S.F. Holding Co., Ltd. ($002352)

Throughout the meeting, analyst friends, thank you for attending SF Holdings 2025 Annual Results Presentation. I'm Gan Lin, Board Secretary. Management joining us here today are Mr. Wang Suhai, Chief Operating Officer; Mr. [ Alex Ko ] the Group Chief Financial Officer; and we also have Mr. Gun Yan Kun, Chief Marketing Officer. We're going to have the agenda as follows. First of all, we're going to have Mr. Huang Su Hai to walk us through the overall operational performance. And then we will have Alex to present us on the financial highlights. And then we're going to have Alex to walk you through the financial overview, and then all the executives will attend the Q&A session. Mr. Wang, the floor is yours, please.

Good evening, investors. Before we start the performance presentation, I'd like to express my sincere gratitude to your long-term attention support to SF Holding. In 2025, facing a complex and volatile external environment and industrial transformation, we firmly advanced 2 strategic priorities. First one, build intelligent supply chains to consolidate our operational foundation. We continue to improve operational efficiency and intelligence through the large language model in logistics industry and facilitate manufacturing upgrading with end-to-end supply chain solution. Second, leading global expansion to unlock incremental growth. Our domestic business pursued progress while maintaining stability and enhanced and leading edge. Our international business kept pace with global expansion of Chinese enterprises, building a dense multimodal cross-border network covering sea, land and air, deepen specialized cities and provide food and logistics support to customers' global footprint. Coming next, let me walk you through the performance. In terms of the progress, the total business volume reached RMB 6.7 billion, up by 25.4%, significantly outpacing industry. Operating revenue was RMB 308.2 billion, grew by 8.4%. Especially Express Logistics revenue reached RMB 228.6 billion, grew by 11.1%. Supply Chain and international revenue reached RMB 72.9 billion, grew by 3.5%. Excluding certain core business such as KRN that are highly affected by international trade policy fluctuation, core supply chain and international revenue surged by 32.3%. In 2025, the company built long-term competitiveness through strategic investment. We dynamically optimizing business mix and improving operational efficiency, ensuring stable delivery of the full year performance. Net profit attributable to shareholders reached TWD 1.11 billion, up by 9.3%, representing a net profit margin of 3.6%, flat Y-o-Y. ROE increased by 0.3%, reaching 11.5%. We're delivering solid business performance. The company continued to enhance shareholder returns by further increasing share repurchase and dividend, demonstrating our firm confidence into future business development. Alex will elaborate on the details later. Let's also take a look at the segment revenue. From the revenue structure, all domestic business segment as a holding maintained steady growth with further prominent competitive edge. Core supply chain and international revenue grew by 32%, accelerating the formation of the second growth curve. I'm going to walk you through the business line performance one by one. First of all, Time Definite Express. Time Definite Express revenue grew by 7.2%, continued to outpace China GDP growth. Thanks to our proactive investment in end touch points and truck client density, we prefessly serve diversified scenario, including performance economy, culture tourism economy, sports event and industrial sector, driving accelerated growth of the traditional time-definite Express revenue, excluding Rail Parcel in the second half of this year. More importantly, we achieved a critical transformation in business philosophy, shifting from the operational-centric standard-driven network coverage model to customer-centric, value-driven me share model. We continue to break service boundary, putting customer value first and further consolidate our leading position in time-definite express sector. Economic Express Economy Express revenue grew by 17.6%. Rely on the scale first optimized later strategy, we gradually achieved process matching of the resource and the product. We drove frontline team to capture key incremental volumes through flexible pricing, leading industry in growth rate. However, and rapid expansion recognized incremental business mix needs optimization. Moving to Q4, the company implemented a differentiated regional authorization and launch enhancement program to continue to significant recovery of the average revenue per piece. The parcel volume growth remained by more than 10 percentage points, achieving simultaneous growth in volume price with strong customer stickiness. On the operational front, incremental volume enable us to explore more flexible fulfillment model. We effectively optimized cost through the centralized pickup at the collection end. And in 2025, the centralized pickup ratio reached 8%, bringing a cost reduction of 0.2 per parcel for optimized parcels rate, driven by the due network of Freight and SF Freight, the revenue reached 11.9% growth. Daily cargo volume exceeding 84,000 tonnes, up 28%, reaching industrial leading level for sale and growth. The company consolidated high-end market with differentiated capacity, providing one-stop disassembly, inspection, installation service to home appliance and furniture and also customized anesthetic and service, but at the same time, it rapidly penetrating the industrial large case market with cargo volume of industry product over 100 kilograms surged by more than 60%. By leveraging scale effect and strategic synergy, the company effectively reduced the cost per kilogram of the freight. Between the integration of SF and SX Freight, we strengthened cooperation with dedicated -- you can see the intercity, the performance and revenue was staying with remarkable growth. For more details, please refer to public disclosure of SF IntraCity. Coming next, for Supply Chain and International, trade policy fluctuations brought disturbance to the Circ business. However, SF sees opportunity for Chinese company going global. Core revenue accelerated quarter-by-quarter, surged 46% Y-o-Y in fourth quarter. Meanwhile, segment net profit grew by RMB 950 million in 2025, making a profit of RMB 190 million. We address global changes with 3 core capacities. First of all, end-to-end supply chain production. We deeply serve certain high-potential industries, including high-tech, industrial equipment and consumer goods and launched a standardized product as China Vietnam Smart Express, N Freight and China India CL Freight to rapidly empower enterprises going global. Secondly, Anzhou International Express empowerment rely on our all-cargo fleet advantage. We opened new cross-border routes to Miami, Oslo and Dubai and other destinations, strengthened our presence in key markets like Japan, India and continue to improve transit time to core Southeast Asia destinations. Thirdly, trusted choice for cross-border e-commerce. We deeply specialized industry belts as wedding dress from Suzhou and Wix from Banan and the K stores from Donghai, set up 50 international specialized outlets in Yiwu, Shenzhen and other cities and working with GT Express to enhance overseas last mile fulfillment capacity. And for the past 1 year, our supply chain penetration with key customers achieved remarkable results, expanding from single point service to full chain coverage from the single market to the global multiregional layout. Take a leading health care supplement brand as an example, we built trust through domestic express service in early stage, public expand to Southeast Asia in 2025, relying on overseas warehouse in Vietnam and the cross-border direct mail, coupled with multi-temperature special warehouse and freshkeeping packaging, we achieve efficient customer clearance, the material and next-day delivery of the order, supporting the brand globalization. Take a new energy material as an example, we used to provide it with one-stop solution for its Korea factory, including domestic consolidation special container transportation and then such success being copied to the Poland factory. All those achievements are attributable to SF overseas resources and capacities. At the end of December, we operated 2.55 million square meters of overseas warehouse, including 2.1 million square meters in Asia Pacific region, ranking #1. In Asia Pacific market, we also connected to the whole world with a high-density freight network of more than 220 flights per week. While at the same time, for Huzhou Hub, it has already become Bejia's largest air cargo hub becoming a gateway for Chinese enterprises going globe. By the end of December, we had launched 59 domestic routes, 22 international routes at Huzhou hub, adding 4 domestic routes and 7 international routes on Y-o-Y basis. In 2025, the airports cargo and throughput reached 1.48 million tonnes, up by 44%. As of international cargo and mile throughput surged 85%. The strategic figures of Huzhou Hub continued to rise, handling more than 55% of the domestic air cargo volume and more than 50% of the international air cargo volume. With core capacities such as L2L transshipment and the full future international cargo terminal, zhou hub is becoming an important gateway connecting global markets, continue to unlock incremental growth for air cargo business. I will also walk you through our fundamentals. SF always customer-centric, committed to the long-term value and sustainable cost reduction, focusing on customer value, continue to consolidate product and service capabilities and building long-term competitive edge. First of all, we continue to deepen SF service value through internal quality improvement and external chain expansion through top-level network design. On domestic side, we adhere to the principle of streamlining network needs, invested dedicated aircraft in provincial capable city cluster, fully utilizing flights in cities with aviation resources and maximizing coverage of the touch point, strengthen our bars of the time-definite service. In 2025, our consolidated facilities in 9 more cities increased areas by 7%, ride utilization of direct flights by 55% in Tier 3 and Tier 4 cities -- Tier 3 and Tier 4 cities and touch points coverage exceed 300,000. By improved overall capacity, we launched the promise guaranteed composition made 100 routes in December, achieved time-definite fulfillment rate close to 96%. We further expanded coverage in 2026. For international routes, we built international network with zhou as a core connecting hub, the Southeast Asia network with Shenzhen as a core, adding 20 routes to improve international express transit by 5%. We tailored customer differentiated needs, deepen refinement and segmented service providing whole vehicle air freight and ease shipping for high-value scenario, while at the same time, we always committed to building resilient ecosystem with our partners. On one side, we deepen cooperation with high-quality partners for complementary advantage. Cargo integration innovation exceed 50%. And also, we continue to improve the ground transportation. SF indeed owns the most complete and systematic capacities in the industry, delivering amazing benefits through collaborative operations. Meanwhile, in actual resources optimization, we built a win-win supply chain ecosystem such as fleet cooperation, equipment co-construction, generating nearly RMB 1.83 billion in benefits in 2025. Over the past 33 years, we regard employees as our core competitiveness and the cornerstone for high-quality service. In 2025, we activated value creation with couriers, rising their per capita compensation by 5.3%. Thirdly, we always focus on cutting-edge technologies and firmly believe that technological innovation can bring great efficiency in the express delivery industry. In 2025, we deeply integrated intelligence and unmanned technologies into the entire operational chain. In software, we expanded from single model to AI agents and the unified intelligence side, planning, dynamic route scheduling and visual intelligent diagnosis through AI continues to release synergy benefits. In hardware, we upgraded 580 sets of the automatic equipment in 2025, deployed more than 1,200 AGVs, upgraded close to 600 intelligent driving vehicles. with nearly 3,000 last-mile unmanned vehicles with cumulated investment more than RMB 3 billion, laying a solid foundation of building a leading intelligent logistics system in the future. Last but not least, I have always stick to the strategy of sustainable and healthy development. Excellence comes from product, differentiation comes from service. We uphold a customer-centric approach, continue to strengthen our service foundation, invest high-quality resources at critical needs, creating ultimate experience and become the most respected global leading intelligent logistics solution provider. Coming next, I will ask King Kuin to walk you through technological application, please. Mr. [indiscernible], please.

Hello, everyone. AI technology continue to literate, and I believe you also care about AI application at assets. We built a powerful AI technology infrastructure with more than 5,000 agents and large language models being widely applied in more than 30 use cases. At the logistics network, AI deeply empower 4 core things to improve operational efficiency. In pickup and delivery, the power AI system provide voice interactive QA, time alerts and intelligent bonded for risk prevention and control. In scheduling, big data predicts arrival time in real time, quickly output alternative plans for optimal scenarios such as price delay. And in terms of the transit and sorting, the intelligent diagnosis is realized by integrating image, video and operational data and the noncompliant item detection is more than 95%. In transportation, agent predicts peak volume in advance by optimizing resources optimization. Ping agents reduced feed trips by 340,000 in 2025. AI also play a very important role. AI-related business contributed RMB 850 million in incremental revenue in 2025. For supply chain and international business, AI high-speed scanner and intelligent document review identify the customer and also helped the declaration names corresponding to HS code with an accuracy of 93%. For customer service, we support one-click order placement while voice to image, AI customer service has already reached 90% of the accuracy. For service, AI capacity has been deeply included into the customer service for large-scale application, improving service proficiency by 30%. In the past, our sales team could only rely on menu experience to identify potential customer from massive Webuild data and then conduct the visit and follow-up such inefficient way lead to the needs of many business opportunities. AI now support us from menu experience to intelligent decision-making. First of all, Lead. We not only analyze internal Webuild data, but also incorporate external data such as transportation volume across store logistics opportunities to capture the opportunity size in real time. Secondly, solution matching. AI assists identifying core pain points such as price sensitive and high time defect requirements, intelligently adapt the sales strategy, generate product recifications and quotation plan. Finally, execution. We intelligently match the best executor with implementing the full process visual management and ensure efficient follow-up of the opportunities. In the near future, the system will continue to evolve from single point intelligence to global intelligence, enabling autonomous collaboration of agents across multiple scenarios and offering self-evolution capacities through the full process closed-loop integration. And then for the supply chain customer, our self-dided by Tan digital supply chain platform achieved new breakthroughs in customer coverage and capability enhancements. For example, in intelligent warehousing and distribution, we co-built a dedicated logistics pub with a well-known overseas food walls and Pero brand to create omnichannel warehousing and distribution solution. We actually through omnichannel integrated warehousing, we will be able to make sure -- achieve the full inventory visibility control and traceability. We also set up domestic retenders for the customer equipped with RFID lightged picking and algorithm-based sourcing and shelf capacity, improving the inventory turnover efficiency. For cross-border scenario, we made the China business Smart Express, address the pain points as difficult cross-border cargo tracking low customer clearance efficiency, we realized a single billing number covering the entire logistics chain, making every part visible. We ensure information security and compliance through the dollar isolation between domestic and overseas. Product visibility rate exceed 97%. RO parcel dropped to 95%, dropped by 95%, improving customer experience. In the near future, we will consolidate our intelligence to provide more value to the customer. Alex walk you through the financial highlights.

Just now Mr. Wang has already provided a full year performance overview. I will walk you through the Q4 performance. As previously communicated, -- starting from Q3, we have a series of the optimized solutions, including advanced operational activation mechanism enhancement program, which actually drove a business turnaround in Q4, putting us back to the growth track. In Q4 2025, the company's business volume reached RMB 4.6 billion, up by 80.3% Y-o-Y, still significantly outpacing the industry average after the enhancement program. Operating revenue reached RMB 83 billion grew by 70%. The gross profit reached RMB 11.8 billion, grew by 10.3%, representing a gross margin of 40.3%, up by 0.4 percentage points. Net profit attributable to the shareholders reached RMB 2.8 billion, grew by 10% the performance is beyond our Q4 guideline and the attributable profit grew by 3.8%. Well in 2025, gross profit reached RMB 41 billion, grew by 3.6%, representing a gross margin of 30.3%, down by 0.6 percentage points. A series of strategic investments be down from Q2 to Q3, which may have a short-term pressure on GP margin, but we quickly optimized that and reaching the highest quarterly gross margin in Q4. You can take a look at the left down corner, the quarter-by-quarter number. It was 40.3% in Q4. It's mainly due to the following reasons. On one side, the company continued to invest in operational support for high-end time definite business to consolidate the product competitive edge. Secondly, the first optimized later strategy and operational activation mechanism, we can optimize business mix, including increasing the proportion of the high-value business, improve operational model through the last mile operations of the e-commerce parcels to enhance the precise matching of the business and matching of the business and the resources. Meanwhile, the company deeply created customer supply chain and the global expansion needs, actively invest strategic resources to strengthen supply chain and international service capacity support the growth of the second growth curve. In terms of the cost, the company adhered to the lean management and continue to promote structural cost reduction. From the perspective of each cost item, labor cost as a percentage of the revenue grew by 2.5 percentage points. On one side, the company always take all risk as core competitiveness, improving their composition and driving business growth through lean incentives. Secondly, we also continue to optimize our operational model, reducing the employee workload and improve operational efficiency through operation model optimization and the application of intelligent and unmanned technologies. The riding capacity cost as pertain to revenue was down by 1 percentage point. The company constantly enhanced time definite competitiveness by expanding direct trans and land transportation. Meanwhile, we effectively consolidate the sites and also by having the international aviation resources, having a joint operation and optimized procurement strategy. Other operating costs as a percentage to revenue decreased by 0.8%, thanks to the increased investment in strategic resources such as overseas infrastructure, improving resources management, strong scale effects driven by the cargo volume growth. Regarding the expenses, thanks to the lean operation and technology improvements, the company promoted organizational flex as well as improved management and the R&D efficiency, resulting in a 0.2 percentage point reduction Y-o-Y in both management expenses ratio and R&D expenses ratio. Meanwhile, lower average low balance reduced interest expenses driving 0.1 percentage down in financial expenses ratio. For sales expenses ratio rose slightly by 0.2 percentage due to the strengthened sales team building and accelerated industrial and international transformation. Overall speaking, the total ratio of the 4 expenses together decreased by 0.3 percentage Y-o-Y. Net profit has already been introduced now. I'm not going to repeat it. It is worth noticing after many years of development, the 3 business segments were all profitable in 2025, resulting in a healthier profit structure. In terms of the capital structures, we have a sufficient OCF by repurchasing the U.S. dollars in the early days, boring and other measures, we will be able to make sure asset liability ratio is being reduced to a healthy percentage, consolidating our performance. But at the same time, in terms of the cash flow, OCF in 2025 was TWD 27.6 billion, down by 40%, mainly due to the changes in operating cash flow and the business mix adjustment and the tax payments. However, the overall OCF remains solid and ample. On capital expenditure, the company maintained focus on investment returns. In 2025, asset-related expenditure was RMB 9.6 billion, down by 3%. Free cash flow was RMB 17.9 billion, providing solid foundation for cash dividends and share repurchase. On shareholder returns. In 2025, the company dividend payout ratio was 40% for the full year. The total interim and financial dividend will be RMB 4.46 billion, an increase of 9% Y-o-Y, excluding the one-off special dividend from the 2024 H share IPO. In addition, the company increased repurchase to demonstrate our confidence into the future business. Cumulative share repurchase have exceeded more than 7 billion since 2022, majority of which have been canceled. At the end of October last year, the company increased the total repurchase quota to RMB 123 billion, of which RMB 2.4 billion have been used to date. Based upon that, we also would like to announce the A share repurchase quota will be increased to RMB 3 billion to RMB 6 billion. In other words, the upper limit would be doubled. And we are also going to change the cancellation to registered capital reduction. We also launched a new H share repurchase program with a ceiling of RMB 500 million. Both programs are valid here March next year. Based upon the current repurchase program, the cancellation ratio would be exceeding 1.2%. In 2025, the company returned through RMB 4.46 billion cash dividends and RMB 1.6 billion share repurchase and returned RMB 6.1 billion to the shareholders, equivalent to 55% of the net profit attributable to the shareholders. The increase of the dividend and proactive repurchase highlight the company's high priority of the shareholder returns and firm confidence in our own operational strength. Looking to the future, the company will continue to create greater value to the shareholders by improving our operational qualities and enhancing market value management. As we continue to achieve steady business growth, SF also attached great importance to sustainable development and social responsibility, continue to improve ESG governance system and also formulating systematic and scientific carbon reduction and implementation pathways. In April of 2025, the company officially obtained SBTI validation, aiming to achieve full value chain net zero emission by 2050. We also officially released the Climate Action white paper last October, committing to become a leader in low-carbon transformation in China's logistics and supply chain industry. Currently based upon our Funko sustainable development management platform, a digital intelligent carbon management system, the company has deployed the carbon reduction initiatives, including green transportation, green park, green packaging and green technology, and we continue to build low-carbon logistics ecosystem with upstream and downstream partners. with continued efforts in environmental protection, in employee care, public welfare and compliance governance. SF's ESG practice have been highly recognized by domestic and international rating agencies. Recently, SSCI ESG ratings been upgraded from single A to AA, ranking first among the world top 4 integrated logistics service providers. System analytics and CDP climate rating also leading the whole industry. I truly believe the rate upgrade is both recognition and a new start point for SF. In the near future, we'll continue to improve the ESG governance and contribute to the high-quality development of the industry. This concludes our 2025 annual performance review. I will now hand over to our moderator, Madam Stanley.

Ladies and gentlemen, now let's move to the Q&A session. [Operator Instructions]. Coming next, let's welcome the participant with the number 518 .

My name is [indiscernible]. Very happy to congratulate on the company with a solid performance, especially in Q4, we continue to see your revenues being further improved and your cost continue to be optimized with decreasing trends. The business started to demonstrate a very nice inflection point. I clearly noticed that in 2025, the type definite parcel achieved accelerated growth in 2025 through scenario expansion, what's your outlook for 2026 growth? And what are the key drivers to continue to support our time definite parcel and Express business growth.

I am Mr. Wang, let me help to respond to the question. First of all, I'd like to share with you a good news. The Time Definite Express maintained solid growth in Q1 of this year. This was mainly due to the product innovation for the longest spring festival holiday in China. However, we provide the festival gifts and gift box so and bringing new growth opportunities. In other words, product innovation provide more opportunities for the business growth. That really gives us the confidence to achieve our target. The growth rate of the time definite revenue, excluding the returns, maintain lower than the Chinese GDP growth in 2026. There are 3 growth drivers. First of all, I think it's the shift in operational mindset. The consumption trends are extending from shopping-driven to diversified emotional consumption and also cultural tourism. Based upon this trend, we will break resources and capability bottlenecks and idles to continue to improve dynamic service capacities around scenario-based product and personalized service. In the past, we designed product on available resources we have. It's like taking order passively. However, today, we conduct the user research in advance, accurately identify demand while securing key resources. For example, like take saga as an example. For SF, it is never just about a ticket delivery. Most of the fans travel across cities and creating opportunities for ticket deliveries, fan economies, fan merchandise deliveries, luggage storage and even the used equipment we can delivery. Those are all the possible service extensions we can provide only for concepts. But at the same time, network and service upgrading. On one side, we continue to densify the same-day delivery network. In 2025, we utilized more than 4,000 passenger flights and newly added 9,000 high-speed rail and same-day routes. We supplemented intra-provincial and economic circle express lines, strengthen the penetration in key locations and our competitive edge. But at the same time, we also provide the human touch service. continue to work with the online and offline, working with organizers of the concert, hyper supers venues and also transportation hub to actually make sure we have available resources, continue to densify our network coverage to shorten the service distance. In 2025, we added an extra 200 campus service center and entered over 10,000 community exclusively and partnered with 300 SnXports and 500 transportation hubs. Those are the key transportation nodes with high traffic. Thirdly, going back to SF. Internally, we continue to optimize resource and cost. We fully integrate and utilize the social resources while amplifying our own resource strength. We proactively attract target customers through flexible resource allocation and optimized pricing strategy. We will enhance comprehensive competitiveness through containerized transportation, chartered freight food and professional packaging, supporting steady growth of the time-definite Express business. In 2026, we have every confidence to hit our target.

Thank you for Mr. Wang for your comprehensive response. I hope the company will deliver a tangible result in the near future.

Coming next, let's welcome participants with 8663.

My name is Shen Xiafeng from Huatai Securities. Your Q4 performance go beyond expectation. especially for international business. A volatile bad trade policies and whether your global business strategy has been changed. And after having the joint strategic share investment into JD Express, what are the synergy you're going to release and how it's going to advance your global business?

I'm Alex. Let me help to respond to your question. In 2025, we do see international trade policies has been changing all the time. However, SF supply chain and international revenue still grow 32% in 2025. While at the same time, you can see that our TRM, the volume has been pretty stable. On the other side, thanks to the business mix optimization and the operation, you can see that for the supply chain and international revenue, excluding freight forwarding, the segment achieved a net profit of RMB 190 million, an improvement of RMB 950 million over 2024 on a comparable basis. The performance already tells the story. In 2026, despite the intensified global competition and the global landscape, still there are so many uncertainties on global agreement. However, Chinese company remain determined to go global and reshape the overseas supply chain. Well, at the same time, SF, we greatly believe or based upon our experience, the greater the external disruption, the higher the consumer demand for cross-border logistics certainties and greater reliance on reliable and efficient logistics partners. That's exactly what SF is truly good at. And in such a macro environment, we believe the threshold of the cross-border logistics in raising significantly. So we believe those new entrants who just in the industry for quite a short period of time, it will be quite struggle for them to gain extra market share. For this year, for SF international strategy, we focus on 3 areas. First of all, breakthroughs business model. We're going to shift it from integrated resources and solution to capture key industrial customers. And secondly, we're also going to have the resources upgrading. We're going to build capacities around the [ atronkines ] land rail transport, customer clearance and even the overseas warehouse to build our own competitive edge. And thirdly, we're also going to continue to invest in resources, leveraging strategic investments to work with our international partners, leveraging asset-light model to improve our last-mile delivery services in overseas market. Mr. [indiscernible], just now you mentioned IF is working with GNT Express. It's actually a great example. both we and GT, we have a synergetic strategy at home and abroad, and we also have complementary resources. Here now, we have already provided C+O, the regular mechanism. The delivery of the share are still in process now. However, as you can see, as we are working with GNT Express, the solid cooperation has already been developed. We are already handpick a few countries to work together, for example, like Mexico as well as Indonesia. We plan to leverage JD Express to continue to strengthen the last-mile delivery fulfillment capacity of the e-commerce parcel, the international market and continue to support our Chinese customers for their global expansion by providing optimized logistics service. To put it simple, in the near future, we're going to leverage data-driven, improve our transparency, service and operational service and efficiency. I truly believe SF international ex business will continue to work with traditional network and supply chain and continue to release 1 plus 1 plus 1 more than 3 strategically dividends and continue to advance our international business as a whole.

I really look forward that the company can have a thriving international business.

Coming next, let's welcome 8416 to raise a question.

I'm Dan Luo from Guosen Securities. First of all, congratulate on the company for your solid performance. Your Q4 performance is still go beyond the market expectation. I have a question. The company adjusted its supply chain organizational structure in 2025, integrating the industrial division into a supply chain BG. In such a backdrop, what is your future development plan for supply chain business plan for supply chain business. But at the same time, last year, we also have the company introduced around 4,000 sales person. What about their contribution to the operational efficiency?

As it was touching upon supply chain and sales management, let me just provide you a feedback first. The organizational integration of supply chain BG is a key step to build a one-stop supply chain service to address the pain points of the key account service such as cross region, cross-department coordination and low efficiency. We integrated 7 key industry divisions and supply chain subsidiaries into one supply chain BG. We established the so-called iron triangle model consisting of the industrial sales solution expert and operational team. The reform achieved deep collaboration from frontline sales, middle office product and back office operation, ensuring unified customer interface and clear positioning. Regarding our supply chain development strategy in 2026, we have built benchmark, standardized and improved and mobilized more. First of all, build benchmark, we deepen value with key accounts, focusing on leading enterprises in 7 sectors, led by the BG to actually have the lighthouse cases. while regarding the horizontal connections, we promote standardized solution replication. We will replicate well-established scenario-based solution. For example, 12 standardized scenarios in high-tech industry to promote them to other mid-tier customers with high growth potential. And then we mobilized or brought down the regional boundary, conduct horizontal industrial operations across region, integrate core business such as warehousing and international supply chain and to improve network-wide performance. Regarding the sales type work, in Q2 last year, we introduced the industrial sales. After 1 year onboarding, they were already a part of the family. We deployed the team based by industrial clusters. For example, the alcohol sales teams based in the core production areas such as Sichuan. Now the sales team is being stabilized at around 4,000 people. Organizational efficiency is ramping up quickly. In addition, we established a multidimensional sales evaluation system, focusing not only on revenue, but also profit, long-term contracts and credit period management, supporting the team to do difficult yet right things to ensure quality and resilience of the business growth. In 2025, integrated logistics revenue in Hi-Tech, industrial equipment, automotive, retail and food industry grown by 20%, significantly outpacing industrial logistics growth. We believe such a professional sales team are helping the company to deepen industrial supply chain penetration, providing great support to our second growth curve.

Coming next, let's welcome 5060.

Congratulate on company for the solid performance. I come from CSRK and I'm Orlando H. I have a question regarding the cost. Starting from March, oil prices has continued to rise, meeting the highest level seen as 2022. With ever-increasing oil price, how is going to impact the operating cost? And what would be your countermeasures? Imagine if the oil price continue to maintain high or even increase, are you going to have the cost transition to your downstream clients? Thanks for the question.

I am Mr. Wang, let me help to answer the question. Frankly speaking, the global uncertainty is continue to be rising. The rising oil price has exerted some pressure on our transportation cost. However, we keep an eye on the market change and take multiple measures to address the ever-increasing oil price. There are a few points. We optimize capacity structure. We leverage assets multi-business resources. For example, the railways in 80, we have already made the deployment. We're going to leverage the structures to adjust the capacity, reducing transportation costs while improving the time-definite service. By the end of 2025, we have already have 1,400 high-quality railroads -- the annual volume already exceeding 2.87 million tonnes. the 50th 5-year plan, and we'll actively expand intermodal transportation with more countries being covered. Secondly, we still also would like to continue to improve our energy mix. We are also actively deploying NEV transportation vehicles. By the end of 2025, and we have operated more than 4,800 new energy vehicles, 300 drones and close to 150 LNG heavy-duty trucks. In addition, we have ordered 100EV heavy-duty trucks for our own fleet, which have been delivered and put into use. For external capacity, we continue to build a win-win ecosystem with our suppliers through systematic and transparent procurement and operational empowerment, we cope with the oil price changes together with suppliers for win-win results. In 2026, we also promote intelligent feeder pricing, covering 194 cities with standard pricing model and dynamic adjustment while system algorithm. We will continue to optimize capacity and energy mix going forward. The third point is regarding how we improve resources efficiency. As all of us can see, AI agent has been deeply integrated into our all operations. We have built capacity agent to achieve precise matching of the capacity and cargo, more scientific route planning and vehicle selection. But at the same time, the people and vehicle cooperation has been more efficient, and we have built high efficiency and deeper resource integration with partners, further improving per vehicle profitabilities. To date, 24 vehicle utilization has been increased by 5%. We will continue to improve per vehicle profitability. Just now, I was talking about the ground transportation in China. However, the oil price in China was be regulated by NDRC. The volatility are significantly lower than the crude oil index worldwide. For international jet fuels, where self-operated overseas routes for the market cost. International freight contracts usually include the fuel surcharges allow the cost to pass through when oil price rise. Last but not least, we firmly believe costs are designed and efficiency gaps are created, a more resilient logistics system forward-looking energy reserves and ultimate efficiency gives us the confidence to meet the cost challenge from the price volatilities. But I'd like to emphasize one point. We always adhere to sustainable and healthy development. Cost reduction, as I mentioned, would never come at the expense of the resources input or cost mix driven.

Coming next, let's welcome participants with 3815.

I'm from Shimin Hu from CITIC Securities. Congratulate on the company for your Q4 performance beyond expectation. me. We are pleased to see the shareholder return, especially the enhancement version. Based upon the cash flow and the repurchase arrangement, what is the 2026 CapEx? Can you share the 2026 full year revenue and the profit growth guidance to the market?

Okay. Thank you very much. Let me Ho respond to the question regarding the market guidance. As capital allocation has always balanced the long-term development and shareholder returns. As I have already mentioned in the prepared remarks, in 2025, our free cash flow was RMB 7.9 billion, remaining ample. And in 2026, we expect we're going to have a steady yet ample cash flow. Regarding the repurchase, as been previously introduced, based upon the latest repurchase program, the company expects to maintain RMB 3.6 billion quota in the Asia market because today, we have already mentioned the quota of the repurchase would be doubled. And in Hare market, we also have a repurchase program with a sitting of RMB 500 million. the company always continue to return the value to the investors in real cash. Regarding CapEx, in 2025, asset-related CapEx was around RMB 9.6 billion, accounted for 3.1% of our total revenue. And in 2024, that number was 3.5%. We believe in 2026, CapEx would be around 3.5% of the total revenue. But here, I'd like to emphasize one more point. We attach great importance to ROI. We always follow the prudent yet rational investment principle and making sure a reasonable return on every capital expenditure. That was regarding CapEx. Well, looking to 2026. In terms of the revenue, as I have already mentioned, in domestic market due to the micro policy continue to be released along with diversified consumer needs. As Mr. Wang has already mentioned about the cultural tourism, experimental consumptions, the development of the industry also lead to the logistics to go for professional and integrated solutions. So we believe -- we still remain confident of having a business growth outpacing the regular GDP growth in China. Well, for international market benefited from the international business development, along with the supply chain reshaping and the international business, we're also going to generate a positive growth trend. So comparatively speaking, in 2026, I think the company's annual revenue would maintain the same growth trend as what we saw in 2025. However, regarding the profit, as we continue to release the effect of the scale, along with the ever innovated operating model and optimized the cost effectiveness, the company will strive to have a steady growth of the annual profit or net profit. In the process, the company will continue to keep an eye on the international relations and the fluctuation of the oil price and fighting the countermeasures to maintain our healthy operation.

Coming next, let's welcome 3134.

I am [indiscernible] Securities. We are a research team, we're truly positive on your value enhancement. We're happy to see your Q4 profit is being restored. However, talking about adjustments, on behalf of the investors and analysts, I'd like to ask you a question regarding improvement. If you take a look at the performance in Q2 of Q3 last year, we do see some performance fluctuations, especially in the profit rate. What are those factors causing profit volatilities to be improved? What adjustment measures has the company taken?

I am Mr. Wang, let me help to answer your question. The Q2, Q3 performance in 2025 was fluctuating. It was because of the 3 forward-looking investments we made. The investment exceed short-term profit pressure, but benefited the long-term competitiveness of the company. So those investments have completed with fifth optimization. Overall operations started improving. Specifically, we did 3 things. First, we consolidated the time-definite product mode. The company deepened differentiated service advantage, steady increased high-end time definite revenue growth, offsetting the short-term investment fluctuations and solidified the long-term high-quality revenue base. Second point, we also optimized the economy Express business model. Under the Scale First optimize Later strategy, the company launched an enhancement program in Q3. It increased the proportion of high-value customers through reasonable pricing, significantly improved e-commerce parcel ASP in Q4 and further repelled the cost. In terms of the cost, we promoted a tiered the last mile operation, setting up dedicated e-commerce outlets and optimized cost structure through intercity and external resources synergy in 2025 and e-commerce exercise delivery optimization rate reached 80%, e-com centralized pickup rate reached 8%. Third point, we strengthened the parcel and international sales team. As I was talking about, we built a solid sales foundation to achieve breakthroughs in high-tech, consumer goods and other industries. Based upon Chinese enterprises global expansion needs, we improved the one-stop supply chain solution. driving core supply chain and international revenue growth 32% for the full year. From the business perspective, we also did some refined upgrading. The first one is organizational reform. The enterprise development office was established last summer as a central brand for operation and resources responsible for full chain closed loop from strategy formulation to target acquisition to operational implementation, translating group strategy into actionable tactics to ensure management mechanism match future development. Secondly, we advanced operational activation strategy. We are actively addressing the operational issues in authorization process and we'll continue to deepen in 3 directions. in the near future. First of all, differentiated a migration with refined authorization based on regional difference, rejecting one-size-fits-all approach. Secondly, strengthen profit alignment, deepen the link between profit target based performance incentives. Thirdly, extending activation coverage, promote the wellness of profit sharing and co-responsibility among all employees. Overall speaking, with business mix optimization and management mechanism upgrading, we are confident to continue to improve operational quality and create better return to the shareholders. That's the measures we took after Q3, Q4 fluctuations last year. We are working hard to further optimize the business, and we have every confidence to improve the operational efficiency.

Very clear answer. Hope that the company has an even better performance in 2026.

Due to time reason, ladies and gentlemen, we're going to accommodate the final question today. Now let's welcome 0092 to raise your question.

I'm Jun Guo from Industrial Securities. Congratulate on the company with a solid performance. I have a question regarding your freight business. Everyone happy to see the freight business continue to develop. However, it seems that the freight market is undergone profound change. Two freight companies delisted recently. What's the impact on industrial transport competition? How will SF respond? How will the freight segment finance profit and market share prioritized in 2026?

Thank you very much. Let me just respond to this question. The freight industry increasingly focused on lean operations and high-quality service. And you can see the competition landscape has entered into a new phase of deepen integration and ecosystem competition. Consolidation and delisting are normal in the industry. However, SF does not overfocus on those events. We just stay committed to deliver high value to the customer, pursue long-term development along with our employees. For SF freight business, we have a very clear and long-term and firm long-term development road map. In 2025, we delivered solid results against our strategy. Customer count grow continuously, customer satisfaction improved steadily. The combined daily cargo volume of SF freight and freight exceeding 80,000 tonnes ranking first in the industry. Scale advantage drove service speed and network optimization with more than 2,300 route upgraded, further strengthening customer loyalty to SF by creating value to the customer. I would like to specifically talk about in the LTL market, we provide cost-effective logistics service to industrial B end customer with LTL cargo volume grow by over 60%. We upgraded our network model for B2B customers and deepened our cooperation with Den, a leading dedicated mine brand. Daily integrated cargo volume was more than 1,800 ton of integration, one on-time performance improved by 10%, surg experience improved by 53% cost decreased by 9.8% per ton so that we can jointly establish a highly competitive LTL network. Looking to 2026, we're going to stick to our policy, be customer-centric and employee-based, focusing on long-term growth, fully meeting customer needs, continue to deliver value while maintaining sound profitability, we will actively expanding market share and consolidate our SF leading position in the industry for scale, speed, quality and series. We will also continue to break through in the LTL market, lead in segmented sectors, deliver high-quality value to the customer and also achieve coordinated growth of scale and profitability. That would be the choice made by SF REIT.

Okay. Thank you very much. And I really look forward to the company is going to deliver wonderful fore.

This concludes our 2025 annual results presentation. Thanks for your attention and participation. The presentation materials are available for review and download on the company's IR website. A kind reminder to all analyst friends, please do not distribute the meeting minutes. We will -- if there is any need, please contact me or the IR team. Thank you all. Thank you very much.

Ladies and gentlemen, here concludes today's meeting. Wishing you a happy life. Thank you.