ZTO Express (Cayman) Inc (ZTO) 2023 Q2 法說會逐字稿

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

大家好，歡迎參加中通快遞 2023 年第二季度財務業績電話會議。 （操作員說明）請注意此事件正在被記錄。

I would now like to turn the conference over to Sophie Li, Company Secretary. Please go ahead.

我現在將會議交給公司秘書 Sophie Li。請繼續。

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

謝謝你，接線員。大家好，感謝您今天加入我們。該公司的業績和投資者關係介紹已於今天早些時候發布，並可在該公司的投資者關係網站 ir.zto.com 上查閱。

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

今天參加電話會議的是中通董事長兼首席執行官賴梅松先生和首席財務官嚴慧萍女士。賴先生將簡要概述公司的業務運營和亮點，隨後嚴女士將介紹財務狀況和指導意見。他們都將在接下來的問答環節回答您的問題。

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 current market and operating conditions and related events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict in a manner 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. Further information regarding this and other risks, uncertainties and factors is included in the company's filings with the U.S. Securities and Exchange Commission. 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.

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》的安全港條款做出的前瞻性陳述。此類陳述基於管理層當前的預期以及當前的市場和運營狀況以及涉及已知或未知的相關事件風險、不確定性和其他因素，所有這些因素都難以以公司無法控制的方式預測，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結果存在重大差異。有關此風險以及其他風險、不確定性和因素的更多信息包含在該公司向美國證券交易委員會提交的文件中。除法律要求外，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義務。

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

現在我很高興向大家介紹賴梅松先生。賴先生將用中文完整地讀完他準備好的發言稿，然後我用英文翻譯給他。

(foreign language)

（外語）

[Interpreted] Hello, everyone. Thank you for joining today's conference call. In the second quarter of 2023, while maintaining a high level of service quality, ZTO grew its volume by 23.8% year-over-year with a total of RMB 7.68 billion, further expanding our market share to 23.5%. Meanwhile, through enhanced revenue structure and process management, we improved overall operational efficiency and achieved an adjusted net profit of RMB 2.53 billion, representing a 43.9% year-over-year growth.

【解讀】大家好。感謝您參加今天的電話會議。 2023年第二季度，中通在保持高水平服務質量的同時，業務量同比增長23.8%，達76.8億元，市場份額進一步擴大至23.5%。同時，通過強化收入結構和流程管理，提升整體運營效率，實現調整後淨利潤25.3億元，同比增長43.9%。

Relative to an pandemic affected low base of last year, the express delivery industry's overall parcel volume grew 20.9% in the second quarter of this year. Depending on varied priorities for scale and profit, each brand implemented different competitive strategies. ZTO has consistently pursued sustainable profitable growth, focusing on long-term growth and competitive advantages.

相對於去年受疫情影響基數較低的情況，今年第二季度快遞行業整體包裹量增長了20.9%。根據規模和利潤的不同優先級，每個品牌實施了不同的競爭策略。中通一貫追求可持續的盈利增長，注重長期增長和競爭優勢。

In the second quarter, we executed the following key tasks initiatives, which helped generating solid performance results. First, we revamped the talent reserve program and through systematic evaluation, quickly replace those who could not keep up. With a strong talent pool and pipeline buildup under a complete [emulate surpass] atmosphere, our team of provision managers are becoming younger yet more prepared to take on greater challenges. Second, we exceeded expectations on cost optimization. In the second quarter, we continue to implement operating process standardization and further refine our evaluation matrix to be more detailed and quantifiable. Our ability to correlate process data to specific behavior of a workstation or individual task operator improved. This enabled us to flat anomalies promptly and effectively rectify problems with precision.

第二季度，我們執行了以下關鍵任務舉措，幫助取得了紮實的業績成果。一是完善人才儲備體系，通過系統考核，快速淘汰跟不上的人才。憑藉強大的人才儲備和管道建設，在完全[模仿超越]的氛圍下，我們的供應經理團隊變得更加年輕，但更準備好迎接更大的挑戰。其次，成本優化超出預期。第二季度，我們繼續實施作業流程標準化，進一步細化評價矩陣，更加細化、量化。我們將過程數據與工作站或個人任務操作員的特定行為關聯起來的能力得到了提高。這使我們能夠及時、有效、精準地糾正異常情況。

Third, we refined volume cost profit tools and further the implementation across the operational network. We sort through the methodologies for pricing, revenue and host sharing between sorting centers and outlets. This effectively enhanced the profitability of our entire network and further widen our industry lead. Benefited from post-pandemic recovery in the Chinese economy, the Express delivery industry has in the healthy growth in the first half of 2023.

三是完善量本利工具，深入運營網絡落地。我們對分揀中心和網點之間的定價、收入和主機共享方法進行了分類。這有效提升了全網盈利能力，進一步擴大了行業領先優勢。受益於疫情后中國經濟復甦，2023年上半年快遞行業健康發展。

Despite price for volume behavior that are still present, the evolutionary trend of the industry's dynamic is very clear. Market share gains through low price competition is often unsustainable and, in many cases, lead to more detriment than gains. We are convinced that high quality of services, robust infrastructure and efficient operations are crucial ingredients to a scaled and [strike] Express delivery enterprise.

儘管量價行為仍然存在，但行業動態的演變趨勢非常明顯。通過低價競爭獲得市場份額往往是不可持續的，而且在許多情況下，弊大於利。我們堅信，高質量的服務、健全的基礎設施和高效的運營是快遞企業規模化和“罷工”的關鍵要素。

ZTO's competitive strategy is to maintain flexibility to be offensive or defensive, locking bottom line and focus on developing our own capabilities from the long run. We will adhere to offer our own pace and steadfastly establishing strengthen our competitive barriers.

中通的競爭策略是靈活攻守，鎖定底線，著眼長遠發展自身能力。我們將堅持走自己的步伐，堅定不移地建立強化競爭壁壘。

With mindfulness on operational safety, we will keep digging deep trenches in the following four key areas: first, improving service capabilities by focusing on end-to-end time lines, streamline and improve operational efficiencies through process standardization, establish more direct linkage among sorting centers, outlets and [last noncosts] , ultimately reducing sortation frequency. Second, expertising the implementation of [lost]initiatives and encourage network partners to pass on market pricing to couriers, so as to incentivize responses for pickup and delivery. Increased non-e-commerce package volume, hence, enhance the profitability of (inaudible) couriers.

牢記運營安全，我們將在四個重點方面持續深耕：一是以端到端時間線為核心提升服務能力，通過流程標準化精簡提昇運營效率，在分揀之間建立更直接的聯動。中心、銷售點和[最後的非成本]，最終減少分揀頻率。其次，專業化實施舉措，鼓勵網絡合作夥伴將市場定價傳遞給快遞公司，以激勵取件和派送的響應。非電子商務包裹量的增加，從而提高了（聽不清）快遞公司的盈利能力。

Third, for those (inaudible) who value exceeds certain threshold, we will increase attention and managerial support to health developing infrastructure, implementing safety measures, enhancing service quality and digitizing information and management, improving operational efficiencies and last mile connectivity. Fourth, expanding last mile presence and transforming (inaudible) into a shared solution for every industry player to reduce last mile cost, enhance in-person service capability and connection with consumers.

第三，對於那些價值超過一定閾值的人（聽不清），我們將加大對衛生基礎設施建設、實施安全措施、提高服務質量、數字化信息和管理、提高運營效率和最後一英里連接的關注和管理支持。第四，擴大最後一英里的存在，並轉變（聽不清）為每個行業參與者的共享解決方案，以降低最後一英里的成本，增強面對面的服務能力和與消費者的聯繫。

Long-term microeconomic development were adopted trend upwards and cyclical fluctuation only provide opportunities for long-term value seekers to explore potential and build endurance. The competitiveness -- the competitive dynamics of Chinese express delivery industry have entered into a critical development stage. We are fully aware of our own strengths and advantages. We know what we can do and understand what needs to change.

長期微觀經濟發展呈上升趨勢，週期性波動只為長期價值追求者提供挖掘潛力、建立耐力的機會。競爭力——中國快遞業的競爭格局已進入關鍵發展階段。我們充分認識到自己的優勢和優勢。我們知道我們能做什麼，也了解需要改變什麼。

Innovation and entrepreneurial spirits are embedded in our shared success culture, propelling us to create value-first for others in the society. Leveraging the harbor of technology, we aim to enhance operational efficiency for the distinct set of competitive advantages, formulate solutions for over 100 million a day parcel volume and usher in payback and the prosperity for express delivery participants and investors.

創新和創業精神植根於我們共同的成功文化中，推動我們為社會上的其他人創造價值至上。借助科技港灣，提昇運營效率，打造獨特競爭優勢，為日均過億件包裹制定解決方案，為快遞參與者和投資者帶來回報和繁榮。

With that, let's welcome Ms. Yan to review our financials.

那麼，讓我們歡迎顏女士回顧一下我們的財務狀況。

Thank you, Chairman, Lai. Hello to everyone on the call. When 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. Detailed information on our financial performance, unit economics and cash flow are posted on our website, and I'll go through some of the highlights here.

謝謝賴主席。大家好。當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變化。有關我們財務業績、單位經濟效益和現金流的詳細信息已發佈在我們的網站上，我將在此介紹一些重點內容。

In the second quarter, ZTO maintained profitable growth, thanks to sound execution of our consistent corporate strategies. Our parcel volume increased 23.8% to RMB 7.7 billion, growing the quarterly market share by 0.5 points to 23.5%. The adjusted net income grew 43.9% to RMB 2.5 billion. Total revenue increased 12.5% to RMB 9.7 billion. ASP for the core express delivery business decreased 7.8% or RMB 0.10, mainly driven by lower average weight per parcel, increases in volume incentives and a mix shift impact from decrease in KA volume whose revenues are recorded to include delivery fees.

二季度，中通繼續保持盈利增長，得益於公司一貫戰略的良好執行。我們的包裹量增長 23.8%，達到 77 億元人民幣，季度市場份額增長 0.5 個百分點，達到 23.5%。調整後淨利潤增長43.9%至人民幣25億元。總收入增長12.5%至人民幣97億元。核心快遞業務的平均售價下降 7.8% 或人民幣 0.10 元，主要是由於每件包裹平均重量下降、數量激勵措施增加以及 KA 數量減少（其收入記錄為包含遞送費用）帶來的混合轉變影響。

Total cost of revenue was RMB 6.4 billion, which decreased 0.3%. Combined unit cost of sorting and transportation decreased 15.7% or RMB 0.12. Specifically, line-haul transportation costs per parcel decreased 14.7% to RMB 0.42, mainly attributable to better economies of scale, optimize line-haul route planning, improved low rate and decreased fuel cost.

總收入成本為人民幣64億元，下降0.3%。分揀和運輸單位綜合成本下降15.7%，即下降0.12元。其中，每件幹線運輸成本下降14.7%至0.42元，主要受益於規模效益提升、優化干線航線規劃、低費率改善以及燃油成本下降。

Unit sorting costs decreased 17.4% to RMB 0.25, driven by scale leverage, increased level of automation, improved standardization in operating procedures and optimized performance evaluation systems.

在規模槓桿、自動化水平提高、作業流程標準化程度提高以及績效評價體系優化的推動下，單位分揀成本下降17.4%至0.25元。

Gross profit increased 50.0% to RMB 3.3 billion as a result of increased revenue and cost productivity gain. Gross profit margin rate increased 8.5 points to 33.9%. SG&A expenses, excluding share-based compensation, as a percentage of revenue, dropped 0.1 points to 5.3%, demonstrating a healthy corporate cost structure and leverage.

由於收入增加和成本生產率提高，毛利潤增長 50.0% 至人民幣 33 億元。毛利率上升8.5個百分點至33.9%。 SG&A 費用（不包括股權激勵）佔收入的百分比下降了 0.1 個百分點，至 5.3%，顯示出健康的企業成本結構和槓桿率。

Income from operations increased 45.0% to RMB 2.9 billion and associated margin grew 6.6 points to 29.6%. Operating cash flow was RMB 3.76 billion for the quarter and EBITDA was RMB 3.88 billion. Capital expenditure totaled RMB 2.2 billion for the quarter, and we are anticipating annual CapEx to be in the range of RMB 6.5 billion to RMB 7.5 billion. We are on track to achieve another year of free cash flow.

運營收入增長 45.0%，達到 29 億元人民幣，相關利潤率增長 6.6 個百分點，達到 29.6%。該季度運營現金流為人民幣 37.6 億元，EBITDA 為人民幣 38.8 億元。本季度資本支出總額為 22 億元人民幣，我們預計年度資本支出將在 65 億元人民幣至 75 億元人民幣之間。我們有望實現又一年的自由現金流。

Now moving on to guidance. Taking into considerations the current market conditions and our operating situation, the company reiterates that its annual volume guidance to be in the range of RMB 29.27 billion to RMB 30.24 billion, representing a 20% to 24% increase year-over-year. Relative to the entire industry performance, the company remained committed to achieve at least 1.5 percentage point increase in volume market share for the year.

現在繼續指導。考慮到當前市場狀況和我們的經營狀況，公司重申全年銷量指引為人民幣292.7億元至人民幣302.4億元，同比增長20%至24%。相對於整個行業的表現，該公司仍然致力於實現今年銷量市場份額至少增長1.5個百分點。

These above estimates represent management's current view and preliminary assessment, which are subject to change. Now this concludes our prepared remarks. Operator, please open the line for questions. Thank you.

上述估計代表管理層當前的觀點和初步評估，可能會發生變化。現在我們準備好的發言就到此結束。接線員，請開通提問線路。謝謝。

(Operator Instructions) And our first question will come from Ronald Keung of Goldman Sachs.

（操作員說明）我們的第一個問題將來自高盛的 Ronald Keung。

(foreign language) Very quickly on -- management talked about the industry -- Express industry reaching a critical point. This is while we have delivered very strong profit growth while increasing market share, but we have seen some of the smaller players starting to cut prices and become more aggressive. So do we see this as a temporary kind of act from the smaller players? Will the kind of extending into the fourth quarter peak season this year and how do we assess this round of price cuts from smaller players?

（外語）很快——管理層談到了這個行業——快遞業達到了一個臨界點。雖然我們在增加市場份額的同時實現了非常強勁的利潤增長，但我們看到一些規模較小的企業開始降價並變得更加激進。那麼我們是否認為這是小企業的暫時行為？那種會延續到今年第四季度的旺季嗎？我們如何評價這輪小廠商的降價？

Second is about service quality and our end-to-end delivery time to share some of the metrics there and compared with peers. And how do we plan to widen our differentiation, not just from end-to-end time but any value-added business or anything that we're planning to maintain our service leadership?

其次是關於服務質量和我們的端到端交付時間，以分享一些指標並與同行進行比較。我們計劃如何擴大我們的差異化，不僅是從端到端的時間，而且是任何增值業務或我們計劃保持我們的服務領先地位的任何事情？

(foreign language)

（外語）

[Interpreted] Thank you very much for your question. First question is really, in essence, about the trend of the pricing going forward. It is typical that during a year, around September and October, the pricing will be about 10% higher than August and July because of the seasonality of the year. Also in November, the price will further increase because the access capacities will then gradually be utilized. The pricing for the market during the second quarter fluctuation, we believe it's more driven by the seasonality.

[解釋]非常感謝您的提問。第一個問題本質上是關於未來定價的趨勢。通常情況下，一年中的 9 月和 10 月左右，由於一年中的季節性因素，價格會比 8 月和 7 月高出 10% 左右。同樣在11月份，由於接入能力將逐漸被利用，價格將進一步上漲。第二季度市場定價波動，我們認為更多是受季節性因素驅動。

ZTO our principle is eliminating loss-making transaction. What we've done differently compared to some of our competitors is that we extended our policy from March and April into May and June instead of making changes to them. So maintained stability in our entire network.

中通的原則是消除虧損交易。與一些競爭對手相比，我們所做的不同之處在於，我們將政策從三月和四月延長到五月和六月，而不是對其進行更改。這樣就保持了我們整個網絡的穩定性。

Your second question is relating to linkage. First of all, we do have a systematic plan on improving, first of all, our quality services and timeliness because under the same pricing, higher quality of services will attract more volume. What we've done in two aspects in our operational is that, first, each of the transit linkage, we will push it to its extreme improving productivity, improving correlation between segments -- different segments of our process of sortation, transportation, improving the route planning and so on and so forth. Those are the typical initiatives that we have implemented all along.

你的第二個問題與鏈接有關。首先，我們確實有一個系統的計劃來改善，首先是我們的服務質量和及時性，因為在相同的價格下，更高的服務質量會吸引更多的數量。我們在運營上做了兩個方面就是，第一，每一個中轉聯動，我們都會把它推到極致，提高生產力，提高環節之間的關聯性——我們不同環節的分揀、運輸，提高流程的效率。路線規劃等等。這些都是我們一直以來實施的典型舉措。

And then the second area, which is what we have referred to in the past called tri-layer throughput. In the past, our advantage is a better connection between the outlets and our sortation centers. Going forward and then really starting these past couple of years, we've been slowly but surely building the connectivity between initiation outlet to the destination sorting center and also amongst the outlets from origination and destination so as to develop those three distinct model of sortation because the ultimate goal is to reduce the number of sortation.

然後是第二個區域，也就是我們過去所說的三層吞吐量。過去，我們的優勢是網點和分揀中心之間有更好的連接。展望未來，然後真正開始過去幾年，我們一直在緩慢但堅定地建立初始出口到目的地分揀中心之間以及始發地和目的地的出口之間的連接，以便開發這三種不同的分揀模型，因為最終目標是減少分揀次數。

What we've done recently is focusing more on helping our outlets improve their processing capability, including equipment, automation, and also their area of -- their work areas so as to ensure the transportation of larger trucks can go in and out to improve the linkage because they then with a certain level of volume in a group of outlets, they are capable of sending the packages directly bypassing the origination center to destination center or in some cases, i.e. The third layer is to go from origination outlets directly to the destination outlet. Hence, this is 0 sortation. We have more and more of our outlets or regions having higher volume, which makes it possible for this for this tri-layer throughput model.

我們最近做的更多的是幫助我們的網點提高加工能力，包括設備、自動化，還有他們的工作區域，保證大卡車的運輸能夠進出，提高效率。聯動，因為他們在一組網點中具有一定的數量，他們能夠將包裹直接繞過始發中心發送到目的地中心，或者在某些情況下，即第三層是從始發網點直接發送到目的地出口。因此，這是0排序。我們有越來越多的網點或區域具有更高的流量，這使得這種三層吞吐量模型成為可能。

For example, in Canton and Yiwu, they represent about 10% of our total volume and many of their outlets having over 200,000 packages a day. And with those scale condition or scale prerequisites, we are in the process of establishing the third and -- the second and the third layer of transportation and sortation throughput. Nowadays, we have on average of two sortations , a little over sortation, which means some of the packages will go through sorting centers -- or two sorting centers. Going forward, our focus is to increase one sortation and also 0 sortation. The level of decrease in the total sortation will allow us to not only improve timeliness but also reduce cost.

例如，在廣州和義烏，它們約占我們總銷量的 10%，並且許多網點每天的包裹數量超過 200,000 個。有了這些規模條件或規模先決條件，我們正在建立第三層和第二層和第三層運輸和分揀吞吐量。如今，我們平均有兩次分揀，有點過度分揀，這意味著一些包裹將經過分揀中心——或者兩個分揀中心。展望未來，我們的重點是增加 1 分揀和 0 分揀。分揀總量的減少不僅可以提高及時性，還可以降低成本。

Aside from developing our own capability in operation, we are also focusing on the second area, which is the last mile development and also focusing on our couriers. The couriers are going to be incentives because our outlets will pass through front-end market price to our couriers, so as to encourage them to pick up and deliver more on time and more responsively and also increase non-e-commerce packages. To do that, as part of the supplement, we also work with our last mile presence development. Typically, the packages will go to sortation centers and the couriers would have to spend time and go pick up those packages from the sortation centers.

除了發展我們自己的運營能力外，我們還重點發展第二個領域，即最後一公里的發展，同時也重點發展我們的快遞員。對快遞員來說將會是一種激勵，因為我們的網點會通過前端市場價格傳遞給我們的快遞員，以鼓勵他們更準時、更快地取貨和送貨，同時也增加非電子商務包裹。為此，作為補充的一部分，我們還致力於最後一英里的存在發展。通常情況下，包裹將被送往分揀中心，快遞員必須花時間從分揀中心提取這些包裹。

With our scale and redesigned process in our operations in sortation, we are able to direct packages directly over to our last mile locations or [post] , which will save plenty of time for the couriers to mainly focusing on delivery. So their ability and their services to provide individualized attention to those customers who need door-to-door -- door-to-door delivery will be greatly improved. And this will not only help our couriers will also help the entire industry in reducing last mile cost.

憑藉我們的規模和重新設計的分揀操作流程，我們能夠將包裹直接送到我們的最後一英里地點或[郵政]，這將為快遞員節省大量時間，讓他們主要專注於交付。因此，他們為需要門到門送貨的客戶提供個性化服務的能力和服務將大大提高。這不僅有助於我們的快遞員，也將有助於整個行業降低最後一英里的成本。

As volume becomes higher going forward, which is a definite future, we do believe helping the whole industry as a solution with our last mile presence will most certainly help the entire industry's healthy growth. To sum it all, scale, stability of outlets and our couriers improvements in their earnings as well as our outlets become more stable because they are also earning more. These are the three focus areas for us to develop differentiated competitive advantage going forward. Hope that answers your question.

隨著未來銷量的增加，這是一個確定的未來，我們相信通過我們最後一英里的存在來幫助整個行業作為解決方案肯定會有助於整個行業的健康增長。總而言之，網點的規模、穩定性和我們的快遞員收入的提高以及我們的網點變得更加穩定，因為他們的收入也增加了。這是我們未來發展差異化競爭優勢的三個重點領域。希望這能回答你的問題。

The next question comes from Qianlei Fan of Morgan Stanley.

下一個問題來自摩根士丹利的範錢雷。

(foreign language) Congratulations on a very solid second quarter results despite the aggressive pricing competition in the industry. I have two questions. The first question is about competition. Very glad to hear that the company's strategy has not changed in the second quarter versus the first quarter to maintain a stable pricing compared with some very aggressive competition from our peers.

（外語）儘管行業內價格競爭激烈，但還是祝賀第二季度業績非常穩健。我有兩個問題。第一個問題是關於競爭。很高興聽到該公司第二季度的策略與第一季度相比沒有改變，與同行的一些非常激烈的競爭相比，保持穩定的定價。

We noticed that in the second quarter, the market share gain of the company was 0.5 percentage points on a year-on-year basis. Considering management mentioned the target of 1.5 percentage point year-on-year market share gain target remains unchanged, does that mean we will be more aggressive in market share competition in the second half of this year? Or it is because we think because of the utilization issues, some of the peers may lose market share because they don't have the handling capacity? And also, Lai mentioned earlier that we will lock in the bottom line. So what's the bottom line of the competition strategy if the market -- the industry competition comes more aggressive than expected?

我們注意到，第二季度，公司市場份額同比增長0.5個百分點。考慮到管理層提到的市場份額同比增長1.5個百分點的目標保持不變，這是否意味著我們今年下半年的市場份額競爭將更加激進？或者是因為我們認為由於利用率問題，一些同行可能會因為沒有處理能力而失去市場份額？而且，賴先生之前提到我們將鎖定底線。那麼，如果市場——行業競爭比預期更加激烈，競爭戰略的底線是什麼？

And the second question is about cost. So very glad to see the second quarter unit cost drop was much significant than expected. So at a earlier, meeting management guided around 5% to 7% drop in unit cost for the full year. So considering the second quarter, we have achieved better than that towards the outlook for the second half of this year in terms of unit profit. And also, what's the outlook for the next two years?

第二個問題是關於成本。非常高興看到第二季度單位成本下降比預期顯著得多。因此，早些時候，會議管理層指導全年單位成本下降約 5% 至 7%。因此，考慮到第二季度，我們在單位利潤方面取得了比今年下半年展望更好的成績。另外，未來兩年的前景如何？

(foreign language)

（外語）

[Interpreted] Thank you very much for your question. First question is really about the price competition. In fact, surely, we have observed that during the second quarter, the price fluctuation becomes extremely volatile. From one perspective, what we have done is, as I described earlier, we didn't change our pricing from May and June -- from March and April all the way throughout May and June. Because indeed, as you look at our decrease in ASP, in essence, aside from the objective reasons, we subjectively have allocated or given profit to the pickup in the delivery end.

[解釋]非常感謝您的提問。第一個問題實際上是關於價格競爭。事實上，我們確實觀察到，在第二季度，價格波動變得極其劇烈。從一個角度來看，正如我之前所描述的，我們所做的就是從五月和六月開始，從三月和四月一直到五月和六月，我們都沒有改變我們的定價。因為確實，你看我們ASP的下降，本質上除了客觀原因之外，我們主觀上已經給派送端的提貨分配或者給予了利潤。

Our market share did only increase 0.5 points because we do believe that in the longer term, ZTO with the largest scale and strongest competitive advantage, we are also taking on the role of a stable agent to ensure that the entire industry is stable and especially during the economic recovery.

我們的市場份額只增加了0.5個百分點，因為我們相信從長遠來看，中通作為規模最大、競爭優勢最強的企業，我們也在承擔起穩定代理商的角色，以確保整個行業的穩定，特別是在疫情期間。經濟復甦。

From our personal sentiment, we are all coming from the same place. We come from the villages. And we all know that we are not trying to create detriments to anyone. And we're just simply using the excess capacity. So if we take on the price actions severely, it would -- because of our scale and influence will really impact the entire industry, which really not what we intend to do. So we are hopeful that typically in starting in September, the volume will recover, and the whole industry will enter into a higher season. Although its installed base and capacity will be utilized and each of the players will become more sensible in matching their capacity and resources to their pricing strategies.

從我們個人的感受來看，我們都是來自同一個地方。我們來自鄉村。我們都知道，我們並不是想給任何人造成損害。我們只是簡單地利用過剩產能。因此，如果我們嚴厲採取價格行動，那麼由於我們的規模和影響力將真正影響整個行業，這確實不是我們打算做的。因此，我們希望，通常從9月開始，成交量就會恢復，整個行業將進入旺季。儘管其裝機基礎和容量將得到利用，並且每個參與者將變得更加明智地將其容量和資源與其定價策略相匹配。

One thing we've done differently now is that ZTO make pricing decisions based on the direction of our routes, which is more granular and we have more visibility. In other way, we have much greater flexibility in precision in making appropriate price decision. In the second half of the year, we are hopeful that the whole pricing trend will stabilize and the price will return and most likely.

我們現在做得不同的一件事是，ZTO 根據我們的路線方向做出定價決策，這更細粒度，我們也有更多的可見性。換句話說，我們在做出適當的價格決策時具有更大的靈活性和精確性。下半年，我們希望整個定價趨勢能夠企穩，價格回歸也是極有可能的。

With regards to the 1.5 point target, we do believe there are still opportunities for us, and then we will strive to achieve our commitment. Second question on the cost side. What we've done is, aside from what we described earlier to provide better operational efficiency through some of the initiatives that we have implemented, we are also improving the direct linkage. So when we're able to quickly find issues and solve problems, we are becoming much more efficient in -- on the cost side. Some of the things that we are also doing, as mentioned earlier, is our outlets are gradually being rerouted to pick up or to drop off to the nearest center in their vicinity instead of just geographically or organized by provinces.

對於1.5分的目標，我們相信我們還有機會，然後我們會努力實現我們的承諾。第二個問題是成本方面。我們所做的是，除了我們之前描述的通過我們實施的一些舉措提供更好的運營效率之外，我們還在改善直接聯繫。因此，當我們能夠快速發現問題並解決問題時，我們在成本方面就會變得更加高效。正如前面提到的，我們正在做的一些事情是我們的網點逐漸重新安排路線，以接送到附近最近的中心，而不僅僅是按地理位置或按省組織。

So the whole entire end-to-end timeliness is improving. This will certainly impact the cost. We do believe there is still more room for us to gain on cost productivity. As I mentioned earlier, currently, we're about 2.09x of sortation throughout the entire network. And each sortation will cost probably about -- approximately about RBM 0.25. So if we reduce the sortation by 0.1%, that is RMB 0.025 cost productivity gain. And we intend to further improve the linkage and reduce the sortation, hence, as I mentioned earlier, the tri-layer throughput model based on our scale will allow us to gain much greater cost productivity going forward.

所以整個端到端的及時性正在改善。這肯定會影響成本。我們確實相信我們在成本生產率方面還有更大的提升空間。正如我之前提到的，目前整個網絡的排序速度約為 2.09 倍。每次分類的成本可能約為 - 大約 RBM 0.25。因此，如果我們將分揀量減少 0.1%，則成本生產率收益為 0.025 元人民幣。我們打算進一步改善聯動，減少分揀，因此，正如我前面提到的，基於我們規模的三層吞吐量模型將使我們未來獲得更大的成本生產率。

The next question comes from Thomas Chong of Jefferies.

下一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) I have two questions. The first question is about our long-term market share expectations. Given that we have talk about the 1.5% market share gain, just want to see how our market share will be trending in the long run? And my second question is really about the parcel mix. Given that we are seeing some changes in the consumer behavior given the macro backdrop, are we seeing the rate of the parcel is having some changes in terms of the heavy weight and the light weight parcel. And how will that affect the cost per parcel trend?

（外語）我有兩個問題。第一個問題是關於我們的長期市場份額預期。鑑於我們已經談論了 1.5% 的市場份額增長，只是想看看我們的市場份額從長遠來看會如何發展？我的第二個問題實際上是關於地塊組合的。鑑於我們在宏觀背景下看到消費者行為發生了一些變化，我們是否看到包裹的重量在重件和輕件包裹方面發生了一些變化。這將如何影響每個包裹的成本趨勢？

(foreign language)

（外語）

[Interpreted] Thank you for your question. Your question really relates to the competitive strategy. So on that, ZTO has always focused on building our own competitive strength and remain stable and profitable -- remain focused on stable and sustainable profitable growth.

[解釋]謝謝你的提問。你的問題確實與競爭策略有關。因此，中通始終專注於打造自己的競爭優勢，保持穩定和盈利——保持穩定、可持續的盈利增長。

The Chinese express delivery industry, it has been apparent that when you have cost advantage, you have scale and you have a high level of quality of services, you will attract greater market share. In essence, express delivery is about value. It's a value proposition with a level of high quality of services, customers will gravitate towards those who have high efficiency or low cost or a reasonable cost. The market is fair. In the past, we have demonstrated and it is evident that when we focus on all three of our corporate focus, i.e., quality, services, market share as well as our own profitable development, our market share continually improve and increase.

對於中國快遞行業來說，很明顯，當你有成本優勢、有規模、有高水平的服務質量時，你就會吸引更大的市場份額。本質上，快遞是關於價值的。這是一種具有高質量服務水平的價值主張，客戶將傾向於那些效率高、成本低或成本合理的人。市場是公平的。過去，我們已經證明，而且很明顯，當我們專注於公司的三個重點，即質量、服務、市場份額以及我們自身的盈利發展時，我們的市場份額會不斷提高和增加。

We do believe the -- and more importantly, for an entire network to be healthy and growing, especially because in China, the franchised model we have been, in all throughout our years, focusing closely on the equitable allocation of courier [unit] and our company as a brand operator. Each of the players need to focus on fair allocation and sustainable growth going forward. We believe if you reference to the developed market in China, there will be concentrated market share in a few players, and this has been the trend we've been seeing the concentration in our market share in the past several years.

我們確實相信——更重要的是，整個網絡要健康發展，特別是因為在中國，我們多年來一直採用特許經營模式，密切關注快遞[單位]和費用的公平分配。我們公司作為品牌運營商。每個參與者都需要關注公平分配和未來的可持續增長。我們相信，如果參考中國的發達市場，市場份額將會集中在少數幾個參與者手中，這也是我們過去幾年市場份額集中的趨勢。

As long as you have a high quality of services, you are also building up scale and efficiency and differentiated competitive advantage, we believe the longer-term market share concentration will continue to demonstrate itself.

只要你有高質量的服務，你也在建立規模和效率以及差異化的競爭優勢，我們相信長期的市場份額集中度將會不斷顯現。

Second question relates to the product mix or parcel mix. Indeed, in the second quarter, we have observed that not only just us, including our competitive partners in this space, they also experienced lower parcel -- average -- lower parcel weight. And this is indeed, as you have observed and mentioned, the consumer shopping behavior has been evolving and changing towards more sporadic shopping. For us, some of our main e-commerce package production regions, the packages will be lighter, yet we believe more of the inland to the north and south, we are having our regions with more agriculture product coming up, for example, that will be heavier. As we are developing a pricing strategy based on routes, we will match the load rate of our transportation resources and our space -- operational space and equipment with the sortation center as well as our network partners and in that sense, determine what the appropriate pricing needs to be for a different set of product mix going forward.

第二個問題涉及產品組合或包裹組合。事實上，在第二季度，我們觀察到，不僅是我們，包括我們在這個領域的競爭合作夥伴，他們也經歷了較低的包裹重量——平均重量——較低的包裹重量。正如您所觀察和提到的，消費者的購物行為確實一直在演變並轉向更加零星的購物。對我們來說，我們一些主要的電商包裝生產地區，包裝會更輕，但我們相信更多的內陸地區，比如北方和南方，我們的地區會出現更多的農產品，比如，重一點。當我們制定基於路線的定價策略時，我們將把我們的運輸資源和空間（運營空間和設備）的負載率與分揀中心以及我們的網絡合作夥伴進行匹配，從這個意義上說，確定合適的定價未來需要一套不同的產品組合。

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

我們的問答環節到此結束。我想將會議轉交管理層發表閉幕詞。

Thank you, everybody, again, for joining us today. Sometimes it takes a step back to take the two steps forward, and we are maintaining our stamina in looking into longer term and also with our financial resources and our competitive strength, we have much greater flexibility in playing offensive or defensive going forward. Opportunities are ahead for us to look not just at the second half of the year when volume will increase, we are also looking forward to many years ahead where we will continue to take a leadership in profitable growth. Thank you again for your continued support, and we look forward to speaking with you soon.

再次感謝大家今天加入我們。有時退一步才能進兩步，我們保持著長遠的耐力，而且憑藉我們的財力和競爭實力，我們未來進攻或防守的靈活性更大。我們面臨的機遇不僅是下半年銷量的增加，我們還期待未來許多年我們將繼續在盈利增長方面保持領先地位。再次感謝您的持續支持，我們期待盡快與您交談。

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

會議現已結束。感謝您參加今天的演示，您現在可以斷開連接了。

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

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]