ZKH Group Ltd (ZKH) 2024 Q1 法說會逐字稿

Ladies and gentlemen, good day, and welcome to the ZKH Group Limited's first-quarter-2024 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to [Jean Lee], Head of Investor Relations. Please go ahead.

女士們、先生們，大家好，歡迎參加震坤行集團有限公司 2024 年第一季財報電話會議。今天的會議正在錄製中。現在，我想將會議交給投資者關係主管[Jean Lee]。請繼續。

Thank you, operator, and thank you, everyone. Welcome to our call today. Joining us today on the call are Mr. Eric Chen, our founder, Chairman and CEO; and Mr. Max Lai, our CFO.

謝謝運營商，也謝謝大家。歡迎您今天致電我們。今天加入我們電話會議的還有我們的創辦人、董事長兼執行長 Eric Chen 先生；以及我們的財務長 Max Lai 先生。

During this call, we will discuss our future performance which are forward-looking statements made under the Safe Harbor provision. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties. Some of these risks discussed are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release. A number of potential risks and uncertainties are included in ZKH Group public filings with the SEC. ZKH Group does not undertake any obligation to update this forward-looking information except as required by law.

在本次電話會議中，我們將討論我們未來的業績，這些業績是根據安全港條款做出的前瞻性陳述。此類聲明並非對未來業績的保證，並且存在一定的風險和不確定性。其中討論的一些風險超出了公司的控制範圍，可能導致實際結果與今天新聞稿中提到的結果有重大差異。震坤行集團向 SEC 提交的公開文件中包含了許多潛在風險和不確定性。除法律要求外，震坤行集團不承擔任何更新此前瞻性資訊的義務。

During today's call, we will also discuss certain non-GAAP financial measures for comparison purposes only. Please see the press release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results.

在今天的電話會議中，我們還將討論某些非公認會計準則財務指標，僅供比較之用。請參閱今天稍早發布的新聞稿，以了解非 GAAP 財務指標的定義以及 GAAP 與非 GAAP 財務表現的調整表。

Eric and Max will share our business updates, operating highlights and financial performance for the first quarter of 2024. After the prepared remarks, we will have a Q&A section.

Eric 和 Max 將分享我們的業務動態、營運亮點和 2024 年第一季的財務表現。

With that, I will turn the call over to Eric. Eric, please go ahead.

這樣，我會將電話轉給艾瑞克。埃里克，請繼續。

(spoken in foreign language) (interpreted) Hello, and welcome to this Q1-2024 earnings conference call for ZKH. We got off to a flying start in 2024, extending last year's growth momentum.

（用外語發言）（翻譯）您好，歡迎參加震坤行 2024 年第一季財報電話會議。 2024 年，我們實現了開門紅，延續了去年的成長動能。

In the first quarter, our GMV reached RMB2.35 billion, representing a slight year-over-year decline, driven primarily by business quality and structural optimization as well as the outsized seasonality impact of delayed timing of the Chinese New Year.

一季度，我們的GMV達到人民幣23.5億元，年比小幅下降，主要是由於業務品質和結構優化以及春節延遲的季節性影響較大。

In the first quarter, we served more than 46,000 customers, up 29% year over year. In terms of individual industries, we noticed promising growth trends in new energy vehicles, chemical engineering, food chemicals, property management and cultural tourism industries. In contrast, industries such as traditional automobiles, mining, steel and coal are facing some pressure. Product wise, we are pleased to see rapid growth in adhesives, lubricants and other chemicals as well as in industrial-grade products such as those used in factory automation as well as tools and consumables, pneumatics and hydraulics and power transmission products.

第一季度，我們服務了超過46,000名客戶，較去年同期成長29%。分行業看，新能源汽車、化工、食品化工、物業管理、文化旅遊等產業成長動能良好。相較之下，傳統汽車、採礦、鋼鐵、煤炭等產業則面臨一定壓力。在產品方面，我們很高興看到黏合劑、潤滑劑和其他化學品以及工業級產品（例如用於工廠自動化的產品）以及工具和消耗品、氣動和液壓以及動力傳輸產品的快速增長。

Our gross margin continued to improve in the first quarter, increasing to 18% from 17.1% in the same period last year. Specifically for the ZKH platform, we achieved a substantial increase in the gross margin of our product sales model, 1P, which grew to 16% from 14.7% in the prior year period. We also witnessed significant growth in the take rate of our marketplace model, 3P, which increased to 11.6% from 11.1% in the prior year period.

第一季毛利率持續改善，從去年同期的17.1%增至18%。具體到震坤行平台，我們的產品銷售模式1P的毛利率實現了大幅提升，從去年同期的14.7%成長到16%。我們也見證了我們的市場模型 3P 的採用率顯著成長，從去年同期的 11.1% 增加到 11.6%。

The combination of improved business quality, cost control and increased efficiencies propelled continuous improvement in profitability. Our adjusted net loss narrowed to RMB43 million in the first quarter of 2024, which is an improvement of approximately RMB44 million from the RMB87 million in the prior year period. Our loss margin improved from negative 4.5% in the first quarter of 2023 to negative 2.3% in the first quarter of this year.

業務品質提升、成本控制和效率提升相結合，推動獲利能力持續提升。 2024年第一季度，我們的調整後淨虧損收窄至人民幣4,300萬元，較上年同期的人民幣8,700萬元減少約人民幣4,400萬元。我們的虧損率從 2023 年第一季的負 4.5% 改善到今年第一季的負 2.3%。

The first quarter of each year is a slow season in B2B industries, accounting for approximately 18% to 20% of full-year revenues. On top of maintaining relatively stable staffing, we were able to achieve a 50% year-on-year improvement in our bottom line in the first quarter of this year, laying the foundation for full-year profitability.

每年第一季是B2B產業的淡季，約佔全年營收的18%至20%。在維持人員相對穩定的基礎上，今年第一季我們的淨利潤年增了50%，為全年獲利奠定了基礎。

Let's take a closer look at our business progress. Throughout the first quarter, our primary focus remained on strengthening our core competitiveness. By consistently investing in operations, products and digitalization while further accelerating global expansion, we meaningfully enhanced services for our corporate customers.

讓我們仔細看看我們的業務進展。一季度，我們的首要任務仍然是增強核心競爭力。透過持續投資於營運、產品和數位化，同時進一步加速全球擴張，我們有意義地增強了為企業客戶提供的服務。

Furthermore, we effectively leveled out our fulfillment capabilities. In March 2024, we put into operation our first smart and automated warehousing facility for a product line of fasteners in Qingpu, Shanghai. This automated warehouse is expected to increase labor productivity by 30% and storage utilization by 100% for this fastener product line while reducing the number of traditional forklifts needed by 70%. The successful launch of this flagship automated warehouse marks the beginning of our transition into a new phase of integrated fulfillment, where the synergy of automation and human expertise enables us to pinpoint the optimal automation solutions for diverse MRO product categories.

此外，我們有效地提升了我們的履行能力。 2024年3月，我們在上海青浦的緊固件產品線首個智慧自動化倉儲設施投入營運。該自動化倉庫預計將使此緊固件產品線的勞動生產率提高30%，倉儲利用率提高100%，同時減少70%所需的傳統堆高機數量。這個旗艦自動化倉庫的成功推出標誌著我們開始向綜合履行的新階段過渡，自動化和人類專業知識的協同作用使我們能夠為不同的 MRO 產品類別找到最佳的自動化解決方案。

On the digital front, in addition to continuing to build and end digital capabilities, we have bolstered our digital marketing initiatives and online customer acquisition capabilities. We also have enhanced the efficiency of online lead acquisition and conversion by leveraging technologies such as intelligent lead analysis and smart outbound calling. In the first quarter, our online customer acquisitions achieved a record quarterly high, up 103% year on year.

在數位化方面，除了繼續建立和結束數位化能力外，我們還加強了數位行銷計劃和線上客戶獲取能力。我們也運用智慧線索分析、智慧外呼等技術，提升線上線索獲取與轉換效率。一季度，我們的線上獲客量創歷史季度新高，年增103%。

Regarding our globalization efforts, we have fast tracked the formation of our local US team, the selection of warehouse sites and the launch of an independent US website. We aim to advance our overseas business through a model of digital innovation and a spirit of joint entrepreneurship. On the product front, we'll focused on curated high-value offerings with large packages with the goal of simplifying the supply chain, reducing cost and risks in fulfillment and improving profitability as we aspire to become a Costco for MRO industry.

在全球化方面，我們快速推進了美國本土團隊的組成、倉址的選擇以及美國獨立網站的上線。我們旨在透過數位創新模式和聯合創業精神推進海外業務。在產品方面，我們將專注於精心策劃的大包裝高價值產品，目標是簡化供應鏈、降低履行成本和風險並提高盈利能力，因為我們立志成為 MRO 行業的 Costco。

We have also curated 5,000 SKUs for our initial global launch, focusing on product lines such as personal protective equipment, security related products, tools, material handling and adhesives. On the supplier side, more than 100 suppliers have joined our international operations. We hope that the services we provide to our suppliers can serve as a gateway for MRO products from China to enter international markets.

我們也為首次全球發布策劃了 5,000 個 SKU，重點在於個人防護設備、安全相關產品、工具、物料搬運和黏合劑等產品線。在供應商方面，已有100多家供應商加入我們的國際業務。我們希望我們為供應商提供的服務能夠成為中國MRO產品進入國際市場的門戶。

Looking ahead, we believe that China's MRO market still holds tremendous potential despite a challenging external environment. This is because China is the world's largest manufacturing market, and the business community has long-term demand for efficient and cost-effective online procurement. Moreover, Chinese companies going global presents yet another opportunity.

展望未來，我們相信，儘管外部環境充滿挑戰，中國MRO市場仍擁有巨大潛力。這是因為中國是全球最大的製造業市場，企業界對高效率、高性價比的線上採購有長期需求。此外，中國企業走出去還提供了另一個機會。

To enhance our long-term growth prospects, we have made certain short-term adjustments and optimizations. Although there may be some temporary impact on sales growth after implementing these modifications, we will redouble our focus on increasing core competitiveness by investing in digital and smart technologies as well as improving our product capabilities and operational efficiency. These initiatives will be more conducive to a healthy and long-term growth.

為了增強我們的長期成長前景，我們進行了一些短期調整和優化。儘管實施這些修改後可能會對銷售成長產生一些暫時影響，但我們將加倍專注於透過投資數位化和智慧技術以及提高我們的產品能力和營運效率來增強核心競爭力。這些措施將更有利於健康、長期成長。

With that, I will now turn the call over to our CFO, Max Lai, to discuss our financial performance. Thank you, everyone.

現在，我將把電話轉給我們的財務長 Max Lai，討論我們的財務表現。謝謝大家。

Thank you, Eric, and thanks, everyone, for making time to join our earnings call today. I will now provide an overview of our 2024-first-quarter financial results.

謝謝艾瑞克，也謝謝大家抽出時間參加我們今天的財報電話會議。我現在將概述我們 2024 年第一季的財務表現。

In the first quarter of 2024, our GMV decreased by 1% year over year to RMB2.3 billion from RMB2.4 billion a year ago. By platform, GMV generated from the ZKH platform decreased by 3.2% year over year to RMB2.1 billion. And GMV generated from GBB platform grew 28.6% year over year to RMB211 million. By business model, GMV of product sales model reduced which is at RMB1.8 billion, a decrease of 3.5% year over year, while GMV from marketplace model was about RMB572.9 million, up 7.3% year over year.

2024年第一季度，我們的GMV年減1%，從一年前的人民幣24億元降至人民幣23億元。分平台來看，震坤行平台GMV年減3.2%至21億元。 GBB平台的GMV年增28.6%至2.11億元。從商業模式來看，產品銷售模式的GMV減少，為人民幣18億元，較去年同期下降3.5%；市場模式的GMV約為人民幣5.729億元，較去年同期成長7.3%。

The proportion of GMV generated from marketplace model was about 24.4% in the first quarter of 2024 compared to 22.5% in the prior year period. Our total net revenues in the first quarter of 2024 was about RMB1.86 billion, representing a decrease of 4% from RMB1.94 billion in the prior year period, mainly due to our focus on high-quality revenues and lower seasonal demand as a result of the late timing of Chinese New Year which fell in the middle of February in 2024.

2024 年第一季度，市場模型產生的 GMV 比例約為 24.4%，而去年同期為 22.5%。 2024年第一季我們的總淨收入約為人民幣18.6億元，比上年同期的人民幣19.4億元下降4%，主要是由於我們注重高品質收入以及季節性需求較低。新年延後到2月中旬的結果。

Looking at the breakdown of total revenue, net product revenues in the first quarter of 2024 were RMB1.78 billion, a decrease of 4.9% from RMB1.67 billion in the prior year before. The decrease was mainly due to lower net product revenues generated from the ZKH platform, partially offset by higher net product revenues from the GBB platform. Net service revenues in the first quarter of 2024 amounted to RMB66.7 million, an increase of 12.8% from RMB59.1 million in the prior year period, primarily attributable to the growth of marketplace model on the ZKH platform.

從總收入組成來看，2024年第一季產品淨收入為人民幣17.8億元，較上年同期的人民幣16.7億元下降4.9%。下降的主要原因是 ZKH 平台產生的淨產品收入減少，但部分被 GBB 平台淨產品收入的增加所抵消。 2024年第一季淨服務收入為人民幣6,670萬元，較上年同期的人民幣5,910萬元成長12.8%，主要得益於震坤行平台市場模式的成長。

Other revenues in the first quarter of 2024 were RMB18.7 million, an increase of 43.8% from RMB13 million in the prior year period, mainly attributable to higher revenue generated from our testing and repairment services and warehousing and logistics services. Gross profit in the first quarter of 2024 grew 1% year over year to RMB334.5 million, resulting in gross profit margin of 18% compared with 17.1% in the prior year period. The increase was driven by higher gross margin of product sales model and higher take rate of marketplace model on the ZKH platform as well as the growth of the marketplace model on the ZKH platform and partially offset by lower gross margin of product sales on the GBB platform.

2024年第一季其他收入為人民幣1,870萬元，比上年同期的人民幣1,300萬元增長43.8%，主要歸因於我們的檢測和維修服務以及倉儲和物流服務產生的收入增加。 2024年第一季毛利年增1%至人民幣3.345億元，毛利率為18%，去年同期為17.1%。這一增長是由於ZKH平台上產品銷售模式毛利率的提高和市場模型採用率的提高以及ZKH平台上市場模型的增長所推動的，但部分被GBB平台上產品銷售毛利率的降低所抵消。

Operating expenses in the first quarter of 2024 were RMB463.7 million, a decrease of 3% from RMB478.2 million in the prior year period. Operating expenses as percentage of net revenues were about 24.9% compared with 24.7% in the prior year period, mainly due to the increase in share-based compensation expenses. Fulfillment expenses in the first quarter of 2024 were RMB97.3 million, a decrease of 12.2% from RMB110.9 million in the prior year period. The decrease was primarily attributable to lower distribution expenses and employee benefit costs.

2024年第一季營運費用為人民幣4.637億元，較上年同期人民幣4.782億元下降3%。營業費用佔淨收入的比例約為24.9%，而上年同期為24.7%，主要是由於股權激勵費用的增加。 2024年第一季的履約費用為人民幣9,730萬元，較上年同期的人民幣11,090萬元下降12.2%。減少的主要原因是分銷費用和員工福利成本減少。

Fulfillment expenses as percentage of net revenues were about 5.2% compared to 5.7% in the prior year period. Sales and marketing expenses in the first quarter of 2024 were about RMB164.1 million, a decrease of 8.8% from RMB179.9 million in the prior year period. The decrease was primarily attributable to the decrease in the employee benefit costs and travel expenses. Sales and marketing expenses as percentage of net revenues were 8.8% compared with 9.3% in the prior year period.

履行費用佔淨收入的百分比約為 5.2%，去年同期為 5.7%。 2024年第一季銷售及行銷費用約為人民幣1.641億元，較上年同期的人民幣1.799億元下降8.8%。減少的主要原因是僱員福利成本和差旅費用減少。銷售和行銷費用佔淨收入的百分比為 8.8%，而去年同期為 9.3%。

Research and development expenses in the first quarter of 2024 were RMB39.8 million, a decrease of 16.6% from RMB47.7 million in the prior year period. The decrease was primarily attributable to lower employee benefit costs. Research and development expenses as percentage of net revenues was 2.1% compared with 2.5% in the prior year period.

2024年第一季研發費用為人民幣3,980萬元，較上年同期的人民幣4,770萬元下降16.6%。減少的主要原因是員工福利成本下降。研發費用佔淨收入的比例為 2.1%，去年同期為 2.5%。

General and administrative expenses in the first quarter of 2024 were RMB162.4 million, an increase of 16.3% from RMB139.7 million in the prior year period. The increase was primarily attributable to the increase in share-based compensation expenses and partially offset by a decrease in other employee benefits costs. General and administrative expenses as percentage of net revenues was 8.7% compared with 7.2% in the prior year period.

2024年第一季的管理費用為人民幣1.624億元，較上年同期的人民幣1.397億元成長16.3%。這一增長主要歸因於股權激勵費用的增加，並被其他員工福利成本的減少部分抵消。一般及管理費用佔淨收入的百分比為 8.7%，而去年同期為 7.2%。

Loss from operating expenses -- loss from operations in the first quarter of 2024was RMB129.6 million compared with RMB147.4 million in the prior year period. Non-GAAP adjusted net loss in the first quarter of 2024 was RMB43.5 million compared with RMB66.9 million in the prior year period. Non-GAAP adjusted net loss margin was 2.3% in the first quarter of 2024 compared with 4.5% in the prior year period.

營運費用損失－2024 年第一季營運損失為 1.296 億元，去年同期為 1.474 億元。 2024 年第一季非 GAAP 調整後淨虧損為 4,350 萬元，而上年同期為 6,690 萬元。 2024 年第一季非 GAAP 調整後淨虧損率為 2.3%，去年同期為 4.5%。

As of March 31, 2024, we had cash and cash equivalents, restricted cash and short-term investments of RMB2.03 billion compared with RMB2.12 billion as of December 31, 2023. Net cash used in operating activities was about RMB224.3 million in the first quarter of 2024 compared with RMB263.4 million in the prior year period.

截至2024年3月31日，我們的現金及現金等價物、受限現金及短期投資為人民幣20.3億元，而截至2023年12月31日為人民幣21.2億元。人民幣224.3元2024 年第一季的銷售額為 2.634 億元，而上年同期為 2.634 億元。

Now, I would like to open the call to Q&A. Operator, please go ahead.

現在，我想打開問答電話。接線員，請繼續。

Leo Chang, Deutsche Bank.

Leo Chang，德意志銀行。

(spoken in foreign language) I'll translate myself. So thank you management, for taking my questions. And my first question is could management update us on China's MRO procurement service market outlook in 2Q, second-quarter 2024 and the second-half 2024?

（用外語發言）我自己翻譯。謝謝管理層回答我的問題。我的第一個問題是，管理階層能否向我們介紹一下中國第二季、2024 年第二季和 2024 年下半年中國 MRO 採購服務市場前景的最新情況？

My second question is Changxiang mentioned that GMV flattish in 1Q due to more focus on high-quality revenue and lower seasonality. Could management please elaborate high-quality growth, and how this should affect our GMV growth in the following quarters? And also, the GMV recovery and new clients sign-up trends in recent months post Chinese New Year? Xiè xiè.

我的第二個問題是，常翔提到，由於更重視高品質收入和較低的季節性，第一季GMV持平。管理層能否詳細說明高品質的成長，以及這將如何影響我們接下來幾季的 GMV 成長？另外，農曆新年後近幾個月的 GMV 復甦和新客戶註冊趨勢如何？兮兮兮。

(spoken in foreign language) (interpreted) Thank you very much for your question. So for your first question, the manufacturing sector in recent years in China has been pretty stable. Of course, on it's a bifurcated situation. For some sectors, they have been growing faster and others are more distressed. I'm talking about sectors like automobile, construction, cement, steel. But in terms of the MRO scale, the scale of the MRO industry is very closely correlated with the data of the manufacturing sector. So I believe the total demand for MRO has been and will continue to be stable on.

（外語）（翻譯）非常感謝你的提問。關於你的第一個問題，近年來中國的製造業是比較穩定的。當然，這是一個兩極化的情況。對於一些行業來說，它們的成長速度更快，而另一些行業則更加困難。我說的是汽車、建築、水泥、鋼鐵等產業。但從MRO規模來看，MRO產業的規模與製造業的數據有著非常密切的相關性。所以我相信MRO的總需求已經並將繼續保持穩定。

If you look at the new MRO suppliers, so in terms of the e-commerce business model of being able to supply nationally both in China and overseas, things are going very good. Because in this existing market, more and more businesses have this need to move their purchases from offline to online and makes the purchase and procurement process more transparent. So that is a trend that is evolving and ongoing. And the need to optimized costs on the part of companies in general hasn't changed.

如果你看看新的 MRO 供應商，那麼就能夠在中國和海外進行全國供應的電子商務業務模式而言，情況進展得非常好。因為在現有的市場中，越來越多的商家有這種需求，將採購從線下轉移到線上，讓採購和採購流程更透明。所以這是一個正在發展和持續的趨勢。整體而言，公司優化成本的需求並沒有改變。

So in terms of MRO in the e-commerce model, things are going very well, and I'm very bullish on that. So if you look at our Q1 performance in terms of the number of our customers, it has increased, and the gross margin also improved. So these things going to show my point about the trend being very, very positive.

因此，就電子商務模式中的 MRO 而言，一切進展順利，我對此非常看好。因此，如果你從客戶數量來看我們第一季的業績，你會發現客戶數量增加，毛利率也有所提高。所以這些事情將表明我的觀點，即趨勢非常非常積極。

The second question -- to answer the second question. So firstly, Chinese New Year 2024 happened in February, which by historical standards was pretty late. So the impact was more obvious in March. So it was eating to the growth in March. And the impact of the CNY this year will be even bigger than last year. So because of the manufacturing trends, factories were more slow going in terms of restarting their operations post CNY.

第二個問題——回答第二個問題。首先，2024 年農曆新年發生在 2 月份，以歷史標準來看，這個時間已經相當晚了。所以3月影響比較明顯。因此，三月的成長受到了影響。而今年農曆新年的影響將比去年更大。因此，由於製造業的趨勢，工廠在春節後重啟運作的速度更加緩慢。

And we have been gradually optimizing the structure of our business and focusing on more high-quality business like I mentioned in my presentation. And because with MRO, a lot of times, the order volume is huge. And if you use activity based costing for some orders for some business, it's not really making money for us, and sometimes, it's even loss-making. So for those business -- for those types of business, as well as business that has long receivables, receivable risks and regulatory risks and business that are generally not helping with our bottom line, we have been eliminating this kind of business left and right to optimize and improve our bottom line.

正如我在演講中提到的，我們一直在逐步優化業務結構，並專注於更多高品質的業務。而且因為有了MRO，很多時候，訂單量是龐大的。如果對某些業務的某些訂單使用基於活動的成本核算，這並不能真正為我們賺錢，有時甚至會虧損。因此，對於那些業務，對於那些類型的業務，以及具有長期應收帳款、應收帳款風險和監管風險的業務以及通常對我們的利潤沒有幫助的業務，我們一直在左右消除此類業務優化並提高我們的利潤。

Going into April, are things going better? I think the answer is positive. We have seen 17% year-over-year growth this April. And in terms of the number of customers served, it was 32,000. So 3,800 of them were new customers. And the number last year was 1,900 new customers. So the pace at which we're growing, the number of customers has been picking up.

進入四月，事情會好轉嗎？我認為答案是肯定的。今年 4 月，我們看到年增 17%。就服務客戶數量而言，為 32,000 人。因此，其中 3,800 名是新客戶。去年新客戶數為 1,900 名。因此，隨著我們成長的速度，客戶數量一直在增加。

And we have been doing this optimization. So in terms of its impact to our GMV and the top line, it will be less than that in ensuing quarters. And I believe our growth for the entire year this year will be still over 20%. Thank you.

我們一直在做這個優化。因此，就其對我們的 GMV 和營收的影響而言，它將小於接下來幾季的影響。而且我相信我們今年全年的成長還是會在20%以上。謝謝。

Ella Ji, China Renaissance.

Ella Ji，中國文藝復興。

(spoken in foreign language) So my question is regarding the outlook for the margin as well as the 3P marketplace take rate outlook for the subsequent quarters. Thank you very much.

（用外語發言）所以我的問題是關於接下來幾季的利潤率前景以及 3P 市場採用率前景。非常感謝。

(spoken in foreign language) (interpreted) So as our product competitiveness keeps improving and as our cost keeps going down, it is really necessary and important to improve our gross margin to some extent. However, at this point, the growth of our scale is still prioritized over the growth of our margins. So that is to say we don't have to hastily reflect our cost advantage in the gross margin.

（外語）（翻譯）所以隨著我們的產品競爭力不斷提高，成本不斷下降，毛利率一定程度的提高是非常必要和重要的。然而，目前我們的規模成長仍然優先於利潤成長。所以也就是說我們不必急於把我們的成本優勢反映在毛利率上。

So in terms of the gross margin improvement this year, in 2023, it was 16.7%. And this year, it will improve by 1.5 to 2 percentage points to 18%. So a very gradual and healthy improvement. And in terms of our ZKH platform 1P business, '23 gross margin was 14.2%, and it was raised too 16%, so 1.5 percentage points. And in terms of ZKH 3P business, take rate will grow from 11.2% in '23 to 12% '24. So GBB take rate will grow from 6% to 7% for GBB.

所以就今年的毛利率提升而言，2023年是16.7%。而今年，這數字將提高1.5至2個百分點，達到18%。這是一個非常漸進和健康的改善。而就我們ZKH平台1P業務而言，'23毛利率是14.2%，也提高了16%，所以1.5個百分點。而就ZKH 3P業務而言，採用率將從'23年的11.2％增長到'24年的12％。因此 GBB 的使用率將從 6% 增加到 7%。

So for our 3P business, we won't be too fixated on improving our take rate by too much. So because we care more about serving more partners and growing our scale, so 3P will grow a little bit to 23% to 25% of total GMV, and take rate will improve from 11% to 12%.

所以對於我們的3P業務來說，我們不會太專注於提高我們的轉換率。因為我們更關心服務更多的合作夥伴並擴大我們的規模，所以3P將小幅增長至總GMV的23%至25%，而拿取率將從11%提高至12%。

Brenda Zhao, CICC.

趙布蘭達，中金公司。

(spoken in foreign language) Good evening. My question is about our strategic directions. As Mr. Chen mentioned that the shelf-label products and the overseas expansions are two important direction for the company, could management give updates on these two aspects? Thank you.

（用外語）晚上好。我的問題是關於我們的策略方向。正如陳總提到的貨架標籤產品和海外擴張是公司的兩個重要方向，管理階層能否介紹一下這兩個方面的最新情況？謝謝。

(spoken in foreign language) (interpreted) Private label is an important way for MRO players to increase their GM and also to lower cost and improve product capability and competitiveness. In 2023, we achieved RMB540 million of revenue from private label products. This year, our goal is to double that and reach RMB1 billion in revenue from private label products.

（外語發言）（口譯）自有品牌是MRO廠商提高GM、降低成本、提高產品能力和競爭力的重要途徑。 2023年，我們實現自有品牌產品收入人民幣5.4億元。今年，我們的目標是自有品牌產品收入翻倍，達到 10 億元。

And in terms of R&D, we are focusing more this year on improving the quality of our private label products and further improve cost competitiveness. We are also pursuing actively, certification of our products in the US and Europe for our overseas market, which we aim to have half of the revenue from private label products. That will further strengthen our competitiveness as well as help to improve our GM.

在研發方面，我們今年更重視提升自有品牌產品的質量，進一步提高成本競爭力。我們也積極尋求在美國和歐洲為我們的海外市場進行產品認證，我們的目標是從自有品牌產品中獲得一半的收入。這將進一步增強我們的競爭力，並有助於改善我們的通用汽車。

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any closing -- any additional or closing comments. Thank you.

問答環節到此結束。我想將會議轉回管理層以進行任何結束——任何附加或結束評論。謝謝。

Once again for joining us today. You can find the webcast of today's call on ir.zkh.com. If you have any further question, please feel free to contact us. Our contact information can be found in today's press release. Thank you, and have a good day.

今天再次加入我們。您可以在 ir.zkh.com 上找到今天電話會議的網路廣播。如果您還有任何疑問，請隨時與我們聯繫。我們的聯絡資訊可以在今天的新聞稿中找到。謝謝你，有美好的一天。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。