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spk01: Good day and welcome to the ZTO Express first quarter 2023 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Sophie Lee, Company Secretary. Please go ahead.
spk03: Thank you, Operator. Hello, everyone, and thank you for joining us today. The company's results and the investor relations presentation were released earlier today and are available on the company's IR website at ir.zpo.com. On the call today from CTO, Mr. Mason Lai, Chairman and the Chief Executive Officer, and Ms. Hui-Ping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights followed by Ms. Yan, who will go through the financials and the 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 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 statement 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 entirety in Chinese before I translate for him in English.
spk05: We have achieved a net profit of 19.2 billion yuan and a net growth of 82%. In 2023, the express delivery industry will have a net growth of nearly 11%. to increase the market share in order to maintain a high-quality service level and to achieve a set profit target, and to increase the market share in order to maintain a high-quality service level and to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase the market share in order to increase Thank you very much. Third, in terms of cost, on the one hand, Fourthly, The service quality is a prerequisite for the expansion of the market share of stable network and continuous expansion of market share. We continue to optimize the quality management of the bracer, strengthen the operation regulations in each part of the transfer system, solve problems at the beginning of the year, and ensure the efficiency and comprehensive customer satisfaction. In the second system, we observed that the industry's low-intensity The growth on the infrastructure is relatively healthy. With the improvement of consumer confidence and the further recovery of the national economy, courier industry operations will also maintain a steady growth trend. The Chinese Communist Party will still focus on doing its best, while paying attention to operating safety and network stability, while doing things and doing things. There are three tasks in front of us. The first is to work hard and work hard. to build an online tool to assist employees to get a market price, to guide endpoints, to build small platform thinking, to help employees to start businesses and recruit, and to increase the percentage of retail sales. Second, deepening the network, especially the ability of endpoints to build. The focus is on the deployment of the ability of endpoints to help and support. Increase the market coverage and penetration of standard products. Increase the profit level. Third, strengthen the delivery capability and service quality and value of Modan's stores. Focusing on helping the industry solve the cost of delivery. Reduce the number of customers. Use Modan's stores as the center to service quality products and services. Since the establishment of the fund in 2002, The President has always insisted on the concept of sharing the same building, focusing on the construction of the foundation, the construction of efficiency and the performance of the advantage, and the innovation of time and space, promoting the fairness and rationality of the participation of all parties. Today, in the express delivery industry, we have a leading position in terms of service quality, scale, and profit level, which is the result of the joint win-win of all cooperation partners under the President's brand. If, in the past ten years, the central government has surpassed and maintained the lead in the connection between the headquarters and the center, then the next stage of health development will be based on our center's focus on whether the connection between the employees and customers can form a solid storage box. We are full of confidence in the prospects of China's express delivery industry development. He or she misjudges and does not optimize the digitalization operation and the formalization management, which will impede the middle class and hinder our leading advantage. Having a different Buddhist concept will guide us to grow and strengthen our industry, and to build an ecological competitiveness. At the same time, we can have more responsibility for the country and society. Buddhist quality, business scale, and the increase of profit and loss, Thank you Chairman Lai. Let me translate first. Hello everyone and thank you for joining us on today's conference call. In the first quarter of 2023, our business volume reached $6.3 billion.
spk03: up 28.5% year-over-year, and our market share increased by 1.8 percentage points over the same period last year. We maintained our industry-leading service quality ranking while at the same time achieved an adjusted net income of $1.92 billion, up 82% year-over-year. In the first quarter of 2023, the express delivery industry volume increased nearly 11% over last year, successfully saving market opportunities. ZTO delivered on a set of strong performance results in accordance with our consistent core strategy of accelerating market share growth while maintaining high quality service and achieving targeted earnings through implementation of the following specific tasks. First, We revised the target setting methodology by referencing the existing market share versus merely based on growth rate, paying particular attention to relatively low standing regions to reduce their lag. We categorized our franchisee partners and designed appropriate policies to match their unique business profiles. We increased communication effort to explain the intention of the change and pointed out the repeatability year after year. hence effectively alleviate their concerns so as to forge ahead without reservations. Secondly, regarding revenue, we refined our volume cost-to-profit analytics and implemented managerial tools across the network to further improve the effectiveness of transit fee pricing to cover associated operating costs. In conjunction with continued effort to optimize KA customer mix, we were able to enhance structure of revenue and quality of earnings. Third, from the perspective of cost, on one hand, we benefited from better economies of scale given higher package volume. On another hand, we were able to improve the efficiency in isolating operational anomalies and address problems more effectively where process data are traced to workstation or individual operator thanks to several standardization initiative we started in the second half of last year, which provided us action-level visibility and quantification to manage productivity. Fourth, high service quality is a prerequisite for price premiums. Network stability and consistent market share expansion We continue to refine the design of quality control points to improve standardized execution throughout the whole process of pickup, rotation, transit, and delivery, addressing root causes and ensure timeliness and overall customer satisfaction. Entering into the second quarter, we observed that the industry's performance was reasonably fair relative to last year's low base. With improved consumer confidence and the further recovery of national economy, we believe the express delivery industry will regain steady growth momentum. Meanwhile, ZTO shall maintain internally focused to improve operational safety and network stability. By keeping the pedal to the metal, we will carry out the following important work. Drive full implementation of the last mile policies that assures the pass-through of market pricing into the hands of couriers. We are cultivating a mini-platform for outlet operators to promote entrepreneurship, hence increase couriers' income as well as proportion of ZTO's retail to C volume. Number two, strengthen capability of the entire network. particularly empower our network partners and outlets to establish capacity for direct linkage. Our goal is to increase market coverage and the penetration of our time-definite products, which will help improve profitability. Number three, enhance capability of delivery to door to improve overall value add and quality of services by our last mile posts. We aim to go from help addressing industry-wide challenges in delivery costs and lightening the workload for delivery personnel to the development of multi-faceted product and service solutions for last mile customers. Since its establishment in 2002, ZTO has always adhered to the philosophy of shared success. paid attention to infrastructure development and their efficient utilization to establish our competitive advantage. And we have consistently stayed relevant in promoting fair and equitable sharing of benefits amongst all participants of our business endeavors. Our leading position at present in the express industry in terms of service quality, scale and the profitability is the result of a common goal and a concerted win-win cooperation by everyone under the ZTO brand. If we attribute our relative success in the industry for the past 10 years to the more effective linkage between headquarters and the sortation centers, then our competitive mode for our next stage of growth and development would largely be dependent on better we are able to build cohesiveness and a streamlined connection among sorting centers, outlets, last mile couriers, and our customers. We are confident in the growth prospects of China's express delivery industry. Staying practical and improving digitization and the data-driven process improvements will continuously enhance ZTO's competitive edge. Altruistic service mindset will propel us to grow our business big and strong, as well as to take on greater responsibility towards the country and the society. The balanced approach and increases in service quality, scale, and reach, plus higher earnings will bring about meaningful payback to everyone who participates, supports, and invests in us. With that, let's welcome Ms. Yen to introduce the financial results and status of ZTO. Thank you, Sophie. Thank you, Chairman.
spk04: Hello, everyone on the call. As I go through our financials, please note that unless specifically mentioned, all numbers quoted are in RMB, and percentage changes refer to year-over-year comparisons. Detailed analysis of our financial performance, unit economics, and cash flow are posted on our website. and I'll go through some of the highlights here. In the first quarter, ZTO maintained profitable growth thanks to sound execution of our consistent corporate strategy. With industry-leading ranking in quality of services, our parcel volume grew 20.5% to $6.3 billion, expanding our market share by 1.8 points, to 23.4% compared to the first quarter last year. We delivered a strong adjusted net income growth over 82% to reach $1.92 billion. Total revenue increased 13.7% to $9 billion. ASP for the core express delivery business decreased 3.7% or 5 cents. resulted mainly from lower average weight per parcel, increase in volume incentives, and mixed shift due to decrease in KA volume, all of the above absorbing positive impact from more effective network pricing. As a note, KA revenue includes delivery fees. As KA revenue as a percentage of total revenue decreases, ASP decreased. because the rest of the revenue is reported net of delivery fees. Total cost of revenue was $6.5 billion, which increased 2.8% because of scale leverage and meaningful productivity gain. Overall unit cost of revenue for the core express delivery business decreased 12.8%, or 14 cents. Line haul transportation costs per parcel decreased 10.6% to $0.51, driven by real-time data monitoring and analytics to optimize resource utilization, route planning, and load rates. Unit sorting costs decreased 11.1% to $0.32, thanks to continued standardization in sortation procedures and improved productivity with better resource deployment. As a result, gross profit increased 55.8% to $2.5 billion because of increased revenues and cost productivity gain. Gross profit margin rate increased 7.6 points to 28.1%. SG&A expenses excluding SBC compensation as a percentage of revenue grew 0.3 points to 5.9%, demonstrating a stable and sound corporate cost structure. Consistent with gross profit, income from operations increased 74.7% to $2 billion, and associated margin rate grew 7.6 points to 21.7%. Again, adjusted net income increased 82.1% to $1.9 billion, and adjusted net income margin grew 8.1 points to 21.4%. Operating cash flow grew 147.7% to $2.7 billion. Capital expenditure totaled $2.3 billion, and we anticipated annual capex in 2023 to be in the range of $6.5 to $7.5 billion. Taking into consideration the current market condition and our operations, we are raising our annual parcel volume projection to be in the range of $29.27 billion to $30.24 billion, representing a 20% to 24% increase year-over-year. We remain committed to increase our market share by at least 1.5 percentage points for 2023 while maintaining high quality of services and customer satisfaction and achieving optimal earnings growth for the year. These estimates represent management's current and preliminary view, which are subject to change. This concludes our prepared remarks. Operator, please open the lines for questions. Thank you.
spk01: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then two. In the interest of time, we ask that you please limit yourself to two questions. Once again, that was more than one to ask a question. And at this time, we will pause momentarily to assemble our roster. And our first question will come from Ronald Keung of Goldman Sachs. Please go ahead.
spk00: Thank you. Thank you. Thank you for taking my question, and congratulations on the strong results. So I have two questions. One is about the unit cost that we have done exceptionally well in cutting unit costs down. So can you go through just whether there's 10% improvement in the unit costs, particularly in trucking and sorting, whether that – could be sustainable, particularly heading into the next few quarters, where the unit cost improvement will continue. Second is, can you also share how you see the latest competitive landscape that's grateful for the industry, given some of the many, many companies are talking about focusing a bit more on market share this year, not just on the profitability? How do we see the competitive landscape when parcel growth is lapsing the easiest low base over the past one or two months now? We're having a less easy base now. So let me let me translate my question. Thank you to the management for congratulating us on the performance of the first quarter. I see that the growth and the cost of transport are very good. I would like to know what actions Li Dian has taken, and if the cost of the unit cost is reduced in the first quarter, will it continue to the next few quarters, and can it be enjoyed? benefit. Secondly, I would like to hear about our thoughts on the financial structure. This year, maybe compared to last year, other players would say they still want to make good profits, but they also want to increase the market share. So everyone wants to increase the market share, but at the same time, we have to think about how we will think about the financial structure this year. Especially since the beginning of May, there may be no low base, so the increase in packaging may be Thank you, Mr. Lai and Mr. Yan. Okay, I'll respond. Regarding the cost, it's obvious that the cost of a single ticket is going to go down.
spk05: The cost of a single ticket and the cost of a separate ticket are going to go down by one cents. On the one hand, it is the impact of the epidemic last year. The size and effect of the development has not been fully utilized. On the other hand, since the second half of last year, we have actively adopted a series of cost-efficiency measures. There is a continuation effect. In fact, there have been a lot of decline in the share price. The share price has also declined, but there is no share price. The cost of each ticket is reduced by 6 cents to 5 cents per ticket. The cost of each ticket is reduced by 4 cents to 3 cents per ticket. We mainly do these jobs. The first is the precision management. In terms of transportation, first we take various measures to reduce resource waste in the use of vehicles. For example, through the combination of traffic and personnel, to reduce the number of employees. The implementation of standard oil management reduces the cost of using oil. In addition, based on the change in the amount of work, we are flexible in the use of oil and the combination of transport resources, which increases the portability. In terms of division, we pay more attention to the scientific management of employees. On the one hand, through the implementation of self-development, we ensure that there are many workers, and we develop the work responsibility of the employees.
spk00: On the other hand,
spk05: uh... This is in terms of cost. The second one is, you asked about the pattern, how to change it. The pattern of the industry is that Its trend must be this, the share must be like this, efficient, with this cost control, good service quality, good head business, it must be accelerated. Long-term businesses have more capacity, better service quality and more stable network. Only stronger order capacity and customer contact. Thank you very much.
spk04: Thank you, Ronald, for your question. So for the first part, you asked about the unit cost and also the expectation for it to continue. Chairman had described that indeed our performances have been quite well for the first quarter. And as we look at the sequential improvements there are also present, but certainly the year-over-year comparisons is much more significant if you look at the first quarter. The first quarter unit cost for transportation and sorting combined decreased by 10 cents year-over-year. On one hand, the impact of the pandemic in the same period last year suppressed the economy of scale and productivity was not fully demonstrated. On the other hand, since the second half of last year, we have began proactively taking a series of cost optimization measures, which have had sustained effects coming into the rest of the quarter, including this quarter. In Q1, the transportation cost per parcel decreased $0.06 to $0.51, and the sorting cost decreased $0.04 to $0.32. And the reason, mainly, some of the things that we've done is with regards to our digitization and refined management in process productivity gain. In terms of the transportation, for example, we optimized redundant drivers by matching routes with the equipment and the personnel. We implemented standard fuel consumption management to reduce fuel costs. As you know, all the data are on the dashboard so that we are able to monitor and compare. In addition, we have developed ability to start, to an extent, dynamically planning our route planning our truck routes so as to meet the demand in business volume. And as it fluctuates, we are able to also better optimize the utilization of the capacity, hence improving our load rate. In terms of sortation, we made the employee management much more As you know, sortation, the labor cost as a percentage, is the largest. On one hand, we implemented a unit rate compensation. In other words, we paid by the quantity of processing. So you do more work and you earn more to stimulate employees' working enthusiasm. On the other hand, we improved efficiency, labor efficiency through optimized scheduling and utilized more skilled hired workers instead of temp workers. Standardization and digitization is certainly another key contributor to our productivity gain. We took the operational process, we broke that apart and quantified indicators and conducted assessments throughout the entire progress of the package. We used digital intelligence tools to realize, to achieve data so that we are gaining visibility into the actual production process. And by comparing the completion of work and their indicators, we will then reward excellent performances and then reprimand poor performances so as to improve the entire overall efficiency. Regardless of the impact, if we disregard the impact of the oil price, the annual cost reduction target for the full year is between 5 to 10 cents for 5 to 7 cents for the cost of sortation and transportation combined. In addition to, in the future, the cost effectiveness of our entire connection between sortation and the transportation, as well as our expanded effort into productivity gain for our network partners, which will create, streamline, and enhance our cohesiveness of the entire operation. We believe the continued effort in digitization and our expanded effort throughout the entire network will help us continue to drive productivity. Certainly without overemphasizing that the scale will continue to bring us leverage. That's for the cost side of the question. And then for your second question relating to the market dynamics, overall is that the market share will continue to be concentrating towards those companies who could operate with the best efficiency with the best quality of services and the most stable network. So with that, the Chairman mentioned that our overall performance and profitability and our strategy to balance our gain on market share, quality of services, and also profitability will remain to be our focus. The industry currently, we have seen the continued acceleration of consolidation organically. The leading enterprises have more room for productivity gain, and the CTO intends to maintain that leadership. The profitability of each company is also differentiated based on their ability and their results speak for itself. Focusing on our own development with advantage of scale and efficiency and continuously depending on our digitization and process improvement, maintain our competitive advantage.
spk00: Thank you, Director Yan.
spk01: The next question comes from of Morgan Stanley. Please go ahead.
spk02: Thank you. uh uh I'll translate for myself. So there are two questions. The first question is about the capacity plan. So we observed that the company has adjusted up the four-year volume guidance and also in the first quarter CapEx has been up a young year. So wondering what's the capacity, optimize the capacity plan for the next few quarters of the year. Is there any adjustment to your four-year CapEx plan? And the same question is about competition. We observed that the first quarter market share gain is faster than the 1.5 percentage point. Is management happy with the current market share advantage as well as unit profit advantage versus your peers? Or you think you will be more aggressive in expanding the relative advantage compared with peers? Thank you.
spk04: Thank you for your question. I'll take the first one regarding CapEx. The full year's guidance is still, we are maintaining it at $6.5 to $7.5 billion for CapEx spending. If you look at last year, because of the pandemic impact, volume incoming a week, so hence we have adjusted our CapEx And in this year, certainly the first quarter, based on strong volume expectations, we are adjusting it to be higher. So there are two reasons, one being the low base and then the other is indeed this year we have a higher volume incoming. Preparing for our capacity is important because we want to continuously monitor the best cost point or a sweet spot. For example, the first quarter we have reached 85 and above million packages per day for a part of March. And looking into the rest of the year, we believe there are still increments to where our capacity need to be adjusted up. So we are planning for installing more machinery and equipment to replace more costly labor, and also some of our older facilities are being upgraded and expanded, all gearing towards the busy season that are coming in for the second half of the year. But certainly, we will continue to monitor the growth in the volume so as to maintain an optimal pace in CapEx investment.
spk05: Okay. The question you asked is the difference between the growth judgment and the growth reason, as well as the gap with the same industry. The industry growth prediction is that China's economy will never recover. The consumer confidence index was established in March to April. Due to the effect of the low index, the industry growth has a strong rebound. Considering the recovery of the overall technology last year and before the end of the year, it is estimated that the annual industry growth rate will be between 12% and 16%. The total annual growth rate will not be lower than 1.5 points. The reason for the growth rate is that, first of all, on the basis of policy and indicators, this year, with the goal of increasing the ratio of capital to technology, and canceling the isolation of late points, so that it can focus more on business growth. In addition, we will carry out division, party, classification, and assessment of each district, to carry out business improvement, to eliminate low share of land. Secondly, in terms of policy advancement, we will pay more attention to the policy declaration of late points, so that the late points can truly understand the policy. to strengthen the network's confidence. Thirdly, in terms of digitalization, we will use the digitalization tools to the best of our ability, so that it will be easier to calculate the price at the end of the day, and it will be more clear to our own data, and it will be easier to find and solve problems at the first time. You also asked about how to maintain the market share and profit with us. We hope for a balanced development. The main reason is that We believe that with the current situation, Let me translate for the chairman for the second part of the question. The industry growth forecast at present
spk04: China's economy is showing signs of gradual recovery, and the consumer's confidence level is also expected to continue to recover and rise. From March to April, due to the lower base effect, the industry's growth are also exhibiting strong rebounds. And considering the overall low base of last year and the current market recovery, we expect that the industry's growth will remain for the full year around 12 to 16 percent. Our market share growth target is still to be no less than 1.5 percentage gain. The strategy, I think, for our overall growth in terms of the policy, we set up certain indicators based on the original market share that each of the regions currently have. And then we, with our new methodology to set growth goals, we focused on market share instead of the year-over-year percentage comparison. This alleviated a lot of the concerns from our network partners so that they will be more focused and less worried about the repeatability and more focused on going for the market and maintaining quality of services and so on and so forth. In terms of the policy promotion, we also paid more attention to the outlets that truly need help as they shorten the gap compared to either our national average or regional average so that they could catch up. The digitization tools, we are also extending that to provide visibility to our network partners so that they are able to closely see what we have measured them upon and providing the guidance in where the problems might be. As far as what we are going to do relative to our competitors, we will continue to focus on our own, what's within our own control. Our consistent strategy has been that all three, including quality of services, market share, and also profitability, all these are part of the performance measure metrics. We drive for balanced development. Services quality is the prerequisite our market premium to help us propel forward with greater market share, performance services, as well as quality, including our empowerment to our network partners and couriers, as well as the better allocation sharing of the benefit of the growth and the profit is going to help ZTO further our competitive advantage going forward.
spk02: Thank you, Director Lai.
spk01: The next question comes from Lu Zhu of Citi. Please go ahead.
spk02: Thank you, Director Lai, for accepting my question. My second question is about the trend of single-voting revenue in the future. We also see that this first quarter, the overall trend is a downward trend. In the future, will we continue to reduce the amount of K? And then the overall, the whole price policy is an optimization issue. In addition to the reduction of the K-volume and the weight reduction, if we look at the second quarter to the fourth quarter, will the downward trend continue to be maintained? If we look at it in a more long-term perspective, what will happen to the trend of single income growth in the future? uh uh uh uh uh Let me translate my question. So the first question is in regards to the ASP trend. So what are the management expectations on the ASP trend going forward this year? Will the decline trend continue throughout the year? And in the longer term, how will the management view the ASP10 for next year? And also, if we look at the earnings growth, is the company still confident to achieve a larger earnings growth than the partial volume growth rate? And the second question in regards to the last mile network development? What's the current number of the last mile post station and the inbox or in-station rate? And how could it improve on the current level? Is there a ceiling for that? Thank you.
spk05: This is a question about the number of people. It's just a little change and you don't have to do it. It's just a little quiet. You don't have to do it. It's just a little change and you don't have to do it. Thank you very much. In the future, we will introduce more divided products to meet the need for difference. At the same time, we will also deeply understand the policy of corner-to-corner. We will give a price to the business owners to develop the power of the business owners to collect the money. Regarding the price of the market and the decline of the market price, the Chinese Communist Party is a firm protector of the market stability. At present, the price of Zhongtong is the highest in Tongda City. We used a better service experience to limit the price of the previous unit, and we managed to ensure that the service quality continued to advance through every section. As the express industry changes to high-quality development, the express industry focuses more on its own ability to build. Under the premise of improving business efficiency and resource utilization, the normal price
spk04: ASP for the first quarter and a full year. The ASP for the first quarter decreased five cents and it's, as I explained earlier, due to a combined impact of package per parcel weight decline, KA as a percentage of revenue decline, and then volume incentive increases. And all these altogether plus or minuses is optimization of three cents offset part of what I had described earlier as negative impact. It is expected that unit price will remain relatively stable throughout the year. ZTO has always been the supporter of stable pricing and reasonable market pricing in the past and will continue to do so. After the first quarter results in the future, what we will plan on doing is continue to, through policymaking and our product structure improvements, to bring up our pricing where possible. The digitization, what Haida mentioned earlier, helped us to make better pricing to cover costs. The pricing is done on a more granular level at the route level. Another thing specifically the chairman mentioned that we are focusing on through our standardized timeliness product improvements and design. We will further introduce new way of going to market and providing differentiated products and services to our customers. More products and innovations is expected to come. And this will also go hand-in-hand with our initiatives to pass through MarketPrice to the couriers so that they are encouraged to bring in more non-e-commerce packages, hence 2C packages. As we continue to focus on better quality of services and maintain the level of customer satisfaction, we'll be able to secure our premium at the marketplace. Through every segment of process improvement, we will be able to maintain such quality of services going forward.
spk05: Your second question is about profit and loss. In normal circumstances, we are confident that profit and loss will be greater than loss. Your third question is about Modan. In 2021, the Chinese Communist Party officially established an assault team. Our goal is to create basic facilities and public platforms for the service industry, with the aim of reducing the cost of the service industry, and at the same time, solving the service barrier of the service industry, and meet the needs of customers' personalization and individualization. In the future, TOUCH will be a center of contact, and will be a link between products and users. At present, we have already reached 90,000 subscribers. The goal of TOUCH is to serve our customers better, to be able to receive and deliver better, Thank you.
spk04: The next part of the question relates to our last mile post. Since 2021, the company formed TUSHI, and we quickly expanded our footprint through a partner network model, and we have developed a reasonable set of footprint as well as capability for services with standardization. The goal of TUSHI is to develop an infrastructure platform which is also open to public, open to all the express delivery companies, focusing on solving the problem for the industry in terms of cost for delivery and at the same time improve the shortcomings of the last mile services. We have set our goals for this quarter to develop further enhanced capabilities at the last mile, including delivery to door and also pickup at door. Services that are going to be gradually developed that are individualized to meet customers' individualized demand is part of our effort. But the main focus is to first establish ability to bring the cost of delivery down because volume are continuously increasing. And then from there, we are able to then produce opportunities or create opportunities for us to provide other services, including with our direct link between our destination outlets to our customers through the services of our network couriers. The comments for the gross comparisons, we have our profit growth in this quarter faster than our volume growth and going into the future as we anticipate the level of revenue development and also our continued effort in cost productivity gain. We believe we are able to maintain for a period of time the growth of our revenue, growth of our bottom line faster than the top line.
spk01: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
spk04: Thank you again for everyone to join us and we have put together some of the answers for you today and we hope to answer more and have more discussions with you in the future. Thank you again.
spk01: The conference has now concluded. Thank you for attending today's presentation
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