ZTO Express (Cayman) Inc (ZTO) 2022 Q4 法說會逐字稿

Thank you for standing by, and welcome to the ZTO Express Fourth Quarter and Fiscal Year 2022 Financial Results Conference Call. (Operator Instructions) Please note this event is being recorded.

感謝您的支持，歡迎參加中通快遞第四季度及 2022 財年財務業績電話會議。 （操作員說明）請注意正在記錄此事件。

I would now like to turn the conference over to Ms. Sophie Li, Director of Capital Markets. Thank you, Sophie. Please go ahead.

我現在想把會議轉交給資本市場總監 Sophie Li 女士。謝謝你，蘇菲。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us today. The company's results and the Investor Relations presentation were released earlier today and are available on the company's IR website at ir.zto.com.

謝謝你，運營商。大家好，感謝您今天加入我們。公司的業績和投資者關係介紹已於今天早些時候發布，可在公司的 IR 網站 ir.zto.com 上查閱。

On the call today from ZTO are Mr. Meisong Lai, Chairman and Chief Executive Officer; Ms. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights. Then I will go through the financials and guidance. We will both be available to answer your questions during the Q&A session that follows.

中通今天致電董事長兼首席執行官賴美松先生；嚴惠萍女士，首席財務官。賴先生將簡要介紹公司的業務運作及亮點。然後我將通過財務和指導。在接下來的問答環節中，我們都可以回答您的問題。

I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and the current market and operating conditions. All of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

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》安全港條款作出的前瞻性陳述。此類陳述基於管理層目前的預期以及當前的市場和經營狀況。所有這些都難以預測，其中許多超出了公司的控制範圍，這可能導致公司的實際結果、業績或成就與前瞻性陳述中的存在重大差異。

Further information regarding this and other risks uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Committee. The company 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 law.

有關此風險和其他風險不確定性和因素的更多信息包含在公司提交給美國證券交易委員會的文件中。公司不承擔因新信息、未來事件或其他原因而更新任何前瞻性陳述的任何義務，除非法律要求。

It is now my pleasure to introduce Mr. Meisong Lai. Mr. Lai will read through his prepared remarks in their entirety in Chinese, I translate for him in English.

現在我很高興向大家介紹賴美松先生。賴先生會用中文完整地讀一遍他準備好的發言稿，我幫他翻譯成英文。

(foreign language)

（外語）

[Interpreted] Hello, everyone. Thank you for participating in today's conference call. For the fourth quarter of 2022, ZTO delivered a total volume of 6.59 billion, which increased 3.9% year-over-year, extending our market share by 1.5 points.

【解讀】大家好。感謝您參加今天的電話會議。 2022年第四季度，中通發貨總量65.9億件，同比增長3.9%，市場份額提升1.5個百分點。

Our public satisfaction ranking continued to be among the top of the industry with steady improvement. Meanwhile, we achieved an adjusted net income of CNY 2.12 billion, which increased to 21% over the fourth quarter of last year.

公眾滿意度持續保持行業前列，穩步提升。同時，我們實現調整後淨收入21.2億元人民幣，比去年第四季度增長21%。

In 2022, affected by the recurring pandemic, overall growth of express industry decelerated. Facing by [barring] challenges, ZTO focus internally and further solidified our industry-leading position with increased market share, improved service quality and profitability.

2022年，受疫情反复影響，快遞行業整體增速放緩。面對挑戰，中通聚焦內部，進一步鞏固了我們的行業領先地位，增加了市場份額，提高了服務質量和盈利能力。

In 2022, our parcel volume reached drove 24.39 billion, which expanded our market share by 1.5 points to 22.1%. At the same time, our adjusted net income grew 37.6% year-over-year to CNY 6.81 billion. Our strong performances came from concerted efforts by everyone under the ZTO brand, including network partners and the carriers.

2022年，我們的包裹量達到243.9億件，市場份額擴大1.5個百分點至22.1%。與此同時，我們調整後的淨收入同比增長 37.6% 至 68.1 億元人民幣。我們的強勁表現來自中通品牌旗下包括網絡合作夥伴和運營商在內的所有人的共同努力。

Start with a clear set of strategic goals we implemented specific work priorities as following: Firstly, we strengthened and the standardized operational safety controls and removed or rectified potential safety hazards.

我們圍繞明確的戰略目標，落實具體工作重點： 一是加強和規范運行安全管控，消除或整改安全隱患。

During the pandemic period, we made best effort to ensure uninterrupted package flow of consumer necessities without compromising prevention efforts.

疫情期間，我們在不影響防控的前提下，盡最大努力確保生活必需品包裹流通不中斷。

Second, through the effective control quality and coordination of all 4 stages of pickup, quotation, transportation and delivery activity. We are able to improve our service quality and the public satisfaction, which in turn enhance the ZTO's brand recognition and the reputation.

第二，通過對提貨、報價、運輸和配送活動4個階段的有效質量控制和協調。我們能夠提高我們的服務質量和公眾滿意度，進而提高中通的品牌知名度和美譽度。

Third, we've raised the level of fairness and transparency of network policy, particularly with regards to KA customer operations by assessing the volume breakdown and the profitability in a couple of KA customers. We systematically eliminated [passage hassles] and restored market competitiveness as well as earnings for partner [always].

第三，我們通過評估幾個 KA 客戶的數量細分和盈利能力，提高了網絡政策的公平性和透明度，特別是在 KA 客戶運營方面。我們系統地消除了[通道障礙]並恢復了市場競爭力以及合作夥伴的收益[總是]。

Fourth, with further integrated operations, finance and IT to improve data-driven process management previous reporting, which mainly presented results to headquarters was upgraded to analytics that provides insights to help identifying problems on a timely basis and solutions can quickly follow.

第四，通過進一步整合運營、財務和IT，改進數據驅動的流程管理，將以前主要向總部展示結果的報告升級為分析，提供洞察力，幫助及時發現問題，並迅速提出解決方案。

In 2022, China's economy demonstrated resilience against multiple headwinds. ZTO also overcame various challenges and keep the both volume and size, which proves the effectiveness -- which proves the effectiveness of our strategy and added confidence for us to continue to focus on ourselves and improve operational excellence.

2022年，中國經濟在多重逆風中展現出韌性。中通也克服了各種挑戰，保持了體量和規模，這證明了有效性——這證明了我們戰略的有效性，並為我們繼續專注於自己和提高卓越運營增添了信心。

Entering the first quarter of 2023, we saw signs of recovery in China's economy, where consumers' confidence [in investing] have increased. The logistics industry has been regarded as a strategic and foundational [harbinger] of the national economy.

進入2023年第一季度，我們看到了中國經濟復甦的跡象，消費者的[投資]信心有所增強。物流業已被視為國民經濟的戰略性基礎[先驅]。

As the pacesetter ZTO strives to lead us to the country's expectations to grow bigger and stronger. Under the priority of stability and sustainability, we will continue to execute our corporate strategy with the following initiatives: First, ensure a safety of pickup and delivery, sorting and transit data security throughout our business processes, continuously improve controls and measures to reduce accidents and avoid [casualties].

作為排頭兵，中通努力帶領我們朝著國家的期望做大做強。在穩定性和可持續性的優先考慮下，我們將繼續通過以下舉措執行我們的企業戰略：首先，在我們的業務流程中確保取件和交付、分揀和傳輸數據安全的安全，不斷改進控制和措施以減少事故和避免[傷亡]。

Second, improve output of infrastructure investments, optimized capacity planning with a more scientific approach and coordinate investment planning to include our network partners' capabilities against the long-term need.

二是提高基礎設施投資產出，更加科學優化運力規劃，協調投資規劃，將網絡合作夥伴的能力納入長期需求。

Third, increase granularity and improve the accuracy of cost analysis in order to set price accordingly by line-haul routes. We use such digitized tools to improve effectiveness of labor resource planning with improved unit efficiencies, increased utilization of PP&E, including transit [length].

三是加大成本分析的粒度，提高成本分析的準確性，實現長途航線價格的合理定價。我們使用此類數字化工具來提高勞動力資源規劃的有效性，提高單位效率，提高 PP&E 的利用率，包括運輸 [長度]。

Fourth, empower of our partner always in various aspects, such as setting parcel volume KPIs according to achievable market share growth to alleviate concerns of added weight year-after-year measured by growth rate.

第四，始終在各個方面為我們的合作夥伴賦能，例如根據可實現的市場份額增長設置包裹量KPI，以緩解以增長率衡量的逐年增加權重的擔憂。

These rewards and recommend assessments with associated operational conduct so as to drive improvements. Analyze the shortcomings of (inaudible) effective growth and provide support for targeted reforms. Provide as many practical tools as possible to better manage their day-to-day.

這些獎勵和建議評估與相關的操作行為，以推動改進。分析（聽不清）有效增長的不足，為有針對性的改革提供支持。提供盡可能多的實用工具，以更好地管理他們的日常工作。

Fifth, per month implementation of last-mile policies to fully incentivize the carriers in acquiring retail customers. With the high risk of pay level in the industry, our carriers will truly achieve entrepreneurship and better serve their customers.

五是每月實施最後一公里政策，充分激勵運營商獲取零售客戶。在行業薪酬水平風險較高的情況下，我們的運營商將真正實現創業，更好地服務客戶。

Sixth, accelerated last mile presence from (inaudible) direct linkage and improve on-demand delivery capacity by post-operating. Explore opportunities of community service and not only reduce delivery cost but (inaudible) last mile products and services.

第六，通過（聽不清）直接鏈接加速最後一英里存在，並通過後期運營提高按需交付能力。探索社區服務的機會，不僅降低交付成本，而且（聽不清）最後一英里的產品和服務。

Seven, strengthen the core Express business and organized resources and competitive advantages of eco businesses. Rely on core competencies and refine diversified capabilities to perform coordinated and high-quality eco-capability metrics.

七、強化核心快遞業務和生態業務的組織資源和競爭優勢。依托核心能力，提煉多元化能力，執行協調優質的生態能力指標。

We remain optimistic about the long-term growth prospects of China's Express delivery industry that the strong will become stronger is an apparent development trend and its desire to pursue profitability has become mainstream. Volume and market share have came through low price and bottom line losses are not sustainable. Only with robust network, efficient delivery capacity, high quality of service and excellent cost efficiencies in our business develop into a bigger and a stronger enterprise.

我們仍然看好中國快遞行業的長期增長前景，強者愈強的發展趨勢明顯，追求盈利成為主流。銷量和市場份額是通過低價獲得的，底線損失是不可持續的。只有強大的網絡、高效的交付能力、優質的服務和卓越的成本效益，我們的企業才能做大做強。

Data-driven process management will help us continuously optimize precision in policy design. The effectiveness of process improvements and efficiencies in resource utilization. We have quickly improved our (inaudible) measure what we have and target what we want to achieve in order to accomplish a balanced set of results in accordance with our overall corporate strategy.

數據驅動的流程管理將幫助我們不斷優化政策設計的精度。流程改進的有效性和資源利用效率。我們已經迅速改進了我們的（聽不清）衡量我們擁有的東西和我們想要實現的目標，以便根據我們的整體公司戰略實現一組平衡的結果。

In 2023, we will accelerate the transformation from high quantity to higher quality by relying on our shared-success culture, best yet stable network, high operating capacity and strong cash flow we will unify our thinking, clearly lay out our goals, make full use of our resources, drive synergy, maintain safety achieved on both quantity and quality.

2023年，我們將加快從高量向高質轉變，依托共贏文化、穩健網絡、高運營能力、強現金流，統一思想，明確目標，用好用好我們的資源，推動協同效應，保持在數量和質量上實現的安全。

Meanwhile, we will support our network partners and the carriers with fairness and protect their rights and interests help improve our network partners' capabilities and strengthen their confidence. We will keep growing our core business and expand the comprehensive logistics products and services to meet diverse consumer needs. As a corporate citizen, we will take on more social responsibilities and create greater social value.

同時，我們將公平地支持網絡合作夥伴和運營商，維護他們的權益，幫助網絡合作夥伴提升能力，增強他們的信心。我們將繼續發展我們的核心業務，並擴展綜合物流產品和服務，以滿足多樣化的消費者需求。作為企業公民，我們將承擔更多的社會責任，創造更大的社會價值。

Next, let's welcome our CFO, Ms. Yan, to introduce the financial results and the status of ZTO.

下面有請我們的CFO閆女士介紹中通的財務業績和現狀。

Thank you, Chairman. Thank you, Sophie, and hello to everyone on the call. As I go through our financials, please note that unless specifically mentioned, all numbers quoted are in RMB and percentage changes refer to year-over-year comparisons.

謝謝主席。謝謝你，Sophie，向通話中的每個人問好。在我查看我們的財務數據時，請注意，除非特別提及，否則所有引用的數字均以人民幣為單位，百分比變化指的是同比比較。

Detailed analysis of our financial performances, unit economics and cash flow are posted on our website, and I'll go through some of the highlights here. We achieved volume targets by growing parcel volume 9.4% to 24.39 billion for the year, with firm implementation of our consistent strategies.

我們的財務業績、單位經濟效益和現金流量的詳細分析已發佈在我們的網站上，我將在這裡介紹一些重點。我們堅定執行一貫戰略，全年包裹量增長 9.4% 至 243.9 億件，實現了包裹量目標。

Our leading market share expanded further by 1.5 points to 22.1%, while we maintained superior quality of services. The adjusted net income increased 37.6% to CNY 6.8 billion for the year. Total revenue increased 7.1% to CNY 9.9 billion for fourth quarter and 16.3% to CNY 35.4 billion for the year.

我們領先的市場份額進一步擴大了 1.5 個百分點，達到 22.1%，同時我們保持了卓越的服務質量。調整後淨利潤增長 37.6%，達到 68 億元人民幣。第四季度總收入增長 7.1% 至人民幣 99 億元，全年增長 16.3% 至人民幣 354 億元。

Annual ASP for the core Express delivery business increased 4.7% and 8.1% for Q4 and full year, respectively as industry pricing became more and more stabilized. Total cost of revenue was CNY 7.1 billion and CNY 26.3 billion, respectively, for Q4 and 2022 which increased 1.9% for Q4 and 10.6% for the year.

隨著行業定價變得越來越穩定，核心快遞業務的年度平均售價在第四季度和全年分別增長了 4.7% 和 8.1%。第四季度和 2022 年的總收入成本分別為 71 億元人民幣和 263 億元人民幣，第四季度和全年分別增長 1.9% 和 10.6%。

Unit cost of revenue for the core Express delivery business decreased 0.7% for Q4 and increased 2.4% for the year. Unit transportation costs declined 2.5% for Q4 and 0.7% for the year, primarily due to increased use of self-owned high-capacity trailer trucks and improved low rate, absorbing the negative impact from increase in diesel fuel price.

核心快遞業務的單位收入成本第四季度下降 0.7%，全年增長 2.4%。單位運輸成本第四季度下降 2.5%，全年下降 0.7%，主要是由於自有大容量拖車的使用增加和低費率改善，消化了柴油價格上漲的負面影響。

Unit sorting costs was flat for Q4 and increased by 5.8% for the year because of a higher level of automation and improved economics, economies of scale offsetting partially increased labor costs and higher depreciation and amortization cost for automated sorting equipment and facilities placed in service.

單位分揀成本第四季度持平，全年增長 5.8%，原因是自動化水平更高、經濟效益提高、規模經濟抵消了勞動力成本的部分增加以及投入使用的自動分揀設備和設施的折舊和攤銷成本增加。

Gross profit increased 23.2% for Q4 and 37.2% for the year as a result of increased volume and ASP. Gross profit margin increased 3.7 points to 28.1% for Q4 and 3.9 points to 25.6% for the year.

由於銷量和平均售價的增加，第四季度的毛利潤增長了 23.2%，全年增長了 37.2%。第四季度毛利率增長 3.7 個百分點至 28.1%，全年增長 3.9 個百分點至 25.6%。

SG&A, excluding SBC, increased 18.8% to CNY 561 million for Q4 and increased 16.6% to CNY 1.9 billion for the year. SG&A excluding SBC as a percentage of revenue remained low at 5.7% for Q4 and 5.4% for the year as our corporate cost structure remained lean and stable.

SG&A（不包括 SBC）第四季度增長 18.8% 至 5.61 億元人民幣，全年增長 16.6% 至 19 億元人民幣。由於我們的企業成本結構保持精簡和穩定，因此不包括 SBC 的 SG&A 佔第四季度收入的百分比仍然很低，為 5.7%，全年為 5.4%。

Income from operations, excluding SBC, increased by 19.8% for Q4 and 37.6% for the year. Associated margin increased 2.6 points for Q4 and 3.5 points for the year.

不包括 SBC 在內的運營收入第四季度增長 19.8%，全年增長 37.6%。第四季度相關利潤率增長 2.6 個百分點，全年增長 3.5 個百分點。

Operating cash flow was CNY 3.8 billion for Q4 and CNY 11.5 billion for the year, increasing 24.7% and 59%, respectively. CapEx totaled CNY 7.2 billion for the year. Operating cash flow steadily increased and CapEx spending level stabilizes, we anticipate free cash flow to further increase for 2023.

第四季度經營現金流為人民幣 38 億元，全年經營現金流為人民幣 115 億元，分別增長 24.7% 和 59%。全年資本支出總額為 72 億元人民幣。經營現金流穩步增加，資本支出水平穩定，我們預計 2023 年自由現金流將進一步增加。

The company announced a USD 0.37 dividend for the year for shareholders on record as of April 6, 2023, representing a 30% dividend payout ratio compared to 25.9% last year.

公司宣布向截至 2023 年 4 月 6 日登記在冊的股東派發 0.37 美元的年度股息，股息支付率為 30%，而去年為 25.9%。

Now turning to our business outlook. Given considerations for the current market conditions, the company expects the parcel volume of 2023 to be in the range of 28.78 billion to 29.75 billion, equivalent to 18% to 22% year-over-year increase.

現在轉向我們的業務前景。考慮到當前的市場狀況，公司預計 2023 年的包裹量將在 287.8 億至 297.5 億件之間，相當於同比增長 18% 至 22%。

Relative to the entire industry performance, the company is confident to achieve at least 1.5 percentage point increase in its market share for the entire year. These estimates represent management's current and preliminary view and are subject to change.

相對於整個行業表現，公司有信心實現全年市場份額至少提升1.5個百分點。這些估計代表管理層的當前和初步觀點，可能會發生變化。

Now this concludes our prepared remarks. Operator, please open the lines for questions. Thank you.

現在我們準備好的發言到此結束。接線員，請打開問題線路。謝謝。

(Operator Instructions) Your first question comes from Tian Hou of TH Capital.

（操作員說明）您的第一個問題來自泰合資本的田侯。

(foreign language) Okay. The guidance for 2023 in terms of volume growth is actually pretty impressive. So I would like to know more about the drivers, the prospective growth. How much would come from traditional e-commerce? And how much will come from the newer players like (inaudible)? And how much you will from other -- other merchants. That is the number -- that is the question, the first part.

（外語）好的。 2023 年的銷量增長指引實際上非常令人印象深刻。所以我想更多地了解驅動因素，即未來的增長。有多少來自傳統電子商務？有多少會來自像（聽不清）這樣的新玩家？以及您將從其他 - 其他商家那裡獲得多少。這就是數字——這就是問題，第一部分。

The second part would be, is that possible to share the trend for the unit price -- unit economics. So that is the first question.

第二部分是，是否有可能分享單價趨勢 - 單位經濟學。這是第一個問題。

(foreign language)

（外語）

(foreign language)

（外語）

[Interpreted] Thank you for your question. First, regarding the guidance. The post-pandemic entire industry we have as we enter into the first quarter, observed the rebound. And as the indication given by the government key conferences, they expect the entire industry's revenue would grow 7%.

[已翻譯] 謝謝你的提問。第一，關於引導。進入第一季度時，我們所擁有的大流行後整個行業都出現了反彈。而正如政府重要會議所給出的指示，他們預計整個行業的收入將增長7%。

And as we look at the numbers for the first quarter and relative to last year, we anticipate a reasonable level of growth, about around 10% for the industry in terms of volume. And ZTO's goal is to continue to expand our market share steadily by at least 1.5 points. We set our goals to increase our volume by 18% to 22%. And hence, relative to our prior experience in our prior track record, we believe this is achievable. And regarding the source or the makeup of the revenue certainly, we won't be able to communicate specific numbers because it really relates to all the other platforms they wish for us to maintain these numbers within ourselves -- by ourselves.

當我們查看第一季度和與去年相比的數據時，我們預計該行業的增長水平將達到合理水平，就數量而言約為 10%。而中通的目標是繼續穩步擴大至少1.5個百分點的市場份額。我們設定的目標是將銷量增加 18% 至 22%。因此，相對於我們之前的業績記錄，我們相信這是可以實現的。關於收入的來源或構成，我們當然無法傳達具體數字，因為它確實與他們希望我們自己維護這些數字的所有其他平台有關——我們自己。

But what I wanted to add is that we, as an open platform, we do serve all the up and coming and increasing, in addition to the traditional e-commerce players, for example, the (inaudible) right? And so we, as the largest player with the biggest capacity and the level of quality of services, we typically command the highest portion of all their volume.

但我想補充的是，作為一個開放平台，我們確實為所有新興和不斷增長的公司提供服務，例如，除了傳統的電子商務玩家，（聽不清）對嗎？因此，作為擁有最大容量和服務質量水平的最大參與者，我們通常佔據他們所有數量的最高部分。

So going into 2022 or '23, we believe the growth is still there, and we want to achieve the largest portion of that increment.

因此，進入 2022 年或 23 年，我們相信增長仍然存在，我們希望實現增長的最大部分。

The second part relates to the cost of our transportation operations. We have implemented digitization projects initiatives so that we have greater visibility in how our operations is being conducted and how we can improve the efficiency. Specifically, load rates, utilization of our vehicles as well as the route planning. So with all these, we believe that the transportation cost trend will continue to be trending down.

第二部分與我們的運輸業務成本有關。我們已經實施了數字化項目計劃，以便我們更清楚地了解我們的運營方式以及我們如何提高效率。具體來說，負載率、我們車輛的利用率以及路線規劃。因此，綜上所述，我們認為運輸成本趨勢將繼續呈下降趨勢。

Your next question comes from Qianlei Fan from Morgan Stanley.

你的下一個問題來自摩根士丹利的範千磊。

(foreign language) So let me translate my first question. So this is about the outlook of unit profitability of this year. So last year, we have seen a very like slow growth for the industry, but the company still achieved a remarkable earnings growth and strong dividend payout.

（外語）所以讓我翻譯我的第一個問題。所以這是關於今年單位盈利能力的展望。所以去年，我們看到該行業非常緩慢的增長，但該公司仍然實現了顯著的盈利增長和強勁的股息支付。

Just want to understand what's the better growth outlook for the industry this year. Was the unit cost down, thanks to higher utilization and lower fuel and also considering the digitalization tools will continue to help the company manage its pricing and cost. Is it fair to say we can continue to expect that the unit profit can still increase from last year's level.

只想了解今年該行業更好的增長前景。由於更高的利用率和更低的燃料，以及考慮到數字化工具將繼續幫助公司管理其定價和成本，單位成本是否下降了。是否公平地說，我們可以繼續預期單位利潤仍可以比去年的水平增加。

(foreign language)

（外語）

[Interpreted] So let me translate and hopefully supplement to Chairman's response. ZTO is a company that has been consistently setting its strategy and also sound performing with sound execution. You are aware that we focus on quality. We focus on market share growth as well as profitability.

[已翻譯] 那麼讓我翻譯並希望對主席的回應進行補充。中通是一家始終如一地制定戰略並以良好的執行力表現良好的公司。您知道我們注重質量。我們專注於市場份額增長和盈利能力。

And all 3 by our track record, has been improving throughout the years. digitization in last year has presented us with some favorable results, and we anticipate these benefits will even further being demonstrated in 2023.

根據我們的記錄，這 3 個方面多年來一直在改進。去年的數字化為我們帶來了一些有利的結果，我們預計這些好處將在 2023 年進一步體現。

One of the key things in addition to what you just mentioned and what we communicated in the comments that we expressed earlier, the initiative relating to how we are better connecting between our sorting hubs, our outlets as well as to the last-mile delivery personnel, the allocation of responsibility and also share of the benefit has becoming 1 of our key focus especially coming into 2003.

除了你剛才提到的和我們之前表達的評論中傳達的內容之外，其中一個關鍵的事情是關於我們如何更好地連接我們的分揀中心、我們的網點以及最後一英里的交付人員之間的倡議，責任的分配和利益的分享已成為我們的重點之一，尤其是進入 2003 年。

This will impact not only on the top line in terms of gaining more market share, bringing more volume as well as the efficiency all across as the integrated process would generate greater cost efficiency. And so these are what we anticipate going into 2023 and the goal we set for our business to achieve unit profit increases.

這不僅會在獲得更多市場份額、帶來更多銷量以及整體效率方面產生影響，因為集成過程將產生更高的成本效率。因此，這些就是我們對 2023 年的預期，以及我們為業務設定的實現單位利潤增長的目標。

(foreign language) So I'll translate. So the second question is about the CapEx guidance for 2023. And considering that Ms. Yan just mentioned, free cash flow will continue to increase this year. Is there any consideration of increasing your dividend payout ratio going forward?

（外語）所以我會翻譯。那麼第二個問題是關於2023年的CapEx指導。考慮到嚴女士剛才提到的，今年自由現金流將繼續增加。有沒有考慮提高你的股息支付率？

Thank you for your question. Regarding the CapEx. For 2022, it was CNY 7.2 billion. And if you look at our prior years, it's around CNY 9.3 billion, CNY 9.2 billion. As we indicated before, we have gone into the tail end of our investment cycle.

謝謝你的問題。關於資本支出。 2022 年為 72 億元人民幣。如果你看看我們前幾年，大約是 93 億元人民幣，92 億元人民幣。正如我們之前所指出的，我們已經進入了投資週期的尾端。

Now going into the next investment cycle is more placement for our comprehensive logistics services capabilities, including larger tracts of land for the comprehensive logistics park, construction and development. But that will take time as we first observe what the development of the market and the economy is and in the second time, the development of our eco businesses would also be a very steady and stable and systematic approach, not a onetime spending [alert].

現在進入下一個投資週期，更多的是佈局我們的綜合物流服務能力，包括更大面積的土地用於綜合物流園區的建設和開發。但這需要時間，因為我們首先觀察市場和經濟的發展情況，其次，我們生態業務的發展也將是一個非常穩健和系統的方法，而不是一次性的支出 [alert] .

So this will -- this sets our goal for CapEx spending is at the level of current or if not lower. So with the continued strong cash performances, we believe our free cash flow will increase. And after taking into consideration what the business needs in terms of reinvestment, any excess, we believe it's rightfully so to give back to our shareholders.

所以這將 - 這將我們的資本支出目標設定在當前水平或更低水平。因此，隨著現金表現持續強勁，我們相信我們的自由現金流將會增加。在考慮了企業在再投資方面的需求以及任何超額投資之後，我們認為回饋股東是理所當然的。

So we do anticipate a high probability of us increasing our dividend payout in the future. And secondly, if I might add, as we communicate to most of our investors that we are in the process of obtaining the 5% favorable dividend tax rate so that RMB could have a much efficient tax structure coming out of China as a way of dividend. And with that in place, hopefully, in a year or 2, we are then able to further increase the payback and return to our shareholders.

因此，我們確實預計未來很有可能增加股息支付。其次，如果我可以補充一點，正如我們與大多數投資者溝通的那樣，我們正在獲得 5% 的優惠股息稅率，這樣人民幣就可以擁有一個來自中國的更有效的稅收結構作為股息的一種方式.有了這些，希望在一兩年內，我們能夠進一步增加回報並回報我們的股東。

(Operator Instructions) Your next question comes from Parash Jain from HSBC.

（操作員說明）您的下一個問題來自匯豐銀行的 Parash Jain。

If I may ask 2 questions, please. First of all, can you help us understand your kind of balance sheet that you want to pursue? You have a very steady cash flow over the years. And now with the CapEx rolling over free cash flow rising, you have been running a net cash balance sheet in the past few years. Is that the new normal? Or you think that with the cash flow predictability, you want to leverage moderately, if not aggressively your balance sheet and return the excess cash to the shareholder in the form of dividend or buyback.

如果我可以問 2 個問題，請。首先，您能否幫助我們了解您想要追求的資產負債表類型？這些年來你的現金流非常穩定。現在隨著自由現金流的資本支出增加，你在過去幾年一直在運行淨現金資產負債表。這是新常態嗎？或者您認為，由於現金流的可預測性，您希望適度（如果不是積極地）槓桿化您的資產負債表，並以股息或回購的形式將多餘的現金返還給股東。

And secondly, on business going into 2023, and I appreciate that you've given a guidance. But any color you can share on how has been the start of the year, both in terms of getting into Chinese New Year and coming out of Chinese New Year and on price competition.

其次，關於進入 2023 年的業務，感謝您提供的指導。但是任何顏色你都可以分享今年年初的情況，無論是進入農曆新年還是離開農曆新年，以及價格競爭。

Thank you for your question. It's all in English so I obtained permission from the Chairman to answer you directly. For the balance sheet, yes we -- looking our past the business has been very conservative in terms of borrowing and lending -- of borrowing -- in terms of borrowing. So our balance sheet is very deleveraged.

謝謝你的問題。都是英文的，徵得主席同意，直接給你答复。對於資產負債表，是的，我們 - 回顧過去，業務在藉貸方面非常保守 - 借貸 - 在藉貸方面。所以我們的資產負債表非常去槓桿化。

We don't have much leverage.

我們沒有太大的影響力。

And now going into the next few years where -- when we are -- when our cash flow -- free cash flow becomes even greater than as I answered to the previous question, we intend to buy back or return dividend to our shareholders. So indeed, that is our intention, and we do have a high level of confidence that will be achieved.

現在進入未來幾年 - 當我們 - 當我們的現金流 - 自由現金流變得比我回答上一個問題時更大，我們打算回購或向股東返還股息。因此，這確實是我們的意圖，我們對實現這一目標充滿信心。

So with your second question, the 2023, any color. When we went into the year, especially after the Chinese New Year, we including the open up of the pandemic restrictions we did see a rebound in the Chinese economy, albeit slow but very steady especially during the recent shopping gala as it related to the one of the national holidays or national celebrated holidays March 8, we saw 1/3 in the e-commerce packages.

那麼關於你的第二個問題，2023，任何顏色。當我們進入這一年時，尤其是在農曆新年之後，包括疫情限制的開放在內，我們確實看到了中國經濟的反彈，儘管緩慢但非常穩定，尤其是在最近的購物盛會期間，因為它與那個有關3月8日的國定假日或國慶節，我們看到1/3在電商套餐中。

Typically, we have a business level of 75 million to 80 million, we saw that went up to 85 million to 90 million packages a day for our business. So we do think there is a strong buildup. Now either it being onetime or consistent and continue we are still observing and wait to see.

通常情況下，我們的業務水平為 7500 萬到 8000 萬，我們看到我們的業務每天增加到 8500 萬到 9000 萬個包裹。所以我們確實認為有很強的積累。現在要么是一次性的，要么是一致的並繼續我們仍在觀察和觀望。

But given the signal, given the policy that's coming from the central government, we believe the economy will be on a steady recovery. And as logistics business, as we said, it leads all the other industry in terms of benefiting or being the benefactor of the economic development.

但鑑於信號，鑑於來自中央政府的政策，我們相信經濟將穩步復甦。而作為物流業務，正如我們所說，它在經濟發展中受益或成為經濟發展的受益者方面領先於所有其他行業。

So we do believe the outcome for this year for our goal to set as 18% to 22% above, way above what the current industry anticipated average growth demonstrates our confidence in addition to our assessment of our own capabilities.

因此，我們確實相信今年我們將目標設定為高出 18% 至 22% 的結果，遠高於當前行業預期的平均增長率，除了我們對自身能力的評估外，還表明了我們的信心。

As far as price (inaudible) mentioned that the pricing we have observed in 2022 starting actually in the second half, very apparently that the corporates are going for bottom line or paying more attention to profit as opposed to using price to obtain market share. And this has been the case as we're going into 2023. We have made some adjustments specifically for smaller parcels. For that, we have not seen any market reactions that would go towards price competition. So we do believe we have got to a turning point where the long-term market price was steadily being stable and then rising. I hope that answers your question.

就價格（聽不清）而言，我們在 2022 年觀察到的定價實際上是從下半年開始的，很明顯，企業正在追求底線或更加關注利潤，而不是利用價格來獲得市場份額。進入 2023 年時，情況就是如此。我們專門針對較小的地塊進行了一些調整。為此，我們還沒有看到任何會導致價格競爭的市場反應。所以我們確實相信我們已經到了一個轉折點，長期市場價格穩定然後上漲。我希望這能回答你的問題。

That indeed. And if I can squeeze just 1 very quick question, if I may. Can you remind us the rationale of raising the convertible bond despite the strong balance sheet that, as you already alluded to? And is there any defined plan of how do you want to utilize that?

確實如此。如果可以的話，我是否可以只提出 1 個非常快速的問題。你能否提醒我們，儘管資產負債表強勁，但正如你已經提到的那樣，提高可轉換債券的理由？是否有關於您要如何利用它的明確計劃？

Yes, certainly. Of course, foremost, it is the way we operate our business. U.S. dollar is something that we don't generate, right? We only generate RMB onshore because of our -- most of our businesses is RMB.

是的，當然了。當然，最重要的是我們經營業務的方式。美元不是我們生產的，對吧？我們只在岸產生人民幣，因為我們的大部分業務都是人民幣。

And to buyback, pay dividend and then most importantly, to inject cash into our project companies that acquire land and landing rights and invest in facilities. It provides us a greater advantage in terms of pricing if we are able to inject with U.S. dollar. The local government has an attitude of welcoming foreign investment into China. So with U.S. dollar, we have that advantage in terms of pricing and cost.

回購、支付股息，然後最重要的是，向我們的項目公司注入現金，這些公司獲得了土地和著陸權並投資於設施。如果我們能夠注入美元，它會在定價方面為我們提供更大的優勢。當地政府持歡迎外資進入中國的態度。因此，使用美元，我們在定價和成本方面具有優勢。

Your next question comes from Ronald Keung from Goldman Sachs.

你的下一個問題來自高盛的 Ronald Keung。

(foreign language) I want to ask 2 questions. One is about the pricing that you mentioned some price cuts this year and had pretty good effects on achieving your volume growth. So do we see any other players following on? And what -- could that be a risk of pricing deterioration through this year while volumes recover and the impact of that?

（外語）我想問2個問題。一個是關於定價，你提到今年有一些降價，對實現銷量增長有很好的影響。那麼我們是否看到其他玩家跟進？什麼 - 這可能是今年定價惡化的風險，而銷量恢復及其影響？

Second is about -- you mentioned about the comprehensive logistics parks and part of your investments that you are putting into. So how should we see that? What will this eventually look like? Would it be nationwide with Express alongside some of your other ZTO like trucking companies and all of those? And how should we see the cooperation between the ZTO entities and the effects of this logistics park construction.

其次是——你提到了綜合物流園區和你正在投入的部分投資。那我們應該怎麼看呢？這最終會是什麼樣子？它會在全國范圍內與 Express 以及您的其他一些 ZTO（例如貨運公司和所有這些公司）一起使用嗎？又該如何看待中通實體之間的合作以及此次物流園區建設的效果。

(foreign language)

（外語）

[Interpreted] Thank you for your question. Regarding the price. So before we get there, we wanted to give you a comprehensive view of our approach to pricing policy. The goal of our corporate has always been maintaining a high level of quality of services and at the same time obtaining greater market share and after obtaining the targeted profit goal.

[已翻譯] 謝謝你的問題。關於價格。因此，在我們到達那里之前，我們想讓您全面了解我們的定價政策方法。我們公司的目標一直是保持高水平的服務質量，同時獲得更大的市場份額，並在獲得目標利潤目標後。

With this, our policy certainly would be consistently in accordance with this 3-prong approach. So it is stable. It is consistent and it's sustainable. In 2023, we have made some modifications, but it is all to the benefit of a stabilized network as well as increased confidence to our newer partners. For example, Chairman mentioned that we have changed the way we set goals for our network partners and also how we allocate those market share gain targets for them.

有了這個，我們的政策肯定會始終按照這種三管齊下的方法。所以它是穩定的。它是一致的，它是可持續的。在 2023 年，我們進行了一些修改，但這都是為了穩定網絡以及增加對我們新合作夥伴的信心。例如，主席提到我們已經改變了為網絡合作夥伴設定目標的方式，以及我們為他們分配這些市場份額收益目標的方式。

Instead of using year-over-year growth rates, we used their relative market share as of current. And then the goal we set for them to achieve in terms of market share for the year which to a great extent, helped network partners to alleviate any of their concerns. So their initiatives or their -- they are driving volume increases out of their own initiatives because they do believe that the next year, the volume setting goals will be continuously will be reasonable for them and achievable at the same time.

我們沒有使用同比增長率，而是使用了它們當前的相對市場份額。然後我們為他們設定了當年的市場份額目標，這在很大程度上幫助網絡合作夥伴減輕了他們的任何顧慮。因此，他們的舉措或他們 - 他們正在推動自己的舉措增加數量，因為他們確實相信明年，數量設定目標將持續對他們來說是合理的，同時也是可以實現的。

We have also implemented new -- what we call it the reward and recommend mechanism instead of fining them for not achieving volume -- certain volume goals, we focus more on positive reinforcement for them to grow on their own initiatives, but keeping their sort of a pocket tight without being punished.

我們還實施了新的——我們稱之為獎勵和推薦機制，而不是因為他們沒有達到數量而罰款——某些數量目標，我們更注重積極強化，讓他們根據自己的主動性成長，但保持他們的那種口袋緊而不受懲罰。

So these are some of the examples we think that all driving towards a stable network, a sound policy. Now the pricing war that you have expressed concern with in the remarks, we have talked about earlier that the corporates are now focusing more on the quality as opposed to the quantity but not at all cost, right, volume is supposed to be profitable for the corporate and for the shareholders instead of just simply the top line -- so we do observe -- we have observed the changes in the sentiment and changes in the behavior of corporates in terms of their pricing practices. Let me see if I missed anything.

所以這些是我們認為所有推動穩定網絡和健全政策的一些例子。現在你在評論中表達的價格戰，我們之前已經談到，企業現在更注重質量而不是數量，但不是不惜一切代價，對，數量應該是有利可圖的公司和股東而不僅僅是頂線——我們確實觀察到——我們觀察到了情緒的變化和企業在定價實踐方面的行為變化。讓我看看我是否遺漏了什麼。

So the 2023, we would reasonably anticipate price fluctuations here and there, depending on the season, but ZTO's price will remain [to be] highest amongst all the players because we have gained price premium in the past with our quality of services and stability of our services as well as our scale and reach these are stabilities that we have experienced and are anticipating going into 2023. So price war, price competition healthy ones, yes, but certainly not those what we had experienced in the past.

因此，到 2023 年，我們可以合理地預計價格會根據季節有所波動，但中通的價格仍將是所有參與者中最高的，因為我們過去憑藉我們的服務質量和穩定性獲得了價格溢價。我們的服務以及我們的規模和影響範圍是我們經歷過並預計到 2023 年的穩定性。所以價格戰、價格競爭是健康的，是的，但肯定不是我們過去經歷過的那些。

The second question relating to our comprehensive logistics. The growth of our logistics business, eventually, we believe it is going to be comprehensive. It's not just limited to Express delivery. We had in the past developed businesses such as what you mentioned, the LTL businesses, then going into 2023 and onward, our goal remains to be eventually become a comprehensive logistic service provider. In the past, we built our facilities, including the larger operational parks exclusively for Express delivery.

第二個問題是關於我們的綜合物流。我們的物流業務的增長，最終，我們相信它會是全面的。它不僅限於快遞。我們過去有發展業務，比如你提到的零擔業務，然後到2023年以後，我們的目標仍然是最終成為綜合物流服務商。過去，我們建造了我們的設施，包括專門用於快遞的大型運營園區。

But as we grow, as we've seen that is, there are more logistics services needs being developed in the marketplace. And our scale and reach allowed us to access greater and greater logistics service markets. Our ability to obtain resources as well as prudently operating them has shown that in some of the examples that we have pilot programs that we implemented has shown that we are able to utilize our resources and maximize the use of our resources for comprehensive capabilities development.

但隨著我們的成長，正如我們所看到的那樣，市場上需要開發更多的物流服務。我們的規模和影響力使我們能夠進入越來越大的物流服務市場。我們的資源獲取能力和審慎經營能力已經表明，在我們實施的一些試點項目中，我們能夠利用我們的資源並最大限度地利用我們的資源進行綜合能力建設。

It has its advantages, for example, one, as we gather all the logistic services in addition to the core Express delivery, for example, cloud warehouse, right? We have the in-warehouse process, one-stop product for our [small B or large B] customers. The LTL business that serves larger packages, those businesses together in the same place one-stop not only can drive synergy, but also on a utilization on the cost front allow us to gain advantage.

它有它的優勢，比如一個，我們把所有的物流服務，除了最核心的快遞，比如說云倉，對吧？我們有入庫流程，為我們的 [small B or large B] 客戶提供一站式產品。提供更大包裹的 LTL 業務，這些業務在同一個地方一站式服務，不僅可以推動協同效應，而且在成本方面的利用也能讓我們獲得優勢。

Chairman gave an example of previous construction design is only 2 floors, but now we have 6 floors being developed and 2 -- 3 floors are used by our other logistic businesses, which we have a 20% or so investment. One example, if you have a cloud warehouse on the third and fourth floor, their customers order placement can be later, hence, even better experience for their consumers because we don't need to go and fetch goods from other warehouse locations.

主席舉了一個例子，以前的建築設計只有2層，但現在我們有6層正在開發，2-3層用於我們其他物流業務，我們有20%左右的投資。舉個例子，如果你在三樓和四樓有一個雲倉庫，他們的客戶下單可以晚一些，因此，他們的消費者的體驗會更好，因為我們不需要去其他倉庫位置取貨。

We can just we call it 0 distance packaging, 0 distance order fulfilling. It improves our timeliness in the delivery as well, let alone the fact that we are able to reduce cost.

我們可以稱之為 0 距離包裝，0 距離訂單履行。它也提高了我們的交貨及時性，更不用說我們能夠降低成本了。

In terms of labor, when you have labor being paid on by the number of processes they do, the number of packages, they do they are nearby. They are in the park and they can serve for Express delivery. They can serve for logistics, the LTL business. For example, so these utilization of -- facilities of labors all provide us greater advantage in terms of cost, in terms of synergy and ultimately provide better experience for the consumers and better efficiency for our customers.

在勞動力方面，當你根據他們所做的過程數量、包裹數量來支付勞動力時，他們就在附近。他們在公園裡，他們可以為快遞服務。他們可以為物流、零擔業務服務。例如，這些勞動力設施的利用都為我們在成本、協同效應方面提供了更大的優勢，並最終為消費者提供更好的體驗，為我們的客戶提供更高的效率。

And so to summarize, the comprehensive logistics park itself, we are preparing to meet greater and increasing demand for comprehensive logistics services, not just Express delivery. And at the same time, we are able to drive synergy not only on the service front but also on the cost front as well. Thank you. And I think, operator, we are at the close of our time.

綜上所述，綜合物流園區本身，我們正在準備滿足對綜合物流服務的更大和不斷增長的需求，而不僅僅是快遞。同時，我們不僅能夠在服務方面，而且還能在成本方面推動協同效應。謝謝。我認為，接線員，我們的時代已經結束了。

No further questions at this time. I will now pass back to the management team for closing remarks.

目前沒有進一步的問題。我現在將轉回給管理團隊作結束語。

Yes. Thank you all very much for participating on today's call, and thank you for all very good quality questions. And I look forward to discussing and talking with you more as now we don't have much travel restrictions. So look forward to speak to you and perhaps seeing you in person. Thank you again.

是的。非常感謝大家參加今天的電話會議，也感謝你們提出的所有高質量問題。我期待著與您進行更多的討論和交談，因為現在我們沒有太多的旅行限制。所以期待與您交談，也許還能見到您本人。再次感謝你。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[此記錄中標記為 [已翻譯] 的部分由現場通話中的口譯員說出。]