BEST Inc (BEST) 2023 Q2 法說會逐字稿

Good day, and welcome to the BEST Inc. Second Quarter 2023 Results Conference Call. (Operator Instructions) Please note, this event is being recorded.

您好，歡迎您參加 BEST Inc. 2023 年第二季業績電話會議。 （操作員指示）請注意，此活動正在錄製中。

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

現在，我想將會議交給董事長兼執行長週志強。請發言。

Thank you, operator. Hello, everyone, and thank you for joining BEST's second quarter 2023 earnings call today.

謝謝接線生。大家好，感謝大家今天參加BEST 2023年第二季財報電話會議。

We are reporting another outperformed quarter achieving both top line growth and bottom line improvements across our business. Our group gross margin turned positive at 4.2% in the second quarter, and we narrowed our net loss by 48.7% year-over-year.

我們報告了又一個業績優異的季度，整個業務實現了營收成長和淨利潤雙雙提升。集團毛利率在第二季轉正至4.2%，淨虧損較去年同期收窄48.7%。

BEST Freight and the BEST Supply Chain Management each reached non-GAAP profitability and generated positive operating cash flow for the quarter. Meanwhile, BEST Global continued to bounce back from the impact of COVID, delivering improved revenue and gross margin with ongoing momentum in cross-border volume and revenue on a quarter-over-quarter basis.

百世貨運和百世供應鏈管理均在本季度實現了非公認會計準則盈利，並產生了正的經營現金流。同時，百世環球繼續從新冠疫情的影響中復甦，收入和毛利率均有所提升，跨境業務量和收入環比保持增長勢頭。

Now let me review each of our business units in more detail. For BEST Freight, Chinese economy's gradual recovery after COVID continued to weigh on the industry's recovery. With our focus on quality and operating excellence, BEST Freight's second quarter volume and revenue grew by 7.2% and 15.2% year-over-year, respectively. We have also made considerable gain with Freight's gross margin. It reached to 5.3% in Q2 compared with negative 7.8% in the same period a year ago. In addition, Freight achieved profitability for the quarter.

現在，讓我更詳細地回顧一下我們各個業務部門。對百世貨運而言，中國經濟在新冠疫情後逐步復甦，這持續拖累了產業的復甦。憑藉我們對品質和卓越營運的專注，百世貨運第二季的貨運量和營收分別較去年同期成長7.2%和15.2%。貨運部門的毛利率也取得了顯著提升，第二季達到5.3%，而去年同期為負7.8%。此外，貨運部門本季實現了盈利。

As service quality remains the cornerstone of our Freight services, our focus moving forward will be on further improving our core competencies in the market. We will continue to develop digital transformation to improve our operating efficiency and ability to provide our key accounts with high-quality services. In addition, we will continue to synergize with the BEST Supply Chain Management to capitalize additional business opportunities.

服務品質始終是我們貨運服務的基石，未來我們將專注於進一步提升市場核心競爭力。我們將持續推動數位轉型，提升營運效率，並更能為重點客戶提供優質服務。此外，我們將繼續與BEST供應鏈管理平台協同合作，把握更多商機。

We expect BEST Freight to continue to be profitable in Q3 and Q4 this year with positive operating cash flow for the full year of 2023.

我們預計百世貨運今年第三季和第四季將繼續獲利，2023 年全年經營現金流將為正值。

Moving on to BEST Supply Chain Management. We continue to benefit from the market's increased demand for third-party integrated logistics services partners with a higher level of service offerings. With our capabilities in technology and integrated services, we are becoming more efficient and further differentiating BEST across markets.

接下來是BEST供應鏈管理。市場對第三方綜合物流服務合作夥伴的需求不斷增長，我們將繼續受益於此，這些合作夥伴將提供更高水準的服務。憑藉我們在技術和綜合服務方面的能力，我們正變得更加高效，並進一步提升BEST在不同市場的差異化優勢。

In the second quarter, revenue from BEST Supply Chain Management increased by 6.7% year-over-year and its gross margin reached to a record high of 10.9%. Furthermore, we continue to expand our customer base. In Q2, it brought in 36 new key accounts and 33 new tender wins. BEST Supply Chain Management's robust growth showcased that our strategy to continuously invest in and improve our digital transformation capabilities and drive synergies across our business is working.

第二季度，百世供應鏈管理業務營收年增6.7%，毛利率達到創紀錄的10.9%。此外，我們持續拓展客戶群，新增36個大客戶，並贏得33個新標。百世供應鏈管理業務的強勁成長表明，我們持續投資和提升數位轉型能力，並推動業務協同效應的策略正在奏效。

We are extending our services to cover more market segments and maximizing overlapping opportunities with BEST Global by utilizing our cross-border and fulfillment capabilities. We expect BEST Supply Chain Management to generate ongoing profit and positive cash flow for the remaining quarters this year and for full year of 2023.

我們正在擴展服務範圍，涵蓋更多細分市場，並利用我們的跨國和訂單履行能力，最大限度地拓展與百世環球的重疊機會。我們預計百世環球供應鏈管理公司將在今年剩餘季度以及2023年全年持續獲利並實現正現金流。

Looking at BEST Global. As we continue optimizing our organizational efficiency and developing our integrated logistics services capabilities in Southeast Asia, we are improving the service quality, network coverage and expanding our reach in cross-border opportunities.

放眼百世國際，隨著我們持續優化組織效率，發展東南亞地區的綜合物流服務能力，我們正在提升服務品質、擴大網路覆蓋範圍，並拓展跨國業務。

On the heels of COVID, BEST Global's business is showing clear signs of recovery. During the second quarter, our key account business has grown 25% quarter-over-quarter. Driven by our robust cross-border capabilities, total volume for our cross-border business in the second quarter increased by approximately 54% quarter-over-quarter.

新冠疫情過後，百世環球的業務呈現明顯復甦跡象。第二季度，我們的大客戶業務較上季成長25%。由於我們強大的跨境能力，第二季跨境業務總交易量較上季成長約54%。

We believe the steps we have taken, place BEST Global on a firm path to growth and profitability. As we continue to execute on our strategy in the second half of 2023, we expect Global's parcel volume to continue to increase quarter-over-quarter and its operating margin and bottom line to show steady improvements for the remainder of the year.

我們相信，我們採取的措施將使百世環球穩步邁向成長和獲利。隨著我們在2023年下半年繼續執行策略，我們預計百世環球的包裹量將繼續環比增長，其營業利潤率和盈利也將在今年剩餘時間內穩步提升。

In summary, we saw remarkable improvements across our business lines in the second quarter. Our dedication in delivering best-in-class services quality and digital transformation continue to be our primary focus. In addition, leveraging synergies among our business units differentiates our offerings and gives us clear competitive advantage. We are confident that with this growth momentum, we are able to drive sustainable growth and profitabilities in near future.

總而言之，我們在第二季度看到了各業務線的顯著改善。我們致力於提供一流的服務品質和數位轉型，這仍然是我們的首要任務。此外，我們充分利用各業務部門之間的協同效應，使我們的產品脫穎而出，並賦予我們明顯的競爭優勢。我們相信，憑藉這一成長勢頭，我們能夠在不久的將來實現可持續的成長和獲利。

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

接下來，我想把電話交給我們的財務長格洛麗亞，她將進一步審查我們第二季的財務狀況。請講，格洛麗亞。

Thank you, Johnny, and hello to everyone. As we continue to accelerate the recovery of our business in the second quarter, both BEST Freight and BEST Supply Chain Management delivered robust growth momentum and reached non-GAAP profitability.

謝謝Johnny，大家好。隨著我們第二季業務持續加速復甦，BEST Freight和BEST Supply Chain Management均實現了強勁的成長勢頭，並實現了非公認會計準則獲利。

Our group's gross margin turned positive and our net loss narrowed by 48.7% year-over-year. In addition, we have significantly reduced our selling, general and administrative expenses by 31.4% year-over-year due to our continuous effort in cost reductions and operating efficiency improvements. Our balance of cash and cash equivalents, restricted cash and short-term investments remained strong at RMB 3.2 billion at the end of the second quarter.

集團毛利率轉為正值，淨虧損較去年同期收窄48.7%。此外，由於我們持續致力於降低成本及提升營運效率，銷售、一般及行政開支較去年同期大幅下降31.4%。截至第二季末，我們的現金及現金等價物、限制性現金及短期投資餘額保持強勁，達人民幣32億元。

Moving to the details of our financials. Our total revenue for the second quarter was approximately RMB 2.1 billion compared with RMB 1.9 billion in the same period of 2022. The increase was primarily due to increased revenue of BEST Freight and BEST Supply Chain Management.

談到我們的財務細節。我們第二季的總營收約為 21 億元，而 2022 年同期為 19 億元。成長主要得益於百世貨運和百世供應鏈管理的收入成長。

Our ongoing work to improve our organizational efficiency and reduce costs continued to bear fruit. We reported gross profit of RMB 88.8 million for the quarter compared with a gross loss of RMB 89.3 million in the same period of last year. Accordingly, our gross margin percentage reached 4.2% compared with a negative 4.6% in the same period of last year.

我們持續提升組織效率和降低成本的努力持續成效。本季毛利為人民幣8880萬元，去年同期毛虧損為人民幣8930萬元。因此，毛利率達4.2%，去年同期為負4.6%。

Our net loss from continuing operations in the second quarter narrowed by RMB 165.7 million to RMB 174.4 million from a net loss of RMB 340.1 million in the same period of 2022.

我們第二季持續經營淨虧損為人民幣 1.657 億元，較 2022 年同期的 3.401 億元收窄至 1.744 億元。

Adjusted EBITDA from continuing operations improved in the second quarter to negative RMB 124.9 million compared with negative RMB 270.3 million for the same period of last year.

第二季持續經營業務調整後息稅折舊攤銷前利潤（EBITDA）有所改善，為負1.249億元人民幣，去年同期為負2.703億元。

With that overview, let's move on to the key financial highlights for our business units.

有了上述概述，讓我們繼續討論我們業務部門的關鍵財務亮點。

For BEST Freight, second quarter revenue was approximately RMB 1.4 billion compared with RMB 1.2 billion for the same period of last year. The increase was primarily due to increased freight volume and higher average selling price per tonne. Freight's gross margin percentage was 5.3%, a 13 percentage point improvement from the same period of last year. Adjusted EBITDA for BEST Freight was RMB 20.4 million compared with negative RMB 34.5 million in Q2 last year.

百世貨運第二季營收約人民幣14億元，去年同期為人民幣12億元。成長主要得益於貨運量增加及每噸平均售價上漲。貨運毛利率為5.3%，較去年同期提升13個百分點。百世貨運調整後息稅折舊攤提前利潤（EBITDA）為人民幣2,040萬元，去年同期為人民幣3,450萬元。

Revenue for BEST Supply Chain Management increased by 6.7% year-over-year in Q2 to RMB 481.2 million, and the gross margin improved by 2.7 percentage points to 10.9%. Excluding the tax advantage of RMB 18 million recognized in Q2 last year, adjusted EBITDA for BEST Supply Chain Management improved by RMB 13.5 million compared with the same period of last year.

百世供應鏈管理第二季營業收入年增6.7%至4.812億元人民幣，毛利率提升2.7個百分點至10.9%。剔除去年第二季確認的1,800萬元人民幣稅優惠，百世供應鏈管理調整後EBITDA較去年同期增加1,350萬元。

For BEST Global, we are gradually recovering from the impact of COVID. Q2 revenue for BEST Global decreased by 0.7% year-over-year to RMB 239.4 million, primarily due to the decrease in volume in Thailand. Its gross margin percentage was negative 20.2%, a decrease of 5.5 percentage points year-over-year. Q2 adjusted EBITDA for BEST Global was negative RMB 100 million compared with negative RMB 97.7 million in Q2 last year.

百世環球正逐步從新冠疫情的影響中恢復。百世環球第二季營收年減0.7%至人民幣2.394億元，主因是泰國市場銷售下降。毛利率為負20.2%，較去年同期下降5.5個百分點。百世環球第二季調整後EBITDA為負人民幣1億元，去年同期為負人民幣9,770萬元。

Our operating expenses, excluding share-based compensation, totaled RMB 245.7 million or 11.5% of revenue compared with RMB 356.1 million or 18.4% of revenue in the same period of last year. Our operating expenses decreased by RMB 110.4 million, representing a 31% decrease year-over-year.

扣除股權激勵費用後，我們的營業費用總計人民幣2.457億元，佔收入的11.5%，而去年同期為人民幣3.561億元，佔收入的18.4%。我們的營業費用減少了人民幣1.104億元，年減31%。

Selling, general and administrative expenses for Q2 were RMB 216.6 million or 10.1% of our total revenue, which represented a 31.3% decrease year-over-year due to reduced head count and better expenses.

第二季銷售、一般及行政開支為人民幣 2.166 億元，佔總收入的 10.1%，年減 31.3%，原因是員工人數減少及開支改善。

R&D expenses were RMB 29.1 million or 1.4% of the total revenue. This compared with RMB 40.9 million or 2.1% of total revenue in Q2 last year.

研發費用為人民幣 2,910 萬元，佔總收入的 1.4%。而去年第二季研發費用為 4,090 萬元，佔總營收的 2.1%。

In summary, our stellar second quarter results highlight the effectiveness of our quality focused and technology-driven strategies, and we believe BEST is on track and stepping firmly on a clear path towards our next stage of growth.

總而言之，我們第二季度的出色業績凸顯了我們以品質為中心和技術驅動策略的有效性，我們相信 BEST 正步入正軌，並堅定地朝著下一階段的成長邁進。

For the second half of 2023, we expect BEST Freight and BEST Supply Chain Management to continue delivering profitability and positive operating cash flows. For BEST Global, we expect a fast recovery of parcel volume and much improved bottom line.

2023年下半年，我們預計百世貨運和百世供應鏈管理將繼續實現盈利並實現正營運現金流。對於百世環球，我們預計包裹量將快速回升，獲利能力也將大幅提升。

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

我們的財務更新到此結束。現在開始問答環節。謝謝。接線生？

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

（操作員指示）我們的問答環節到此結束。我想將會議交還給Johnny Chou，請他做最後發言。

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

感謝您參加我們的電話會議。感謝您對BEST的支持。如果您還有其他問題，請聯絡我們的投資者關係團隊。我們期待盡快與您聯繫。非常感謝。

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

會議現已結束。感謝您參加今天的演講，現在您可以斷開連接了。