111 Inc (YI) 2024 Q4 法說會逐字稿

Hello everyone, and thank you for joining 111's conference call today. On the call today from the company are Dr. Gang Yu, Co-Founder and Executive Chairman, Mr. Junling Liu, Co-Founder, Chairman and CEO, Mr. Luke Chen, CFO of One's major subsidiary, and Mr. Harvey Wang, COO.

大家好，感謝您參加今天的111電話會議。今天參加公司電話會議的有聯合創始人兼執行董事長於剛博士、聯合創始人、董事長兼首席執行官劉俊玲先生、One 主要子公司的首席財務官 Luke Chen 先生和首席營運官 Harvey Wang 先生。

As a reminder, today's conference call is being broadcast live via webcast. The company's earnings press release was distributed earlier today, and along with the earnings presentation are available on the company's IR website.

提醒一下，今天的電話會議將透過網路直播。該公司的盈利新聞稿已於今天早些時候發布，盈利報告也可在該公司的 IR 網站上查閱。

Before the conference call gets started, let me remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1,995.

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

這些聲明是基於管理層目前的預期和當前的市場及營運條件，並與已知和未知的風險、不確定性和其他因素有關的事件有關，所有這些因素都可能導致實際結果大不相同。有關這些風險的更多信息，請參閱該公司向美國證券交易委員會提交的文件。

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. Please note that all numbers are in RMB, and all comparisons refer to year-over-year comparisons unless otherwise stated. Please also refer to the earnings press release for detailed information of the comparative financial performance on a year-over-year basis.

111 不承擔因新資訊、未來事件或其他情況而更新任何前瞻性陳述的義務，除非適用法律要求。請注意，所有數字均以人民幣計算，所有比較均為同比比較，除非另有說明。有關同比財務業績比較的詳細信息，請參閱收益新聞稿。

With that, I will turn the call over to one-on-one CEO Mr. Junling Liu.

說完這些，我會把電話轉給一對一執行長劉俊玲先生。

Good morning and good evening everyone. Thank you for joining the fourth quarter and the full year 2024 earnings call.

大家早安，晚上好。感謝您參加 2024 年第四季和全年財報電話會議。

The information we'll be discussing here is also available in the slides posted earlier today on the company's website. I encourage everyone to download the presentation as well as the earnings report from our investor relations website at ir.111.com.cn.

我們將在此討論的資訊也可以在公司網站上今天早些時候發布的幻燈片中找到。我鼓勵大家從我們的投資者關係網站ir.111.com.cn下載該簡報以及收益報告。

2024 was a year of significant challenges stemming from the macroeconomic pressures and ongoing healthcare reforms. These headwinds have impacted the broader healthcare industry. Yet we delivered our first ever operational profitability and the positive offering cash flow.

2024年是充滿重大挑戰的一年，挑戰源自於宏觀經濟壓力和正在進行的醫療改革。這些不利因素已經影響了更廣泛的醫療保健產業。然而，我們首次實現了營運獲利和正現金流。

An important milestone in our company's history. The solid performance is a direct result of our diligent execution of strategic initiatives to boost operational efficiency and cement us as one of the most efficient healthcare platform operators in the sector.

這是我們公司歷史上的一個重要里程碑。穩健的業績直接得益於我們認真執行策略性舉措，以提高營運效率並鞏固我們作為該領域最高效的醫療平台營運商之一的地位。

It also underscores our agility and the resilience in navigating unfavorable and complex market conditions. Beyond financial performance, we also advanced our technologies and strengthened our supply chain infrastructure, laying the foundation for long term growth. These improvements position us to better meet future demand with greater speed and the lower costs, ultimately driving value across the industry.

這也凸顯了我們應對不利和複雜的市場條件的靈活性和韌性。除了財務表現之外，我們還改進了技術，加強了供應鏈基礎設施，為長期成長奠定了基礎。這些改進使我們能夠以更快的速度和更低的成本更好地滿足未來的需求，最終推動整個產業的價值。

And next, I will provide a deeper look into the current industry landscape, outline our outlook and opportunities, and highlight key financial achievements. I will also share updates on our advancements in technology and the supply chain infrastructure, as well as the recent industry recognition.

接下來，我將深入探討當前的產業格局，概述我們的前景和機遇，並強調關鍵的財務成就。我還將分享我們在技術和供應鏈基礎設施方面的進步以及最近的行業認可。

Finally, I will discuss our growth strategies for navigating this challenging environment before handing over to our CFO, Mr. Luke Chen for a detailed analysis of our financial performance.

最後，我將討論我們應對這一充滿挑戰的環境的成長策略，然後交給我們的財務長 Luke Chen 先生對我們的財務表現進行詳細分析。

Turning to the macroeconomic landscape. Economic uncertainties in China have led to increasingly cautious consumer behavior, slowing discretionary spending, and significantly dampening retail sales growth. The healthcare sector is no exception.

轉向宏觀經濟情勢。中國經濟的不確定性導致消費者行為愈發謹慎，可自由支配支出放緩，並顯著抑制了零售額成長。醫療保健產業也不例外。

According to the National Bureau of Statistics, China just saw a 3.6% year-over-year growth in 2024 per capita healthcare expenditure. This represents a sharp decline of 12.4% points from the 16% growth in the prior year and the lag behind the 5% GDP growth during the same period.

根據國家統計局的數據，2024年中國人均醫療支出較去年同期成長3.6%。這比上年的16%的成長速度大幅下降了12.4個百分點，也落後於同期5%的GDP成長率。

At the same time, downstream pharmacies continue to face pressure from ongoing healthcare reforms, including adjustments to individual medical accounts, phased rollout of coordinated outpatient benefits, and heightened regulatory oversight.

同時，下游藥局繼續面臨正在進行的醫療改革的壓力，包括個人醫療帳戶的調整、分階段推出協調門診福利以及加強監管監督。

These reforms aim to build a more sustainable and efficient healthcare system, ultimately benefiting well-managed pharmacy chains with strong product offerings and service capabilities.

這些改革旨在建立更永續、更有效率的醫療保健體系，最終使管理良好、產品供應和服務能力強大的藥局連鎖店受益。

However, the transition period presents short term operational challenges and the regulatory frameworks. Another key factor impacting pharmacist is an aggressive expansion that took place during the pandemic. Optimism about long term healthcare demand led to a surge in new store openings.

然而，過渡期帶來了短期營運挑戰和監管框架。影響藥劑師的另一個關鍵因素是疫情期間的大力擴張。對長期醫療保健需求的樂觀情緒導致新店開幕數量激增。

But market growth has not kept pace. As a result, China's total retail pharmacy sales dropped by 2.2% in 2024, according to Zhongkang data. With more stores competing in a stagnant market, per store revenues have fallen, intensifying industry competition.

但市場成長卻未能跟上。因此，中康的數據顯示，2024年中國零售藥局總銷售額將下降2.2%。由於市場不景氣，越來越多的商店參與競爭，每家商店的收入下降，行業競爭加劇。

Newer stores still in their growth phase face additional pressure weighing on short-term profitability. Large pharmacy chains are already feeling the impact. For instance, Jianzhijia or JZJ Chain Drugstore expects its net profit attributable to shareholders, excluding non-recurring gains and losses to decline by up to 69% in 2024.

仍處於成長階段的新店面臨著短期獲利能力的額外壓力。大型連鎖藥局已經感受到了影響。例如，健之家或JZJ連鎖藥局預計2024年扣除非經常性損益後的歸屬於股東的淨利將下降高達69%。

Followed by 66% and 45% decline for Yin Yang or YXT Health and the Shanghai [DER] or Shanghai number one pharmacy code respectively. Independent pharmacists with limited resources face even greater financial strain. Given this challenging backdrop, digital transformation is no longer optional. It is essential.

緊隨其後的是陰陽藥業（Yin Yang Health，股票代號：YXT）和上海[DER]（上海第一大藥局代碼）分別下降了66%和45%。資源有限的獨立藥劑師面臨的財務壓力更大。鑑於這一充滿挑戰的背景，數位轉型已不再是可選項。這很重要。

Pharmacists must cope with weaker consumer sentiments. Slower healthcare spending and shifting patient behaviors while managing cost pressure and operational inefficiencies. The key to survival and growth lies in innovation, rethinking service delivery, optimizing product categories, enhancing client management, and improving operational coordination across stores.

藥劑師必須應對消費者情緒的低迷。減緩醫療保健支出並改變患者行為，同時管理成本壓力和營運效率低下。生存和發展的關鍵在於創新、重新思考服務交付、優化產品類別、加強客戶管理以及改善跨門市的營運協調。

This is where digitalization and AI-driven solutions come in. As a pioneer in the digital revolution, we have integrated leading technologies across our operations from sales and procurement to customer demand identification, inventory optimization, and the warehouse allocation.

這就是數位化和人工智慧驅動的解決方案發揮作用的地方。作為數位革命的先驅，我們將領先技術融入從銷售和採購到客戶需求識別、庫存優化和倉庫分配等整個營運過程中。

Our fully digitized operating system also empowers our upstream and downstream partners to reduce costs, improve efficiency, and enhance service quality. Beyond the necessity of digital transformation, we remain highly confident in China's long term healthcare market, supported by two key structural trends.

我們全面數位化的營運體係也幫助我們的上下游合作夥伴降低成本、提高效率、提升服務品質。除了數位轉型的必要性之外，我們對中國的長期醫療保健市場仍充滿信心，這得益於兩大關鍵結構性趨勢。

First, the ongoing anti-corruption campaign in the healthcare sector is driving greater transparency in hospital procurement, which is anticipated to expedite the shift of drug sales and prescriptions to retail pharmacies.

首先，醫療領域持續的反腐敗運動正在提高醫院採購的透明度，預計將加速藥品銷售和處方向零售藥局的轉移。

This transition represents RMB1 trillion out of hospital pharmaceutical distribution market that could eventually account for nearly half of the entire pharmaceutical distribution sector. In the short term, however, policy execution remains uneven across provinces and cities with uncertainties and delays in medical reform, refinement and implementation.

這項轉變意味著醫院藥品分銷市場將退出1兆元人民幣，最終可能占到整個藥品分銷產業的近一半。但短期內，各省市政策執行仍不平衡，醫改完善和落地實施仍存在不確定性與滯後性。

In the 2025 government work report, China called for promoting the coordinated development and the governance of healthcare, medical insurance, and the pharmaceutical sector. It aims to steadily advance provincial level coordination of basic medical insurance while improving its financing and benefit adjustment mechanisms.

中國在2025年政府工作報告中提出，推動醫療衛生、健保、醫藥等領域協調發展與治理。穩步推動基本醫療保險省級統籌，完善籌資和待遇調節機制。

Once these adjustments are fully in place, particularly with on-time payments from governments national medical insurance, pharmacy chains will be among the primary beneficiaries.

一旦這些調整全面到位，特別是政府的國家醫療保險按時支付，連鎖藥局將成為主要受益者之一。

As a trusted partner to chain pharmacies, we're well positioned to capitalize on this growth. With an extensive and price attractive product portfolio and a relentless focus on customer experience, we strive to strengthen our leadership and expand market share in this dynamic landscape.

作為連鎖藥局值得信賴的合作夥伴，我們有能力利用這項成長機會。憑藉廣泛且價格誘人的產品組合以及對客戶體驗的不懈關注，我們致力於在這個充滿活力的市場中鞏固領導地位並擴大市場份額。

Second, China's rapid aging population will fuel sustained growth in healthcare consumption while the government encourages the silver economy. Despite recent fluctuations, China's healthcare expenditure as a percentage of GDP remains significantly lower than that of developed countries, indicating ample room for expansion.

其次，中國人口老化加劇，政府大力鼓勵發展銀髮經濟，醫療消費將持續成長。儘管近期中國醫療衛生支出佔GDP比重有所波動，但仍遠低於已開發國家，仍有較大的成長空間。

As healthcare needs continue to rise, we believe the overall trajectory of the pharmaceutical and healthcare market will remain strong over the long term. Turning to our financial highlights, our rigorous and disciplined approach to raising operational efficiency delivered meaningful improvements in Q4, despite ongoing short-term headwinds.

隨著醫療保健需求不斷上升，我們相信醫藥和醫療保健市場的整體趨勢將長期保持強勁。談到我們的財務亮點，儘管短期內仍面臨阻力，但我們採取嚴謹、自律的提高營運效率的方法，在第四季度取得了有意義的改善。

We effectively reduce total operating expenses by half year-over-year, bring them to just 5.5% of revenues, down 470 basis points from the prior year. While fulfilment expenses rose slightly as a percentage of revenues, primarily due to a one-time warehouse relocation fee. We drove reductions across multiple cost categories.

我們有效地將總營運費用年減了一半，降至僅佔收入的 5.5%，比上年下降了 470 個基點。雖然履行費用佔收入的百分比略有上升，但主要原因是一次性倉庫搬遷費。我們推動了多個成本類別的削減。

Selling expenses declined by 220 basis points to 2% of the net revenues from 4.2% a year ago. While the general and administrative expense ratio fell by 190 basis points, and the technology expense ratio decreased by 80 basis points.

銷售費用從一年前的淨收入的 4.2% 下降了 220 個基點，降至 2%。其中，一般及管理費用率下降190個基點，技術費用率下降80個基點。

Excluding share-based compensation, our operating expense ratio improved by 130 basis points to a record low 5.3%. For the full year 2024. We achieved a yearly profit from operations for the first time with income from operations reaching RMB2.1 million, representing a sharp turnaround from an operational loss of RMB350.1 million in 2023.

除去股權激勵費用，我們的營業費用率改善了 130 個基點，達到歷史最低的 5.3%。預計 2024 年全年。我們首次實現年度經營獲利，經營收入達210萬元人民幣，較2023年3.501億元的經營虧損大幅扭轉。

Our bottom line improved by RMB332.7 million or [40] 94.1% from a year ago. On a non-GAAP basis, income from operations was RMB22.3 million compared to the RMB123.9 million lost a year earlier. Non-GAAP bottom line improved by RMB126.6 million or 99.5% from 2023.

我們的底線比去年同期增加了 3.327 億元人民幣，即 [40] 94.1%。以非美國通用會計準則計算，營業利潤為2,230萬元人民幣，去年同期營業虧損為1.239億元。非公認會計準則底線較 2023 年增加 1.266 億元，增幅 99.5%。

Additionally, we generated yearly positive offering cash flow of RMB263 million for the first time. These milestones highlight the efficiency of our strategic initiatives and the resilience of our business model. In 2024, we reduced operating expenses by 31% year-over-year, lowering them to 5.7% of revenues, down 230 basis points from 8% in 2023.

此外，我們首次實現了年度正發行現金流2.63億元。這些里程碑彰顯了我們策略舉措的效率和商業模式的彈性。2024 年，我們將營運費用年減 31%，降至營收的 5.7%，較 2023 年的 8% 下降 230 個基點。

While fulfilment expenses remain largely unchanged as a percentage revenues, the general and administrative expense ratio declined 100 basis points to 0.5%. selling expenses fell to 2.2% of revenues compared to 3% in the prior year. While technology expenses dropped to 0.5% of revenues from 0.8% a year earlier.

雖然履行費用佔收入的百分比基本不變，但一般及行政費用率下降了 100 個基點，至 0.5%。銷售費用佔收入的比重從上年的3%下降至2.2%。而技術支出佔收入的比重則從一年前同期的 0.8% 下降至 0.5%。

Excluding share-based compensation, operating expenses as a percentage of revenues decreased 90 basis points to 5.6%. Our high operational efficiency was driven by strategic investments in infrastructure and optimized personnel arrangements.

不包括股權激勵費用，營業費用佔收入的百分比下降了 90 個基點，至 5.6%。我們的高營運效率得益於對基礎設施的策略性投資和優化的人員安排。

By prioritizing sustained growth, we have to continuously enhance our industry leading digital capabilities for operations, marketing, supply empowerment, and a supply chain. This ensures that our technology-driven efficiencies remain a key competitive advantage.

透過優先考慮持續成長，我們必須不斷增強我們在營運、行銷、供應授權和供應鏈方面的行業領先的數位化能力。這確保了我們的技術驅動效率仍然是關鍵的競爭優勢。

In Q4, our advanced digital infrastructure contributed to further reductions in technology and staffing expenses, reinforcing our ability to adapt to evolving market conditions while positioning us for future opportunities.

第四季度，我們先進的數位基礎設施進一步降低了技術和人員成本，增強了我們適應不斷變化的市場條件的能力，同時為我們未來的機會做好了準備。

Although our revenues are smaller than some more established players, our operational efficiency is a key differentiator. As one of the most efficient healthcare e-commerce platforms, we remain committed to driving further cost reductions and enhancing profitability through scalability and the refined execution.

儘管我們的收入比一些更成熟的公司要少，但我們的營運效率是一個關鍵的區別因素。作為最高效的醫療保健電子商務平台之一，我們始終致力於透過可擴展性和精細化的執行來進一步降低成本並提高獲利能力。

This unwavering focus on leveraging technology to drive operational excellence across various aspects is the cornerstone of our strategy. The savings generated from our continuous optimizations will bolster our financial flexibility, allowing us to strategically allocate resources and reinvest in tech advancements, business growth, and the customer experiences at the right moment.

堅定不移地專注於利用技術推動各個方面的卓越運營，這是我們策略的基石。我們持續優化所產生的節省將增強我們的財務靈活性，使我們能夠策略性地分配資源並在適當的時機重新投資於技術進步、業務成長和客戶體驗。

From a technological standpoint, we have been strengthening our digital capabilities by investing in system development, advanced models, algorithms, and the data applications. These efforts are designed to fortify our core competitiveness in the digital landscape.

從技術角度來看，我們一直在透過投資系統開發、先進模型、演算法和數據應用來增強我們的數位化能力。這些努力旨在增強我們在數位領域的核心競爭力。

As a result, we have made further strides in leveraging digital and AI technologies. First, powered by our proprietary intelligent JDP platform and inventory sharing technology, we have achieved foundational system level integration with upstream partners to establish a unique decentralized inventory network that enhances stock volume and availability.

我們在利用數位和人工智慧方面取得了進一步的進展。首先，透過自主研發的智慧JDP平台和庫存共享技術，我們與上游合作夥伴實現了基礎系統級的集成，建立了獨特的去中心化庫存網絡，提升了庫存量和可用性。

This development enabled by smart demand forecasting algorithms and an advanced inventory management system has successfully expanded platform accessible SKUs by 33,000 and inventory availability by RMB290 million in 2024.

這項發展得益於智慧需求預測演算法和先進的庫存管理系統，已成功將平台可存取的 SKU 擴展到 33,000 個，並在 2024 年將庫存可用性擴展到 2.9 億元。

By strengthening our supply capability, we are not only optimizing efficiency, but also ensuring a real-time elastic response capabilities to meet customer demand. Second, we have optimized our marketing strategies to stimulate demand and build intelligent operational systems to support key events by leveraging cutting edge technology.

透過加強我們的供應能力，我們不僅優化了效率，而且確保了即時的彈性響應能力以滿足客戶需求。二是優化行銷策略，激發需求，利用前沿科技手段，建構智慧化營運體系，協助重大活動。

During our flash sales event from November to December, we utilize advanced data analytics and AI-driven insights to fine tune discount mechanisms or implement necessary technology upgrades for our operational system nearly every week.

在 11 月至 12 月的閃購活動期間，我們幾乎每週都會利用先進的數據分析和人工智慧驅動的洞察力來微調折扣機製或為我們的營運系統實施必要的技術升級。

These tech-driven efforts drove user retention and higher transaction volumes. The results speak for themselves. Gross merchandise volume or GMV in December, increased by 17% from the prior month, while gross profit grew by 8%, notably, average revenue per user or ARPU surged by 18% and average revenue per order or ARPU rose by 14%.

這些技術驅動的努力提高了用戶保留率和交易量。結果不言而喻。12月份商品交易總額（GMV）季增17％，毛利成長8％，值得注意的是，每位用戶平均收入（ARPU）飆升18％，每訂單平均收入（ARPU）增長14％。

These results underscore the strategic value of our technology investments and effectiveness of our precision targeted promotions and a tech-enabled intelligent platform. Finally, 2025 marks a pivotal year for AI technology development in China and the world.

這些結果凸顯了我們技術投資的策略價值以及我們精準定位促銷和技術支援的智慧平台的有效性。最後，2025年是中國和世界人工智慧技術發展的關鍵一年。

As an industry leader at the forefront of technological innovation, we have made AI a key focus in advancing our capabilities, and it plays a critical role in driving our intelligent demand analysis, optimizing supply chains, and enhancing market responsiveness.

作為站在技術創新前沿的行業領導者，我們將人工智慧作為提升我們能力的重點，它在推動我們的智慧需求分析、優化供應鏈和增強市場響應能力方面發揮關鍵作用。

For example, by integrating technology advancements with deep business collaboration, our AI power one catalog can better utilize procurement data from our operations and thousands of partners, pharmacies to identify market trends, analyze consumer behavior shifts, and update demand lists more precisely.

例如，透過將技術進步與深度業務協作相結合，我們的 AI power one 目錄可以更好地利用來自我們的營運和數千家合作夥伴、藥局的採購數據來識別市場趨勢，分析消費者行為變化，並更準確地更新需求清單。

We assigned greater weight to high demand products in the assortment strategy while giving regional attention to long tail goods to meet specific demands. On the technology front, we improved forecasting accuracy from 71% to 82%.

我們在品類策略中更重視高需求產品，同時在區域上關注長尾商品，以滿足特定需求。在技​​術方面，我們將預測準確率從71％提高到82％。

As a result, the broad catalog introduced 6,598 new products in 2024, contributing over RMB905 million in GMV. The platform-wide stock out rate dropped from 4.9% to 2.4%, setting the industry benchmark for supply chain efficiency. We also re-engineered our data pipeline, reducing demand list generation time from 5 hours to just 30 minutes, a 10-fold efficiency boost.

結果，該大目錄在 2024 年推出了 6,598 種新產品，貢獻了超過人民幣 9.05 億元的 GMV。全平台缺貨率由4.9%下降至2.4%，樹立了供應鏈效率的產業標竿。我們也重新設計了資料管道，將需求清單產生時間從 5 小時縮短到 30 分鐘，效率提高了 10 倍。

By prioritizing precision forecasting plus real-time response, we have established a model to demonstrate smart integration of cost reduction, operational efficiency, business growth, and ecosystem synergy in the healthcare e-commerce industry.

透過精準預測和即時回應，我們建立了一個模型來展示醫療電子商務產業成本降低、營運效率、業務成長和生態系統協同的智慧整合。

Beyond technology, we are leading supply chain management, with expanded infrastructure and the continual innovations in warehousing and all delivery for enhanced efficiency, cost reductions, ensuring high quality services.

除了技術之外，我們還引領供應鏈管理，擴大基礎設施，不斷創新倉儲和所有配送環節，以提高效率，降低成本，確保高品質的服務。

Next, I'd like to move to new achievements we've made. The initiation and expansion of the network is one of the most important milestones achieved in 2024. It's designed to streamline logistics services while lowering costs both internally and externally.

接下來，我想談談我們所取得的新成就。這個網路的啟動和擴展是 2024 年實現的最重要的里程碑之一。其旨在簡化物流服務，同時降低內部和外部成本。

This advanced cross fulfilment centre transshipment model has established an integrated, highly efficient logistics network connecting our five major super hubs across East, Central, south, north, and southwest China.

這種先進的跨訂單中心轉運模式建立了一個一體化、高效的物流網絡，連接我們在中國東部、中部、南部、北部和西南地區的五大超級樞紐。

By incorporating first mile and the last mile services, we're heading towards a comprehensive national network with seamless end to end supply chain control. In Q4, we expanded last mile delivery coverage to traditional metropolitan areas including Wuhan, Guangzhou, Chongqing, and Tianjin.

透過整合第一英里和最後一英里的服務，我們正在走向一個具有無縫端到端供應鏈控制的綜合性全國網路。第四季度，我們將最後一哩配送覆蓋範圍擴大到武漢、廣州、重慶、天津等傳統大都會地區。

With 28 transportation routes now in operation, our network continues to strengthen this reach. Our ability to execute at scale is reflected in our Growing external customer base, which increased by 17 in Q4, a 20% rise from the previous quarter.

目前，我們的運輸線路已達28條，網路覆蓋範圍不斷擴大。我們的規模執行能力體現在我們不斷成長的外部客戶群中，第四季增加了 17 個，比上一季成長了 20%。

Operationally, we have also achieved significant improvements for the full year 2024. The audit damage rate dropped by 56% while average delivery time improved by nearly a full day. Financially, the network generated RMB7.1 million in total gains in 2024, including cost savings.

在營運方面，我們在 2024 年全年也取得了顯著的進步。審計損壞率下降了56%，平均交貨時間提高了近一整天。從財務角度來看，該網路在 2024 年創造了包括成本節省在內的總收益 710 萬元。

In the future, we plan to integrate fulfilment centres under the cooperation into the network, further enhancing our distribution infrastructure and the logistics efficiency. Moreover, in 2024, negotiations with key logistics partners led to a 5% reduction in JD logistics delivery fees and the total savings of RMB1.22 million from SF Express and ZTO.

未來我們計劃將合作的配送中心整合到網路中，進一步增強我們的配送基礎設施和物流效率。此外，2024年，透過與主要物流合作夥伴的談判，京東物流配送費降低了5%，順豐和中通合計節省了122萬元。

In addition, through rent negotiations and the strategic warehouse relocations, we achieved RMB8.63 million in annual cost savings, including one-time relocation expenses. These endeavours combined with improvements in warehouse labor efficiency and the packaging of optimization resulted in a 4.9% year-over-year reduction in fulfilment costs to RMB381 million in 2024.

此外，透過租金談判和策略性倉庫搬遷，我們每年節省成本863萬元人民幣，包括一次性搬遷費用。這些努力加上倉庫勞動效率的提高和包裝的優化，導致2024年的履行成本年減4.9%至人民幣3.81億元。

Furthermore, to enhance our supply and the distribution capabilities and align with our strategy for the nationwide compound network, we have expanded our supply chain infrastructure with seven new fulfilment centres going online in Q4.

此外，為了增強我們的供應和分銷能力並配合我們的全國複合網路策略，我們擴展了我們的供應鏈基礎設施，並在第四季度上線了七個新的履行中心。

Late editions include centres in Guangzhou, Wuhan, Shijiazhuang, Jinan, Chongqing, Xinjiang, and Hualikan. The new centres will reduce delivery times for local customers while expanding our national network to a total of 18 fulfilment centres. This will enable us to deliver to over 300 major cities within 24 hours and nationwide within 72 hours.

後期版本包括廣州、武漢、石家莊、濟南、重慶、新疆和花梨坎的中心。新中心將縮短當地客戶的送貨時間，同時將我們的全國網路擴展至總共 18 個配送中心。這將使我們能夠在 24 小時內將貨物送達 300 多個主要城市，並在 72 小時內將貨物送達全國各地。

Our rapid fulfilment centre expansion is a testament to the effectiveness of our current margin friendly franchise model. A collaborative approach that transforms the existing warehouses into full-fledged fulfilment centres and a significant shorter time frame, supported by our fully digitized systems and processes, especially in remote regions.

我們的履行中心快速擴張證明了我們當前利潤友善的特許經營模式的有效性。透過協作方式，將現有倉庫轉變為成熟的履行中心，並在更短的時間內完成，並由我們完全數位化的系統和流程提供支持，尤其是在偏遠地區。

Under this model, one on one holds a share of the gross merchandise value. In 2025, we plan to expand our fulfilment centres footprint by adding at least 15 more centres. As we reflect in Q4 funds, I'd like to highlight several key industry recognitions that underscore our market leadership and a strong regional influence.

在這種模式下，一對一持有商品交易總值的份額。2025 年，我們計劃再增加至少 15 個配送中心，擴大我們的配送中心覆蓋範圍。正如我們在第四季度基金中所反映的那樣，我想強調幾個關鍵的行業認可，這些認可凸顯了我們的市場領導地位和強大的區域影響力。

First, we will recognized as the most valuable healthcare and a pharmaceutical company for investment, highlighting our strong growth potential and the long term value creation. Second, we were ranked among the Top 100 private enterprises in Chongqing.

首先，我們將被認定為最具投資價值的醫療保健和製藥公司，凸顯我們強勁的成長潛力和長期價值創造。二是躋身重慶民營企業100強。

Third was honoured as an outstanding case of a productive internet service platform in Shanghai's Pudong district, recognizing our innovative approach to digital transformation in healthcare e-commerce. Meanwhile, our tech portfolio now includes 33 patents upon four new additions in Q4.

第三屆上海浦東新區網路高效服務平台優秀案例獎，充分肯定了我們在醫療電商數位轉型方面的創新做法。同時，我們的技術組合現在包括 33 項專利，其中第四季度新增了 4 項。

These latest patterns reflect our commitment to technological advancements and the strategic focus on enhancing efficiency, safety, and user experience. This includes a group chat content, semantic analysis based incident monitoring system and a method which leverages AI-driven language processing to improve real-time risk detention detection and crisis management.

這些最新模式體現了我們對技術進步的承諾以及提高效率、安全性和使用者體驗的策略重點。其中包括群聊內容、基於語義分析的事件監控系統以及利用人工智慧驅動的語言處理來改進即時風險拘留檢測和危機管理的方法。

We have also developed a doctor allocation algorithm based on consultation data, optimizing physician matching to enhance the service efficiency and the patient outcomes. Additionally, we introduced an advanced drug sorting method and improving fulfilment accuracy and efficiency.

我們也開發了基於諮詢數據的醫生分配演算法，優化醫生匹配，以提高服務效率和患者的治療效果。此外，我們引入了先進的藥物分類方法，並提高了履行準確性和效率。

Lastly, our emotional analysis system based on pharmaceutical purchase pathways provides deeper insight into customer behavior, allowing us to refine personalized services and consumer engagement. We're deeply grateful for the recognition from both local markets and the industry.

最後，我們基於藥品購買途徑的情緒分析系統可以更深入地洞察客戶行為，使我們能夠完善個人化服務和消費者參與度。我們非常感謝當地市場和產業的認可。

These accolades will undoubtedly bolster our credibility as we continue to solidify our market position and foster innovation within the sector.

隨著我們繼續鞏固我們的市場地位並促進該領域的創新，這些榮譽無疑將增強我們的信譽。

Last but not least, I'll provide an overview of our growth strategies for revenue, margin, and profit. As we look ahead to 2025, we remain optimistic, although fully prepared for many challenges lying ahead.

最後但同樣重要的一點是，我將概述我們的收入、利潤和利潤成長策略。展望2025年，我們依然保持樂觀，儘管我們已經做好充分準備應對未來的許多挑戰。

On the supply side, we have strategically consolidated resources from major commercial players across the country through our GDP initiative, and we will continue to prioritize investment in the JDP platform to optimize the range of product offerings.

在供給側，我們透過GDP計畫策略性地整合了全國主要商業參與者的資源，並將繼續優先投資JDP平台，以優化產品供應範圍。

This model has already proven its significant value in connecting new partners and enhancing our supply capabilities. Additionally, our wholesale purchasing models will expand the promotion of key products from leading pharmaceutical companies. Leveraging our strong digital marketing network.

該模式在連接新合作夥伴和增強我們的供應能力方面已經證明了其重要價值。此外，我們的批發採購模式將擴大領先製藥公司重點產品的推廣。利用我們強大的數位行銷網路。

To further strengthen our supply capabilities, we're increasing the number of franchised human centres in multiple underserved provinces, thus expanding our reach. Finally, our national network will ensure an integrated approach to managing products and the logistics across the entire country. With these enhanced the supply capabilities, we can better offer customers the most comprehensive selection of pharmaceutical products at comp competitive prices.

為了進一步加強我們的供應能力，我們正在多個服務不足的省份增加特許經營人力中心的數量，從而擴大我們的覆蓋範圍。最後，我們的全國網路將確保採用綜合方法來管理全國範圍內的產品和物流。透過增強供應能力，我們可以更好地以有競爭力的價格為客戶提供最全面的醫藥產品選擇。

On the other side, we're strategically stimulating customer engagement and the loyalty through high impact initiatives such as flash sales events, which led to substantial traffic and the demand and enhanced customer retention.

另一方面，我們透過限時搶購活動等高影響力的舉措，從策略上刺激客戶參與度和忠誠度，這帶來了大量流量和需求，並提高了客戶保留率。

Together with growth project aims to increase customers' share wallet, strengthening relationships and driving further growth. It focuses on mid-tier customers, enhancing service quality across all sales stages to meet their core needs through their business development and ultimately elevate our platform's value and scale.

隨著成長項目的實施，我們的目標是增加客戶的份額，加強關係並推動進一步成長。它專注於中端客戶，透過業務發展提高各個銷售階段的服務質量，滿足他們的核心需求，並最終提升我們平台的價值和規模。

Moreover, by utilizing innovative online and offline integrated marketing models, including brand live streams and the number one summit, we are directly connecting industries with end customers, creating new growth avenues while reinforcing our brand as a leader in customer centric digital driven solutions.

此外，透過利用創新的線上和線下整合行銷模式，包括品牌直播和第一峰會，我們將產業與最終客戶直接聯繫起來，創造新的成長途徑，同時鞏固我們的品牌作為以客戶為中心的數位驅動解決方案領導者的地位。

We remain steadfast in our commitment to driving operational efficiency, recognizing it as a critical factor of our continued success in a competitive and a fast evolving market. The integration of AI and fully fledged digitization is essential for us to maintain our industry leading efficiency but also deepen customer engagement and enable the creation of innovative products and services.

我們堅定不移地致力於提高營運效率，並認識到這是我們在競爭激烈且快速發展的市場中持續取得成功的關鍵因素。人工智慧與成熟數位化的整合對於我們保持行業領先效率、深化客戶參與度和創造創新產品和服務至關重要。

These initiatives are well aligned to reinforce our market leadership. Technology is not just an enabler. It is the backbone of our strategy empowering us to build a more agile, intelligent, and the customer centric business in an evolving healthcare landscape.

這些舉措有利於鞏固我們的市場領導地位。科技不僅僅是一種推動因素。它是我們策略的支柱，使我們能夠在不斷發展的醫療保健領域建立更靈活、智慧和以客戶為中心的業務。

At the heart of this transformation is AI, which we are leveraging to redefine how we interact with customers, optimize decision making, and enhance operational efficiency. We have made significant investments in AI-driven analytics, automation, and the digital infrastructure to elevate customer engagement, customize experiences, and improve service delivery.

這項轉變的核心是人工智慧，我們利用人工智慧重新定義我們與客戶的互動方式、優化決策並提高營運效率。我們對人工智慧驅動的分析、自動化和數位基礎設施進行了大量投資，以提高客戶參與度、客製化體驗並改善服務交付。

Our AI power tools analyze vast amounts of data in real time, enabling predictive insights that allow us to anticipate market shifts, refine resource allocation, and drive smarter decision making. Our 100% digitized platform is not just about efficiency. It is a dynamic intelligent engine that continuously leans, learns, and adapts, allowing us to proactively shape industry trends rather than react to them.

我們的人工智慧工具可以即時分析大量數據，提供預測性見解，讓我們能夠預測市場變化、優化資源配置並推動更明智的決策。我們的100％數位化平台不僅僅關乎效率。它是一個動態的智慧引擎，可以不斷地學習和適應，使我們能夠主動塑造行業趨勢，而不是對其做出反應。

As the industry undergoes rapid transformation, our commitment to leading edge technologies ensure we remain at the forefront. We remain steadfast in advancing our AI-driven digital transformation, embedding intelligent automation, machine learning, and next generation customer interfaces into our operations.

隨著產業的快速轉型，我們對尖端技術的承諾確保我們始終處於領先地位。我們堅定不移地推動人工智慧驅動的數位轉型，將智慧自動化、機器學習和下一代客戶介面嵌入到我們的營運中。

Our goal is to seamlessly integrate technology and human expertise, creating frictionless, intelligent and engaging experiences that will define how customers and the businesses interact in the healthcare sector.

我們的目標是無縫整合技術與人力專業知識，創造無摩擦、智慧且引人入勝的體驗，從而定義客戶和企業在醫療保健領域的互動方式。

With that, I'll have the call to our CFO, Mr. Luke Chen to walk through our financials.

為此，我將致電我們的財務長 Luke Chen 先生，介紹我們的財務狀況。

Thank you and good morning, evening, everyone.

謝謝大家，早安，晚上好。

I want to begin by thanking all of our colleagues for their resilience and hard work over fiscal year 2024 as we navigated a challenging environment for making necessary changes to improve our operation and cost efficiency while maintaining our competitive edge.

首先，我要感謝我們所有同事在 2024 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，以改善我們的營運和成本效率，同時保持了我們的競爭優勢。

Moving to the financials, my prepared remarks will focus on a few key vendors and a financial highlights. You can refer to the details of the of the fourth quarter and the fiscal year 2024 results from size 17 to 20 in section 2 of our presentation.

談到財務狀況，我準備好的發言將集中在幾個關鍵供應商和財務亮點上。您可以參考我們簡報第 2 部分中 17 至 20 號第四季和 2024 財年業績的詳細資訊。

Again, all comparisons are year-over-year and all numbers are in RMB unless otherwise stated.

再次強調，除非另有說明，所有比較都是同比計算，所有數字均以人民幣為單位。

Let's start with the four quarter results. Total net revenues for RMB3.8 billion and the gross segment profit was RMB202.5 million due to an unable macro environment, macroeconomic environment. Net revenues and gross profit decreased 6.3% and 5.5% respectively.

讓我們從四個季度的業績開始。由於宏觀環境、宏觀經濟環境不佳，總淨收入為人民幣 38 億元，分部毛利為人民幣 2.025 億元。淨收入和毛利潤分別下降6.3%和5.5%。

Total operating expenses for the quarter decreased 50.1% to RMB209.8 million. As a percentage of net revenues, total operating expenses for the quarter were down to 5.5% from 10.2% as we continue to enhancing our operating leverage and optimizing our operating efficiency.

本季總營業費用下降50.1%至人民幣2.098億元。由於我們持續提高營運槓桿並優化營運效率，本季總營運費用佔淨收入的百分比從 10.2% 降至 5.5%。

For human expenses accounted for 2.7% of Q4 net revenues as compared to 2.5% in the prior year. So, the marketing expenses as a percentage of net revenue for the quarter was 2%, down from 4.2% a year earlier. G&A expenses accounted for 0.5% of net revenue, down from 2.4% in the previous year, and technology expenses accounted for 0.4% of net revenue, down from 1.2% in the same quarter of 2023.

人力支出佔第四季淨收入的 2.7%，去年同期為 2.5%。因此，本季行銷費用佔淨收入的百分比為 2%，低於去年同期的 4.2%。一般及行政費用佔淨收入的 0.5%，低於去年的 2.4%，技術費用佔淨收入的 0.4%，低於 2023 年同期的 1.2%。

As a result, the loss on operations was RMB2.3 million, representing an improvement of 95.8% from RMB55.2 million in the prior year.

結果，營業虧損為人民幣230萬元，較上年的人民幣5,520萬元改善了95.8％。

As a percentage of net revenues and that loss from operations accounted for 0.1% in the quarter, down from 1.3% a year ago. The net loss attributable to ordinary shareholders for RMB14.8 million representing an improvement of 774.9% for RMB59 million in the previous year.

佔淨收入的百分比為本季的 0.1%，低於一年前的 1.3%。歸屬於普通股股東的淨虧損為1,480萬元，較上年的5,900萬元改善774.9%。

As a percentage of net revenues and net loss attributable to ordinary shareholders accounted for 0.4% in the quarter, down from 1.4% a year earlier. As for our fiscal full year 2024, I would like to run through a few highlights. Again, you can refer to details in our debt and earning release or the comparisons to up to full year to 2023.

以淨收入計算，本季歸屬於普通股股東的淨虧損佔淨營收的0.4%，低於去年同期的1.4%。至於我們的 2024 財年全年，我想介紹一些亮點。再次，您可以參考我們的債務和收益報告的詳細資訊或與 2023 年全年的比較。

Our full year 2024 revenues on RMB14.4 billion and the gross profit was RMB829.2 million. Net revenues and the block settlement had a 3.7% and a 2.3% decrease effectively. For whole year 2024, total operating expenses decreased 31% to RMB827.1 million as a percentage of net revenues, total operating expenses decreased by 230 basis points to 5.7% to 8% a year earlier.

我們2024年全年營收為人民幣144億元，毛利為人民幣8.292億元。淨收入和區塊結算分別下降了3.7%和2.3%。2024年全年，總營業費用下降31%至8.271億元人民幣，佔淨收入的比例，總營業費用下降230個基點至5.7%至去年同期的8%。

For human expenses accounted for 2.6% of their revenues as compared to 2.7% in the previous year. Sales and marketing expenses as a percentage of net revenues reduced to 2.2% this year from 3% in 2023. G&A expenses accounted for 0.5% of net revenue, down from 1.5% a year earlier. Technology expenses account for 0.5% of net revenues as compared to 0.8% in 2023.

人力支出佔其收入的 2.6%，而前一年為 2.7%。銷售和行銷費用佔淨收入的百分比將從 2023 年的 3% 降至今年的 2.2%。一般及行政開支佔淨收入的 0.5%，低於去年同期的 1.5%。技術費用佔淨收入的 0.5%，而 2023 年則為 0.8%。

As a result, inbound operations were RMB2.1 million compared to last-bound operations of RMB351 million in 2023. Non-GAAP for operations was RMB22.3 million compared to the GAAP loss on operations of RMB123.9 million in 2023.

因此，入境業務為 210 萬元人民幣，而 2023 年的上一次入境業務為 3.51 億元。非公認會計準則下的營業利潤為人民幣 2,230 萬元，而 2023 年公認會計準則下的營業虧損為 1.239 億元。

That net loss attributed to other shareholders as the potential net revenues decreased to 0.3% by 1.1% a year ago. We are confident that we are on the right path towards profitability, driven by our robust capabilities, and these capabilities will continue to enable us to scale our business efficiently and enhance our operational performance, ultimately delivering profitability and maximize value for our shareholders.

此淨虧損歸因於其他股東，因為潛在淨收入比去年同期下降了 1.1%，至 0.3%。我們相信，在強大能力的推動下，我們正走在實現盈利的正確道路上，這些能力將繼續使我們能夠有效地擴展業務、提高營運績效，最終實現盈利並為股東實現價值最大化。

Please refer to size 21 to 25 of the appendix session for selected financial statements. And a quick note on cash position as of December 31, 2024, we had a cash and cash equivalents we should cash and short term investment of RMB518.3 million and we have achieved the first ever annual positive opening cash flow.

選定的財務報表請參閱附錄部分 21 至 25 頁。簡要說明截至 2024 年 12 月 31 日的現金狀況，我們擁有現金和現金等價物，以及短期投資為人民幣 5.183 億元，並且我們實現了有史以來第一個年度正期初現金流。

Today, the company has a total outstanding amount of RMB1.08 billion recorded in redeemable no controlling interest and accrual expenses and other current liabilities. And this amount is owed to a group of investors in one pharmacy technology pursuant to their 2020 equity investment as previously disclosed in accordance with the terms of this investment.

目前，公司未償還的可贖回負債及應計費用和其他流動負債總額為人民幣10.8億元。而該款項是根據先前揭露的2020年股權投資協議中，欠某藥業科技一群投資者的款項。

111 has received the redemption request on certain of such investors. Following communication and negotiation, the company has reached agreements or obtained the commitment letters for investors representing approximately 97% of total amount to reschedule the repayments, allowing for free repayments over extended periods if the holders exercise their redemption rights.

111已收到部分此類投資者的贖回請求。經過溝通協商，公司已與投資者達成協議或取得承諾函，約佔總金額的97%的投資者可以重新安排還款期限，若持有人行使贖回權，則可以延長還款期限並享有免費還款。

To date, the company has already paid a portion of the repurchase the funds upon signing the agreements. In January 2025, an arbitration tribute though in Shanghai ruled in favor of an investment seeking redemption, requiring the company Hong Kong subsidiary to repurchase the investment share.

目前，公司已按協議簽署時的規定支付了部分回購款項。2025年1月，上海的仲裁庭裁定支持一項投資贖回請求，要求該公司香港子公司回購該投資份額。

In one pharmacy technology for RMB30 million plus accrued interest. We do not expect the arbitration outcome to have any impact on the business operations of our PRC entities, and we remain in active discussion with net investors to negotiate and finalize a mutually agreed revised repayment schedule.

在一家製藥廠的技術上花費了3000萬元人民幣加上應計利息。我們預計仲裁結果不會對我們中國實體的業務運營產生任何影響，我們仍在與淨投資者進行積極討論，以協商並最終確定雙方同意的修訂還款計劃。

We will provide updates to investors if there are any significant developments. This concludes our prepared remarks.

如果有任何重大進展，我們將向投資者提供最新消息。我們的準備好的演講到此結束。

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

謝謝。接線員，我們現在可以開始問答環節。

(Operator Instructions)

（操作員指令）

Robert Sassoon, Water Tower Research.

羅伯特‧薩松 (Robert Sassoon)，水塔研究公司。

Hi, how are you doing? Very resilient performance in the face of adverse conditions. So let me ask you on that point, the unfavorable macroeconomic environment. Can you actually specify how that actually affected the company's performance in the quarter and of course for 2024 as a whole?

嗨，你好嗎？在不利條件下表現非常有韌性。所以我想問您關於這一點的問題，不利的宏觀經濟環境。您能否具體說明這對公司本季以及整個 2024 年的業績有何影響？

Morning, Robert. Yeah, sure. So, first of all, even with the very tough macro environment, we achieved a major milestone in the company's history by delivering the first ever operating profit both at the non-GAAP and the GAAP level. We also achieved a positive flow over RMB263 million.

早上好，羅伯特。是的，當然。首先，即使宏觀環境非常嚴峻，我們仍然首次在非公認會計準則和公認會計準則層面實現了營業利潤，實現了公司歷史上的一個重要里程碑。我們也實現了超過2.63億元的正流量。

And in the meantime, this slashed operating expenditure by 130 basis points to 5.3% of revenue, making us one of the most efficient operators in the industry. And even compared with some of the really gigantic state-owned established companies.

同時，這將營運支出削減了 130 個基點，降至收入的 5.3%，使我們成為業內最高效的營運商之一。甚至與一些真正龐大的國有企業相比。

And also our bottom line improved by almost RMB350 million at the GAAP level. And I'm very proud of the team who worked tirelessly throughout the year, the dedication and focus on executing our strategies are really outstanding.

而且以 GAAP 標準，我們的底線利潤提高了近 3.5 億元。我為全年不知疲倦工作的團隊感到非常自豪，他們對執行策略的奉獻精神和專注度確實非常出色。

In 2024, we managed to significantly increase our product range by innovative business models like the franchise warehouse I spoke about in my script. And shared inventory with the upstream supplying partners who worked extremely hard to offer competitive prices. We substantially increased our performance centres and to increase our reach.

2024 年，我們透過創新的商業模式（例如我在劇本中提到的特許經營倉庫）成功大幅增加了我們的產品範圍。並與上游供應合作夥伴共享庫存，他們竭盡全力提供有競爭力的價格。我們大幅增加了我們的表演中心並擴大了我們的覆蓋範圍。

And the AI also has become an integral part of our business operations and it made us extremely efficient to a level where we can compete against, the biggest giants in the industry, that's the accomplishments that our team achieved, which translated into the opening profit and a positive cash flow.

人工智慧也已成為我們業務營運不可或缺的一部分，它使我們極其高效，達到了可以與行業巨頭競爭的水平，這就是我們團隊的成就，轉化為開業利潤和正現金流。

Right, that's a good answer. Thank you.

好的，這是一個很好的答案。謝謝。

Your gross margin nevertheless has still continued to improve year-on-year in the fourth quarter and in the full year. So, what are the are the main factors driving that? And can you provide more color on gross margin trends?

儘管如此，你們的毛利率在第四季和全年仍然同比持續提高。那麼，推動這現象的主要因素是什麼？您能否提供更多有關毛利率趨勢的資訊？

Yeah, we achieved gross marginal improvement, yet at the same time, I offered customers very competitive prices. There's no magic here. So, first of all, in order to offer the best selection for our customers, we insist on providing both low margin and a high margin products. And of course you know the low margin products don't make money.

是的，我們實現了毛利率的提高，同時，我為客戶提供了一個極具競爭力的價格。這裡沒有什麼魔法。因此，首先，為了給客戶最佳選擇，我們堅持提供低利潤和高利潤的產品。當然，您知道利潤低的產品是賺不到錢的。

What we did is that we outsourced part of the low margin products to our partners who reside closer to their customers, to save on shipping costs in order to, having in order to have a reasonable margin, with competitive pricing.

我們的做法是，將部分低利潤產品外包給距離客戶較近的合作夥伴，以節省運輸成本，以獲得合理的利潤和有競爭力的價格。

Secondly, the teams have specific goals and the KPIs to sell the higher margin products, including our own private labor products. The other thing we do is that, we try to use a decentralized model to encourage our suppliers to store their inventory into our warehouses on a consignment basis and we offer a holistic services, speaking of services.

其次，團隊有明確的目標和KPI，以銷售利潤較高的產品，包括我們自己的私人勞動產品。我們做的另一件事是，我們嘗試使用分散模式來鼓勵我們的供應商以寄售方式將他們的庫存存放到我們的倉庫中，並且我們提供整體服務。

In addition to what I just mentioned, I mean I've also developed other service modules such as supply chain financing, the live streaming, and so on. So the service revenue stream will continue to be one of the core metrics we manage with great diligence.

除了我剛才提到的之外，我還開發了其他服務模組，例如供應鏈融資、直播等等。因此，服務收入流將繼續成為我們精心管理的核心指標之一。

Last, we constantly tweak our assortment management and, the AI assisted data analytics enable us to really optimize our assortments.

最後，我們不斷調整我們的分類管理，人工智慧輔助數據分析使我們能夠真正優化我們的分類。

So moving on to the operating expenses side, it seems you've managed to decrease that quite significantly, and the fourth quarter operating expenses as a percentage of revenues further decreased year-on-year to 5.5%. So how was how was this achieved?

那麼談到營運費用方面，似乎你們已經成功大幅降低了營運費用，第四季度營運費用佔收入的百分比比去年同期進一步下降至 5.5%。那麼這是如何實現的呢？

Yeah, I mean, it's always a tough battle to balance our bottom line and top line, a deep cut in the OpEx could end up a big loss in the in the top line. And our core competence really comes from being efficient. And over the years, we have developed a very sound approach.

是的，我的意思是，平衡我們的底線和頂線始終是一場艱苦的戰鬥，大幅削減營運支出可能會導致頂線的巨大損失。我們的核心競爭力確實來自於高效率。多年來，我們已經形成了非常完善的方法。

Staffing optimization is critical. We constantly review and adjust our corps structure and headcounts as, this is where, expenses can easily get out of control. The other thing we do is, there are a few buckets of expenses in our operations, very simply put it, you have fulfilment, which is the, biggest portion of our, OpEx, you have sales and you have G&A also includes the technology, team.

人員配置優化至關重要。我們不斷審查和調整我們的軍團結構和人員數量，因為在這種情況下，費用很容易失控。我們做的另一件事是，我們的營運中有幾項開支，簡單地說，有履行，這是我們營運支出中最大的一部分，有銷售，有 G&A，還包括技術、團隊。

We break down each line item of those expenses and manage with very fine granularity. To give an example like fulfilment, we will break it down into, warehouse rental, the number of employees, the shelving cost, the picking cost, the wrapping material, and the shipping costs, the damage rate, return, etc. Each of the above category has someone responsible, to hit the target.

我們將這些費用逐一分解，並進行精細管理。舉個例子，例如訂單執行，我們會把它分解成倉庫租金、員工人數、貨架成本、揀貨成本、包裝材料、運輸成本、損壞率、退貨等。以上每個類別都有人負責，以達到目標。

Lastly, of course, the most essential element is really our digital capabilities, over the years, we have invested hundreds of millions of yuan into technology and our whole operation is 100% digitized, which provides real-time data and that real-time data enable us to make real-time adjustments.

最後當然最重要的還是我們的數位化能力，多年來我們在技術上投入了數億元，整個營運實現了100％數位化，提供了即時數據，讓我們能夠即時調整。

And this year we want to ensure that the company will need to go through an AI transformation and I'm really looking forward to updating our efforts in customer interfaces and the underlying AI system architecture.

今年我們要確保公司需要經歷人工智慧轉型，我非常期待在客戶介面和底層人工智慧系統架構方面更新我們的努力。

Thank you for that detailed answer.

感謝您的詳細回答。

Just a final question from me, you're obviously, it's quite impressive that you, despite the really adverse conditions that you are facing, you actually posted your first ever annual operating profit and positive operating cash flow.

我的最後一個問題是，儘管您面臨著非常不利的條件，但您仍然實現了有史以來的第一個年度營業利潤和正營業現金流，這顯然令人印象深刻。

So can you just go through what the key drivers behind that milestone were and how sustainable is this profitability going forward, more importantly?

那麼，您能否簡單介紹一下這項里程碑背後的關鍵驅動因素是什麼？更重要的是，這種獲利能力在未來的可持續性如何？

Yeah, Robert, let me answer this question. Yes, we all noticed we have achieved first ever annual operating profit and positive cash flow in 2024, whole basis, and we believe the key drivers behind our relentless efforts to improve our operating efficiency. You can tell that by maintaining our revenue scale, our operating expenses decreased to 130 basis points for year-over-year in 2024. In our long term improved by 31%.

是的，羅伯特，讓我來回答這個問題。是的，我們都注意到，我們在 2024 年實現了有史以來的第一個年度營業利潤和正現金流，我們相信，關鍵驅動因素是我們不懈地努力提高營運效率。您可以看到，透過維持我們的收入規模，我們的營運費用在 2024 年年減了 130 個基點。從長期來看，我們的成長速度提高了 31%。

We also well managed our working capitals to generate positive cash flow of RMB263 million. All our accounts payable days is about 45 days, and our accounts receivable days is about 10 to 12 days, and our inventory turnover days is about 25 to 30 days.

我們也妥善管理營運資金，產生人民幣2.63億元的正現金流。我們所有應付帳款天數約 45 天，應收帳款天數約為 10 至 12 天，庫存週轉天數約為 25 至 30 天。

So we are highly efficient, well managed, in compared to, as during just mentioned, even compared to those that dynamic players. We believe that we have built a solid foundation for 2025 and onwards.

因此，與我們剛才提到的相比，甚至與那些充滿活力的參與者相比，我們效率很高，管理得很好。我們相信，我們已經為2025年及以後奠定了堅實的基礎。

In 2025, we will continue to build up the scale in total margin, and efficiently, with this AI support and our product ability and positive generation we believe will be sustainable.

2025年，我們將繼續擴大總利潤規模，並憑藉AI的支持以及我們的產品能力和積極的生成，我們相信這將是可持續的。

Thanks for all that, and I'll jump back in the queue.

謝謝你，我會重新回到隊列。

Zhen Feng, ICC.

甄峰，ICC。

Thank you for taking my question.

感謝您回答我的問題。

This is [Qanun] from ICC, and congratulations on your great progress in 2024. I have two questions actually. The first one is just a quick follow-up question on expense control. I just wondered if there's any further expense control action that we could look forward to in 2025.

我是 ICC 的 [Qanun]，祝賀您在 2024 年取得巨大進步。實際上我有兩個問題。第一個問題是關於費用控制的一個快速後續問題。我只是想知道 2025 年我們是否可以期待進一步的費用控制措施。

And another question is about revenue and earnings. Given the current market environment, what's the driver to support revenue growth, especially considering that we also need to maintain a good profit margin?

另一個問題是關於收入和收益。在當前的市場環境下，支持收入成長的動力是什麼，尤其是考慮到我們還需要保持良好的利潤率？

Hi, this is how I take your question regarding this, operation cost and, actually, looking back on each operation, cost last year, from an perspective, they were basically optimized in a very structured way.

你好，這就是我對你關於這個問題的回答，營運成本，實際上，回顧去年的每項營運成本，從某個角度來看，它們基本上是以非常結構化的方式進行優化的。

Well, of course, many of these optimization will gradually upgrade from those small and temporary improvements to structural optimization. And in this year, 2025, of course, in next year and in the future, we will definitely continue to utilize AI and our internet technologies.

那麼當然很多這些優化都會從那些小小的、暫時的改進逐漸升級到結構性的最佳化。而今年，2025年，當然還有明年，以及以後，我們肯定會繼續利用人工智慧和網路技術。

To continuously optimize their costs and this has already become integrated in our DNA of our company and of on our each employee. And the second question regarding this the growth. And actually, on our supply side, we adopt a decentralized model.

不斷優化成本，這已經融入我們公司和每位員工的 DNA 中。第二個問題與成長有關。實際上，在供應方面，我們採用的是分散的模式。

And adding more and more orders fulfilment centres as Junling just mentioned. And actually, there is a new fulfilment centre just opened this week. And we also bring a greater variety of our product selection, and we established a digital external competition mechanism. This mechanism from upstream suppliers, or upstream, especially those pharmaceutical companies to continuously reduce their cost and also to offer more and more competitive prices.

並且正如俊玲剛才所提到的，增加越來越多的訂單履行中心。事實上，本週剛開設了一個新的履行中心。我們也帶來了更多樣化的產品選擇，並建立了數位化的外部競爭機制。這種機制從上游的供應商，或上游，特別是那些製藥公司不斷降低他們的成本，並提供越來越有競爭力的價格。

While on our demand side, our focus is on feeding the most efficient and competitive chain store customers in this industry. We launched the Growing Together program.

而在需求方面，我們的重點是滿足該行業最高效、最具競爭力的連鎖店客戶的需求。我們啟動了「共同成長」計劃。

Recently, and also, last year, and we launched Flash sales festival. It's, every Monday and Tuesday, every week until now, and also our AI powered intelligent procurement system. With all that and we aim to obtain more share of wallets from our customers, especially from those chain store customers.

最近，還有去​​年，我們也推出了閃購節。直到現在，每週一和週二都是如此，這也是我們人工智慧採購系統。透過所有這些，我們的目標是從客戶，特別是連鎖店客戶那裡獲得更多的份額。

While expanding our scale, we will reduce cost and definitely enhance our profit profitability.

我們在擴大規模的同時，降低成本，實際提高獲利能力。

Okay, that's very clear. I have no further questions.

好的，很清楚。我沒有其他問題了。

Zoe, Citi.

佐伊，花旗。

This is Zoe from City.

我是來自城市的佐伊 (Zoe)。

Thank you for taking my question. My first question is about, can you talk about more about your technology advancement in the past year, especially in AI applications, and some of your competitors are offering AI empowered solutions to grassroots medical institutions?

感謝您回答我的問題。我的第一個問題是，您能否詳細介紹一下過去一年來你們的技術進步，特別是在人工智慧的應用方面，你們的一些競爭對手正在為基層醫療機構提供人工智慧解決方案？

Are you considering launching a similar business and will AI be a key part of your future growth?

您是否考慮開展類似的業務，人工智慧是否會成為您未來發展的關鍵部分？

My second question is about the reducing fulfilment cost. What are your key initiatives last year to further reduce the cost and what are further potential in the future? My third question is So, how much, how much are you budgeting for AI investment?

我的第二個問題是關於降低履行成本。去年您為進一步降低成本採取了哪些主要措施？未來還有哪些潛力？我的第三個問題是，那麼您為人工智慧投資預算了多少？

Let me answer your question. Let me, review that what we have accomplished last year through technology.

讓我來回答你的問題。讓我回顧一下我們去年透過科技所取得的成就。

Last year we had two critical initiatives or strategies. One is that using technology to drive efficiency towards profitability. So, we have account to that. And the second was to drive more towards the platform business instead of heavy asset owned business so let me let's go to that talk more about AI, how we invest in AI will have coming AI.

去年我們有兩個重要的舉措或策略。一是利用科技推動效率轉向獲利轉變。所以，我們對此有考慮。第二是推動平台業務，而不是重資產業務，所以讓我來多談人工智慧，我們如何投資人工智慧，將會迎來人工智慧。

So as you can see that first of all, as we drive more towards a platform business, we build a lot of systems. One system with a kind of self-services system for R&D subsidy system. So, we use that system for merchants on our platform and they we have a monitoring system by pricing a price adjustment system and kind of like they do DIY the DIY service. They do it by themselves.

所以正如你所看到的，首先，隨著我們更多地轉向平台業務，我們建立了許多系統。一種是研發補貼制度的自助服務系統。因此，我們在自己的平台上為商家使用該系統，我們透過定價調整系統為他們提供監控系統，有點像他們自己做 DIY 服務一樣。他們自己做。

So that we can handle over 1,000 merchants and 30,000 SPU promotions per week, and all the promotions achieved good results, more than double their sales through that promotion. So, but the behind the technology was the was the kind of everything was done with technology.

這樣我們每週就可以處理超過 1,000 個商家和 30,000 個 SPU 促銷活動，並且所有促銷活動都取得了良好的效果，透過促銷活動的銷售額增加了一倍以上。所以，但技術背後是一切都是用技術完成的。

Second was important, we can shared inventory. Okay, we were the first in the industry to start, shared inventory for BIC. All the, sounds easy but very complex in the in the systems in the processes because the customers purchased by cars and three customers purchased by units. How we build the system not only to handle the differences, but also have the supply chain to manage the whole different processes.

第二點很重要，我們可以分享庫存。好的，我們是業內第一家為 BIC 提供共享庫存的公司。所有這些聽起來很簡單，但在系統中和過程中卻非常複雜，因為三個客戶按汽車購買，而另外三個客戶按單位購買。我們如何建構系統不僅可以處理差異，而且還有供應鏈來管理整個不同的流程。

So we come to that, but we send that to sharing between our inventory and our GBP partners as well as what you mentioned, the franchise for centres. Okay, the fulfilment centres, the size for filming centres, they have, their own inventory and we, our system where, share the inventory with ours.

所以我們就談到這一點，但是我們將其用於我們的庫存和 GBP 合作夥伴之間的共享，以及您提到的中心特許經營權。好的，履行中心、拍攝中心的規模，他們有自己的庫存，而我們的系統與我們的共享庫存。

And present to customers and only realize the sales when sold through our platform. It's a very complex system and right now we only have 11 franchises fulfilment centres. And in the future this year we're adding another, plan 15. So with more of that, we can quickly increase our selection with a much lighter asset, much higher efficiency.

並呈現給客戶，只有透過我們的平台銷售才實現銷售。這是一個非常複雜的系統，目前我們只有 11 個特許履行中心。今年我們將增加另一個計劃，即計劃 15。因此，有了更多的這樣的產品，我們可以用更輕的資產、更高的效率快速增加我們的選擇。

So these are give me information about the data and that's also, we use industry data, we use our own data, we use our partner's data, our customers' data by direct connections with their ERP systems. So, with the AI's assistant power empowerment, we are able to achieve very high efficient accuracy, achieve about 95% accuracy and forecasting accuracy reached 82%.

所以這些都給我提供了有關數據的信息，而且，我們使用行業數據，我們使用我們自己的數據，我們使用我們合作夥伴的數據，我們客戶的數據，透過與他們的 ERP 系統直接連接。所以，在AI的輔助力量賦能下，我們能夠達到非常高的高效準確度，達到95%左右的準確度，預測準確度達到82%。

So we also talk about the AI what we have done last year. So, we build the so-called AI powered price index tool. To better predict, optimize our pricing strategies. So that's all we use, we use also large data large funding models to build a so-called AI business intelligence for the chat BI or system. This is generated AI product using the large Chinese model of technology.

因此我們也談論了去年我們在人工智慧方面所做的事情。因此，我們建構了所謂的人工智慧價格指數工具。為了更好地預測，優化我們的定價策略。這就是我們所使用的全部，我們也使用大數據大型資金模型來為聊天 BI 或系統建立所謂的 AI 商業智慧。這是利用大型中國模型技術生成的AI產品。

Well, right now we have our employees are our people, we can all be using the chat with the system acquiring the system information, for example, we ask what why the commercial rate was down for certain regions last week, by using the natural language and getting the data back.

嗯，現在我們的員工都是我們的人民，我們都可以使用聊天系統獲取系統信息，例如，我們通過使用自然語言詢問為什麼上週某些地區的商業利率下降並獲取數據。

And the world will you build a customer service, powered by AI system and reducing our, yeah, so this year we make AI as a very big part of our strategy.

世界將會建立一個由人工智慧系統驅動的客戶服務並減少我們的損失，是的，所以今年我們將人工智慧作為我們策略的重要組成部分。

Okay, we have a plan to develop various AI agents and so the way and we integrate AI as a core engine to drive end to end integration spanning price intelligence, product collection, supply chainization, and the customer service.

好的，我們計劃開發各種人工智慧代理，並將人工智慧作為核心引擎，推動涵蓋價格智慧、產品收集、供應鏈化和客戶服務的端到端整合。

So that's probably answer the first question about how we use technology for the advancement. Let me also talk about the organization, how we achieve better efficiency. I do want to know that the selecting a big part is the, fulfilment. Also the right now, with more, fulfilment centres, adding more the franchises in fulfilment centres, we are closer customers.

所以這可能回答了關於我們如何利用科技來推動進步的第一個問題。我也來談談組織，我們如何實現更高的效率。我確實想知道選擇很大一部分是滿足感。而且現在，隨著配送中心的增多，配送中心特許經營權的增加，我們與客戶的關係更加密切。

So our last delivery cost will be reduced. However, we need to balance the distribution of inventory among the warehouses. To make sure that we reduce the long-distance cross region delivery but have more regional delivery. So that's the part we focus in. Okay. So last year when we negotiate with all the carriers to make sure that we have a lot of regional degree and regional cost.

所以我們的最終運輸成本將會降低。然而，我們需要平衡各個倉庫之間的庫存分配。確保我們減少長距離跨區域配送，增加區域配送。這就是我們關注的部分。好的。所以去年我們與所有營運商進行談判，以確保我們擁有大量的區域程度和區域成本。

Also we relocate our warehouse much more efficient, okay. We call it super house. Now adding more franchising warehouses we have a much better, more regional delivery, better, through the hog network, we are able to redistribute our inventory to all those franchising for centres as well as our, super hubs.

此外，我們的倉庫搬遷效率更高，好的。我們稱之為超級房子。現在透過增加更多的特許經營倉庫，我們可以提供更好、更具區域性的配送服務，透過生豬網絡，我們能夠將庫存重新分配給所有特許經營中心以及我們的超級樞紐。

And we also use the network to do first now for our large suppliers and what they do last now for large customers. And the network is very efficient. Not only the cost is, 20% to 30% lower and asking for third party logistics, but also big draw in that way.

我們也利用網路為我們的大型供應商提供先行服務，並持續為大型客戶提供服務。而且網路非常有效率。這樣，不僅成本比要求第三方物流低20%到30%，而且吸引力也很大。

So those are the benefits of the com network. So, this year, we extend our laws to include all our franchising partners. Okay, but you will only accomplish the connection among all superpowers. So, this will, we really anticipate a decrease in our register cost. So how this answers the question, though.

這些就是 com 網路的好處。因此，今年我們擴大了法律範圍，涵蓋了所有特許經營合作夥伴。好的，但是你只會完成所有超級大國之間的連結。因此，我們確實預計註冊成本將會下降。那麼，這如何回答這個問題呢？

My last question is how much are you budgeting for AI investment per year?

我的最後一個問題是，您每年用於人工智慧的投資預算是多少？

Yeah, we have some plans we're building a platform to host a series of agents, AI agents, and we started on the first few, and we feel that there are immediate interactions with our customers. This will not only improve customer experience but also increase. Our customers speaking as well as Apple and conversion rate.

是的，我們有一些計劃，我們正在建立一個平台來託管一系列代理、人工智慧代理，我們已經從前幾個代理開始了，我們覺得可以與我們的客戶進行即時互動。這不僅可以改善客戶體驗，而且還會增加。我們的客戶以及蘋果的發言以及轉換率。

So through these applications, we hope to achieve, more not only cost reduction but also customization in terms of we're building a team and we are training all our employees, AI applications, and how do we effectively come back to the work to, better use of AI.

因此，透過這些應用程序，我們希望不僅降低成本，而且在組建團隊和培訓所有員工、人工智慧應用程式方面實現客製化，以及如何有效地回到工作中，更好地利用人工智慧。

Sure. Got it.

當然。知道了。

Jean Van, private investor.

Jean Van，私人投資者。

Thank you for taking my questions.

感謝您回答我的問題。

First of all, congratulations to you on the first ever annual operating profit and positive operating cash flow. I have two questions about the future plan and the outlook of 2025. First question is, are there any plans to expand partnerships with the pharmaceutical companies? Pharmacies and other healthcare providers, what will be the key focus areas of these collaborations.?

首先恭喜你們首次實現年度營業利潤和營業現金流為正。我有兩個問題，關於未來的規劃和2025年的展望。第一個問題是，有沒有計劃擴大與藥廠的合作？藥房和其他醫療保健提供者，這些合作的重點領域是什麼？

The second question What are your expectations for the market in 2025? Are there any changes in the regulations and laws on the horizons that will impact your business model or your profitability?

第二個問題您對2025年的市場有什麼預期？未來的法律法規是否會發生一些變化，從而影響您的商業模式或獲利能力？

Okay, then, I think your two questions actually are, correlated.

好的，那麼我認為您的兩個問題實際上是相關的。

I'll talk about the market first and then, about the partnership with the upstream and downstream, with the company. So, regarding this market, I think like all the other markets in China, we know there is a reform led by our state government. Currently happen in this pharmaceutical area.

我先談談市場，然後再談談與上下游、與公司的合作。因此，關於這個市場，我認為與中國所有其他市場一樣，我們知道這是由州政府主導的改革。目前就發生在這個製藥領域。

And the key focus of this reform, we all know is to enhance the efficiency of all steps and all links. The result is to reduce the cost of medical insurance, and of course, reduce the cost of the medical expenses of, the residents.

而這次改革的重點，大家都知道，就是要提高各環節、各環節的效率。結果就是降低了健保成本，當然也降低了居民的醫療費用成本。

Under this key focus, we as an internet technology company, AI company, we have inherent advantage and also need to take greater responsibility compared to those traditional players. And they have been Very good practices in other industries, like in in 3C industry and FMCG, etc.

在這個重點之下，我們作為一家網路科技公司、人工智慧公司，與傳統公司相比，我們有先天的優勢，同時也需要承擔更大的責任。而且他們在其他行業也有非常好的實踐，例如在3C行業和快速消費品等。

So we believe that our government will continue to introduce new policies to encourage the innovation in this industry, to improve efficiency and to reduce costs. So, during this reform, we will leverage our advantage in AI in internet digitization to consolidate our value and to create greater value. And then talk about your second question on partnership.

所以我們相信我們的政府會繼續推出新的政策來鼓勵這個產業的創新，提高效率，降低成本。所以在這次變革當中，我們會利用網路數位化、人工智慧方面的優勢，來鞏固我們的價值，創造更大的價值。然後談談關於合作關係的第二個問題。

Actually, our business model is to connect our upstream part that is pharmaceutical companies, drug providers with those downstream partners, that is pharmacy terminals, and even patients through our digital platform.

其實我們的商業模式是透過數位平台把上游的藥廠、藥品供應商，與下游的合作夥伴，也就是藥局終端，甚至是病人連結起來。

So in the future, we will further expand our cooperation with both upstream and downstream partners. The key is also to enable those drugs to enter China's retail terminals, that is pharmacy, more effectively. And to help those of pharmacy better sell and promote these drugs through an AI powered digital platform. We believe under the wave of AI technology, this will totally change and substitute with the traditional model of drug promotion that relies heavily on human efforts.

所以未來我們會進一步擴大與上下游合作夥伴的合作。關鍵還在於如何讓這些藥品更有效地進入中國的零售終端，也就是藥局。並幫助藥房透過人工智慧數位平台更好地銷售和推廣這些藥品。我們相信在AI技術的浪潮下，這將徹底改變並取代傳統嚴重依賴人力的藥品推廣模式。

Hope to answer your questions.

希望能夠解答您的疑問。

Thank you for your detailed answer.

感謝您的詳細回答。

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. If you require further information or have any interest in visiting 111 in Shanghai, China, please let the company know.

最後，我謹代表整個 111 管理團隊感謝您對今天電話會議的關注與參與。如果您需要更多資訊或有興趣參觀中國上海的111，請告知公司。

Thank you for joining us. That concludes today's call.

感謝您加入我們。今天的電話會議到此結束。