Q4 2024 ZTO Express (Cayman) Inc Earnings Call
Good day and welcome to the G. P O Express fourth quarter and full year 2024 financial results Conference call.
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Speaker Change: I would now like to turn the conference over to Sophie Li head of capital markets. Please go ahead.
Speaker Change: Thank you Rocco.
Sophie Li: Hello, everyone and thank you for joining us today the conference results in the Investor Relations presentation were released earlier today and available on the company's IR website at IR <unk> com.
Speaker Change: On the call today from <unk> Mr.
Speaker Change: Mr Mason Lai, Chairman and Chief Executive Officer.
Yan: And Mr. <unk> <unk>, Chief Financial Officer, Mr. Lai will give a brief overview of the company's business operations and highlights followed by MS. Yan, who will go through the financials and guidance.
Yan: They will both be available to answer your questions during the Q&A session that follows.
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 of 90 95.
Speaker Change: Such statements are based on management's current expectations and current market and operating conditions.
Speaker Change: Late to events that involve known or unknown risks uncertainties and other factors.
Speaker Change: All of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results performance or achievements to.
Speaker Change: To differ materially from those in the forward looking statements.
Speaker Change: Further information regarding this and other risks uncertainties and factors is included in the company's filings with the U S Securities and Exchange Commission.
Speaker Change: 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.
Speaker Change: It is now my pleasure to introduce Mr. Mason why Mr. Lai will read through his prepared remarks in their entirety in Chinese before I translate for him in English.
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Speaker Change: Thank you Chairman Lai.
Speaker Change: Let me translate.
Speaker Change: <unk>.
Speaker Change: Hello, everyone. Thank you for joining today's conference call.
Speaker Change: Quarter of 2020 for CTO maintained its high service quality and with a total parcel volume of Knight point 67 billion up 11 year over year.
Speaker Change: We achieved adjusted net income of $2 73 billion, which grew 23, 4% year over year.
Speaker Change: Further solidifying our industry leading profitability.
Speaker Change: In 2024 eight express.
Speaker Change: Express delivery industry maintained relatively high growth and the overall scale exceeded expectation.
Speaker Change: Well with frequent ecommerce promotions in the consumers' growing price sensitivity they proportion of lower value parcel. It does continue to increase.
Speaker Change: Exerting downward pressure on logistics pricing.
Speaker Change: Facing challenges CTO stayed committed to offer high quality growth strategy on one hand, we accelerated the development of differentiated products and services and deepen the cooperation with E Commerce platform.
Speaker Change: Optimizing product mix as well as profitability, while enhancing brand recognition and customer satisfaction.
Speaker Change: On another we strengthened the standardization and a coordination across all operational Seckman soap opera traffic platform further improved end to end timeliness reduced the loss and damage and complaint rate.
Speaker Change: In addition, we ramped up efforts to empower ever in network partners enhancing their capabilities to alleviate pickup and delivery cost pressures and improve service quality.
Speaker Change: For 2024, Cto's annual peso volume reached 34 billion growing 12, 6% year over year, notably number of retail parcels in the fourth quarter grew nearly 50%.
Speaker Change: Significantly outpacing overall ecommerce parcel growth.
Speaker Change: Reverse peso for the full year more than doubled compared to last year.
Speaker Change: The optimization of our product mix brought by an ace and housekeeping Hoffman to AFP 40 core express delivery business.
Speaker Change: Alleviating the impact from lower average weight per parcel in the price competition.
Speaker Change: Together with continued operational caustic Fisher seeking and the stable SG&A structure.
Speaker Change: <unk> achieved an adjusted annual net income of 10 point 15 billion, increasing by 12, 7% year over year.
Speaker Change: Entering 2025, they express delivery industry has maintained strong growth momentum. However, the trend is consumption downgrade has yet to reverse and the price competition remains intense intense inc.
In such a market environment, our core focus is to align closely with market dynamics.
Speaker Change: <unk> service quality achieved a higher than industry average volume growth.
Speaker Change: Further we must motivate and they enable our network partners with fair cost of borrowing and a profit sharing mechanism.
Speaker Change: Effectively strengths and pickup and delivery infrastructure and cost competitiveness, so as to improve market penetration for retail parcel alongside of E Commerce volume growth.
Speaker Change: And ultimately improve earnings of all it and careers.
Speaker Change: <unk> partner network stability.
Speaker Change: Key initiatives include the following.
Speaker Change: First thing covered T seem to end to end service quality by refining operational procedures and implementing data benchmarking along.
Speaker Change: Mining performance with internal metrics and external indicators to optimize efficiency and resource utilization.
Speaker Change: Improved first offers delivery ratio will boost overall, timeliness and bringing forth brand awareness.
Speaker Change: Second effectively achieve mission critical volume targets by granting full autonomy to regional management teams to stay in lockstep with market changes with sufficient resources.
Speaker Change: Ensuring fair and transparent that work policies for all in adopting tiered approaches to tap into new customers potentials.
Speaker Change: Joined efforts by pick up until the brewery partners to effectively target incremental market can capture volume driven growth opportunities.
Speaker Change: Third.
Speaker Change: Further product and the service is enhancement is strengthening strategic partnership with E Commerce platform.
Speaker Change: Operating details integrated ecosystem resources to abuse comprehensive supply chain capabilities.
Speaker Change: Finding differentiated products to enhance brand recognition in the cockpit customer loyalty.
Speaker Change: Fourth improve lost mountain network expansion and penetration by clearly defining responsibility so sectional coordinator to effectively execute initiative such as profit sharing sufficiently to incentivize careers to service retail Pos those.
Speaker Change: Establish direct linkage between all late in a last mile posts.
Speaker Change: Integrate commercial opportunities into local leasing.
Speaker Change: This initiative will help to reduce last mile cost.
Speaker Change: Increased retail volume improved profitability for all it and careers and expand consumer reach through multiple channels.
Speaker Change: Last but not least improve end to end time, Dennis and operating efficiency improvement by implementing technology and data driven tools.
Speaker Change: To optimize route planning low rate and in time capacity investments or upgrades.
Speaker Change: Over the past three decades, China's express delivery industry represented largely by private enterprises has evolved through scale expansion in concentration as well as profitability that Virgin.
Speaker Change: Details right from the latest comer fall or show a consistent leader is not a coincidence.
Speaker Change: Regardless of how the industrial landscape has shifted CTO of core competitiveness stem from our shared success because lots of people. So that our partners can also be.
Speaker Change: However, an entrepreneurial spirit of dedication for silver for sovereign and the focus as well as some of her proven ability to quickly adapt and grow through challenges and adversity.
Speaker Change: Today, we stand at a critical junction of microeconomic and industry development.
Speaker Change: We firmly believe that China's express delivery industry and its broader logistic market hold immerse growth prospect.
Speaker Change: By staying committed to our focus on the industry and the being of her best.
Speaker Change: Striving for operational excellence and expanding our scale leadership with healthy quality of earnings in sync with market dynamics.
Speaker Change: And stand behind offer and network partners.
Speaker Change: Together, we're confident and well equipped to achieve our mission, which is to bring happiness to more people to wherever services.
Speaker Change: Next let's welcome Barbara CFO, Ms Yan to present, the financials results in the future plan.
Barbara: Thank you Chairman Lai and thank you Sophie Hello to everyone on the call.
Barbara: As I go through our financials. Please note that unless specifically mentioned all numbers quoted are in RMB and percentage changes referred to year over year comparisons.
Barbara: Detailed financial information.
Barbara: <unk> says unit economics, and cash flow are posted on our website and I'll go through some of the highlights here.
Barbara: We adhered to the principle of profitable growth and continued to improve the quality of services and customer satisfaction.
Barbara: We attained 11% parcel growth to reach $9 7 billion for the fourth quarter, and 12, 6% or 34 billion for the year.
Barbara: Adjusted net income grew 23, 4% to $2 7 billion and 12, 7% to $10 2 billion for the quarter and the year respectively.
Barbara: Total revenue increased 21, 7% to $12 9 billion for Q4, and 16, 3% to 44 billion for the year.
Barbara: Asps for the core express delivery business increased 10, 3% or 13 cents for Q4, and two 7% or four cents for the year.
Barbara: As the impact of decline in average weight per parcel and increase in incremental volume incentives were offset by the positive impact of the volume increase in retail parcels.
Barbara: The total cost of revenue was $9 2 billion and 36 billion for Q4, and the year, respectively, which increased 22, 3% for Q4 and 14, 2% for the year.
Barbara: Overall unit costs for the core express delivery business increased 11, 1% to 93.
Barbara: Well for Q4 at one 9% to 87.
Barbara: For the year.
Barbara: Combined unit cost of sorting and transportation decreased six 5% or <unk> for Q4 and for the year, It was 6% or for <unk>.
Barbara: Benefiting largely from economy of scale specifically.
Barbara: Unit cost of line haul transportation decreased 11, 1% to 40 for Q4 and decreased eight 7%.
241 for the year driven by more effective route planning in conjunction with improvements in fleet operations.
Barbara: And it's sorting cost was flat for Q4, and 2024, and 26 and 27 cents respectively.
While improvements in automation and labor efficiency contributed to cost savings additional costs were incurred for sorting activities conducted on behalf of franchise.
Barbara: Partners.
Barbara: Unit K a cost increased 15.
Barbara: For the Q4 and seven for the year.
Barbara: In line with K, a revenue increase driven by significant volume increases in retail and more specifically reverse parcels.
Barbara: Gross profit increased 22% to $3 8 billion for Q4 increased 17, 6% to $13 7 billion for 2024.
Barbara: Gross profit margin rate decreased.
Barbara: Four points to 29, 1% and increased.
Barbara: <unk> six points to 31% for the year.
Barbara: For the quarter and the year respectively.
Barbara: SG&A, excluding SBC decreased seven 3% to 649 million for Q4 increased nine 3% to $2 4 billion for the year.
Barbara: SG&A expenses, excluding SBC as a percentage of revenue declined two 5% for Q4.
Barbara: Five 4%.
Barbara: For the year, reflecting strong corporate cost efficiency.
Barbara: Income from operations increased 25, 3% to $3 5 billion for Q4 and increased 17, 7% to 11 8 billion for the year associated margin grew eight points to 26, 7% and zero point.
Barbara: 6% points to 26, 6% for the year.
Barbara: Operating cash flow was $2 8 billion for the quarter and $11 4 billion for the year, representing decreases of 28, 5% and 14, 5% respectively.
Barbara: This decline was primarily due to one.
Barbara: One time refund of.
Barbara: Franchise deposits totally.
Barbara: Totally $1 2 billion.
Barbara: There are new business policy to ease liquidity pressure of franchisees, who in the past must make certain deposit with Wade bill purchases and.
Barbara: And then received refund upon appropriate delivery of the package.
Barbara: Two higher advances were reverse logistic operations based on the terms custom married.
Barbara: With platform operators.
Barbara: Three tightening VA T rate refund policies.
Barbara: And for a bigger portion of cash management products accounted under long term financial investments.
Barbara: We're associated.
Barbara: Interest income is recognized over the term longer than a year.
Barbara: Charity.
Barbara: Our adjusted EBITDA for Q4 and.
Barbara: In 2024.
Barbara: $4 6 billion in 2014, $16 4 billion respectively.
Barbara: Capital expenditure for Q4 totaled $1 2 billion.
Barbara: And annual Capex came in at $5 9 billion.
Barbara: Indicating that we have achieved another year of free cash flow.
Barbara: Now moving on to business outlook based on current market and operating conditions.
Barbara: We estimated that the industry growth would likely be around 15% for 2025 and.
Barbara: And we anticipate the company's parcel volume for the year to be in the range of <unk>.
Barbara: 48 billion to $42 2 billion.
Barbara: Representing a 22, 24% increase year over year.
Barbara: These estimates represent management's current and preliminary view, which are subject to change.
Barbara: And this concludes our prepared remarks.
Barbara: Operator, please open the line for questions. Thank you.
Barbara: Thank you we will now begin the question and answer session.
Speaker Change: Youre asking question Press Star then one on your telephone keypad.
Barbara: If youre using a speakerphone please pick up your handset before pressing the keys.
Barbara: If at any time you question has been addressed we would like to withdraw your question. Please press Star then two.
Barbara: We do ask you please limit yourself to two questions.
Speaker Change: Today's first question comes from Ronald Keung with Goldman Sachs. Please go ahead.
Barbara: Yeah.
Speaker Change: Now youre going to see what's in there too.
Barbara: Yeah, No no no.
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Speaker Change: Yeah, I think that's how I feel like to go off at all.
Speaker Change: Nah stocks at all would you do you are you at all the time here.
Speaker Change: Now to cool down the road, how long do you hope to go.
Speaker Change: That's helpful.
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Speaker Change: So hopefully we will do something or capex.
Speaker Change: Capex.
Speaker Change: On the Capex cycle.
Speaker Change: So you want to do.
Speaker Change: I always thought.
Bob: Bob You said Capex the Seahawks I don't know if I can.
Bob: Thank you management for the Okay. A quick questions. So number one I wanted to ask about Oh I already on volume growth this year.
Bob: And so how has all market share progress so far this year.
Bob: First quarter and what has been the impact on pricing just how players are reacting and what would be the impact to just oh.
Bob: Profits this year with this strategic shift and want to hear about all topics, whether we think the capex cycle has peaked.
Bob: The Capex plan for 2025.
Bob: Yes.
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Speaker Change: [noise]. So first let me translate for the chairman and for the first two part question and then I'll answer the third part.
Bob: Sure.
Bob: This year, we anticipated.
Bob: Most of the industry to be around 15% and we set our goal to be.
Bob: 20% to 24%, which I'm certainly indicate that we have a plan to.
Bob: Grow above industry average.
Bob: In turn.
Bob: <unk> and also enlarging our market share.
Bob: It is of course without saying that we continue to focus on our strategy.
Bob: Our overall strategy, which is to improve quality of services.
Bob: Maintain and expand our market leadership as well as.
Bob: Achieve reasonable profit and this year our.
Bob: Our focus will be gravitating towards.
Bob: Towards the quality of our.
Bob: Services and also the market share and volume increases and it's very clear.
Bob: The kitted through our numbers.
Bob: Then the second part of the question relating to.
Bob: The first.
Bob: Two months into the year, where we have observed.
Bob: The growth momentum is still very much demonstrated on because they were observed.
Bob: Oh.
Bob: Normalized e-commerce promotions.
Bob: There are a lot of.
Bob: Got it.
Bob: Greece's.
Bob: In a smaller lighter weight packages.
Bob: And then the new business models, such as live streaming and E Commerce.
Bob: And then also reverse logistics continues to drive additional volume.
Bob: And then also.
Bob: Not the least the government has.
Bob: Wrote out lots of favorable policies to stimulate consumption, including tradings in subsidies, which also boosted consumer willingness to spend.
Bob: It will support a recovery in consumption.
Bob: The cost effectiveness of express delivery industry has in the past and will continue in the future to sustain steady increase in the parcel volumes is consumption.
Bob: Still.
Bob: With potential for growth now looking ahead.
Bob: The cross border logistics and rural industry logistics.
Bob: We will also fuel our industry demand as we talked about CTO preparing and.
Bob: Improving our capability in the supply chain.
Bob: Logistics services, so we think that the overall.
Bob: Potential for the growth is very much intact and for us to gradually roll out our.
Bob: New focus or.
Bob: No gravitation in the.
Bob: Market share as well as our alongside our quality of life.
Bob: Customer services and it will.
Bob: Help us achieve the goal that we set for us.
Bob: No. This year, we have achieved.
Bob: 2024 hour.
Bob: Next came in at $5 9 billion as we have from pretty much established the entire network with the close to 95 or about 95 Super sorting centers.
Bob: Most of the Capex spending for this year 2025 will be on the remaining few tracks of land that we would.
Bob: Want to secure to replace current rental spaces, and then plus also there are some upgrades to existing.
Bob: Facilities that will be in the plan. So we estimate our total 2025 capex will come in somewhere around five to $5 5 billion.
Bob: And again we.
Bob: With strong cash flow.
Bob: From operations, we intend to repeat another free cash flow year.
Ronald Keung: I hope that answers your question Ronald.
Ronald Keung: Thank you.
Ronald Keung: Okay.
Ronald Keung: Thank you and our next call.
Ronald Keung: Ocean Council.
Ronald Keung: With Morgan Stanley. Please go ahead.
Ronald Keung: Thank you operator.
Ronald Keung: Thank you Joe.
Ronald Keung: Thank you Vishal agenda.
Ronald Keung: Oh, Yeah, that's outlets.
Ronald Keung: Sure Glenn.
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Ronald Keung: Actual projects.
Ronald Keung: She does sound Guangdong, yes, we do.
Ronald Keung: So I'm glad that we want.
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Ronald Keung: Yeah.
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Speaker Change: And welcome Jim.
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Speaker Change: Why don't you go ahead Charles.
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Speaker Change: But can you tell me Josh.
Speaker Change: Yeah, well I'm glad you got some.
Speaker Change: So it's all going through different parts of the economy.
Speaker Change: No.
Speaker Change: Thank you management for taking my question and congratulations on a very solid earnings growth.
Speaker Change: I have two questions. The first question is about technology.
Speaker Change: That's why last.
Speaker Change: Yeah, we have.
Speaker Change: Hum.
Speaker Change: I'll tee it up.
Speaker Change: AI and other technologies.
Speaker Change: And that has driven some technology.
Speaker Change: Potentially it could be applied into the logistics sector for example, autonomous driving onto them humanoid so and call that maybe we have during the past decade have been achieving cost inflation improvement through automation.
Speaker Change: And and cell phone talks and.
Speaker Change: The economy of scale has been marginally decrease.
Speaker Change: So was that new developments in technology and AI.
Speaker Change: Hum you potential in terms of cost savings or in terms of Robyn expansion in.
Speaker Change: In the next decade and the same question is also related to that so.
Speaker Change: <unk> has mentioned Capex.
Speaker Change: Has been largely done regarding that's walking center like system.
Speaker Change: Yes.
Speaker Change: In China.
Speaker Change: Over the medium term, if we assume that the technology continues to evolve very well the call.
Speaker Change: I'll stop applying technology drops rapidly will that impact our expectation of capex over the medium term.
Speaker Change: Yes.
Speaker Change: Okay.
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Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Again answer translate for the first part and then.
Speaker Change: More specifically address your second part of your question as it relates to the cost.
Speaker Change: There has been a wide.
Speaker Change: Wide application of AI technology in the industry and of course as each deal is done.
Speaker Change: Oh without exception.
Speaker Change: For example machine vision.
Speaker Change: We integrated with visual recognition technology.
Speaker Change: And also the algorithm in sorting.
Speaker Change: Now sorting equipment in the process, enabling the system to automatically adjust operating procedures.
And also reduce sorting errors and improve.
Speaker Change: Efficiency.
Speaker Change: In the order.
Speaker Change: Processing feud.
Speaker Change: I also enabled automatic generation of four segment tracking codes.
Speaker Change: For segment tracking codes will allowed the.
Speaker Change: Modest.
Speaker Change: Unit from destination determination, so that the package could go directly to the courier.
Speaker Change: In terms of customer service. For example, we also have AI powered tools to enable a quicker response.
Speaker Change: Speed as al as well it reduce dependency on a human.
Speaker Change: Benches, so there are plenty of.
Speaker Change: But communities that are currently already in place for us to utilize this technology and certainly as it continues to develop we will stay at the forefront to cooperate and work with the leading research.
Speaker Change: Companies are in.
Speaker Change: Applying their technology in our operational environment.
Speaker Change:
Speaker Change: Chairman Lai referred to some of the application as well not only to our operating platform, but also to our network partners.
Speaker Change: The last mile front end to end for example, he he indicated that he has recently visited many of our.
Speaker Change: Franchised outlets and he has observed the improved level of automation, which allowed not only standardization of the operation of express delivery, but also <unk>.
Speaker Change: Improved efficiency reduce cost.
Speaker Change: Some of the specific examples that we are able to.
Speaker Change: Work with our network partners in empowering them in adopting.
Speaker Change: Advanced technology includes autonomous driving vehicles.
Speaker Change: Chairman.
Speaker Change: Indicated that there's some.
Speaker Change: Application already went into the commercialization.
Speaker Change: We maintained an open attitude towards new technology and work in collaboration with the research from wit and rolled out solution, specifically for our initiatives, which is the direct link.
Speaker Change: So four one.
Speaker Change: Autonomous vehicles, it has great advantage over manned vehicle.
Speaker Change: Examples here is on an average on a monthly average one.
Speaker Change: Manned vehicle would cost about two to 3000 RMB.
Speaker Change: But in the daily operating capacity is about 1500 to 2000 packages.
Speaker Change: The traditional manned vehicles are typically.
Speaker Change: Fossil fuel powered.
Speaker Change: Powered vehicle and it costs about.
Speaker Change: 15.
Her or package, but using the autonomous vehicle that we are currently in design and ready to roll out in 2025.
Speaker Change: I would estimate cost only seven to eight cents per package.
Speaker Change: We are looking to.
Speaker Change: Purchased in bulk with these factories and do research firm, which will further reduce the cost on a per.
Speaker Change: Our unit basis to somewhere around five to six cents or even lower to five things.
Speaker Change: So one of our focus is not necessarily spending our own money, but using a brand using our influence to work with the research firm as well as the manufacturer in empowering our network partners to secure OEM equipment.
Speaker Change: And.
Speaker Change: Offer.
Speaker Change: Better competitive price for our network partners.
Speaker Change: And.
Speaker Change: Secondly, the example, the chairman referred to is.
Speaker Change: When we.
Speaker Change: When our network partners the outlet used more and more of the autonomous.
Speaker Change: At COSE.
Speaker Change: Where the government continuously real out or remove limitation on the use.
Speaker Change: Use of autonomous vehicles on the road, we believe there will be greater opportunity for us to help reduce.
Speaker Change: Per unit cost and improve efficiency.
Speaker Change: Now to the third part of the question as I alluded to earlier.
Speaker Change: We are of the philosophy that at the right time spending the right amount of money technology is continuously evolving and we are watching closely in how it could best integrate into our operations as well as helping our network partners and improving their efficiencies.
Speaker Change: So at the forefront, we will utilize our brand influence as well as our take the logical sense.
Speaker Change: Sensitivity as well as awareness.
Speaker Change: As you know that we have over 1100.
Speaker Change: Personnel, including some of the algorithm.
Speaker Change: Engineers, they will help us and participating and benefiting from the technology sector.
Speaker Change: Technological development trend.
Cost wise is a very much a paced with our volume increase as well as our efficiency gain plan.
Speaker Change: To just bring about additional color as we.
Speaker Change: Truly achieve the trial your throughput.
Speaker Change: As our volume continues to increase then the cost will be deployed as we mentioned earlier scientifically making investment is important for us.
Speaker Change: We are from a very practical term approaching this a option for us.
Speaker Change: Thank you. Thank you very much that's very insightful. Thank you.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Eric who would UBS. Please go ahead.
Speaker Change: Hey.
Speaker Change: So if you don't have to hit with excuse me.
Speaker Change: It doesn't change.
Danielle: Oh, Hey, Danielle.
Danielle: So I think you guys actually guangxi.
Danielle: So in general that's the whole agenda.
Danielle: So quite some time.
Speaker Change: No Joe Shan Li <unk>.
Danielle: So that sums up mobile how would you be so sure.
Speaker Change: Yeah. He take Oh, we have told you about 10 o'clock she sits in telling you.
Danielle: So there's always going to be you won't even talk about it.
Speaker Change: As you can see the without actually having to ship their lives.
Danielle: So you always have some sort of incentive.
Danielle: Such as Union Macondo era.
Danielle: Okay.
Danielle: But.
Danielle: So that's something that Glen send that 101 connects you to women.
Jake: Sure Jake.
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Jake: Yeah, I think it's something to you John.
Jake: Kind of I would call kind of how Clinton.
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Speaker Change: I'll watch that finding jobs.
Speaker Change: Thank you.
Speaker Change: The line is <unk> for taking my questions I've got two question.
Speaker Change: First of all regarding our ratio, including the recent puzzle over housing.
Speaker Change: Strong growth momentum last year.
Speaker Change: You'll see that we've got.
Speaker Change: Momentum would continue for this year.
Speaker Change: Do they have any.
Speaker Change: Growth target on that.
Speaker Change: Also we have noted.
But competition.
Speaker Change: It's funny that in Morgantown.
Speaker Change: Whats kind of the level, we have seen during the past couple of culture and the trend going forward. The another question also regarding our costs.
Speaker Change: You have seen our cost per personnel, including transport consulting costs have been below like sudden RMB.
Speaker Change: It would be a potential cost cutting potential bump here.
Speaker Change: The lateral will be eventually.
Speaker Change: Going forward.
Speaker Change: Yeah.
Speaker Change: To really expand our reach.
You like the cost burden from social silicones children's there'll be oh would be that big.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: She needs if you will.
Speaker Change: Yes.
Speaker Change: Thanks Shannon.
Speaker Change: Women's on consolidation.
Speaker Change: Suddenly on Asia.
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Speaker Change: Thank you Sunday lunch.
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Speaker Change: Bye bye.
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Speaker Change: She has talked about.
Speaker Change: Melissa.
Momentum maintained.
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Speaker Change: Alicia teenagers Chelsea Chi Tsang Julianne 19.
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Speaker Change: Deanna.
Speaker Change: Are you seeing tougher winter than women's that challenge ACM Shanghai for you all to shrink bunch of coffee.
Johan: Thank you Johan.
Speaker Change: <unk> finance.
Johan: Hi, Andy.
Johan: <unk> charged <unk>.
Johan: <unk>, Oh, mainly century, Chunghwa, Google adoption Tanisha agenda, So E G.
Johan: So cheap.
Johan: Got it.
Speaker Change: Jim Sheehan Hunch women, Hong Kong Shan Shan Shan eshop.
Johan: You'll be sharp and deep.
Johan: E P.
Speaker Change: Cool.
Speaker Change: Thanks Shelby.
Speaker Change: Tom <unk>.
Speaker Change: So in general a man.
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Speaker Change: Thank you.
Speaker Change: Simon.
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Speaker Change: Yourself.
Speaker Change: Two for me.
Speaker Change: Our main Wheeler Youll cutting.
Speaker Change: Thanks, Joe Smith.
Speaker Change: Sure.
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Speaker Change: Shimon.
Speaker Change: That's good.
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Speaker Change: Angela Aman.
Good.
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Speaker Change: It's a good one to that.
Speaker Change: Yeah.
Speaker Change: John said it all.
Speaker Change: So just I wanted to chat.
Speaker Change: Thanks, Andy and good morning.
Speaker Change: Thank you.
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Speaker Change: Uh huh.
Speaker Change: Josh.
Speaker Change: So it gets on that either.
Speaker Change: She sang.
Speaker Change: China has a woman junior and I'm gonna be awesome.
Chad: Thank you Chad sandwich.
Speaker Change: Let's see.
Speaker Change: Non food.
Speaker Change: And a continued.
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Speaker Change: So, let's see if I'm in charge here.
Speaker Change: And any thoughts you have talked in the frequent.
Speaker Change: So again more tankers.
Gina: To get preachy, Gina wanted to name with animals.
Speaker Change: Interesting.
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Michelle Shimon: Well Michelle Shimon.
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Speaker Change: Yeah.
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Speaker Change: Thank you Bob.
Speaker Change: Women.
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Speaker Change: She went ball CFO John <unk>.
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Speaker Change: Yeah.
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Nathan: Hi, Nathan.
Speaker Change: Sure Paul.
Nathan: Yeah.
Nathan: Tiny issue you saw.
Nathan: Caroline Shawcor cobalt change hunting.
Nathan: Awesome.
Nathan: Woman clarity Shawcor CFO.
Nathan: Gene, which our China chocolate shave off one more channel we'll know more.
Nathan: <unk> see.
Nathan: Okay.
Nathan: So between those.
Speaker Change: The only thing for Jimmy and Piedmont will remain challenged and you can see the syngas.
Nathan: <unk> achieved so far she's a la Mesa.
Speaker Change: Okay. That's helpful.
Speaker Change: Oh man.
Speaker Change: Yes.
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Speaker Change: Two.
Speaker Change: Oh I thought at the end of Piedmont.
Speaker Change: I mean the answer.
Speaker Change: Sure.
Speaker Change: Thank you for your question and let me translate.
Speaker Change: And supplement where we can.
Speaker Change: Yeah.
Speaker Change: So first of all regarding the.
Speaker Change: The retail volume.
Speaker Change: In Q4, our average.
Speaker Change: Our parcel volume exceeded 7 million parcels with a $3 million from our own ordering channel and then about $4 million from the reverse parcel.
Speaker Change: Which doubled.
Speaker Change: From last year.
Speaker Change: For 2025, our goal is to achieve.
Speaker Change: Eight point or.
Speaker Change: Million.
Speaker Change: Daily volume on average.
Speaker Change: This compared to 2024 at.
Speaker Change: 546 million, which more than likely to be doubled in that.
Speaker Change: Pretty high goal.
Speaker Change: And so we have planned our passageway to achieve such go in the following four areas. One is to continue to.
Speaker Change: <unk> our initiatives so that our careers can.
Speaker Change: Achieve.
Sure.
Speaker Change: The retail market price.
Speaker Change: The tools that we will use is embedded in their handheld devices, which will help.
Speaker Change: Incentivize the couriers to serve retail.
Speaker Change: <unk> and.
Speaker Change: Number two.
Speaker Change: We will continue to work with the platform in implementing the measurement metrics and make that part of the measurement internally. So that the specific target specific goals will be achieved.
Speaker Change: The system improvements will also be in sync.
Speaker Change: With such initiative.
The <unk>.
Speaker Change: Continued collaboration or deepening.
Speaker Change: Arrangements with our.
Speaker Change: Platform will also help expand the surface area of the retail or specifically reverse parcels.
Speaker Change: The the Prada.
Speaker Change: Product differentiation is number four will help.
Speaker Change: Improve our ability to serve different customer needs.
Speaker Change: Is it speed if it's quality it's.
Speaker Change: If it's combination we will be able to expand and.
Speaker Change: Meet different demands.
Speaker Change: And the question you have some.
Speaker Change: The question you also mentioned about the cost.
Speaker Change: Cost further reduction.
Speaker Change: We believe from in terms of our transit.
Speaker Change: What we have done in continuous breakdown of the whole process and read.
Speaker Change: Use.
Speaker Change: Damage to reduce loss.
Speaker Change: And also together with the what we mentioned to try their throughput model well.
Speaker Change: Help us reduce sortation.
Speaker Change: Frequency as well as connecting destination, and our origination outlets or our centers will help us reduce the cost.
Speaker Change: On a per.
Speaker Change: Per unit basis.
Speaker Change: Our goal for 2025 is to achieve at least.
Speaker Change: Three cents reduction for sortation and transportation combined.
Speaker Change: Unit cost.
Speaker Change: So with the success and implementation of our initiatives to.
Speaker Change: Establish direct link between outlets and the.
Speaker Change: Post our goal is to have around $42, six or almost 40% and above of the packages go directly to the outlet which will translate into about.
Speaker Change: <unk> 20.
Speaker Change: Her package savings.
Speaker Change: We think there again more opportunities for us to reduce costs as volume continues to improve and increase.
Speaker Change: So the third question regarding to the social our.
Speaker Change: Social welfare expenses.
Speaker Change: We've always focused on people.
Speaker Change: And continuously we.
Speaker Change: Protect and improve the.
Speaker Change: The interest.
Speaker Change: And the rights of our careers.
Speaker Change: We have our self employed employees as well as the outsourcing employees, 100% coverage on their social welfare payment.
Speaker Change: Oh careers also were encouraged to.
Speaker Change: We also encourage our outlet owners to cover.
Speaker Change: Careers and we have achieved.
Speaker Change: Help them achieved 100% commercial insurance coverage.
Speaker Change: To be noted is that in the industry. We are the first to roll out a corporate sponsored.
Speaker Change: Whether 24 seven.
Speaker Change: Daniel Group insurance for our careers.
Speaker Change: Currently the stability or the turnover rate performance of our courier is in.
Industry is relatively.
Speaker Change: Better than the rest.
Not only have the lower cost, but also have the willingness and.
Speaker Change: Yeah also have the willingness to work with the brands to provide better.
Speaker Change: Our sense of belonging and also a sense of achievement with the.
Speaker Change: Radius surrounding the.
Speaker Change: Cost, we believe we are able to help.
Speaker Change: Our careers not only.
Speaker Change: Receive better income, but also have better work environment and safer work environment.
Speaker Change: And I hope that answers your question.
Thank you Ms lines, Yes, that's very clear thank you.
Speaker Change: Hi, Sam.
Speaker Change: This concludes our question and answer session.
Speaker Change: Like to turn the conference back over to the company for closing remarks.
Speaker Change: Okay.
Speaker Change: Again, thank you everybody for joining today's call and thank you for your continued support we are available for further questions or discussion and we look forward to talking to you soon.
Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Speaker Change:
Speaker Change: [music].