, and we have guaranteed the overall performance of the main business and new business volumes, especially the increase in single-ticket profit levels and overall profits. Although the expansion of market share is lower than expected at the beginning of the year, we seek the best balance of growth and strength, which is in line with the environment and reasonable. From a more long-term perspective, the Marathon of the Express Business Market, the stable, healthy, and sustainable development of the Jiameng Internet, is the foundation for maintaining China's vitality, ensuring the fair distribution of the overall network policy, which is the concept of sharing and building together.

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Meisong Lai: It is helpful for us to work together with our partners in Jiameng, as well as our business partners, to promote capability building, and the sharing of resources, but also achieve significant results in the areas of post-occupation responsibility, such as the division of effective standards and the comparison of capacity, especially in the areas of balancing real-time requirements and maximizing resource utilization. With the ability to move forward, the ability to find the root of the problem in time, coupled with a strong team's responsibility and execution, we can quickly implement adjustments and improve the ability to change the system. In 2024, the delivery industry showed a steady growth trend in the first two months. The rise of new e-commerce platforms, including live streaming and social media platforms, has triggered a boom in mass consumption.

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Meisong Lai: Improving the ability to personalize the service, speed up the display, label, delivery, opening, and closing, reduce the delay, and maintain the level of service quality and customer satisfaction. China will continue to improve the concentration of the industry. The country continues to support the expansion and strengthening of the logistics industry, thereby preventing the cost of social logistics from interfering with the development of the country. In the process of digitalization, the green environment, and quantitative transformation, the overall development space and opportunities of the industry are very broad. The comprehensive capabilities that the President has today are the foundation for building a competitive advantage in the future. It is also the basis for not only creating our own food supply but also the confidence that we continue to contribute to the value of express delivery people and society and to improve the return of investors. Thank you. Hello everyone.

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Speaker Change: Hello, everyone. Thank you for participating in today's conference call for the fourth quarter of 2023.

Speaker Change: Video customer satisfaction levels continue to rank among the industry top.

Speaker Change: Our portfolio reached 877.

Speaker Change: 71 billion peso, which increased to 32% over last year.

Speaker Change: Or four eight percentage points above industry average and we achieved $2 2 billion of adjusted net income for the quarter.

Speaker Change: In 2023, China Express delivery industry maintained relatively strong growth momentum.

Speaker Change: Yes, Chris competition, particularly in the product.

Speaker Change: Necessary measures in certain markets to maintain based upon.

Our annual parcel volume grew 23, 8% to reach $32 2 billion.

Speaker Change: Core express delivery unit price declined 16 cents for the year.

Speaker Change: That was fully absorbed by our cost productivity gains thanks to Digitization and process management that has been continuously lifting operational efficiency.

Speaker Change: Together with effective corporate cost controls.

Speaker Change: Reis the operating adjusted operating margin rate by four three percentage points to 26, 7% for the year.

Speaker Change: As a result, the adjusted net income for the year worth 9 billion, which increased 32, 2% over 2022.

Operator: Thank you for participating in today's conference call for the fourth quarter of 2020. ZTO's customer satisfaction level continues to be among the top in the industry. Our volume reached 8.71 billion pesos, which increased by 32% over last year, or 4.8 percentage points above the industry average, and we achieved $2.2 billion of adjusted net income for the quarter. In 2023, China Express Delivery Industry maintained relatively strong growth momentum. Get Price Competition, particularly in the production... All necessary measures in certain markets to maintain base volume. Our annual parcel volume grew 23.8% to reach $32.2 billion.

Speaker Change: <unk> has been consistently focused on balanced among quality of services market share in earnings.

Speaker Change: <unk> and the enterprises to create value.

Speaker Change: And there is no absolute gave more takes between scale or profit.

Speaker Change: Is that there is always relative trade offs or balanced among competing priority.

They think microeconomic uncertainties mix of e-commerce structure shift and industry competitive dynamics.

Speaker Change: Focused on improving overall service quality and differentiated service capability.

Speaker Change: We continue to eradicate unprofitable volume <unk> customers to capable network partners.

Speaker Change: Kris incentive to protect critical markets.

Speaker Change: Our overall performance results were solid and particularly so in unit economics and total profit expansion.

Operator: Core Express delivery unit prices declined $0.16 for the year, and that was fully absorbed by cost productivity gains that have been continuously lifting operational efficiency. Together with effective cost control, we raised the adjusted operating margin rate by 4.3 percentage points to 26.7% for the year. As a result, they adjusted net income for the year worth $9 billion, which increased 32.2% over 2022. ZTO has consistently been focused on the balance among quality of services, market share, and earnings. The goal of any enterprise is to create value, and there is no absolute give or take between scale or profit. Instead, there are always relative tradeoffs or balance among competing priorities.

Speaker Change: Even though we did knocking market share against what was targeted in the beginning of the year. We believe our results were consistent with the balanced approach to strategies and adaptive to current marketing them.

Speaker Change: In the longer term perspective extract deliberate it's like running a marathon stable.

Speaker Change: Stable and healthy development of the patent our network is the foundation of V P of longevity.

Speaker Change: <unk> and a fair policy stem from our shared success culture, and it's important for us to successfully equally meant initiative, including patent our capacity and capability building.

Speaker Change: Existing facilities upgrade in the resource utilization improvement.

Speaker Change: Last mile expansion and better customer reach and the service quality and customer satisfaction improvement.

Speaker Change: Focusing on our own affairs, we achieved another year of significant cost of productivity gain.

Speaker Change: Total unit costs have decreased to 17%.

Speaker Change: Within which transformation.

Operator: Facing microeconomic uncertainties, a mix of e-commerce structure shifts and industry competitive dynamics, we focused on improving overall service quality and the differentiated service capability. We continue to eradicate unprofitable volumes.

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Speaker Change: Other than benefiting from increasing scale and leverage we have continuously implementing digitization and the lean management initiative in recent years and the generated meaningful results.

So clearly defined roles and responsibilities and associated measurements matrix.

Operator: We direct K8 customers to capable network partners, giving them an increased incentive to protect critical markets. Our overall performance results were solid, and particularly so in unit economics and total profit expansion. Even though we did not gain market share against what was targeted at the beginning of the year, we believe our results were consistent with a balanced approach to strategies and adaptive to current marketing norms. From a longer-term perspective, express delivery is like running a marathon. Stable and healthy development of the partner network is the foundation of ZTO's longevity.

Speaker Change: Labor efficiencies and the resource utilization greatly improved.

Speaker Change: Better visibility and timely identification of the issue matched up with strong execution.

We have quickly improved our ability to quickly adjust solve problems and to drive better results.

Speaker Change: China Express delivery experience the stable growth for the first two months of 2024.

Speaker Change: The rise of new e-commerce channels, such as video streaming and retail social network stimulated mass consumption.

Speaker Change: Even though price stabilization in the increase has yet to arrive that shifted from high quantity towards high quality is the undercurrent that is inevitably taking shape.

Operator: Equitable and fair policies stem from our shared success culture, and it is important for us to successfully implement initiatives including partner capacity and capability building, Existing Facilities Upgrade and Resource Utilization Enhancement, Last mile extension, and better customer reach and service quality and customer satisfaction improvement. Focusing on our own affairs, we achieved another year of significant cost productivity gains. Total unit cost decreased $0.17, within which transformation decreased $0.06 and flotation $0.05.

Speaker Change: B the best we can focusing on 50 healthy volume base and a fair allocation of economic interest among brand operator, and they're all at an express careers are men's focus there so far.

Speaker Change: Her work going forward.

Speaker Change: Following are some of the key initiative.

Speaker Change: First supported enable improvements in bottom line operating efficiencies.

Speaker Change: Improved transparency and fairness of pricing policy.

Speaker Change: Designs suitable policy and deploy swiftly to maximize utilization of idle resources.

Speaker Change: San device volume acquisition with improved effectiveness.

Speaker Change: Second.

Operator: Other than benefitting from increasing scale leverage, we have continuously implemented digitization and link management initiatives in recent years and generated meaningful results through clearly defined roles and responsibilities and associated measurement matrix. Labor efficiencies and resource utilization have greatly improved. Better visibility and timely identification of issues matched up with strong execution. We have greatly improved our ability to quickly adjust, solve problems, and drive better results. China Express delivery experienced stable growth for the first two months of 2024. The rise of new e-commerce channels, such as video streaming and retail social networks, stimulated mass consumption.

Speaker Change: Optimize scale advantage.

Speaker Change: The level of aggregation and sort to the smallest of the labor unit possible.

Speaker Change: To reduce last mile delivery costs and improve productivity.

Help all of us to build out capacity and the capabilities that fit well with out of Alberta rotation.

Speaker Change: Ensure careers get to take home the lion's share of the profit from incremental non e-commerce packages, they help to market and the <unk>.

Speaker Change: Increased <unk> linkage last mile to reduce cost and improve delivery efficiencies.

Speaker Change: Salary reduction of sortation frequency.

Third improve service quality meeting given individualized.

Improved time minutes of pickup and delivery, including service to door reduce damages and loss.

Speaker Change: On top of quality of service and customer satisfaction.

Speaker Change: Fourth in <unk>.

Speaker Change: The accuracy and the timeliness of data and analysis improve.

Speaker Change: Utilization of Digitization tool to help enhance the effectiveness of operation not management.

Operator: Even though price stabilization and increase have yet to arrive, the shift from high quantity towards high quality is the undercurrent that is inevitably taking shape; be the best we can. Focusing on safety, a healthy value base, and fair allocation of economic interest among brand operators, Tundra outlets, and express couriers are the main focuses of our work going forward. The following are some of the key initiatives.

We believe that going forward, the China expressing industry will continue to bifurcate by scale and the profitability loss increasing concentration.

Speaker Change: National economic policies have been consistently supportive of express delivery companies to scale up and to improve efficiencies.

Speaker Change: And the rays quality of earnings.

Speaker Change: Plenty of work needs to be done to measure up to developed countries.

Speaker Change: Underpinned with Digitization and the environmental consciousness.

Operator: First, support and enable improvements in front-line operating efficiency; improve transparency and fairness of pricing policy; Design usable policies and deploy swiftly to maximize utilization of idle resources. Samdevice volume acquisition was effectively improved.

Speaker Change: Its transformation from quantity to quality express delivery businesses <unk> and <unk>.

Speaker Change: Integral part of all aspects of production distribution and consumption, providing high quality products and services.

And becoming an important driving force for modernization of manufacture manufacturing agriculture, and development of urban and rural markets in China.

Operator: Optimize scale advantage, reduce the level of aggregation and sort to the smallest delivery unit possible, reduce last mile delivery costs, and improve productivity, helping all of us to build our capacity and capabilities that fit well with that of our rotation hub. Ensure couriers get to take home the lion's share of the profit from incremental non-e-commerce packages they help to market and increase direct linkage to the last mile to reduce costs and improve delivery efficiency. Accelerate the reduction of flotation frequency; Third, improve service quality by meeting individualized needs. Improve timeliness of pickup and delivery, including service to the door, reduce damages and loss, and stay on top of quality of service and customer satisfaction. 4.

Speaker Change: There are positive growth prospects and earnings upside to the industry.

Speaker Change: Our strengths today will serve as the foundation for comprehensive competitiveness in the future.

Speaker Change: Ensuring our relevancy and most importantly, affirming our commitment and confidence in creating long lasting value for our business partners and shareholders.

Speaker Change: Now that's a welcome our CFO, Mr <unk> to take us through our financials and outlook.

CFO: Thank you Jim and thank you Sophie Hello, everyone to the call as I go through our financials. Please note that unless specifically mentioned all numbers quoted are in RMB and percentage changes refer to year over year comparison.

Tailored information on our financial performances.

Omics and cash flow are posted on our website.

CFO: And I will go through some of the highlights here.

Operator: Enhance the accuracy and timeliness of data and analysis. Improve the utilization of digitization tools to help enhance the effectiveness of operational management. We believe that going forward, the China Express industry will continue to bifurcate by scale and profitability, thus increasing concentration. National economic policies have been consistently supportive of express delivery companies to scale up and improve efficiencies, and they earn a great quality of earnings. Plenty of work needs to be done to measure up to develop the country.

CFO: We achieved volume target by growing parcel volume, 32% to $8 7 billion for Q4, and 23, 8% to $30 2 billion for the year with firm execution of a consistent strategy.

CFO: Our adjusted net income grew four 4% to $2 2 billion at 32, 3% two 9 billion for the quarter and the year respectively.

CFO: We maintained high quality of services and customer satisfaction.

CFO: Total revenue increased seven 6% to $10 6 billion for Q4, and eight 6% to $38 4 billion for the year.

CFO: ASP for the core express delivery businesses decreased 18, 2% or 27 cents for Q4, and 11, 3% or 16 for the year.

Operator: Underpinned by digitization and environmental consciousness in its transformation from quantity to quality, express delivery businesses will be an integral part of all aspects of production, distribution, and consumption, providing high-quality products and services and becoming an important driving force for the modernization of manufacturing, agriculture, and the development of urban and rural markets in China. There are positive growth prospects and earnings upside for the industry. Our strengths today will serve as foundations for comprehensive competitiveness in the future, ensuring our relevancy, and most importantly, affirming our commitment and confidence in creating long-lasting value for our business partners and shareholders. Now, let's welcome our CFO, Ms. Yan, to take us through our financials and outlook. Thank you, Chairman, and thank you, Sophie. Hello, everyone, on the call.

CFO: During the fourth quarter, we did not raise price as would take place in the past during e-commerce promotional period, given price competition and our readiness to process concentrated high volume Asps.

CFO: ASP decline was attributable to a mix shift in K, a volume an increase in volume incentives and a lower average weight per parcel.

CFO: Total cost of revenue was $7 5 billion and $26 8 billion, respectively for Q4 in 2323, which increased five 5% for Q4 and one 6% for the year.

CFO: Combined unit cost of sorting and transportation decreased 14, 9% or 13 for Q4 and for the year. It was 13, 2% or 11.

CFO: Benefiting largely from economies of scale.

CFO: In addition unit costs of nine haul transportation decreased 11, 5% to 46 cents for Q4 and decreased four 1% to 45 cents for the year driven by more effective route planning in conjunction with low rate improvements without affecting timeliness.

Huiping Yan: As I go through our financials, please note that, unless specifically mentioned, all numbers quoted are in RMB, and percentage changes refer to year-over-year comparisons. Detailed information on our financial performances, unique economics, and cash flow is posted on our website, and I will go through some of the highlights here.

And decreases.

CFO: Fuel prices also helped.

CFO: Unit sorting cost decreased 21% to 26.

Huiping Yan: We achieved volume targets by growing parcel volume 32% to $8.7 billion for Q4 and 23.8% to $30.2 billion for the year with firm execution of our consistent strategy. Our adjusted net income grew 4.4% to $2.2 billion and $32.3% to $9 billion for the quarter and the year, respectively, while we maintained a high quality of services and customer satisfaction. Total revenue increased 7.6% to $10.6 billion for Q4, and 8.6% to $38.4 billion for the year. However, ASP for the core express delivery businesses decreased 18.2% or $0.27 for Q4 and 11.3% or $0.16 for the year. During the fourth quarter, we did not raise prices as would have taken place in the past during e-commerce promotional periods, given price competition and our readiness to process concentrated high volumes.

CFO: 15% to 27 days for Q4 and the year respectively.

CFO: Driven by increased automation and labor efficiency gains achieved through standardization in operating procedures and optimization of performance metrics.

CFO: Gross profit increased 12, 8% to $3 1 billion for Q4 and increased 29% to $11 7 billion for 2023 as a combined result of increased volume offsetting ASP decline plus added benefits from cost productivity gain.

CFO: Gross profit margin rate increased one four points to 29, 5% and increased four eight points to 34% for the fourth quarter and the irrespective.

CFO: SG&A excluding <unk>.

CFO: G&A, excluding SBC increased 24, 9% to 0.7 billion for Q4 and increased 14, 3% to $2 2 billion for the year.

CFO: SG&A expenses, excluding SBC as a percentage of revenue combined.

CFO: As a percentage of revenue remained low at six 6% for Q4 and five 6% for the year as our corporate cost structure.

Huiping Yan: ASP decline was attributable to a mixed shift in KA volume, an increase in volume incentives, and a lower average weight per parcel. Total cost of revenue was $7.5 billion and $26.8 billion, respectively, for Q4 in 2023, which increased 5.5% for Q4 and 1.6% for the year. Combined unit cost of sorting and transportation decreased 14.9% or $0.13 for Q4 and for the year was 13.2% or $0.11, benefiting largely from economies of scale. In addition, unit costs of line haul transportation decreased 11.5% to $0.46 for Q4 and decreased 4.1% to $0.45 for the year, driven by more effective route planning in conjunction with low rate improvements without affecting timeliness, and decreases in fuel prices also helped. Unit sorting costs decreased 20.1% to $0.26 and 15% to $0.27 for Q4 and the year, respectively.

CFO: Leanne and stable.

CFO: Income from operations increased 12% to $2 8 billion for Q4 and increased 29, 4% to 10 billion for the year associated margin grew one point to 25, 9% and 4.1 0.2.

CFO: 226% for the year.

CFO: Indicating that we have achieved the goal of improving quality of earnings.

CFO: Judah level better than 2019 prior to COVID-19 pandemic.

CFO: Operating cash flow was $3 9 billion for the quarter and $13 4 billion for the year adjusted EBITDA for Q4, and 2023 was $3 7 billion and $14 1 billion respectively.

CFO: Capital expenditure for Q4 totaled <unk> 9 billion and the annual Capex came in at $6 7 billion.

CFO: In 2023, indicating that we have achieved another year of free cash flow.

CFO: The company has now established a regular dividend policy and has announced a 60 <unk> U S dollar per share cash dividend for 2023 to shareholders on record as of April 10 2024.

CFO: This dividend represents a 40% payout ratio and a 68% increase from dividend from last year.

Huiping Yan: Driven by increased automation and labor efficiency gains achieved through standardization in operating procedures and optimization of performance metrics, gross profit increased 12.8% to $3.1 billion for Q4, and increased 29% to $11.7 billion for 2023 as a combined result of increased volume offsetting ASP decline plus added benefits from cost productivity gains. Gross profit margin increased 1.4 points to 29.5% and increased 4.8 points to 30.4% for the fourth quarter and the year, respectively. SG&A excluding SBC increased 24.9% to $0.7 billion for Q4 and increased 14.3% to $2.2 billion for the year.

CFO: For 2024, the company plans to declare and pay cash dividends semi annually no less than 40% of the company's distributable profit for the fiscal year.

CFO: In addition.

CFO: The company also announced an upsized two days existing share repurchase program by 500 million U S. Dollar to bring the total authorization amount of the current program to 2 billion and extended programs by another 12 months till June 32025.

Combining share repurchase and dividend we are committed to steadily improve shareholder returns.

Speaker Change: Now moving on to business outlook.

Speaker Change: We anticipate the express delivery industry in China would grow 10% or more in volume in 2024, and we will maintain our leadership effort industry transformation towards profitable growth with both quantity and quality.

Balanced approach to service quality volume and earnings is our consistent strategy under the near term conditions surrounding economic development and industry competition.

Huiping Yan: FG&A expenses, excluding SBC, as a percentage of revenue combined remained low at 6.6% for Q4 and 5.6% for the year as our corporate cost structure remained lean and stable. Income from operations increased 12% to $2.8 billion for Q4 and increased 29.4% to $10 billion for the year. Associated margin grew 1 point to 25.9% and 4.1 points to 26% for the year, indicating that we have achieved the goal of improving the quality of earnings to a level better than in 2019, prior to the COVID-19 pandemic. Operating cash flow was $3.9 billion for the quarter and $13.4 billion for the year.

Speaker Change: Oh Recalibrated strategy is to target a healthy earnings goal, while improving quality of services and customer satisfaction and attain appropriate market share expansion.

Speaker Change: For 2024, the company expects its parcel volume to grow in the range of $34 73 to <unk> 30, 564 billion, representing a 15% to 18% increase year over year.

Speaker Change: These above estimates represent management's current and preliminary view, which are subject to change.

Speaker Change: This concludes our prepared remarks.

Speaker Change: Operator, please open the line.

Speaker Change: To calls and questions.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: We will now begin the question answer session.

Speaker Change: You May press Star then one on there.

Speaker Change: Mhm speaker phone please pick up.

Speaker Change: Before pressing the keys.

Speaker Change: My question has been addressed.

Speaker Change: Your question please.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: You limit yourself to two questions.

Speaker Change: One question.

Speaker Change: Again it is star then one.

Speaker Change: At this time, we will just pause.

Speaker Change: Well have some more roster.

Speaker Change: And the first question will come from Ronald.

Ronald: Oh Goldman Sachs.

Ronald: Oh yeah.

Ronald: Hi.

Ronald: Yeah, Doug.

Ronald: With Q1 can you just kind of Philadelphia.

Ronald: No.

Speaker Change: Thank you.

Speaker Change: Okay cool.

Speaker Change: Cool cool woman from our southern factory cool.

Speaker Change: Hi, Hello.

Ronald Keung: Adjusted EBITDA for Q4 and 2023 was $3.7 billion and $14.1 billion, respectively. Capital expenditure for Q4 totaled $0.9 billion, and the annual CPEC... 2023, indicating that we have achieved another year of free cash flow. The company has now established a regular dividend policy and has announced a $0.62 U.S. dollar per share cash dividend for 2023, with two shareholders on record as of April 10, 2024. This dividend represents a 40% payout ratio and a 68% increase from the dividend from last year. For 2024, the company plans to declare and pay cash dividends semi-annually, no less than 40% of the company's distributable profits for the fiscal year. In addition, the company also announced an increase to the $16 share repurchase program by $500 million to bring the total authorization amount of the current program to $2 billion and extend the program by another 12 months till June 30, 2025.

Speaker Change: The table on Ohio.

Speaker Change: For possible.

Speaker Change: I'm all good.

Speaker Change: Salt Lake City.

So.

Speaker Change: Yeah.

Speaker Change: Google profit cool market share that for home and doing well.

Volume across the country.

Speaker Change: Okay.

Speaker Change: Okay. That's helpful.

Speaker Change: We are in that account.

Speaker Change: And the Capex.

Speaker Change: Yes.

Speaker Change: Please go ahead.

Speaker Change: Woman.

Speaker Change: On your Capex cool.

Speaker Change: Goodbye.

Speaker Change: The dividend payout ratio should be okay.

Speaker Change: Yes.

Speaker Change: Okay.

And then I'll find it.

Speaker Change: Thank you.

Speaker Change: Management I have two questions. One is that we show you a possible growth expectations for this year.

Speaker Change: Is your expectation on that.

Speaker Change: Particularly on the pricing front.

Speaker Change: Whether we think what is the view on.

Speaker Change: They go public deposit trends this year given that we have achieved quite a stable to slightly up on possible in 2023, yeah. They take competition.

Speaker Change: Second is on Capex.

Speaker Change: A patient with each year and given the free cash flow.

Speaker Change: The dividend payout.

Speaker Change: And then two immediate intermediate term thank you.

Speaker Change: Okay got you knew that you win.

Speaker Change: Okay.

Yes.

Speaker Change: Yeah, sometimes don't want it.

Speaker Change: No woman wants.

Speaker Change: I'm talking about which is a good chance.

Speaker Change: So the Gulf coast, and so by women's too.

Speaker Change: Heavily box from Gulf Coast Plaza.

Speaker Change: Uh huh.

Speaker Change: So you're servicing the woman zincate it see subtle.

Speaker Change: Uh huh.

Ronald Keung: Combining share repurchase and dividend, we are committed to steadily improving shareholder returns. Now, moving on to Business Outlook. We anticipate the express delivery industry in China will grow 10% or more in volume in 2024, and we will maintain our leadership effort in industry transformation towards profitable growth through both quantity and quality. A balanced approach to service quality, volume, and earnings is our consistent strategy. Under the near-term conditions surrounding economic development and industry competition, our recalibrated strategy is to target a healthy earnings goal while improving the quality of services and customer satisfaction and attain appropriate market share expansion. For 2024, the company expects its parcel volume to grow in the range of $34.73 billion to $35.64 billion, representing a 15% to 18% increase year-over-year. These estimates represent management's current and preliminary view, which are subject to change. This concludes our prepared remarks. Operator, please open the line for me to call and ask questions. Thank you. Congratulations on your 23rd anniversary.

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Jeff: Kind of June so.

Speaker Change: So we will send out call you said that you see kind of thing the increase.

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Speaker Change: So uhm.

Speaker Change: Lead time issue.

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Speaker Change: So that's one.

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Speaker Change: Truthfully I think Jeff.

Speaker Change: Thank you Michelle.

Speaker Change: So the agenda.

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Speaker Change: Yeah.

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Speaker Change: Here with me.

Ronald Keung: First, you mentioned the increase in package sales in 2020. What do you think about this year's business model? Third, what do you think about the dividend payout ratio? I have two questions.

Speaker Change: Finishing from.

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Speaker Change: Pete teammate to the cost for them.

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Speaker Change: <unk>.

Huiping Yan: One is that you shared your possible growth expectations for this year. What is your expectation of the competition, particularly on the pricing front, and what is your view on the e-bid or profit capital trend this year, given that we have achieved quite a stable and slightly higher-profit capital in 2023 despite the intense competition? Second, is CapEx. What is our CapEx expectation for this year? Given the cash flows, do we see higher dividend payout room in the medium term? Thank you for your question.

Speaker Change: So.

Women.

Speaker Change: Junior.

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Speaker Change: Just some thoughts about <unk>.

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Speaker Change: So that's our job, albeit cheesecake factory is doing.

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Speaker Change: And so you'll see us how you buy the food issue.

Meisong Lai: [inaudible] This announcement is 8%. We predict that the industry will continue to develop at medium and high speed. [inaudible] Good to see everyone.

Speaker Change: Tissues.

Let me first translate for the chairman for your first question and then I'll answer it.

Speaker Change: The second part with our dividend.

Speaker Change: Uh huh.

Speaker Change: In 2000.

Meisong Lai: In terms of delivery price competition, it will definitely not come back. The growth of low-priced shares is also temporary. The essence of accounting competition is excellent quality and a stable network. The President has been paying a lot of attention to the strength of China's return to the Middle East and long-term competition. We have made three changes this year. [inaudible] In general, if the service quality is good and the cost-benefit ratio is good, profit will definitely increase. ,...

Speaker Change: The 24 to <unk>.

Speaker Change: The government or the Bureau of course have announced an 8% growth.

Speaker Change: Our expectation and we believe.

Speaker Change: In our earlier remarks that we can get at least a 10%.

Speaker Change: Possible and our goal is to grow 15% to 18%. So that's clearly above the industry.

Speaker Change: Average.

Speaker Change: We think that from a price perspective the competition.

Speaker Change: In the longer run.

Speaker Change: Ill step aside because it is a natural process that any industry would go through.

Speaker Change: The low price.

Speaker Change: But market share obtained from low price is not sustainable.

Speaker Change: The industry does it.

Meisong Lai: The whole industry, actually... In the future, in the era of express delivery, we are still accelerating diversification. There is a large-scale head office. The stronger, the better.

Speaker Change: Press delivery industries are accelerating their differentiation with the leading companies, having a clear advantage in scale.

Speaker Change: Capital strength in network stability that.

Meisong Lai: This trend is very obvious. The second change is from single-unit accounting to integrated logistics. ,, You mentioned last year's 1st to 2nd of February was better than this year's 1st to 2nd of February. This year, our strategy is to improve service quality, market share, and profitability. , Sanqing, Shi Xiaoqing, Our annual turnover is 15% to 18% 350,000,000,000 yuan, 50,000,000,000 yuan in bonuses. Our main measures are 1. Optimize service capability and continue to promote diversified products 2. Further reduce the use of full-chain services.

Speaker Change: The trend of strong and getting stronger its quite clear and quite obvious.

Industry concentration because she needs to increase leading express delivery companies will reach.

Speaker Change: The market value of that is much greater than what it is today.

Speaker Change: The competition.

Speaker Change: We'll go from single express delivery capabilities to comprehensive logistic capabilities.

Speaker Change: And the D. T O are having the same goal and taking a leadership in the transformation from.

Speaker Change: Quality.

Speaker Change: From quantity only two combined with quantity and quality, we hope to develop differentiated.

Speaker Change: Right.

Speaker Change: As well as differentiated products, including timeliness product reverse logistics, so that we can build a early mover advantages too.

Speaker Change: To really stand out with quality of services, because we believe that is the key.

Speaker Change: Two obtaining market share in the long run.

Speaker Change: There are several transformation or changes or shifts in the industry as I mentioned earlier, we have to correlate T towards quantity and quality.

Meisong Lai: Promote customer service experience upgrade 4. Ensure that the policy is transparent and reasonable 5. Extract network points and increase the potential 6.

We're also observing the comprehensive cost.

Speaker Change: <unk>.

Meisong Lai: Improve network point profitability 7. Third, pay attention to network point capabilities 8. Build a 100% capability 9.

Speaker Change: Vantage is being built.

Speaker Change: But looking at the first and the second month.

Speaker Change: Situations for 2024.

Speaker Change: Our strategy.

Speaker Change: The same focusing on a balanced approach to.

Operator: Improve the ratio of modems 10. Fourth, improve the production of products 11. Fifth, strengthen the construction of modem capability 12. Improve the efficiency of both parties 13. Satisfy users [inaudible] Let me first translate for the chairman for your first question, and then I'll answer the other part. The second part, which I want to divide it into.

Improve our quality of services.

Speaker Change: Our first priority and then I'm looking at the balance between.

Speaker Change: Kit volume market expansion as well as the earnings go.

Speaker Change: We do on all three and it is in the current environment.

Speaker Change: Matter of.

Speaker Change: Allocating our resources and putting our attention is to achieve the most optimal and appropriate goals.

Speaker Change: Specific.

Speaker Change: Work has been cut out for US in addition to the summary that we've driven in our prepared remarks, we think our scope.

Huiping Yan: The government or the Bureau of Post has announced an 8% growth. We believe in our earlier remarks that at least 10% growth is possible, and our goal is to grow 15% to 18%, so that's clearly above the industry average. We think that from a price perspective, the competition in the longer run will subside because market share obtained from a low price is not sustainable. The express delivery industries are accelerating their differentiation with the leading companies having a clear advantage in scale. Capital Strength and Network Stability

Speaker Change: And the strategy really relates around the following five specific task.

Optimized service quality promoting diversified products, but are shortening the.

Speaker Change: Delivery time and upgrade customer service.

Speaker Change: Experience to ensuring policy transparency and equitable.

Speaker Change: Policy tapping into incremental volume potential of outlets and increase the profitability of the outlet.

Three focusing on knowledge capability building and capacity building establish their sortation and delivery functions and increase the proportion of linkage towards the last mile.

Huiping Yan: The trend of getting stronger is quite clear and quite obvious. As industry concentration continues to increase, leading express delivery companies will reach market values that are much greater than what it is today, will go from single express delivery capability to Comprehensive Logistic Capability, and ZTO having the same goal in taking the leadership in the transformation from quantity only to combined with quantity and quality, we hope to develop differentiated price, as well as differentiated products, including timeliness products, reverse logistics, so that we can build early movement advantages, to really stand out There are several transformations, or changes, or shifts in the industry, as I mentioned earlier.

Implementing last mile policies.

Speaker Change: Four increasing portion of individual parcels, which is what are we referring to is knowing ecommerce.

Speaker Change: Retail parcels and then five strengthening last mile capacity.

Speaker Change: Building improvements in our ability to pick up deliver two door.

Speaker Change: As well as meeting.

Individualized needs of our customers.

Speaker Change: Now, let's move on to the second part of your questions.

Speaker Change: 40% payout ratio that we have announced.

Speaker Change: As we mentioned that in.

The company achieved.

Speaker Change: Our free cash flow and we believe our cash generation will allow us to continue to generate strong free cash flow.

Speaker Change: We have.

Speaker Change: Clearly distinctly set ourselves up for a company with growth as well as return to our shareholders.

Speaker Change: 40% is certainly a start going forward combined with dividend.

Huiping Yan: We have the quality towards quantity and quality, and we are also observing the comprehensive competitive advantages being built. Looking at the first and second month, we are looking at improving our quality of services as our utmost priority. And then looking at the balance between market volume, market expansion, as well as the earnings goal. We do want all three, and it is, in the current environment, a matter of... allocating our resources and focusing our attention to achieve the most optimal and appropriate goals. The work has been cut out for us.

Speaker Change: Share buyback, we are committed to.

Speaker Change: Provide healthy and consistent return to our shareholders that are going to be increasing steadily going forward.

Speaker Change: That answers all your question Ronald.

Speaker Change: Yeah.

Speaker Change: Uh huh.

Speaker Change: Yeah.

Speaker Change: That's fun.

Yeah.

Speaker Change: Oh, Yundong Smoky Oh.

Speaker Change: So they had no Tom's and Gaba Tom Thanks, Yeah, one test that.

Speaker Change: Probably don't quite follow.

Speaker Change: Sometimes all of them.

Speaker Change: Can you go and you do it sounds like Oh, what's what's that wasn't factored listen gentlemen.

Speaker Change: Hum.

Speaker Change: Can you quantify at all.

Speaker Change: Oh, yeah yeah.

Speaker Change: Yeah, I can themselves senior lifestyle.

Huiping Yan: In addition to the summary that we've given in our prepared remarks, we think our goal and the strategy really relate to the following five specific tasks: Optimize service quality, promote diversified products, further shorten delivery time, and upgrade customer service; ensure policy transparency and equitable policy tapping into the incremental volume potential of outlets and increase the profitability of the outlets. 3.

Speaker Change: What time to tell exactly.

Speaker Change: I'll come back in Q.

Speaker Change: Sure sure.

Paul: Go ahead Paul.

Paul: Sure.

Yeah, that's all gone now.

Paul: No other watching from Yoko.

Paul: Say again.

Paul: Oh, Yes, I tried as a whole what's cool.

But that would give me you'll end up on the.

Paul: Let me put all outlook yeah yeah.

Paul: Yeah.

Huiping Yan: Focusing on knowledge capability building and capacity building, establishing their sortation and delivery functions, and increasing the proportion of delivery linkage towards the last mile. Implementing last mile policies, being the 4. increasing proportion of individual parcels, which is what we are referring to as non-e-commerce retail parcels, and 5.

Paul: <unk> yeah.

Paul: Joseph.

Joseph: So I got a passionate team.

Michelle mentioned globally.

Joseph: They dominate yourself I mean don't know Gwen Chicago some of them.

Speaker Change: Yeah got it yes, probably.

Joseph: That's cool.

Joseph: That's about right.

Joseph: Yeah.

Speaker Change: It sounds like them ourselves. Thank you management for taking my question comes its relations offered a new hiding there any profit.

Huiping Yan: Strengthening last mile capacity, building improvements in our ability to pick up and deliver to the door, as well as meeting the individualized needs of our customers. Now let's move on to the second part of your question, the 40% payout ratio that we've announced. As we mentioned, as the company achieves... We believe in free cash flow, and we believe our cash generation will allow us to continue to generate strong free cash flow. We have clearly, distinctly set ourselves up for a company with growth as well as return to our shareholders. Forty percent is certainly a start going forward, combined with a dividend share buyback. We are committed to providing a healthy and consistent return to our shareholders that is going to be increasing steadily going forward. I hope that answers all your questions, Ronald. Yeah, I don't know.

Speaker Change: Can I just missed it and we do appreciate a lot the managements efforts.

Speaker Change: In terms of improving shareholder return I have two questions. The first one.

Speaker Change: It's when they kept awards competition.

Speaker Change: So.

Speaker Change: What's the what's the management's expectation.

Speaker Change: On the.

I'll also after completion.

Speaker Change: I'm.

Speaker Change: <unk> seen the worst already or not yet or we have already seen a few smaller players.

Speaker Change: Has become less aggressive this year compared with last year do you think that could be the new normal or confusion could escalate again.

Speaker Change: The volume softness.

Speaker Change: What's the expectation on the coffee outlook on a year on year basis.

Speaker Change: And the same question is about.

To build delivery requirements from regulators.

Speaker Change: Uh huh.

Speaker Change: Observed.

Speaker Change: Changes to operations.

Thomas Chong: Congratulations on the company's performance and new heights. I have two small questions. The first question is also related to the last question. I would like to ask about the competition pattern. In fact, this year, we have observed that some small players in the industry are not as aggressive in competition as they were last year. I would like to ask the management team's opinion on this. Will this be a new state of competition this year?

Speaker Change: The potential impact on Cogs and <unk>.

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Speaker Change: So the surety Nishu, it's you can't really not so good.

Speaker Change: Yes.

Thomas Chong: Or if the volume of packaging in the industry declines, competition may become aggressive again. Is the worst time in the industry over? And in the direction of unit net profit, how is the management team's outlook for this year? This is the first question.

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Thomas Chong: The second question I would like to ask is about the impact of the express delivery service that started in March this year. Have we observed any changes on the business side? What is the potential impact of this on our future costs and future competition? What is the management team's expectation of the intensity of the competition? Have we seen the worst already or not yet?

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Speaker Change: The solution to that.

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Speaker Change: So we have had a shift so.

Thomas Chong: We have already seen a few smaller players competing less aggressively this year compared to last year. Do you think that could be the new normal, or could competition escalate again if industry volume softens? What's the expectation for the unit profit outlook on a year-on-year basis? And the same question is about the to-go delivery requirements from regulators.

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Speaker Change: So you're jostled teaching how are you.

Speaker Change: No I'm sorry, do you go from congestion.

Thomas Chong: Have you observed any changes to operations? What's the potential impact on cost and competition dynamics? Thanks.

Speaker Change: Oh, Glenn so cohorts, yet tons should I kind of need.

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Speaker Change: I used the phrase unsold Philips N N GT shelf he said to you.

Meisong Lai: Thank you for your questions. The first problem is the competition pattern. For a long time, express delivery has been a marathon.,,, The competition is getting stronger and stronger, it's becoming more and more regular, and in the long run, the share price will definitely be more and more concentrated, and the current competition is still very strong. [inaudible] There must be ups and downs.

Speaker Change: So the shelf is that money to something you said.

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Speaker Change: Food pharma and then they need a man so cool part of your question.

Speaker Change: So through these channels.

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Speaker Change: So it's almost pretty hesitant to all women.

Speaker Change: Both of them.

Speaker Change: Tissue.

Speaker Change: Thank you for your question.

Speaker Change: The yes, we have observed that the competitive environment has been shifting in accordance with the <unk>.

Meisong Lai: This year, we pay more attention to improving the quality of services. We pay more attention to... [inaudible] ensuring the stability of the share price on the basis of an increase in the number of shares and reasonable profits. The second question is... Xinhui, Xinhui, Xinhui, Xinhui, Xinhui. We can speed up and improve the management of the industry. We can make the courier company pay more attention to the customer experience. In the long term, it is conducive to the development of high-quality products in the industry. ZTO has always paid great attention to the customer experience.

Economic development, and particularly E Commerce development.

Speaker Change: We are we believe.

Speaker Change: Again, the express delivery business operation.

Speaker Change: And the enterprise go is like running a marathon.

Speaker Change: <unk> on the best being the best of ourselves.

Speaker Change: Most.

Speaker Change: Courtney and feasible.

Speaker Change: With strong cost advantage and better quality of services, and timeliness and all services and better operating efficiencies or we will.

Huiping Yan: In terms of platform index and customer satisfaction, we have always been leading in the industry. At present, we have built 110,000 Modan stands. In order to alleviate the pressure from the Modans, we have increased the distance between us and our clients. We are building a service that is safe to visit. The ability to visit our clients and meet their needs. In the long run, this is a good thing. So the President's decision is good. We will improve our service quality. Thank you. Thank you for your questions. Yes, we have observed that the competitive environment has been shifting in accordance with economic development and, particularly, e-commerce development. Again, the Express Delivery business operation and the enterprise goal are like running a marathon. Focusing on the best, being the best of ourselves, is the most important and feasible thing, with a strong cost advantage, better quality of services, and timeliness in our services, and better operating efficiency. We will become the winner of the whole race.

Speaker Change: Because the winner of the whole race.

Speaker Change: The concentration of the industry continues to take place.

Speaker Change: Looking at the current.

Speaker Change: Situations question, everybody is still seeking market share gain.

Of course, each yield this year as we had mentioned earlier the strategy is consistent and we are recalibrating across the three priorities.

Speaker Change: For this year, we are focusing more on improving the quality of services providing.

Speaker Change: Customer satisfaction with differentiated products and services and are meeting individualized and customized needs.

Speaker Change: So ensuring quality improvements.

Speaker Change: In obtaining appropriate earnings while expanding our market.

Speaker Change: <unk> is our strategy going forward.

Speaker Change: The.

Speaker Change: Unit economics, if I may at the comments everything.

Speaker Change: As laid out in front of us as we further strengthen our productivity gains.

Speaker Change: And are supporting our network partners to grow last mile expanding their capabilities, we are able to attain our goal of continued profit expansion.

Huiping Yan: The concentration of the industry continues to take place. Looking at the current situation, everybody is still seeking market share gain, and for ZTO this year, as we mentioned earlier, the strategy is consistent, and we are recalibrating across the three priorities. For this year, we are focusing more on improving the quality of services, providing customer satisfaction with differentiated products and services, and meeting individualized and customized needs. So, ensuring quality improvement and attaining appropriate earnings while expanding our market presence is our strategy going forward. Unit economics, if I may add the comment, everything is laid out in front of us as we further strengthen our productivity gains and support our network partners to grow the last mile, expanding their capabilities. We are able to attain our goal of continued profit expansion.

On your second question, Yes. Indeed, there are new rules that are being issued and we believe that the concept to the emphasis is continuing on.

Speaker Change: Improving customer satisfaction and logistic experiences.

Speaker Change: Which is consistent with what we've always been working on and particularly so as we establish a near 11.

Speaker Change: 110000 last mile post.

Speaker Change: It is indeed to help not only our network partners to improve their quality of earnings but most importantly is to help improve last mile service quality.

Speaker Change: Two door delivery capability.

Speaker Change: Meeting the demand.

Speaker Change: Individualized as well as customized so in the longer royalties is a good thing for the industry as we are shifting towards more of quality of services. So we will continue our efforts going forward in this arena.

Huiping Yan: On your second question, yes, indeed, there are new rules that are being issued, and we believe that the emphasis is continuing on improving customer satisfaction and the logistics experience, which is consistent with what we've always been working on, and particularly so as we establish near 110,000 last mile posts. It is indeed to help not only our network partners to improve their quality of earnings, but most importantly, it is to help improve last mile service quality and door delivery capability. Meeting the demand, individualized as well as customized.

Speaker Change: Uh huh.

Speaker Change: Yeah.

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Speaker Change: English at home I think it'd be a lot of time to start getting the samples going out like what your ear warmer on Sunday and wall hangings personal cool congratulations to company reports you mean, good performance in the fourth quarter and throughout the year.

Huiping Yan: So in the longer run, this is a good thing for the industry as we are shifting towards more quality services. So we will continue our efforts going forward in this arena. Okay, thank you very much.

Speaker Change: Beginning this year.

Speaker Change: With the strong growth among our peer companies are.

Speaker Change: No the areas in which it did.

Aaron Luo: Thank you, Aaron Luo. Hello, Mr. Lai, Ms. Yan, Sophie. I am Aaron Luo, an analyst at Haitong Economics. First of all, I would like to congratulate the company on achieving good results in the fourth quarter and the whole year. Since the beginning of the year, we have also observed a strong increase in the number of sales in the same industry. Combined with the company's stoppage in the release of this year's performance, the company is rapidly stagnating and stagnating.

Speaker Change: It's undergoing transformation or the government is our long term strategy you impact considering the market environment.

Speaker Change: Are we planning to adopt a more aggressive pricing strategy.

Speaker Change: Thank you.

Speaker Change: Thank you very much for your question indeed.

Speaker Change: Indeed.

Speaker Change: A very clear answer to your question is our long term strategy. Our consistent strategy remains the same and I think our fourth quarter results as well as our plans for 2024. It clearly indicates that our strong belief first of all that price attained low.

Aaron Luo: I would like to ask which aspects of the company will be reformed or adjusted. Will our long-term strategy still insist on taking a more aggressive price strategy due to the change in the market environment to obtain sales? First of all, congratulations to the company for achieving good performance in the fourth quarter and throughout the year. Since the beginning of this year, we have observed strong growth among our peer companies.

Speaker Change: Price of taking market share is not sustainable and it is important again as a leadership role taking that leadership role in the industry to grow from quantity to quality as well.

Speaker Change: In combination with quantity going forward is our goal.

So we believe that the price competition in combination with the earlier question asked by are.

Huiping Yan: I would like to know the areas in which the company is undergoing transformation or adjustment. Is our long-term strategy still intact considering the market environment? Are we planning to adopt a more aggressive pricing strategy to gain business volume? Thank you.

Speaker Change: Hurting is that yes, indeed, there are indications or expressions by many of the industry players that they will also follow.

Speaker Change: The the trends follow the transformation to go from a quantity only two more quality and we believe this is a process that will be taking place for the near term and the the overall goal of our business.

Huiping Yan: Thank you very much for your question. Indeed, a very clear answer to your question is that our long-term strategy or consistent strategy remains the same. And I think our fourth-quarter results, as well as our plan for 2024, clearly indicate that our strong belief, first of all, that price-attained, low-price-attained market share is not sustainable. And it is important, again, as a leadership role, taking a leadership role in the industry, to grow from quantity to quality as well, in combination with quantity going forward is our goal. And so we believe that the price competition, in combination with the earlier question asked by Ms. Hurling, is that, yes, indeed, there are indications or expressions by many of the industry players that they will also follow the transformation to go from quantity only to more quality. And we believe this is a process that will be taking place in the near term.

Speaker Change: Means to keep our network partners.

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Speaker Change: And any interest amongst all of the players, including all of our partners are all locations being equitable and market share is important but it's not the only thing <unk>.

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Speaker Change: What we aim.

Speaker Change: And to achieve going forward.

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Speaker Change: Number one senior manager.

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Huiping Yan: And the overall goal of our business remains to keep our network partners, and the interest amongst all the players, including our network partners, allocation being equitable, and market share is important, but it's not the only thing. Profit, profitable growth, is what we aim to achieve going forward. Thank you very much.

Speaker Change:

Speaker Change: Okay.

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Speaker Change: You know why there wont be a law suit.

Speaker Change: Yeah.

Speaker Change: Let me translate myself.

Speaker Change: Thank you. Thank you management for taking my question and that's meet the blind.

Speaker Change: As mentioned earlier, we also know that it would be have a long term focus on improving our service quality product mix than pushing for further product differentiation could.

Qianlei Fan: Thank you, UBN. Thank you, Mr. Lai, Mr. Yan, and Ms. Sophie for accepting my question. I have a small question to ask you.

Speaker Change: Could you please shed more light on like what kind of initiatives.

For this year.

Qianlei Fan: As Mr. Lai and Ms. Yan just mentioned, we have noticed that our long-term development goal is to improve our service quality, improve our product quality, and promote product sharing. Can you please share with us what specific measures we will take this year? What are our advantages and shortcomings?

Speaker Change: What kind of goes under Wantages rehab compared to peers.

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Speaker Change: The last question would be.

Speaker Change: Hi, Matt.

Speaker Change: Quantitative.

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Speaker Change: So yeah.

Speaker Change: So some of those timing in nature.

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Qianlei Fan: Is there anything we can improve? Thank you, Mr. Lai and Ms. Yan. Let me translate myself first.

Speaker Change: That said I think it's only about a week.

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Qianlei Fan: Thank you, management, for taking my question. As Mr. Lai and Ms. Yan mentioned earlier, we also noted that we have a long-term focus on improving our service quality, product mix, and pushing for further product differentiation. Could you please shed more light on what kind of initiatives we will take for this year and what are the advantages we have compared to peers? And the last question would be, do we have any like quantitative goals on this in this round? Thank you so much.

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Meisong Lai: Thank you for your questions. ???????????, In terms of the headquarters level, there are three balances. [inaudible] At the same time, this year, we still need to focus on the efficiency of the transfer link. [inaudible] ?????????????,????????? ??????????????????, [inaudible] ????????,????,????????,????, ???????????,?????????? [inaudible] See you next time! Not to get, [inaudible] ?????????,??????,??????, [inaudible] to sign each other.

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Speaker Change #103: Yes, the gang.

Speaker Change #103: So that together.

Meisong Lai: Qianlei Fan, Huiping Yan, Meisong Lai, Sophie Li, Qianlei Fan, Lu Xu, Aaron Luo, ZTO Express: Our business growth index is 15-18, but the growth rate of our 3,000 units is much higher than this index. We believe that through the implementation of this policy, we hope that the president will be able to jump out and form a competitive advantage. Thank you very much for your questions.

Speaker Change #103: Sure.

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Speaker Change #104: Are you sure you caught it.

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Speaker Change #105: Thank you very much for your question.

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Speaker Change #105: Overall, our strategy we have for them.

Speaker Change #105: <unk> has mentioned.

Earlier that we will continue to focus on our own.

Meisong Lai: The overall strategy, we mentioned earlier that we will continue to focus on our own. At the headquarters level, we first put forth the quality of services in front and manage the relationship between profit and market share. At the sortation center level, we are focusing on better allocation or more efficient allocation of resources to meet the varying interests of sortation center outlets as well as network couriers. For ourselves, we will further our efforts and initiatives to improve the transit efficiency and capability, for example, as we mentioned earlier, reduce the total process time, increase the quality by reducing losses in delay and fully utilize our resources. To the outlets, we think that many initiatives are there to, first of all, improve the clear allocation of roles and responsibilities between the sortation center, the outlets, and the couriers so that they each individually improve quality as well as efficiency in every of their work segments.

Speaker Change #105: At the headquarter level, we first have.

Speaker Change #105: <unk> put forth.

Speaker Change #105: Quality of services.

Speaker Change #105: In the front end of it.

Speaker Change #105: Managing the relationship between profit and market share at the head at the sortation centers level, we are focusing on better.

Speaker Change #105: All locations are more efficient allocation of resources.

Speaker Change #105: Our resources to meet the varying interest.

Speaker Change #105: Sortation center outlets as well as our network careers, we for ourselves we will further our efforts and initiatives to improve the transit efficiency and capability for.

Speaker Change #105: For example, we mentioned earlier reduced the total process time.

Speaker Change #105: Increase.

Speaker Change #105: The quality by reducing losses and delay.

Speaker Change #105: And fully utilized our resources to the outlets, we think that many of the initiatives are there to first of all improve.

Speaker Change #105: Clear.

Speaker Change #105: Allocation of roles and responsibilities between the Sortation center to outfit and careers. So that they each individually for every of their work segments will improve quality.

Speaker Change #105: As well as efficiencies.

Meisong Lai: For our couriers, we distinctly laid out policies and laid out initiatives to improve linkage as well as ensure that they are able to, as couriers, be motivated or incentivized to attain more non-e-commerce and retail shares by allowing them to gain the lion's share of the marketing price, so that they are... non-differentiated, compensated with no differentiation from pickup or delivery fees. With that, we are clearly, from an overall standpoint, having objectives for the last mile to achieve three areas of goal. One is to reduce overall cost and then two, distinctly improve Service to Door on-demand services to meet customized individual demand and also improve connectivity with our customers so that couriers are able to gain access to more retail volume and retail packages.

Speaker Change #105: Our careers.

Speaker Change #105: <unk> distinctly laid out policies and laid out initiatives to improve our linker.

Speaker Change #105: Linkage as well as ensuring that they are able to courier.

Speaker Change #105: Motivated or incentivized to attain more non e-commerce and retail shares by allowing them to gain the lion's share of the marketing price.

Speaker Change #105: So that they are.

Speaker Change #105: Working for themselves instead of them.

Speaker Change #105: Non differentiated.

Speaker Change #105: Compensated with no differentiation from pick up or delivery fee.

Speaker Change #105: With that we are clearly on a overall standpoint, having objectives for the last mile to achieve our three areas of Oh goal. One is to reduce overall cost and then to us.

Distinctly improve.

Service to door on demand services to meet the customized individual demand and also improve connectivity with our customers. So that careers are able to gain access to more retail volume and retail packages.

Meisong Lai: And then thirdly, at the appropriate location and time, we want to introduce commercial opportunities to our last mile posts so that they are also improving the quality of their earnings. On an overall basis, we have set our volume growth for the business to be 15-18% for the year. And certainly, our retail volume or non-e-commerce volume growth goal is significantly higher than this 15-18% so that we hope to pull away from the senseless price competition and become truly differentiated from the Tongda group and with longer-term and improved service quality and brand distinction. I hope that answers your question.

Speaker Change #105: And then thirdly at the appropriate location in time, we want to introduce commercial opportunities to our last mile.

Speaker Change #105: So that they are also improving the quality of their earnings.

Speaker Change #105: On an overall basis, we have.

Speaker Change #105: Our volume growth for the business to be 15% to 18% for the year and certainly our retail.

Speaker Change #105: Volumes are now e-commerce volumes growth goal is significantly higher than this 15% to 18% so that we hope to pull away from the sensors.

Speaker Change #105: Price competition and become truly differentiate it from the <unk> group and and with longer term and.

Speaker Change #105: Improved service quality and brand distinction.

Operator: Thank you, Mr. Lai and Mr. Yan. So, I think we are at 9.30, so thank you very much everybody for joining today's call. We welcome further discussions and elaboration of our intention, which is very clear, and in the current environment of how we grow our business, how we develop our brand, and improve our shareholder returns. Thank you again for joining us today. The Ultimate Parody Site! [inaudible] The Ultimate Parody Site! Thomas Chong, Huiping Yan, Meisong Lai, Sophie Li, Qianlei Fan, Lu Xu, Aaron Luo, ZTO Express

Speaker Change #106: I hope that answers your question.

Speaker Change #107: Hey, Steve.

Steve: You don't seem too.

Speaker Change #109: Thank you.

Speaker Change #109: Yeah.

Steve: So I think we are.

Speaker Change #110: We're at 930, so thank you very much everybody for joining today's call. We welcome further discussions and the operation of our intention which is very clear.

Speaker Change #110: The current environment of how we grow our business, how we develop our brand and improving our shareholder return.

Speaker Change #110: If you again for joining us today.

Speaker Change #110: Yeah.

Speaker Change #111: And we thank you ma'am and to the rest of the management team.

Speaker Change #112: The conference call has now concluded. Thank you again for attending today's presentation at this time.

Speaker Change #113: You may disconnect your lines.

[music].