BEST Inc (BEST) 2022 Q4 法說會逐字稿

Good day, and welcome to the BEST Inc. Fourth Quarter 2022 Results Conference Call. (Operator Instructions). Please note this event is being recorded.

美好的一天，歡迎來到 BEST Inc. 2022 年第四季度業績電話會議。 （操作員說明）。請注意正在記錄此事件。

I would now like to turn the conference over to the Chairman and CEO, Johnny Chou. Please go ahead.

我現在想將會議轉交給董事長兼首席執行官 Johnny Chou。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining BEST's fourth quarter and full year 2022 earnings call today.

謝謝你，運營商。大家好，感謝您今天參加 BEST 的第四季度和 2022 年全年財報電話會議。

2022 was a challenging year. The COVID-19 pandemic and its related controls, seriously impacted general economy, and this was very particularly hard for the logistics industry. When China lifted its restrictions in the fourth quarter, many of our employees, partners and customers tested positive to COVID and our operation was severely disrupted. However, under such difficult environment, we prevailed. BEST Supply Chain Management beat our internal 2022 budget, increasing its gross margin by 6.3 percentage points year-over-year in the fourth quarter, while BEST Freight annual loss narrowed by 28.5% compared with 2021. BEST Global also started its recovery and growth at the end of the year.

2022 年是充滿挑戰的一年。 COVID-19 大流行及其相關控制措施嚴重影響了整體經濟，這對物流業來說尤為艱難。當中國在第四季度解除限制時，我們的許多員工、合作夥伴和客戶的 COVID 檢測呈陽性，我們的運營受到嚴重干擾。然而，在如此艱難的環境下，我們還是取得了勝利。 BEST Supply Chain Management 超過了我們內部的 2022 年預算，其第四季度的毛利率同比增長了 6.3 個百分點，而 BEST Freight 的年度虧損與 2021 年相比收窄了 28.5%。BEST Global 也開始了復甦和增長年末。

After lifting of COVID pandemic-related controls, we have seen a rapid recovery in general economy in our multiple business lines. We are confident to deliver a strong growth in the financial results in 2023. In addition, our Board has authorized an up to 20 million shares repurchase program.

在取消與 COVID 大流行相關的控制後，我們看到我們多個業務線的整體經濟快速復蘇。我們有信心在 2023 年實現強勁的財務業績增長。此外，我們的董事會已批准一項高達 2000 萬股的股票回購計劃。

Now let's take a closer look at each of our business units. For BEST Freight, we focus heavily on digital transformation, cost reductions and quality improvement. As a result, our operating efficiency and service quality has significantly improved. For the fourth quarter of 2022, despite a decrease of 7.6% in total volume, Freight gross margin improved by approximately RMB 200 million, and its net loss narrowed by 69.3% compared with Q4 2021. For the full year, Freight volume decreased by 6.1%, but narrowed its net loss by 28.5% year-over-year.

現在讓我們仔細看看我們的每個業務部門。對於 BEST Freight，我們重點關注數字化轉型、降低成本和提高質量。因此，我們的運營效率和服務質量顯著提高。 2022年第四季度，儘管貨運總量下降7.6%，但貨運毛利率較2021年第四季度改善約2億元人民幣，淨虧損較2021年第四季度收窄69.3%。全年貨運量下降6.1% %，但淨虧損同比收窄 28.5%。

Looking ahead, service quality remains our #1 priority. While continuing to improve Freight service quality through digital transformations, we are putting a strong emphasis on the synergy between BEST Global and Supply Chain Management to further reduce our costs and maximize our growth opportunities. We anticipate BEST Freight return to profitability in the second quarter of 2023 and generate positive cash flow throughout the year.

展望未來，服務質量仍然是我們的第一要務。在通過數字化轉型繼續提高貨運服務質量的同時，我們非常重視 BEST Global 和供應鏈管理之間的協同作用，以進一步降低我們的成本並最大化我們的增長機會。我們預計 BEST Freight 將在 2023 年第二季度恢復盈利，並在全年產生正現金流。

Moving on to BEST Supply Chain Management, supply Chain Management technically know-how and superb service capabilities helped us weather the storm. Despite restrictions and shutdowns from COVID resurgence throughout the year. BEST Supply Chain management went above and beyond to make sure we provided our customers with top quality services. Customers quickly recognized our efforts, and we were rewarded with additional business.

轉向BEST Supply Chain Management，supply Chain Management的技術訣竅和卓越的服務能力幫助我們度過難關。儘管全年因 COVID 捲土重來而受到限制和關閉。 BEST 供應鏈管理超越一切，確保我們為客戶提供最優質的服務。客戶很快就認可了我們的努力，我們也因此獲得了額外的業務回報。

In the second half of 2022, we added 64 new key account customers. Supply Chain Management's revenue increased by 2.7% and 0.4% for the fourth quarter and full year of 2022 respectively compared with the same period of 2021. Its gross margin improved by 6.3 percentage points to 4.4% in Q4 2022 and for the full year. Supply Chain Management's gross margin improved by 2 percentage points to 6.1%. The distribution volume for supply chain management also increased by 82.1% for the fourth quarter.

2022年下半年新增大客戶64家。與 2021 年同期相比，2022 年第四季度和全年供應鏈管理的收入分別增長 2.7% 和 0.4%。2022 年第四季度和全年的毛利率提高 6.3 個百分點至 4.4%。供應鏈管理的毛利率提高了 2 個百分點，達到 6.1%。第四季度供應鏈管理的分銷量也增長了82.1%。

Supply Management remains the center of BEST's synergetic logistics ecosystem, by further optimizing its account structures and realizing additional operating efficiencies. We expect BEST Supply Chain Management to be profitable by the second quarter of 2023 and to generate positive cash flow throughout the year.

通過進一步優化其賬戶結構並實現額外的運營效率，供應管理仍然是 BEST 協同物流生態系統的中心。我們預計BEST Supply Chain Management將在2023年第二季度實現盈利，並在全年產生正現金流。

Finally, let's take a look at BEST Global. Southeast Asia's market environment was extremely challenging over the past year. On top of the COVID restrictions in cross-border activities, relaxed pandemic control policy shifted consumptions to off-line from the online. And some of the major e-comm platforms reduce their reliances on third-party logistic services, creating additional challenges for our global business.

最後，讓我們來看看BEST Global。過去一年，東南亞的市場環境極具挑戰性。除了疫情對跨境活動的限制外，寬鬆的疫情控制政策使消費從線上轉移到線下。一些主要的電子商務平台減少了對第三方物流服務的依賴，給我們的全球業務帶來了額外的挑戰。

As the border opened up in Q4, we immediately adjusted our strategy and realigned our organization in response to the evolving Southeast Asia market. Notably, we greatly elevated our organization's capabilities, widened our network coverage, we also used our IT know-how to improve our infrastructure and operating capabilities and significantly improved our service quality. As our part of our go-to-market strategy, we have been expanding small- and medium-sized enterprise coverage to diversify our customer base. The revenue contribution from those customers grew by 13 percentage points to 42.2% in Q4 2022.

隨著第四季度邊境的開放，我們立即調整了戰略並重新調整了我們的組織，以應對不斷變化的東南亞市場。值得注意的是，我們極大地提升了我們的組織能力，擴大了我們的網絡覆蓋範圍，我們還利用我們的 IT 知識來改善我們的基礎設施和運營能力，並顯著提高了我們的服務質量。作為我們進入市場戰略的一部分，我們一直在擴大中小型企業的覆蓋範圍，以使我們的客戶群多樣化。這些客戶的收入貢獻在 2022 年第四季度增長了 13 個百分點，達到 42.2%。

In addition, we are accelerating our B2B2C and cross-border business to provide additional product offerings. We believe this strategic direction will usher in Global's fast recovery and prompt growth for much improved gross margin and better cash flow for BEST Global in 2023.

此外，我們正在加速 B2B2C 和跨境業務，以提供更多產品。我們相信這一戰略方向將迎來環球的快速復蘇和快速增長，從而為百世環球在 2023 年大幅提高毛利率和改善現金流。

In summary, we believe with the ending of COVID pandemic control, the worst is now behind us. During 2022, our focus on digital transformation, service quality and customer satisfaction improvement and cost reduction significantly improved our operating efficiency and increased the customer satisfaction. BEST now is in a strong position for fast recovery and growth in both our top and bottom lines.

總之，我們相信隨著 COVID 大流行控制的結束，最壞的情況已經過去。 2022 年，我們專注於數字化轉型、服務質量和客戶滿意度提升以及成本降低，顯著提高了我們的運營效率並提高了客戶滿意度。 BEST 現在在我們的收入和利潤方面處於快速恢復和增長的有利位置。

We now expect both our Freight and Supply Chain Management business to reach profitability in the second quarter of 2023 with each business unit generating positive cash flow and strong profitability growth throughout the year. BEST Global has also proven resilient, and we are seeing promising recurring trends. We expect BEST Global to grow its top line by 40% in 2023 with strong improvements to profitability and cash flow.

我們現在預計我們的貨運和供應鏈管理業務將在 2023 年第二季度實現盈利，每個業務部門全年都會產生正現金流和強勁的盈利增長。 BEST Global 也證明了它的韌性，我們看到了有希望的反復出現的趨勢。我們預計 BEST Global 的收入將在 2023 年增長 40%，盈利能力和現金流將得到大幅改善。

With that, I would like to turn the call over to our CFO, Gloria, for further review of our fourth quarter financials. Go ahead, Gloria.

有了這個，我想把電話轉給我們的首席財務官格洛麗亞，以進一步審查我們第四季度的財務狀況。去吧，格洛麗亞。

Thank you, Johnny, and hello to everyone. 2022 was a tough year. COVID continued to hit the logistics industry particularly hard. Many factors were beyond our control but we adjusted to the environment and BEST has shown solid financial and operational resilience.

謝謝你，約翰尼，向大家問好。 2022 年是艱難的一年。 COVID 繼續對物流業造成特別嚴重的打擊。許多因素超出了我們的控制範圍，但我們根據環境進行了調整，BEST 顯示出穩健的財務和運營彈性。

BEST Freight and Supply Chain Management narrowed their fourth quarter net losses by 69.3% and 81.3%, respectively, on a year-over-year basis. Even though our total revenue, excluding BEST UCargo and Capital, decreased by 15.9% for the fourth quarter and 9.7% for the full year of 2022. We continue to maintain a healthy balance sheet. Our cash and cash equivalents, restricted cash and short-term investments totaled RMB 3.2 billion after we used RMB 1.4 billion during 2022 to repurchase our convertible senior notes due 2024.

BEST Freight 和 Supply Chain Management 第四季度的淨虧損同比分別縮小了 69.3% 和 81.3%。儘管我們的總收入（不包括 BEST UCargo 和 Capital）在第四季度下降了 15.9%，在 2022 年全年下降了 9.7%。我們繼續保持健康的資產負債表。在我們在 2022 年使用 14 億元人民幣回購 2024 年到期的可轉換優先票據後，我們的現金和現金等價物、受限制現金和短期投資總計 32 億元人民幣。

Now let me walk you through our key financial results for the fourth quarter and full year of 2022. Our revenue for the fourth quarter was approximately RMB 2 billion compared with RMB 2.7 billion in the same period of 2021. Revenue for the full year was about RMB 7.7 billion compared with RMB 11.4 billion in previous year. The decrease was primarily due to the wind down of our UCargo business unit and the lower Freight and Global volume. Fourth quarter and full year revenue for UCargo were approximately 952,036 million compared with RMB 350 million and RMB 2.8 billion in the same period of 2021.

現在讓我向您介紹一下我們 2022 年第四季度和全年的主要財務業績。我們第四季度的收入約為人民幣 20 億元，而 2021 年同期為人民幣 27 億元。全年收入約為77億元人民幣，上年為114億元人民幣。減少的主要原因是我們的 UCargo 業務部門的關閉以及貨運和全球貨運量的減少。 UCargo 第四季度和全年收入約為 9520.36 億元，而 2021 年同期為 3.5 億元人民幣和 28 億元人民幣。

Our cost control measures drove improvements in our overall gross margin in 2022. For Q4, gross margin improved to negative 3% compared with negative 8.4% in the same period of 2021. Gross margin for the full year of 2022 was negative 3.4%. We also narrowed our net loss from continuing operations in the fourth quarter to RMB 366 million with a loss -- from a loss of RMB 734 million for the same period of 2021. Net loss from continuing operations for the full year was RMB 1.5 billion compared with RMB 1.3 billion in previous year.

我們的成本控制措施推動了 2022 年整體毛利率的改善。第四季度，毛利率從 2021 年同期的負 8.4% 改善至負 3%。2022 年全年毛利率為負 3.4%。我們還將第四季度的持續經營業務淨虧損從 2021 年同期的虧損人民幣 7.34 億元收窄至 3.66 億元人民幣。全年持續經營業務淨虧損為人民幣 15 億元，相比之下上年為13億元人民幣。

Adjusted EBITDA for continuing operations in Q4 also improved to negative RMB 296.9 million versus negative RMB 635.2 million for the same quarter of 2021. Adjusted EBITDA for continuing operations for the full year was negative 1.2 billion compared with negative 927.2 million in 2021.

第四季度經調整的持續經營業務 EBITDA 也從 2021 年同期的負 6.352 億元人民幣改善至負 2.969 億元人民幣。全年經調整的持續經營業務 EBITDA 為負 12 億元，而 2021 年為負 9.272 億元。

Next, moving on to key financial highlights for our business units. For BEST Freight, fourth quarter revenue was approximately RMB 1.3 billion compared with RMB 1.9 billion for the same period of 2021. The decline was primarily attributable to the decrease in UCargo revenue. The fourth quarter UCargo revenue decreased by RMB 349 million year-over-year. Gross margin made a significant improvement, up over 10 percentage points to negative 1.3% in the fourth quarter from negative 11.7% in the same period of 2021.

接下來，繼續介紹我們業務部門的主要財務亮點。對於BEST Freight，第四季度收入約為人民幣13億元，而2021年同期為人民幣19億元。下降的主要原因是UCargo收入減少。第四季度UCargo收入同比減少人民幣3.49億元。毛利率顯著改善，從 2021 年同期的負 11.7% 上升超過 10 個百分點至第四季度的負 1.3%。

Adjusted EBITDA for BEST Freight was negative RMB 115.5 million compared with negative RMB 423.9 million in Q4 2021. For the full year 2022, revenue for BEST freight was RMB 4.9 billion compared with RMB 8.2 billion in previous year. Excluding UCargo, freight revenue decreased by 10.7% year-over-year. Gross margin for 2022 was negative 4.6% compared with negative 3.2% of 2021. Adjusted EBITDA for best freight was negative RMB 416.7 million, compared with negative RMB 610.8 million in 2021.

BEST Freight 的調整後 EBITDA 為負 1.155 億元人民幣，而 2021 年第四季度為負 4.239 億元人民幣。2022 年全年，BEST Freight 的收入為 49 億元人民幣，而去年同期為 82 億元人民幣。不包括 UCargo，貨運收入同比下降 10.7%。 2022 年毛利率為負 4.6%，而 2021 年為負 3.2%。最佳運費的調整後 EBITDA 為負 4.167 億元人民幣，而 2021 年為負 6.108 億元人民幣。

Revenue for BEST Supply Chain Management increased by 2.7% year-over-year to RMB 500.6 million, and its gross margin was greatly improved to 4.4% from negative 1.9% in the same period of 2021. Adjusted EBITDA for Supply Chain Management was negative RMB 5.2 million compared with negative RMB 62.9 million in the same period of previous year. For the full 2022, revenue for BEST Supply Chain Management was RMB 1.8 billion or 0.4% year-over-year increase. Gross margin improved by 2.1 percentage points to 6.1% from 4% in 2021. Adjusted EBITDA for Supply Chain Management was 9.6 million compared with negative 56.3 million in 2021.

百世供應鏈管理收入同比增長2.7%至5.006億元人民幣，毛利率從2021年同期的負1.9%大幅提升至4.4%。供應鏈管理調整後EBITDA為負人民幣520萬元，上年同期為負6290萬元。 2022年全年，百世供應鏈管理收入為人民幣18億元，同比增長0.4%。毛利率從 2021 年的 4% 提高 2.1 個百分點至 6.1%。供應鏈管理的調整後 EBITDA 為 960 萬，而 2021 年為負 5630 萬。

For BEST Global, Q4 revenue decreased by 40.8% year-over-year to RMB 195.7 million primarily due to the decreased volume. Its gross margin for the quarter was negative 34.9%, a decrease of 30.1 percentage points year-over-year. Q4 adjusted EBITDA for BEST Global was negative RMB 122.8 million compared with negative 78.8 million in Q4 2021.

對於百世環球，第四季度收入同比下降 40.8% 至人民幣 1.957 億元，主要原因是銷量下降。本季度毛利率為負34.9%，同比下降30.1個百分點。 BEST Global 第四季度調整後的 EBITDA 為負 1.228 億元人民幣，而 2021 年第四季度為負 7880 萬元。

For the full year, revenue for Best Global was RMB 916.9 million compared with 1.2 billion in 2021. Gross margin for the year was negative 18% compared with negative 5.4% in previous year. The decrease in gross margin was primarily due to lower parcel volume.

全年，Best Global 的收入為人民幣 9.169 億元，而 2021 年為人民幣 12 億元。全年毛利率為負 18%，而上年為負 5.4%。毛利率下降主要是由於包裹量減少。

Adjusted EBITDA for BEST Global was negative 386.4 million compared with negative 239.8 million in 2021. Our operating expenses, excluding share-based compensation in the fourth quarter totaled RMB 277.1 million, representing 14% of our total revenue. This compared with 381.4 million also 14% of the revenue in the same period of 2021. For the full year of 2022, our operating expenses, excluding share-based compensation, were approximately RMB 1.2 billion, which was flat compared with previous year.

BEST Global 的調整後 EBITDA 為負 3.864 億元，而 2021 年為負 2.398 億元。我們的運營費用（不包括第四季度的股權薪酬）總計人民幣 2.771 億元，占我們總收入的 14%。這與 3.814 億美元相比，也佔 2021 年同期收入的 14%。2022 年全年，我們的運營費用（不包括股權激勵）約為 12 億元人民幣，與上年持平。

For more of our fourth quarter and full year 2022 financial results, please refer to our earnings press release for further details.

有關我們第四季度和 2022 年全年財務業績的更多信息，請參閱我們的收益新聞稿以了解更多詳細信息。

In closing, our Q4 results were encouraging. Our efforts in cost reduction, service quality improvement and the business structure optimization are proving effective. Moving forward, in 2023, we believe that our strength in technology, domestic and global supply chain management and logistics capabilities will enable us to capture new business opportunities and deliver a strong profitable growth in 2023 and beyond.

最後，我們的第四季度業績令人鼓舞。我們在降低成本、提高服務質量和優化業務結構方面的努力被證明是有效的。展望未來，到 2023 年，我們相信我們在技術、國內和全球供應鏈管理和物流能力方面的實力將使我們能夠抓住新的商機，並在 2023 年及以後實現強勁的盈利增長。

This concludes our financial update. I will now open the call to questions. Thank you. Operator?

我們的財務更新到此結束。我現在將開始提問。謝謝。操作員？

(Operator Instructions) Our first question comes from Thomas Chong with Jefferies.

（操作員說明）我們的第一個問題來自 Jefferies 的 Thomas Chong。

I have 2 questions. So first, would you please provide some color about the Q1 performance of Freight, Supply Chain and Global business units since China reopening, and how should we expect the 2023 outlook? And second, you mentioned that BEST Global would achieve profitability in certain countries in 2023. So which country should we expect?

我有兩個問題。那麼首先，請您介紹一下自中國重新開放以來貨運、供應鍊和全球業務部門第一季度的表現，以及我們對 2023 年前景的預期如何？第二，您提到百世環球2023年會在部分國家實現盈利，那麼我們應該期待哪個國家？

Okay. The first question regarding to Freight and Supply Chain on the Q1, I assume you are talking about this year. Yes, Q1 is we're seeing a fast recovery from a general economy, as well as our business lines. And as the number we are seeing right now, the Q1, the Supply Chain Manager is probably positive. And other than the January, the Chinese New Year impact, Freight should be doing really well on February and March as well for the number we have seen lately. So the performance for February, for the Supply Chain Management and the Freight is ahead of our plan. So that's definitely.

好的。關於第一季度貨運和供應鏈的第一個問題，我想你是在談論今年。是的，第一季度我們看到整體經濟以及我們的業務線正在快速復蘇。正如我們現在看到的數字，第一季度，供應鏈經理可能是積極的。除了 1 月、農曆新年的影響外，貨運在 2 月和 3 月的表現也應該很好，就我們最近看到的數字而言。因此，2 月份供應鏈管理和貨運的表現超出了我們的計劃。所以那是肯定的。

The second is you are talking about Global, and we are seeing some very promising trends in terms of our turnaround in certain countries, and particularly strong in Vietnam, in Malaysia. Certain countries we've seen a very promising business growth as well as a turnaround in our every operating metrics. So that will be my question to you.

第二個是你在談論全球，我們在某些國家看到了一些非常有前途的趨勢，尤其是在越南和馬來西亞。在某些國家/地區，我們看到了非常有前途的業務增長以及我們每項運營指標的轉變。所以這就是我要問你的問題。

(Operator Instructions) This concludes our question-and-answer session. I would now like to turn the conference back over to Johnny Chou for any closing remarks.

（操作員說明）我們的問答環節到此結束。我現在想把會議轉回給 Johnny Chou 作閉幕詞。

Thank you for joining our call. We appreciate your support of BEST. Please reach out to our Investor Relations team if you have any further questions.

感謝您加入我們的電話。感謝您對 BEST 的支持。如果您有任何其他問題，請聯繫我們的投資者關係團隊。

We look forward to speaking with you soon. Thank you very much. Operator?

我們期待盡快與您交談。非常感謝。操作員？

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。