ZTO Express (Cayman) Inc (ZTO) 2023 Q3 法說會逐字稿

Good day, and welcome to the ZTO Express Third 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 年第三季財務業績電話會議。 （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 Sophie Li. Please go ahead.

我現在想把會議交給 Sophie Li。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，接線生。大家好，感謝您今天加入我們。該公司的業績和投資者關係簡報已於今天稍早發布，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，中通通訊董事長兼執行長賴梅松先生接聽了電話；顏慧萍女士，財務長。賴先生將簡要概述公司的業務運作和重點，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 the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, 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》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，並與涉及已知事件的事件相關。或未知的風險、不確定性和其他因素，所有這些因素都難以預測，並且許多因素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結果存在重大差異。

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

有關此風險以及其他風險、不確定性和因素的更多資​​訊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，本公司不承擔因新資訊、未來事件或其他原因而更新任何前瞻性聲明的義務。

It is now my pleasure to introduce Mr. Meisong Lai. Mr. Lai will race 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。賴先生將用中文快速講完他準備好的講話，然後我用英文翻譯給他。

(foreign language)

（外語）

[Interpreted] Thank you, Chairman, Lai. Hello, everyone. Thank you for joining today's conference call. For the third quarter of 2023, ZTO's parcel volume was 7.52 billion, which increased by 18.1% and expanded our market share to 22.4%. We maintained our industry-leading service quality and achieved an adjusted net profit of RMB 2.34 billion, representing a 25% year-over-year growth.

[譯] 謝謝賴主席。大家好。感謝您參加今天的電話會議。 2023年第三季度，中通快遞包裹量為75.2億件，成長18.1%，市佔率擴大至22.4%。服務品質維持業界領先，實現調整後淨利23.4億元，年增25%。

In the third quarter, China's express delivery industry maintained relative figure and grew its volume by 16.7% year-over-year. At the same time, low price for volume trade-off became rampant. Facing disruptive price competition, ZTO adhered to its consistent strategy of maintaining a high level of service quality, achieving targeted earnings while advancing our market presence. The company shored up defenses and exercised discipline around no loss-making volumes and put our main focus on firming up network stability and long-term competitiveness.

第三季度，我國快遞業維持相對增速，業務量較去年同期成長16.7%。同時，以低價換取數量的現象十分猖獗。面對顛覆性的價格競爭，中通公司堅持一貫的策略，維持高水準的服務質量，在提高市場佔有率的同時實現目標獲利。公司加強防禦，嚴守紀律，確保不出現虧損，並將主要重點放在鞏固網路穩定性和長期競爭力。

The following are some of our key initiatives. Firstly, we placed a great deal of emphasis on end-to-end time business by enhancing digitization tools to initiate interferences needed to manage operating processes. Quality standards for each of the key steps throughout the flow of package ensured quick discovery of root causes to defects, resulting in improved end-to-end timeliness business and overall customer satisfaction.

以下是我們的一些關鍵舉措。首先，我們非常重視端到端時間業務，透過增強數位化工具來發起管理營運流程所需的干擾。整個包裝流程中每個關鍵步驟的品質標準確保了快速發現缺陷的根本原因，從而提高了端到端業務的及時性和整體客戶滿意度。

At the beginning of August, severe weather brought loss in the (inaudible) and suspended the operations of our (inaudible) center for nearly a month, causing property damages and loss of packages. Facing natural disasters, we actively coordinated major nodes and modified routes to divert parcels to minimize active impact on overall service quality across our network. ZTO's end-to-end timeliness returned to the top of the industry in September.

8月初，惡劣天氣造成（聽不清楚）損失，使我們（聽不清楚）中心暫停營運近一個月，造成財產損失和包裹遺失。面對自然災害，我們積極協調主要節點，修改線路分流，盡量減少對網路整體服務品質的正面影響。 9月，中通端到端時效重回產業前列。

Secondly, while steadily improving service quality, we continuously seek optimal balance between improving timeliness and reducing costs. Cost efficiency gain in the third quarter once again exceeded expectations. A further refined assessment system raised the level of standardization and enhanced the ability to affiliate relevant workstation or individual task operator. Through visibility, comparability and reward or recommend, we promptly and effectively identified anomalies, optimized and rectified them with precision and improved overall operational efficiency.

其次，我們在穩定提升服務品質的同時，不斷尋求提高時效與降低成本之間的最佳平衡。第三季的成本效率收益再次超出預期。考核系統進一步細化，提高了標準化水平，增強了掛靠相關工作站或個別任務操作人員的能力。透過可視性、可比較性和獎勵推薦，及時有效地發現異常狀況，精準優化整改，提升整體營運效率。

Thirdly, we help to upgrade capability and the capacity of partner outlets, which serves as an integral part of overall efficiency of the entire transit process, we provided technical input and implementation oversight on design and construction process, safety measures, service quality measures and information management so as to improve our partners' operational efficiencies and last-mile connectivity.

第三，我們協助提升能力和合作網點的能力，這是整個運輸過程整體效率的一個組成部分，我們在設計和施工過程、安全措施、服務品質措施和資訊方面提供技術輸入和實施監督管理，以提高合作夥伴的營運效率和最後一哩的連接。

The express delivery industry in China has undergone 30 years of development and is at a critical turning point. Despite frequent shifts in competitive landscape, leaders of undisputed advantages have clearly emerged.

中國快遞業經歷了30年的發展，正處於關鍵的轉捩點。儘管競爭格局頻繁變化，但具有無可爭議優勢的領先者已經明顯湧現。

ZTO has consistently pursued healthy and sustainable growth and focused simultaneously on service quality, customer satisfaction and brand value with long-term competitive strength. Going forward and in accordance with a healthy pace, we will continue to strengthen our network foundation, enriched product offering and innovative operations.

中通一貫追求健康永續發展，同時注重服務品質、顧客滿意度和品牌價值，並具備長期競爭實力。未來，我們將繼續以健康的步伐，強化網路基礎、豐富產品、創新營運。

The following are 5 of our key initiatives. First, we will advance forward the implementation of marketing initiatives, and encourage network partners to pass market pricing to couriers in order to incentivize pickup responsiveness, therefore, increase non-e-commerce volume.

以下是我們的 5 項關鍵措施。首先，我們將推動行銷措施的實施，鼓勵網路合作夥伴將市場定價傳遞給快遞員，以激勵取貨響應能力，進而增加非電商業務量。

Second, we will accelerate the expansion of our last-mile presence with [Tuxi Life Plus] to reduce pickup and delivery costs, enhancing person delivery fulfillment and improve network partners and courier profitability.

其次，我們將透過【途喜生活+】加速拓展最後一公里業務，降低取件和配送成本，提高專人配送履行度，提高網路合作夥伴和快遞公司的獲利能力。

Third, we will continue to refine digitization processes and tools, disseminate data analytics across frontline operations and elevate process management from both modern to predictive and drive greater effectiveness.

第三，我們將繼續完善數位化流程和工具，在一線營運中傳播數據分析，並將流程管理從現代提升為預測性，並提高效率。

Fourth, we will improve economic output of infrastructure investments by more scientifically aligning long-term growth planning, capital budget, installed capacity and utilization optimization.

四是更科學地統籌長期規劃、資金預算、裝置容量和優化利用，提高基礎建設投資經濟產出。

Fifthly, we will continue to strengthen our e-commerce driven core express delivery business by introducing differentiated time-definite products. Meanwhile, we will respond to varied emerging market demand by designing and providing innovative products and services capabilities, advancing forward towards comprehensive logistics expense.

第五，持續做強電商驅動的核心快遞業務，推出差異化限時產品。同時，我們將透過設計和提供創新的產品和服務能力，因應多樣化的新興市場需求，邁向綜合物流費用。

During the recent Double 11 shopping festival, ZTO reached a new milestone, with daily parcel orders surpassing 100 million for consecutive days, which peaks over 160 million. Our leading timeliness performance led the way to excellent quality, faster delivery, high volume and stable pricing. We leveraged our strong capacity and streamlined operations to maximize scale and efficiency. This not only proved the effectiveness and the sustainability of our strategic approach but also instilled greater confidence in our ability to execute for long-term excellence.

剛過去的雙11期間，中通快遞再創新里程，單日包裹訂單量連續幾天破億，高峰突破1.6億。我們領先的及時性表現帶來了卓越的品質、更快的交貨、高產量和穩定的價格。我們利用強大的能力和精簡的營運來最大限度地提高規模和效率。這不僅證明了我們策略方針的有效性和可持續性，也讓我們對長期卓越的執行能力充滿信心。

China's express delivery industry is undergoing a distinctive dynamic shift where volume is further concentrating yet quality continues to diverge where the better and stronger are rising to even higher ground. With comprehensive strengths we built and accumulated over the years, such as superior service quality, stable partner network, high profitability and stronger capital reserves, ZTO firmly stands in the leadership position. We will continue to strive for balanced increases in all 3 of our strategic objectives of quality earnings and scale going forward.

中國快遞業正經歷著數量進一步集中、品質進一步分化、優勝劣汰的鮮明動態變化。中通憑藉著多年來建立和累積的綜合優勢，優質的服務品質、穩定的合作夥伴網絡、高盈利能力和雄厚的資本儲備，牢牢佔據行業領先地位。未來，我們將繼續努力實現優質獲利和規模這三個策略目標的均衡成長。

With the help of technology, we will focus on long-term initiatives such as diversifying products and services, reducing currency frequencies, improving direct linkage across coating centers, outlets and last-mile post, therefore, fortifying our competitive edge.

在科技的幫助下，我們將專注於長期舉措，例如產品和服務多樣化、減少貨幣頻率、改善塗裝中心、網點和最後一英里郵政之間的直接聯繫，從而增強我們的競爭優勢。

Embarking from the nearest milestone of our 100 million parcels a day, we are committed to create increasing value to our participants in the success of ZTO including customers, employees, partners, suppliers and investors as well as the country and society that have nurtured our growth and development.

從每天處理一億個包裹這一最近的里程碑開始，我們致力於為中通成功的參與者創造越來越多的價值，包括客戶、員工、合作夥伴、供應商和投資者以及培育我們成長的國家和社會和發展。

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

接下來，請我們的財務長嚴女士來回顧我們的財務狀況。

Thank you, Chairman. Thank you, Sophie. Hello to everyone on the call. Allow me to take us through the financials and guidance. Please note that unless specifically mentioned, all numbers I will be quoting are in RMB and percentage changes refer to year-over-year comparisons. Detailed financials of our performance, unit economics and cash flow are posted on our website, and I'll go through some of the highlights here.

謝謝主席。謝謝你，蘇菲。大家好。請容許我向我們介紹一下財務和指導。請注意，除非特別說明，我引用的所有數字均以人民幣為單位，百分比變化指的是同比變化。我們的業績、單位經濟效益和現金流的詳細財務數據發佈在我們的網站上，我將在這裡介紹一些重點內容。

In the third quarter, ZTO maintained profitable growth, thanks to sound execution of our consistent corporate strategies. Parcel volume increased 18.1% to 7.5 billion and our adjusted net income grew 25% to RMB 2.3 billion, while we maintained high quality of services and customer satisfaction.

第三季度，中通持續維持獲利成長，得益於公司一貫策略的良好執行。包裹數量成長 18.1%，達到 75 億美元，調整後淨利潤成長 25%，達到 23 億元人民幣，同時我們維持了高品質的服務和客戶滿意度。

Total revenue increased 1.5% to RMB 9.1 billion. ASP for the core express delivery business decreased 13.5% or RMB 0.19, mainly driven by mix shift impact from the decrease in the proportion of KA volume, increase in volume incentives and lower average weight per parcel. We cranked up incentives to the extent necessary to protect existing market share as we faced radical price competition during the quarter.

總收入成長1.5%至人民幣91億元。核心快遞業務平均售價下降 13.5%，即人民幣 0.19 元，主要是由於 KA 貨量佔比下降、貨量激勵措施增加以及平均單件重量下降等混合轉型影響。由於本季面臨激烈的價格競爭，我們加大了必要的激勵力度，以保護現有市場份額。

Our quarterly market share rose slightly by 0.3 points to 22.4%.

我們的季度市佔率小幅上升 0.3 個百分點，達到 22.4%。

Total cost of revenue was RMB 6.4 billion, which decreased 2%. Combined unit cost of sorting and transportation decreased 11% or RMB 0.09, benefiting largely from economies of scale. In addition, unit cost of line haul transportation decreased 11.4% to RMB 0.43 driven by more effective route planning in conjunction with low rate improvements without negatively impacting timeliness. Decreases in fuel prices also helped.

總收入成本為人民幣64億元，下降2%。分類和運輸的單位綜合成本下降了 11%，即 0.09 元人民幣，主要受益於規模經濟。此外，由於更有效的路線規劃以及低費率改進，線路運輸的單位成本下降了 11.4% 至 0.43 元人民幣，但沒有對時效產生負面影響。燃油價格的下降也起了一定作用。

And the decrease of 10.4% to RMB 0.25 for unit sorting costs came from the increase in level of automation as well as labor efficiency gains achieved through standardization in operating procedures and optimization of performance metrics.

單位分類成本下降10.4%至0.25元，主要得益於自動化水準的提高以及透過操作流程標準化和績效指標優化實現的勞動效率提升。

Gross profit increased 10.7% to RMB 2.7 billion as a combined result of increased volume offsetting ASP decline plus added benefits from cost productivity gain.

毛利成長 10.7%，達到人民幣 27 億元，這是銷量增加抵銷了平均售價下降的影響，加上成本生產力提高帶來的額外收益。

Gross profit margin rate increased to 0.5 points to 29.8%.

毛利率提高0.5個百分點至29.8%。

SG&A expenses, excluding share-based compensation, as a percentage of revenue dropped 0.1 points to 4.8%, demonstrating a healthy and lean corporate cost structure.

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 4.8%，展現了健康、精簡的企業成本結構。

Income from operations increased 11.4% to RMB 2.4 billion, and associated margin rate grew 2.4 points to 26.7% as we continue to improve quality of earnings to reach a level better than 2019, which is prior to the COVID-19 pandemic.

隨著我們繼續提高獲利質量，達到優於 2019 年（COVID-19 大流行之前）的水平，營業收入增長 11.4%，達到 24 億元人民幣，相關利潤率增長 2.4 個百分點，達到 26.7%。

Operating cash flow was RMB 2.94 billion for the quarter and EBITDA was RMB 3.45 billion. Capital expenditure totaled RMB 1.3 billion, and we anticipate annual CapEx in 2023 will come in below RMB 7 billion. We are on track to achieve another year of free cash flow.

本季營運現金流為人民幣 29.4 億元，EBITDA 為 34.5 億元。資本支出總計13億元人民幣，我們預期2023年的年度資本支出將低於70億元。我們有望實現另一年的自由現金流。

Now moving on to our guidance. We have previously guided 1.5 percentage point annual market share gain, and we strive to achieve such goals up until it became no longer justifiable considering extreme price competition during the quarter. We made a decision to hold our grounds and to then turn our attention to more longer-term gains such as improving end-to-end timeliness by reaching deep for operational effectiveness and efficiencies.

現在繼續我們的指導。我們先前曾指導每年市佔率成長 1.5 個百分點，我們努力實現這一目標，直到考慮到本季極端的價格競爭而不再合理為止。我們決定堅守陣地，然後將注意力轉向更長期的收益，例如透過深入提高營運有效性和效率來提高端到端的及時性。

Market share gain will continue to be one of our key measures of growth and it cannot be obtained by causing unnecessary losses to our bottom line as we further our balanced approach to all 3 aspects of our corporate strategies.

市場佔有率的成長將繼續是我們成長的關鍵指標之一，隨著我們進一步對公司策略的所有三個方面採取平衡的方法，它不能透過對我們的利潤造成不必要的損失來獲得。

On that note, the company reiterates that its parcel volume for 2023 is expected to be in the range of RMB 29.27 billion to RMB 30.24 billion, representing a 20% to 24% increase year-over-year.

對此，該公司重申，2023年包裹量預計在292.7億元人民幣至302.4億元之間，年增20%至24%。

These estimates represent management's current and preliminary view, which are subject to change.

這些估計代表了管理層當前和初步的觀點，可能會發生變化。

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

現在我們準備好的發言就到此結束。接線員，請開通提問線。謝謝。

(Operator Instructions) And our first question comes from Qianlei Fan of Morgan Stanley.

（操作員指示）我們的第一個問題來自摩根士丹利的範錢磊。

(foreign language)

（外語）

[Interpreted] Congratulations on very solid results despite industry competition pressure. I have two questions. The first one is about the competition strategy. We noted that the company year-to-date has achieved a very balanced growth in terms of profitability and market share gain. But we do notice that the market, the competition strategy from peers may have changed. Some of them seems to be quite difficult in terms of profitability in the third quarter results, but some of them also reiterated that next year, their priority will be more share gain in terms of profitability. So the question is what's the competition strategy from our company in the first quarter of this year and into 2024? Do we still think the target that profit growth to be faster than volume growth and our market share will continue to grow versus peers is achievable?

[解讀] 恭喜您儘管面臨業界競爭壓力，仍取得了非常紮實的業績。我有兩個問題。第一個是關於競爭策略。我們注意到，該公司今年迄今在獲利能力和市場份額成長方面實現了非常平衡的成長。但我們確實注意到，市場、同業的競爭策略可能已經改變了。其中一些公司在第三季業績獲利方面似乎相當困難，但其中一些公司也重申，明年他們的首要任務將是在獲利方面獲得更多份額。那麼問題是我們公司從今年第一季到2024年的競爭策略是什麼？我們仍然認為利潤成長快於銷售成長以及我們的市佔率相對於同業持續成長的目標是可以實現的嗎？

My second question is about the dividend payout. So we do notice that the CapEx has decreased on a year-on-year basis and free cash flow remains very healthy. We did mention that we have the intention to increase the dividend payout to reward our shareholders. Do we have a higher visibility on the dividend payout for our full year or after our full year results next year?

我的第二個問題是關於股息支付的問題。因此，我們確實注意到資本支出較去年同期有所下降，自由現金流仍然非常健康。我們確實提到，我們打算增加股息支付以獎勵我們的股東。我們對全年股息支付或明年全年業績後的股息支付是否有更高的了解？

(foreign language)

（外語）

[Interpreted] Now let me first translate the first question for Chairman. The first question relates to the competitive outlook. We've always focused on our long-term growth because we understand that express delivery business, the industry in nature, it's a long-term marathon instead of a short sprint. ZTO has consistently focused on our 3 aspects of the corporate strategy. We maintained the principle that we don't do loss-making businesses. So consistently in the past, we have been able to adhere to our 3-pronged approach, which is conditioned upon quality of services and targeted earnings goal achieved, we will improve our market share. So that still stays the same as consistent going forward.

[譯]現在我先翻譯主席提出的第一個問題。第一個問題涉及競爭前景。我們一直注重長期發展，因為我們知道快遞產業本質上是一場長期的馬拉松，而不是短暫的衝刺。中通一貫關注企業策略的三個面向。我們堅持不做虧損生意的原則。因此，過去我們一直能夠堅持我們的三管齊下的方法，以服務品質和實現的目標獲利目標為條件，我們將提高我們的市場份額。因此，未來仍然保持一致。

Now given market dynamic changes, however, we always believe the strength of quality of services and capacity to deliver such high-quality of services, we will continue to draw our customers and draw market share and timeliness and customer satisfaction. And also the brand awareness will continue to be our focus going forward. And we believe, from a strategic standpoint, that will further expand our goal. Again, market share will remain.

然而，現在考慮到市場的動態變化，我們始終相信，憑藉服務品質的實力和提供高品質服務的能力，我們將繼續吸引客戶，贏得市場份額、及時性和客戶滿意度。品牌知名度將繼續成為我們未來的重點。我們相信，從戰略角度來看，這將進一步擴大我們的目標。同樣，市場佔有率將保持不變。

Now you mentioned specifically profit, volume and market share development, it's always going to be a balance, and we still believe we are confident to achieve the goal that we set.

現在您具體提到了利潤、銷售和市場份額的發展，這始終是一個平衡，我們仍然相信我們有信心實現我們設定的目標。

The second part of the question, I'll answer that. The business is operating in its optimal and continue to go up to the higher -- increase in the higher level. So the CapEx spending for our core express delivery businesses is pretty much set. So as we look into developing our comprehensive logistics capabilities, there might be some investment cycles come through. But now what we are looking at it being gradual and not all of a sudden, right? So it's a matter of time for us to raise our dividend payout ratio because it is our clear objective to return the capital -- return the investment to our shareholders.

問題的第二部分，我來回答。業務正在以最佳狀態運行，並繼續朝著更高水平邁進。因此，我們核心快遞業務的資本支出已基本確定。因此，當我們考慮發展綜合物流能力時，可能會經歷一些投資週期。但現在我們看到的是漸進的而不是突然的，對嗎？因此，我們提高股息支付率只是時間問題，因為我們明確的目標是返還資本——將投資返還給我們的股東。

The next question comes from Ronald Keung of Goldman Sachs.

下一個問題來自高盛的羅納德薑（Ronald Keung）。

(foreign language) Let me translate it in English. I think in terms of the current competitive landscape, while it's been quite concerning but we've actually done really well and earnings have grown healthily and we also generated free cash flow. So this outperformance versus peers means, how should we think about the landscape from here? If we could capture a very healthy earnings and cash flow, should this actually strengthen our position into the longer term? So are we trending well even in this competitive environment? And how do we see the outlook for 2024 as a result and our strategy?

（外語）我把它翻譯成英文。我認為就當前的競爭格局而言，雖然這非常令人擔憂，但我們實際上做得非常好，收入健康成長，我們也產生了自由現金流。因此，這種優於同行的表現意味著，我們該如何看待這裡的前景？如果我們能夠獲得非常健康的收益和現金流，這實際上是否會增強我們的長期地位？那麼，即使在這種競爭環境中，我們的趨勢是否良好？我們如何看待 2024 年的成果和我們的策略？

And my second question is about our Southbound Connect potential. We see some of the limited trading volume in our Hong Kong shares might have later than expected Southbound Connect. Are there any proactive steps that management could take in expediting this Southbound Connect potential?

我的第二個問題是關於我們的南向互聯潛力。我們認為港股通的部分交易量有限，可能會晚於預期。管理階層是否可以採取任何積極主動的措施來加速南向互聯的潛力？

(foreign language)

（外語）

Thank you, Ronald. So let me translate for Chairman for the answers.

謝謝你，羅納德。讓我為主席翻譯以獲得答案。

[Interpreted] As far as competitive landscape, we think the long-term trajectory continued to stabilize. As you can see that the number in the marketplace, about 8 or 9, we don't think there are major changes. However, the diversification, I should say, the bifurcation, is becoming more and more apparent where you have advantage in cost, efficiency and quality of services. Those will eventually win more market share and increased market presence.

【解讀】就競爭格局而言，我們認為長期軌跡持續穩定。正如您所看到的，市場上的數量大約是 8 或 9 個，我們認為沒有重大變化。然而，多元化，我應該說，分叉，正在變得越來越明顯，你在成本、效率和服務品質方面具有優勢。這些最終將贏得更多的市場份額和更大的市場影響力。

In the past, we've always focused on all 3, and those continue to be our focus. And relatively speaking, however, as we see that development of e-commerce, the overall profit is meeting resistance because of the price competition. So offering more diverse product and services, for example, increase the non-e-commerce packages, also servicing more of the reverse logistics or return packages, will help us improve the earnings of our network outlets as well as our couriers. So focusing on those areas, improving the network stability, at the same time, improving our overall capability of serving not just e-commerce packages but including a higher percentage of non-e-commerce packages will help us deter or offset some of the impact from the e-commerce concentration.

過去，我們一直專注於這三個方面，而這些仍然是我們的重點。但相對而言，我們看到電子商務的發展，整體利潤因為價格競爭而受到阻力。因此，提供更多樣化的產品和服務，例如增加非電子商務包裹，以及為更多的逆向物流或退貨包裹提供服務，將有助於我們提高網路網點以及快遞員的收入。因此，請關注這些領域，提高網路穩定性，同時提高我們的整體能力，不僅服務電子商務包裹，而且包括更高比例的非電子商務包裹，將有助於我們阻止或抵消一些影響從電商集中度來看。

So in other words, we do believe out of the 3, relatively speaking, we will focus in that regard more of the enriched product offering and varied revenue structure so that it could propel us forward into the future where we maintain a high level of quality of earnings and, at the same time, increasing our market share.

換句話說，我們確實相信，相對而言，在這三者中，我們將更多地關注這方面，豐富的產品供應和多樣化的收入結構，以便它可以推動我們走向未來，保持高水平的品質收益，同時增加我們的市場佔有率。

The second question relates to the strategy of going into the (inaudible). We think that we will continue to maintain high quality of operations. And that is really the key, increasing our volume of trading of liquidity. This is somewhat more determined by some of the metrics or measurement. The company has been included in the stock inspection scope of the Stock Connect. The adjustment window for the Stock Connect is in March and September year. And according to the policy measurements during the measurement period, we must meet certain standards of trading volume and so on and so forth. And we believe, we have been -- based on current information, we have a high probability of being entered or admitted into the connect by next year in March.

第二個問題涉及進入（聽不清楚）的策略。我們認為我們將繼續保持高品質的營運。這確實是關鍵，增加我們的流動性交易量。這在某種程度上更多地是由一些指標或測量決定的。本公司已納入滬港通股票核查範圍。滬港通調整窗口期為每年3月及9月。而且根據測量期間的政策測量，我們必須達到一定的交易量標準等等。我們相信，根據目前的信息，我們很有可能在明年三月之前進入或獲準加入該連接。

The next question comes from Aaron Luo of UBS.

下一個問題來自瑞銀集團的羅亞倫。

(foreign language) Let me translate myself first. Congrats for the solid Q3 earnings. And I got 2 questions. One is about our capacity utilization. As you mentioned earlier, we achieved the peak daily volume in Double 11 to around like 160 million parcels. And I'm a bit curious what is our ideal capacity utilization rate? And what's our like CapEx expenditure plan going forward, like in the next couple of years?

（外語）我先翻譯一下。恭喜第三季的穩健獲利。我有兩個問題。一是關於我們的產能利用率。正如您剛才提到的，我們在雙11期間實現了每日處理量的峰值，達到1.6億件左右。我有點好奇我們理想的產能利用率是多少？未來幾年我們的資本支出計畫是怎麼樣的？

And the second question is more about our long-term strategy to focus more on the mid- to high-end parcels, like Mr. Lai mentioned earlier, the business parcels or the individual parcels. So what's the development so far? And what kind of expectation we should have, like the volume share kind of goal, like to what percentage going forward?

第二個問題更多的是關於我們的長期策略，更專注於中高端包裹，就像賴先生剛才提到的，商業包裹或個人包裹。那麼目前進展如何呢？我們應該有什麼樣的期望，例如銷售份額目標，例如未來的百分比是多少？

(foreign language)

（外語）

[Interpreted] Okay. The first question relates to our optimum capacity. We've always focused on infrastructure development, and we are one of the players -- amongst all the industry players, we are the one with the highest level of self-owned facilities and also transportation fleet. And we have currently, after the Double 11, achieved over 100 million a day level, and that is the current most optimal capacity because that is where our cost is the most effective or efficient. We have, throughout the years, invested and built infrastructure in across the whole country, especially in the key major nodes or major cities across the nation.

[解釋]好的。第一個問題與我們的最佳能力有關。我們一直專注於基礎設施建設，我們是參與者之一——在所有行業參與者中，我們是擁有最高水準的自有設施和運輸車隊的參與者。而我們目前雙11之後達到了每天過億的水平，這是目前最優化的產能，因為那是我們成本最有效的地方。這些年來，我們在全國範圍內，特別是在全國的關鍵節點、主要城市，投資建設了基礎設施。

Compared to the past, this year, our CapEx spending is going to come in below RMB 7 billion, and for next year, we'll be somewhere below RMB 6 billion. We believe some of our facilities do require upgrades and some have a Phase 2 or Phase 3 that could be easily developed to double the capacity. So actual investment will most definitely taper down.

與過去相比，今年我們的資本支出將低於 70 億元人民幣，明年將低於 60 億元。我們相信，我們的一些設施確實需要升級，有些設施有第二階段或第三階段，可以輕鬆開發以將容量翻倍。因此，實際投資肯定會逐漸減少。

The third question relates to our diversified product offerings. The current year, our standardized packages, the increase in its volume has way surpassed or much faster than our regular express packages. So we do believe we have built up the momentum to increase within express delivery a time-definite product and outside focusing on developing more of the non-e-commerce packages. We do see this as a key initiative because it could help us improve the quality of earnings by our network partner and also couriers as we ensure the couriers receive the market front and pricing instead of the same pricing given for regular express delivery packages so that they are more motivated to work for themselves to improve their customer connection and also improve quality of services.

第三個問題涉及我們多元化的產品供應。今年，我們的標準化包裹，其數量的增長已經遠遠超過或遠遠快於我們普通的快遞包裹。因此，我們確實相信，我們已經形成了在快遞領域增加限時產品的勢頭，並在外部重點開發更多非電子商務包裹。我們確實認為這是一項關鍵舉措，因為它可以幫助我們提高網路合作夥伴和快遞公司的收入質量，因為我們確保快遞公司獲得市場前沿和定價，而不是與常規快遞包裹相同的定價，以便他們更有動力為自己工作，以改善客戶聯繫並提高服務品質。

We have made it a mandate and put measurements around the 2-door pickup so that they are more timely and they are more responsive. In this overall approach, without disclosing the specific percentages, we do believe -- we do want to have this varied product offering. And at the same time, it could come back and help us improve the overall earnings and also quality of earnings for all the players, including us and also the network partners and couriers.

我們已將其作為一項強制要求，並對兩門皮卡進行了測量，以便測量更加及時、響應更加靈敏。在這種整體方法中，在不透露具體百分比的情況下，我們確實相信——我們確實希望提供這種多樣化的產品。同時，它可以回來幫助我們提高所有參與者的整體收入和收入質量，包括我們以及網路合作夥伴和快遞員。

The next question comes from (inaudible) of CICC.

下一個問題來自中金公司（聽不清楚）。

(foreign language) Let me translate for myself. So I have 2 questions. The first 1 is about reverse logistics for e-commerce parcels. Because we know this kind of business requires higher service quality and will generate higher returns, so can you share with us our volume in terms of this kind of business and our future strategy?

（外語）我自己翻譯一下。所以我有兩個問題。第一個是關於電子商務包裹的逆向物流。因為我們知道這種業務對服務品質要求比較高，會產生比較高的回報，所以您能跟我們分享一下我們在這種業務方面的體量以及我們未來的策略嗎？

And the second one is about our last-mile facilities such as (inaudible) parcel supermarket that Mr. Lai mentioned in his speech. So can you share with us as current state how many of these facilities are there -- you have built? And is there any target for us in the future. And also, it would be very helpful if you can share with us the benefits to our (inaudible) in their operation?

第二個是關於我們最後一公里的設施，例如賴先生在演講中提到的（聽不清楚）包裹超市。那麼您能否與我們分享您已經建造了多少這樣的設施？未來我們有什麼目標嗎？而且，如果您能與我們分享我們（聽不清楚）在他們的營運中的好處，那將會非常有幫助？

(foreign language)

（外語）

[Interpreted] The first question is with regards to the reverse logistics packages. Nowadays, if we look at the combined volume of all major players or major platform of e-commerce, the return volume is somewhat every day around $10 million. So the increase in the proportion of these packages really rely on -- or is dependent on how fast we can respond to pickup and how well the service is provided. It's because we saw this significant volume in the marketplace, we have started to pay more attention and tried to improve our ability to respond. For example, the 2-hour average pickup time window, we are developing capabilities to pick up even faster within -- and shorter than the 2 hours.

[解讀]第一個問題是關於逆向物流包裹的。如今，如果我們看一下所有主要電子商務參與者或主要電子商務平台的總交易額，每天的退貨金額大約在 1000 萬美元左右。因此，這些包裹比例的增加真正依賴於——或者說依賴於我們響應取件的速度以及提供的服務的品質。正是因為我們看到了市場上如此巨大的銷量，我們才開始更加關注並努力提高我們的應對能力。例如，2 小時的平均接載時間窗口，我們正在開發能力，以便在比 2 小時更短的時間內更快地接載。

So we think that the continued focus and also the exercise or training of our capacity or capabilities to pick up on a more timely basis has helped us to improve the development of our -- that side of the capability. And we have seen the increase in the reverse business' volume at a very promising and fast pace.

因此，我們認為，持續的關注以及對我們的能力的鍛鍊或訓練，以更及時地恢復，有助於我們改善我們這方面能力的發展。我們已經看到反向業務量以非常有希望和快速的速度成長。

The second part regarding the last-mile development, we currently have over 10,000 locations under the brand of [Tuxi Plus]. And our target is to grow even more. And the benefit is really severalfold. First of all, as we could allow our couriers to receive the market price, in other words, they are working for themselves, and they are not only able to improve their sales or improve their earnings, but they could also be motivated to provide better services and develop better connectivity with the customers, with their customers.

第二部分關於最後一公里的發展，我們目前擁有【Tuxi Plus】品牌的門市超過10,000家。我們的目標是進一步成長。而且好處確實是數倍的。首先，因為我們可以讓我們的快遞員接受市場價格，換句話說，他們正在為自己打工，他們不僅能夠提高他們的銷量或提高他們的收入，而且他們還可以有動力提供更好的服務。服務並與客戶及其客戶建立更好的聯繫。

The key benefit for the industry as a whole is that we could indeed utilize the last-mile post or presence to help the entire industry to reduce the delivery cost. As the concentration of the delivery packages increases, as volume increase for the marketplace, we think that continue to hire people to deliver is not feasible. So the role that last-mile post plays is to help reduce the delivery cost and develop better linkage, develop more timeliness in responsiveness of customer services.

對於整個行業來說，主要的好處是我們確實可以利用最後一英里的郵政或存在來幫助整個行業降低交付成本。隨著配送包裹集中度的增加，隨著市場數量的增加，我們認為繼續僱用人員配送是不可行的。因此，最後一哩郵政發揮的作用是幫助降低交付成本並建立更好的聯繫，提高客戶服務回應的及時性。

Within its radius, we think the pickup and the dropoff by consumers to have their packages shipped will continue to evolve, and the penetration ratio or the proportion of such packages being dropped off or being picked up at the post will increase.

在其半徑內，我們認為消費者取件和投遞包裹的方式將繼續演變，並且滲透率或此類包裹在郵局投遞或取件的比例將會增加。

And then secondly, we think it would provide opportunities for the last mile to service not just express deliveries, it would have other services within the local settings, for example, opening the locks or delivery, other life necessities. So this is a comprehensive service point where the consumers will have much better stickiness to those locations.

其次，我們認為它會為最後一英里提供服務，不僅僅是快遞，它還會在當地提供其他服務，例如開鎖或送貨，其他生活必需品。所以這是一個綜合服務點，消費者對這些地點的黏性會更好。

And this is a strategy that we will continue to further as we not only build the infrastructure for the industry but also provide better, faster, more responsive services to our customers beyond express delivery related services.

這是我們將繼續推進的策略，因為我們不僅為產業建立基礎設施，而且除了快遞相關服務之外，還為客戶提供更好、更快、更靈敏的服務。

So operator, I believe that's the last question we could take. And once again, thank you, everybody, for joining today's call, and we look forward to have further discussions with you all, and thank you, and have a great day and great evening.

接線員，我相信這是我們可以回答的最後一個問題。再次感謝大家參加今天的電話會議，我們期待與大家進行進一步的討論，謝謝大家，祝您度過美好的一天和美好的夜晚。

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。]