Q1 2024 ZTO Express (Cayman) Inc Earnings Call
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Operator: Good day, and welcome to the ZTO Express first quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, today's event is being recorded. I would now like to turn the conference over to Sophie Li, Head of Capital Markets. Please go ahead.
Good day.
Cause the CTO Express first quarter 2024 financial results conference call.
All participants will be in listen only mode.
Should you need assistance. Please signal a 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 telephone keypad.
To withdraw your question. Please press Star then two.
Please note today's event is being recorded.
Sophie Li: I would now like to turn the conference over to Sophie Li head of capital markets. Please go ahead.
Sophie Li: Thank you, Operator. Hello, everyone, and thank you for joining us today.
Sophie Li: Thank you operator, Hello, everyone and thank you for.
Sophie Li: Joining us today.
Sophie Li: The company's results and 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, followed by Ms. Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows.
Sophie Li: The company's results.
Sophie Li: We released earlier today.
Sophie Li: Awesome.
Sophie Li: On the call today from <unk>.
Sophie Li: So my chairman and Chief Executive Officer.
Speaker Change: Yes, Chief Financial Officer, Mr. Lai will give a brief.
Speaker Change: This operation.
Speaker Change: Hello.
Speaker Change: We will go to any financial guidance.
Speaker Change: They will both be available to answer your questions during the Q&A session that follows.
Sophie Li: 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, many 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 future.
Speaker Change: I'll remind you that this call may contain forward looking statements made on the safe Harbor provisions of the private Securities Litigation Reform Act of 95.
Speaker Change: Such statements are based on management's trying to express.
Speaker Change: Patients in the current market and operating conditions.
Speaker Change: Related to events that involve known or unknown risks uncertainties and other factors.
Speaker Change: All of which are difficult to predict and many of them.
Speaker Change: 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: 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 the 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 briefly go through his prepared remarks in their entirety.
Speaker Change: Further information regarding this and other risks uncertainties and factors is included in company's filings with the U S Securities and Exchange Commission.
Speaker Change: The company does not undertake any obligation to update any forward looking statements.
Speaker Change: Thought of new information future events or otherwise.
Speaker Change: As required under law.
Speaker Change: It is now my pleasure to introduce Mr. Mr. Lai Mr Laboratories during his prepared remarks in their entirety in Chinese before I translate for him.
Speaker Change: <unk>.
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Meisong Lai: Thank you for participating in today's phone call. In the first quarter of 2024, China Air's service quality ranked first in the industry, and sales amounted to 71.7 percent, an increase of 14 percent at the same time. At the same time, we achieved 22.1 percent sales. After the adjustment of 2 billion yuan, the net profit increased by 16%.
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Meisong Lai: Last year, the express delivery industry's sales volume increased by 25.2%, far more than expected because of new e-commerce live broadcast, and social media platforms. On the one hand, it stimulated mass online consumption and led to an increase in the number of courier services. On the other hand, it also contributed to the growth of social media platforms. (inaudible) The purpose of a business is to create value. The President insists on sustainable and healthy development. Under the premise of maintaining the necessary scale of basic business, we actively give up some of the short-term losses. The market share of a system has fallen by 1.9% over the same period of 10 years.
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Meisong Lai: However, our level of profit has further widened with Tonghan. The president's strategic goal is to maintain a balanced development in terms of service chain, profit, and business scale. At the beginning of 2014, we shifted the focus of our strategy to FOMO quality while maintaining the level of scale, business volume, and good profit. We will focus more on the creation of differentiated products and services to meet the diversified and personalized needs of customers and improve consumers' understanding and recognition of Chinese-made brands.
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Meisong Lai: [inaudible] We focus on improving high-priced platform customers, improving the proportion of products, and optimizing the income structure. However, the single-ticket income of the President's express and new business has fallen by 10 points compared to the previous year.
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Meisong Lai: In addition, the stable and reasonable management cost structure, single-ticket profits, and total profits have both increased. In the second quarter of this year, industry sales continued to grow at a rapid pace. At the same time, the price competition in some core markets is still very fierce. President Trump has firmly encouraged us to develop our strategic strategy, and the following are the main tasks: 1. Improving operating performance With innovative thinking, we should look at mature operating systems 2. Rely on digitized information driving and economical management 3. Pay attention to the safe production of the whole chain 4. Ensure efficiency 5. Use resources 6.
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Meisong Lai: Thereby improve efficiency 7. Reducing division and division Innovative product structures enrich division and division, [inaudible] The ability of the supply chain to polish and diversify product services, create brand awareness, and customer awareness, 3. You must effectively face competition, grasp market information, clear your own accounts, carefully analyze, and ensure the fairness and transparency of network policies. [inaudible] The 14 cities that we have set up on both sides of the strait have increased the proportion of the upper class.
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Meisong Lai: We have actively deployed the Modan chain so that businessmen can focus on the work of the lower class and build up the service capability and cost advantage of the post office to promote the chain of the entire industry and provide solutions. Through export and transfer, we have added commercial elements to enrich Modan's revenue.
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Meisong Lai: We must strengthen the network, strengthen communication with networks, unify the market, unify thinking, advocate a reasonable balance of long-term and short-term interests, safeguard the rights of networks and businesses, and promote a fair and reasonable policy., China Express is changing from a high-quantity to a quantity-to-quantity combination, which is a necessary trend. We are adjusting our strategic focus, placing service quality at the forefront, deploying new growth points, and improving competitiveness. Our goal is to build a long-lasting and sustainable post-Sino-Chinese partnership. We are standing on the cutting-edge of industry diversification. [inaudible], Next, Mr. Yan will introduce you to the financial structure and budget plan. Thank you.
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Huiping Yan: Hello, everyone. Thank you for joining today's conference call. In the first quarter of 2024, ZTO maintained its industry-leading service quality ranking. With a personal volume of $7.17 billion, which grew 14% year-over-year, we achieved an adjusted net profit of $2.22 billion, representing a year-on-year increase of 16%. In the first quarter of this year, parcel volume of the express delivery industry increased by 25.2% over last year, far exceeding expectations.
Speaker Change: Please allow me to translate.
Speaker Change: Chairman.
Speaker Change: Hello, everyone and thank you for joining today's conference call.
Speaker Change: Corner of 2020.
Speaker Change: <unk> maintained its industry, leading service quality ranking.
Speaker Change: With the parcel volume of seven point 17 billion, which grew 14% on a year over year.
Speaker Change: Adjusted net profit of $2 22 billion, representing a year on year increase of 16%.
Speaker Change: The first quarter of this year parcel volume of the express delivery industry increased by 25, 2% over last year.
Speaker Change: Far exceeded expectation.
Huiping Yan: The booming development with frequent promotions by new live streaming e-commerce and social network retailing helped stimulate online consumption and fueled the growth of express delivery volume. On the other hand, it also contributed to an increase in the proportion of low-priced e-commerce. We firmly believe that the ultimate purpose of a business is to create value. ZTO insisted on healthy and sustainable growth and chose to let go of profitable parcel volume on the premise of base-level volume necessary for scale leverage. In the first quarter, our market share contracted by 1.9 percentage points compared to last year.
Speaker Change: The main development with frequent promotions by new live streaming e-commerce, and the social networks retailing helped the minimum wage.
Speaker Change: Function and fuel the growth of express delivery volume.
Speaker Change: On the other hand, it also contributed to increasing the proportion of low priced ecommerce parcel.
Speaker Change: We firmly believe that the ultimate purpose.
Speaker Change: This is to create value.
Speaker Change: Detailing 15 on healthy and sustainable growth and total knuckle unprofitable parcel volumes on the premise.
Speaker Change: This level of volume necessary for scale leverage.
Speaker Change: Let me first corner of a market share contracted by one nine percentage points compared to last year.
Huiping Yan: However, our leading level of earnings among industry peers has further widened. ZTO's consistent strategy is to maintain balance in three aspects of growth, including service quality, profitability, and skill. At the beginning of 2024, we shifted our focus to service quality. While maintaining a healthy level of volume and achieving optimal profits, we placed more attention and resources on developing differentiated products and services to meet the diverse and personalized needs of customers, which will enhance ZTO's brand awareness and recognition. In the first quarter, we further improved our leading position among Hongda peers in the end-to-end time limit.
However, our leading level of earnings a mountain industrial peers to further widen.
Speaker Change: Did she was consistent strategy is to maintain balancing three aspects of growth, including service quality profitability and scale at the beginning of 2020, we shifted our focus to service quality.
Speaker Change: While maintaining a healthy level of Hollywood and the TV optimum optimal profit when placed them more attention and resources on developing differentiated products and services to meet the diverse and our personal lives the needs of customers.
Speaker Change: <unk> brand awareness and the rest of the nation.
Speaker Change: In the first quarter, we further improved our friendly.
Speaker Change: Amongst all that here.
Speaker Change: Yes.
Huiping Yan: The responsiveness of TUDOR and the on-demand service capability of LASMA have improved, and the increase in reverse and retail prices significantly surpassed overall market volume growth while proactively addressing the structural shift in consumption and express delivery price competition. We focused on our own, extended the higher-value customer base, increased the proportion of retail fossils, and enhanced the revenue structure. In the first quarter, our core Express ASP decreased to 4 cents year-on-year, which was significantly lower than the industry.
Speaker Change: The responsiveness of couture and on demand service capability of last mile happening.
Speaker Change: And the increasing reverse and retail customers significantly surpassed overall market volume growth.
Speaker Change: Well proactively addressing the structural shift in consumption and express delivery price competition.
Speaker Change: Focused on our own.
Speaker Change: Extended higher value customer base increasing.
Increase the proportion of retail parcel and in comp to revenue structure.
Speaker Change: First quarter Evercore Express ASP decreased 4% year on year.
Speaker Change: Which was significantly lower in that industry.
Huiping Yan: Thanks to further implementation of the link management initiative, our combined sorting and transportation costs per parcel decreased by $0.06 compared to last year, and in combination with a stable corporate cost structure, Oath Profit Proposal and Total Profit have increased. Entering into the second quarter, the industry volume demonstrated strong growth momentum. Meanwhile, price competition remained fierce, particularly in major regions.
Thanks to further implementation of lean management initiative.
Speaker Change: Combined sorting and transportation costs per parcel decreased by 6% compared to last year.
Speaker Change: And in combination with a stable corporate cost structure.
Speaker Change: Gross profit per parcel and total profits have increased.
Speaker Change: Entering into the second quarter, the industry volume demonstrated strong growth and Meanwhile, quest competition remains fierce particularly.
Speaker Change: Major region.
Huiping Yan: ZTO remained firm on our strategic focus and execution surrounding the following main tasks. First, taking an innovative approach towards a mature and established operating framework, rely on digitization and data analytics to drive process management and problem solving. Focus on safety protection, time guaranteed, and resource utilization throughout the entire chain to improve quality and efficiency. 2.
Speaker Change: CTO remained firm, our strategic focus and execution around.
Speaker Change: The following main task.
Speaker Change: Sure.
Speaker Change: <unk> efficiency.
Speaker Change: Taking innovative approach to worthy mature and established the operating framework.
Speaker Change: Rely on Digitization and data analytics to drive process management and the problem solving broken.
Speaker Change: Some 50 production time guarantee and resource utilization throughout the entire team to improve quality and efficiency and reduce <unk>.
Speaker Change: Currency.
Huiping Yan: Enhanced Product Mix, Diversify and Enrich Express Delivery Services Increased market penetration of distinctive products such as ZTO Haokai, Logistically Leveraged Meteorologistics Ecological Resources develop capabilities for comprehensive supply chain management. We provide differentiated products and services in order to increase brand awareness and recognition. Third, effectively address press competition.
Speaker Change: Second product mix.
Speaker Change: Diversify Enbridge express delivery services.
Speaker Change: <unk> market penetration of 15th of products, such as CTO how quiet.
Speaker Change: I think they're just typically leverage.
Speaker Change: Just tick ecological resources.
<unk> capabilities for comprehensive supply chain management.
Speaker Change: We find differentiated product and services in order to increase brand awareness and recommendation.
Speaker Change: Third effectively address press competition.
Huiping Yan: Stay tuned into Marketing Intelligence and take clear account of our own resources, improve the precision of the pricing policy to become more case-specific as well as clear and transparent. Fourth, Jensen Lassma Press, drive firm implementation of the last-mile profit-sharing strategy and increase the intake of retail profit. Increase direct linkage between the sorting center and the last mile outlet plus courier. Freeing up the livery personnel to concentrate on servicing a lot more customers, to improve the capabilities and cost-competitiveness of LASMO posts and offer solutions to serve non-VTO volumes, which in turn will promote healthy development of the industry. Introducing commercial opportunities to existing express pickup and delivery traffic so as to enhance the local economy. 5.
Speaker Change: They tuned into marketing intelligence and clear account cover own resources.
Speaker Change: Improve precision of pricing policy to become more specific as well as fair and transparent.
Speaker Change: Fourth strengthen last mile presence.
Strive firm implementation of last mile profit sharing strategy and increase the intake of retail parcel.
Speaker Change: Increased direct linkage between sorting center in last mile.
Careers.
Speaker Change: Freeing up delivery person now to concentrate out servicing a lot more customer.
Speaker Change: Improved capabilities and cost competitiveness of last mile posts.
Speaker Change: And offer solutions to serve non CTO volume.
Speaker Change: <unk> promotes healthy development of the industry.
Speaker Change: Introducing commercial opportunities to existing express pickup and delivery of traffic.
Speaker Change: Between <unk> economics.
Huiping Yan: Improve Franchisee Partners, improve communication, unify thinking, advocate a balance between long-term and short-term income, and protect the rights and interests of all lives and careers. Ensure fairness of all network policies, and develop useful technology tools to help improve visibility to operational data as well as convenience to conduct business day-to-day. The shift from quantity-driven to growth in both quantity and quality for China's express delivery industry is inevitable.
Speaker Change: Yes.
Speaker Change: Of our franchisee partners.
Speaker Change: Improve communication unified thinking advocates balance between long term and short term interest.
Speaker Change: Protect the riot 10 inches of almonds and careers.
Speaker Change: Sure fair enough of all the network policies.
Speaker Change: I love useful technology tools to help improve disabilities operational data as well as convenience to conduct the day to day.
Speaker Change: The shift from quantity driven to growth in both quantity and quality of life for China's express delivery industry is an amicable.
Huiping Yan: We have modified our strategic focus to prioritize service quality. The goal is to build new engines of growth and innovate greater competitive advantages with which to forge a strong moat for ZTO's longevity. Standing at the turning point of industry transformation, everyone under the ZTO brand, including network partners and couriers, will work together to maintain aspiration and confidence, shore up competitive strength, and ongoing relevance, through our comprehensive end-to-end capabilities and leadership role with inclusiveness.
Speaker Change: We have modified our strategic focus to prioritize service quality the go.
So as to build new engines of growth and innovate, which our competitive advantages with which to forge strong moat for details longevity.
Speaker Change: Ending at a turning point of industry transformation.
Speaker Change: We won onto the detailed brand, including network partners and careers well work together to maintain aspiration and are confident.
Speaker Change: Sure.
Speaker Change: How does he have strength and ongoing relevance.
Speaker Change: Throughout her comprehensive end to end.
Speaker Change: Capabilities and leadership role with Impulsiveness.
Huiping Yan: We intend to promote healthy competition and growth in the industry, maximize Last Mile Resource Utilization, and synergize common interests, hence creating value for industry participants, investors, and ultimately society. Now, let's hear from our CFO, Ms. Yan, about our financial results and parking.
Speaker Change: We intend to promote healthy competition and grow something industry.
Speaker Change: Maximize last mile resource utilization.
Speaker Change: <unk> common interests, hence creating value for industry participants.
Speaker Change: Turf and ultimately be society.
Huiping Yan: Now, let's hear from our CFO Ms Yan.
Huiping Yan: All of our financial results in pockets.
Huiping Yan: Thank you Chairman Lai and thank you Sophie. Hello to everyone on 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 comparisons. Detailed financial information, including unit economics and cash flow, is posted on our website, and I'll go through some of the highlights here. In the first quarter, while we paid more attention to the quality of services and brand value improvements, we adhered to the principle of profitable growth and achieved a 15.8% increase in adjusted net income to reach $2.2 billion.
Huiping Yan: Thank you Tim the line and thank you Sophie Hello to everyone on the call.
Huiping Yan: As I go through our financials. Please note that unless specifically mentioned all numbers quoted are in RMB and percentage.
Huiping Yan: It's changes referred to year over year comparison.
Huiping Yan: Detailed financial information.
Huiping Yan: You're including unit economics, and cash flow are posted on our website and I'll go through some of the highlights here.
Huiping Yan: In the first quarter, where we paid more attention to quality of services and brand value improvement, we adhered to the principle of profitable growth and achieved a 15, 8% increase in adjusted net income to reach $2 2 billion.
Huiping Yan: Our parcel volume grew 13.9% to $7.2 billion, representing a market share of 19.3%, which decreased 1.9 points compared to the first quarter of last year. However, an increase in the proportional share of lower-priced parcels driven by frequent and deep discounts offered by e-commerce platforms including live streaming and social network retailing that stimulated consumption prompted us to recalibrate effort and resource allocation between volume and profit. We limited the amount of incremental volume incentives for the quarter, and the ASP of our core express delivery business decreased 2.5% or 4 cents, which is well below the volume-weighted average ASP decrease of about 20 cents for the top four Tongda players.
Huiping Yan: So volume grew 13, 9% to $7 2 billion, representing a market share of 19, 3%, which decreased one nine points compared to the first quarter of last year.
Huiping Yan: The increase in the proportional share of lower priced parts, so driven by frequency and deep discounts offered by E Commerce platform, including live streaming and social network retailing that stimulated consumption prompted us to recalibrate effort and resource allocation.
Huiping Yan: Between volume and profit.
Huiping Yan: We limited the amount of incremental volume incentives for the quarter and the ASP of our core express delivery business decreased two 5% or four cents.
Huiping Yan: Which is well below the volume weighted average ASP decrease of about 20.
For the top four turned our players.
Huiping Yan: Our total revenue increased 10.9% to $10.0 billion. Total cost of revenue was $7 billion, which increased 7.7%. Overall unit cost for the core express delivery business decreased 5.3%, or $0.06. Specifically, Lion Hall transportation costs per parcel decreased 7% to $0.47, driven by improved resource utilization and route planning. Unit sorting cost decreased 5.4% to 30 cents thanks to continued standardization in sortation procedures and improved labor and automation productivity.
Huiping Yan: Oh total revenue increased 10, 9%.
Huiping Yan: 10.0 billion.
Huiping Yan: Total cost of revenue was $7 billion, which increased seven 7% overall unit cost for the core express delivery business.
Creased, five 3% or six cents.
Huiping Yan: Specifically the line haul transportation costs per parcel decreased 7% to 47.
Huiping Yan: Driven by improved resource utilization and route planning.
Huiping Yan: Unit sorting cost decreased five 4% to 30.
Huiping Yan: Thanks to continued standardization and sortation procedures and improved labor and automation productivity.
Huiping Yan: Gross profit increased 19% to $3 billion, and the gross profit margin rate increased 2 points to 30.1%. Consistent with gross profit, income from operations increased 16.2% to $2.3 billion, and the associated margin rate grew 1.1 points to 22.8%. SG&A expenses, excluding SBC, as a percentage of revenue, grew 0.1 points to 6%, given a stable and sound corporate cost structure. Operating cash flow was $2 billion, which decreased 25.8% against a high base amount for the first quarter of 2023.
Huiping Yan: Gross profit increased 19% to <unk> 3 billion and gross profit margin rate increased two points to 31%.
Huiping Yan: Consistent with gross profit income from operations increased 16, 2% to $2 3 billion and associated margin rate grew one one points to 22, 8%.
SG&A expenses, excluding SBC as a percentage of revenue grew 0.1, 0.26% given a stable and sound corporate cost structure.
Huiping Yan: Operating cash flow was $2 billion, which decreased 25, 8% against a high base amount for first quarter 2023.
Huiping Yan: In the first quarter of last year, receivables collection increased during the process of K accounts optimization. In addition, KDA accounts for the first quarter of 2024 included newly established headquarter-level platform customers who enjoy longer receivable terms. Our retail parcel volume grew over 40% year over year under the initiatives to increase higher value parcels. Adjusted EBITDA was $3.7 billion. Capital expenditure totaled $1.7 billion, and we anticipated again annual capital expenditure to be below $6 billion.
Huiping Yan: In first quarter last year receivables collection increased during the process of K accounts optimization.
Huiping Yan: In addition.
Huiping Yan: It counts for first quarter of 2024 included newly established headquarter level platform customers, who enjoys longer receivable terms.
Huiping Yan: Our retail parcel volume grew over 40% year over year under the initiatives to increase higher value parcel.
Huiping Yan: Adjusted EBITDA was $3 7 billion capital expenditure totaled $1 7 billion and we anticipated again annual capital expenditure.
To be below $6 billion.
Huiping Yan: Now moving on to our guidance. We estimated the overall industry growth to be around 15-20% for the year, and we reiterate that our parcel volume for 2024 is expected to be in the range of $34.73 billion to $35.64 billion, representing a 15% to 18% increase. We remain committed to our balanced approach for sustainable and profitable growth. We have prioritized improvements in the quality of services and the development of differentiated products and services to enhance brand value and recognition.
Huiping Yan: Now moving on to our guidance we.
Huiping Yan: We estimated the overall industry growth to be around 15% to 20% for the year and we reiterate that our parcel volume for 2024 is expected to be in the range of $34 73 billion to $35 64 billion, representing a 15% to 18% increase.
Huiping Yan: <unk>.
Huiping Yan: We remain committed to our balanced approach for sustainable and profitable growth.
Huiping Yan: We have prioritized improvements in quality of services and development of differentiated product and services to enhance brand value and recognition.
Huiping Yan: Under the near-term market dynamics, we aim to reach our earnings goal and then attain an appropriate level of volume share. The above estimates represent management's current and preliminary view, which are subject to change. Now, this concludes our prepared remarks. Operator, please open the line for questions. Thank you.
Huiping Yan: Under the near term market dynamics, we aim to reach our earnings goal and then obtaining appropriate level of volume share.
Huiping Yan: The above estimates represent management's current and preliminary view, which are subject to change.
Huiping Yan: This concludes our prepared remarks.
Speaker Change: Operator, please open the lines for questions.
Speaker Change: <unk>.
Operator: Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Thank you.
Speaker Change: To ask a question. Please press star one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press stars and two. We ask that you please limit yourself to two questions. At this time, we will pause for a moment to assemble our office. And today's first question comes from Quinly Sun with Morgan Stanley. Please go ahead.
If at any time your question has been addressed.
Speaker Change: Your question. Please press Star then two.
Speaker Change: I ask you please limit yourself to two questions.
At this time, we will pause for a moment to some of our roster.
And today's first question comes from when we saw them with Morgan Stanley. Please go ahead.
Speaker Change: Alright, Thank you operator.
Qianlei Fan: Thank you, Operator. Mr. Lai, Ms. Yan, Sophie, good morning.
Nigel young: Nigel young so it sounds like that's all helpful.
Qianlei Fan: Congratulations on your excellent performance. Thank you for accepting my questions. I have two questions. The first question is, as Mr. Lai just mentioned, in the first quarter of this year, we strategically gave up some losses to pursue better quality growth. I would like to ask, compared to last year's relatively positive market share expansion in the first quarter, why did you make such a strategic decision in the first quarter of this year? Or why did you make such a small strategic change?
Nigel young: Yes.
Nigel young: Yeah, that's yeah.
Nigel young: I think all of that.
Nigel young: Oh, well no one depot in teaching methodology at all.
Qianlei Fan: And I would like to ask, Mr. Lai, how do you judge the progress of future industry integration? The second question is about unit net profit. I am very happy to see that the unit net profit has risen year-on-year. Mr. Yan just mentioned that we may pursue market share again on the basis of the profit goal this year. I would like to ask, if the competition strategy of the competitors is generally stable in the next few quarters, can we judge whether the unit net profit will continue to maintain such an expansion in the next few quarters or not?
Nigel young: Can you admit that you need to do a heightened termination that's all true yeah.
Nigel young: T J telco deal, it's an island.
Qianlei Fan: Thank you for taking my questions, Mr. Lai, Ms. Yan, and Sophie. Congratulations on the very strong earnings growth. I have two questions. The first question is about what Mr. Lai has mentioned.
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Qianlei Fan: In this year, we have strategically given up some loss-making volumes. What has triggered this strategic focus shift? What is your expectation of the industry consolidation dynamics going forward? My second question is about unit profitability. It is encouraging to see unit profit increased year-on-year and quarter-on-quarter. If we assume competition from peers to stay largely unchanged for the rest of the year, is it reasonable to expect unit profit expansion on a year-on-year basis will continue for the rest of the year?
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Qianlei Fan: Thank you.
John: Sounds good.
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Speaker Change: So all things that are let me translate for myself. Thank you for taking my question. So I missed my young and healthy.
Speaker Change: Nations Sounder very strong earnings growth I have two questions. The first question is about what's next and I have mentioned this year, we have strategically given up some loss making bargains.
Speaker Change: What has triggered this that's got to do cultural shifts.
Speaker Change: What's so what's your expectation on the industry consolidation dynamics going forward.
My second question is about our unit profitability it.
Speaker Change: It's encouraging to see our unit profit has increased.
Speaker Change: Here in the quarter on quarter, if we assume hum competition strategy from peers can stay largely unchanged for the rest of the year is it reasonable to expect our unit profit expansion. Yeah. Your basis will continue for the for the rest of the year.
Speaker Change: Yeah.
Speaker Change: Okay.
Meisong Lai: Hello, thank you for your question. The first question is... [inaudible] We have made some structural adjustments to the front and rear, so our internal assessment is still an increase of three hundred percent and an increase of three thousand percent, which is an effective increase in the number of ships. In terms of the situation of the system, it is still within our expectations. (inaudible) The situation in the industry is getting more and more obvious. The situation with Qian Zeyue and Qian Lei is definitely...
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Meisong Lai: . We are confident in the health and stability of China in the future. (inaudible) What's this? Creeping.
Speaker Change: Two of them and they really don't.
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Meisong Lai: We believe that the president will continue to maintain a certain level of profit in the industry.
It's a wonderful tool to us.
Speaker Change: Yeah, but I mean are you sure.
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Meisong Lai: Thank you very much for your question. Readingjusting our focus on all three of our priorities is, in a way, a pressure or challenge to the profitability of all Express delivery businesses. And yet, on the other hand, our goal is to maintain profitable growth. So the strategy shift on one consideration is to avoid unnecessary volume. We increased our retail volume. We increased what we called effective volume to maintain our profit focus. And also, at the same time, for the longer-term view, quality of services is not just certain measurements but more recognition within our consumers' minds as they think about ZTO.
Thank you very much for your question, yes, Indeed, we.
Speaker Change: Readjusted our focus.
Speaker Change: Our focus on all three of our priorities.
Speaker Change: It is.
Speaker Change: The reason for that change is because we wanted to focus more on longer term profitable growth.
Speaker Change: Given the market dynamics as of now specifically as is that if I may supplement that the mix or the structure of the parcels.
Speaker Change: In the marketplace included a greater portion of lower valued items, which in a way is a pressure or challenge to the profitability of all express delivery businesses and yet on the on the other hand, our goal is to maintain profitable growth.
Speaker Change: So the strategy shift.
Speaker Change: One consideration is to avoid unnecessary volume.
Speaker Change: <unk> increased our retail volume, we increased what we called effective volume to maintain our profit forecast.
Speaker Change: And also at the same time for the longer term view quality of services is not just certain measurement.
Speaker Change: But more for recognition within our consumers' mind as.
Speaker Change: Think about GTO differentiated products and services is something that we must and we need to.
Meisong Lai: Differentiated products and services is something that we must and need to develop going forward instead of marginalized competition. On the second part of the question, we will continue to maintain balanced growth. There is a saying in our business that loss-making parcels are avoided, or, strategically speaking, if it's unnecessary, we do not want to take in loss-making parcels. The overall industry growth is continued shifting towards quality and quantity. Our goal is to maintain or improve our professional share on the earning side as well as for future growth.
Speaker Change: Develop going forward going forward instead of the margin.
Speaker Change: Petition.
Speaker Change: On the second part of the question, we will continue to maintain.
Balanced growth.
Speaker Change: There is a saying in our business that.
Speaker Change: Loss, making.
Speaker Change: Parcels are avoided or strategically speaking if it's necessary, we do not want to take in loss, making parcels.
Speaker Change: The overall industry growth is continued shifting towards quality and quantity.
Speaker Change: Our goal is to maintain or improve our proportional share on the earnings side as well for a few.
Speaker Change: Future growth.
Qianlei Fan: Thank you. Thank you, Mr. Lai and Mr. Yan.
Alonso: Thank you. Thank you Alonso handle.
Operator: Thank you. Our next question comes from Lu Weizheng with Haitian Securities. Please go ahead. Hello, Mr. Lai, Mr. Yan, Sophie. I'm Luo Yuezhang, an analyst at Haikang Exchange. Congratulations on your new company.
Speaker Change: Thank you. Our next question comes from Louise.
Speaker Change: Hi, Tony Securities. Please go ahead.
Lu Xu: Hello, Mr. Lai, Mr. Yan, Sophie. I'm Luo Yuejiang, an analyst at Haikang Exchange. Congratulations on the good performance of your company. I'd like to ask the management about two issues related to the shortfall. The first one is the comparison of the company's shortfall in the first quarter. How much has the company improved compared to the same period last year? How does the company view the development prospects of the shortfall market? The second one is that if the shortfall market continues to increase its penetration rate, what are the company's specific measures? What are the measures for the shortfall of freedom and the shortfall of expectations?
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Speaker Change: Thank you Thiago anytime now.
Speaker Change: Sure.
Speaker Change: Good day, ladies and gentlemen.
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Speaker Change: Come back.
Speaker Change: Yeah.
Speaker Change: So can you talk about Google intense attention since you've been pretty close to that.
Speaker Change: Yeah, well it sounds like you had some gains.
Lu Xu: How much has the proportion of individual parcels increased in the first quarter of the company compared to the same period last year? How does the company view the prospects of the individual parcel market? What specific measures does the company take if it wants to increase the penetration rate in the individual platform market, including self-owned and reverse logistics?
Speaker Change: How much.
Speaker Change: Two questions.
Speaker Change: The company compared to the same thing.
Speaker Change: Although the company view the perfect individual parts of the market.
Speaker Change: Specific measures that the company wants to increase.
Speaker Change: Completion rate.
Speaker Change: That is helpful.
Speaker Change: Logistics.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Well, it's yeah.
Meisong Lai: ????? The growth rate is relatively fast, about the same as the growth rate. ?????????????500??, ???????????,???????? So damn, damn bad one time.
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Meisong Lai: We would like to point out that last year, for the first time, we optimized the Modan tool. We mainly released the express delivery men. We sent out a large number of pieces of equipment last year.
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Meisong Lai: [inaudible].......?? Our goal for this year is to... More than 6 million people. Last year we had an average of 3.9 million people.
Speaker Change: So you don't put a good thing so we're hustling.
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Meisong Lai: This is one. In the end, we rely on the experience of the customer and the service to increase the quality of our products.
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Meisong Lai: Thank you very much for your question. First of all, as we mentioned earlier, our first quarter... retail volume grew over 40%. Our daily average as of now is 5 million parcels, of which $3 million is our own, and then the rest, about $2 million, is reverse logistics. One of the key initiatives through which we hope to increase and continue to see results is a way to free up our couriers. We installed certain machinery at our outlet.
Speaker Change: Thank you very much for your question first of all as we mentioned earlier, our first quarter.
Speaker Change: Retail volume grew over 40%.
Speaker Change: Our daily average is now is 5 million parcels.
Speaker Change: And included.
Speaker Change: Which 3 million is our own and then the rest about two 2 million is reverse.
Speaker Change: Logistics.
Speaker Change: One of the key initiatives.
Speaker Change: Through which we hope to increase and continue to see result.
Speaker Change: Is the way to free up our careers.
Speaker Change: We installed.
Certain machinery at our outlet.
Meisong Lai: Once they reach a certain level of daily volume, we require such equipment to be used so as to free up our couriers. Typically, in the past, couriers have to go to their station or go to their outlets to help sort the parcels and then take their own parcels, their own meaning the region that they serve, take those parcels back to conduct delivery services, which is very time-consuming for the first step in order to get those parcels for themselves.
Speaker Change: Once they reach a certain level of daily volume, we require such equipment to be used so as to free up our careers.
Speaker Change: Typically in the past carriers have to go to.
Speaker Change: The their station to go to their outlets to help sortation and then.
Speaker Change: Take their own <unk>.
Speaker Change: <unk> got their own meaning the region that they serve take those parcels back too.
Conduct delivery services, which is very time consuming and for the first step in order to get those parcels for themselves. So windows machinery installed the careers are able to focus around delivery and providing two door services, including <unk>.
Meisong Lai: So with the machinery installed, the couriers are able to focus on delivery and providing two-door services, including pickup as well. This year, we have The goal is to increase our retail volume to 6 million parcels, whereas last year it was less than $4 million.
Speaker Change: Up as well.
Speaker Change: This year, we have.
Speaker Change: Our goal to increase our retail volume two 6 million parcels.
Speaker Change: Last year was less than $4 million.
Speaker Change: Our ultimate goal.
Speaker Change: That is to continue to raise this proportion.
Meisong Lai: Our ultimate goal is to continue to raise this proportion, and through mainly to... initiatives. One is to ensure our couriers receive the front-end pricing benefit so that they can certainly, truly differentiate pickup and delivery fee income. Two, we want to improve the, what we call it, direct linkage, as I described earlier, so that the couriers can spend more time working within a shorter radius in their service area to help improve the quality of services, including on-demand, two-door delivery, and quicker response to pickup so that they can improve retail.
And through E.
Speaker Change: Mainly too.
Speaker Change: <unk> one is to ensure our careers receive the front end.
Speaker Change: Pricing benefit so that they could certainly truly differentiate pickup and delivery.
Speaker Change: Fee income.
Speaker Change: Two we want to improve the.
Speaker Change: The what we call it direct linkage as I described earlier, so that the careers can spend more time working within a shorter radius in their service area to help improve quality of services, including on demand to door delivery and.
Speaker Change: Quicker response to pick up.
Speaker Change: They can improve retail.
Speaker Change: <unk>.
Speaker Change: Ratio.
Okay.
Lu Xu: Okay, thank you, Director Lai and Director Yan, for the clear answers. Thank you. I don't have any more questions.
Speaker Change: Thank you and I don't know until the J E T.
Speaker Change: When we go to college.
Speaker Change: Yeah.
Thank you.
Operator: Thank you. And our next question comes from Ronald Keung with Goldman Sachs. Please go ahead.
Speaker Change: Thank you.
Ronald Keung: So it comes from Ronald Keung with.
Ronald Keung: Goldman Sachs. Please go ahead.
Ronald Keung: Thank you, Mr. Lai, Mr. Yan, and Sophie. I have two questions.
Ronald Keung: Yeah like the only angle in itself.
Well no because you would not be.
Ronald Keung: First, our strategy now is to focus on profit-sharing. We may not be as focused on the short-term market as we used to be. How should we think about the long-term strategy of express delivery for three to five years? Is it better to have two or three smaller players than one bigger delivery company? Or is it better to have two or three smaller players than one bigger delivery company?
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Ronald Keung: What's it done now well, maybe not that much yourself.
Ronald Keung: Yeah.
Ronald Keung: Oh My God, how did you come up both the woman quite a feat.
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Ronald Keung: Hobbled or thought then so that's the guy for you, but you could talk a whole lot of Thunder yet.
Ronald Keung: This is a strategy for the next three to five years. Second, besides the domestic market, do we have any new strategies or ideas for overseas delivery? Thank you, Mr. Lai, Mr. Yan, and Sophie. I have two questions.
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Ronald Keung: On the call.
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Ronald Keung: While I mentioned that.
Ronald Keung: Yeah.
Ronald Keung: Exactly.
Ronald Keung: Thank you.
Ronald Keung: One is to think about the eventual express delivery industry landscape. If we're focusing more on profitability in the near term and less on expanding market share in the near term, what should we think about in the next three to five years? Will China's express delivery industry become more like a 3-4 players at similar scale but consolidating into those 3-4 players? Or will we still expect it to be a one major leading player followed by two to three smaller players in the 2-3-4?
So two questions one has to think about the eventful express delivery industry landscape.
Ronald Keung: If we are focusing more on profitability in the near term, but and less on expanding market share in the near term.
Ronald Keung: Can we think about in the next three to five years will where China's express delivery industry become more like a retail play is that similar scale that consolidate into those people pay us although we still expect it to be a one major leading player followed by two new smaller in the Tech report.
Ronald Keung: So, some thinking and how strategy may evolve over the next three to five years. Second, as the Chinese market matures, how are we in our progress or thinking about expanding beyond China and going global? Any progress there or new strategies?
Ronald Keung: There's some thinking and our strategy.
Ronald Keung: Strategy may evolve.
Ronald Keung: Five years.
Ronald Keung: The China market matures Halloween program, so I'm thinking about expanding beyond China and going global.
Speaker Change: Congrats on your new strategies I think I can thank you.
Speaker Change: So.
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Meisong Lai: So, Thomas Chong, Huiping Yan, Meisong Lai, Sophie Li, Qianlei Fan, Lu Xu, Aaron Luo, Li Chang, ZTO Express. In terms of the three indicators, we have to maintain a balanced development in terms of service quality, scale of business, and profit. Although we have seen a decrease in the business-to-service ratio this quarter, we will continue to work hard this year. The growth of the 15th to 18th presidents is still full of confidence.
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Meisong Lai: We are not... After all, the profit of each ticket is different. So we hope that after a period of time, [inaudible] We have to have a good service chain. This is our constant strategy. As for how many companies there will be in China in the future, or the top one or two, or how big they are, I think it will depend on the future. Our president should do his job well.
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Meisong Lai: [inaudible] I believe that China has an advantage in terms of profit and service quality. I believe that the companies that have these advantages, both in scale and in service quality and in profit, will definitely last longer and longer. The second question is about the international situation. In the past few years, China and the United States have been working together on a wide range of cross-border products. These products include imported tax-exempt oil, household detergents, and export exclusives.
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Meisong Lai: In Southeast Asia, Cambodia, Laos, Burma, Africa, Nigeria, Kenya, Uganda, Egypt, South Africa, and Pakistan, we have been working on local express delivery. The recovery of international business is mainly due to cross-border market price stability, the expansion of new donation line business, the company can further demonstrate the construction of international retail business and physical business, at the same time strictly control costs, cost-effectiveness, and profitability.
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Meisong Lai: Thank you for your question. The first question relates to our strategy and specifically relates to market share. As you know, we always focused on a balanced approach to all three focus areas, meaning quality of services, earnings, and also volume. We still believe our goal of achieving 15% to 18% growth is appropriate given the current market environment. But that doesn't mean we don't want volume.
Speaker Change: Thank you for your question first question relate to our strategy and specifically relates to our market share.
As you know, we always focused on a balanced approach of all three focus area.
Speaker Change: Meaning quantity of services earnings and also volume, we still believe our goal of achieving 15% to 18% growth is appropriate given the current market environment, and where not to say that we don't want volume where only.
Meisong Lai: We're only recalibrating the focus because we think for the longer term, brand recognition among our customers is more important for long-term sustainable volume growth and profitable growth. In addition, the increase in retail volume or hence improvements in our revenue structure will help improve the profitability of outlets and couriers. We believe after a period of time of our initiative to improve their earnings capability will further stabilize our network in preparing for longer-term growth.
Speaker Change: Recalibrating the focus because we think for the longer term the <unk>.
Speaker Change: Rand recognition in our customers is more important for the long term sustainable volume growth and profitable growth.
Speaker Change: The Ah in.
Speaker Change: Additionally, the increase in retail volume core hence improvements in our <unk>.
Revenue structure will help improve the profitability of on it and and careers. We believe after a period of time of our initiatives to improve their earnings capability. It will further stabilize our network.
Speaker Change: And preparing for the longer term growth.
Meisong Lai: In the longer run, we believe we will continue to focus on our own affairs, i.e., at any point in time, we will focus on one. We want quality services. We also seek profitability, and, most importantly, healthy growth depends on our business brand recognition. As a matter of how many are going to remain in the marketplace or what the proportional share taken by each player is not something that we are able to determine go forward and focus.
Longer run we believe we will continue to focus on our own affairs and.
Speaker Change: I E any point in time that we will focus on one we want.
Speaker Change: Quantity of services, we also.
Speaker Change: <unk> profitability and most importantly, the healthy growth depends on our business.
Speaker Change: <unk> recognition.
Speaker Change: As a matter of how many are going to remain in the marketplace or what are the proportional share taken by each players.
Speaker Change: It's not something that we are able to determine right now, but we are short of what we are sure of is our own.
Meisong Lai: We want to continue to enhance and develop growth engines and enhance our competitive advantage. We believe it is those who have scale, quality of services, and profitability that will grow continuously and sustain themselves for a much longer term. The second part of your second question is relating to our international business. Throughout the years, ZTO has formed a rich cross-border product layout with business types including import, bound, direct mail, freight forwarding, warehousing, export, dedicated line, etc. In Southeast Asia, including Cambodia, Laos, Myanmar; in Africa, Nigeria, Kenya, Uganda, Egypt, South Asia, including Pakistan, and some of the other regions have all developed local express services on the ground.
Speaker Change: Go and focus we want to continue to enhance and develop.
Speaker Change: Both engines and enhance our competitive advantage. We believe it is those who are with scale quality of services and profitability.
Speaker Change: It will grow continuously and sustain.
Speaker Change: Much longer term.
Speaker Change: The second part of your second question is relating to our international business.
Speaker Change: Throughout the years <unk> has formed a rich cross border product lay out with business types, including import bounded direct meal freight forwarding warehousing export dedicated line et cetera in South East Asia, including Cambodia Laos.
Myanmar in Africa, Nigeria, Kenya, Uganda, Egypt, South Asia, including Pakistan, and some of the other regions have all developed local express services on the ground there.
Meisong Lai: Given the rebound in international business recently due to standardization and cross-border market prices, the smooth expansion of new specialty line services is some of the things that we are exploring. The company will further attempt to develop international individual and boutique services while strictly controlling cost efficiencies, seeking cost efficiency, so we are expected to further expand that part of our strategy of future growth. Thank you.
Speaker Change: Given the rebound in our international business recently.
Speaker Change: Due to standardization and our cross border market price.
Speaker Change: The smooth expansion of new specialty line services are some of the things that we are exploring the company will further attempt to developed international.
Speaker Change: Individuals and boutique services, while strictly controlling cost.
Speaker Change: Efficient fees.
Speaker Change: Seeking cost efficiencies.
Speaker Change: So that we are expected to further expand that part of our strategy our future growth. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Operator: Thank you. And our next question comes from Xi Zilu with Chonggong Securities. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Question comes from <unk> Securities. Please go ahead.
Xi Zilu: Good morning, Mr. Lai, Mr. Yan, and Sophie. I am a lawyer from Changjiang Zhengquan.
Hum.
Nigel.
Nigel young: So if we thought it was she jumped into the.
Nigel young: Our hope is on track.
Yeah.
Xi Zilu: Thank you very much for your questions. The first question is, what is the biggest concern in the market right now? This is a fast-changing business model that can accelerate and optimize the market. In the past, we have always believed that fast-changing industries would have a positive impact on the economy and would be able to see positive growth.
Nigel young: Either way.
Nigel young: Thank you.
Nigel young: Yes.
Nigel young:
Nigel young: Okay.
Nigel young: Awesome.
Nigel young: Hum.
Nigel young: Thank you.
Nigel young: Mhm.
Nigel young: Yes.
Xi Zilu: Since the beginning of last year, and in the first quarter of this year, it didn't seem to support our judgment. We found that the overall market share of the second-tier companies has increased significantly, and the cost seems to have accelerated. So I would like to ask you, What do you think of the performance of the entire crypto industry? At what time will future market shares be able to see this diversification again?
Nigel young: Thanks, Chris.
Nigel young: Yes.
Nigel young: Bulk which is.
Nigel young: Awesome.
Nigel young: Cool.
Nigel young: Alright.
Nigel young: Hum.
Right.
Nigel young: Alright.
Nigel young: Brian.
Nigel young: Good morning.
Nigel young: Hum Jonathan.
Hi, Jim.
Nigel young: Yeah.
Nigel young: This should help on the aggravation much. Thank you.
Nigel young: Thanks for taking my call.
Xi Zilu: Including whether market share is still a core target for us in the next 5 to 10 years, or whether the quality of services and profits may become our core point in the next phase. This is the first question. Of course, I would like to ask again: How do we understand the bottom line of the company's market share? The second question is about consumer mentality and product upgrading. I don't know how long the company expects to be able to succeed in consumer mentality and product upgrading. And what kind of goals do you want to achieve in the long run in the future?
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Speaker Change: Duncan.
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Jonathan: Hi, Jonathan.
Jonathan: Women to be here.
Jonathan: Oh sure.
Jonathan: Jonathan do you want to blame.
Jonathan: Okay.
Jonathan: Okay cool.
Jonathan: Conditions.
Speaker Change: Got it.
Speaker Change: With more comments on the Blue box.
Speaker Change: Attendance will be Tuesday.
Speaker Change: Uh huh.
Speaker Change: Okay.
Speaker Change: That sounds.
Dave: Thanks, Dave.
Dave: Oh, yes.
Xi Zilu: Let me briefly translate Thank you for giving me this opportunity. Perhaps the most concerning and vital topic in the market right now could be the express delivery industry's structure being optimized. We have always believed that the express delivery industry has economies of steel, and the strong will remain strong in the future. However, the growth rate of package volumes last year and the first quarter of this year do not seem to support this judgment.
Dave: Thank you.
Dave: Okay.
Dave: Question.
Dave: Warehouse and most concerning.
Mike: Mike Please.
Speaker Change: Right now can be explained.
Speaker Change: Delivery English please sure.
Speaker Change: Mines.
We have always believed that.
Speaker Change: The express delivery industry has.
Speaker Change: And as long as we remain strong in the future.
Patrick: Right Patrick.
Speaker Change: And of course this year.
Speaker Change: Do not.
Speaker Change: Seem to be suggesting.
Speaker Change: We found that to be sure.
Speaker Change: Second how are you.
Speaker Change: Please.
Yes.
Hum.
Speaker Change: Sure.
Xi Zilu: We found that the share of second-tier companies has increased significantly, and cost optimization seems to be accelerating. We would like to ask how you view the pattern in your predictions of the express delivery industry and whether market share will still be the core goal in the next five to ten years. The quality of profits is more important than market share in the Pacific. And where is the bottom line of our time? How long does our company expect to achieve consumer awareness and product upgrades? What goals do we want to achieve in the long term? Thank you.
Speaker Change: The extra week.
Speaker Change: Yes.
Speaker Change: The pattern in there.
Speaker Change: Reducing the exports.
Speaker Change: Uh huh.
Speaker Change: Yes.
Speaker Change: With their market share was stupid.
Speaker Change: Next five to 10 years.
ZIP is quality.
Speaker Change: Or more market share.
Speaker Change: Where is the bottom line.
Speaker Change: Please.
Thank you Jim.
Jim Cowan: Second question is how long.
Speaker Change: We expect to achieve them.
Speaker Change: Consumer.
Exactly right.
Speaker Change: Hum.
Speaker Change: We wanted to achieve.
Speaker Change: Long time in the future.
Speaker Change: Sure.
Speaker Change: Thank you.
Meisong Lai: Thank you for your question. The first question is... [inaudible] In fact, to consider whether a business is good or not, you should look at it from three indicators. One is profit; the other is service quality. So yeah... [inaudible] I wish you all a healthy and long-lasting development.
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Speaker Change: Paul.
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Meisong Lai: So, what you just mentioned is... [inaudible] After the ranking, the share price of the company has gone up. However, this indicator alone is not comprehensive. We should look at the quality of the service and the improvement in profitability. So it's very easy to get a share because the price of each house is the same, and the head must have taken more. In fact, some are like the president, which is to take the initiative to give up some low-cost express mail.
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Sue: Hi, Sue.
Sue: Only on a Chuck of it is the total amount of capital.
Sue: She says food users.
Sue: So can you cancel them play out.
So it's been a fun feature.
Sue: Cut Tanja D to quit.
Sue: You saw it.
Sue: If I look at each.
Sue: Got it.
Sue: Sure.
Sue: Uh huh.
Sue: And I kind of it's just who can do so.
Sue: Yeah.
Meisong Lai: [inaudible] This trend is definitely getting more and more obvious. Good service quality, high cost-benefit ratio, and profitable.??,??,?? This is a song question. [inaudible] There are people who are capable, profitable, and well-trained, and their share will definitely increase in the long term. (inaudible) You have to look at three indicators. You can't just look at one indicator. The first question is the ratio of the users. The second question is...
Sue: So, it's just who convinced.
Sue: So close to the.
Sue: If I would say downhole assembly useful.
Sue: Yeah.
Sue: You mean, they need it.
Sue: Sure thing so good so I mean, Pat, namely Charlotte how are you doing.
Sue: Sure.
Sue:
Hi, Richard Lynch.
Sue: Yeah.
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Sue: <unk>.
Sue: All right.
Turning to technical thing.
Sue: Cheaply.
Sue: So the <unk> 90, <unk> 90, 494 will turn out.
Sue: Uh huh.
Jeff: Thank Jeff.
Jeff: Uh huh.
Jeff: Just don't have handle hauck <unk> <unk>.
Jeff: Yeah.
Jeff: To kind of think of spill something one click.
Jeff: B is an attempt.
Ananda: Oh, it's Ananda.
Ananda: Sure.
Ananda: Yeah. So in Q2, so the shrink.
Meisong Lai: The President has been pursuing a positive lead, and we hope that in the future, our consumers, our users, will be the first to think of the President when they send us dollars. We are also disappointed in the future ranking, for example, now. Thank you for watching! We must consider the cost-benefit ratio. Now, the cost-benefit ratio is 9,500 to 1,000. We are very optimistic about the future of China's exports. We have firm confidence.
Ananda: Thanks, though.
Ananda: It's one comment you said a woman.
To ensure the well looks at any share.
Ananda: Yes.
Ananda: Sure why don't I leave that for me.
Ananda: The shelf as well.
Speaker Change: A question for Don.
Speaker Change: <unk> Association of our control.
Speaker Change: Let me assure leila.
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Charles.
Charles: Put some thought to it.
Charles: The operations.
Charles: The woman so should a Sunday nuomi to total Suntrust teach outs you're seeing.
Charles: Quite different.
Charles: Jude will make central a philosophy.
Charles: But what's it out.
Charles: So you need if I my boss as being competitive.
Charles: The telephone she's a woman to digital.
Well I'm going to China, I should say a woman who used it.
Charles: Hudson to women.
Charles: Well, mainly it's a con element.
So how do you the junior.
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Charles: Sure.
Charles: Suddenly ultra Shannon want monthly.
Charles: So first on carnival so for granted.
Charles: So yeah.
Charles: Yeah.
Charles: Well Neal kidney machine.
Meisong Lai: Although China's export market is large, its value has not been fully demonstrated yet. The overall profit level is still very low. As we continue to diversify, let's take a long-term view. The benefits of the whole industry will definitely continue, and there will be a lot of growth. Secondly, we can clearly see that compared to developed countries, [inaudible] If I may choose... In the future, we will use our products to improve the lives of thousands of people, which is a huge achievement. Xie Xie
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Charles: So the thought of what jobs.
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Charles: Sure.
Meisong Lai: Thank you very much for your questions. First, relating to the market share dynamics going forward, it is important to view an express delivery company or any express delivery company on all three aspects, not just on market share. Those three aspects are volume, certainly, profit, and importantly, quality of services. Because we are looking at the express delivery business growth as a marathon, our shift in the focus among all three is specifically for the purpose of longer-term growth. Indeed, our first quarter market share decreased. But we are also looking at the healthy level of our quality of earnings, including the quality of earnings of our network partners. We think...
Charles: Okay.
Charles: Thank you very much for your question.
First relating to an a.
Charles: Market share dynamics going forward.
Charles: It is important to view a express delivery company or any expressed as a company.
Charles: On all three aspects.
Charles: Not just only on market share.
Charles: Those all three aspects are volumes certainly.
Charles: Profit and importantly quality of services, because we are looking at the express delivery business.
Growth is a marathon.
Charles: Our share.
Charles: Shifting in.
Charles: Focus of our I'm all three is specifically for the purpose of all of our longer term growth.
Charles: Indeed, our first quarter market share has decreased.
Charles: But yet we are also looking at a healthy level of our quality of earnings.
Charles: And including the quality of earnings of our network partners.
Charles: Inc.
Xi Zilu: The longevity of a business depends on balanced growth in all these three areas, and Focusing more on our own capability, for much longer future growth, including developing consumers' awareness of our brand and the value recommendation will help us achieve greater market presence with healthier earnings and hence richer products and services. So this goes into the second part of the question. I.. continually leading in the quality of services. We hope in the future that we will become one of the top choices among the players in the industry, including Sunfeng and Jingdong.
Charles: The longevity of our business depends on balanced growth of all these three areas.
Charles: And.
Charles: Focusing more on our own capability.
Charles: Our much longer future growth.
Charles: And including developing consumers' awareness of our brand and.
Charles: And the value recognition will help us.
Charles: We achieved greater market presence.
Charles: Rick.
Rick: Healthier earnings.
And Richard product and services.
Rick: So this goes into the second part of the question.
Rick: We.
Rick: Our <unk>.
Rick: Continually continuously leading in the quality of services.
Rick: Hope in the future that we will become one of the top choices.
Rick: On the players of the industry, including Central and Kingdom.
Xi Zilu: Our goal is to pull apart or pull away from the homogeneous competition, specifically only for pricing among the Tonda players, with our balanced growth in our own business. But that's not to say that we don't want volume. Volume is important, especially for a scaled business model. Our first quarter, including today's daily volume, is between $95 million and $100 million, so that our scale leverage and cost productivity gain will continue to demonstrate. The entire industry, with its current growth, and what we anticipate for the future, which is going more towards quality and quantity together.
Rick: Our goal is to.
Rick: Pull apart or a pull away from the home on genius.
Rick: Competition.
Rick: Specifically only for pricing.
Rick: The <unk> players.
Rick: With our balanced growth in our own business.
Rick: It's not to say that we don't want volume volume is important, especially for a scaled business model, our first quarter and including today's daily volume is between 95 million to 100 million, so that our scale leverage and cost productivity gain.
Rick: We will continue to demonstrate.
Rick: The entire industry with its current growth.
Rick: And what we anticipate for the future.
Rick: Which is going more towards quality and quantity together the profitability will gradually released.
Xi Zilu: The profitability will gradually release. As you know, compared to developed countries, the cost of logistics as a percentage of GDP is still not as efficient as that in developed countries. With our country's focus on going into the factory, going into rural areas, as well as going overseas, there are huge opportunities for comprehensive logistic growth. The express labor industry, with its scale and network resources already in place, under such a development scenario of the future, so we believe we will continue to focus on our own balanced approach and growth, taking shares where we need to and must, will be sustainable growth in the future.
Rick: As you know compared to developed country the GDP.
Rick: Cost of logistics as a GDP.
Rick: <unk> of GDP is still not as efficient as those developed country with our <unk>.
Rick: Increased focus on going into the factory going into rural area as well as going overseas. There are huge opportunities are rare.
Rick: Presented toward.
Rick: Comprehensive logistic growth.
Rick: Especially the industry with its scale and network resources already in place.
Rick: Has huge advantage.
Rick: Under such development.
Rick: Scenario of the future. So we believe we will continue to focus on.
Rick: On our own balance approach and growth.
Rick: Taking shares where we need to and modest.
Rick: But focus more on quality and.
Rick: Quantity together.
We will be a sustainable growth in the future.
Rick: Okay.
Rick: Yeah.
Operator: Thank you, Mr. Lai. Thank you, Mr. Yan. Your answers are very clear. Thank you.
Rick: Oh, excuse me and I don't know.
Rick: C C.
Operator: Thank you. And this concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.
Speaker Change: Thank you and this concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Sophie Li: Thank you again, everybody, for joining today's call, and we look forward to speaking with you offline when you have further questions.
Speaker Change: Thank you again, everybody for joining today's call and we look forward to speak with you offline. When you have further questions.
Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines or have a wonderful day.
Speaker Change: Thank you.
Speaker Change: Today's conference call.
Speaker Change: We thank you all for attending today's presentation.
Speaker Change: Now disconnect your lines have a wonderful day.
Speaker Change: [music].
Operator: Thank you for watching!