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spk00: Welcome to the ZTO Express fourth quarter and fiscal year 2023 financial results announcement conference call. All participants will be in a listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press stars and 2. Please note, this event is being recorded. I would like to turn the conference over to Ms. Sophie Lai, Director of Capital Markets. Please go ahead, ma'am.
spk07: Thank you, Operator. Hello, everyone, and thank you for joining us today at Companies to Result in an Investor Relations Presentation. were released earlier today and are available on the company's IR website at IR.ZTO.com. On the call today from ZTO are Mr. Mason Lai, Chairman and the Chief Executive Officer, and Mrs. Hui-Ping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Mrs. Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows. I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control. which may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. It is now my pleasure to introduce Mr. Mason Lai. Mr. Lai will read through his prepared remarks in their entire team Chinese before I translate for him in English.
spk03: It is 4.8% higher than the average in the industry. At the same time, we achieved 22.1 billion yuan in adjustment and profit. In 2023, the express market maintained a good growth. However, the price competition, especially in the mass production area, is still very strong. While the Chinese Communist Party continues to maintain the general policy of network policy, it is necessary to keep up and be strong in part of the main production industry. The operating profit level has been significantly improved. This is a reasonable control of the management cost structure. In 2023, the operating profit after adjustment increased from 22.4% last year to 4.3% and reached 26.7%. The profit after adjustment last year was 91 yuan, and the growth was 32.3%. China has always been focused on the balance of service quality, market segment, and profit indicators. One of the core values of a business is the value of creation. There is no absolute trend between scale and profit. This has a relative balance. Facing the uncertainty of the big environment in 2023, the change in consumption structure, and the competitive state of the industry, we pay more attention to the construction of service quality and differentiating capabilities. From a more long-term perspective, The development of the express business market marathon, joint network stability, health, and continuity is the key to maintaining the vitality of the Chinese Communist Party, and ensuring that the overall network policy is fair and universal, and that we share the same ideas. It will help us to work together with our joint partners and business partners to build these capabilities, to share resources, to expand and improve services, and to continue to improve important work. It is one of the key factors in the industry in 2023. The total cost of one ticket per year has dropped by 1.7 cents. Among them, the cost of shipping has dropped by 6 cents, and the cost of distribution has dropped by 5 cents. In addition to the scale of the effect, the Chinese Communist Party has not only advanced the formal and formal management, but also the classification of the quality standards and the comparison of the quantity. especially the balance of practical requirements and the maximization of resources, has achieved significant results. With the ability to move, the foundation of the problem that can be found in time, plus the strong and powerful responsibility and execution power of the team, we can quickly implement adjustments and change the ability of the company to keep improving. Entering 2024, the express delivery industry has shown a steady growth in the past two months. The rise of new e-commerce, including broadcasting and social media platforms, has triggered a wave of public consumption. Although the price of the industry has not been stabilized or improved, the change from high-capacity to high-quality development is a natural trend. Continue to do your job well, co-operate with development and security, guard the bottom line of the business, and do well on the network, especially at the center of the network. and the distribution of profits between business owners will be the key work for us in the near future. The main objectives of the implementation include 1. Enhance the efficiency and efficiency of the system network. Increase the transparency and transparency of the policy. Use the business volume of the air-conditioning resource effectively. Make the relationship between profit and loss more secure. 2. 3. Increase the capability of individualization, speed up the display, signage, delivery door, and storage speed. 4. Increase the accuracy and timeliness of data, improve visibility and usability, make the team efficient management and execution, have tools, have grasp. The progress of China's派系优胜利财 will continue to improve the concentration of the industry, the country will continue to support the industry to grow and strengthen, The cost of social logistics is different from that of developed countries. In the process of digitalizing the digital environment and transforming it into quality, express delivery and its future comprehensive logistics capabilities will penetrate into production, distribution, circulation, consumption, and other areas, and provide high-quality services to promote modernization of industries and the development and development of the so-called consumer market. Thank you.
spk07: Hello, everyone. Thank you for participating in today's conference call. For the fourth quarter of 2023, ZTO's customer satisfaction level continued to rank among the industry top. Our volume reached 8.71 billion pesos, which increased 32% over last year, or 4.8 percentage points above industry average, and we achieved 2.2 billion of adjusted net income for the quarter. In 2023, China Express delivery industry maintained relatively strong growth momentum, yet price competition, particularly in the production regions, were severe. We insisted on keeping the underlying pricing policies across the network consistent, while taking necessary measures in certain markets to maintain base volume. Our annual parcel volume grew 23.8% to reach $32.2 billion. core express delivery unit price declined 16 cents for the year. That was fully absorbed by cost productivity gain thanks to digitization and process management that have been continuously lifting operational efficiency. Together with effective cost controls, we raised the adjusted operating margin rate by 4.3 percentage points to 26.7% for the year. As a result, They adjusted net income for the year worth $9 billion, which increased 32.2% over 2022. ZTO has been consistently focused on balance among quality of services, market share, and earnings. The goal of any enterprise is to create value, and there is no absolute give or take between scale or profits. Instead, there is always relative trade-offs or balance among competing priorities. Facing microeconomic uncertainties, mix of e-commerce structure shifts, and industry-competitive dynamics, we focused on improving overall service quality and the differentiated service capability. We continue to eradicate unprofitable volume. We direct the KA customers to capable network partners. increased incentives to protect critical market presence. Our overall performance results were solid, and particularly so in unit economics and total profit expansion. Even though we did not gain market share against what was targeted in the beginning of the year, we believe our results were consistent with the balanced approach to strategies and adaptive to current market environment. In a longer-term perspective, Express delivery is like running a marathon. Stable and healthy development of the partner network is the foundation of ZTO's longevity. Equitable and fair policies stem from our shared success culture, and it's important for us to successfully implement initiatives including partner capacity and capability building, existing facilities upgrade and resource utilization enhancements. last mile expansion and better customer reach and service quality, and customer satisfaction improvement. Focusing on our own affairs, we achieved another year of significant cost of productivity gain. Total unit cost decreased 17 cents, within which transformation decreased 6 cents and sortation 5 cents. Other than benefiting from increasing scale leverage, we have continuously implemented digitization and link management initiatives in recent years and generated meaningful results. Through clearly defined roles and responsibilities and associated measurement matrix, labor efficiencies and resource utilization greatly improved. Better visibility and timely identification of the issue matched up with strong execution. we have greatly improved our ability to quickly adjust, solve problems, and drive better results. China Express delivery experienced a stable growth for the first two months of 2024. The rise of new e-commerce channels, such as video streaming and retail social networks, stimulated mass consumption. Even though price stabilization and increase have yet to arrive, The shift from high quantity towards high quality is the undercurrent that is inevitably taking shape. Be the best we can, focusing on safety, healthy value base, and fair allocation of economic interest among brand operator, and express careers are main focuses of our work going forward. The following are some of the key initiatives. Support and enable improvements in frontline operating efficiency. Improve transparency and fairness of pricing policy. Design suitable policy and deploy swiftly to maximize utilization of idle resources. Incentivize volume acquisition with improved effectiveness. Second, optimize scale advantage. Reduce the level of aggregation and sort to the smallest delivery unit possible. Reduce last-mile delivery costs and improve productivity. Help always to build out capacity and the capabilities that fit well with that of our sortation hub. Ensure couriers get to take home the lion's share of the profit from incremental non-e-commerce packages they help to market and to pursue. Increase direct linkage to last-mile to reduce costs and improve delivery efficiencies. Accelerate reduction of sortation frequency. Third, improve service quality meeting individualized needs. Improve timeliness of pickup and delivery, including service to door. Reduce damages and loss, and stay on top of quality of service and customer satisfaction. Fourth, enhance the accuracy and the timeliness of data and analysis. improve utilization of digitization tool to help enhance the effectiveness of operational management. We believe that going forward, the China Express industry will continue to bifurcate by scale and profitability, plus increasing concentration. National economic policies have been consistently supportive of Express delivery companies to scale up and improve efficiencies and raise quality of earnings. Plenty of work needs to be done to measure up to developed countries. Underpinned with digitization and environmental consciousness in its transformation from quantity to quality, express delivery businesses will be an integral part of all aspects of production, distribution, and consumption providing high quality products and services. and becoming an important driving force for modernization of manufacturing, agriculture, and development of urban and rural markets in China. There are positive growth prospects and earnings upside to the industry. Our strength today will serve as foundations for comprehensive competitiveness in the future, ensuring our relevancy, and most importantly, affirming our commitment and confidence in creating long-lasting value for our business partners and shareholders. Now let's welcome our CFO, Ms. Yen, to take us through our financials and outlook. Thank you, Chairman, and thank you, Sophie.
spk06: Hello, everyone, to the call. As I go through our financials, please note that unless specifically mentioned, all numbers quoted are in IMB, and percentage changes refer to year-over-year comparisons. Detailed information on our financial performances, unique economics, and cash flow are posted on our website, and I will go through some of the highlights here. We achieved volume target by growing parcel volume 32% to $8.7 billion for Q4 and 23.8% to $30.2 billion for the year with firm execution of our consistent strategies. Our adjusted net income grew 4.4% to $2.2 billion and 32.3% to $9 billion for the quarter and the year respectively, while we maintained high quality of services and customer satisfaction. Total revenue increased 7.6% to $10.6 billion for Q4 and 8.6% to $38.4 billion for the year. ASP for the core express delivery businesses decreased 18.2% or $0.27 for Q4 and 11.3% or $0.16 for the year. During the fourth quarter, we did not raise price as would take place in the past during e-commerce promotional period given price competition and our readiness to process concentrated high volume. ASP decline was attributable to a mixed shift in KA volume, an increase in volume incentives, and a lower average weight per parcel. Total cost of revenue was $7.5 billion and $26.8 billion respectively for Q4 in 2023, which increased 5.5% for Q4 and 1.6% for the year. Combined unit cost of sorting and transportation decreased 14.9% or $0.13 for Q4 and for the year was 13.2% or $0.11, benefiting largely from economies of scale. In addition, unit cost of line haul transportation decreased 11.5% to 46 cents for Q4 and decreased 4.1% to 45 cents for the year, driven by more effective route planning in conjunction with load rate improvements without affecting timeliness and decreases in fuel prices also helped. Unit sorting costs decreased 20.1% to $0.26 and 15% to $0.27 for Q4 and the year, respectively. Driven by increased automation and labor efficiency gains achieved through standardization in operating procedures and optimization of performance metrics. Growth profit increased 12.8%. to $3.1 billion for Q4 and increased 29% to $11.7 billion for 2023 as a combined result of increased volume, offsetting ASP decline, plus added benefits from cost productivity gain. Gross profit margin rate increased 1.4 points to 29.5% and increased 4.8 points to 30.4% for the fourth quarter and the year respectively. SG&A excluding SBC increased 24.9% to $0.7 billion for Q4 and increased 14.3% to $2.2 billion for the year. SG&A expenses excluding SBC, as a percentage of revenue remained low at 6.6% for Q4 and 5.6% for the year, as our corporate cost structure remained lean and stable. Income from operations increased 12% to $2.8 billion for Q4 and increased 29.4% to $10 billion for the year. Associated margin grew 1 points to 25.9% and 4.1 points to 26% for the year, indicating that we have achieved the goal of improving quality of earnings to the level better than 2019 prior to COVID-19 pandemic. Operating cash flow was $3.9 billion for the quarter and $13.4 billion for the year. Adjusted EBITDA for Q4 in 2023 was $3.7 billion and $14.1 billion respectively. Capital expenditure for Q4 totaled $0.9 billion, and the annual capex came in at $6.7 billion in 2023, indicating that we have achieved another year of free cash flow. The company has now established a regular dividend policy and has announced a $0.62 U.S. dollar per share cash dividend for 2023 to shareholders on record as of April 10, 2024. This dividend represents a 40% payout ratio and a 68% increase from dividend from last year. For 2024, the company plans to declare and pay cash dividends semi-annually, no less than 40% of the company's distributable profits for the fiscal year. In addition, the company also announced an upside to the existing share repurchase program by $500 million to bring the total authorization amount of the current program to $2 billion and extend the program by another 12 months until June 30, 2025. Combining share repurchase and dividends, we are committed to steadily improve shareholder returns. Now moving on to business outlook. We anticipate the express delivery industry in China would grow 10% or more in volume in 2024, and we will maintain our leadership effort in industry transformation towards profitable growth with both quantity and quality. Balanced approach to service quality, volume, and earnings is our consistent strategy. Under the near-term conditions surrounding economic development and industry competition, our recalibrated strategy is to target a healthy earnings goal while improving quality of services and customer satisfaction and attain appropriate market share expansion. For 2024, the company expects its parcel volume to grow in the range of 34.73% to $35.64 billion, representing a 15% to 18% increase year over year. These above estimates represent management's current and preliminary view, which are subject to change. This concludes our prepared remarks. Operator, please open the line to calls and questions.
spk00: Thank you. 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're using a speakerphone, please pick up your headset before pressing the keys. If any time a question has been addressed and you'd like to address your question, please press star, then two. We please ask that you limit yourself to two questions or one question and a single follow-up. Again, it is star, then one to ask a question. At this time, we will just pause momentarily to assemble our roster. And the first question will come from Ronald Cohn of Goldman Sachs.
spk02: Thank you, Mr. Lai, Mr. Yan, and Mr. Sun. Congratulations on this 23rd year's performance. Anyway, there are two questions. First, we just talked about the growth of this 24th year. As for this year's financial structure, how do we look at it, especially the price? And in 2023, we also made a more stable and proposal-based profit-earnings increase. Let's look at the 24-year balance of profit and market share. We have already shared the volume growth. Let's look at the 24-year idea of each profit-earnings increase. Second, I would like to ask our CapEx this year, because we see that we now have a regular dividend. How do we see CapEx and the dividend payout ratio in the mid-term this year? Is there any room for improvement in the mid-term? Thank you, management. I have two questions. One is that you've shared your parcel volume growth for expectations this year. What is your expectation on the competition, particularly on the pricing front, and whether we think what is the view on a EBIT or profit to parcel trend this year, given that we have achieved quite a stable, slightly up profit to parcel in 2023, despite the intense competition? Second is on CapEx, so what is our CapEx expectation of this year? And given the free cash flows, do we see a higher dividend payout room in the near to medium, in the medium term?
spk03: Thank you. Thank you for your question. In the past 24 years, the growth of the industry, our official national values, This announcement is 8%. We predict that the industry will still maintain medium-high-speed development. 10%, more than 10% growth. We have already given 15% to 18% growth targets for the middle and high-speed development in the past few years. In terms of growth, in terms of the industry, express delivery... This year, we have three changes. From quantity to quantity and We still want to form some competitive barriers on this differentiated service. The percentage of this image is going to increase significantly. In general, if your service is good and has a cost advantage, its salary will definitely continue to increase. The whole industry, in the future, actually, the accounting is still accelerating. The head office has a scale, has a network advantage. The stronger, the stronger. This trend is very obvious. The second change is from a single accounting to a comprehensive flow. Our Chinese Communist Party is also focusing on e-commerce. We definitely need to increase the ratio of the three countries to the other countries. It has become the advantage of the environmental competition. It has been set up by the full-scale environmental supply chain. It is a good foundation. It has the advantage. You just mentioned that Last year, we did better from January to February. This year, we did better from January to February. This year, our strategy is to further improve service quality, market segment, and profit balance, and promote high-quality business development. This is the weight. Our annual business volume increased by 15% to 18%, which is about 350,000. The growth is about 50,000. Our main measures are, first, to optimize service capability, to continue to promote diversified products, to further promote all-in-one implementation, to promote customer service experience, to ensure that policies are transparent and reasonable, Let me first
spk06: Translate for the chairman for your first question, and then I'll answer the second part with our dividend. In 2024, the government or the Bureau of Posts have announced an 8% growth expectation, and we believe in our earlier remarks that we think at least a 10% is possible, and our goal is to grow 15% to 18%, so that's clearly above the industry average. We think that from a price perspective, the competition in a longer run will subside because it is a natural process that any industry would go through. The low price Market share obtained from low price is not sustainable. The express delivery industries are accelerating their differentiation with the leading companies having clear advantage in scale, capital strength, and network stability. The trend of strong getting stronger is quite clear and quite obvious. as industry concentration continues to increase, leading express delivery companies will reach market value that is much greater than what it is today. The competition will go from single express delivery capabilities to comprehensive logistics capabilities. And ZTO having the same goal in taking the leadership in the transformation from quantity only to combined with quantity and quality. We hope to develop differentiated price as well as differentiated product, including timeliness product, reverse logistics, so that we can build early-movement advantages to really stand out with quality of services, because we believe that is the key to obtaining market share in the long run. There are several transformations or changes or shifts in the industry. As I mentioned earlier, we have the quality towards quantity and quality. And we are also observing the comprehensive competitive advantages being built. Looking at the first and second month situation for 2024, we think our strategy remains the same, focusing on balanced approach to improve our quality of services as our most priority, and then looking at the balance between market volume, market expansion, as well as the earnings goal. We do want all three, and it is in the current environment a matter of allocating our resources and putting our attentions to achieve the most optimal and appropriate goals. Specific work has been cut out for us In addition to the summary that we've given in our prepared remarks, we think our goal and the strategy really relates around the following five specific tasks. Optimize service quality, promoting diversified products, further shortening the delivery time, and upgrade customer service experience to ensuring policy transparency and equitable policy, tapping into the incremental volume potential of outlets and increase the profitability of the outlets. Three, focusing on outlet capability building and capacity building, establish their sortation and delivery functions and increase the proportion of delivery linkage towards the last mile, implementing last mile policies being the four increasing portion of individual parcels, which is what we're referring to as non-e-commerce retail parcels. And then five, strengthening last mile capacity, building improvements in our ability to pick up, deliver to door, as well as meeting individualized needs of our customers. Now let's move on to the second part of your question. The 40% payout ratio that we've announced. As we mentioned that as the company achieved free cash flow and we believe our cash generation will allow us to continue to generate strong free cash flow, we have clearly, distinctly set ourselves up for a company with growth as well as return to our shareholders. Forty percent is certainly a start going forward combined with dividend share buyback, we are committed to provide healthy and consistent return to our shareholders that are going to be increasing steadily going forward. Hope that answers all your questions, Ronald.
spk02: Yeah, thank you.
spk00: Next, we have Fan Kunlai of Morgan Stanley.
spk05: Thank you. Thank you, Mr. Lai, Ms. Yan, and Sophie. Congratulations on the company's success. Thank you, Mr. Lai. I would like to ask about the format of competition. Actually, this year, we have observed that some small players in the industry are not as competitive as last year. I would like to ask the management's opinion. Is this a new standard of competition this year? Or is it possible to compete if the volume of the industry falls? Right. Let me translate for myself. Thank you, management, for taking my question. Congratulations for the new high in the annual profit since listed. And we do appreciate a lot the management's efforts in terms of increasing shareholder return. I have two questions. The first question is related with competition. So what's measurement expectation on the intent of the competition? Have we seen the worst already or not yet? We have already seen a few smaller players has been competing less aggressively in this year compared with last year. Do you think that could be the new normal, or competition could escalate again if industry volume softens? What's the expectation on the unit profit outlook on a year-on-year basis? And the same question is about the to-do delivery requirements from regulators. Have you observed any changes to operations? What's the potential impact on cost and competition dynamics?
spk03: Thanks. There is a cost advantage, there is a real effect. The effect is obvious. The companies will definitely be stronger and stronger. This is the rule of nature. In the long term, the share will definitely be more and more concentrated. The competition at the moment is still very strong. Because every family So our strategy is to ensure that The second question is about the new rules for delivery. On March 1st, the new rules for delivery can accelerate and promote industry standardization and management, making delivery companies pay more attention to customer experience. In the long term, to advance to high-quality development in the industry. ZTE has always focused on service quality and consumer experience. It has always been leading in the industry in terms of platform index and consumer satisfaction. At present, we have built 11,000 MoDAN stations. While relieving the pressure of MoDAN, we have drawn closer to our customers to build the service and ability of our customers. Thank you for your question.
spk06: Yes, we have observed that the competitive environment has been shifting in accordance with the economic development and particularly e-commerce development. We believe, again, the express delivery business operation and the enterprise goal is like running a marathon, focusing on the best, being the best of ourselves is most important and feasible. With strong cost advantage, better quality of services and timeliness in our services, and better operating efficiencies, we will become the winner of the whole race. The concentration of the industry continues to take place. Looking at the current situation, bless you, everybody is still seeking market share gain. And for ZTO this year, as we had mentioned earlier, the strategy is consistent, and we are recalibrating across the three priorities. So for this year, we are focusing more on improving the quality of services, providing customer satisfaction with differentiated product and services, and meeting individualized and customized needs. So ensuring quality improvements and attaining appropriate earnings while expanding our market presence is our strategy going forward. The unit economics, if I may add the comments, everything is laid out in front of us as we further strengthen our productivity gain and supporting our network partners to grow last mile, expanding their capabilities, we are able to attain our goal of continued profit expansion. On your second question, yes, indeed, there are new rules that are being issued, and we believe that the emphasis is continuing on improving customer satisfaction and logistic experiences, which is consistent with what we've always been working on, and particularly so as we establish near 110,000 last mile posts. It is indeed to help not only our network partners to improve their quality of earnings, but most importantly is to help improve last mile service quality to door delivery capability, meaning the demand individualized as well as customized. So in the longer run, this is a good thing for the industry as we are shifting towards more of quality of services. So we will continue our effort going forward in this arena.
spk00: Next, we have LaHong Chung of Haitong Securities.
spk05: First of all, congratulations to the company for its good performance in the fourth quarter and the whole year. First of all, congratulations to the company for achieving good performance in the fourth quarter and throughout the year. Since the beginning of this year, we have observed strong growth among our peer companies. I'd like to know the areas in which the company is undergoing transformation or adjustment. Is our long-term strategy still intact? Considering the market environment, are we planning to adopt a more aggressive pricing strategy to gain business volume? Thank you.
spk06: Thank you very much for your question. Indeed, a very clear answer to your question is our long-term strategy or consistent strategy remains the same. And I think our fourth quarter results as well as our plan for 2024 clearly indicates that our strong belief, first of all, that price attained, low price attained market share is not sustainable. And it is important, again, as a leadership role, taking a leadership role in the industry to grow from quantity to quality as well in combination with quantity going forward is our goal. So we believe that the price competition in combination with the earlier question asked by Ms. Herling is that, yes, indeed, there are indications or expressions by many of the industry players that they will also follow the transformation to go from quantity only to more quality. And we believe this is a process that will be taking place for the near term and the overall goal of our business remains to keep our network partners and the interest amongst all the players, including on our partners' allocation being equitable. And market share is important, but it's not the only thing. Profit, profitable growth is what we aim to achieve going forward.
spk05: Thank you.
spk00: Next, we have Aaron Lu of UBS.
spk01: Thank you, Mr. Lai, Mr. Yan, and Ms. Sophie, for accepting my question. Actually, I have a small question I want to ask you. As Mr. Lai and Mr. Yan mentioned, we have also noticed that one of our long-term development goals is to improve our service quality, including improving our product quality and promoting product distribution. Let me translate myself. Thank you, management, for taking my question. And as Ms. Lai and Ms. Yan has mentioned earlier, we also noted that we have a long-term focus on improving our service quality, product mix, and pushing for further product differentiation. Could you please shed more light on what kind of initiatives we will take for this year, and what are those advantages we have compared to peers? And the last question would be, do we have any quantitative goals on this front? Thank you so much.
spk03: and then put the quality first in a more important position. From the whole line, we need to balance the center of gravity and the distribution of benefits. At the same time, this year we still need to focus on the efficiency of the transportation. We need to make sure that the quality of the service is as good as possible. We need to increase the market of all-in-one marketing. The cost will also be further optimized. In terms of points of view, we still need to distribute the marketing distribution of each section well. For example, the employee's side-by-side policy, let him start from old business to start business, For example, to speed up the promotion of the end-of-year training, we have a clear target this year, that is, how much the level of training needs to be increased in every place in the country and in the province. Then further strengthen this division, with the end-of-year training as a unit, We can save costs after optimization. Secondly, we can increase the development of door-to-door policy, improve individualized demand, and meet the individualized demand of users. This indicator is far higher than this indicator. Thank you very much for your question. The overall strategy we have
spk06: have mentioned earlier that we will continue to focus on our own. At the headquarter level, we first have put forth the quality of services in the front and managing the relationship between profit and market share. At the sortation center's level, we are focusing on better allocation or more efficient allocation and resources to meet the varying interests of sortation center outlets as well as network couriers. For ourselves, we will further our effort and initiatives to improve the transit efficiency and capability For example, as we mentioned earlier, reduce the total process time, increase the quality by reducing losses and delay, and fully utilize our resources. To the outlets, we think that many initiatives are there to, first of all, improve the clear allocation of roles and responsibilities between the sortation center, the outlet, and the couriers so that they each individually for every of their work segments will improve quality as well as efficiencies. For our couriers, we distinctly laid out policies and laid out initiatives to improve quality linkage, as well as ensuring that they are able to, as courier, motivated or incentivized to attain more non-e-commerce and retail shares by allowing them to gain the lion's share of the marketing price so that they are working for themselves instead of non-differentiated compensated with no differentiation from pickup or delivery fee. With that, we are clearly, on an overall standpoint, having objectives for the last mile to achieve three areas of goal. One is to reduce overall cost, and then two, distinctly improve service to-door on-demand services to meet the customized individual demand and also improve connectivity with our customers so that couriers are able to gain access to more retail volume and retail packages. And then thirdly, at the appropriate location and time, we want to introduce commercial opportunities to our last mile customers. so that they are also improving the quality of their earnings. On an overall basis, we have set our volume growth for the business to be 15% to 18% for the year, and certainly our retail volume, our non-e-commerce volumes growth goal is significantly higher than than this 15% to 18% so that we hope to pull away from the senseless price competition and become truly differentiated from the Tong Da Group and with longer term and improved service quality and brand distinction. I hope that answers your question. Thank you. So I think we are at 9.30. So thank you very much, everybody, for joining today's call. We welcome further discussions and elaboration of our intention, which is very clear in the current environment of how we grow our business, how we develop our brand, and improving our shareholder return. Thank you again for joining us today.
spk00: And we thank you, ma'am, and to the rest of the management team for your time also today. The conference call has now concluded. Thank you again for attending today's presentation. At this time, you may disconnect your lines.
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