111 Inc (YI) 2023 Q4 法說會逐字稿

Hello, everyone, and thank you for joining 111's conference call today.

大家好，感謝您今天參加 111 的電話會議。

On the call today from the company our Dr. Gang Yu, Co-Founder and Executive Chairman; Mr. Junling Liu, Co-Founder, Chairman and CEO; and Mr. Luke Chen, CFO of 111's major subsidiary; and Mr. Haihui Wang, COO.

今天在公司聯合創始人兼執行主席於剛博士的電話會議上；劉俊嶺先生，共同創辦人、董事長兼執行長；以及111主要子公司財務長Luke Chen先生；以及營運長王海輝先生。

As a reminder, today's conference call is being broadcast live via webcast.

提醒一下，今天的電話會議正在透過網路直播進行直播。

The company's earnings press release was distributed earlier today and together with the earnings presentation are available on the company's IR website.

該公司的收益新聞稿已於今天稍早發布，並且可在該公司的投資者關係網站上查看收益報告。

Before the conference call get started, let me remind you that this call may contain forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

在電話會議開始之前，請允許我提醒您，本次電話會議可能包含根據 1995 年《私人證券訴訟改革法案》安全港條款做出的前瞻性陳述。

Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which would cause actual results to differ materially.

此類陳述是基於管理層目前的預期以及當前的市場和經營狀況，並涉及涉及已知和未知風險、不確定性和其他因素的事件，所有這些因素都會導致實際結果存在重大差異。

For more information about these risks, please refer to the company's filings with the SEC.

有關這些風險的更多信息，請參閱該公司向 SEC 提交的文件。

111 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 applicable law.

111 不承擔因新資訊、未來事件或其他原因而更新任何前瞻性陳述的義務，除非適用法律要求。

Please note that all numbers are in RMB and all comparisons refer to year-over-year comparisons unless otherwise stated.

請注意，除非另有說明，所有數字均以人民幣為單位，所有比較均指同比比較。

Please also refer to the earnings press release for detailed information of the comparative financial performance on a year-over-year basis.

另請參閱收益新聞稿，以了解同比財務績效比較的詳細資訊。

With that, I'll turn the call over to 111 CEO, Mr. Junling Liu, please go ahead.

下面我就把電話轉給111執行長劉俊嶺先生，請您接聽。

Good morning and good evening everyone.

大家早安，晚上好。

Thank you for joining our fourth quarter 2023 earnings call.

感謝您參加我們的 2023 年第四季財報電話會議。

The information will be discussing is also available in the slides that were posted earlier today on the company's website.

今天早些時候在該公司網站上發布的幻燈片中也提供了將要討論的資訊。

I encourage you to download the presentation as well as the earnings report from our Investor Relations website at ir.111.com.cn.

我建議您從我們的投資者關係網站 ir.111.com.cn 下載簡報和收益報告。

As we gather here today, I'm reminded of the journey we've embarked upon over the past year, a journey characterized by unprecedented challenges, yet remarkable resilience and innovation in the ever evolving landscape of healthcare, our team at 111 has not only navigated through those turbulent waters, but has also set new benchmarks, proving that strategic agility and unwavering commitments are the bedrock of our success.

當我們今天聚集在這裡時，我想起了我們在過去一年中踏上的旅程，這段旅程的特點是前所未有的挑戰，但在不斷發展的醫療保健領域具有非凡的韌性和創新能力，我們111的團隊不僅渡過這些動盪的水域，但也樹立了新的基準，證明戰略敏捷性和堅定不移的承諾是我們成功的基石。

Today, I'm here to share with you the milestones we've achieved, the challenges we've overcome and the exciting path that lies ahead for us.

今天，我在這裡與大家分享我們所取得的里程碑、我們克服的挑戰以及我們未來的令人興奮的道路。

Our discussion today will encompass a comprehensive overview of our operational and strategic frameworks, painting a picture of our company's enduring strengths and our vision for a future where healthcare is transformed by technology and innovation, then our Chief Financial Officer, Mr. Luke Chen, will present a power analysis of our financial performance.

我們今天的討論將全面概述我們的營運和策略框架，描繪我們公司的持久優勢以及我們對透過技術和創新改變醫療保健的未來願景，然後我們的財務長 Luke Chen 先生將對我們的財務表現進行實力分析。

Now let me start with the macro situation in our industry.

下面我就從我們產業的宏觀情況說起。

The year 2003 marks a significant turning point for China's economy and the healthcare industry.

2003年是中國經濟和醫療保健產業的重要轉捩點。

As we emerge from the shadows of the pandemic, the industry faced a dual challenge adapting to the post-pandemic normalization and responding to the accelerating shift towards digital health solutions.

當我們走出大流行的陰影時，該行業面臨著適應大流行後正常化和應對向數位健康解決方案加速轉變的雙重挑戰。

This dynamic presented both opportunities and obstacles, [recycling] the competitive landscape and the customer expectations.

這種動態既帶來了機遇，也帶來了障礙，[循環利用]競爭格局和顧客期望。

The anti-corruption [campaign] that swept through the hospital system in 2023 is poised so significantly reshape the landscape of the healthcare industry.

2023年席捲醫院體系的反腐敗運動勢將大大重塑醫療保健產業的格局。

This strengthened campaign saw some hospital presidents being apprehended for engaging in bribery casting a long shadow over the traditional methods of business conduct within the sector.

這次加強的行動導致一些醫院院長因參與賄賂而被捕，給該行業的傳統商業行為方式蒙上了陰影。

As a consequence, pharmaceutical companies are now grappling with new challenges in getting their medications adopted by hospitals marking a pivotal shift away from the law of sales strategies.

因此，製藥公司現在正在努力應對新的挑戰，讓他們的藥物被醫院採用，這標誌著銷售策略法則的關鍵轉變。

This heightened scrutiny on ethical practices is not just a temporary hurdle, but a transformative force heralding a new era of transparency and integrity in healthcare transactions.

這種對道德實踐的嚴格審查不僅僅是一個暫時的障礙，而是一股變革力量，預示著醫療保健交易透明和誠信的新時代的到來。

This evolution in the healthcare ecosystem is set to redirect the flow of drug sales, moving some of them out of the hospitals and into the more accessible and diverse realm of retail pharmacies.

醫療保健生態系統的這種演變將改變藥品銷售的方向，將其中一些藥品從醫院轉移到更容易獲得和多樣化的零售藥房領域。

Such a transition underscores the paradigm shift towards more open and competitive markets where efficiency and value are dictate the dynamics of drug distribution and sales rather than the traditional practices.

這種轉變強調了向更開放和競爭性市場的範式轉變，其中效率和價值決定了藥品分銷和銷售的動態，而不是傳統做法。

Our company strategically positions at the nexus of this transformation embraces the shift type with a business model that empowers pharmacies.

我們公司的策略定位是這項轉型的核心，包括轉變類型和為藥局提供支援的商業模式。

Where at the forefront of championing a competitive landscape where success is predicated on operational excellence, customer satisfaction, and the delivery of genuine value, by leveraging cutting-edge technology and innovative service models, we aim to enhance the capabilities of pharmacies, enabling them to thrive in this new environment have increased the accountability and the competition.

在競爭格局的最前沿，成功取決於卓越營運、客戶滿意度和真正價值的交付，我們的目標是透過利用尖端技術和創新服務模式，增強藥房的能力，使他們能夠在這個新環境中蓬勃發展增加了責任和競爭。

In this transformative period, our company stands ready to support pharmacies in navigating the complexities of this new landscape, providing them with the technology insights the network needed to excel.

在這個變革時期，我們公司隨時準備好支持藥局應對這一新形勢的複雜性，為他們提供網路所需的技術洞察力。

We welcome the dawn of a new era in healthcare, one characterized by [operational] efficiency and innovation -- and we remain dedicated to playing a pivotal role in shaping its emergence.

我們歡迎醫療保健新時代的到來，這個新時代的特點是[營運]效率和創新——我們將繼續致力於在塑造這個新時代的過程中發揮關鍵作用。

Through collaboration innovation and a steadfast commitment to ethical business practices, we look forward to contributing to a healthier, more transparent healthcare system for all.

透過協作創新和對道德商業實踐的堅定承諾，我們期待為所有人建立更健康、更透明的醫療保健系統做出貢獻。

Another significant phenomenon to note is that healthcare industry traditionally seen as conservative and slow-moving is now at the forefront of technological innovation.

另一個值得注意的重要現像是，傳統上被視為保守且行動緩慢的醫療保健產業現在卻處於技術創新的前沿。

This shift is driven by several factors, an aging population, rising healthcare costs and increasing consumer demand for personalized and accessible care.

這種轉變是由多種因素推動的，包括人口老化、醫療保健成本上升以及消費者對個人化和可及性照護的需求不斷增加。

In response to these trends 111 has strategically positioned itself as a leader in the digital healthcare revolution.

為了因應這些趨勢，111 將自己策略性地定位為數位醫療革命的領導者。

Our approach has been focused on enhancing our core offerings through digitization and operational efficiencies.

我們的方法一直專注於透過數位化和營運效率來增強我們的核心產品。

The year 2023 emerged as a beacon of hope, marked by numerous promising developments that signal positive developments I just talked about.

2023 年就像一座希望的燈塔，出現了許多有希望的發展，這些發展標誌著我剛才談到的積極發展。

Nonetheless, it unfolded to reveal itself as one of the most challenging periods in recent history.

儘管如此，它還是成為近代史上最具挑戰性的時期之一。

The initial optimism surrounding a post-pandemic rebound proved to be short [lived] as the reality of the economic landscape, a landscape setting, characterized by various formidable challenges that tested the resilience and adaptability of business across the board.

事實證明，圍繞疫情後反彈的最初樂觀情緒是短暫的，因為經濟狀況的現實是，經濟情勢的特徵是各種艱鉅的挑戰，全面考驗著企業的彈性和適應性。

This period saw a notable downturn in pharmacy same-store sales, a critical indicator of consumer engagement and market health, which declined as customers types and their [belts] in response to the uncertain economic climate.

在此期間，藥局同店銷售顯著下滑，這是消費者參與度和市場健康狀況的關鍵指標，隨著客戶類型及其[腰帶]因不確定的經濟環境而下降。

For the all, the sector was involved in fierce pricing competition with businesses aggressively lowering prices in a bit to capture market share, thereby escalating the challenges associated we are maintaining profitability and growth.

總的來說，該行業參與了激烈的價格競爭，企業大幅降低價格以奪取市場份額，加劇了我們保持盈利和成長的相關挑戰。

This period underscores the importance of agility, resilience, and strategic foresight in navigating the complexities of the temporary business of the contemporary business environment. 111's response to these challenges eliminate the path forward, highlighting the potential of reinvention and the growth even in the face of daunting obstacles.

這段時期強調了敏捷性、彈性和策略遠見對於應對當代商業環境中臨時業務的複雜性的重要性。 111 對這些挑戰的回應消除了前進的道路，凸顯了即使面對艱鉅的障礙，重塑和增長的潛力。

As the company continues to adapt and evolve, it remains steadfast in its commitment to delivering value to its customers, stakeholders and the broader community reinforcing its role as a pivotal player in the healthcare industry.

隨著公司不斷適應和發展，它仍然堅定地致力於為客戶、利益相關者和更廣泛的社區提供價值，鞏固其作為醫療保健行業關鍵參與者的作用。

In the fourth quarter of 2022, we experienced the peak over the pandemic, our pharmaceutical sales significantly search, reaching unprecedented times due to increased demand for health-related products and medications.

2022年第四季度，我們經歷了疫情的高峰期，由於對健康相關產品和藥品的需求增加，我們的藥品銷售大幅搜索，達到前所未有的倍數。

This surge set a challenging high baseline for the subsequent year.

這一激增為接下來的一年設定了具有挑戰性的高基線。

In Q4 to (technical difficulty) 2023, while our revenue witnessed a slight year-over-year reduction of 1%, closing at RMB4.1 billion.

2023年第四季（技術難度），我們的營收年減1%，收在人民幣41億元。

Gross segment profit had a 15.5% decrease compared to the same period in the previous year.

分部毛利較去年同期下降15.5%。

Our total operating expenses witnessed an increase to RMB420.8 million from RMB361.9 million in the corresponding quarter of the previous year.

我們的總營運費用從去年同期的3.619億元增加到人民幣4.208億元。

This escalation in expenses was primarily due to decisive measures undertaken to terminate the ESOP granted for future years and to implement further reductions in our workforce.

費用增加主要是由於採取果斷措施終止未來幾年授予的員工持股計畫並進一步裁員。

These steps were pivotal in realigning our operational strategy and ensuring long-term sustainability.

這些步驟對於調整我們的營運策略和確保長期可持續性至關重要。

Despite these significant actions, our dedication to improving operational efficiency remained steadfast, by meticulously, managing our operational costs and continuously seeking efficiency improvements we were able to offset some of these financial impacts of these strategic decisions.

儘管採取了這些重大行動，我們仍然堅定不移地致力於提高營運效率，透過精心管理營運成本並不斷尋求效率改進，我們能夠抵消這些策略決策的一些財務影響。

A critical aspect of our financial management strategy involves excluding share-based compensation expenses, which amounted to RMB151.4 million for the quarter compared to RMB68.7 million for the same quarter of the previous year.

我們財務管理策略的一個重要面向涉及排除股權激勵費用，本季該費用為 1.514 億元，而去年同期為 6,870 萬元。

After adjusting for these expenses, our total operating expenses as a percentage of net revenues demonstrated in notable improvement decreasing to 6.6% from 7.1% in the same quarter of the previous year.

調整這些費用後，我們的總營運費用佔淨收入的百分比顯著改善，從去年同期的 7.1% 降至 6.6%。

It is also great to note that our operational efficiency has shown continuous improvement.

值得注意的是，我們的營運效率不斷提高。

Specifically, we've managed to lower the fulfillment expenses to 2.5% of net revenues this quarter down from 2.9% in the same quarter last year, reflecting a decrease in fulfillment costs by 14.7%.

具體來說，本季我們成功地將履行費用佔淨收入的比例從去年同期的 2.9% 降至 2.5%，反映出履行成本下降了 14.7%。

Sales and marketing expenses after adjustments for share-based compensation, have decreased as a percentage of net revenues to 2.6% in this quarter from 2.7% in the previous year.

股權激勵調整後的銷售和行銷費用佔淨收入的比例從前一年的 2.7% 下降至本季的 2.6%。

Our general and administrative expenses have remained stable at 0.9% of net revenues identical to the previous year.

我們的一般和管理費用保持穩定，佔淨收入的 0.9%，與前一年相同。

Technology expenses, after excluding share-based compensation, have also maintained their proportion of net revenues at 0.6%, same as last year.

扣除股權激勵後，技術費用佔淨收入的比例也維持在0.6%，與去年相同。

Looking back at the entire 2023 annual performance as an impressive demonstration of the resilience and the strategic acumen 111 has posted a robust increase in net revenues, reaching RMB14.9 billion and marketing a commendable year-over-year growth over 10.6%.

回顧整個2023年的業績，111的韌性和戰略敏銳性令人印象深刻，淨收入強勁增長，達到人民幣149億元，同比增長超過10.6%，值得稱讚。

This growth underscores the company's successful navigation through market dynamics and its ability to capture a larger share of the digital health market.

這一成長凸顯了該公司成功掌握市場動態以及佔領數位健康市場更大份額的能力。

Equally noteworthy is the modest yet positive uptick in gross profit, which climbed by 1.1% year-over-year so RMB849 million.

同樣值得注意的是毛利小幅積極成長，年增 1.1% 至 8.49 億元。

On the financial stewardship funds 111 has shown remarkable progress and efficiency in managing its operating expenses, which totaled RMB1.2 billion, a continuous decrease from RMB1.21 billion in the previous year.

在財務管理基金方面，111在管理營運費用方面取得了顯著的進步和效率，總計人民幣12億元，較前一年的人民幣12.1億元持續下降。

When adjusting for share-based compensation expenses, the total operating expenses as a percentage of net revenues notably decreased to 6.5% this year from 7.8% last year.

在調整股權激勵費用後，總營運費用佔淨收入的比例從去年的 7.8% 大幅下降至今年的 6.5%。

Signaling of the leaner and more streamlined operational structure.

標誌著更精簡、更精簡的營運結構。

Furthermore, the company has successfully reduced its loss from operations both on a GAAP and non-GAAP basis, demonstrating enhanced operational efficiency and types of financial control.

此外，該公司還成功減少了以公認會計原則和非公認會計原則計算的營運損失，證明了營運效率和財務控制類型的提高。

The GAAP loss from operations decreased to 2.3% of net revenues, down from 2.7% last year.

GAAP 營運虧損佔淨收入的比例從去年的 2.7% 降至 2.3%。

While the non-GAAP loss from operations multiple, decreased to 0.8% from 1.6% last year.

而非 GAAP 營運虧損倍數則從去年的 1.6% 降至 0.8%。

These improvements, coupled with a healthy liquidity positions of RMB673.7 million in cash, restricted cash, and short-term investments as of December 31, 2023, position, 111 on a solid foundation for future growth and innovation.

這些改善，加上截至 2023 年 12 月 31 日的現金、限制性現金和短期投資 6.737 億元人民幣的健康流動性頭寸，111 為未來的成長和創新奠定了堅實的基礎。

Please allow me a moment to underscore the progress we've achieved in our operations during the fourth quarter and entire 2023.

請容許我強調一下我們在第四季和整個 2023 年營運中取得的進展。

This period has been characterized by our continued focus on advancing digitization and improving our management processes, laying the groundwork for even more substantial returns on this strategic investment in the times ahead.

這段時期的特點是我們繼續專注於推動數位化和改善管理流程，為未來這項策略投資獲得更豐厚的回報奠定基礎。

At the heart of our business expansion is our commitment to operational efficiency, achieving through the strategic integration of technology across our supply chain, demand, fulfillment, and overall operations.

我們業務擴張的核心是我們對營運效率的承諾，透過跨供應鏈、需求、履行和整體營運的技術策略整合來實現。

Our progress is fundamentally attributed to the efficient application of technology innovations that refine our ability to anticipate and fulfill customer demand with unmatched speed and accuracy.

我們的進步從根本上歸功於技術創新的有效應用，這些創新提高了我們以無與倫比的速度和準確性預測和滿足客戶需求的能力。

This technological synergy enhances our operational capabilities, allowing us to execute with greater precision and adaptability.

這種技術協同增強了我們的營運能力，使我們能夠以更高的精度和適應性執行任務。

The result is a highly efficient operational model that drives continuous growth by optimizing every facet of our business from supply to demand through the intelligent use of technology.

其結果是建立了一個高效的營運模式，透過智慧地使用技術來優化我們業務從供應到需求的各個方面，從而推動持續成長。

For example, our smart sales asset driven by the Eagle Eye analytics tool streamline customer interactions and marketing strategies to boost efficiency dramatically.

例如，我們由 Eagle Eye 分析工具驅動的智慧銷售資產簡化了客戶互動和行銷策略，從而顯著提高了效率。

Currently with -- to optimize pharmacy operations by segmenting customers, effectively providing positive service strategies, implementing an efficient smart sourcing system introducing cloud prescription services, utilizing the pharmacy operation analysis board, and employing a pharmacy CRM system, among other advancements.

目前，透過細分客戶、有效提供積極的服務策略、實施高效的智慧採購系統、引入雲端處方服務、利用藥房營運分析板、採用藥房 CRM 系統等來優化藥房營運。

This comprehensive strategy not only identifies pharmacy need with unparalleled position, but also furnishing them with the necessary tools to excel and - competitive market efficiently.

這項全面的策略不僅以無與倫比的地位確定了藥房的需求，而且還為他們提供了必要的工具，以使其在市場上脫穎而出並有效地競爭。

This cohesive and efficiency are in the approach ensures that every facet of our operation, is streamline for peak performance [embodying] our commitment to enhancing operational efficiency across the board.

這種方法中的凝聚力和效率確保了我們營運的各個方面都得到簡化，以實現最佳績效[體現]我們對全面提高營運效率的承諾。

A pivotal extension of this strategy is our commitment to offering a comprehensive selection, ensuring an expensive assault of medication and medical equipment.

這項策略的關鍵延伸是我們致力於提供全面的選擇，確保藥品和醫療設備的昂貴攻擊。

This not only amplifies our operational efficiency, but also caters to a wider range of customer needs and preferences, thereby enriching the diversity of our product offerings.

這不僅提高了我們的營運效率，還滿足了更廣泛的客戶需求和偏好，從而豐富了我們產品的多樣性。

This holistic approach underlines our dedication to not just streamlining operations, but also providing an extensive variety products, further positioning us as a leader and operational excellence and market breath.

這種整體方法強調了我們不僅致力於簡化運營，而且還提供廣泛的產品，進一步將我們定位為領導者、卓越的營運和市場氣息。

Our JBP merchant business is at the center of the effort of providing the best selection for our customers to ensure these partners can have great experience on our platform.

我們的 JBP 商家業務的核心是為客戶提供最佳選擇，以確保這些合作夥伴在我們的平台上獲得良好的體驗。

Our teams working tirelessly to offer a range of services to our JBP partners, including automating transactional workflows, cutting down the stock-top-shelf timeframe from hours to me a minutes and a similarly optimizing the replenishment process for peak efficiency.

我們的團隊孜孜不倦地為我們的 JBP 合作夥伴提供一系列服務，包括自動化交易工作流程、將庫存頂架時間從幾小時縮短到一分鐘，以及類似地優化補貨流程以實現最高效率。

We also offer critical tools such as immediate sales visualization, allowing merchants to efficiently perform data queries through mobile devices, thousands of times per day.

我們還提供即時銷售視覺化等關鍵工具，使商家能夠透過行動裝置每天有效率地執行數千次資料查詢。

This capability empowers them to execute data-driven decisions, quickly and accurate.

這種能力使他們能夠快速、準確地執行數據驅動的決策。

Another key highlights of our achievements was the significant optimization of our supply chain and the innovative and cost-saving measures implemented in our warehouse operations through strategic redesigns and the integration of cutting-edge technologies, we were able to streamline our storage and distribution processes, resulting in multiple reductions in operational costs.

我們成就的另一個關鍵亮點是我們的供應鏈的顯著優化以及透過策略重新設計和尖端技術的整合在我們的倉庫運營中實施的創新和成本節約措施，我們能夠簡化我們的存儲和配送流程，從而實現營運成本的倍率降低。

The optimization not only improves our logistical efficiency, but also enhanced our overall supply chain resilience, ensuring faster and more reliable delivery of goods to our customers.

此次優化不僅提高了我們的物流效率，也增強了我們整體供應鏈的彈性，確保更快、更可靠地將貨物交付給客戶。

These (inaudible) reflect our commitment to operational excellence and our ability to adapt and innovate in response to dynamic market demands.

這些（聽不清楚）反映了我們對卓越營運的承諾以及我們適應和創新以響應動態市場需求的能力。

Strengthening our sales efficiency was a major focus in 2023, leading to significantly higher productivity per unit output while refining our sales strategies and leveraging advanced analytics managed to optimize our sales force's performance and improve our market penetration.

加強我們的銷售效率是 2023 年的主要重點，從而顯著提高單位產量的生產率，同時完善我們的銷售策略並利用先進的分析來優化我們的銷售人員的績效並提高我們的市場滲透率。

This achievement is indicative of our strategic approach so sales management and our ability to effectively harness data and technology to drive growth and maximize returns on investments.

這項成就表明了我們的策略方針、銷售管理以及我​​們有效利用數據和技術來推動成長和最大化投資回報的能力。

Pivotal element of our strategy this year was the upgrade of our supply offers marked by a substantial increase in the absolute value of our private label brands.

我們今年策略的關鍵要素是我們的供應報價升級，其標誌是我們自有品牌的絕對價值大幅增加。

This development not only diversified our product portfolio, but also enhanced our brand equity and customer trust.

這項發展不僅豐富了我們的產品組合，也增強了我們的品牌資產和客戶信任度。

By focusing on quality and innovation, we have successfully positioned our own brands as leaders in their respective categories, contributing to our overall market strength and sustainability.

透過專注於品質和創新，我們成功地將自己的品牌定位為各自類別的領導者，為我們的整體市場實力和永續發展做出了貢獻。

Reflecting on the entirety of the 2023.

回顧整個2023年。

It's evidence that the year was reached in launched on acknowledgments and accolades for our efforts and achievements.

這證明這一年是在對我們的努力和成就的認可和讚揚中到來的。

One of the accomplishments this year was our intensified focus on technological innovation, which led to the addition of four new patents to our portfolio.

今年的成就之一是我們更加重視技術創新，這導致我們的產品組合中增加了四項新專利。

This investment in technology underscores our dedication to staying at the forefront of industry advancements and maintaining a competitive edge by pioneering global solutions and securing intellectual property rights.

這項技術投資凸顯了我們致力於維持產業進步的前沿，並透過開拓全球解決方案和保護智慧財產權來保持競爭優勢。

We are not only enhancing our product offerings, but also contributing to the broader technological landscape setting new standards for innovation and excellence.

我們不僅增強我們的產品供應，而且還為更廣泛的技術領域做出貢獻，為創新和卓越設定新標準。

Following an array of concerted efforts by 111 the company has achieved significant milestones, marking its prominence and innovation within the e-commerce and internet service sectors.

經過111的一系列共同努力，該公司已經取得了重要的里程碑，標誌著其在電子商務和互聯網服務領域的突出地位和創新能力。

These endeavors have not only exemplified 111 commitment to excellence, but also automated in the attendance of two prestigious recognitions in Q4 2023.

這些努力不僅體現了 111 對卓越的承諾，而且在 2023 年第四季度自動獲得了兩項享有盛譽的認可。

Firstly 111 has been honored as the 2023 Shanghai E-commerce Demonstration Enterprise, a testament to its leading role in advancing the e-commerce landscape.

首先，111榮獲2023年度上海市電子商務示範企業，證明了其在推動電子商務發展方面的領導角色。

Demonstrating the exemplary practices and driving digital e-commerce innovation.

示範實踐，驅動數位電商創新。

This accolades reflect 111 successful integration of technology and commerce, second benchmarks for industry peers, secondly, the company has been recognized as a Shanghai key productive internet service platform will highlight significant contributions to the internet services our domain.

這項榮譽體現了111科技與商業的成功融合，二是行業同行的標桿，二是公司被認定為上海市重點生產性互聯網服務平台，彰顯了公司對本領域互聯網服務的重大貢獻。

This designation underscores from a minor impact on enhancing the digital infrastructure and services in one of Shanghai's, most dynamic and technologically advanced districts.

這項指定強調了對加強上海最具活力和技術最先進的地區之一的數位基礎設施和服務的微小影響。

Together, these recognitions underscore 111 influential position in shaping the future of digital commerce and internet services.

這些認可共同凸顯了 111 在塑造數位商務和網路服務未來方面的影響力地位。

Solidifying its status as a pioneer in the industry.

鞏固了其作為行業先鋒的地位。

A significant milestone for the year was listing in Shanghai data exchange with over 720,000 product master data and a 1.2 million enterprise master data increase covering 99.6% of the pharmaceutical market.

全年重要里程碑是在上海數據交易所掛牌，產品主數據超72萬條，新增企業主數據120萬條，覆蓋醫藥市場99.6%。

111 Inc information brain series listed on the Shanghai data exchange.

111 Inc資訊大腦系列在上海數據交易所上市。

Epitomizes the company's significant contributions and the leading edge in digitizing the pharmaceutical industry.

集中體現了公司在製藥業數位化方面的重大貢獻和領先優勢。

This remarkable achievement not only showcases 111's innovative capabilities and a strategic profile, but also solidifies its pivotal role in advancing the digital transformation of healthcare, furthering its commitment to enhancing industry efficiency.

這項驕人的成就不僅展現了111的創新能力和策略佈局，也鞏固了其在推動醫療健康數位轉型中的關鍵作用，進一步履行了其對提高產業效率的承諾。

Receiving national recognition from [HCSWs] as a demonstration e-commerce enterprise and have been named a Shanghai e-commerce demonstration enterprise were among our most prestigious accomplishments in 2023.

獲得 [HCSW] 國家認可的電子商務示範企業，並被評為上海市電子商務示範企業，是我們 2023 年最負盛名的成就之一。

These honors are a testament to our innovative business practices, our leadership in digital commerce and our contribution to the development of the e-commerce industry.

這些榮譽證明了我們創新的商業實踐、我們在數位商務領域的領導地位以及我們對電子商務產業發展的貢獻。

We underscore our commitment to excellence and our role at the pioneer in the digital transformation of commerce.

我們強調我們對卓越的承諾以及我們作為商業數位轉型先鋒的角色。

As we look forward to our future growth initiatives, it is clear that our path is paved with strategic investments in key areas that will propel our company to new heights.

當我們展望未來的成長計劃時，很明顯，我們的道路是透過在關鍵領域的策略性投資鋪平的，這將推動我們的公司達到新的高度。

Firstly, focusing on operational efficiency is fundamental to our approach, recognizing efficiency as a core competitive advantage.

首先，關注營運效率是我們方法的基礎，將效率視為核心競爭優勢。

We are dedicating resources towards enhancing our operational frameworks and processes.

我們正在投入資源來增強我們的營運框架和流程。

This involves investing in advanced technologies and methodologies to streamline our operations, reduce waste and improve productivity.

這涉及投資先進技術和方法，以簡化我們的營運、減少浪費並提高生產力。

By doing so, we aim to not only accelerate our response times to market changes, but also to ensure that we can deliver services and products with greater speed and precision.

透過這樣做，我們的目標不僅是加快對市場變化的反應時間，而且確保我們能夠以更快的速度和精度提供服務和產品。

This focus on operational excellence is expected to drive significant improvements in our overall performance, making us formidable competitor in the marketplace.

對卓越營運的關注預計將推動我們整體績效的顯著提高，使我們成為市場上強大的競爭對手。

Secondly, offering the comprehensive selection of products is simple to meeting customer needs and creating a sustainable competitive mode for our company.

其次，提供全面的產品選擇，很容易滿足客戶的需求，為我們公司創造可持續的競爭模式。

In the coming periods, we will intensify our efforts to understand and anticipate the evolving preferences of our customers this will involve leveraging data analytics and market research to ensure our product portfolio is both diverse and aligned with customer demand.

在未來一段時間內，我們將加強了解和預測客戶不斷變化的偏好，這將涉及利用數據分析和市場研究，以確保我們的產品組合既多樣化又符合客戶需求。

By doing so, we aim to not only satisfy the immediate needs of our customers, but also to foster long-term loyalty and trust, thereby solidifying our market position.

透過這樣做，我們的目標不僅是滿足客戶的直接需求，而且是培養長期的忠誠度和信任，從而鞏固我們的市場地位。

The enhancement of our ecosystem with partners, including JBP and marketplace merchants, is another pillar of our future initiatives.

與包括 JBP 和市場商家在內的合作夥伴一起增強我們的生態系統是我們未來計劃的另一個支柱。

We recognize the value of the nurturing stronger, more collaborative relationships with our partners as a means to expand and prosper together.

我們認識到與合作夥伴培養更牢固、更具協作性的關係的價值，以此作為共同擴張和繁榮的手段。

Through these partnerships we aim to create synergistic ecosystem where share knowledge, resources and capabilities can lead to neutral growth and success.

透過這些合作夥伴關係，我們的目標是創建協同生態系統，共享知識、資源和能力可以帶來中性成長和成功。

By aligning our goals and strategies with our partners.

透過與合作夥伴協調我們的目標和策略。

We anticipate unlocking new opportunities for innovation and a market expansion.

我們預計將釋放創新和市場擴張的新機會。

In addition to the most comprehensive selection within the industry, were also making low pricing one of our strategic priorities.

除了業內最全面的選擇外，我們還將低價作為我們的戰略重點之一。

Their convinced that our advanced digital capabilities will enable us to obtain unparallel operational efficiency.

他們堅信我們先進的數位化能力將使我們獲得無與倫比的營運效率。

It is our belief that the true measure of our success is in our ability to transfer these efficiency gains directly to our customers, offering them exceptional value without compromising of quality.

我們相信，衡量我們成功的真正標準在於我們是否有能力將這些效率效益直接轉移給我們的客戶，在不影響品質的情況下為他們提供卓越的價值。

By implementing this strategy, they are not just focusing on immediate benefits, but are laying the groundwork for long-term recognition and loyalty from our customers.

透過實施這項策略，他們不僅關注眼前的利益，也為客戶的長期認可和忠誠度奠定了基礎。

Our commitment to maintaining low prices, coupled with our unmatched selection, is expected to become a hallmark of our brand identity over time.

隨著時間的推移，我們對維持低價的承諾以及無與倫比的選擇預計將成為我們品牌形象的標誌。

This dedication will be acknowledged by our customers and will stand as one of our key competitive advantages.

這種奉獻精神將得到我們客戶的認可，並將成為我們的主要競爭優勢之一。

Optimizing our organization structure is also on our agenda.

優化組織架構也提上了我們的議程。

We're committed to creating a more agile, flexible, and responsive organization that can quickly adapt to changes and seize new opportunities.

我們致力於創造一個更敏捷、靈活、反應靈敏的組織，能夠快速適應變化並抓住新機會。

This involves the evaluating and realigning our teams, processes, and systems to ensure they are conducive to our strategic objectives -- by fostering a culture of continuous improvement and adaptability.

這涉及評估和重新調整我們的團隊、流程和系統，以確保它們有利於我們的策略目標——透過培養持續改進和適應性的文化。

We aim to enhance our operational effectiveness and it drives sustainable growth.

我們的目標是提高營運效率並推動永續成長。

Lastly, our commitment to the digitization remains unwavering in an era that technology is continually reshaping industries will aim to stay ahead by embracing digital transformation across all factors of our business.

最後，在科技不斷重塑產業的時代，我們對數位化的承諾仍然堅定不移，我們的目標是透過在我們業務的所有因素中進行數位轉型來保持領先地位。

This includes investing in digital tools and platforms to enhance our operational efficiency, customer engagement and product information -- and product innovation.

這包括投資數位工具和平台，以提高我們的營運效率、客戶參與度和產品資訊以及產品創新。

By doing so, we aim to unlock new growth avenues, improving customer expenses and streamline operations, digitization is not just a strength for us.

透過這樣做，我們的目標是開闢新的成長途徑，改善客戶費用並簡化運營，數位化不僅僅是我們的優勢。

It's a fundamental aspect, our vision for the future.

這是一個基本面，也是我們對未來的願景。

Together, these initiatives present our comprehensive approach to ensuring long-term growth and success by focusing on these key areas, we are confident in our ability to navigate the challenges ahead and seize opportunities that the future holds.

這些舉措共同展示了我們透過專注於這些關鍵領域來確保長期成長和成功的綜合方法，我們對應對未來挑戰並抓住未來機會的能力充滿信心。

As we approach the conclusion of my remarks, I want to reflect on the journey of 111 has undertaken and expedition marked by both adversity and the trials.

在我的發言接近尾聲之際，我想回顧111的旅程和充滿逆境和考驗的探險之旅。

Our commitment has remained [unshaking], we steadfastly pursue our mission to lead the wave of innovation in the healthcare industry, our passion for launching groundbreaking initiatives and our dedication to excellence in service delivery, shine even against the backdrop, have the industry dynamic challenges.

我們的承諾仍然[堅定不移]，我們堅定不移地追求引領醫療保健行業創新浪潮的使命，我們對發起突破性舉措的熱情以及我們對卓越服務交付的奉獻精神，即使在背景下也能發光發熱，應對產業動態挑戰。

It's this very landscape that has tested our resilience and sharpened our strategic vision, transforming potential obstacles into avenues for growth and innovation.

正是這種環境考驗了我們的韌性，並增強了我們的策略願景，將潛在的障礙轉化為成長和創新的途徑。

I extend our heartfelt gratitude to not only our investors whose unwavering support has been a cornerstone of our journey, but also to our dedicated employees your hard work, creativity and perseverance has been instrumental in our achievements this year.

我不僅向我們的投資者致以衷心的感謝，他們堅定不移的支持是我們前進的基石，而且還要感謝我們敬業的員工，你們的辛勤工作、創造力和毅力對我們今年取得的成就至關重要。

Together, we will navigate the challenges and seize opportunities, embodying a culture of collaboration and excellence.

我們將共同應對挑戰並抓住機遇，體現協作和卓越的文化。

It's profound appreciation I pass the microphone to Mr. Luke Chen, who will present an in-depth analysis of our financial outcomes.

非常感謝我將麥克風交給 Luke Chen 先生，他將對我們的財務表現進行深入分析。

Thank you, each and every one of you for contributing to our shared vision have a healthy future.

感謝你們每一個人為我們共同的願景做出了貢獻，並擁有一個健康的未來。

Thank you, Junling, and good morning or evening, everyone.

謝謝君凌，大家早安或晚上好。

I want to begin by thanking all of our colleagues for their resilience and hard work over fiscal year 2023 as we navigated a challenging environment for making necessary changes to improve our operational and cost efficiencies while maintaining our competitive edge.

首先，我要感謝所有同事在 2023 財年的堅韌和辛勤工作，我們在充滿挑戰的環境中做出了必要的改變，以提高我們的營運和成本效率，同時保持我們的競爭優勢。

Moving to the financials, my prepared remarks were focused on a few key business and financial highlights.

轉向財務方面，我準備的發言主要集中在一些關鍵的業務和財務亮點上。

You can refer to the details of the fourth quarter and fiscal year 2023 results from slides 22 to 25 in section to of our presentation again, all comparisons are year-over-year and all numbers are in RMB unless otherwise stated.

您可以再次參考我們演示文稿第 22 至 25 節中第四季度和 2023 財年業績的詳細信息，所有比較均為同比，所有數字均以人民幣為單位，除非另有說明。

Let's start with the fourth quarter results.

讓我們從第四季的業績開始。

Considering the sudden sales surge during the pandemic in Q4 last year, we have managed to maintain our net revenue for the quarter, which is slightly decreased 1% to RMB4.1 billion.

考慮到去年第四季疫情期間銷售額突然激增，我們成功維持了該季度的淨收入，小幅下降 1% 至 41 億元人民幣。

Gross segment profit for the quarter amounted to RMB214 million, by gross margin was 5.2% for the quarter.

本季分部毛利為人民幣2.14億元，以季毛利率計算為5.2%。

Total operating expenses for the quarter were up 16.3% to [RMB421 million] excluding the share-based compensation expenses of RMB151.4 million for the quarter and RMB68.7 million for the same quarter last year, respectively total operating expenses as a percentage of net revenues decreased to 6.6% from 7.1% in the same quarter of last year.

本季總營運費用成長 16.3% 至 4.21 億元人民幣，不包括本季 1.514 億元人民幣和去年同期 6,870 萬元的股權激勵費用，總營運費用佔總營運費用的百分比淨收入從去年同期的7.1%下降至6.6%。

During the fourth quarter, the company recorded the unrecognized share-based compensation of RMB153 million upon the cancellation of the share option plan at the company's subsidiary level.

第四季度，公司因取消子公司層級的股票選擇權計畫而錄得未確認的股權激勵人民幣1.53億元。

The company also recorded RMB17 million severance expenses in the quarter as a result of organization optimization.

由於組織優化，該公司本季也錄得人民幣1,700萬元的遣散費。

Fulfillment expenses as a percentage of net revenue for the quarter was down to 2.5% from 2.9% in the same quarter of last year.

本季履行費用佔淨收入的百分比從去年同期的 2.9% 降至 2.5%。

Excluding the share-based compensation, sales, and marketing expenses as a percentage of net revenue for the quarter were 2.6%, down from 2.7% in the same quarter of last year.

剔除股權激勵後，本季銷售和行銷費用佔淨收入的比例為 2.6%，低於去年同期的 2.7%。

General and administrative expenses accounted for 0.9% of net revenue, which is same as last year.

一般及行政費用佔淨收入的0.9%，與去年持平。

And technology expenses accounted for 0.6% of net revenue, which was same as last year.

技術費用佔淨收入的0.6%，與去年持平。

As a result, non-GAAP loss from operations was RMB55.2 million compared to RMB39.7 million in the same quarter of last year.

結果，非公認會計原則營運虧損為 5,520 萬元，而去年同期為 3,970 萬元。

As a percentage of net revenues, non-GAAP loss from operations accounted for 1.3% in the quarter as compared to 1% in the same quarter last year.

以非公認會計準則計算，本季營運虧損佔淨收入的百分比為 1.3%，而去年同期為 1%。

Non-GAAP net loss attributable to ordinary shareholders was RMB69 million compared to RMB45.7 million in the same quarter last year.

非美國通用會計準則歸屬於普通股股東的淨虧損為 6,900 萬元，去年同期為 4,570 萬元。

As a percentage of net revenues non-GAAP net loss attributable to ordinary shareholders accounting for 1.4% in the quarter as compared to 1.1% in same quarter of last year.

以非公認會計準則計算，本季歸屬於普通股股東的淨虧損佔淨收入的百分比為 1.4%，而去年同期為 1.1%。

As for our fiscal full year 2023, I would like to run through a few highlights.

對於 2023 財年全年，我想簡單介紹一些要點。

Again, you can refer to the details in our deck and earnings release.

同樣，您可以參考我們的資料和收益發布中的詳細資訊。

All comparisons are to full year 2022.

所有比較均以 2022 年全年為基準。

Full year net revenues were RMB14.9 billion, representing a year-over-year growth at 10.6%.

全年淨收入為人民幣149億元，較去年成長10.6%。

Our B2B segment revenue grew 11.4% to RMB14.6 billion and the B2C segment revenue decreased 14.5% to RMB777.4 million.

B2B 業務收入成長 11.4% 至 146 億元，B2C 業務收入下降 14.5% 至 7.774 億元。

We have achieved across segment profit growth at 1.1% as a result, the combined gross segment margin was 5.7%, with B2B segment margin at 5.3% and a B2C segment margin at -- 21%.

因此，我們的跨部門利潤成長了 1.1%，部門綜合毛利率為 5.7%，其中 B2B 部門利潤率為 5.3%，B2C 部門利潤率為 21%。

For full year 2023, total operating expenses decreased 1% to RMB 1.2 billion, excluding the share-based compensation expenses of RMB226.2 million for this year and RMB157.4 million for last year, respectively.

2023年全年，總營運費用下降1%至人民幣12億元，不包括今年人民幣2.262億元及去年人民幣1.574億元的股權激勵費用。

Total operating expenses as a percentage of net revenues decreased to 6.5% this year from 7.8% last year.

總營運費用佔淨收入的比例從去年的 7.8% 降至今年的 6.5%。

Fulfillment expenses accounted for 2.7% of net revenues this year as compared to 3% last year.

今年的履行費用佔淨收入的 2.7%，而去年為 3%。

Excluding the share-based [combination] selling and marketing expenses as a percentage of net revenues reduced to 2.5% this year from 3% last year.

不包括基於股份的[組合]銷售和行銷費用佔淨收入的百分比從去年的 3% 降至今年的 2.5%。

General and administrative expenses account for 0.7% of net revenue this year, down from 0.9%.

今年一般及管理費用佔淨收入的 0.7%，低於 0.9%。

Technology expenses accounted for 0.6% of net revenue this year as compared to 0.9% of last year.

今年技術費用佔淨收入的0.6%，去年為0.9%。

As a percentage of net revenues, non-GAAP loss from operations decreased to 0.8% this year from 1.6% last year.

非 GAAP 營運虧損佔淨收入的百分比從去年的 1.6% 降至今年的 0.8%。

Non-GAAP net loss attributable to ordinary shareholders as a percentage of net revenues decreased to 1.1% this year as compared to 1.9% last year.

今年非美國通用會計準則歸屬於普通股股東的淨虧損佔淨收入的比例從去年的 1.9% 降至 1.1%。

We are confident that we are headed the right path to profitability.

我們相信，我們正走在有獲利的正確道路上。

Our strong technology capabilities will continue to enable us to build scale improve efficiency, it will deliver profitability and maximize value for shareholders.

我們強大的技術能力將繼續使我們能夠建立規模、提高效率，為股東帶來獲利並實現價值最大化。

Please refer to slide 26 to 33 of the appendix section for selected financial statements.

部分財務報表請參閱附錄部分第 26 至 33 投影片。

And a quick note on our cash position as of December 31, of 2023, we had cash and cash equivalents, we still cash and short-term investments of RMB674 million.

簡要說明截至 2023 年 12 月 31 日我們的現金狀況，我們擁有現金和現金等價物，我們仍有現金和短期投資人民幣 6.74 億元。

As of the date of this earnings release, we had a total outstanding amount of RMB1.1 billion, which has been included in the balance of redeemable noncontrolling interest and accrued expenses and other current liabilities owned to a group of investors of one pharmacy technology pursued to the equity investment made in 2022 as previously disclosed.

截至本財報發布之日，我們的未償還金額總額為人民幣11 億元，已包含在所追求的一項製藥技術的一組投資者擁有的可贖回非控股利息和應計費用以及其他流動負債的餘額中先前揭露的2022年股權投資。

As of the date of this earnings release, we have received redemption requests from certain of such investors for a total redemption amount of RMB0.2 billion in accordance with the terms of the initial investment in one pharmacy technology.

截至本財報發布之日，我們已收到部分此類投資者的贖回請求，根據一項製藥技術的初始投資條款，贖回總額為人民幣2億元。

We are currently in the process of negotiating with these investors and other relevant stakeholders regarding the repayment and our restructuring of such redemption obligations.

我們目前正在與這些投資者和其他相關利益相關者就償還和重組此類贖回義務進行談判。

This concludes our prepared remarks thank you.

我們準備好的演講到此結束，謝謝。

Operator we are now ready to begin the Q&A session.

接線員，我們現在準備開始問答環節。

(Operator Instructions) Xipeng Feng, CICC.

（操作員指示） 馮西鵬，CICC。

Well, hi, this is Xipeng from CICC.

嗯，大家好，我是中金公司的西鵬。

Thank you for taking my questions and congratulations on the company progress.

感謝您回答我的問題並對公司的進步表示祝賀。

Well, I have two questions actually.

嗯，實際上我有兩個問題。

And the first question is about [momentum] while the market seems to be in depression, but 111 do you prefer while in 2023 in both revenue and gross profit?

第一個問題是關於[勢頭]，雖然市場似乎處於低迷狀態，但是111您更喜歡2023年的收入和毛利嗎？

I just wonder what is the reason behind this growth and will that be sustainable in the future?

我只是想知道這種成長背後的原因是什麼？

And my second question is about the strategy would you please share some more color on the company's development strategy on the next few years?

我的第二個問題是關於策略的，請您分享一下公司未來幾年的發展策略？

Thanks.

謝謝。

Can you repeat the second question again?

你能再重複一次第二個問題嗎？

What was the question again?

又問了什麼？

Strategy for 2024?

2024年的戰略？

Okay sure.

好吧，當然。

Yeah, I mean, not really would you please share some more color on the company's development strategy regarding the

是的，我的意思是，不是真的，請您分享更多有關公司發展策略的信息

(inaudible).

（聽不清楚）。

Got it.

知道了。

Thank you, Xipeng okay.

謝謝你，西鵬好吧。

First of all of -- regards to your first question, how we achieved growth in the depression market, fundamentally, it comes to our early capability to adapt and our strategic agility and really the team's resilience.

首先，關於你的第一個問題，我們如何在蕭條市場中成長，從根本上講，這涉及我們的早期適應能力、我們的策略敏捷性以及團隊的真正韌性。

If you'll recall, we really achieved continuous operational efficiency we continuously reduce our operational expenditure and we continuously pursue the path of increasing productivity per unit output.

如果您還記得的話，我們確實實現了持續的營運效率，我們不斷減少營運支出，我們不斷追求提高單位產出生產力的道路。

And the second thing we did was really to expand our selection.

我們做的第二件事就是擴大我們的選擇範圍。

We wanted to provide the widest selection across the whole industry.

我們希望為整個行業提供最廣泛的選擇。

So our customers can have more choices on our platform.

所以我們的客戶可以在我們的平台上有更多的選擇。

And thirdly, of course, really in addition to our selection, we offer unparalleled services, and this includes from order placement to order fulfillment, the whole process and can this sustain?

第三，當然，除了我們的選擇之外，我們還提供無與倫比的服務，這包括從下訂單到訂單履行，整個流程，這個可以持續嗎？

Yes, absolutely, and not only will this sustain it is my belief that we're going to pick up even more momentum.

是的，絕對如此，而且我相信這不僅會維持我們將獲得更多動力。

And with regards to your second question, I'd like to talk a little about our future strategy, at least in the following sequence of priorities.

關於你的第二個問題，我想談談我們未來的策略，至少是按照以下優先順序。

Firstly, we still believe that in order to survive in this razor thin margin market it is extremely competitive.

首先，我們仍然相信，為了在這個利潤微薄的市場中生存，競爭非常激烈。

We have to be efficient, so operational efficiency is going to be at the heart of our company's strategy because this is going to be our key competitive advantage.

我們必須保持高效，因此營運效率將成為我們公司策略的核心，因為這將成為我們的關鍵競爭優勢。

We want to be the most efficient operator in the industry full-stop, and I believe we are well on our way to become the most efficient operator.

我們希望成為業內最高效的運營商，我相信我們正在成為最高效的運營商。

And secondly, we want to -- continue with the strategy we had in the past is to provide the widest selection for our customers so they can have all choices on our platform and they can do one-stop shop.

其次，我們希望繼續我們過去的策略，為我們的客戶提供最廣泛的選擇，這樣他們就可以在我們的平台上擁有所有選擇，並且可以進行一站式購物。

They don't have to go to various places.

他們不必去各個地方。

In addition to that, we want to provide the best prices to.

除此之外，我們也希望提供最優惠的價格。

We believe that -- with the great selection and the best price that's going to build customers' loyalty.

我們相信，豐富的選擇和最優惠的價格將建立客戶的忠誠度。

And the other thing we wanted to focus on is to really invest in our capabilities in digitization.

我們想要關注的另一件事是真正投資於我們的數位化能力。

And I would believe that this area is going to help to really transform the industry with digital technology so that pretty much illustrates our strategy, our vision for the future ahead.

我相信這個領域將有助於透過數位技術真正改變產業，從而很好地說明我們的策略以及我們對未來的願景。

Thank you.

謝謝。

(Operator Instructions) [Victor Yen], Private Investor.

（操作員指示）[Victor Yen]，私人投資者。

Thank you for taking -- giving me the chance to raise questions.

感謝您給我提出問題的機會。

I have two questions into aspects.

我有兩方面的問題。

First is about the increase in operational loss as a percentage of net revenues.

首先是營運虧損佔淨收入的百分比的增加。

This is notable could you provide more insights into the factors contributing to this race?

值得注意的是，您能否對促成這場比賽的因素提供更多見解？

And how you plan to address them moving forward?

您打算如何解決這些問題？

Second question is about what Junling just mentioned about digitalization.

第二個問題是關於剛才俊嶺提到的數位化問題。

What progress has the company made in technological innovation last year?

去年公司技術創新有哪些進展？

And how will this advancement help the company gain a competitive edge in the future?

這項進步將如何幫助公司在未來獲得競爭優勢？

Thank you.

謝謝。

Thank you, I think -- it's great you noticed that there is an increase in operational expenditure and the loss was greater than we initially anticipated.

謝謝您，我認為 - 很高興您注意到營運支出有所增加，並且損失比我們最初預期的要大。

Let me just explain, first of all, there is a huge sum of ESOP there because we as a management decided to cancel the ESOP for year 2024 and 2025, there is accounting practice and they have to really put the numbers into Q4 of last year.

讓我解釋一下，首先，那裡有一大筆員工持股計劃，因為我們作為管理層決定取消 2024 年和 2025 年的員工持股計劃，有會計實踐，他們必須將這些數字真正放入去年第四季度。

And secondly, we also made a decision in Q4 to further streamline our organization and we had a whole series of organization optimization exercise that created a lot of severance pay those two expenditures actually took up a majority of the loss.

其次，我們在第四季也做出了進一步精簡組織的決定，我們進行了一系列的組織優化活動，產生了大量的遣散費，這兩項支出實際上佔了大部分損失。

If you take that out, our operational loss actually made a very impressive improvement and of course, with all the measures that have been taken, we look forward to a lot of great things in 2024 thanks.

如果去掉這一點，我們的營運損失實際上取得了非常令人印象深刻的改善，當然，透過採取的所有措施，我們期待 2024 年會發生很多偉大的事情，謝謝。

Let me take the second question from Victor on the technology progress.

讓我回答Victor關於科技進步的第二個問題。

We have invested heavily in technology last year.

去年我們在科技方面投入了大量資金。

We, as a company, have made remarkable progress, leveraging AI, big data and supply chain channelization technologies and we are -- gave some examples points.

作為一家公司，我們利用人工智慧、大數據和供應鏈通路化技術取得了顯著的進步，我們舉了一些例子。

The so-called telescope initiative launched from several companies your leverages big data to test channel management capabilities such as [peripheral] margin size, demand, forecasting and pricing strategy authorization.

多家公司發起的所謂望遠鏡計畫利用大數據來測試通路管理能力，例如[外圍]利潤規模、需求、預測和定價策略授權。

Junling also mentioned that our company has received four new patents and our information.

俊嶺也提到，我們公司已經獲得了四項新專利以及我們的資訊。

So called (inaudible) information brain was listed at the Shanghai data exchange that's quite a milestone.

所謂的（聽不清楚）資訊大腦在上海數據交易所上市，這是一個里程碑。

We have a TP of 1.2 million entries, covering more than 99.6% of market data by employing TP based large, large language models and through minimal manual annotations.

我們的TP有120萬條，採用基於TP的大型語言模型，透過最少的人工標註，涵蓋了99.6%以上的市場數據。

Model training and the fine tuning and techniques.

模型訓練以及微調和技術。

Significant pro breakthroughs were achieved in drug and pharmaceutical recognition models and synergy scoring models our accuracy has reached 99% and automation in the supply chain management side, we launched several digital supply chain products last year, we introduced a fire grill and control products for pharmaceutical commercial partners.

在藥品識別模型、協同評分模型等方面取得重大突破，準確率達99%，供應鏈管理端實現自動化，去年我們推出了多款數位化供應鏈產品，推出了醫藥火烤及控制產品商業夥伴。

We provided operational automation tools to our JBP partners, improving system product listing efficiency from hours minutes.

我們為 JBP 合作夥伴提供營運自動化工具，將系統產品清單效率從幾小時縮短到幾分鐘。

Just these few examples can illustrate that how much effort we have invested in technology and the program I made.

光是這幾個例子就足以說明我們在科技和我所做的程序上投入了多少心血。

Thank you, Victor.

謝謝你，維克多。

(Operator Instructions) [Ethan Lang, ION Health and Capital].

（操作員說明）[Ethan Lang，ION Health 和 Capital]。

First of all, thank you for your sincere your mission (inaudible) and I want to ask a few questions.

首先，感謝您真誠的使命（聽不清楚），我想問幾個問題。

First of all, I know you started the company's operational cost had been continuous, decreasing activity the company take last year in supply chain management and warehouse logistics to improve efficiency and reduce cost and how much potential for improvement remains?

首先，我知道貴公司的營運成本一開始就持續減少，去年公司在供應鏈管理和倉儲物流方面採取的提高效率、降低成本的活動，還有多少改進的潛力？

And I also want to know since the company won numerous awards last year, what is the significance of these awards and the value to the company?

而且我也想知道公司去年獲得了許多獎項，這些獎項的意義和對公司的價值是什麼？

And also what is the company's current cash position and would the company continue to burn cash to grow the business?

公司目前的現金狀況如何？

Okay.

好的。

So probably I'll take the first two and then Luke will take the last one.

所以可能我會選前兩個，然後盧克會選最後一個。

The first question, you mentioned about how we reduce our operational costs.

第一個問題，您提到我們如何降低營運成本。

Last year, we focus heavily on reducing costs and enhancing our efficiency.

去年，我們專注於降低成本和提高效率。

In addition to improving our services, we have made quite some breakthroughs.

除了改善我們的服務之外，我們還取得了一些突破。

Along with, we continue optimize our fulfillment costs.

同時，我們繼續優化我們的履行成本。

As you can see, a quite a remarkable reduction in fulfillment cost and measures such as improving workforce efficiency, process re-engineering rent reduction and increasing the proportion of regional fulfillment allow the fulfillment cost reach to 2.74%.

可以看到，配送成本大幅降低，加上提高員工效率、流程再造、降低租金、提高區域配送比例等措施，使得配送成本達到了2.74%。

Okay.

好的。

And the significant decrease from the 2.94% of the year before and just this alone reduce costs resulting in cost savings over RMB20 million.

較上年的2.94%大幅下降，光是這一項就降低了成本，節省成本超過2,000萬元。

We also increase improve the service quality of our supply chain upstream, we launched so-called golden 100 service covering upstream customers comparatively will provided in entirely warehouse performance service, simplifying the entire delivery process, reducing supplier warehouse of reading time by 50% and improving receipt time by 30% market share mention.

我們也增加供應鏈上游的服務質量，我們推出了覆蓋上游客戶的所謂金百服務，將提供全倉績效服務，簡化整個配送流程，減少供應商倉的讀取時間50%，提高收貨時間以30%市佔率提。

(inaudible) example on our call this intelligent supply chain service platform we launched last year.

（聽不清楚）我們去年推出的智慧供應鏈服務平台的例子。

The integrated warehouse to warehouse transshipment plus last model delivery model achieved cost savings of 20% for transshipment and reduce energy on road by [60%] and increased the total efficiency by 20%.

一體化倉對倉轉運加尾模配送模式，實現轉運成本節省20%，路上能源減少【60%】，總效率提升20%。

So through this effort, you can see that we have time to improve our operation efficiency -- by supply chain costs.

所以透過這個努力，你可以看到我們有時間透過供應鏈成本來提高我們的營運效率。

I think the next question about the awards we have won one last year, Junling mentioned quite a few including the National e-commerce demonstration, the price, Shanghai e-commerce demonstration to price, the Shanghai key productivity and internet service platform is accurate in all of those awards.

我想下一個關於我們去年獲得的獎項的問題，俊嶺提到了很多，包括國家電子商務示範、價格、上海電子商務示範價格、上海市重點生產力和互聯網服務平台，這些都是準確的。獎項。

We feel very proud of early those this owners signifies that the company has achieved sustainable, robust and that the development in fields such as digital technology, innovation, intelligence supply chain management and tissue operation are the holes and we advanced position amongst peers.

我們為早期的業主感到非常自豪，這表明公司已經實現了可持續、穩健，在數位技術、創新、智慧供應鏈管理和衛生紙營運等領域的發展是短板，我們在同業中處於領先地位。

And we believe that we are highly recognized from the industry and the regulatory bodies playing an important role in promoting the tissue translation up and upgrading of the pharmaceutical and the health industry.

我們相信，我們得到了產業和監管機構的高度認可，在推動醫藥健康產業的組織轉化和升級方面發揮了重要作用。

Lang like Luke answer the next question.

朗喜歡盧克回答下一個問題。

Yeah sure.

是的，當然。

Yes about cash, as we have just disclosed our cash, cash equivalents that we stay cash and short-term investments amounted to RMB674 billion as of December 31, 2023.

是的，關於現金，我們剛剛披露了截至 2023 年 12 月 31 日的現金、現金等價物和短期投資總額為 6,740 億元人民幣。

It will be looking at our working capital days, our AP days is around 42 to 45 days.

它將關注我們的營運資金天數，我們的 AP 天數約為 42 至 45 天。

Our [inventory] days is around 25 to 30, and our AR days is 7 to 12.

我們的[庫存]天數約為 25 至 30 天，我們的 AR 天數為 7 至 12 天。

So basically, we have a positive cash flow on the trading level, which means the cash received for the sales of drug and the cash paid for the purchase of the drugs.

所以基本上，我們在交易層面上有正現金流，這意味著銷售藥品收到的現金和購買藥品支付的現金。

Now as we've discussed is that we are very close to profitability and we believe that with our ability to make profit, we will no longer needed for cash to grow on this business, instead, we are confident that this business will create a global positive cash flow for the company.

現在，正如我們所討論的，我們非常接近盈利，我們相信，憑藉我們的盈利能力，我們將不再需要現金來發展這項業務，相反，我們有信心這項業務將創造一個全球性的增長點。

Yeah, I hope we answered your questions.

是的，我希望我們回答了您的問題。

(Operator Instructions) [Judah Woo, Albert Capital]

（操作員指令）[Judah Woo，Albert Capital]

Hi, everyone.

大家好。

This is Judah Wang, Albert Capital.

我是艾伯特資本的 Judah Wang。

Thank you for taking my question and congratulations on your success last year?

感謝您回答我的問題並祝賀您去年的成功？

Here, I've got two questions.

在這裡，我有兩個問題。

The first one is about JBP business segments I wanted to know what are the expected outcomes of that JBP business segments expansion and how will it enhance customer experience and operational efficiency?

第一個是關於JBP業務部門，我想知道JBP業務部門擴張的預期成果是什麼？

And the second one is about your OEM product.

第二個是關於你的 OEM 產品。

What are the concrete terms for its ODM products in the future?

未來其ODM產品的具體條款為何？

Thank you.

謝謝。

Okay.

好的。

Thank you Jada I'll take your two questions, JBP is one of the fastest growing business segment in 111 in last quarter.

謝謝Jada，我會回答你的兩個問題，JBP是上季度111中成長最快的業務部門之一。

Q4 2023, JBP business has been growing 35% year-over-year and is now close to 60% of our total inventory and also our total sales.

2023 年第四季度，JBP 業務年增 35%，目前接近我們總庫存和總銷售額的 60%。

And JBP not only a supply channel actually is in fact, fast growing channel.

JBP不僅是一個供應管道，實際上還是一個快速成長的管道。

JBP provide a total solution for our upstream partners right now pharmaceutical company and also commercial company, including assortment management at price management, inventory management, customer acquisition, digital marketing, and also financing services.

JBP為我們的上游合作夥伴目前的製藥公司和商業公司提供整體解決方案，包括價格管理、庫存管理、客戶獲取、數位行銷和融資服務的品種管理。

With the current launch of the third generation of JBP, which provide a much more robust solution for both the partner.

目前第三代 JBP 的推出，為合作夥伴雙方提供了更強大的解決方案。

We can anticipate the result to continue the growth momentum and not only in sales revenue side, but also from profit perspective.

我們可以預期，不僅在銷售收入方面，而且從利潤角度來看，結果將繼續成長動能。

And as all the value added services actually literally help our partners who gain more sales and more profit.

因為所有的增值服務實際上都在幫助我們的合作夥伴獲得更多的銷售額和更多的利潤。

And at the same time, we are also giving us more profit.

同時，我們也為我們帶來了更多的利潤。

And regarding OEM products there are couple of some private label registering in 111 we have Guangzho, which is for our channels store customers and (inaudible) is for our individual store customer and also (inaudible) is for factory supplements.

至於OEM 產品，有一些自有品牌在111 註冊，我們廣州有，這是針對我們的通路商店客戶的，（聽不清楚）是針對我們的個人商店客戶的，也（聽不清楚）是針對工廠補充劑的。

By last quarter, we already launch 175 private label to use almost all of these products have been well accepted by our stream customers.

到上個季度，我們已經推出了 175 個自有品牌，幾乎所有這些產品都被我們的串流客戶廣泛接受。

We are now sold in more than 20,000 pharmacies across the country, including those very remote areas like Xinjiang and [Shenyang] and et cetera.

現在全國20,000多家藥局都有販售，包括新疆、瀋陽等偏遠地區。

And much more SKUs have been in our pipeline, including OTC, including -- including supplements and also medical devices.

我們正在準備更多的 SKU，包括非處方藥 (OTC)，包括補充劑和醫療設備。

As we all know, private label product has been a very important margin contributor of those the top listed shares to us which has been disclosed in the financial report.

眾所周知，自有品牌產品一直是我們這些頂級上市股票的非常重要的利潤貢獻者，這一點已在財務報告中披露。

But for our majority of our customer 111 customer, they are small, medium store or even individual store and they don't have the credibility to establish their own brand.

但對於我們大部分的111客戶來說，他們都是中小店甚至個體店，他們沒有信譽來建立自己的品牌。

So Guangzhou (inaudible) become a very attractive solution for them and those private label also help us to build up a very long-term relationship with those customers thank you.

因此，廣州（聽不清楚）對他們來說成為一個非常有吸引力的解決方案，這些自有品牌也幫助我們與這些客戶建立了非常長期的關係，謝謝。

(Operator Instructions) Mark Zhou, Private Investor.

（操作說明）Mark Zhou，私人投資者。

Hello thanks for Junling and team I have two questions.

您好，感謝 Junling 和團隊，我有兩個問題。

The first is that we are seeing the company narrowing the loss.

首先，我們看到該公司的虧損正在縮小。

What's your future plan to further improve gross margin and to improve profitability?

未來進一步提高毛利率、提高獲利能力的計畫是什麼？

The second is that we understand that the buyer group has terminated the covenant privatization of the company.

第二是我們了解到買方集團已經終止了公司私有化的契約。

What does that mean to the company and what will be the company's future plan on capital market?

這對公司意味著什麼？

Thank you.

謝謝。

Okay thank you.

好的，謝謝。

I will take the first question regarding the margin and our strategy towards a healthy business model has been working very well, and we are seeing significant improvements on our ability to generate more and more profit.

我將回答關於利潤的第一個問題，我們的健康商業模式策略一直運作良好，我們看到我們創造越來越多利潤的能力有了顯著提高。

And firstly to reduce our fulfillment costs are we direct source from pharmaceutical company.

首先，為了降低我們的履行成本，我們直接從製藥公司採購。

It has been highly effective in lowering the cost of product, and we now sourced from over 500 local and international pharmaceutical companies.

它在降低產品成本方面非常有效，我們現在從 500 多家本地和國際製藥公司採購。

And we will continue to deepen our strategic relationship with our existing partners and as well as securing new partnerships and such relationships provide us with a wide range of products collection at a lower cost.

我們將繼續深化與現有合作夥伴的策略關係，並建立新的合作夥伴關係，這種關係為我們提供了以更低的成本提供廣泛的產品系列。

The second level, we which is a key strategy of ours such mentioned just now is our JBP model in the past quarter, it has been growing very well it's about close to 60% of our total inventory.

第二個層面，我們剛才提到的一個關鍵策略是我們的JBP模型，在過去的一個季度裡，它成長得非常好，大約接近我們總庫存的60%。

We are going to launch a new generation of this JBP, which provides a robust system to enable our partners to better manage inventory, manage and price, et cetera, and all these value added services, we have held out partner to get more sales and more profit.

我們即將推出新一代的JBP，它提供了一個強大的系統，使我們的合作夥伴能夠更好地管理庫存、管理和價格等等，而所有這些增值服務，我們都為合作夥伴提供了更多的銷售和服務。

And also at the same time will also bring us those value added profit for our services.

同時也將為我們的服務帶來那些增值利潤。

And certainly, we will continue to optimize our product assortment and structure through our AI technology and big data.

當然，我們將繼續透過人工智慧技術和大數據優化我們的產品種類和結構。

We are much more effective to battles our portfolio of products [bundle] those high velocity, but maybe low margin products as those which strive traffic together with some very healthy margin products.

我們更有效地對抗我們的產品組合[捆綁]那些高速但可能低利潤的產品，因為那些與一些非常健康的利潤產品一起爭取流量的產品。

And we have now about 5,000 SKUs with very good margin, including our own private label products and new products are from those pharmaceutical companies.

我們現在有大約5,000個SKU，利潤率非常好，包括我們自己的自有品牌產品和來自那些製藥公司的新產品。

And we are very confident that we will be able to help those pharmaceutical channel in commercializing their product with a high efficiency and high gross margin.

我們非常有信心能夠幫助這些醫藥管道以高效率和高毛利率將其產品商業化。

And last but not the least, and as part of the country, the healthcare strategy, the revolution of medical achievement, the drug sales separation that we bring extra sales to retail market pro hospital.

最後但並非最不重要的一點是，作為國家的一部分，醫療保健策略、醫療成就的革命、藥品銷售分離，我們為醫院零售市場帶來了額外的銷售。

And well, I believe it will not only sales but also bring more marketing function to retail market because previously a lot of education itself inside a hospital now it comes to the retail market and the these marketing functions.

嗯，我相信它不僅會銷售，還會為零售市場帶來更多的行銷功能，因為以前醫院內部有很多教育，現在涉及零售市場和這些行銷功能。

And with 111 capability of those big data digital marketing capability, we were able to provide us a very effective service to pharmaceutical companies, and this will be a good profit 111.

而憑藉111的那些大數據數位行銷能力，我們能夠為我們的製藥公司提供非常有效的服務，這將是一個很好的利潤111。

And as we already have those capabilities, both in our B2C and B2B model on digital marketing.

因為我們已經在數位行銷的 B2C 和 B2B 模式中具備了這些能力。

Thank you.

謝謝。

Regarding the privatization.

關於私有化。

Yeah, as previous announced, the buyer group has officially notified the special committee that it would no longer pursue the privatization of the company.

是的，正如先前宣布的那樣，買方團體已正式通知特別委員會，不再尋求公司私有化。

And this means that the company will continue to maintain its listing status in Nasdaq.

而這意味著該公司將繼續維持在納斯達克的上市地位。

We think it's good for the company to continue to be a public company and keep the door of the capital market open as demand that we will contain more meetings with existing and potential investors to help them to understand our business model and update on our latest development.

我們認為，公司繼續作為上市公司並保持資本市場的大門敞開是有好處的，因為我們將與現有和潛在投資者舉行更多會議，幫助他們了解我們的商業模式並更新我們的最新發展。

The management team will continue to focus on growing the business and delivering profitability to create value for shareholders.

管理團隊將繼續專注於業務成長和獲利能力，為股東創造價值。

Thank you.

謝謝。

Thank you that is all the time we have for questions.

謝謝您，我們一直有時間提問。

In closing, on behalf of the entire 111 management team, we'd like to thank you for your interest and participation in today's call.

最後，我們謹代表整個 111 管理團隊感謝您對今天電話會議的關注與參與。

If you require any further information or have any interest in visiting 111 in Shanghai, China.

如果您需要更多資訊或有興趣訪問中國上海的 111。

Please let the company know.

請告知公司。

Thank you for joining our call today this concludes the call.

感謝您參加今天的電話會議，電話會議到此結束。