Q2 2024 ZTO Express (Cayman) Inc Earnings Call

August 21, 2024

Speaker Change: [music].

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Operator: Good day and welcome to the ZTO Express to announce second quarter and half year 2024 financial results conference call.

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Operator: Good day and welcome to the ZTO Express to announce second quarter and half year 2020 for financial development conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Good day and welcome to the ZTO Express to announce second quarter and half year 2024 Financial Results Conference call.

Operator: Thank you for attending today's presentation.

Speaker Change: Good day and welcome to the V T O express to announce second quarter and half year 'twenty 'twenty four financial conference call.

Operator: All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: All participants will be in a listen only mode.

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

Operator: After today's presentation, there will be an opportunity to ask questions.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask the questions, you may press star and one on your touchtone phones. To withdraw your question, please press star and two. Please note, this event is being recorded.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2.

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

Operator: To ask a question, you may press star then one on your touchtone phone.

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: To withdraw your question. Please press Star then two.

Operator: To withdraw your question, please press star then two.

Operator: Please note, this event is being recorded.

Speaker Change: We felt this event is being recorded.

Sophie Li: I would now like to turn the conference over to Sophie Li, Corporate Secretary and Director of Capital Markets.

Operator: I would now like to turn the conference over to Sophie Li, Corporate Secretary and Director of Capital Markets.

Operator: You may now disconnect.

I would now like to turn the conference over to Sophie Li Corporate Secretary and director of capital markets. Please go ahead.

Operator: Thank you, Betsy.

Operator: Please note this event is being recorded.

Sophie Li: Thank you Betsy.

Operator: Hello, everyone, and thank you for joining us today. The company's results in an investor relations presentation were released earlier today and available on the company's IRR.VTO.com.

Sophie Li: Please go ahead.

Sophie Li: Hello, everyone and thank you for joining us today.

Sophie Li: Resolved.

Sophie Li: Patients.

Sophie Li: Thank you.

Speaker Change: Were released earlier today.

Sophie Li: Yes.

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Operator: I would

Speaker Change: All right.

Speaker Change: Duffy.

Operator: On the call today from the CEO, our Mr. Meisong Lai. Chairman and the Chief Executive Officer, and Ms. Wiking Yen, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights. Followed by Ms. Yen, who are both truly financials and guidance. They will both be available to answer your questions during the Q&A session that follows.

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Speaker Change: Chief Financial Officer.

Speaker Change: Mr. Lai will keep it brief overview.

Speaker Change: Operations and highlights followed by me.

Speaker Change: Those two of the financials and guidance.

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

Operator: I remind you that this call may continue forward, looking statements made under the saved hyperprolations of the Private Security and Litigation Reform Acts of 1995. Such statements are based on management's current expectations and current market and operating conditions, and related investments that involve no one or annoy risk on 30-10 other factors. All of which are difficult to predict, and many of which are beyond the company's control, which may cause the complex actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, with uncertainties and factors, is included in the complex following with the US Security and Exchange Commission.

Speaker Change: I remind you that this call may contain forward looking statements made under the safe Harbor provisions of the private Securities Litigation Reform Act.

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Speaker Change: Such statements are based on management's current expectations and current market and operating conditions.

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Speaker Change: That involved one car online.

Speaker Change: Uncertainties and other facts.

Speaker Change: All of which are difficult to predict many of which are beyond the company's control.

Speaker Change: You may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements.

Speaker Change: Further information regarding this and other.

Speaker Change: Risks uncertainties and factors is included in the company's filings with the U S Securities and Exchange Commission.

Operator: 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 laws.

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

Operator: now like to turn the conference over to Sophie Li, Corporate Secretary and Director of Capital

Sophie Li: It is not my pleasure to introduce Mr. Meisong Lai. Mr. Lai will withdraw his prepared remarks in their entirety in Chinese before I shall sleep, for you in English.

Sophie Li: 謝謝, Hello everyone and thank you for joining us today.

<unk>: It is now my pleasure to introduce Mr. <unk>, Mr. Lai will read through his prepared remarks.

Operator: Markets.

Speaker Change: Chinese before I should sleep booking English.

Meisong Lai: Hello, everyone. Thank you for participating in today's conference. 2020 is your second week.

Sophie Li: Thank you for watching.

Joe: Hi, Joe.

Sophie Li: On the call today from ZTO are Mr. Meisong Lai, Chairman and the Chief Executive Officer of ZTO.

Joey: Thank you Joey.

Joey: Roughly.

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Sophie Li: Meisong Lai, Huiping Yan, Chief Financial Officer, Mr. Lai will give a brief overview of the company's business operations and highlights.

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Sophie Li: Followed by Miki Yan, who are both truly financials and...

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Speaker Change: Okay, Let me translate for chairman.

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

Speaker Change: Hello, everyone and thank you for attending today's conference call in the second quarter of 2024.

Sophie Li: I remind you that this call may contain forward-looking statements made under the safe hyper-provision of the Private Securities Litigation Reform Act of 1998.

Meisong Lai: In the second quarter of 2024, the KEO maintained industry-beating service quality maintenance, and with a repassal border growth at 10 percent a year over a year that reached 8.45 billion. We achieved a gestate mining comm model of 2.81 billion, which increased 11 percent over the last year, demonstrating continued strong profitability. In this second quarter, despite my for economic softness, driven by booming development of e-commerce promotion, online consumption maintenance of China Express, the debris industry increased to 21.3 percent, exceeding expectations. However, the proportion of low-price e-commerce parcels continued to turn up, and price competition further intensified.

Sophie Li: Such statements are based on management's current expectations and current market and operating conditions.

Speaker Change: From an industry leading service quality.

Speaker Change: And the breakdown of our parcel volume growth.

Speaker Change: The year over year that reached $8 45.

Speaker Change: We achieved adjusted net income of $2 81 billion.

Speaker Change: Which increased 11% over last year, demonstrating continued strong profitability.

Speaker Change: Second quarter, despite microeconomic softness.

Speaker Change: Kevin.

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Speaker Change: Promotion.

Speaker Change: Wine consumption relatively high growth.

Speaker Change: First off one of China's express delivery industry increased 21, 3%.

Speaker Change: Exceeding expectation.

Speaker Change: Over the propulsion loci e-commerce.

Speaker Change: As the trend up.

Speaker Change: Price competition further intensified.

Meisong Lai: While prioritizing service quality, the yield continued to six values among service quality, profit, and scale to drive sustainable and healthy development of the entire network.

Speaker Change: Well, our prioritizing service quality.

Speaker Change: Interesting.

Speaker Change: Non profit and scale to drive sustainable and healthy development of the entire network.

Meisong Lai: During the second quarter, upon further elimination of unprofitable volumes, a remarket share contracted by two percentage points compared to the same period last year. At the beginning of this year, across all three of our major matrix, we put greater oversight on quality, while maintaining a scale-adventaged quality level and appropriate level of profit. We directed attention and resources towards upgrading customers next, refining differentiated products and services, and encompassing brand awareness and customer satisfaction. Our last mile's development were implemented in the initiative to explore opportunities to reduce last mile's delivery costs and the inclusive profitability for all its and careers.

Speaker Change: During the second quarter upon further elimination.

Speaker Change: After the call volume.

Speaker Change: Sure contracted by two percentage points compared to the same period last year.

Speaker Change: At the beginning of this year across Australia fiber major metrics.

Sophie Li: Please go ahead.

Speaker Change: Later effort size and quality.

Speaker Change: A scale advantage volume level and appropriate level of profit with directed attention and resources towards upgrading customer next refining differentiated products and services.

Sophie Li: Thank you, Betsy.

Sophie Li: Hello everyone and thank you for joining us today.

Brian: And Brian.

Brian: Brand awareness and customer satisfaction.

Brian: Last mile development rate demand has been initiated.

Amit: For opportunities to reduce last mile delivery costs and improve the profit inherently Amit in Korea.

Meisong Lai: In the second quarter, the yields end-to-end delivery time racked top amount on their peers and customer-complete rate continued to decrease. Meanwhile, with the improved response time and on-demand service capability, the ratio of retail costals was further extended. As the optimization of revenue structure partially alleviated, unit price pressure, driven by price commutations, our ASP was flat, combined with the cost efficiency gain and the reasonable SG and NA structure, both the unit profit and the total profitability remained industry meeting. Entering into the second half of the year, the industry volume kept a strong growth momentum. Meanwhile, despite the intense price competition in the production regions, we observed a limited room for the price cuts given the typical cost of plus pricing model.

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.

Brian: The second quarter.

Brian: And to enter a great time black top among our peers and customer of our company.

Sophie Li: On the call today from ZTO are Mr. Meisong Lai, Chairman and, the Chief Executive Officer and Ms. Huiping Yan, Chief Financial Officer.

Brian: The decrease.

Sophie Li: 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.

Brian: Meanwhile, with improved response time.

Brian: <unk> service capability and ratio of retail parcel with further.

Brian: Yeah.

Brian: As the optimization of revenue structure, partially alleviate pricing pressure driven by competition.

Brian: Our ASP was flat.

Brian: Combined with the cost efficiency and a reasonable SG&A structure.

Brian: The unit profit and the total profitability remains industry leading.

Brian: And to answer the second half of the year, the industrial volume capped a strong growth momentum. Meanwhile.

Brian: The intense price competition in the protection regions, we observed.

Brian: Further price cuts given the typical cost plus pricing model.

Meisong Lai: It's time for the entire express industry to shift from high-quality to high-quality development, thriving to fulfill social viability and serve capital objectives. The details the leadership action to transform from high-quality to high-quality stems from our long-lasting focus on things the best we can and achieve balance among quality, profitability, and scale. Considering the market conditions, we have more effort on increasing rent awareness and reclamation on the premise of achieving scale advantage to produce a both-blow-shuffle process. In addition, we are committed to actively addressing and leads of the network partners and career-specific actions. On our First, we will revamp events and improve network policies to ensure performance, relevancy, transparency, and fairness with clear rewards or recommend effectiveness.

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Speaker Change: It's a high quality development.

Speaker Change: Right into casino, social viability and conserve capital objectives.

Speaker Change: Cts leadership action to transform from high quality to a high quality in depth.

Speaker Change: Lastly, we're focused on being the best we can and achieve balanced among quality profitability and scale.

Speaker Change: Considering the market conditions.

Speaker Change: Accurate.

Speaker Change: Awareness and recognition.

Speaker Change: Achieving scale advantage to volume level.

Speaker Change: Sure.

Speaker Change: In addition, we're committed to accurately adjust age.

Speaker Change: The network partners and carriers.

Speaker Change: Specific actions under implementation.

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First we have them with us and improve network policies to ensure performance relevancy.

Sophie Li: Related Investing Events That Involve No One or Unwanted Persons, on Thursday, June 10.

Speaker Change: And the third is clear with words or recommend effectiveness.

Meisong Lai: Second, we will continuously enhance service quality, which would find indicators closing tied to performance evaluation. Offer tailor-made support and improvements for under-performing outlets to drive high quality as well as differentiated services. Third, we will firmly advance the last-mile profit allocation strategy for multiple careers pro-activeness to increase the retail cost of the ratio and achieve more income. Fourth, we will accelerate the expansion of last-mile profit rates, encourage larger outlets to invest in swimming equipment, establish direct linkage to a last-mile proposed, reducing delivery cost and the freeing of delivery personnel to concentrate on service and last-mile customers.

Speaker Change: Second we will complete our fleet.

Service quality with refining indicator is closely tied to performance translation.

Speaker Change: <unk> tailor made to support an improvement for underperforming to drive high quality as well as differentiated services.

Third we will firstly advance the last now profit allocation strategy.

Speaker Change: Promote careers coax shipments to increase the reach our capital ratio.

Speaker Change: Achieve more income.

Fourth we will accelerate the expansion of last mile footprint.

Speaker Change: Kris.

Speaker Change: Encourage larger outlets to investment.

Kris: Established direct linkage to a laptop post reducing delivery costs and the free delivery now.

Kris: To concentrate on servicing landmark customer.

Meisong Lai: Through a consolidation of resources, we intend to provide solutions to alleviate delivery cost pressure for the whole industry. Fifth, we will further enhance our products and increase the penetration of high-end products, strengthen collaboration with online platforms and leverage details logistic. Ecological resources to expand capability of comprehensive supply chains, improving brand awareness and customer appreciation. Six, the vigilance and the maintenance of crisis-facing market uncertainties and fluctuations. We will increase the effectiveness of communication with our network partners, unifying teams and green force confidence and advocate balance between long-term and short-term interests and any network stability. Despite uncertainty in the micro-use environment, the express delivery industry has demonstrated resilience across economic cycles by offering robust support for the advancement of the digital economy and improving circulation efficiency.

Kris: Through a consolidation of resources, we intend to provide solution alleviate delivery cost pressure for the whole year.

Kris: Thanks.

Kris: We will further enhance our product suite.

Kris: Increase the penetration of high end product.

Kris: Strengthen collaboration with online platform and leverage CEO logistics.

Kris: Ecological resources.

Kris: And capital policy of comprehensive supply chain.

Kris: <unk> brand awareness and customer appreciation.

Kris: Thanks.

Speaker Change: As I mentioned.

Speaker Change: Off price is facing market uncertainties and fluctuations.

Speaker Change: We've got increased effectiveness of communications with our network partners.

Speaker Change: Manufacturing and reinforced confidence and advocate.

Speaker Change: Between long term national account.

Speaker Change: Network stability.

Speaker Change: Despite uncertainties in the micro environment.

Sophie Li: All of which are difficult to.., and many of which are beyond the company.

Cross sell different industry.

Speaker Change: <unk> resilient across economic cycles by offering robust support for the advancement of digital economy, and improving circulation patient.

Meisong Lai: We will see some opportunities in front of challenges, including intensified industry connotations. We will deal with focus on service quality, further thus mouth strategic objective, and enhanced profitability for all its, as well as careers by establishing unique competitive advantages. So as to gradually, establish, appreciate ourselves from the rest of Tonda in brand reclamation and customer satisfaction.

Speaker Change: We will see some opportunities in profit challenges.

Speaker Change: The SEC filings.

Speaker Change: <unk>.

Speaker Change: Thank you all of our focus on service quality.

Speaker Change: Thus, our strategic objectives and enhance profitability for all of us as well.

Speaker Change: Careers by separately.

Speaker Change: Capacity advantages so as to gradually as satisfactorily differentiate ourselves from the rest of tinder in brand recognition and customer satisfaction.

Meisong Lai: Providing more choices for customers and for consumers and customers, with aiming to create value for the country, society, as well as employees and shareholders.

Speaker Change: Providing more choices for customers.

Speaker Change: Consumers and customers.

Operator: Good day and welcome to the ZTO Express to announce second quarter and half year 2020 for Financial Development Conference Call.

Operator: Good day and welcome to the ZTO Express to announce second quarter and half year 2020 for Financial Development Conference Call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: We're aiming to create value for the country society, as well as employee and shareholder.

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

Meisong Lai: Now that's here, farming is here about our financial results and targets.

Speaker Change: Now this year.

Operator: All participants will be in a listen only mode.

Speaker Change: About our financial results and targets.

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 current, market and operating conditions and relate to investments 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 achievement to differ materially from those in the forward looking statements.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Sophie Li: Thank you. Thank you, Tamara and Sophie.

Sophie Li: For further information regarding this and other...

Speaker Change: Thank you.

Speaker Change: Thank you Chairman Lai and Sophie Hello to everyone on the call today.

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

Sophie Li: Risk on Certainties and Factors is included in the company's filings with the U.S. Security and Exchange Commission.

Operator: After today's presentation, there will be an opportunity to ask questions.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask the question, you may press star and one on your touchtone phone. To withdraw your question, please press star and two.

Speaker Change: Go through our financials. Please note that unless specifically mentioned.

Operator: To ask the question, you may press star and one on your touchtone phone. To withdraw your question, please press star and two.

Speaker Change: <unk> quoted are in RMB and finished changes referred to the year over year comparison.

Wiking Yen: Detailed financial, performances, unicornomics, and cash flow information are posted on our website, and I'll only go through some of the highlights here. In the second quarter, we adhered to the principle of profitable growth and achieved a 10.9% increase in adjusted net income to reach 2.8 billion, while continuing to improve the quality of services and brand value. Our parcel volume grew 10.1% to 8.45 billion. We continued to find to resource allocation to achieve optimal balance between volume and profit in the second quarter. ASP for our core Express delivery business stayed flat at 1.24 RMB, as the impact of decline in the average way per parcel and increased in incremental volume incentives were offset by the positive impact of the volume increase in non-ecommerce parcels.

Sophie Li: 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

Huiping Yan: Westaycommittedtoourbalancedapproachtosustainableandprofitablegrowth,prioritizingimprovementsinqualityofservicesanddevelopmentWearereiteratingour2024volumegrowthguidanceof15-18%. Theseestimatesrepresentmanagement'scurrentandpreliminaryview,whicharesubjecttochange.

Meisong Lai: Currently,whilewehaveachieveddirectsettlementprocesswithByteDance,Pinduoduo,aswellasDouwu.

Speaker Change: It held financial.

Norman: Norman says unit economics, and cash flow information are posted on our website and I'll only go through some of the highlights here.

Operator: Please note, this event is being recorded.

Sophie Li: I would now like to turn the conference over to Sophie Li, Corporate Secretary and Director of Capital Markets.

Sophie Li: I would now like to turn the conference over to Sophie Li, Corporate Secretary and Director of Capital Markets. Please go ahead. Thank you, Betsy. Hello, everyone. Thank you for joining us today. The company's results in an investor relations presentation were released earlier today and available on the company's IRR.VTO.com.

Operator: Aftertoday'spresentation,therewillbeanopportunitytoaskquestions.

Speaker Change: In the second quarter, we adhered to the principle of profitable growth and achieved a 10, 9% increase in adjusted net income to reach $2 8 billion, while continuing to improve the quality of services and brand value.

Sophie Li: Please go ahead.

Operator: Toaskaquestion,youmaypressstarthenoneonyourtouchtonephone.

Sophie Li: Thank you, Betsy.

Sophie Li: Hello, everyone.

Sophie Li: Thank you for joining us today.

Sophie Li: The company's results in an investor relations presentation were released earlier today and available on the company's IRR.VTO.com.

Speaker Change: Our parcel volume grew 10, 1% to 845 billion.

Sophie Li: On the call today from the CEO, our Mr. Meisong Lai.

Sophie Li: On the call today from the CEO, our Mr. Meisong Lai. Chairman and the Chief Executive Officer, and Ms. Wiking Yen, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Ms. Yen, who are both truly financial and guidance. They will both be available to answer your questions during the Q&A session that follows.

Speaker Change: We continue to fine tune resource allocation to achieve optimal balance between volume and profit in the second quarter.

Sophie Li: Chairman and the Chief Executive Officer, and Ms. Wiking Yen, Chief Financial Officer.

Operator: Towithdrawyourquestion,pleasepressstarthentwo.

Huiping Yan: Thisconcludesourpreparedremarks.

Operator: Pleasenotethiseventisbeingrecorded.

Operator: Betsy,pleaseopenthelineforquestions.

Meisong Lai: Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Ms.

Speaker Change: ASP for our core express delivery business stayed flat at 124, RMB as the impact of decline in the average weight per parcel and increase in incremental volume incentives were offset by the positive impact of the volume increase in non e-commerce part.

Operator: IwouldnowliketoturntheconferenceovertoSophieLi,CorporateSecretaryandDirectorofCapitalMarkets.

Operator: Thankyou.

Sophie Li: I remind you that this call may continue forward, looking statements made under the saved hyperprolations of the private security and litigation reform acts of 1995. Such statements are based on management's current expectations and current market and operating conditions, and related investments that involve no one or on low risk on 30-10 other factors. All of which are difficult to predict, and many of which are beyond the company's control, which may cause the complex actual results, performance or achievements to differ materially from those in the forward looking statements. Further information regarding this and other risks with uncertainties and factors is included in the complex following with the US Security and Exchange Commission.

Speaker Change: So.

Wiking Yen: Our total revenue increased 10.1% to 10.7 billion. The cost of revenue was 7.1 billion, which increased 10.4%. Overall unit cost for the core Express delivery business increased 0.7% or 1 cent. Specifically, line haul transportation costs per parcel decreased 6.8% to 39 cents, driven by improvements in fleet operations with better resource utilization. Unit sorting costs increased 4.6% to 26 cents due to increased DNA cost on new equipment and facilities. Unit CA cost decreased 4 cents a increased 4 cents in line with CA revenue increased. Gross profit increased 9.6% to 3.6 billion, and gross profit margin rate decreased 0.1 points to 33.8%.

Speaker Change: Our total revenue increased 10, 1% to $10 7 billion.

Stefan: The cost of revenue when Stefan <unk> 1 billion, which increased 10, 4%.

Stefan: Overall unit costs for the core express delivery business.

Stefan: Increased <unk>.

Stefan: 7% or one tank.

Stefan: Specifically line haul transportation costs per parcel decreased six 8% to 39.

Stefan: Driven by improvements in fleet operations with better resource utilization.

Stefan: And it's sorting cost increased four 6% to 26%.

Stefan: Due to increased D&A cost on new equipment and facilities.

Sophie Li: 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 laws.

Stefan: Units K eight comp decreased four cents.

Stefan: Creased for scent in line with K a revenue increase.

Meisong Lai: Yen, who are both truly financial and guidance.

Sophie Li: It is not my pleasure to introduce Mr. Meisong Lai. Mr. Lai will withdraw his prepared remarks in their entirety in Chinese before I should sleep for him in English. Thank you all for participating in today's call.

Stefan: Gross profit increased nine 6% to $3 6 billion and gross profit margin rate decreased one point.

To 33, 8%.

Wiking Yen: Consistent with gross profit, income from operations increased 11.7% to 3.2 billion, and associated margin rate grew 0.4 points to 30%. SG&A expenses excluding SBC as a percentage of revenue grew 0.3 points to 5.5%.

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

Stefan: Consistent with gross profit income from operations increased 11, 7% to $3 2 billion and associated margin rate grew 0.4 points to 30%.

Operator: Pleasegoahead.

Operator: Toaskaquestion,youmaypressstarthen1onyourtouchtonephone.

Sophie Li: Thankyou,Betsy.

Operator: Ifyouareusingaspeakerphone,pleasepickupyourhandsetbeforepressingthekeys.

Stefan: SG&A expenses, excluding SBC as a percentage of revenue grew 0.3 points to five 5%.

Wiking Yen: Corporate cost efficiencies remained intact. Operating cash flow was 3.5 billion, which decreased 7.5% mainly due to dividend tax and increased in financing along to our network partners. Adjustment EBITDA was 4.3 billion and increased of 11.7%. Capital expenditure totaled 1.3 billion for Q2, or 2.9 billion for the first half of the year. With that, we anticipate annual cab bags in 2024 to come in below 6 billion as previously planned.

Stefan: Corporate cost efficiencies remain intact.

Meisong Lai: [inaudible] were cancelled, and the three-part film crew were cancelled, and the three-part film crew were cancelled. 2nd, Shishu Ji-Shen-Fu Zilean, Shihua Gexian-Fu Ziliao, Jiang-Gong-Zhe Da-Chen-Chen-Quan, Yu-Kao, He-Yu-Xiao-Huan-Lin,[inaudible] also a value of China's express delivery industry increased to 21.3 percent, exceeding expectations. However, the proportion of low-price e-commerce proposals continues to turn up and price competition further intensified. While prioritizing service quality, the deal continues to seek value among service quality, profit, and scale to drive sustainable and healthy development of the entire network.

Stefan: Operating cash flow was $3 5 billion, which decreased seven 5%, mainly due to dividend tax and increase in financing along to our network partners.

Stefan: Adjusted EBITDA was $4 3 billion, an increase of 11, 7%.

Stefan: Capital expenditure totaled $1 3 billion for Q2 or $2 9 billion for the first half of the year with that we anticipate annual Capex in 2024 to.

Sophie Li: Mr. Mason Lai.

Stefan: To come in below $6 billion as previously planned.

Wiking Yen: The company has announced an interim cash dividend of US$35 per AES, an ordinary share for the six months ended June 30, 2024, which is a 40% pay-all ratio to holders of its ordinary shares and AES as of the close of business on September 10, 2024. Now moving on to our guidance, we stay committed to our balanced approach to sustainable and profitable growth, prioritizing improvements in quality of services and development of differentiated product services to enhance brand recognition and value. We are reiterating our 2024 volume growth guidance of 15 to 18%. These estimates represent management's current and preliminary view, which are subject to change.

Stefan: The company has announced an interim cash dividend of U S. Dollar 35 cents per eight yes, and ordinary share for the six months ended June 30.

Stefan: 2024, which is a 40% payout ratio to holders of ordinary shares and a T S.

Stefan: As of the close of business on September 10, 2024.

Operator: Ifatanytimeyourquestionhasbeenaddressedandyouwouldliketowithdrawyourquestion,pleasepressstarthen2.

Sophie Li: The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise.

Now moving on to our guidance.

Speaker Change: We stay committed to our balanced approach to sustainable and profitable growth prioritizing improvements and quality of services and development of differentiated products and services to enhance brand recognition and value.

We are reiterating our 2020 for volume growth guidance of 15% to 18%.

Speaker Change: These estimates.

Speaker Change: Present, management's current and preliminary view, which are subject to change.

Wiking Yen: This concludes our prepared remarks.

This concludes our prepared remarks.

Operator: Let's see. Please open the line for questions.

Speaker Change: <unk>. Please open the line for questions. Thank you.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.

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

Speaker Change: I ask a question you May press Star then one on your Touchtone phone.

Speaker Change: If you are 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 star, then two.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: In the interest of time, please limit yourself to one question and one follow-up.

Speaker Change: In the interest of time, please limit yourself to one question and one follow up.

Operator: At this time, we will pause momentarily to assemble our roster.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Ronald Kim: The first question today comes from Ronald Kim with Goldman Sachs.

Speaker Change: The first question today comes from Ronald Keung with Goldman Sachs. Please go ahead.

Ronald Kim: Please go ahead.

Sophie Li: © The Bulletproof Executive 2013, It is now my pleasure to introduce Mr. Meisong Lai.

Speaker Change: Yes.

Speaker Change: Yeah, Hello Drew go ahead, Jim that's you're right that's how it lays out the woman.

Speaker Change: The woman.

Speaker Change: Cool.

Joe: No Joe.

Speaker Change: You should not a woman.

Speaker Change: Also have you been you cheat sheet holiday Barnes <unk> noble.

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Junior: Junior novel sure Schellinger, you future cool.

Speaker Change: From a chemo.

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Ronald Kim: The first question is about 10 points. The second question is about the number of points you can see. The first question is about the number of points you can see. The number of points you can see.

Speaker Change: Do you want to start you cool Shuang Ya.

Sophie Li: Mr. Lai will read through his prepared remarks in their entirety in Chinese.

Speaker Change: Can you tell that to me would you do if you do the trick will be hung up on that if you go from here.

Speaker Change: We caution you that you'll be collecting data.

Speaker Change: Sounds good.

They are to kind of cool.

Got.

Speaker Change: And in Europe.

Speaker Change: Sure.

Meisong Lai: 您好,您拨打的电话已关机, 大家好感謝各位參加今天的電話會議, 2024年2月起度,中通服務質量排名保持行業領先,業務量達到84.5億件,同比增長12% 同時,我們保持了良好的盈利水平,實現了…… 28.1亿元的调整后经历的同比增长11% 二季度在宏觀經濟成壓及電商普遍撤銷的雙重作用下線上消費維持了相對高的增長快遞行業業務量同比增長了21.3% 整體規模超出預期相比之下,低單價電商件的比例將前期進一步加大快遞價格競爭持續激烈中通在重點關注質量提升的同時, 继续追求服务质量、业务规模和盈利三方面的平衡从而维护全网可持续的健康发展二季度,我们继续控制全链路亏损减量制度市場份額較去年同期下降了兩個百分比, 今年年初,我們提出將三大指標中的質量擺在更重要的位置在保持規模業務鏈和合理利潤水平的同時,優化科商機構打造差異化的產品與服務。促成消費者的認知和滿意度在末端發展上,拓展新的思路和賽道,降低派遣成本,提高晚點和夜午的收入水平。二季度中通快遞核心業務的單票收入保持穩定結合持續實現的成本效益及合理的管理費用結構單票利潤和總盈利水平保持在行業領先的水平進入下半年,快遞行業業務量延續了嬌快的增長態勢儘管產量趨越的價格,震盪依然激烈我們相信成本加減法的競價空間已接近底線, 快递行业整体必须真正从高数量走向高质量,从而实现社会价值和满足资本的追求總統從高數量向高質量的率先舉措來自於我們持續尊重自身持續有效平衡服務質量業務規模和盈利水平的三大指標, 面对市场的实际情况,我们将凭借自身的实力提升品牌价值,把握规模份额的底线,实现合理利润。公平公正的做好中心站點和業務員之間的利益分配具體落實的抓捕包括, 一、梳理網絡政策,將政策的導向與各項工作指標有效把鉤,保障網絡政策的普惠和透明,真正做到獎優伐利,兼多樂地。 2.持续提升服务质量,细化各项服务指标,将工作达成情况与考核有效关联,通过分类治理,关注帮扶整改落后晚点,保障高效优质的差异化服务。第三,雜誌推進倒腳倒編工作處理好網點和業務員之間計算的分成兩關這發業務員的內生動力提升散派比例增加業務員收入 4.持续加快莫丹建设,鼓励规模晚点投入分几十倍,实现莫丹执念,降低派遣成本,为业务员专注投地和上门服务提供条件, 整合資源為降低整個行業的派遣成本提供解決方案 5.升級產品機構,提升高端產品服務的滲透力,加深與平台客戶的連接,協同中通物流生態資源,拓展綜合物流供應鏈的能力,打造品牌認知與客戶信心。六,面对市场的变化,保持警惕。警惕性和未知感加强与完整的沟通统一思想坚定信心倡导谈党之利益的合理平衡维护网络稳定, 清廣洪關軍事宏觀環境, 依然存在不確定性但在電商和新零售業態的推動下會計業呈現出了跨越週期的需求韌性為服務線上經濟發展促進產品要素流通提供了有力支撐面對內需強勁和競爭激烈的行業格局我們在挑戰中捕捉機遇, 總統將專注質量先行,側重末端網絡運營策略的調整,為站點和業務員營造優質的營利能力,從而塑造獨特的競爭資源和優勢伴隨行業科學的兩極分化,進一步從通達系中脫穎而出,為消費者和客戶提供更多優質的選擇,提升品牌興致,為社會和國家,為員工和股東創造價值下面我們請嚴總給大家介紹財務結果和預測規劃謝謝, Hello, everyone.

Speaker Change: No.

Speaker Change: And that drove her job, but J P.

Tom: Hi, Tom.

Tom: Got to Dot com.

Diego: Thank you Diego.

Diego: Oh, no I'm sure it cool.

Diego: Temporary that you go out I'm sure.

Diego: Bob could you pick up.

So I'll walk right.

Diego: Doug.

Diego: Wendy.

Diego: The minimum goal.

Speaker Change: Cool cool.

Speaker Change: Cool.

Speaker Change: Alright, great.

Speaker Change: I'll give you two bushel will go down to go.

Speaker Change: Oh I'm not talking about the what you should see operating leverage.

Speaker Change: How are you.

Meisong Lai: Thank you for attending today's conference call.

Speaker Change: Thank you management first is about the possibility of about 10%.

Meisong Lai: ZTO maintained industry-leading service quality.

Meisong Lai: And with our capital growth at 10% year-over-year that reached $8.45 billion, we achieved adjusted net income of $2.81 billion, which increased 11% over last year. Demonstrating continued strong profit.

Meisong Lai: The second quarter, despite microeconomic softness.

Meisong Lai: Driven by booming development of e-commerce promotion, online consumption maintains relatively high growth. Tassel value of China's express delivery industry increased 21.3%.

Speaker Change: Slower than the industry. So as we talked about could be announcements about volume it's not unimportant.

Speaker Change: And so scale leverage so when you hear our guidance the implied second half.

Speaker Change:

Speaker Change: Should we expect some fine tuning up our strategy to maximize the.

Speaker Change: Ill talk about here.

Speaker Change: The ability.

Speaker Change: Good news for the unit profit.

Speaker Change: Stable.

Speaker Change: Underlying unit cost actually has been quite stable with well.

Speaker Change #100: Is there further room to improve operating efficiencies all have been maxed out all of the efficiencies that we've done in the past what can we do to improve the operating leverage.

Ronald Kim: Thank you. In the last half of the year, we are still growing up. But we are still growing up in the lower half of the industry.

Speaker Change: Okay.

Chi Chi: Chi Chi.

Sophie Li: Mr. Lai will read through his prepared remarks in their entirety in Chinese

Chi Chi: Yeah.

Sophie Li: before I translate for him in English.

Chi Chi:

Chi Chi: So you will maintain your southern Union.

Yeah.

Chi Chi: Brenda.

Brenda: Hi, Jeff.

Brenda: Kevin.

Brenda: So it's really nice to see.

Brenda: Chapter 13 2 million.

Brenda: <unk>.

Brenda: Judy.

Speaker Change #103: Oh sure.

Jonathan: The same thing Jonathan is central to the <unk>.

Charlotte: Our main Youll Charlotte.

Charlotte: Yeah.

Speaker Change #105: Great question.

Speaker Change #105: Yes.

Speaker Change #106: So somebody in our hedge funds are women.

Speaker Change #107: It's a good time is slow.

Meisong Lai: 季度市场份额较去年同期下降了2个百分点, 今年年初,我们提出将三大指标中的质量摆在更重要的位置在保持规模业务量和合理利润水平的同时, 优化科商机构打造差异化的产品与服务促成消费者的认知和满意度, 在末端发展上,拓展新的思路和赛道降低派件成本,提高网点和业务员的收入水平, 在二季度,中通全链路时效稳致通达度第一课收率持续降低, 末端上门服务的响应速度和安需服务的能力不断提高逆向闪现的占比进一步提升, 收入结构优化有效地缓解了竞争带来的单票价格压力二季度,中通快递核心业务的单票收入保持稳定, 这和持续实现的成本效益及合理的管理费用结构单票利润和总盈利水平保持在行业领先的水平, 进入下半年,快递行业业务量延续着较快的增长态势尽管产量区别的价格震荡依然激烈, 我们相信成本加减法的竞价空间已接近底线快递行业整体必须真正从高数量走向高质量, 从而实现社会价值和满足资本的追求中通从高数量向高质量的率先举措, 来自于我们持续专注自身持续有效平衡服务质量、业务规模和盈利水平的三大指标, 面对市场的实际情况我们将凭借自身的实力提升品牌价值, 把握规模份额的底线实现合理利润, 公平公正的做好中心站点和业务员之间的利益分配具体落实的抓索包括, 一、梳理网络政策将政策的导向与各项工作指标有效挖钩, 保障网络政策的普惠和透明真正做到讲究法律、监督录地, 二、持续提升服务质量细化各项服务指标, 将工作达成情况与考核有效关联通过分类治理, 关注帮扶整改落后网点保障高效优质的差异化服务, 三、砸车推进、倒脚倒编工作处理好网点和业务员之间, 计算的分层量关系四、激发业务员的内生动力, 提升散派比例增加业务员收入, 五、持续加快莫当建设鼓励规模网点投入分解释费, 实现莫当质量降低派进成本, 为业务员专注投地和上门服务提供条件整合资源, 为降低整个行业的派进成本提供解决方案 5.升級產品機構,提升高端產品服務的滲透力,加深與平台客戶的連接,協同中通物流生態資源,拓展綜合物流供應鏈的能力,打造品牌認知與客戶薪資。第二季期間,隨著繼續削減不可減的價格,市場的分配比去年減少了2%。在今年初,我們所有三個主要的平衡中, We put greater emphasis on quality, while maintaining a scale-advantaged volume level and appropriate level of profit.

Speaker Change #106: Trish.

Meisong Lai: We directed attention and resources towards upgrading customer mix, refining differentiated, products and services, and enhancing brand awareness and customer satisfaction.

Speaker Change #106: But so let's say that.

Meisong Lai: On last-mile development, we implemented new initiatives to explore opportunities to reduce, last-mile delivery costs and improve the profitability for all lists and couriers.

Meisong Lai: In the second quarter, ZTO's end-to-end delivery time racked up among Tongda peers, and the, customer complaint rate continued to decrease.

Meisong Lai: Meanwhile, with the improved response time and on-demand service capability, the ratio, of retail cost was further expanded.

Meisong Lai: As the optimization of revenue structure partially alleviated unit price pressure driven by price, computation, our ASP was flat. Combined with the cost efficiency gain and a reasonable SG&A structure, both the unit, profit and the total profitability remained industry-leading.

Speaker Change #108: The reason.

Meisong Lai: Entering into the second half of the year, the industry volume kept a strong growth momentum. Meanwhile, despite the intense price computation in the production regions, we observed a limited, room for further price cuts given the typical cost-to-plus pricing model.

Speaker Change #106: Hello.

Meisong Lai: It's time for the entire express industry to shift from high-quantity to high-quality, development, striving to fulfill social viability and serve capital objectives.

Meisong Lai: ZTO's leadership action to transform from high-quantity to high-quality stemmed from, our long-lasting focus on being the best we can and achieve balance among quality, profitability, and scale.

Meisong Lai: Considering the market conditions, we will put more effort on enhancing brand awareness, and recognition on the premise of achieving scale advantage to volume-level block-shopping profits.

Speaker Change #106: South Africa.

Meisong Lai: In addition, we are committed to equitably address the interests and needs of the network, partners and careers. Specific actions under implementation include the following. First, we will revamp and improve network policies to ensure performance relevancy, transparency, and fairness with clear rewards or recommend effectiveness. Second, we will continuously enhance service quality with refined indicators closely tied, to performance evaluation, offer tailor-made support and improvements for underperforming outlets to drive high-quality as well as differentiated services.

Meisong Lai: Third, we will firmly advance the last mile profit allocation strategy, promote careers, proactiveness to increase the retail cost ratio and achieve more income.

Speaker Change #106: And then she says somebody in our med <unk> syndrome.

Meisong Lai: Fourth, we will accelerate the expansion of last mile profit.

Meisong Lai: Encourage larger outlets to invest in sorting equipment, Establish direct linkage to a large-small proposed Reducing delivery costs and freeing up delivery personnel to concentrate on servicing large-small customers, Through consolidation of resources, we intend to provide solutions to alleviate delivery cost pressure for the whole industry Fifth, we will further enhance our product mix, increase the penetration of high-end products, strengthen collaboration with online platforms, and leverage ZTO's logistic and ecological resources to expand the capability of comprehensive supply chains, improving brand awareness and customer appreciation Sixth, be vigilant and maintain a sense of crisis-facing market uncertainties and fluctuations, We will increase effectiveness of communication with our network partners, unify thinking, and reinforce confidence and advocate a balance between long-term and short-term interests, maintaining network stability Despite uncertainties in the micro-environment, the express delivery industry has demonstrated resilience across economic cycles by offering robust support for the advancement of digital economy and improving circulation efficiency, We will seize opportunities in front of challenges, including intensified industry competition ZTO will focus on service quality, further large-small strategic objectives, and enhance profitability for outlets as well as couriers by establishing unique competitive advantages, so as to gradually but steadfastly differentiate ourselves from the rest of Tongdae in brand recognition and customer satisfaction, Providing more choices for consumers and customers, we're aiming to create value for the country, society, as well as employees and shareholders

Sophie Li: Now let's hear from Ms. Yan about our financial results and targets

Sophie Li: Thank you.

Huiping Yan: Thank you, Chairman Lai and Sophie.

Good how are you.

Huiping Yan: 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 the year-over-year comparisons, Detailed financial performances, unit economics, and cash flow information are posted on our website, and I'll only go through some of the highlights here In the second quarter, we adhered to the principle of profitable growth and achieved a 10.9% increase in adjusted net income to reach $2.8 billion while continuing to improve the quality of services and brand value, Our parcel volume grew 10.1% to $8.45 billion We continued to fine-tune resource allocation to achieve optimal balance between volume and profit in the second quarter, ASP for our core express delivery business stayed flat at 1.24 RMB as the impact of decline in the average weight per parcel and increase in incremental volume incentives were offset by the positive impact of the volume increase in non-e-commerce parcels.

Speaker Change #106:

Huiping Yan: Our total revenue increased 10.1% to $10.7 billion. The cost of revenue was $7.1 billion which increased 10.4%.

Speaker Change #109: D E.

Huiping Yan: Overall unit cost for the core express delivery business increased 0.7% or 1 cent.

Huiping Yan: Line haul transportation cost per parcel decreased 6.8% to $0.39 driven by improvements in fleet, operations with better resource utilization. Unit sorting cost increased 4.6% to $0.26 due to increased DNA cost on new equipment and facilities.

Speaker Change #106: Yeah.

Huiping Yan: Unit KA cost decreased 4 cents or increased 4 cents in line with KA revenue increase.

Ronald Kim: From the perspective of our future, Japan is a very big country. In the last half of the year, we are growing up in the lower half of the year. In the last half of the year, we are still confident.

Huiping Yan: Gross profit increased 9.6% to $3.6 billion and gross profit margin rate decreased 0.1 points to 33.8%. Consistent, with gross profit income from operations increased 11.7% to $3.2 billion and associated margin rate grew 0.4 points to 30%.

Tom: Tom at this time English sheep.

Huiping Yan: SG&A expenses excluding SBC as a percentage of revenue grew 0.3 points to 5.5%. Corporate cost efficiencies remained intact.

Huiping Yan: Operating cash flow was $3.5, billion which decreased 7.5% mainly due to dividend tax and increase in financing or loans to our network partners.

Huiping Yan: Adjusted EBITDA was $4.3 billion, an increase of 11.7%. Capital expenditure totaled $1.3 billion for Q2 or $2.9 billion for the first half of the year.

Speaker Change #110: Excuse me.

Huiping Yan: With that, we anticipate annual CAPEX in 2024 to come in below $6 billion as previously, planned.

Matt: Hey, Matt.

Huiping Yan: The company has announced an interim cash dividend of U.S. dollar 35 cents per ADS and ordinary share for the sixth month ended June 30, 2024, which is a 40% payout, ratio.

Huiping Yan: Two holders of its ordinary shares and ADS as of the close of business on September 10, 2024.

Speaker Change #112: Michelle shut money as well.

Huiping Yan: Now moving on to our guidance.

Huiping Yan: We stay committed to our balanced approach, to sustainable and profitable growth, prioritizing improvements in quality of services and development, We are reiterating our 2024 volume growth guidance of 15-18%. These estimates represent management's current and preliminary view, which are subject to change.

Speaker Change #112: The woman somebody in there.

Huiping Yan: This concludes our prepared remarks.

Speaker Change #112: <unk>.

Lisa: Thank you Lisa.

Lisa: Yeah, No mishopin units.

Lisa:

Lisa: It is sometimes industry.

Lisa: And some other things.

Lisa: Pending.

Speaker Change #114: That's really just the Shanghai knowing she.

Healy delays on Asia.

Local Romania, sometimes.

Speaker Change #115: <unk> okay.

Speaker Change #116: E D.

Speaker Change #116: You can do the same there too.

Speaker Change #116: Which are creative assumption.

Something.

Speaker Change #116: That's a good one.

Speaker Change #116: We know a timing game.

Speaker Change #118: Yes, Sir.

Speaker Change #118: Google.

Speaker Change #119: Sometimes it is hard to suddenly sort of deal with them.

Speaker Change #118: I've been having it.

Meisong Lai: During the second quarter, upon further elimination of profitable volumes, a vermaki share contracted by two percentage points compared to the previous year. At the beginning of this year, across all three of our major matrix, we put greater effort on quality, while maintaining a scale-adventaged quality level and appropriate level of profit, with directed attention and resources to the worst-upgrading customer, next, refining depreciated products and services, and encompassing brand awareness and customer satisfaction.

Speaker Change #119: Excellent.

Speaker Change #119: Sure.

Speaker Change #119: Peter.

Speaker Change #120: So <unk> so far.

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Speaker Change #122: Women someone unit.

Speaker Change #123: It's a good what we use.

Speaker Change #123: One time elements in there.

Meisong Lai: Our last mile development, where it cemented meme-initiative to explore opportunities to reduce last mile delivery costs, and the inclusive profitability for all this and careers. In the second quarter, leak yields end-to-end delivery time, rest, top amount of up years, and customer-accompanied rate continued to decrease. Meanwhile, with the improved response time and ultimate service capability, the ratio of retail parcels was further expanded. As the optimization of revenue structure partially alleviated, unit price pressure, driven by price commutations, our ASP was flat, combined with the cost-efficient digging and the reasonable SG&L structure, both the unit profit and the total profitability remained industry-meeting.

Speaker Change #123: <unk> mobile.

Speaker Change #123: Portland.

Speaker Change #123: The yieldco in elements of the campaign.

Speaker Change #123: You hear Famulus sandwich emphasis <unk>.

Speaker Change #123: Diesel column to the timing perusal.

Speaker Change #123: Yes.

Speaker Change #124: We're maintaining.

Speaker Change #125: He was a focus on cheap you choose a woman's have pull things together kind of interesting.

Meisong Lai: Thenimprovingthesecondpartisreducingthecostofthelastmile.

Speaker Change #125: So <unk>.

Speaker Change #126: Welcome to the inter Tan Ker assignment.

Speaker Change #126: Thank you.

Meisong Lai: Theinitiatives,therearetwo-fold.

Speaker Change #126: <unk>.

Ronald Kim: This city is under construction. But in recent years, because of the cost of the city, or the cost of the city, it can be reduced to 3.5 million yuan. This city is under construction. It can be reduced to 3.5 million yuan.

Speaker Change #126: So it hasn't been.

Speaker Change #126: <unk> chassis and container.

Kenya.

Speaker Change #126: So the Choctaw.

Speaker Change #126: So Pete.

Speaker Change #126: So good timing.

Speaker Change #126: <unk>.

Speaker Change #126: From Munich.

Speaker Change #126: So the 10 billion youll cleaning usage fee.

Meisong Lai: Entering into the second half of the year, the industry volume kept a strong growth momentum. Meanwhile, despite the intense price competition in the production regions, we observed a limited room for the price cuts given the typical cost-of-plus pricing model.

Speaker Change #128: You hear something.

Can choose some home channel and its own kind of near 30.

Speaker Change #128: <unk> will bring.

Speaker Change #129: In the Shanghai.

Speaker Change #129: <unk> two nuomi.

Meisong Lai: It's time for the entire express industry to shift from high-quality to high-quality development, striving to fulfill social viability and serve capital objectives. The leak yields the leadership action to transform from high-quality to high-quality stem from our long-lasting focus on seeing the best we can, and achieve balance among quality, profitability, and scale. Considering the market conditions would have brought more effort on the company's range of weariness and repination on the premise of achieving scale advantage to follow the both blood health process. In addition, we are committed to accessibility, addressing, and needs of the network partners and careers.

Speaker Change #129: These in turn until it even cleaner box there.

Speaker Change #130: It's gene.

Meisong Lai: Thank you, Ronald, for your question.

Speaker Change #130: Thank you Ron for your question. So let me translate for the Chairman first question.

Meisong Lai: Let me translate for the chairman. First question, indeed, the parcel volume for the total industry has grown and exceeded our expectations. In the second half of the year, we do have the following plan. Our market share decreased 2%. The main reason being that, first, there are a lot more price competition, or a price competition intensified. There are a lot more ineffective, or what we call it, an effective indeed. It is just below the cost. It's price below the cost. So the overall portion of non-profit volume has increased. So what we do is we very effectively controlled such volume coming into our network because we adhered to our strategy that set out in the beginning of the year to focus more on quality of services and, with that, to achieve appropriate level of profit and, in turn, market share.

Indeed.

Speaker Change #130: Parcel volume for it.

Speaker Change #131: Total industry has grown and exceeded our expectations.

Meisong Lai: Thefirstoneisrelatingtothecouriers.

Speaker Change #130: In the <unk>.

Speaker Change #132: Second half of the year.

Speaker Change #132: Do have defined plan.

Yeah.

Speaker Change #133: Our market share decreased 2% mainly.

Speaker Change #133: The main reason being that there.

Speaker Change #133: There are a lot more price competition or price competition intensified and unlock more ineffective or we call. It.

Meisong Lai: Specific actions on our implementation. First, we will revamp events and improve network policies to ensure performance, relevancy, transparency, and fairness with clear rewards or recommend effectiveness. Second, we will continuously enhance service quality, which would find indicators closing tied to performance evaluation. Offer tailor-made support and improvements for under-performing outlets to drive high quality as well as differentiated services. Third, we will firmly advance the last-mile profit allocation strategy for multiple careers pro-activeness to increase the retail cost of the ratio and achieve more income.

Speaker Change #133: In fact, if indeed it is below the cost.

Speaker Change #133: Price below the cost so the overall.

Meisong Lai: However, the proportion of low-priced e-commerce parcels continues to trend up.

Speaker Change #134: Question of nonprofit for.

Meisong Lai: WecallittheDaojiaDaobianpolicyorinitiativeswhichstartedlastyear. Thegoalistoincreasetheincomeofourcouriers. So,earlyoninourremarks,wetalkedaboutallowingthecourierstoachievemarketpricingorgainingthemajorityshareofthemarketpricingistoincentivizethemsothattheyaremotivatedtomakeaspecialtriptogopickup.

Speaker Change #134: Volume has increased so what we do.

Speaker Change #134: <unk>.

Speaker Change #134: Very effectively controlled.

Speaker Change #134: As such volume coming into our network, because we adhered to our strategy set out in the beginning of the year to focus more on quantity of services.

Meisong Lai: Thesecondpartoftheinitiativesrelatestoimprovingtheoutlet'sprofitability.

Meisong Lai: And price competition further intensifies, 我要prioritizing service quality, ZTO continues to seek balance among service quality, profit, and scale to drive sustainable and healthy development of the entire network.

Meisong Lai: During the second quarter, upon further elimination of profitable volunteers, Avermarket share contracted by 2 percentage points compared to the third period last year.

Speaker Change #134: And with that to achieve appropriate level of profit and in.

Speaker Change #134: And in turn market share.

Meisong Lai: If we look at overall perspective, our capacity and the volume are in tune; they are reasonably matched. In the first half of the year, the results that we achieved are out of the range of 15 to 18% guidance for the whole year. Which means that in the second half of the year, we should at least achieve 18% of growth in order to come into the range of our previous guidance. And based on the current conditions and current view of our businesses, we have a higher confidence of achieving such a target. So, more from a theoretical perspective, if we want more volume, we can simply reduce the price.

Speaker Change #134: If we look at in the overall perspective our.

Speaker Change #134: Capacity.

Speaker Change #134: And the volume are in tune.

Speaker Change #134: Reasonably matched.

Meisong Lai: Fourth, we will accelerate the expansion of last-mile profit rates, encourage larger outlets to invest in swimming equipment, establish direct linkage to a last-mile proposed, reducing delivery cost and the freeing of delivery personnel to concentrate on service and last-mile customers. Through consolidation of resources, we intend to provide solutions to alleviate delivery cost pressure for the whole industry. Fifth, we will further enhance our products and increase the penetration of high-end products, strengthen collaboration with online platforms, and leverage details logistic.

Speaker Change #134: In the first half of the year the results that we achieved.

Speaker Change #134: Out of the range of 15% to 18%.

Speaker Change #134: <unk> for the whole year, which means that in the second half of the year, we should at least to achieve 18% of growth in order to come into the range of our previous guidance and based on the current conditions.

Meisong Lai: Lastyear,wehaveaboutcloseto2,000outletsinstalled, ortheyhavetoridetotheoutlettopickupthepackagesthatareboundfortheirdeliveryservicearea. Sowiththeinstallationofthosemachines,theoutletsnolongerrelyonmanualsortation. Sotheridersorthecouriersdonotneedtotraveltotheoutletsanymore. Instead,theywillreceivepackagesdirectlyfromtheoutleteitherthroughautonomousdrivingvehiclesorelectricalvehiclesthatareutilizedbytheoutlettosendthosepackagesdirectlytothecouriers. Sothatthecourierscanworkwithinamuchsmallerandmoreconcentratedservicearearadius,andhenceallowingthemmoretimeandmorefocusonservingtodoorandalsopickupfromthedoor.

Meisong Lai: At the beginning of this year, across all three of our major matrix.., to put greater emphasis on quality, while maintaining a scale-advantaged volume level and appropriate level of profit.

Speaker Change #134: Conditions and current view of our businesses, we have a high confidence of achieving such.

Meisong Lai: We directed attention and resources towards upgrading customer mix, refining differentiated products and services, and Encountering Brand Awareness and Customer Satisfaction.

Speaker Change #134: Target so.

Speaker Change #134: Hmm.

Speaker Change #135: More from a from a theoretical perspective.

Meisong Lai: Ecological resources to expand capability of comprehensive supply chains, improving brand awareness and customer appreciation. Six, the vigilance and the maintain a sense of crisis-facing market uncertainties and fluctuations. We will increase the effectiveness of communication with our network partners, unifying teams, and bring forth confidence and advocate balance between long-term and short-term interests, containing network stability. Despite uncertainty in the micro-use environment, the express delivery industry has demonstrated resilience across economic cycles by offering robust support for the advancement of digital economy and improving circulation efficiency.

Speaker Change #135: More volume and we can simply reduce the price.

Meisong Lai: But we didn't choose to do that again because we wanted to focus on profitable growth while achieving a reasonable match between the capacity and our market share volume gain. We should be able to achieve healthy growth on both. Second half of the year, again, we will continue to focus on improving quality of services, developing differentiated product to achieve reasonable level of profit and volume balance.

Speaker Change #136: We didn't choose to do that again, because we wanted to focus on profitable growth.

Speaker Change #136: While achieving reasonable match between the capacity and.

Speaker Change #136: Our market share volume game.

Speaker Change #136: We should be able to achieve.

Speaker Change #136: Healthy growth on both.

Speaker Change #136: Second half of the year again, we will continue to focus on improving quality of services.

Speaker Change #136: Eloping differentiated product to achieve reasonable level of profit.

Speaker Change #136: And.

Speaker Change #137: Volume got it.

Meisong Lai: Second part of the question.

Speaker Change #138: Second part of the question.

Meisong Lai: Indeed, for the entire industry through all these years of fine tuning of operations and investment of automation and so on and so forth, the unit cost productivity gang has been declining. For us, however, in the first half of the year, we exceeded our goal for cost productivity gang for the year. We have invested for over 26 supersonic centers; there are reserves, ample reserves for capacity release in the future. We do believe that the capacity installed as well as its flexibility in meeting as up to 50% of volume demand; we are still well on track to consistently and gradually release meaningful cost efficiency going forward.

Speaker Change #138: Indeed for the entire industry through all these years of fine tuning of operations and investment of automation and so on so forth.

Meisong Lai: We will see some opportunities in front of challenges including intensifying industry connotations. We will deal with focus on service quality, further last-mile strategic objective, and enhanced profitability for all its, as well as, careers by establishing unique, competitive advantages. So as to gradually, establish, appreciate ourselves from the rest of Tonda in brand reclamation and customer satisfaction. Providing more choices for customers and for consumers and customers, with aiming to create value for the country, society, as well as employees and shareholders.

Speaker Change #138: Unit cost productivity gain.

Speaker Change #138: Gang has been declining.

Speaker Change #139: For us however, in the first half of the year, we exceeded our goal for cost productivity gain for the year.

Speaker Change #139: We have invested.

Speaker Change #139: For over 26 Super sorting centers.

Speaker Change #139: They are our reserves <unk> reserves for our capacity relief.

In in the future.

Speaker Change #139: Do believe that the capacity installed.

Speaker Change #139: As well as.

Speaker Change #139: <unk> in meeting as up to 50% of our.

Meisong Lai: Now that's here, Farming is in about a financial result in target. Thank you. Thank you, Tamara and Sophie.

Speaker Change #139: Volume demand, we are still well on track to consistently and gradually.

Sophie Li: I remind you that this call may continue forward, looking statements made under the saved hyperprolations of the private security and litigation reform acts of 1995.

Wiking Yen: Hello to everyone on the call. As I go through of financials, please note that, unless specifically mentioned, all numbers quoted are in R&B and percentage changes refer to the year of year comparison. Detailed Financial, Performances, Units, Economics, and Cash Flow Information are posted on our website and I'll only go through some of the highlights here.

Speaker Change #139: Really meaningful.

Speaker Change #139: Cost efficiency.

Speaker Change #139: Going forward.

Speaker Change #139: Then for the unit.

Meisong Lai: For the unit profitability based on the overall capacity as well as the reserve, we think that the strategy being consistently carried out, there will be stability in our profit growth on a total level as well as unit level.

Speaker Change #139: Profitability.

Speaker Change #139: Just on the overall capacity as well as the reserve, we think that the strategy being consistently carried out.

Operator: Intheinterestoftime,pleaselimityourselftoonequestionandonefollow-up.

Meisong Lai: Anotheraspectofthissecondinitiativerelatestotheoutlet. WithsendingthepackagesdirectlytothecouriersaswellassendingthepackagesdirectlytoLastMilePOST,theoutletownersareabletoreducetheirdeliverycost. Forexample,inthepast,eachpackageonaveragewouldcosttheoutletabout$0.80forthecourierstodeliver. NowcourierswouldthenputpartoftheirpackagesintothePOSTwhichwillsharetheir$0.40.

Sophie Li: Helloeveryoneandthankyouforjoiningustoday.

Operator: Atthistime,wewillpausemomentarilytoassembleourroster.

Meisong Lai: Outofthat$0.80willgotothePOST.

Speaker Change #139: They will be stability in our profit growth.

Wiking Yen: In the second quarter, we adhered to the principle of profitable growth and achieved a 10.9% increase in adjusted net income to reach 2.8 billion while continuing to improve the quality of services and brand value. Our parcel volume grew 10.1% to 8.45 billion. We continued to find to resource allocation to achieve optimal balance between volume and profit in the second quarter. ASP for our core Express delivery business stayed flat at 1.24 RMB as the impact of decline in the average way per parcel and increase in incremental volume incentives were offset by the positive impact of the volume increase in non-ecommerce parcels.

Speaker Change #139: On a total level as well as unit level.

Okay.

Speaker Change #139: Yeah.

Speaker Change #139: Okay.

Qianlei Fan: The next question comes from Q&A fan with Morgan Stanley. The second question is related to Japan. Let me translate to myself; congratulations on the very resilient profit growth in the same quarter.

Operator: Betsy, please open the line for questions.

Speaker Change #139: The next question comes from Chi Tsang with Morgan Stanley. Please go ahead.

Operator: Thank you.

Speaker Change #139: Okay.

Speaker Change #140: Well, thank you operator.

Operator: To ask a question, you may press star then 1 on your touchtone phone. If you are 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 star then 2.

Why don't you handle choppy.

Speaker Change #141: Given all that you want to tell them Oh go ahead.

Nathan: Yes Nathan.

Nathan: Talks are well known that that's that one.

Nathan: Hum.

Nathan: Okay.

Nathan: Sure.

Speaker Change #143: Our retail parcel are on track to double yeah, Yeah, No no phone calls Oh, my God, They tell parcel at all and Oh.

Wiking Yen: Our total revenue increased 10.1% to 10.7 billion. The cost of revenue was 7.1 billion which increased 10.4% overall unit cost for the core Express delivery business increased 0.7% or 1 cent. Specifically, line haul transportation costs per parcel decreased 6.8% to 39 cents driven by improvements in fleet operations with better resource utilization. Unit sorting costs increased 4.6% to 26 cents due to increased DNA cost on new equipment and facilities. Unit CA cost decreased 4 cents a increased 4 cents in line with CA revenue increased.

Nathan: Oh yeah.

Speaker Change #144: Volume W E T.

Speaker Change #145: Any other targets.

Speaker Change #146: Cleveland Gela, yet all of them are sometimes yes, yeah go once you shouldn't Guang Ah.

Speaker Change #146: But oh, yeah, Youll, Ken Doll gene control colonial life quite yet again as Jim Jones.

Sophie Li: Thecompany'sresultsandinvestorrelationspresentationwerereleasedearliertodayandareavailableonthecompany'sIRwebsiteatir.zto.com.

Meisong Lai: Withthatinitiativethatweimplemented,thedirectlinkagebetweenoutletandthePOSTwouldallowagreaterportion,closeto60%or40%ofthepackagesgoingtothePOSTdirectly.

Sophie Li: OnthecalltodayfromZTOareMr.

Meisong Lai: Sothentheoutletdoesnotneedtopaythewhole$0.80.

Speaker Change #146: Oh, well Mitchell Ghansham.

Speaker Change #147: I'm kind of going daughter, yeah, we like them a lot more.

Sophie Li: MeisongLai,ChairmanandtheChiefExecutiveOfficerandMs.

Speaker Change #147: It sounds like you don't you gentlemen, John Caldwell Diamond Jumbo Oh go ahead sorry.

Speaker Change #147: Right.

Speaker Change #147: King.

Sophie Li: HuipingYan,ChiefFinancialOfficer.

Meisong Lai: Soweestimatedandwecalculatedofthat$0.40becauseitstillneedstobesenttothePOST.

Speaker Change #147: Right.

Speaker Change #147: Well no the people Gamble Shang Guang jumbo.

Speaker Change #148: Okay cool.

Speaker Change #149: Just broadly each one.

Speaker Change #149: But don't be Belk home gender.

Sophie Li: Mr. Laiwillgiveabriefoverviewofthecompany'sbusinessoperationsandhighlightsfollowedbyMs.

Meisong Lai: Theoutletownerswouldpayonaveragebetween$0.10to$0.20toachievethatdirectdeliverytothePOST.

Wiking Yen: Gross profit increased 9.6% to 3.6 billion and gross profit margin rate decreased 0.1 points to 33.8%. Consistent with gross profit income from operations increased 11.7% to 3.2 billion and associated margin rate grew 0.4 points to 30%. SGNA expenses excluding SPC as a percentage of revenue grew 0.3 points to 5.5%. Corporate cost efficiencies remained intact. Operating cash flow was 3.5 billion which decreased 7.5% mainly due to dividend tax and increased in financing along to our network partners.

Speaker Change #149: Yeah.

Speaker Change #150: Let me translate for myself congratulations on the very prolific wells in the second quarter.

Qianlei Fan: I have two questions. This is question is about the retail process in announcement company mentioned that we are on track to double our retail possible volume. And would you please remind us our current daily retail possible volume, the percentage of the retail volume in our total volume. Our target for this year and probably the target to achieve for the next few years.

Speaker Change #151: I have two questions. The first question is about the retail puzzle.

Operator: In the interest of time, please limit yourself to one question and one follow-up.

Operator: At this time, we will pause momentarily to assemble our roster.

Speaker Change #151: Those men company.

Mentioned that so we are on track to double our retail parcel volume and Ah would you. Please remind us our current daily retail parcel volume percentage Oh.

Speaker Change #153: Hopefully talking about volume.

Speaker Change #154: The total volume.

Speaker Change #154: Target for this year and probably the target to achieve for the next few years.

Meisong Lai: 謝謝您的提問我們今年上半年行業份額下降了兩個底, 主要原因是價格上競爭比以往要激烈無效快遞低於成本價的快遞在行業當中份額提升, 我們有效地控制虧本快遣的業務量所以上半年還是按照我們制定的戰略思路去推行, 把服務質量擺在更重要的位置合理的利潤, 然後適當的份額我們的份額其實上半年我們還是增長, 但是跟行業增長低於行業的增長, 從我們的產能來講基本是合理的, 就是能買那下半年, 我們上半年的增長是低於我們直營的那意味著我們直營沒變, 那我們下半年的增長肯定要高於上半年的增長那到底就是要18%的增長才能夠做到, 我們下半年是12% 那差不多就是要做到18%以上的增長, 那我們還是有信心的那至於這個平衡的問題, 因為理論上來講如果我們也可以拿到上半年可以拿到更多的份額, 但是你肯定要更多的份額就是無效快遞的佔比會上升, 這個我們認為產能跟份額要在合理之間如果因為中通還是超雙位數的業務量, 它跟產能還是比較匹配的所以下半年我們還會做好, 在保證服務增量的前提下平衡好業務量增長跟利潤的關係, 第二個問題成本下降的空間確實這幾年整個快遞業, 通過產能的建設通過工具的優化, 確實整個行業成本下降都非常好那我們上半年其實我們也是完成了, 我們制定的成本下降的目標有可能我們這個成本, 好像有些方面的成本下降不是太明顯比如說我們這個產能投入, 我們在去年我們產能投入26個分佈中心也就是我們在部分區域的產能是剩的, 所以在未來幾年如果拉長來看這個成本是有下降空間的, 但是在今年因為廠房多, 或者是設備投入產能還可以擴張50% 這個方面這個成本有可能, 有些趨越有些上升, 根據中通全網的綜合能力和實力以及我們轉運的效能, 有理由相信我們的利潤和單票的利潤, 會保持在穩定的合理之間謝謝, 或價格競爭激增有很多的不利, 我們稱之為不利事實上價格下降, 所以整體的不利的部分量增長了我們非常有效地控制, 這樣的量進入我們的網絡, Second part of the question, indeed for the entire industry through all these years of fine-tuning of operations and investment of automation and so on and so forth, the unit cost productivity gain has been declining.

Qianlei Fan: The same question is about cost reduction. We understand that the competition of express delivery business is not only about cost reduction at the line call, but also about cost reduction at home network, especially at network partners and last mile. So if you help us to better understand our initiatives to help the network and last mile to reduce cost and potential cost in the next few years.

Speaker Change #155: The second question is about cost reduction.

Speaker Change #156: We understand that the competition of express delivery business.

Speaker Change #156: Uh huh.

Meisong Lai: On last mile development, we implemented new initiatives to explore opportunities to reduce last mile delivery costs and improve the profitability for outlets and couriers.

It's not it's not only about cost reduction.

Meisong Lai: In the second quarter, ZTO's end-to-end delivery time racked up a mountain of appeals and the customer complaint rate, Meanwhile, with the improved response time and on-demand service capabilities, The ratio of retail cost was further extended, as the optimization of revenue structure partially alleviated in the price pressure driven by price competition.

Meisong Lai: 我们的AFP在插线, Combined with the cost-efficiency gain and a reasonable SG&A structure, both the unit profit and the total profitability remained industry-leading.

Wiking Yen: Adjustment EBITDA was 4.3 billion and increased of 11.7%. Capital expenditure totaled 1.3 billion for Q2 or 2.9 billion for the first half of the year. With that we anticipate annual catbacks in 2024 to come in below 6 billion as previously planned.

Speaker Change #156: The line called but also about cost reduction at the whole network, especially at the network partners and last mile. So to help us too.

Speaker Change #156: Better understand our initiatives to help them network and last mile to reduce cost.

Speaker Change #156: And a potential cost.

Speaker Change #158: It's complex.

Speaker Change #158: In the next few years. Thank you.

Wiking Yen: The company has announced an interim cash dividend of US$35 per AES, an ordinary share for the six month ended June 30, 2024, which is a 40% pay-all ratio to holders of its ordinary shares and AES as of the close of business on September 10, 2024. Now moving on to our guidance, we stay committed to our balanced approach to sustainable and profitable growth, prioritizing improvements in quality of services and development of differentiated product services to enhance brand recognition and value. We are reiterating our 2024 volume growth guidance of 15 to 18%. These estimates represent management's current and preliminary view, which are subject to change.

Meisong Lai: Thank you. Thank you for your question.

Speaker Change #158: Sure.

Meisong Lai: In the end of your question, actually, it's just a communication.

Speaker Change #159: You did say that.

Speaker Change #159: Sure.

Speaker Change #160: Uh huh.

Meisong Lai: It's right now that I'm going to be doing this for the future. The first thing is that in our recent years, we've been working together to create a better position. In the end, we've been working together to create a better position.

Speaker Change #160: That's all.

Speaker Change #160: Yes.

Speaker Change #161: Got it.

Speaker Change #161: Do you guys use.

We continue in this city.

Speaker Change #161: Yeah.

Speaker Change #161: But instead of thinking of it.

Speaker Change #161: Luis.

Speaker Change #162: Jews Saint Jacques <unk>.

Sophie Li: Such statements are based on management's current expectations and current market and operating conditions, and related investments that involve no one or on low risk on 30-10 other factors. All of which are difficult to predict, and many of which are beyond the company's control, which may cause the complex actual results, performance or achievements to differ materially from those in the forward looking statements.

Speaker Change #161: Cool.

Speaker Change #161: Some mainland suite.

Speaker Change #163: Do you still live in EMEA.

Meisong Lai: For us, however, in the first half of the year, we exceeded our goal for cost productivity gain for the year.

Meisong Lai: We have invested for over 26 super sorting centers.

There were minimal.

Meisong Lai: There are reserves, ample reserves for capacity release in the, future. We do believe that the capacity installed as well as its flexibility in meeting as up to 50% of volume demand, we are still well on track to consistently and gradually release meaningful cost efficiency going forward.

Meisong Lai: Then for the unit profitability, based on the overall capacity as well as the reserve, we think that the strategy being consistently carried out, there will be stability in our profit growth on a total level as well as unit level.

Meisong Lai: Entering into the second half of the year, the industry volume kept a strong growth momentum.

Speaker Change #164: Chimpanzee and she says.

Meisong Lai: MING PAO CANADA // MING PAO TORONTO, Despite the intense price competition in the production regions, we observed a limited room for further price cuts given the typical cost-plus pricing model.

Meisong Lai: It is time for the entire express industry to shift from high-quantity to high-quality development, striving to fulfill social viability and serve capital objectives.

Speaker Change #164: <unk>.

Meisong Lai: ZTO's leadership action to transform from high-quality to high-quantity stemmed from our long-lasting focus on being the best in the world.

Meisong Lai: Considering the market conditions, we will put more effort on increasing brand awareness and recognition on the premise of achieving scale-advantaged, quality-level, blood-sugar-free, and low-carbohydrate foods.

Yes.

Meisong Lai: In addition, we are committed to accessibly address, Specific actions under implementation.

Speaker Change #164: Okay.

Meisong Lai: First, we will revamp and improve network policies to ensure performance relevance.

Sophie Li: Thank you for watching.

Sophie Li: Yanwhowillgothroughthefinancialsandguidance.

Meisong Lai: 謝謝您的提問我們今年上半年行業份額下降了兩個底主要原因是價格上競爭比以往要激烈無效快遞低於成本價的快遞在行業當中份額提升我們有效地控制虧本快遣的業務量所以上半年還是按照我們制定的戰略思路去推行把服務質量擺在更重要的位置合理的利潤然後適當的份額我們的份額其實上半年我們還是增長但是跟行業增長低於行業的增長從我們的產能來講基本是合理的就是能買那下半年我們上半年的增長是低於我們直營的那意味著我們直營沒變那我們下半年的增長肯定要高於上半年的增長那到底就是要18%的增長才能夠做到我們下半年是12%那差不多就是要做到18%以上的增長那我們還是有信心的那至於這個平衡的問題因為理論上來講如果我們也可以拿到上半年可以拿到更多的份額但是你肯定要更多的份額就是無效快遞的佔比會上升這個我們認為產能跟份額要在合理之間如果因為中通還是超雙位數的業務量它跟產能還是比較匹配的所以下半年我們還會做好在保證服務增量的前提下平衡好業務量增長跟利潤的關係第二個問題成本下降的空間確實這幾年整個快遞業通過產能的建設通過工具的優化確實整個行業成本下降都非常好那我們上半年其實我們也是完成了我們制定的成本下降的目標有可能我們這個成本好像有些方面的成本下降不是太明顯比如說我們這個產能投入我們在去年我們產能投入26個分佈中心也就是我們在部分區域的產能是剩的所以在未來幾年如果拉長來看這個成本是有下降空間的但是在今年因為廠房多或者是設備投入產能還可以擴張50%這個方面這個成本有可能有些趨越有些上升根據中通全網的綜合能力和實力以及我們轉運的效能有理由相信我們的利潤和單票的利潤會保持在穩定的合理之間謝謝或價格競爭激增有很多的不利我們稱之為不利事實上價格下降所以整體的不利的部分量增長了我們非常有效地控制這樣的量進入我們的網絡Secondpartofthequestion,indeedfortheentireindustrythroughalltheseyearsoffine-tuningofoperationsandinvestmentofautomationandsoonandsoforth,theunitcostproductivitygainhasbeendeclining.

Speaker Change #165: So cheap.

Sophie Li: Second, we will continuously improve in-house service quality with refined indicators closely tied to... Offer tailor-made support and, for underperforming outlets to drive high-quality as well as differentiated, Third, we will firmly advance the Last Mile Profit Allocation Strategy, to increase the retail cost of the rations and achieve more income.

Speaker Change #164: No.

Sophie Li: Further information regarding this and other risks with uncertainties and factors is included in the complex following with the US Security and Exchange Commission.

Operator: The next question comes from Qianlei Fan with Morgan Stanley.

Yeah.

Speaker Change #164: She says.

Speaker Change #164: Davidson.

Speaker Change #164: That's all.

Sophie Li: 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 laws.

Speaker Change #164: Sure.

Speaker Change #164: Yes.

Speaker Change #164: Yeah.

Speaker Change #164: Okay.

Operator: Please go ahead.

Speaker Change #164: You kind of gotten ship.

Sophie Li: It is not my pleasure to introduce Mr. Meisong Lai.

Wiking Yen: This concludes our prepared remarks. Let's see. Please open the line for questions. Thank you.

Speaker Change #164: Yes.

Sophie Li: Mr. Lai will withdraw his prepared remarks in their entirety in Chinese before I should sleep for him in English.

Speaker Change #164: Sure.

Sophie Li: Thank you all for participating in today's call.

Speaker Change #164: Because it's all about.

Qianlei Fan: Thank you, operator.

Sunshine: Sunshine and she is a woman she said.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handsets before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. In the interest of time, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster.

Sunshine: So I lost all that challenge is.

Speaker Change #167: I'll jump off.

Speaker Change #167: I used to the Chuck just not having the same for me.

Sophie Li: TheywillbothbeavailabletoansweryourquestionsduringtheQ&Asessionthatfollows.

She got him in that.

Speaker Change #167: That agenda.

Sophie Li: IremindyouthatthiscallmaycontainforwardlookingstatementsmadeunderthesafeharborprovisionsofthePrivateSecuritiesLitigationReformActof1995. Suchstatementsarebasedonmanagement'scurrentexpectationsandcurrentmarketandoperatingconditionsandrelatetoinvestmentsthatinvolveknownorunknownrisks,uncertaintiesandotherfactors,allofwhicharedifficulttopredictandmanyofwhicharebeyondthecompany'scontrol,whichmaycausethecompany'sactualresults,performanceorachievementtodiffermateriallyfromthoseintheforwardlookingstatements.

Speaker Change #167: Great.

Speaker Change #167: Yeah.

Speaker Change #167: Some tonnage right. It's good he does E G.

Speaker Change #168: Yeah going through the paper she sent shortly.

Speaker Change #168: One of them and teach agenda.

Speaker Change #168: Yes.

Speaker Change #168: Patient chocolate Chunghwa shelf, Google shopping to the East Houston, California and she.

Ronald Kim: The first question today comes from Ronald Kim with Goldman Sachs. Please go ahead.

Speaker Change #168: Decided at home she Stifel Bunny.

Speaker Change #168: So they have on each also.

Speaker Change #168: Chunky carefully.

Meisong Lai: [inaudible] were cancelled, and the three-part film crew were cancelled, and the three-part film crew were cancelled.

Unnamed: [inaudible] The second question is, how can we solve the problem of climate change?

Jeff: This is Jeff.

Jeff: Quint Turner, that's what legal chopper, some people pay too much.

Jan: Jan will then cause.

Jan: Yeah. So look you can go through a school bus units.

Speaker Change #171: Uh huh.

Speaker Change #171: Yeah.

Speaker Change #171: See you soon.

Speaker Change #171: Yeah.

Speaker Change #171: Janet see what this thing.

Speaker Change #171: For Ya.

Speaker Change #171: And so those two things.

Speaker Change #171: Yeah.

Speaker Change #171: Sure.

Speaker Change #171: Gentlemen.

Speaker Change #171: That's perfect.

Unnamed: Let's move on to the next question. The second question is, how can we solve the problem of climate change?

Speaker Change #171:

Speaker Change #171: Let me say either jump.

Speaker Change #171: Joe.

Speaker Change #171: Mental Chilean Testament too.

Speaker Change #171: So it should be cheap lumpier.

Speaker Change #172: One thing in their niches.

Speaker Change #173: Oh man.

Speaker Change #174: Pocket I'm with you there in Chile, So you don't want to cheat Charlotte.

Speaker Change #174: It's a big country, so to fend off somewhat.

Speaker Change #174: So what I'm going to use.

Speaker Change #174: Sure.

Speaker Change #174: What I'm, saying in it.

Speaker Change #174: Good.

Speaker Change #174:

Ghansham: Sure Ghansham.

Ghansham: She did.

Speaker Change #176: Diesel chassis.

Meisong Lai: 2nd, Shishu Ji-Shen-Fu Zilean, Shihua Gexian-Fu Ziliao, Jiang-Gong-Zhe Da-Chen-Chen-Quan, Yu-Kao, He-Yu-Xiao-Huan-Lin,[inaudible] also a value of China's express delivery industry increased to 21.3 percent, exceeding expectations.

Meisong Lai: [inaudible][inaudible] Thank you Thank you Thank you Thank you Thank you[inaudible] the last Hanye, the last Hanye,[inaudible] the city is low, the cost of the city is low, the cost of the city is low,[inaudible] In the first half of the year, the results that we achieved is out of the range of 15 to 18% guidance for the whole year, which means that in the second half of the year, we should at least achieve 18% of growth in order to come into the range of our previous guidance And based on the current conditions and current view of our businesses, we have higher confidence of achieving such a target, so more from a theoretical perspective, if we want more volume, we can simply reduce the price, but we didn't choose to do that, again, because we wanted to focus on profitable growth, while achieving reasonable match between the capacity and our market share volume gain, we didn't choose to do that, again, because we wanted to focus on profitable growth, while achieving reasonable match between the capacity and our market share volume gain. We should be able to achieve healthy growth on both.

Speaker Change #176: True.

Speaker Change #176: Yeah.

Speaker Change #176: 10 year paper on this quickly.

Speaker Change #176: Just goldfish and Panama.

Meisong Lai: In the past few years, we saw that the three-way train station would be taken to the station. Now, at the time, the station was sent to the Muodan Gate. And then, in the evening, the gate was closed. The gate was closed.

Speaker Change #176: Well not crazy shelf goods should Indian filing, but frankly on our team.

Speaker Change #177: The machines animals.

Speaker Change #177: So.

Speaker Change #177: What I meant in <unk>.

Speaker Change #178: Oh, yeah okay.

Speaker Change #178: So good mentality, but she couldn't overcome.

Speaker Change #178: <unk> yeah.

Tammy: So yoga Tammy.

Tammy: Bunching sudden shut them down.

Tammy: The mechanical car to somebody disposal.

Tammy: <unk> you.

Tammy: Uh huh.

Tammy: Going to the field.

Tammy: Hum.

Thank you.

Speaker Change #180: Patches have been Chechen attributed to Coachella manga Union.

Speaker Change #181: How much into Pepe.

Speaker Change #182: Not so much in front of us.

Speaker Change #182: You bet and to get you said just as much as if we got let me she advantages such as scientists such at all on what that came with us as much.

Speaker Change #182: No problem I was just so much in it.

Same charter.

Thank you Tom look on that.

Speaker Change #183: You told them instead of your tone cool Oh my.

Speaker Change #183: Okay, you just about how much of it.

Speaker Change #183: Sure.

It was little wonder instead of I'd say, you're much internally.

Speaker Change #184: <unk> 10 trillion chassis in the buckets that might change that sounds good.

Sophie Li: Furtherinformationregardingthisandotherrisks,uncertaintiesandfactorsisincludedinthecompany'sfilingswiththeU.S. SecurityandExchangeCommission.

Meisong Lai: Sowithfirstofallthe$0.40reductioninpaymenttothecourierandthenacostofabout$0.10to$0.20tosendthosepackagestothePOST,theoutletscouldnetabouta$0.20orsosavingontheirdeliverycost.

Michael: Yeah Michael.

So I'm looking at two things one you mean 90.

Michael: Okay.

Michael: Page <unk>.

Dan Schultz: So Dan Schultz, who are switches assign Jenkins radiant Perseus.

Michael: Juices.

And so you'll get to the St. Joe Bunzl scientific meeting their needs.

Speaker Change #187: So oh I thought it was.

Speaker Change #187: What gives us some homeless on gen two designs and so on without it.

Speaker Change #187: Yeah.

Speaker Change #188: D. C can you just check all the time.

Speaker Change #188: Second call on Monday with remote control.

Speaker Change #189: I'm Lucky to forget.

Hey, Tien tsin.

Jim: Sure Jim.

Jim: Absolutely.

Jim: So to the wood Mackenzie.

Jim: Tissue.

Sophie Li: We will accelerate the expansion of LASMAO.

Speaker Change #191: Thank you very much for your question. Our currently our daily volume Oh non e-commerce parcels.

Sophie Li: We encourage larger outlets to invest in sorting equipment. Establish direct linkage to a large-small proposal, reducing delivery costs and freeing up delivery personnel to concentrate on service in large-small.

Sophie Li: Thank you for watching, to alleviate the liquid cost pressure.

Speaker Change #191: Exceeded 500.

Speaker Change #191: $5 4 million and our year end goal is to achieve a.

Daily volume, our average 6 million packages.

Speaker Change #191: You know that in our last year we.

Speaker Change #191: Started off with a daily volume of about 4 million packages.

Speaker Change #191: And we are on track to achieve our goal to double that volume because the peak volume with most.

Speaker Change #191: Most likely exceed 7 million parcels per day.

Speaker Change #191: And this is our goal and we are.

Speaker Change #191: Crawford to achieve that.

Speaker Change #192: How do we achieve that and chairman went into all the details. So I'll give me some time I'll go through the specifics with you.

Qianlei Fan: Mr. Lai, Mr. Yan, Sophie, thank you for accepting my question.

Sophie Li: Fifth, we will further encompass our product...

Speaker Change #193: First of all.

Speaker Change #194: It's related to increasing the ratio is what we referred to in our remarks, Oh non e-commerce packages.

Speaker Change #195: It's a ratio two hour delivery total so in other words, if I deliver 100 packages and there needs to be at least six packages a pick up as non ecommerce.

Meisong Lai: So, one of the things that there are four specific strategies that we implemented to improve the portion of not e-commerce or what we call individual parcels or retail parcels. One is to enhance consumers' willingness to send parcels at our posts through deliberate marketing effort and the promotions in using of digital tools. So, the handheld building your own focused group or targeted group is something that is being implemented.

Sophie Li: Increase the penetration of high-end products.

Speaker Change #195: So one of the things that they there are four specific strategies that we implemented to improve the portion.

Speaker Change #195: Not E e-commerce, or we call it individual parcels of retail parcels one is to enhance our consumers' willingness to sand parcels at our posts to deliberate marketing effort.

And the promotions.

Speaker Change #195: And using our digital tools, so the handheld building your own.

Speaker Change #195: Right.

Speaker Change #196: [noise] focused group, where targeted group is not something that are being implemented number two training all carriers to improve their awareness of serving our customers increase customer loyalty so more personalized more.

Meisong Lai: Number two, training all couriers to improve their awareness of serving customers, increase customer loyalty. So, more personalized, more higher quality standards issued to our couriers so that they are able to be recognized having the capability of serving to door as well as pick up from the consumers, from the customers.

Higher quality standards issued to our careers.

Speaker Change #196: So that they are able to.

Speaker Change #196:

Speaker Change #196: Be recognized as having the capability of serving two door as well as pick up from the.

Speaker Change #196: The consumers from the customers.

Meisong Lai: Number three, shifting quality management of the delivery services focus from post-event to pre-event. So, thereby reducing a customer complaints or anticipate any potential problems that could arise. So, hence improved overall experience.

Speaker Change #196: Three.

Speaker Change #196: Shifting quality management after delivery services, Okay from post event to pre event, so, thereby reducing our customer complaints or anticipate any potential problems that could arise.

Speaker Change #196: So hence improve the overall experience.

Meisong Lai: Number four, strengthening the corporation with e-commerce platforms, enhancing direct coordination between the headquarters and those on platforms. Currently, while we have achieved direct settlement process with Bite Dance, Ping Doo Doo, as well as Doo. Then improving the second part is reducing the cost of the last mile. The initiatives, there are two folks. The first one is relating to the couriers. What we call it the Dao Ja Tao Bien policy or initiative which started last year. The goal is to increase the income of our couriers. So, early on in our remarks, we talked about allowing the couriers to achieve market pricing or gaining the majority share of the market pricing is to incentivize them so that they are motivated to make a special trip to go pick up.

Sophie Li: Strengthen collaboration with online classes, and Leverage ZTO's blockchain.

Speaker Change #196: Number four strengthening the corporation with e-commerce platforms enhancing direct coordination between the headquarters.

Sophie Li: Building brand awareness and customer appreciation.

Sophie Li: 6.

Sophie Li: Be vigilant and maintain a sense of crisis-facing market uncertainties and the fluctuations of the market.

Sophie Li: We will increase effectiveness of communication with our network partners, and reinforce confidence and advocate balance.

Speaker Change #196: And those are platforms.

Speaker Change #196: Currently while we have achieved direct settlement.

Dan: Process with by Dan.

Speaker Change #198: Pinto door.

Speaker Change #199: Well Oh Oh.

Speaker Change #199: Then improving.

Speaker Change #199: The second part is reducing the cost of the last mile.

Speaker Change #199: The.

Speaker Change #200: Initiatives there are two fold the first one is relating to the careers.

Speaker Change #199: We call it a touch at all being a.

Speaker Change #199: Policy or initiatives, which are started.

Speaker Change #199: Last year.

Speaker Change #199: The goal is to increase.

Speaker Change #199: The income of our careers. So early on in our in my remarks, we talked about allowing the careers to achieve market pricing or gaming. The majority share of the market pricing is to incentivize them. So that they are motivated to make.

Speaker Change #201: A special trip to go pick up.

Speaker Change #201: Yeah.

Meisong Lai: The second part of the initiative relates to improving the outlet's profitability. Last year, we have about close to 2000 outlets installed. A machinery and equipment that enable them to provide package that are sorted or directed or destined directly to post. Qianlei gave an example. In the past, the couriers have to go to the post, sorry, go to the outlet, help sorting, or they have to write to the outlet to pick up the packages that are bound for their delivery service area. So, with the installation of those machines, the outlets no longer rely on manual sortation.

Speaker Change #201: The second part of the initiatives relates to improving the.

Speaker Change #201: Outlets profitability.

Speaker Change #201: We are last year, we have about close to 2000.

Speaker Change #201: Outlet installed.

Speaker Change #201: Machinery and equipment that enables them to provide.

Speaker Change #201: Market that are sorted toward directed or destined directly to post.

Speaker Change #202: Chairman, giving an example.

Speaker Change #203: In the past the carriers have to go to the post Oh I'm, sorry go to the outlet help sorting or they have to write to the post to pick up right to the outlets to pick up the packages that are bound for their delivery our service area.

Speaker Change #203: So with the installation of those machines.

Speaker Change #203: The outlet.

Speaker Change #203: No longer rely on manual sortation.

Meisong Lai: So the writers or the couriers do not need to travel to the outlets anymore. Instead, they will receive packages directly from the outlet, either through autonomous driving vehicles or electrical vehicles that are utilized by the outlet to send those packages directly to the couriers. So that the couriers can work within a much smaller and more concentrated service area radius, and hence allowing them more time and more focus on serving to door and also pick up from the door.

Speaker Change #203: So the writers or the carriers do not need to travel to the outlet anymore.

Speaker Change #203: And instead, they will receive packages directly from the outlet either through.

Meisong Lai: Second half of the year, again, we will continue to focus on improving quality of services, developing differentiated products, to achieve reasonable level of profit and volume balance. Second part of the question, indeed for the entire industry through all these years of fine tuning of operations and investment of automation and so on and so forth, the unit cost per activity gang has been declining. For us, however, in the first half of the year, we exceeded our goal for cost per activity gang for the year.

Economists driving vehicles or electrical vehicles that are utilized by the outlet centers packages directly to the careers that are couriers can work within a much smaller and more concentrated serviced area radius.

Speaker Change #203: And hence, allowing them more time and more focused on serving our two door and also pick up from the door.

Meisong Lai: Another aspect of this second initiative relates to the outlet. With the direct sending the packages directly to the couriers as well as sending the packages directly to last mile post, the outlet owners are able to reduce their delivery cost. For example, in the past, each package on average would cost the outlet about 80 cents for the couriers to deliver. Now couriers would then put part of their packages into the post, which will share their 80 cents; of 40 cents out of that 80 cents would go to the post. With that initiative that we implemented, the direct linkage between outlet and the post would allow a greater portion of close to 60 percent or 40 percent of the packages going to the post directly.

Speaker Change #203: Ah another aspect of this second initiative relates to the outlet.

Speaker Change #203: With the direct.

Speaker Change #203:

Speaker Change #203: Pending the packages directly to the careers as well as finding the packages directly to our last mile posts.

Meisong Lai: We have invested for over 26 super sorting centers. There are reserves, ample reserves for capacity release in the future. We do believe that the capacity installed, as well as its flexibility in meeting as up to 50% of volume demand, we are still well on track to consistently and gradually release meaningful cost efficiency going forward. Then for the unit profitability based on the overall capacity, as well as the reserve, we think that the strategy being consistently carried out, there will be stability in our profit growth on a total level as well as unit level.

Speaker Change #203: The outlet.

Speaker Change #203: Owners are able to reduce their delivery cost for.

Sophie Li: Thecompanydoesnotundertakeanyobligationtoupdateanyforwardlookingstatementsasaresultofnewinformation,futureeventsorotherwiseexceptasrequiredunderlaw.

Meisong Lai: Forus,however,inthefirsthalfoftheyear,weexceededourgoalforcostproductivitygainfortheyear.

Meisong Lai: Goingforward,wearegoingtofocusontheseinitiativesinfullyimplementation.

Speaker Change #203: For example.

Speaker Change #203: In the past each packages on average are.

Dan: What caused the outlet about 80 cents, all Florida careers to deliver now careers with Dan.

Meisong Lai: Wehaveinvestedforover26supersortingcenters.

Meisong Lai: Therearereserves,amplereservesforcapacityreleaseinthefuture. Wedobelievethatthecapacityinstalledaswellasitsflexibilityinmeetingasupto50%ofvolumedemand,wearestillwellontracktoconsistentlyandgraduallyreleasemeaningfulcostefficiencygoingforward.

Part of their packages into the post, which we'll share their 80 cents.

Speaker Change #204: Oh 40.

Dan: Out of that 80 cents will go to.

Speaker Change #204: Most.

Speaker Change #204: With that initiative.

Speaker Change #204: Initiatives that we implemented the direct.

Speaker Change #204: Linkage between outlet and the post what allowed a greater portion of close to 60% 40%.

Speaker Change #204: Oscar.

Speaker Change #204: Packages going to.

Speaker Change #204: The post directly.

Meisong Lai: So then the outlet does not need to pay the whole 80 cents. So we estimated and we calculated of that 40 cents because it still need to be sent to the post. The outlet owners would pay, on average, between 10 to 20 cents to achieve that direct delivery to the post. So with first of all the 40 cents reduction in payment to the courier and then a cost of about 10 to 20 cents to send those packages to the post, the outlet could net about a 20 cents or so saving on the delivery cost.

Speaker Change #204: Then.

Meisong Lai: Thenfortheunitprofitability,basedontheoverallcapacityaswellasthereserve,wethinkthatthestrategybeingconsistentlycarriedout,therewillbestabilityinourprofitgrowthonatotallevelaswellasunitlevel.

Meisong Lai: Thenwewillachieveagoalofnotonlyimprovingtheoutlet'sprofitabilityaswellasthecourier'searnings. Hence,thelong-termeffectwouldbefortheoverallnetworkstabilitytobeestablishedbecausetheprofitlevelwillbeincreased.

Speaker Change #204: The outlet.

Speaker Change #204: Does that need to paint the whole 80 pence.

Speaker Change #204: So.

Speaker Change #204: We estimated and recalculated.

Speaker Change #204: Of that 40 cent.

Speaker Change #204: Because it still need to be sent to the post.

Q&A Fan: The next question comes from Q&A Fan with Morgan Stanley. Please go ahead. Thank you, operator. The next question comes from Q&A Fan.

Speaker Change #204: All of the owners would pay on average between 10 to 20.

Speaker Change #204: To achieve that direct deals.

Speaker Change #204: Delivery to the post.

Q&A Fan: The second question is related to the government. The next question comes from Q&A Fan. [inaudible] Thank you. Thank you. Thank you for your question. The two of you mentioned is that it is the right time to make the right choice for the future. The first one is that the design of this year is the most important position. The goal is to increase the third level of the third level of the third level of the third level of the third level.

Speaker Change #204: So with first of all the 40.

Speaker Change #204: Reduction in payment to the carrier and then a cost of about 10 to 20 cents to sandoz packages to the coast.

Sophie Li: ItisnowmypleasuretointroduceMr.

Qianlei Fan: ThenextquestioncomesfromQianleiFanwithMorganStanley.

Speaker Change #204: It could net about 20, or so savings and they did agree Uh huh.

Meisong Lai: MasonLai.

Qianlei Fan: Pleasegoahead.

Qianlei Fan: Thankyou,operator.

Meisong Lai: Mr. LaiwillreadthroughhispreparedremarksintheirentiretyinChinesebeforeItranslateforhiminEnglish.

Qianlei Fan: Mr. Lai,Mr.

Meisong Lai: Going forward, we are going to focus on these initiatives in fully implementation, then we will achieve a goal of not only improving the outlet's profitability as well as the careers earnings. So, hence, the long-term effect would be for the overall network stability to be established because the profit level will be increased. And it will provide support for our overall delivery fee reduction, not only for us but also potentially as a solution to the whole industry.

Speaker Change #204: Going forward we are.

Qianlei Fan: Yan,Sophie,thankyouforacceptingmyquestion.

Speaker Change #204: Going to focus on these initiatives.

Qianlei Fan: Iwouldliketocongratulatethecompanyonsteadyprofitgrowthinthesecondquarter.

Speaker Change #204: In a fully implementation and we will achieve.

Speaker Change #204: A goal of not only improving the profitability as well as our careers earnings.

Hans: So Hans.

Sophie Li: Thank you for attending Network Stability.

Hans: The long term effect would be for.

Sophie Li: The express delivery industry has demonstrated resilience across economic cycles by offering robust support for the advancement of the digital economy and improving circulation, 我們正陣營運我們將專注於服務質素, Further does Mao's strategic object and enhance profitability for all its as well as careers by establishing unique competitive so as to gradually but satisfactorily differentiate ourselves from the rest of Chong Da in grand recognition and, Providing more choices for consumers and customers.

Hans: The overall network stability to be established because.

The profit level will be increased.

Hans: And.

It will provide a.

Hans: Support for all over all.

Speaker Change #206: Delivery fee reduction not only for us, but also potentially as a solution to the whole industry.

Meisong Lai: This is not a overnight goal. We are working towards this change in shift from volume to quality to focus on more differentiated products and services so that the ZTO could break away from a marginalized price competition and establish competitive, unique competitive advantage.

Speaker Change #206: This is a.

Speaker Change #206: Not a overnight a goal we are working towards this.

Speaker Change #206: Change in shift.

Speaker Change #206: Volume to quality to focus on more differentiated product and services. So that D. T O could break away from homogenized price competition and establish competitive a unique competitive advantage.

Meisong Lai: Thank you very much, Lai Zhuang, Yan Zhuang.

Speaker Change #206: Oh, Thank you very much Michael.

Speaker Change #206: Yeah.

Qianlei Fan: Ihavetwosmallquestions.

Speaker Change #206: Yeah.

Eugene Lowe: The next question comes from Lowe, Eugene, with Python. Please go ahead. First of all, congratulations to the company for achieving good performance in the 7th quarter.

Speaker Change #207: The next question comes from low use Jang with title. Please go ahead.

Qianlei Fan: Thefirstsmallquestionisthatthecompanyalsomentionedintheannouncementthattheretailparcelisontracktodoublethisyear.

Qianlei Fan: I would like to congratulate the company on, steady profit growth in the second quarter.

Louis Jang: Oh my opinions on Saturday.

Sophie Li: We are aiming to create value for the country, society, as well as the employees and the children.

Speaker Change #209: Wish I told Doug I think you shouldn't worry at all since I'm going to go inside you can spell out what that can do that that's all at once he goes I think I would tell them that well I wouldn't put it its been tied just to stay on it because I like when people are going to the tenant.

Sophie Li: Now let's hear from Meitian about our financial results and targets.

Qianlei Fan: Canyouremindusofthedailyvolumeoftheretailparcelandthetotalvolumeratioandthisyear'starget?

Qianlei Fan: I have two small questions.

Huiping Yan: Thank you.

Speaker Change #210: So can you tell us that goes back to two things.

Speaker Change #209: Patches.

Speaker Change #209: It's actually been two bushel, China jumped by keeping the.

Speaker Change #209: Yeah I'll go into ships.

Speaker Change #209: Now you just thought about making a grandma that's inside of cycles.

Meisong Lai: Anditwillprovidesupportforouroveralldeliveryfeereductionnotonlyforusbutalsopotentiallyasasolutiontothewholeindustry.

Speaker Change #209: Yeah Yeah.

Speaker Change #209: Yeah, She's done get more then they can tell them that well.

Speaker Change #211: Washington been doing quite well quite you can shoot the messenger and Jason Statham.

Speaker Change #212: I would point out when I got involved with that one.

Qianlei Fan: The first small question is that the company also mentioned in the announcement that the retail parcel is on track to double this year.

Speaker Change #212: Some of them will fail.

Huiping Yan: Thank you Qianlei and Sophie.

Speaker Change #213: Well first of all congratulations two companies once you mean.

Qianlei Fan: Ifyouhaveatargetforthenextfewyears,pleaseshareitwithus.

Meisong Lai: Thisisnotanovernightgoal. WeareworkingtowardsthischangeinshiftfromvolumetoqualitytofocusonmoredifferentiatedproductandservicessothatZTOcouldbreakawayfromhomogenizedpricecompetitionandestablishauniquecompetitiveadvantage.

Speaker Change #213: Oh my goodness.

Eugene Lowe: My question is about the capital expenditure plan for the years 2024, 25, and a non-repair. I would like to know which areas the residents will allocate it to and how we make the capital expenditure plan.

Speaker Change #215: Well My question is about the capital expenditure plan for the years two.

Speaker Change #215: 2020 to 25 P M.

Speaker Change #216: I'd like to know, which analysts investment well, although it could get to and how we make that capital expenditure.

Qianlei Fan: Thesecondquestionisaboutdiscounts.

Meisong Lai: Thankyouverymuch,PresidentLaiandPresidentYan.

Meisong Lai: 季度市场份额较去年同期下降了2个百分点今年年初,我们提出将三大指标中的质量摆在更重要的位置在保持规模业务量和合理利润水平的同时优化科商机构打造差异化的产品与服务促成消费者的认知和满意度在末端发展上,拓展新的思路和赛道降低派件成本,提高网点和业务员的收入水平在二季度,中通全链路时效稳致通达度第一课收率持续降低末端上门服务的响应速度和安需服务的能力不断提高逆向闪现的占比进一步提升收入结构优化有效地缓解了竞争带来的单票价格压力二季度,中通快递核心业务的单票收入保持稳定这和持续实现的成本效益及合理的管理费用结构单票利润和总盈利水平保持在行业领先的水平进入下半年,快递行业业务量延续着较快的增长态势尽管产量区别的价格震荡依然激烈我们相信成本加减法的竞价空间已接近底线快递行业整体必须真正从高数量走向高质量从而实现社会价值和满足资本的追求中通从高数量向高质量的率先举措来自于我们持续专注自身持续有效平衡服务质量、业务规模和盈利水平的三大指标面对市场的实际情况我们将凭借自身的实力提升品牌价值把握规模份额的底线实现合理利润公平公正的做好中心站点和业务员之间的利益分配具体落实的抓索包括一、梳理网络政策将政策的导向与各项工作指标有效挖钩保障网络政策的普惠和透明真正做到讲究法律、监督录地二、持续提升服务质量细化各项服务指标将工作达成情况与考核有效关联通过分类治理关注帮扶整改落后网点保障高效优质的差异化服务三、砸车推进、倒脚倒编工作处理好网点和业务员之间计算的分层量关系四、激发业务员的内生动力提升散派比例增加业务员收入五、持续加快莫当建设鼓励规模网点投入分解释费实现莫当质量降低派进成本为业务员专注投地和上门服务提供条件整合资源为降低整个行业的派进成本提供解决方案5.升級產品機構,提升高端產品服務的滲透力,加深與平台客戶的連接,協同中通物流生態資源,拓展綜合物流供應鏈的能力,打造品牌認知與客戶薪資。第二季期間,隨著繼續削減不可減的價格,市場的分配比去年減少了2%。在今年初,我們所有三個主要的平衡中,Weputgreateremphasisonquality,whilemaintainingascale-advantagedvolumelevelandappropriatelevelofprofit.

Luo Yujian: ThenextquestioncomesfromLuoYujianwithHaitong.

Eugene Lowe: The second question is about the course reduction place about the whole process in the future.

Speaker Change #216: Second question is about the cost of infection place now the home not just in the future.

Meisong Lai: Thank you for your question. Thank you very much.

Sure.

Speaker Change #216: Q1.

Speaker Change #217: In person and she said, yes, it time intensive.

Meisong Lai: However, the proportion of low-price e-commerce proposals continues to turn up and price competition further intensified.

Q&A Fan: [inaudible][inaudible] So, one of the things that there are four specific strategies that we implemented to improve the portion of not e-commerce or what we call individual parcels or retail parcels. One is to enhance consumers' willingness to send parcels at our posts through deliberate marketing effort and the promotions in using of digital tools. So, the handheld building your own focused group or targeted group is something that are being implemented. Number two, training all couriers to improve their awareness of serving customers, increase customer loyalty.

Speaker Change #218: Cushing is chosen should each at a time.

Speaker Change #217: Yes.

Speaker Change #219: Jim element type of thing.

Speaker Change #220: She go sleep.

So Eugene <unk>, She says goodbye.

Speaker Change #220: <unk>.

So Sheila Ching huh.

Speaker Change #220: So good.

Speaker Change #220: Thanks for the yacht true because you'd be fun into the need.

Meisong Lai: This is not too developed, but we are able to take the initiative of 2.35 to 3.35. The strategy is that you will be able to take the initiative 2.35.

Speaker Change #220: So good.

Speaker Change #220: Ginger.

Speaker Change #221: Pardon me.

Speaker Change #221: Hey.

Speaker Change #221: Another to give you some of them are sensitive than others.

Speaker Change #221: There's a ton of images. So could you. So when you say if I if we find out.

Meisong Lai: These are the first and last steps.

Speaker Change #222: You finished.

Meisong Lai: The second step is that we are able to take the initiative and we are able to take the initiative to take the initiative and we are able to take the initiative to take the initiative and we are able to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative to take the initiative and we are able to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative to take the initiative The next time, it will be 2.5 cm, because you won't be able to do 1.5 cm each time.

Speaker Change #223: The dealers and end user one said to me in a moment.

Speaker Change #223: It's a card at all I mean, the theory pretty much where she had to some facility.

Speaker Change #224: In pet food.

Speaker Change #225: Turning she isn't each.

Speaker Change #225: Okay.

Speaker Change #225: Yeah.

Speaker Change #226: Uh huh.

Speaker Change #226: Yeah.

Julie: So once we find challenges cause he's a phone line, Julie who chooses to do.

Speaker Change #228: Met with Egypt and pool.

Speaker Change #228: On Sunday.

Speaker Change #228: And do different she said you've achieved.

Speaker Change #228: NASA Lucidness you bet countries.

Speaker Change #228: So yeah.

Speaker Change #229: For me it really total switches you and as you well know and due to timing. So when you put it to them Hey, this was pneumonia.

Speaker Change #228: Yeah.

Speaker Change #228: So good.

Speaker Change #230: She fund that you see.

Speaker Change #231: Please hold any time its own thing gosh, it's you know I have been through what else. They do two things on this appointment.

Speaker Change #230: Yeah.

Speaker Change #230: Really you because there's a chance on some about agreed with unions ended up at <unk>.

The woman said forget it.

Speaker Change #232: I think that's the tonnage as a fund manager.

Speaker Change #232: Okay.

Speaker Change #232: They don't know if we book and ship to this game.

Speaker Change #232: So this is a good time and forgotten.

Jon Michael Janet.

Touch on behalf of the <unk>.

Speaker Change #233: I'd say in the Champaign.

Tony: Tony jump in whichever tool.

Speaker Change #235: She just got Jim your users.

Tony: She thought too.

Tony: Okay.

Tony: Confronted.

Tony: With that she nutrition Institute.

Tony: So oh.

Tony: The image on Chile.

Speaker Change #236: I can't wait for shoot wet and cold call me.

Speaker Change #236: Thank you.

Speaker Change #236: <unk> made good a bunch of the sugar.

Uh huh.

Speaker Change #236: So it's against that.

Speaker Change #236: So you should see much of it.

Speaker Change #238: That's it for me.

Speaker Change #239: So how are you thinking about species.

Speaker Change #239: Do you have an element, we say hello, youll see less of it.

Speaker Change #240: She is on a silent teacher excuse me is home.

Speaker Change #240: Well of course, it should soon see.

So if that's all she'd go multi function to being so.

Eddie: Hi, Eddie.

Eddie: Chuck what do I mean, Jim simple actually it was true.

Speaker Change #242: Gotcha that you do.

Speaker Change #242: So you see this hospital groups.

Speaker Change #242: And then it too.

Speaker Change #243: So on June so that's launching goodwill that you decided you may need to cause is since I started here.

Speaker Change #243: King.

Speaker Change #243: What could be some churn at age 50, or so due to.

Speaker Change #243: Is it isn't that.

Speaker Change #244: <unk> uses that could cheap, but it also appears that once you send us your wishes and P. Centrella to Tulsa fast time to give more detail.

Speaker Change #244: You choose the telephony knew him in maple cockpit choosing <unk>.

Speaker Change #244: Conclusion, Andy and will soon enter a new food jumped on it and in doing that diligence.

Speaker Change #245: No woman music channels.

Speaker Change #245: Sure.

Speaker Change #246: Excuse me the name of Vinci, and we need some we'll see.

Speaker Change #246: So we use of course with milestones.

Meisong Lai: If the distance between the three points and the whole point is 0.5 cm, the distance between the two points will be lower.

Speaker Change #246: What's on the inside of Infineon patches have been spoken for.

Speaker Change #246: Thank you.

Meisong Lai: The second point is the distance between the three points, whether it is the distance between the three points or the distance between the three points, the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points.

Speaker Change #247: No women viewers on.

Speaker Change #248: So first and you can look at the function into the Buffalo, Michigan. Once you decided you meet you personally it's super important that you're crazy.

Speaker Change #248: Any of them.

Speaker Change #248: No.

Speaker Change #249: So, yes really minute she said villa.

Susan: Susan equipment.

Speaker Change #250: Got it.

Speaker Change #249: Good.

Lisa: Where do you see with Lisa.

Lisa: You continue to Samsung can easily switch research it.

Awesome.

Speaker Change #252: So much you exactly talking India always owe me someone you want to forget putting a hot shower.

Meisong Lai: The distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points and the distance between the three points.

Speaker Change #253: Chairman of Aberdeen.

Speaker Change #254: She says hey at some point edge it ease up at venture citizens was there some other things that some other sensor theme award.

Speaker Change #255: Well I mean, there's something feed.

Speaker Change #256: So in the supplemental vignettes should tick up.

Speaker Change #257: So the thumb historically, St John Donahoe I forget.

Speaker Change #257: India being so good it's also a companion chip.

Speaker Change #258: Honey that GNL.

Speaker Change #259: Sure sure.

Speaker Change #259: So you are.

Speaker Change #259: Tissues.

Speaker Change #259: Yeah.

Meisong Lai: Thank you very much for your question.

Huiping Yan: 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 changes refer to the year-over-year comparison. Detailed financial, For more information, please visit our website at www.cayman.com, In the second quarter, we adhered to the principle of profitable growth and achieved a 10.9% increase in adjusted net income to reach $2.8 billion while continuing to improve the quality of services and brand value.

Thank you very much for your question.

Speaker Change #259: Yeah.

Speaker Change #260: Well we are the first question is about the Capex.

Meisong Lai: The first question is about the Quebec. In the past, we have been consistently investing in Quebec, mainly to build transportation centers in established transit capabilities. So today, most of our super sorting centers were self-owned and above 90% to be specific by me supplement. So the going forward, we won't be in need of expanding our Quebec spending. Based on the economic development, some areas or weaker areas, we have also reserved space 200 to 300 hectare acres, for example. If our volume demand increases one fold or even two fold, we have sufficient reserve already there. So we don't need to spend capital to acquire further, more significant land use rights.

Qianlei Fan: Can you remind us of the daily volume of the retail parcel and the total volume ratio and this year's, target?

Speaker Change #260: And in the past we've been consistently investing in capex, mainly to build a sortation centers and establish transit capabilities.

Qianlei Fan: If you have a target for the next few years, please share it with us.

Qianlei Fan: The second question is about discounts.

So today, most of our Super sorting centers or self owned.

Speaker Change #261: And oh above 90% to be specific if I may supplement so the going forward, we wont be in need of expanding our capex spending.

Speaker Change #262: Based on the economic development. Some areas are weaker areas. We have also a reserved.

Meisong Lai: Wedirectedattentionandresourcestowardsupgradingcustomermix,refiningdifferentiatedproductsandservices,andenhancingbrandawarenessandcustomersatisfaction.

Qianlei Fan: Wehaveseenthatthefuturecompetitionbetweencouriercompanieswillnotonlybeintheconceptleveldiscounts,butmorewillalsocomefromthenetworkleveldiscounts,thatis,thenetworkleveldiscounts.

Luo Yujian: Pleasegoahead.

Speaker Change #262: Space 200 to 300 Hector acres for example, if our volume demand increases.

Speaker Change #263: One phone or you've been twofold, we have sufficient a reserve are already there. So we don't need to spend capital to acquire further more significant Lang is right, we just need to either develop them or upgrade them.

Meisong Lai: We just need to either develop them or upgrade them.

Meisong Lai: While prioritizing service quality, the deal continues to seek value among service quality, profit, and scale to drive sustainable and healthy development of the entire network.

Meisong Lai: The consideration, however, does need to be given to our initiatives in a longer term developing comprehensive logistic capabilities. For example, warehousing or in-warehouse processing, LKL businesses or those ecosystem businesses do rent spaces from us so that they are able to form a comprehensive and higher efficient, efficiently co-located. Product and services by utilizing our capacity. Going forward, it is very clear that acquisition for land use rights, building super centers, are going to be very minimal. The growth of our or putting in line of services, putting in services, the capacity is very much directed or mashed with our anticipated demand of capacity in the sortation, transportation and all the segments of our operations.

Speaker Change #264: The the consideration however, do need to be given to our initiatives in and in the longer term developing comprehensive logistic capabilities for example, warehousing or in warehouse processing a L. T. All businesses all those ecosystem businesses do.

Meisong Lai: During the second quarter, upon further elimination of profitable volumes, a vermaki share contracted by two percentage points compared to the previous year.

Qianlei Fan: SoIwouldliketoaskthecompanyaboutthenetworkleveldiscountsforthisyearandinthefuture,aswellastheoveralljudgmentofthecostreductionspaceforthewholenetwork.

Luo Yujian: Hello,PresidentLaiandPresidentYan.

Speaker Change #265: Do a rank spaces from us so that they are able to.

Meisong Lai: At the beginning of this year, across all three of our major matrix, we put greater effort on quality, while maintaining a scale-adventaged quality level and appropriate level of profit, with directed attention and resources to the worst-upgrading customer, next, refining depreciated products and services, and encompassing brand awareness and customer satisfaction.

Speaker Change #265: Form a comprehensive and higher efficient efficiently co located.

Qianlei Fan: Ihavetwoquestions.

Luo Yujian: IamLuoYujian,ananalystatHaitong.

Speaker Change #265: Product and services by utilizing our capacity.

Q&A Fan: So, more personalized, more higher quality standards issued to our couriers so that they are able to be recognized having the capability of serving to door as well as pick-up from the consumers, from the customers. Number three, shifting quality management of the delivery services focus from post-event to pre-event. So, thereby reducing a customer complaints or anticipate any potential problems that could arise. So, hence improved overall experience. Number four, strengthening the corporation with e-commerce platforms, enhancing direct coordination between the headquarters and those on platforms.

Speaker Change #265: And going forward. It is very clear that acquisition for land use rights building Super centers are going to be a very minimum.

Qianlei Fan: Thefirstquestionisabouttheretailparcel.

Speaker Change #265: The the growth of our or putting in line of services putting services the capacity.

Speaker Change #265: It's very much directed or mashed with our anticipated demand of <unk> capacity in the sortation transportation in all the segments of our operations.

Meisong Lai: We are able to foresee with a very clear visibility that going forward we will be able to generate increasing free cash flow. We talked about giving back return to our shareholders. It is based on the fact that the cash generation will continue to be healthy and the catback spending will be stable or reducing in going into 2004, 2025 so that our overall return to the shareholders will increase.

And we are able to foresee with a very clear visibility and going forward, we will be able to generate increasing free cash flow are we talked about getting back return to our shareholders is based on the fact that the cash.

Q&A Fan: Currently, while we have achieved direct settlement process with bite dance, ping do doo, as well as doo. Then improving the second part is reducing the cost of the last mile. The initiatives, there are two folks. The first one is relating to the couriers.

Speaker Change #265: <unk> will continue to be healthy and the capex spending will be stable or reducing and going into 2000 and for 2025, so that our overall.

Meisong Lai: Our last mile development, where it cemented meme-initiative to explore opportunities to reduce last mile delivery costs, and the inclusive profitability for all this and careers.

Speaker Change #265: We returned to the shareholders will increase.

Meisong Lai: The second part relates to the question on how we are able to continue to reduce the operating cost. Indeed, as you look into the past, even though ZTO has been leading this effort, but for the whole industry, it has been continuously achieving high cost efficiencies. In the past, what we have been doing and what we have been able to achieve greater results or ahead of everybody is that our connection between the outlets and the Fortation Center has been more advanced or more ahead of everybody. Now, going forward, as we continue to rely on lean operations, looking into greater visibility of each of the segments of our operations, we are still able to, as volume increases, as our productivity gains continue to release.

Speaker Change #265: The second part relates to the question on how we are able to.

Meisong Lai: In the second quarter, leak yields end-to-end delivery time, rest, top amount of up years, and customer-accompanied rate continued to decrease.

Speaker Change #265: Continue to reduce.

Meisong Lai: Meanwhile, with the improved response time and ultimate service capability, the ratio of retail parcels was further expanded.

Speaker Change #265: The operating cost.

Meisong Lai: As the optimization of revenue structure partially alleviated, unit price pressure, driven by price commutations, our ASP was flat, combined with the cost-efficient digging and the reasonable SG&L structure, both the unit profit and the total profitability remained industry-meeting.

Meisong Lai: What we call it the Dao Ja Tao Bien Policy or Initiative which started last year. The goal is to increase the income of our couriers. So, early on in our remarks, we talked about allowing the couriers to achieve market pricing or gaining the majority share of the market pricing is to incentivize them so that they are motivated to make a special trip to go pick-up. The second part of the initiative relates to improving the outlet's profitability.

Indeed, as you look into the past, even though the T or have been leading this effort, but the for the whole industry. It has been continuously achieving high cost efficiencies.

Meisong Lai: Onlast-miledevelopment,weimplementednewinitiativestoexploreopportunitiestoreducelast-miledeliverycostsandimprovetheprofitabilityforalllistsandcouriers.

Meisong Lai: Inthesecondquarter,ZTO'send-to-enddeliverytimerackedupamongTongdapeers,andthecustomercomplaintratecontinuedtodecrease. Meanwhile,withtheimprovedresponsetimeandon-demandservicecapability,theratioofretailcostwasfurtherexpanded.

Speaker Change #265: In the past, what we've been doing and what we've been able to achieve greater results or ahead of everybody is that our connection between the outlets and the Sortation Center has been a more advanced or more ahead of everybody now going forward.

As we continue to rely on our lean operations looking into greater visibility of each of the segment of our operations. We are still able to as volume increases as our productivity gain continue to our release, we still believe there are.

Meisong Lai: Last year, we have about close to 2000 outlets installed, and the machinery and equipment that enable them to provide package that are sorted or directed or destined directly to post. Qianlei gave an example. In the past, the couriers have to go to the post, sorry, go to the outlet, help sorting or they have to write to the outlet to pick up the packages that are bound for their delivery service area. So with the installation of those machines, the outlets no longer rely on manual sortation.

Meisong Lai: We still believe there are plenty of opportunities for us to achieve scale leverage, as well as on a unit level continued cost efficiency. And then the second consideration, which is more of a long term, but steady visibility to us, is that because of the route planning, we talked about in the past the trial layer throughput concept. As again, we said earlier, we were able to improve the connectivity between the outlets and the Fortation Center. Going forward, as volume increases, we are able to establish greater connectivity between the origination outlets to a destination sorting center or the third layer being the origination center to the destination outlets or the origination outlets to destination outlets.

Speaker Change #265: Are plenty of opportunities for us to achieve scale leverage as well as on a.

Speaker Change #265: And that level continued cost efficient efficiency and then the second consideration, which is more of a long term, but steady visibility to us is that because of the route planning.

Speaker Change #265: We talked about in the past the triad later throughput concept.

Speaker Change #265: As again, we said earlier, we were able to improve the connectivity between outlets and Sortation center going forward as volume increases we are able to establish greater connectivity between our origination on it to a destination.

Meisong Lai: So the writers or the couriers do not need to travel to the outlets anymore. And instead, they will receive packages directly from the outlet either through autonomous driving vehicles or electrical vehicles that are utilized by the outlet to send those packages directly to the couriers so that the couriers can work within a much smaller and more concentrated service area radius and hence allowing them more time and more focus on serving to door and also pick up from the door.

Speaker Change #265: Switching center or the third layer being the origination center to the destination Oh, that's for the origination the outlets to destination outlets.

Meisong Lai: All these are simply put in order to reduce the number of sortation. In the past, we were at the level of 2.5 per parcel. We are reducing it now to 2.09 and continue to decrease because of better our planning and volume increases. We estimated that for each one-time reduction of the sortation, we are able to reduce about 25 cents, being 10 cents in sortation and 15 cents for transportation. With that, we have a clear room for the future to further reduce our unit level cost because of this trial or report concept.

Speaker Change #265: All of these Ah is simply put an effort to reduce the number of sortation in the past we were at the level of 2.5.

Speaker Change #265: Her parcel we are reducing it now to 2.09 and continue to decrease because of better our planning and volume increases.

Speaker Change #265: We estimated for each one.

Meisong Lai: Another aspect of this second initiative relates to the outlet. With the direct sending the packages directly to the couriers as well as sending the packages directly to last mile post, the outlet owners are able to reduce their delivery cost. For example, in the past each package on average would cost the outlet about 80 cents for the couriers to deliver. Now couriers would then put part of their packages into the post which will share their 40 cents out of that 80 cents will go to the post.

Speaker Change #265: One time reduction of the sortation.

Speaker Change #265: We are able to reduce about.

Speaker Change #265: About 25 cents.

Speaker Change #265: Being 10 cents in sortation, and 15 cents or transportation.

Speaker Change #265: With that we have a.

Speaker Change #265: Clear room for the future to further reduce our unit level cost because of this.

Speaker Change #265: <unk> report a concept.

Speaker Change #265: Our market share.

Meisong Lai: Market share, as we looked at the first half of the year, declined two points. This is still matched relatively well with our capacity and services. Anywhere outside of that range will not generate as effective economy of scale and will cost us to have increased marginal cost with diminished marginal benefit.

Speaker Change #265: Sure.

Speaker Change #265: We looked at the first half of the year declined two point.

Speaker Change #265: This is still a.

Speaker Change #265: Matched relatively well with our capacity or.

Speaker Change #265: Capacity in services.

Meisong Lai: With that initiative that we implemented, the direct linkage between outlet and the post would allow a greater portion of close to 60 percent or 40 percent of the packages going to the post directly. So then the outlet does not need to pay the whole 80 cents. So we estimated and we calculated of that 40 cents because it still need to be sent to the post. The outlet owners would pay on average between 10 to 20 cents to achieve that direct delivery to the post.

Speaker Change #265: Anywhere outside of that range will not generate as effective a economy of scale and it will cause us to have increased marginal cost with that.

Manish: Manish marginal benefit so we are as you ask the question.

Meisong Lai: So we are, as you asked the question, how we plan our capital investment and deployment. It's very much a science related to what we are able to serve, what are the capacity build up, and what we anticipate to come with the most optimal volume and optimal cost.

Manish: <unk>, all capital investment and deployment.

Manish: Very much a science related to what we are able to serve what are the capacity built up for what we anticipate to come out with the most optimal volume and optimum cost.

Meisong Lai: Thank you for your question.

Speaker Change #267: Thank you for your question.

Meisong Lai: So with first of all the 40 cents reduction in payment to the courier and then a cost of about 10 to 20 cents to send those packages to the post, the outlet could net about a 20 cents or so saving on the delivery cost. Going forward, we are going to focus on these initiatives in fully implementation, then we will achieve a goal of not only improving the outlet's profitability as well as the career's earnings.

Operator: This concludes our question and answer session.

Speaker Change #268: This concludes our question and answer session I would like to turn the conference back over for any closing remarks.

Meisong Lai: I would like to turn the conference back over for any closing remarks. Thanks again for your continued attention and support. A strategy shift in the beginning of the year has been very effective for us, specifically in improving the non-ecommerce packages. It's reflected in our bottom line. Balance approach will continue to be our future focus, including the last mile initiatives. We believe we are building long-term competitive advantages so that we are differentiated from the rest of the tone.

Speaker Change #268: Sure.

Speaker Change #269: Thanks again for your continued attention and support our strategy shift in the beginning of the year has been very effective for us are specifically in improving their non E. Commerce packages are it's reflected in our bottom line.

Qianlei Fan: We have seen that the future competition between courier companies will not only be in the concept level discounts, but more will also come from the network level discounts, that is, the network level discounts.

Huiping Yan: Our parcel volume grew 10.1% to 8.45 billion.

Qianlei Fan: So I would like to ask the company about the network level discounts for this year and in the future, as well as the overall judgment of the cost reduction space for the whole network.

Huiping Yan: We continue to fine-tune resource allocation to achieve optimal balance between volume and profit in the second quarter.

Qianlei Fan: I have two questions.

Huiping Yan: ASP for our core express delivery business stayed flat at 1.24 RMB as the impact of decline in the average weight per parcel and increase in incremental volume incentives were offset by the positive impact of the volume increase in non-e-commerce parcels.

Qianlei Fan: The first question is about the retail parcel.

Huiping Yan: Our total revenue increased 10.1% to $10.7 billion. The cost of revenue was $7.1 billion, which increased 10.4%.

Qianlei Fan: In the announcement, the company mentioned that, we are on track to double our retail parcel volume.

Huiping Yan: Overall unit cost for the core express delivery business, increased 0.7% or 1 cent. Specifically, line haul transportation cost per parcel decreased 6.8% to $0.39, driven by improvements in fleet operations with better resource utilization.

Qianlei Fan: Would you please remind us of our current daily retail parcel volume, the percentage in our total volume, our target for this year, and probably the target to achieve for the next few years?

Huiping Yan: 您的单位费用增加了4.6%至26元, due to increased DNA cost on new equipment and facilities.

Qianlei Fan: The second question is about cost reduction.

Huiping Yan: Unit K-A cost decreased 4 cents, or increased 4 cents in line with K-A revenue increase.

Qianlei Fan: We understand that the competition of express delivery business is not, only about cost reduction at the line call, but also about cost reduction at the whole network, especially at network partners and last mile.

Huiping Yan: Gross profit increased 9.6% to $3.6 billion and gross profit margin rate decreased 0.1%.

Huiping Yan: Now moving on to our guidance.

Qianlei Fan: So would you help us to better understand our initiatives to help the network and last mile to reduce cost and potential cost saving room in the next few years?

Huiping Yan: 到33.8% Consistent with gross profit, income from operations increased 11.7% to $3.2 billion, and associated margin rate grew 0.4 points to 30%.

Huiping Yan: We stay committed to our balanced approach to sustainable and profitable growth, prioritizing improvements in quality of services and development of differentiated product and services to enhance brand recognition and value.

Qianlei Fan: Thank you.

Huiping Yan: SG&A expenses, excluding SBC, as a percentage of revenue, grew 0.3 points, corporate cost efficiencies remained intact.

Huiping Yan: We are reiterating our 2024 volume growth guidance of 15 to 18 percent. These estimates represent management's current and preliminary view, which are subject to change.

Meisong Lai: 您提的這兩件事情,其實就是總統正在做或者未來要見崔恰的事。第一個就是,我們今年的策略就是把服務車輛擺在更重要的位置,目的就是要增加產線的散佈,提供業務員上門攬收,上門遞送的能力要增強。我們的目標是,前半年其實我們產線的比例的增長是遠遠大於我們整體總統網絡企業的增長。我們目標今年其實產線的增長要達到50%,去年我們不到400萬,今年全年要到600萬。那有可能高峰期,我們預計肯定是要超700萬以上,這個肯定是做得到的。產線其實從網絡上來講就是一個到角到邊的政策,讓業務員拿到一手的價格,激發他的內心動力,提高他們產線的積極性。第三是從基地服務管理,質量管理從事後變為事情,降低可疏率。第四是加大與平台的合作力度,強化總對總對接。目前我們跟智捷、德沃、拼多多都實現了責令結算,通過這些措施提升產線的比例,目的是增加我們業務員的收入,業務員收入就更穩定。通過末端折煉,再加上一些智能工具的使用和普及,比如說現在很熱門的無人車,我們的站點推廣的速度也非常快。那麼通過設備的投入,路由的優化以及工具的使用, 讓站點派遣成本下降我舉個例子,過去我們給業務員八毛錢的派費, 那業務員拿回去四毛錢放到驛站那他有百分之六七是四毛錢是貴大的, 那麼現在就是直接站點直接到莫丹給莫丹四毛錢那麼八毛錢四毛錢增加了站點到莫丹的, 有通過無人車的有通過我們自有車輛配送的大概也就是不到兩毛錢的成本, 基本上在如果是無人車的話只要一毛錢左右我們用電車用駕駛員的大概在兩毛錢以內, 從中可以降低兩毛多的成本這個目的就是增加晚點的營利能力, 讓他更穩定更有競爭力這兩項措施其實閃電跟折電它是一件事情, 這就是我們現在在做的事情謝謝, and we are confident to achieve that

Huiping Yan: Operating cash flow was $3.5 billion, which decreased 7.5%, mainly due to dividend tax and increase in financing or loans to our network partners.

Huiping Yan: This concludes our prepared remarks.

Meisong Lai: How do we achieve that?

Huiping Yan: Adjusted EBITDA was $4.3 billion, an increase of 11.7%.

Operator: Betsy, please open the line for questions.

Operator: We will now begin the question and answer session.

Meisong Lai: Chairman went into the details, so give me some time I will go through the specifics with you, First of all is related to increasing the ratio is what we refer to in our remarks of non-e-commerce packages as a ratio to our delivery total So in other words, if I deliver 100 packages and there needs to be at least 6 packages pick up as non-e-commerce So, one of the things, there are four specific strategies that we implemented to improve, the portion of non-e-commerce or we call it individual parcels or retail parcels.

Huiping Yan: Capital expenditure totaled $1.3 billion for Q2, or $2.9 billion for the first half of the year. With that, we anticipate annual CAPEX in 2024, to come in below $6 billion as previously planned.

Operator: Thank you.

Operator: To ask a question, you may press star and 1 on your touchtone phone.

Meisong Lai: One is to enhance consumers' willingness to send parcels at our post through deliberate, marketing effort and the promotions in using of digital tools.

Huiping Yan: The company has announced an interim cash dividend, of US$0.35 per ABS and ordinary share for the 6th month ended June 30.

Operator: If you are using a speakerphone, please pick up your handset before pressing the keys.

Meisong Lai: So, the handheld building your own focused group or targeted group is something that, are being implemented.

Huiping Yan: 2024, which is a 40% payout ratio to holders of its ordinary shares and ADS, as of the close of business on September 10, 2024.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Meisong Lai: Number two, training our couriers to improve their awareness of serving customers, increase, customer loyalty. So, more personalized, more higher quality standards issued to our couriers so that they, are able to be recognized having the capability of serving to door as well as pick up from the consumers, from the customers.

Operator: In the interest of time, please limit yourself to one question and one follow-up.

Speaker Change #269: Balanced approach will continue to be our future focus.

Meisong Lai: Number three, shifting quality management of the delivery services focus from post-event, to pre-event. So, thereby, reducing a customer complaints or anticipate any potential problems that, could arise. So, hence, improve the overall experience.

Operator: At this time, we will pause momentarily to assemble our roster.

Meisong Lai: Number four, strengthening the cooperation with e-commerce platforms, enhancing direct, coordination between the headquarters and those platforms. Currently, while we have achieved direct settlement process with ByteDance, Pinduoduo, as well, as Douwu. Then improving the second part is reducing the cost of the last mile.

Meisong Lai: The initiatives, there are two-fold.

Meisong Lai: The first one is relating to the couriers.

Meisong Lai: We call it the Daojia Daobian policy or initiatives which started last year.

Speaker Change #269: Including the last mile initiatives. We believe we are building long term competitive advantages. So that we are a differentiated us.

Meisong Lai: The goal is to increase the income of our couriers.

Meisong Lai: So, early on in our remarks, we talked about allowing the couriers to achieve market pricing, or gaining the majority share of the market pricing is to incentivize them so that they are motivated to make a special trip to go pick up.

Meisong Lai: The second part of the initiatives relates to improving the outlet's profitability.

Meisong Lai: This is not an overnight goal. We are working towards this change in shift from volume to quality to focus on more differentiated product and services so that ZTO could break away from homogenized price competition, and establish a unique competitive advantage.

Operator: The first question today comes from Ronald Keung with Goldman Sachs.

Meisong Lai: Last year, we have about close to 2,000 outlets installed, or they have to ride to the outlet to pick up the packages that are bound for their delivery service area. So with the installation of those machines, the outlets no longer rely on manual sortation. So the riders or the couriers do not need to travel to the outlets anymore. Instead, they will receive packages directly from the outlet either through autonomous driving vehicles or electrical vehicles, that are utilized by the outlet to send those packages directly to the couriers. So that the couriers can work within a much smaller and more concentrated service area radius, and hence allowing them more time and more focus on serving to door and also pick up from the door.

Meisong Lai: Thank you very much, President Lai and President Yan.

Ronald Keung: Please go ahead.

Meisong Lai: Another aspect of this second initiative relates to the outlet. With sending the packages directly to the couriers as well as sending the packages directly to Last Mile POST, the outlet owners are able to reduce their delivery cost. For example, in the past, each package on average would cost the outlet about $0.80 for the couriers to deliver. Now couriers would then put part of their packages into the POST which will share their $0.40.

Operator: The next question comes from Luo Yujian with Haitong.

Ronald Keung: 谢谢Lai总,Yan总,Sophie 那也看到这个很稳健的这个业绩那想问一下第一就是我们二季度这个十个点的包裹量那就还是比行业慢一些那我们在announcement里面也提到这个量是包裹量还是非常重要的因为能带来这个规模效应那我们看下半年还有我们这个指引那我们是下半年预计这个怎么平衡, 业务量和利润的一个双赢那想听一下我们经历过去两个季度的这个可能比行业慢的这个速度以后现在有什么新的一些想法还有战略第二就看到这个每一个包裹的单金利润就可能还是比较平的然后看到就是成本这边感觉没有太再降下去单票那所以到底这个是因为业务量还是一个temporary的一个还是我们已经把过去几年做的这些效果现在已经大概稳定下来了那能不能够看到有更多的这个成本效应和带来的这个利润可以高于业务量或者利润高于这个收入增长的这个我们下半年能不能看到多一些这些operating leverage 然后翻译一下 Thank you management First is about a possible volume of 10% and slower than the industry So as we talked about in the announcement volume is not unimportant as it brings a scale of leverage So want to hear our guidance in the second half 謝謝您的體會, 字幕由Amara.org社区提供我們今年上半年, 韩逸芬的下节联络這主要原因是, 這是價格上競爭的第七个, 然后校快递呢低於成本價的快遞在行業當中這個份額是提升的, 讓我們有效的控制這個虧本虧錢的業務量, 所以上半年還是按照我們制定的戰略思路所以把服务质量摆在了更重要的位置上, 合理的利潤那我們的份額呢,其實上半年我們還是增長的但是跟行業增長,低於行業的增長, 从我们的产能来讲,基本是合理的,就是这个买卖我們上半年的這個, 增长是低于我们的那意味著我們資金沒變那我們下半年的增長肯定要高於上半年, 到底就要十八个政策才能够做到字幕由Amara.org社区提供, 差不多要做到十八以上的程度我們還是有信心的至於平衡的問題因為理論上來講如果我們也可以拿到上半年可以拿到更多的份額但是你肯定要更多的份額就是無效快遞的佔比會上升, 这个我们认为,产能跟份额要在合理之间因为中通还是超双位数的产业, 字幕由Amara.org社区提供還是李肖, 下半年我們還會做好保證服務質量的前提下平衡好增長跟利潤的關係, 第二個問題,成本下降的空間,確實這幾年整個快遞業通過產能的建設通過工具的優化,其實整個行業成本下降都非常好, 我們上半年其實這個我們也是, 完成了我們制定的成為下層的目標, 超額完成有可能呢,我們這個成本好像,這個,有些方面的成本下降不是太明顯比如說,我們這個產能投入,我們在去年,我們產能投入26個分佈中心也就是我們在部分區域的產能是剩的, 所以在未来几年,如果拉长来看,我们这个才能在单票上面能够這些資本投資的這些, 這就是成本是有下降空間的但是在今年因為廠房多, 或者是倍投入,產能還可以擴展50%,這方面的这个成本有可能有些上升, 根据中通全网的综合能力和实力,以及我们转运的效能,有理由相信我们的利润和单票的利润会保持在稳定的合理之间。 Thank you, everyone, for your questions.

Meisong Lai: Out of that $0.80 will go to the POST.

Operator: Please go ahead.

Operator: Let me translate for the chairman.

Meisong Lai: With that initiative that we implemented, the direct linkage between outlet and the POST would allow a greater portion, close to 60% or 40% of the packages going to the POST directly. So then the outlet does not need to pay the whole $0.80. So we estimated and we calculated of that $0.40 because it still needs to be sent to the POST. The outlet owners would pay on average between $0.10 to $0.20 to achieve that direct delivery to the POST.

Luo Yujian: Hello, President Lai and President Yan.

Operator: First question.

Operator: We believe we are building long-term competitive advantages so that we are differentiated from the rest of the Tongda.

Meisong Lai: So with first of all the $0.40 reduction in payment to the courier and then a cost of about $0.10 to $0.20 to send those packages to the POST, the outlets could net about a $0.20 or so saving on their delivery cost.

Luo Yujian: I am Luo Yujian, an analyst at Haitong.

Operator: The parcel volume for the total industry has grown and exceeded our expectations.

Meisong Lai: Going forward, we are going to focus on these initiatives in fully implementation.

Luo Yujian: First of all, I would like to congratulate the company for achieving good results in the second quarter.

Operator: In the second half of the year, we do have the following plan.

Meisong Lai: Then we will achieve a goal of not only improving the outlet's profitability as well as the courier's earnings.

Luo Yujian: I would like to ask two questions.

Operator: Our market share decreased 2%. The main reason being that, first, there are a lot more price competition or price competition intensifies.

Speaker Change #270: From the rest of that.

Meisong Lai: Hence, the long-term effect would be for the overall network stability to be established because the profit level will be increased.

Luo Yujian: First, I would like to ask about our future stable capital expenditure.

Operator: There are a lot more ineffective, or we call it ineffective, indeed it is just below the cost.

Meisong Lai: And it will provide support for our overall delivery fee reduction not only for us but also potentially as a solution to the whole industry.

Luo Yujian: As President Lai mentioned, the company has a lot of production capacity.

Operator: We look forward to speaking with you in the future, and thanks again for joining today's call.

Operator: It's priced below the cost.

Operator: We look forward to speaking with you in the future.

Luo Yujian: I would like to ask how much production capacity does the company generally build according to the capital expenditure plan?

Meisong Lai: So hence, the long-term effect would be for the overall network stability to be established because the profit level will be increased. And it will provide support for our overall delivery fee reduction not only for us but also potentially as a solution to the whole industry.

Operator: So the overall proportion of non-profitable volume has increased.

Speaker Change #270: We look forward to speaking with you in the future and thanks again for joining today's call.

Operator: So what we do is we very effectively controlled such volume coming into our network because we adhered to our strategy that set out in the beginning of the year to focus more on quality of services, and with that to achieve appropriate level of profit and in turn market share.

Operator: If we look at an overall perspective, our capacity and the volume are in tune, they are reasonably matched.

Operator: Thanks again for joining today's call.

Operator: In the first half of the year, the results that we achieved is out of the range of our 15 to 18 percent.

Operator: For information on guidance for the whole year, which means that in the next half of the year we should at least achieve to achieve 18 per cents of growth to come to the range of our previous guidance.

Operator: Conditions and current view of our businesses.

Operator: We have a high confidence of achieving such target, so, More from a from a theoretical Perspective if we want more volume, and we can simply reduce the price But we didn't choose to do that again because we wanted to focus on profitable growth while achieving reasonable match between the capacity and our market share volume gain, We should be able to achieve healthy growth on both.

Operator: Second half of the year, again, we will continue to focus on improving quality of services, developing differentiated product to achieve reasonable level of profit and volume balance.

Operator: Second part of the question.

Operator: The conference is now concluded. Thank you for returning today's presentation.

Operator: The conference is now concluded.

Operator: Indeed, for the entire industry, through all these years of fine-tuning of operations and investment of automation and so on and so forth, the unit cost productivity gain has been declining.

Speaker Change #271: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: For us, however, in the first half of the year, we exceeded our goal for cost productivity gain for the year.

Luo Yujian: First of all, congratulations to the company for achieving good performance in the second quarter.

Operator: We have invested for over 26 supersorting centers.

Luo Yujian: My question is about the capital expenditure plan for the years 2024 and 2025 and the longer period.

Operator: There are reserves, ample reserves, for capacity release in the future.

Luo Yujian: I would like to know which areas the investment will be allocated to and how we make the capital expenditure plan.

Operator: You may now disconnect.

Operator: We do believe that the capacity installed, as well as its flexibility in meeting as up to 50% of capacity, volume demand, we are still well on track to consistently and gradually release meaningful, For the unit profitability, based on the overall capacity as well as the reserve, we think that the strategy being consistently carried out, there will be stability in our profit growth on a total level as well as unit level.

Operator: You may now disconnect.

Luo Yujian: My second question is about the cost reduction plans for the whole process in the future.

Qianlei Fan: 謝謝兩位長官您好, The next question comes from Qianlei Fan with Morgan Stanley, please go ahead.

Luo Yujian: Thank you.

Qianlei Fan: It's not only about cost reduction at the line call, but also about cost reduction at the whole network, especially at network partners and last mile.

Meisong Lai: Thank you for your question.

Qianlei Fan: So, would you help us to better understand our initiatives to help the network and last mile to reduce cost and potential cost room, cost saving room in the next few years.

Meisong Lai: The capital expenditure plan is mainly for the construction of production capacity. In the past, China has continuously increased the construction of production capacity.

Qianlei Fan: Thank you.

Meisong Lai: At present, most of our distribution centers are free.

Qianlei Fan: 謝謝謝謝您的提問, 你提的這兩件事情其實就是總統正在做,或者未來要建成像的, 我們今年的策略就是把活佛策略擺在了更重要的位置目的就是要增加3,000的商品, 也提供業務員上門攬收、上門遞送的能力要增強那我們的目標呢是, 前半年其實我們產線的比例的增長是遠遠大於我們謝謝, 网络界那样的挣扎我們目標青年其實, 謝謝謝謝去年我們不到400萬今年全年要到600萬, 那有可能高峰吃,我們預知,肯定輸要操七百萬以上,這個肯定是做得到的, 反正就是我們其實從網絡上來講,就是一個到腳到鞭的事讓業務員拿到一手的價格,就發他的內心動力, 提高他们的事业滿天的支持性, 手段主要有幾個第一個是通過營銷手段及工具的推廣提升消費者到末端門店之間的第二是培訓小哥,強化小哥服務消費者的意義, 提升客戶年薪第三類從置地服務管理, 这段管理从事后变为事情,降低可书令第四是加大于, 平台的合作力度,強化總對總對勁目前我們跟自己的德沃、拼多多都實現了責任結算全部這些措施, 提升散件的比例目的是增加我們業務員的收入因為不想受熱就更穩定第二個就是, 降本,降本其實它是兩部分我們大部分看到的是我們轉運的降本就是總部車管的降本我們從去年開始呢就是持續推進就是網點的能力建設我們大概到目前有兩千個左右的碗體已經裝了, 它可以直接分到業務員和莫大門店通過不當責任, 再加上一些智能工具的使用和普及比如說現在很熱門的無人車字幕由Amara.org社区提供, 過去全統的模式是我們快遞小哥騎了個電三輪到站點拿錢, 現在的模式是站點則送到莫丹門店然後業務員以門店為半徑顆粒度服務他周邊的比如說一千戶人家左右的這樣的一個半徑很小的範圍那麼通過這個設備的投入路由的優化以及工具的使用, 暫停派遣成本下降我舉個例子過去我們給業務員八毛錢的派對, 那業務員拿回去四毛錢放到驛站那他有百分之六七十四毛錢是歸他的那麼現在呢就是直接站點直接到莫丹點莫丹四毛錢八毛錢四毛錢, 剩下了暫停到末端的, 有通過無人車的有通過我們自有車輛配送的大概也就是不到兩毛錢基本上在如果是无人车的话在一码钱, 我們用電車用駕駛員的大概在兩毛錢以內增加晚點的營利能力,讓它更穩定,更有信心, 這兩項措施,其實閃電跟折電,它是一件事情。幫助業務員的收入增強幫助暫停的營利能力增強從而達到兩個目的就是中通的散件比例上升從網絡上來的, 盈利水平比較高的產經在中東網絡流通的更多字幕由Amara.org社區提供, 郭文貴議員這就是我們現在在做的事情, Thank you very much for your questions.

Meisong Lai: It is difficult to make a definite plan.

Qianlei Fan: Currently, our daily volume of non-e-commerce parcels exceeded 5.4 million, and our year-end goal is to achieve daily volume average 6 million packages.

Speaker Change #271: Okay.

Meisong Lai: According to the actual situation and the requirements of the government, 就是綜合物流,比如說把生態,產能計算進去, 快運,冷鏈,包括倉。所以這個,總體方向呢,就是肯定是放緩, 因為大頭就是在這個埋頭地間分撥, 那基本上呢,我們在很多地方其實, 你的借量漲個五十,乃至一百,它都已經是夠了, 所以資本方面未來投入會減少。第二呢,就是我們還有很多的產能, 比如說你車輛,因為車輛它有個周期,五年六年, 有個周期它計劃呢,就是會投入非常非常的多, 跟剛開始這些借量,百分之五六十六七所增長的時候呢, 這個是不一樣的。那未來也不可能說像中鋒這麼大的規模, 一年增長百分之五六, 所以我們在這個資本開始產能建設方面呢, 其實我們可以預見, 包括我們對股東的回報, 這個是跟你的收入跟產能是掛鉤的。降本空間呢,剛才講的,除了轉運的降本跟折斂, 因為轉運降本呢,過去講得多, 今天呢,剛剛前面有人提到, 就是周派怎麼降,就是從站點到末端, 前面已經詳細介紹, 那我們還是從中心來講, 第一呢,轉運環節來講, 我們會持續管控好我們轉運每個環節的效能, 就是可視化對比法, 自己跟自己比,跟行業比, 我們可以確定的講呢, 中鋒在這方面還是會在行業裡面保持領先。第二呢,我們會在路由規劃上面, 你說我過去介紹的三萬底加, 就是從我們過去取勝, 是始發中心跟目的中心的鏈接, 在行業裡面做得比較好, 就是我們建分撥,然後買自由車, 這個方面呢,大家現在也都基本追, 追得差不多追平。那未來呢,就是第二三環, 就是始發中心跟目的地站點的鏈接, 或者是始發站點跟目的地中心的鏈接, 這第二三環,現在也是在優化路由, 也是在推進。那如果第二三環形成了, 就會形成第三三環, 就是從始發站點跟目的地站點的鏈接, 也就是說中鋒裡面我們內部考核的, 就是你的分界停次, 所以這個裡面其實未來隨著你規模, 你路由的優化還是有非常, 有空間的成本肯定是持續下降, 是有保障的那我們為什麼就, 再回到原點為什麼我們上半年, 我們的份額好像降了兩個點因為其實對總統來講, 你這百分之十的增長或者十五的增長, 到十八的增長對我們的成本是最優的, 如果你真的增了很多那你要去添加, 比如說當天車費增加然後這個運力跟操作各方面, 其實合理的計量在出現的成本是最優化的, 謝謝 Thank you very much, for your question Well we, The first question is about the CAPEX In the past, we've been consistently investing in CAPEX mainly to build sortation centers and establish transit capabilities Till today, most of our supersorting centers were self-owned and above 90% to be specific that may supplement so going forward we won't be in need of expanding our CAPEX spending based on the economic development some areas or weaker areas we have also reserved space 200 to 300 hectare acres, for example if our volume demand increases one fold or even two fold we have sufficient reserve already there so we don't need to spend capital to acquire further more significant land use rights we just need to either develop them or upgrade them The consideration, however do need to be given to our initiatives in the longer term developing comprehensive logistic capabilities for example warehousing or in warehouse processing LTL businesses, or those ecosystem businesses do rent spaces from us so that they are able to form a comprehensive services by utilizing our capacity.

Qianlei Fan: You know that in last year, we started off with daily volume about 4 million packages, and we are on track to achieve our goal to double that volume because the peak volume would most likely exceed 7 million parcels per day. This is our goal, and we are confident to achieve that.

Meisong Lai: Going forward, it is very clear that acquisition for land use rights, building super centers are going to be very minimal.

Qianlei Fan: How do we achieve that?

[music].

Meisong Lai: The growth of our – or putting in line of services, putting services, the capacity is very much directed or matched with our anticipated demand of capacity in the sortation, transportation and all the segments of our operations.

Qianlei Fan: Chairman went into the details, so give me some time, I'll go through the specifics with you.

Meisong Lai: We are able to foresee with a very clear visibility that going forward, we will be able to generate increasing free cash flow.

Qianlei Fan: First of all, it's related to increasing the ratio, is what we refer to in our remarks, of non-e-commerce packages as a ratio to our delivery total. So in other words, if I deliver 100 packages and there needs to be at least 6 packages, pick up as non-e-commerce.

Meisong Lai: We talked about giving back return to our shareholders. It's based on the fact that the cash generation will continue to be healthy and the cap-back spending will be stable or reducing going into 2004-2025 so that our overall return to the shareholders will increase.

Qianlei Fan: So, one of the things, there are four specific strategies that we implemented to improve the portion of non-e-commerce or we call it individual parcels or retail parcels. One is to enhance consumers' willingness to send parcels at our post through deliberate marketing effort and the promotion, in using of digital tools, so the handheld, building your own, focused group or targeted group is something that are being implemented.

Meisong Lai: The second part relates to the question on how we are able to continue to reduce the, operating cost.

Qianlei Fan: Number two, training our couriers to improve their awareness of serving customers, increase customer loyalty. So more personalized, more higher quality standards issued to our couriers, so that they are able to.., be recognized having the capability of serving two-door as well as pickup from the customers.

Meisong Lai: Indeed, as you look into the past, even though ZTO has been leading this effort, but for the whole industry, it has been continuously achieving high cost efficiency in the past.

Qianlei Fan: Number 3, Shifting quality management of the delivery services focus from post-event to pre-event, so thereby reducing the customer complaints or anticipate any potential problems that could arise, so as to improve the overall experience.

Meisong Lai: What we've been doing and what we've been able to achieve greater results or ahead of everybody is that our connection between the outlets and the sortation center has been more advanced or more ahead of everybody.

Qianlei Fan: Number four, strengthening the cooperation with e-commerce platforms, enhancing direct coordination between the headquarters and those platforms. Currently, while we have achieved direct settlement process with ByteDance, and Pinduoduo, as well as Douwu.

Meisong Lai: Now going forward, as we continue to rely on lean operations looking into greater visibility of each of the segments of our operations, we are still able to, as volume increases, as our productivity gain continues to release, we still believe there are plenty of opportunities for us to achieve scale leverage as well as on a unit level continued cost efficiency.

Qianlei Fan: The second part is reducing the cost of the last mile.

Meisong Lai: And then the second consideration, which is more of a long-term but steady visibility, to us, is that because of the route planning, we talked about in the past the tri-layer throughput concept.

Qianlei Fan: The initiatives, there are two-fold.

Meisong Lai: As again we said earlier, we were able to improve the connectivity between the outlets and sortation center.

Qianlei Fan: The first one is relating to the couriers.

Meisong Lai: This is not an overnight goal. We are working towards this change in shift from volume to quality to focus on more differentiated products and services so that ZTO could break away from a marginalized price competition and establish competitive, a unique competitive advantage.

Meisong Lai: Going forward, as volume increases, we are able to establish greater connectivity between the origination outlet to destination sorting center or the third layer being the origination center to the destination outlet or the origination outlet to destination outlet. All these is simply put an effort to reduce the number of sortations.

Qianlei Fan: We call it the 到夹到边 policy or initiatives, which started last year.

Meisong Lai: In the past, we were at the level of 2.5 per parcel.

Qianlei Fan: The goal is to increase.., the income of our couriers.

Meisong Lai: We are reducing it now to 2.09 and continue to decrease because of better route planning and volume increases. We estimated for each one-time reduction of the sortation, we are able to reduce about $0.25 being $0.10 in sortation and $0.15 for transportation.

Qianlei Fan: So early on in our remarks, we talked about allowing the couriers to achieve market pricing or gaining the majority share of the market pricing is to incentivize them so that they are motivated to make a special trip to go pick up, The second part of the initiative relates to improving the outlet's profitability.

Meisong Lai: With that, we have clear room for the future to further reduce our unit level cost because of this tri-layer throughput concept.

Qianlei Fan: We, last year we have about close to 2,000.

Meisong Lai: Market share as we looked at the first half of the year declined two points.

Qianlei Fan: Outlets installed, Chairman gave an example. In the past, the couriers have to go to the outlets, help sorting, or they have to ride to the outlets to pick up the packages that are bound for their delivery service area. So with the installation of those machines, The outlets no longer rely on manual sortation. So the riders or the couriers do not need to travel to the outlets anymore. And instead, they will receive packages directly from the outlet, either through autonomous driving vehicles or electrical vehicles that are utilized by the outlet to send those packages directly to the couriers.

Meisong Lai: This is still matched relatively well with our capacity or capacity in services.

Qianlei Fan: So that the couriers can work within a much smaller and more concentrated service area radius and hence allowing them more time and more focus on serving to door and also pickup from the door.

Meisong Lai: Anywhere outside of that range will not generate as effective economy of scale and will cause us to have increased marginal cost with diminished marginal benefit.

Qianlei Fan: Another aspect of this second initiative relates to the outlet with the direct, sending the packages directly to the couriers as well as sending the packages directly to last mile post. The outlet owners are able to reduce their delivery cost. For example, in the past, each package on average would cost the outlet about $0.80 for the couriers to deliver.

Meisong Lai: We are, as you asked the question, how we plan our capital investment and deployment.

Qianlei Fan: Now couriers would then.., put part of their packages into the post, which will share their $0.80, $0.40 out of that $0.80 will go to the post.

Meisong Lai: It's very much a science related to what we are able to serve, what are the capacity build-up, what we anticipate to come with the most optimal volume and optimum cost.

Qianlei Fan: With that initiative that we implemented, the direct linkage between outlet and the post would allow a greater portion, close to 60% or 40% of the packages going to the post directly, does not need to pay the whole $0.80.

Meisong Lai: Thank you for your question.

Qianlei Fan: So, we estimated and recalculated of that $0.40, because it still needs to be sent to the post.

Operator: This concludes our question and answer session.

Qianlei Fan: The outlet owners would pay on average between 10 to 20 cents, to achieve that direct delivery to the post.

Sophie Li: I would like to turn the conference back over for any closing remarks.

Qianlei Fan: So with, first of all, the $0.40 reduction in payment to the courier and then a cost of about $0.10 to $0.20 to send those packages to the post, the outlet could net about a $0.20 or so saving on the delivery cost.

Sophie Li: Thanks again for your continued attention and support.

Qianlei Fan: Going forward, we are going to focus on these initiatives, in fully implementation, then we will achieve, A goal of not only improving the outlet's profitability as well as the courier's earnings. 字幕由Amara.org社区提供, The long-term effect would be for the overall network stability to be established because the profit level will be increased. It will provide support for our overall...

Sophie Li: Our strategy shift in the beginning of the year has been very effective for us, specifically in improving the non-e-commerce packages. It's reflected in our bottom line.

Qianlei Fan: Delivery fee reduction, not only for us, but also potentially as a solution to the whole industry.

Sophie Li: Balanced approach will continue to be our future focus, including the last mile initiatives.

Qianlei Fan: This is not an overnight goal, we are working towards this, from volume to quality to focus on more differentiated product and services so that ZTO could break away from homogenized price competition and establish unique competitive advantage.

Sophie Li: We believe we are building long-term competitive advantages so that we are differentiated from the rest of the tone down.

Qianlei Fan: Thank you very much, Lai Zong, Yan Zong.

Sophie Li: We look forward to speaking with you in the future.

Luo Yujiang: The next question comes from Luo Yujiang with Hightown.

Sophie Li: Thanks again for joining today's call.

Luo Yujiang: Please go ahead.

Operator: The conference is now concluded.

Luo Yujiang: Lai总,Yan总,Sophie,好我是海通交易分析师,罗岳江首先恭喜公司二季度取得了好的业绩我想请教两个小问题第一个想请教一下我们未来稳态的一个资本开支是怎样的刚刚Lai总提到公司的产能空间很大想请教一下公司在具体制定资本开支计划的时候一般是根据多少产能的增长来制定的第二个问题是我们的业务量已经达到每天一亿般的一个规模想请教一下公司总体的一个账本空间刚刚Lai总和Yan总已经详细讲解了末端的一个账本的展望那我们的核心成本这一块包括运输成本分件这些下降的空间未来该如何展望谢谢下面我翻译一下, First of all, congratulations to the company for achieving good performance in the second quarter.

Operator: Thank you for attending today's presentation.

Luo Yujiang: My question is about the capital expenditure plan for the years 2024 and 2025 and the longer period.

Luo Yujiang: I'd like to know which areas the investment will be allocated to and how we make the capital expenditure plan.

Luo Yujiang: Second question is about the cost reduction plans about the whole process in the future.

Luo Yujiang: 谢谢您的提问资本开支其实主要是在产能建设方面, 過去中共持續地加大產能的建設, 目前我們大部分分佈中心都是自由的你說一定這個規劃呢,其實是很難規劃的我們根據實際的情況,這個同時政府的要求有些地方呢,就是你, 經濟不是太發達,但是我們投入拿的土地,比如說兩三百畝,三四百畝,它的產能就是足夠,比如說你再翻一倍,乃至翻兩倍,這些地方也是有生育權的。第二个,我们在投资方面还是考虑到我们的第二个增长曲线, 综合沃留,把生态产能计算进去快預淵累獵包括沖, 字幕由Amara.org社区提供總體方向肯定是放緩,因為大頭就是在這個, 埋頭遞減分撥基本上呢我們在很多地方其實你的戒量三分五十乃至一百它都已經是夠了所以在資本方面未來投入會減少第二就是我們還有很多的傳聞比如說你車輛因為車輛它有個周期五年六年有個周期它, 企劃就會投入非常非常多跟剛開始的戒令百分之五六折六七所增長的時候是不一樣的未來也不可能像中東這麼大的規模一年增長百分之百, 所以我們在這個日本开始产能建设方面,其实我们可以预见,包括我们对股东的回报不太行,这个是跟你的收入跟产能是瓜葛的, 降冷空間呢,剛才講的,除了轉運的降本跟折斂,因為轉運降本的故事講得多, 今天剛剛前面有人提到,就是都派怎麼降,就是從站點到末端,前面已經詳細介紹了。我們還是從中心來講第一,轉運環節來講我們會持續管控好我們轉運每個環節的效能就是可視化對比法自己跟自己比,跟行業比我們可以確定的講總統在這方面還是會在行業裡面保持領先第二,我們會在路由規劃上面以我過去介紹的三個問題, 我们过去取胜是始发中心跟末绩中心的链接在行业里面做得比较好就是我们建分拨,然后买自由车這個方面呢,大家現在也都基本追,追得差不多追平那未來呢,就是第二三網就是司法中心跟目的地站點的鏈接或者是司法站點跟, 這個目的地中心的聯繫現在也是在優化漏油,也是在推進, 如果第二張網形成了,就會形成第三張網就是從始發站點跟目的地站點的聯繫也就是說中通裡面我們內部考核的就是你的分階頻次我們從過去2.54、2.64降到了差不多2.09 那我们以下见, 這樣一次就是兩毛五分錢因為你轉撥費要一毛多一次操作就是一毛五分錢如果站點跟站點分裂,它其實名次很薄,它的成本就會更低。那我们第二种方法,始发站点跟目的地中心链接,或者始发中心跟目的地站点链接,它是一次分布,它就可以省,也可以省两滑鼠分期。所以這個裏面其實未來, 随着规模有了优化也有,還是有非常多的, 有空间的,成本肯定是持续下降自由宝藏, 那我們為什麼就再回到原點為什麼我們上半年我們的份額好像降了兩個點因為其實對總統來講你這10%的增長或者15%的增長到18%的增長對我們的成本是最低的, 如果你真的升了很多,那你要去添加,比如說當天車費增加盈利跟操作各方面其實合理的介面在虛心的成本是最優化的, Thank you very much for your question.

Luo Yujiang: The first question is about the CAPAX. In the past, we've been consistently investing in Capex, mainly to build sortation centers and establish transit capabilities. Until today, most of our super sorting centers were self-owned, and above 90% to be specific, that may supplement.

Meisong Lai: Astheoptimizationofrevenuestructurepartiallyalleviatedunitpricepressuredrivenbypricecomputation,ourASPwasflat. CombinedwiththecostefficiencygainandareasonableSG&Astructure,boththeunitprofitandthetotalprofitabilityremainedindustry-leading. Enteringintothesecondhalfoftheyear,theindustryvolumekeptastronggrowthmomentum. Meanwhile,despitetheintensepricecomputationintheproductionregions,weobservedalimitedroomforfurtherpricecutsgiventhetypicalcost-to-pluspricingmodel.

Qianlei Fan: Intheannouncement,thecompanymentionedthatweareontracktodoubleourretailparcelvolume.

Luo Yujiang: So going forward, we won't be in need of expanding our Capex spending.

Luo Yujiang: Based on the economic development, some areas or weaker areas, we have also reserved a space 200 to 300 hectare acres, for example.

Luo Yujiang: If our volume demand increases one-fold or even two-fold, we have sufficient reserve already there, so we don't need to spend capital to acquire further more significant land-use rights. We just need to either develop them or upgrade them.

Luo Yujiang: The consideration, however, do need to be given to our initiatives in the longer term developing comprehensive logistic capabilities.

Luo Yujiang: For example, warehousing or in-warehouse processing, LTL businesses, all those ecosystem businesses do rent spaces from us so that they are able to form a comprehensive and higher efficiently co-located. Products and Services by utilizing our capacity.

Luo Yujiang: Going forward, it is very clear that acquisition for land use rights, building super centers are going to be very minimal.

Luo Yujiang: The growth of our putting in line of services, putting services, the capacity is very much directed or matched with our anticipated demand of capacity in the sortation, transportation and all the segments of our operations.

Luo Yujiang: We are able to foresee with a very clear visibility that going forward, we will be able to generate increasing free cash flow. We talked about giving back return to our shareholders, it's based on the fact that the cash generation will continue to be healthy and the cutback spending will be stable or reducing going into 2004-2025 so that our overall return to the shareholders will increase.

Luo Yujiang: The second part relates to the question on how we are able to...

Luo Yujiang: Indeed, as you look into the past, even though ZTO has been leading this effort, but for the whole industry, it has been continuously achieving high cost efficiency.

Meisong Lai: It's time for the entire express industry to shift from high-quality to high-quality development, striving to fulfill social viability and serve capital objectives.

Unnamed: Thank you very much, Lai Zhuang, Yan Zhuang.

Luo Yujiang: In the past, what we've been doing and what we've been able to achieve greater results or ahead of everybody is that our connection between the outlets and the flotation center has been more advanced or more ahead of everybody.

Luo Yujiang: Now going forward, as we continue to rely on lean operations, looking into greater visibilities of each of the segments of our operations, we're still able to, as volume increases, as our productivity gains continue to release, we still believe there are plenty of opportunities for us to achieve scale leverage as well as on a unit level continued cost efficiency.

Luo Yujiang: And then the second consideration, which is more of a long-term but steady visibility to us, is that because of the route planning, we talked about in the past the tri-layer throughput concept.

Luo Yujiang: As, again, we said earlier, we were able to improve the connectivity between the outlets and flotation center.

Luo Yujiang: Going forward, as volume increases, we are able to establish greater connectivity between the origination outlet to destination flotation center or the third layer being the origination center to the destination outlet or the origination outlet to destination outlet. All these is simply put an effort to reduce the number of sortations.

Luo Yujiang: In the past, we were at level of 2.5 per parcel. We are reducing it now to 2.09 and continue to decrease because of better route planning and volume increases.

Meisong Lai: The leak yields the leadership action to transform from high-quality to high-quality stem from our long-lasting focus on seeing the best we can, and achieve balance among quality, profitability, and scale.

Lou Yu-Jian: The next question comes from Lou Yu-Jian with Python. Please go ahead.

Luo Yujiang: We estimated for each one-time reduction of the sortation. We are able to reduce about $0.25, being $0.10 in sortation and $0.15 for transportation.

Luo Yujiang: With that, we have...

Luo Yujiang: There is clear room for the future to further reduce our unit level cost because of this tri-layer throughput concept, share, as we looked at the first half of the year, declined two points.

Luo Yujiang: This is still matched relatively well with our capacity or, Capacity in Services.

Luo Yujiang: Anywhere outside of that range will not generate as effective economy of scale and will cause us to have increased marginal cost with diminished marginal benefit.

Luo Yujiang: So we are, as you asked the question, how we plan our capital investment and deployment.

Luo Yujiang: It's very much a science related to what we are able to serve, what are the capacity build-up, what we anticipate to come with the most optimal volume and optimal cost.

Lou Yu-Jian: Lai Zhuang, Yan Zhuang, Sophie Li, I am the director of Highton Jiao-Yuan University, Lou Yu-Jian. I would like to ask you two questions. One, please teach us what we are going to do in the future. Just now, Lai told me that the company's market is very large. Please teach us how to improve the market and how many markets are going to improve in the future.

Luo Yujiang: Thank you for your questions.

Operator: This concludes our question and answer session.

Operator: I would like to turn the conference back over for any closing remarks.

Operator: Thanks again for your continued attention and support.

Operator: Our strategy shift in the beginning of the year has been very effective for us, specifically in improving the non-e-commerce packages. It's reflected in our bottom line.

Operator: Balanced approach will continue to be our future focus, including the last mile initiatives.

Meisong Lai: It'stimefortheentireexpressindustrytoshiftfromhigh-quantitytohigh-qualitydevelopment,strivingtofulfillsocialviabilityandservecapitalobjectives. ZTO'sleadershipactiontotransformfromhigh-quantitytohigh-qualitystemmedfromourlong-lastingfocusonbeingthebestwecanandachievebalanceamongquality,profitability,andscale.

Qianlei Fan: Wouldyoupleaseremindusofourcurrentdailyretailparcelvolume,thepercentageinourtotalvolume,ourtargetforthisyear,andprobablythetargettoachieveforthenextfewyears?

Meisong Lai: Considering the market conditions would have brought more effort on the company's range of weariness and repination on the premise of achieving scale advantage to follow the both blood health process.

Meisong Lai: In addition, we are committed to accessibility, addressing, and needs of the network partners and careers.

Meisong Lai: Specific actions on our implementation.

Unnamed: The second question is, we have already reached the point where we are going to ask the company's market for a long time. Lai Zhuang and Yan Zhuang have been trying to improve the market for a long time.

Luo Yujian: Firstofall,Iwouldliketocongratulatethecompanyforachievinggoodresultsinthesecondquarter.

Luo Yujian: Iwouldliketoasktwoquestions.

Luo Yujian: First,Iwouldliketoaskaboutourfuturestablecapitalexpenditure.

Meisong Lai: First, we will revamp events and improve network policies to ensure performance, relevancy, transparency, and fairness with clear rewards or recommend effectiveness.

Unnamed: Let's move on to the next question.

Luo Yujian: AsPresidentLaimentioned,thecompanyhasalotofproductioncapacity.

Luo Yujian: Iwouldliketoaskhowmuchproductioncapacitydoesthecompanygenerallybuildaccordingtothecapitalexpenditureplan?

Unnamed: First of all, congratulations to the company for receiving good performance in the 7th quarter.

Unnamed: My question is about capital expenditure plan for the years 2000, 24, 25, and the number of periods.

Unnamed: I would like to know which areas the residents will allocate it to and how we make the capital expenditure plan. The second question is about the cost reduction place, about the whole process in the future.

Luo Yujian: Firstofall,congratulationstothecompanyforachievinggoodperformanceinthesecondquarter.

Luo Yujian: Myquestionisaboutthecapitalexpenditureplanfortheyears2024and2025andthelongerperiod.

Luo Yujian: Iwouldliketoknowwhichareastheinvestmentwillbeallocatedtoandhowwemakethecapitalexpenditureplan.

Qianlei Fan: Thesecondquestionisaboutcostreduction.

Luo Yujian: Mysecondquestionisaboutthecostreductionplansforthewholeprocessinthefuture.

Meisong Lai: Thank you. In the past, we have not been able to share the cost of capital expenditure. So, you said that the cost reduction place is very difficult. It is difficult for us to share the cost reduction place. There are some places where you are going to ask the company's market for a long time. This is not too developed, but we were able to get it at 235.30 a.m. Its potential is that you are going to be able to get it at 2.30 a.m.

Luo Yujian: Thankyou.

Huiping Yan: Thankyouforyourquestion.

Huiping Yan: Thecapitalexpenditureplanismainlyfortheconstructionofproductioncapacity. Inthepast,Chinahascontinuouslyincreasedtheconstructionofproductioncapacity.

Huiping Yan: Atpresent,mostofourdistributioncentersarefree.

Huiping Yan: Itisdifficulttomakeadefiniteplan.

Meisong Lai: Consideringthemarketconditions,wewillputmoreeffortonenhancingbrandawarenessandrecognitiononthepremiseofachievingscaleadvantagetovolume-levelblock-shoppingprofits.

Huiping Yan: Accordingtotheactualsituationandtherequirementsofthegovernment,就是綜合物流,比如說把生態,產能計算進去,快運,冷鏈,包括倉。所以這個,總體方向呢,就是肯定是放緩,因為大頭就是在這個埋頭地間分撥,那基本上呢,我們在很多地方其實,你的借量漲個五十,乃至一百,它都已經是夠了,所以資本方面未來投入會減少。第二呢,就是我們還有很多的產能,比如說你車輛,因為車輛它有個周期,五年六年,有個周期它計劃呢,就是會投入非常非常的多,跟剛開始這些借量,百分之五六十六七所增長的時候呢,這個是不一樣的。那未來也不可能說像中鋒這麼大的規模,一年增長百分之五六,所以我們在這個資本開始產能建設方面呢,其實我們可以預見,包括我們對股東的回報,這個是跟你的收入跟產能是掛鉤的。降本空間呢,剛才講的,除了轉運的降本跟折斂,因為轉運降本呢,過去講得多,今天呢,剛剛前面有人提到,就是周派怎麼降,就是從站點到末端,前面已經詳細介紹,那我們還是從中心來講,第一呢,轉運環節來講,我們會持續管控好我們轉運每個環節的效能,就是可視化對比法,自己跟自己比,跟行業比,我們可以確定的講呢,中鋒在這方面還是會在行業裡面保持領先。第二呢,我們會在路由規劃上面,你說我過去介紹的三萬底加,就是從我們過去取勝,是始發中心跟目的中心的鏈接,在行業裡面做得比較好,就是我們建分撥,然後買自由車,這個方面呢,大家現在也都基本追,追得差不多追平。那未來呢,就是第二三環,就是始發中心跟目的地站點的鏈接,或者是始發站點跟目的地中心的鏈接,這第二三環,現在也是在優化路由,也是在推進。那如果第二三環形成了,就會形成第三三環,就是從始發站點跟目的地站點的鏈接,也就是說中鋒裡面我們內部考核的,就是你的分界停次,所以這個裡面其實未來隨著你規模你路由的優化還是有非常有空間的成本肯定是持續下降是有保障的那我們為什麼就再回到原點為什麼我們上半年我們的份額好像降了兩個點因為其實對總統來講你這百分之十的增長或者十五的增長到十八的增長對我們的成本是最優的如果你真的增了很多那你要去添加比如說當天車費增加然後這個運力跟操作各方面其實合理的計量在出現的成本是最優化的謝謝ThankyouverymuchforyourquestionWellweThefirstquestionisabouttheCAPEXInthepastwe'vebeenconsistentlyinvestinginCAPEXmainlytobuildsortationcentersandestablishtransitcapabilitiesTilltodaymostofoursupersortingcenterswereself-ownedandabove90%tobespecificthatmaysupplementsogoingforwardwewon'tbeinneedofexpandingourCAPEXspendingbasedontheeconomicdevelopmentsomeareasorweakerareaswehavealsoreservedspace200to300hectareacresforexampleifourvolumedemandincreasesonefoldoreventwofoldwehavesufficientreservealreadytheresowedon'tneedtospendcapitaltoacquirefurthermoresignificantlanduserightswejustneedtoeitherdevelopthemorupgradethemTheconsiderationhoweverdoneedtobegiventoourinitiativesinthelongertermdevelopingcomprehensivelogisticcapabilitiesforexamplewarehousingorinwarehouseprocessingLTLbusinessesorthoseecosystembusinessesdorentspacesfromussothattheyareabletoformacomprehensiveservicesbyutilizingourcapacity.

Meisong Lai: These are the differences. The second one is that we are still thinking about the potential of our second production. [inaudible] The next time, it is 2.5 cm, because you will not be able to get 1.5 cm in total, If the distance between the three points and the whole point is 0.5 cm, the distance between the two points will be lower. The second point is the distance between the three points, whether it is the distance between the three points or the distance between the three points,[inaudible] Product and Services by utilizing our capacity.

Meisong Lai: Going forward, it is very clear that acquisition for land use rights, building super centers are going to be very minimum. The growth of our or putting in line of services, putting services, the capacity is very much directed or mashed with our anticipated demand of capacity in the sortation, transportation and all the segments of our operations. We are able to foresee with a very clear visibility that going forward, we will be able to generate increasing free cash flow.

Meisong Lai: Inaddition,wearecommittedtoequitablyaddresstheinterestsandneedsofthenetworkpartnersandcareers.

Huiping Yan: Goingforward,itisveryclearthatacquisitionforlanduserights,buildingsupercentersaregoingtobeveryminimal.

Meisong Lai: Specificactionsunderimplementationincludethefollowing.

Huiping Yan: Thegrowthofour–orputtinginlineofservices,puttingservices,thecapacityisverymuchdirectedormatchedwithouranticipateddemandofcapacityinthesortation,transportationandallthesegmentsofouroperations.

Meisong Lai: We talked about giving back return to our shareholders. It is based on the fact that the cash generation will continue to be healthy and the catback spending will be stable or reducing in going into 2004-2025 so that our overall return to the shareholders will increase. The second part relates to the question on how we are able to continue to reduce the operating cost. Indeed, as you look into the past, even though ZTO has been leading this effort, but for the whole industry, it has been continuously achieving high-cost efficiencies.

Meisong Lai: First,wewillrevampandimprovenetworkpoliciestoensureperformancerelevancy,transparency,andfairnesswithclearrewardsorrecommendeffectiveness.

Huiping Yan: Weareabletoforeseewithaveryclearvisibilitythatgoingforward,wewillbeabletogenerateincreasingfreecashflow. Wetalkedaboutgivingbackreturntoourshareholders. It'sbasedonthefactthatthecashgenerationwillcontinuetobehealthyandthecap-backspendingwillbestableorreducinggoinginto2004-2025sothatouroverallreturntotheshareholderswillincrease.

Meisong Lai: Second,wewillcontinuouslyenhanceservicequalitywithrefinedindicatorscloselytiedtoperformanceevaluation,offertailor-madesupportandimprovementsforunderperformingoutletstodrivehigh-qualityaswellasdifferentiatedservices.

Qianlei Fan: Weunderstandthatthecompetitionofexpressdeliverybusinessisnotonlyaboutcostreductionatthelinecall,butalsoaboutcostreductionatthewholenetwork,especiallyatnetworkpartnersandlastmile.

Huiping Yan: Thesecondpartrelatestothequestiononhowweareabletocontinuetoreducetheoperatingcost.

Meisong Lai: In the past, what we have been doing and what we have been able to achieve greater results or ahead of everybody is that our connection between the outlets and the rotation center has been more advanced or more ahead of everybody. Now going forward, as we continue to rely on lean operations, looking into greater visibility of each of the segments of our operations, we are still able to, as volume increases, as our productivity gains continue to release.

Meisong Lai: Third,wewillfirmlyadvancethelastmileprofitallocationstrategy,promotecareersproactivenesstoincreasetheretailcostratioandachievemoreincome. Fourth,wewillacceleratetheexpansionoflastmileprofit.

Qianlei Fan: Sowouldyouhelpustobetterunderstandourinitiativestohelpthenetworkandlastmiletoreducecostandpotentialcostsavingroominthenextfewyears?

Huiping Yan: Indeed,asyoulookintothepast,eventhoughZTOhasbeenleadingthiseffort,butforthewholeindustry,ithasbeencontinuouslyachievinghighcostefficiencyinthepast.

Sophie Li: EncouragelargeroutletstoinvestinsortingequipmentEstablishdirectlinkagetoalarge-smallproposedReducingdeliverycostsandfreeingupdeliverypersonneltoconcentrateonservicinglarge-smallcustomersThroughconsolidationofresources,weintendtoprovidesolutionstoalleviatedeliverycostpressureforthewholeindustryFifth,wewillfurtherenhanceourproductmix,increasethepenetrationofhigh-endproducts,strengthencollaborationwithonlineplatforms,andleverageZTO'slogisticandecologicalresourcestoexpandthecapabilityofcomprehensivesupplychains,improvingbrandawarenessandcustomerappreciationSixth,bevigilantandmaintainasenseofcrisis-facingmarketuncertaintiesandfluctuationsWewillincreaseeffectivenessofcommunicationwithournetworkpartners,unifythinking,andreinforceconfidenceandadvocateabalancebetweenlong-termandshort-terminterests,maintainingnetworkstabilityDespiteuncertaintiesinthemicro-environment,theexpressdeliveryindustryhasdemonstratedresilienceacrosseconomiccyclesbyofferingrobustsupportfortheadvancementofdigitaleconomyandimprovingcirculationefficiencyWewillseizeopportunitiesinfrontofchallenges,includingintensifiedindustrycompetitionZTOwillfocusonservicequality,furtherlarge-smallstrategicobjectives,andenhanceprofitabilityforoutletsaswellascouriersbyestablishinguniquecompetitiveadvantagessoastograduallybutsteadfastlydifferentiateourselvesfromtherestofTongdaeinbrandrecognitionandcustomersatisfactionProvidingmorechoicesforconsumersandcustomers,we'reaimingtocreatevalueforthecountry,society,aswellasemployeesandshareholdersNowlet'shearfromMs.

Qianlei Fan: Thankyou.

Huiping Yan: Whatwe'vebeendoingandwhatwe'vebeenabletoachievegreaterresultsoraheadofeverybodyisthatourconnectionbetweentheoutletsandthesortationcenterhasbeenmoreadvancedormoreaheadofeverybody.

Sophie Li: YanaboutourfinancialresultsandtargetsThankyou.

Huiping Yan: Nowgoingforward,aswecontinuetorelyonleanoperationslookingintogreatervisibilityofeachofthesegmentsofouroperations,wearestillableto,asvolumeincreases,asourproductivitygaincontinuestorelease,westillbelievethereareplentyofopportunitiesforustoachievescaleleverageaswellasonaunitlevelcontinuedcostefficiency.

Meisong Lai: We still believe there are plenty of opportunities for us to achieve scale leverage as well as on a unit level continued cost efficiency. And then the second consideration, which is more of a long term, but steady visibility to us, is that because of the route planning, we talked about in the past the trial layer throughput concept. Again, we said earlier we were able to improve the connectivity between the outlets and rotation center.

Sophie Li: Thankyou,ChairmanLaiandSophie.

Huiping Yan: Andthenthesecondconsideration,whichismoreofalong-termbutsteadyvisibilitytous,isthatbecauseoftherouteplanning,wetalkedaboutinthepastthetri-layerthroughputconcept. Asagainwesaidearlier,wewereabletoimprovetheconnectivitybetweentheoutletsandsortationcenter. Goingforward,asvolumeincreases,weareabletoestablishgreaterconnectivitybetweentheoriginationoutlettodestinationsortingcenterorthethirdlayerbeingtheoriginationcentertothedestinationoutletortheoriginationoutlettodestinationoutlet. Alltheseissimplyputanefforttoreducethenumberofsortations. Inthepast,wewereatthelevelof2.5perparcel. Wearereducingitnowto2.09andcontinuetodecreasebecauseofbetterrouteplanningandvolumeincreases. Weestimatedforeachone-timereductionofthesortation,weareabletoreduceabout$0.25being$0.10insortationand$0.15fortransportation.

Meisong Lai: Going forward, as volume increases, we are able to establish greater connectivity between the origination outlets to a destination sorting center or the third layer being the origination center to the destination outlets or the origination outlets to destination outlets. All these are simply put in order to reduce the number of sortation. In the past, we were at the level of 2.5 per parcel. We are reducing it now to 2.09 and continue to decrease because of better our planning and volume increases.

Huiping Yan: HellotoeveryoneonthecallAsIgothroughourfinancials,pleasenotethatunlessspecificallymentioned,allnumbersquotedareinRMBandpercentagechangesrefertotheyear-over-yearcomparisonsDetailedfinancialperformances,uniteconomics,andcashflowinformationarepostedonourwebsite,andI'llonlygothroughsomeofthehighlightshereInthesecondquarter,weadheredtotheprincipleofprofitablegrowthandachieveda10.9%increaseinadjustednetincometoreach$2.8billionwhilecontinuingtoimprovethequalityofservicesandbrandvalueOurparcelvolumegrew10.1%to$8.45billionWecontinuedtofine-tuneresourceallocationtoachieveoptimalbalancebetweenvolumeandprofitinthesecondquarterASPforourcoreexpressdeliverybusinessstayedflatat1.24RMBastheimpactofdeclineintheaverageweightperparcelandincreaseinincrementalvolumeincentiveswereoffsetbythepositiveimpactofthevolumeincreaseinnon-e-commerceparcels.

Meisong Lai: We estimated for each one-time reduction of the sortation, we are able to reduce about 25 cents being 10 cents in sortation and 15 cents for transportation. With that, we have a clear room for the future to further reduce our unit level cost because of this trial or through-port concept. Market share, as we looked at the first half of the year, declined two points. This is still matched relatively well with our capacity and services. Anywhere outside of that range will not generate as effective economy of scale and will cost us to have increased marginal cost with diminished marginal benefit.

Huiping Yan: Withthat,wehaveclearroomforthefuturetofurtherreduceourunitlevelcostbecauseofthistri-layerthroughputconcept.

Huiping Yan: Marketshareaswelookedatthefirsthalfoftheyeardeclinedtwopoints.

Huiping Yan: Thisisstillmatchedrelativelywellwithourcapacityorcapacityinservices. Anywhereoutsideofthatrangewillnotgenerateaseffectiveeconomyofscaleandwillcauseustohaveincreasedmarginalcostwithdiminishedmarginalbenefit.

Huiping Yan: Weare,asyouaskedthequestion,howweplanourcapitalinvestmentanddeployment.

Unnamed: Thank you for your question.

Huiping Yan: It'sverymuchasciencerelatedtowhatweareabletoserve,whatarethecapacitybuild-up,whatweanticipatetocomewiththemostoptimalvolumeandoptimumcost.

Operator: This concludes our question and answer session.

Meisong Lai: I would like to turn the conference back over for any closing remarks. Thanks again for your continued attention and support. A strategy shift in the beginning of the year has been very effective for us, specifically in improving the non-ecommerce packages. It's reflected in our bottom line. Balance the approach will continue to be our future focus, including the last mile initiatives. We believe we are building long-term competitive advantages so that we are differentiated from the rest of the PONDA. We look forward to speaking with you in the future and thanks again for joining today's call.

Meisong Lai: Third, we will firmly advance the last-mile profit allocation strategy for multiple careers pro-activeness to increase the retail cost of the ratio and achieve more income.

Huiping Yan: Thankyouforyourquestion.

Operator: Thisconcludesourquestionandanswersession.

Sophie Li: Iwouldliketoturntheconferencebackoverforanyclosingremarks. Thanksagainforyourcontinuedattentionandsupport.

Huiping Yan: Ourtotalrevenueincreased10.1%to$10.7billion. Thecostofrevenuewas$7.1billionwhichincreased10.4%. Overallunitcostforthecoreexpressdeliverybusinessincreased0.7%or1cent. Linehaultransportationcostperparceldecreased6.8%to$0.39drivenbyimprovementsinfleetoperationswithbetterresourceutilization.

Meisong Lai: 您提的這兩件事情,其實就是總統正在做或者未來要見崔恰的事。第一個就是,我們今年的策略就是把服務車輛擺在更重要的位置,目的就是要增加產線的散佈,提供業務員上門攬收,上門遞送的能力要增強。我們的目標是,前半年其實我們產線的比例的增長是遠遠大於我們整體總統網絡企業的增長。我們目標今年其實產線的增長要達到50%,去年我們不到400萬,今年全年要到600萬。那有可能高峰期,我們預計肯定是要超700萬以上,這個肯定是做得到的。產線其實從網絡上來講就是一個到角到邊的政策,讓業務員拿到一手的價格,激發他的內心動力,提高他們產線的積極性。第三是從基地服務管理,質量管理從事後變為事情,降低可疏率。第四是加大與平台的合作力度,強化總對總對接。目前我們跟智捷、德沃、拼多多都實現了責令結算,通過這些措施提升產線的比例,目的是增加我們業務員的收入,業務員收入就更穩定。通過末端折煉,再加上一些智能工具的使用和普及,比如說現在很熱門的無人車,我們的站點推廣的速度也非常快。那麼通過設備的投入,路由的優化以及工具的使用讓站點派遣成本下降我舉個例子,過去我們給業務員八毛錢的派費那業務員拿回去四毛錢放到驛站那他有百分之六七是四毛錢是貴大的那麼現在就是直接站點直接到莫丹給莫丹四毛錢那麼八毛錢四毛錢增加了站點到莫丹的有通過無人車的有通過我們自有車輛配送的大概也就是不到兩毛錢的成本基本上在如果是無人車的話只要一毛錢左右我們用電車用駕駛員的大概在兩毛錢以內從中可以降低兩毛多的成本這個目的就是增加晚點的營利能力讓他更穩定更有競爭力這兩項措施其實閃電跟折電它是一件事情這就是我們現在在做的事情謝謝andweareconfidenttoachievethatHowdoweachievethat?

Sophie Li: Ourstrategyshiftinthebeginningoftheyearhasbeenveryeffectiveforus,specificallyinimprovingthenon-e-commercepackages. It'sreflectedinourbottomline. Balancedapproachwillcontinuetobeourfuturefocus,includingthelastmileinitiatives.

Meisong Lai: Through consolidation of resources, we intend to provide solutions to alleviate delivery cost pressure for the whole industry.

Meisong Lai: Fifth, we will further enhance our products and increase the penetration of high-end products, strengthen collaboration with online platforms, and leverage details logistic.

Huiping Yan: Unitsortingcostincreased4.6%to$0.26duetoincreasedDNAcostonnewequipmentandfacilities.

Meisong Lai: ChairmanwentintothedetailssogivemesometimeIwillgothroughthespecificswithyouFirstofallisrelatedtoincreasingtheratioiswhatwerefertoinourremarksofnon-e-commercepackagesasaratiotoourdeliverytotalSoinotherwordsifIdeliver100packagesandthereneedstobeatleast6packagespickupasnon-e-commerceSo,oneofthethings,therearefourspecificstrategiesthatweimplementedtoimprovetheportionofnon-e-commerceorwecallitindividualparcelsorretailparcels.

Huiping Yan: UnitKAcostdecreased4centsorincreased4centsinlinewithKArevenueincrease.

Meisong Lai: Oneistoenhanceconsumers'willingnesstosendparcelsatourpostthroughdeliberatemarketingeffortandthepromotionsinusingofdigitaltools.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Huiping Yan: Grossprofitincreased9.6%to$3.6billionandgrossprofitmarginratedecreased0.1pointsto33.8%. Consistentwithgrossprofitincomefromoperationsincreased11.7%to$3.2billionandassociatedmarginrategrew0.4pointsto30%. SG&AexpensesexcludingSBCasapercentageofrevenuegrew0.3pointsto5.5%.

Meisong Lai: So,thehandheldbuildingyourownfocusedgrouportargetedgroupissomethingthatarebeingimplemented.

Sophie Li: Webelievewearebuildinglong-termcompetitiveadvantagessothatwearedifferentiatedfromtherestofthetonedown.

Meisong Lai: Ecological resources to expand capability of comprehensive supply chains, improving brand awareness and customer appreciation.

Meisong Lai: Six, the vigilance and the maintain a sense of crisis-facing market uncertainties and fluctuations.

Operator: You may now disconnect. Thank you very much.

Meisong Lai: We will increase the effectiveness of communication with our network partners, unifying teams, and bring forth confidence and advocate balance between long-term and short-term interests, containing network stability.

Sophie Li: Welookforwardtospeakingwithyouinthefuture.

Operator: Thanksagainforjoiningtoday'scall.

Theconferenceisnowconcluded. Thankyouforattendingtoday'spresentation. Youmaynowdisconnect.

Huiping Yan: Corporatecostefficienciesremainedintact. Operatingcashflowwas$3.5billionwhichdecreased7.5%mainlyduetodividendtaxandincreaseinfinancingorloanstoournetworkpartners. AdjustedEBITDAwas$4.3billion,anincreaseof11.7%. Capitalexpendituretotaled$1.3billionforQ2or$2.9billionforthefirsthalfoftheyear. Withthat,weanticipateannualCAPEXin2024tocomeinbelow$6billionaspreviouslyplanned.

Meisong Lai: Numbertwo,trainingourcourierstoimprovetheirawarenessofservingcustomers,increasecustomerloyalty.

Huiping Yan: ThecompanyhasannouncedaninterimcashdividendofU.S, dollar35centsperADSandordinaryshareforthesixthmonthendedJune30,2024,whichisa40%payoutratio. TwoholdersofitsordinarysharesandADSasofthecloseofbusinessonSeptember10,2024.

Meisong Lai: So,morepersonalized,morehigherqualitystandardsissuedtoourcourierssothattheyareabletoberecognizedhavingthecapabilityofservingtodooraswellaspickupfromtheconsumers,fromthecustomers.

Huiping Yan: Nowmovingontoourguidance.

Meisong Lai: Numberthree,shiftingqualitymanagementofthedeliveryservicesfocusfrompost-eventtopre-event. So,thereby,reducingacustomercomplaintsoranticipateanypotentialproblemsthatcouldarise. So,hence,improvetheoverallexperience.

Meisong Lai: Numberfour,strengtheningthecooperationwithe-commerceplatforms,enhancingdirectcoordinationbetweentheheadquartersandthoseplatforms.

Meisong Lai: Despite uncertainty in the micro-use environment, the express delivery industry has demonstrated resilience across economic cycles by offering robust support for the advancement of digital economy and improving circulation efficiency.

Meisong Lai: We will see some opportunities in front of challenges including intensifying industry connotations.

Meisong Lai: We will deal with focus on service quality, further last-mile strategic objective, and enhanced profitability for all its, as well as, careers by establishing unique, competitive advantages.

Meisong Lai: So as to gradually, establish, appreciate ourselves from the rest of Tonda in brand reclamation and customer satisfaction.

Meisong Lai: Providing more choices for customers and for consumers and customers, with aiming to create value for the country, society, as well as employees and shareholders.

Wiking Yen: Now that's here, Farming is in about a financial result in target.

Wiking Yen: Thank you.

Wiking Yen: Thank you, Tamara and Sophie.

Wiking Yen: Hello to everyone on the call.

Wiking Yen: As I go through of financials, please note that, unless specifically mentioned, all numbers quoted are in R&B and percentage changes refer to the year of year comparison.

Wiking Yen: Detailed Financial, Performances, Units, Economics, and Cash Flow Information are posted on our website and I'll only go through some of the highlights here. In the second quarter, we adhered to the principle of profitable growth and achieved a 10.9% increase in adjusted net income to reach 2.8 billion while continuing to improve the quality of services and brand value.

Wiking Yen: Our parcel volume grew 10.1% to 8.45 billion.

Wiking Yen: We continued to find to resource allocation to achieve optimal balance between volume and profit in the second quarter.

Wiking Yen: ASP for our core Express delivery business stayed flat at 1.24 RMB as the impact of decline in the average way per parcel and increase in incremental volume incentives were offset by the positive impact of the volume increase in non-ecommerce parcels.

Wiking Yen: Unit sorting costs increased 4.6% to 26 cents due to increased DNA cost on new equipment and facilities. Unit CA cost decreased 4 cents a increased 4 cents in line with CA revenue increased.

Wiking Yen: SGNA expenses excluding SPC as a percentage of revenue grew 0.3 points to 5.5%. Corporate cost efficiencies remained intact.

Wiking Yen: Operating cash flow was 3.5 billion which decreased 7.5% mainly due to dividend tax and increased in financing along to our network partners.

Wiking Yen: Adjustment EBITDA was 4.3 billion and increased of 11.7%. Capital expenditure totaled 1.3 billion for Q2 or 2.9 billion for the first half of the year.

Wiking Yen: With that we anticipate annual catbacks in 2024 to come in below 6 billion as previously planned.

Wiking Yen: Now moving on to our guidance, we stay committed to our balanced approach to sustainable and profitable growth, prioritizing improvements in quality of services and development of differentiated product services to enhance brand recognition and value.

Wiking Yen: We are reiterating our 2024 volume growth guidance of 15 to 18%. These estimates represent management's current and preliminary view, which are subject to change.

Wiking Yen: This concludes our prepared remarks.

Wiking Yen: Let's see.

Operator: Please open the line for questions.

Operator: Thank you.

Operator: We will now begin the question and answer session.

Operator: To ask a question, you may press star then one on your touch tone phone.

Operator: If you are using a speaker phone, please pick up your handsets before pressing the keys.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Operator: In the interest of time, please limit yourself to one question and one follow-up.

Operator: At this time, we will pause momentarily to assemble our roster.

Ronald Kim: The first question today comes from Ronald Kim with Goldman Sachs.

Ronald Kim: Please go ahead.

Ronald Kim: [inaudible] The second question is, how can we solve the problem of climate change?

Operator: Let's move on to the next question.

Operator: The second question is, how can we solve the problem of climate change?

Meisong Lai: We should be able to achieve healthy growth on both.

Meisong Lai: Second part of the question, indeed for the entire industry through all these years of fine tuning of operations and investment of automation and so on and so forth, the unit cost per activity gang has been declining.

Meisong Lai: For us, however, in the first half of the year, we exceeded our goal for cost per activity gang for the year.

Meisong Lai: We have invested for over 26 super sorting centers.

Meisong Lai: There are reserves, ample reserves for capacity release in the future. We do believe that the capacity installed, as well as its flexibility in meeting as up to 50% of volume demand, we are still well on track to consistently and gradually release meaningful cost efficiency going forward.

Meisong Lai: Then for the unit profitability based on the overall capacity, as well as the reserve, we think that the strategy being consistently carried out, there will be stability in our profit growth on a total level as well as unit level.

Qianlei Fan: The next question comes from Q&A Fan with Morgan Stanley.

Qianlei Fan: Please go ahead.

Qianlei Fan: Thank you, operator.

Qianlei Fan: The next question comes from Q&A Fan.

Qianlei Fan: The second question is related to the government.

Qianlei Fan: The next question comes from Q&A Fan.

Qianlei Fan: [inaudible] Thank you.

Qianlei Fan: Thank you.

Qianlei Fan: Thank you for your question.

Meisong Lai: The two of you mentioned is that it is the right time to make the right choice for the future.

Meisong Lai: The first one is that the design of this year is the most important position.

Meisong Lai: The goal is to increase the third level of the third level of the third level of the third level of the third level.

Meisong Lai: [inaudible][inaudible] So, one of the things that there are four specific strategies that we implemented to improve the portion of not e-commerce or what we call individual parcels or retail parcels. One is to enhance consumers' willingness to send parcels at our posts through deliberate marketing effort and the promotions in using of digital tools.

Meisong Lai: So, the handheld building your own focused group or targeted group is something that are being implemented.

Meisong Lai: Then improving the second part is reducing the cost of the last mile.

Meisong Lai: The initiatives, there are two folks.

Meisong Lai: The first one is relating to the couriers.

Meisong Lai: What we call it the Dao Ja Tao Bien Policy or Initiative which started last year.

Meisong Lai: The goal is to increase the income of our couriers. So, early on in our remarks, we talked about allowing the couriers to achieve market pricing or gaining the majority share of the market pricing is to incentivize them so that they are motivated to make a special trip to go pick-up.

Meisong Lai: The second part of the initiative relates to improving the outlet's profitability.

Meisong Lai: Qianlei gave an example.

Meisong Lai: In the past, the couriers have to go to the post, sorry, go to the outlet, help sorting or they have to write to the outlet to pick up the packages that are bound for their delivery service area. So with the installation of those machines, the outlets no longer rely on manual sortation. So the writers or the couriers do not need to travel to the outlets anymore. And instead, they will receive packages directly from the outlet either through autonomous driving vehicles or electrical vehicles that are utilized by the outlet to send those packages directly to the couriers so that the couriers can work within a much smaller and more concentrated service area radius and hence allowing them more time and more focus on serving to door and also pick up from the door.

Meisong Lai: Now couriers would then put part of their packages into the post which will share their 40 cents out of that 80 cents will go to the post.

Meisong Lai: So then the outlet does not need to pay the whole 80 cents.

Meisong Lai: So we estimated and we calculated of that 40 cents because it still need to be sent to the post.

Meisong Lai: The outlet owners would pay on average between 10 to 20 cents to achieve that direct delivery to the post.

Meisong Lai: So hence, the long-term effect would be for the overall network stability to be established because the profit level will be increased.

Meisong Lai: And it will provide support for our overall delivery fee reduction not only for us but also potentially as a solution to the whole industry.

Meisong Lai: This is not an overnight goal.

Meisong Lai: We are working towards this change in shift from volume to quality to focus on more differentiated products and services so that ZTO could break away from a marginalized price competition and establish competitive, a unique competitive advantage.

Meisong Lai: Thank you very much, Lai Zhuang, Yan Zhuang.

Lou Yu-Jian: The next question comes from Lou Yu-Jian with Python.

Lou Yu-Jian: Please go ahead.

Lou Yu-Jian: Lai Zhuang, Yan Zhuang, Sophie Li, I am the director of Highton Jiao-Yuan University, Lou Yu-Jian.

Lou Yu-Jian: I would like to ask you two questions.

Lou Yu-Jian: One, please teach us what we are going to do in the future.

Lou Yu-Jian: Just now, Lai told me that the company's market is very large.

Lou Yu-Jian: Please teach us how to improve the market and how many markets are going to improve in the future.

Lou Yu-Jian: The second question is, we have already reached the point where we are going to ask the company's market for a long time.

Lou Yu-Jian: Lai Zhuang and Yan Zhuang have been trying to improve the market for a long time.

Operator: Let's move on to the next question.

Operator: First of all, congratulations to the company for receiving good performance in the 7th quarter.

Lou Yu-Jian: My question is about capital expenditure plan for the years 2000, 24, 25, and the number of periods.

Lou Yu-Jian: I would like to know which areas the residents will allocate it to and how we make the capital expenditure plan.

Lou Yu-Jian: The second question is about the cost reduction place, about the whole process in the future.

Lou Yu-Jian: Thank you.

Lou Yu-Jian: In the past, we have not been able to share the cost of capital expenditure.

Lou Yu-Jian: So, you said that the cost reduction place is very difficult.

Lou Yu-Jian: It is difficult for us to share the cost reduction place.

Lou Yu-Jian: There are some places where you are going to ask the company's market for a long time.

Lou Yu-Jian: This is not too developed, but we were able to get it at 235.30 a.m.

Lou Yu-Jian: Its potential is that you are going to be able to get it at 2.30 a.m.

Lou Yu-Jian: These are the differences.

Lou Yu-Jian: The second one is that we are still thinking about the potential of our second production.

Lou Yu-Jian: [inaudible] The next time, it is 2.5 cm, because you will not be able to get 1.5 cm in total, If the distance between the three points and the whole point is 0.5 cm, the distance between the two points will be lower.

Lou Yu-Jian: The second point is the distance between the three points, whether it is the distance between the three points or the distance between the three points,[inaudible] Product and Services by utilizing our capacity.

Meisong Lai: Going forward, it is very clear that acquisition for land use rights, building super centers are going to be very minimum.

Meisong Lai: The growth of our or putting in line of services, putting services, the capacity is very much directed or mashed with our anticipated demand of capacity in the sortation, transportation and all the segments of our operations.

Meisong Lai: We are able to foresee with a very clear visibility that going forward, we will be able to generate increasing free cash flow.

Meisong Lai: The second part relates to the question on how we are able to continue to reduce the operating cost.

Meisong Lai: Indeed, as you look into the past, even though ZTO has been leading this effort, but for the whole industry, it has been continuously achieving high-cost efficiencies.

Meisong Lai: Now going forward, as we continue to rely on lean operations, looking into greater visibility of each of the segments of our operations, we are still able to, as volume increases, as our productivity gains continue to release.

Meisong Lai: We still believe there are plenty of opportunities for us to achieve scale leverage as well as on a unit level continued cost efficiency.

Meisong Lai: And then the second consideration, which is more of a long term, but steady visibility to us, is that because of the route planning, we talked about in the past the trial layer throughput concept.

Meisong Lai: Again, we said earlier we were able to improve the connectivity between the outlets and rotation center.

Meisong Lai: In the past, we were at the level of 2.5 per parcel.

Meisong Lai: We are reducing it now to 2.09 and continue to decrease because of better our planning and volume increases.

Meisong Lai: Market share, as we looked at the first half of the year, declined two points.

Meisong Lai: This is still matched relatively well with our capacity and services.

Meisong Lai: Anywhere outside of that range will not generate as effective economy of scale and will cost us to have increased marginal cost with diminished marginal benefit.

Meisong Lai: So we are, as you asked the question, how we plan our capital investment and deployment.

Meisong Lai: It's very much a science related to what we are able to serve, what are the capacity build up, and what we anticipate to come with the most optimal volume and optimal cost.

Meisong Lai: Thank you for your question.

Operator: This concludes our question and answer session.

Meisong Lai: I would like to turn the conference back over for any closing remarks.

Meisong Lai: Thanks again for your continued attention and support.

Meisong Lai: A strategy shift in the beginning of the year has been very effective for us, specifically in improving the non-ecommerce packages. It's reflected in our bottom line.

Meisong Lai: Balance the approach will continue to be our future focus, including the last mile initiatives.

Meisong Lai: We believe we are building long-term competitive advantages so that we are differentiated from the rest of the PONDA.

Meisong Lai: We look forward to speaking with you in the future and thanks again for joining today's call.

Operator: The conference is now concluded.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect.

Operator: Thank you very much.

Q2 2024 ZTO Express (Cayman) Inc Earnings Call

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