S.F. Holding Co., Ltd. (002352) Earnings Call Transcript & Summary

Good evening. Thank you for attending 2026 Interim Result Conference of S.F. Holding. [Operator Instructions] Now all participants are in listen-only mode. The meetings only be served for the investors. And we're also going to provide you the slide audio and the writing records for only internal use but not be disclosed publicly. S.F. Holding has not authorized any media, [indiscernible] we bring relevant content of this meeting. And also the reproduction [indiscernible] be on for infringement. S.F. Holding reserves the rights to pursue legal liabilities. We would like to urge you, the market is risky investment requires [indiscernible]. The meeting gets started. Would like to remind you, after the prepared remarks, we're going to have a Q&A session, please. Ladies and gentlemen, thank you very much. Thanks for joining us for S.F. Holding H1 investor presentation. I'm happy to share and introduce our team with you. The management meeting attending this conference, including Mr. Huang Sihai, the Chief Operating Officer, Mr. [indiscernible], the Chief Marketing Officer and Chief Technology Officer, Mr. [indiscernible], and the Chief Financial Officer. And we're going to have the earnings and business highlights first. And then we're going to have the technology application and then Alex to walk you through the financial overview and then the management, please join us for Q&A session, please.

Good evening, all the analysts and investors. Before I walk you through you our results. I'd like to thank all of our investors for your long-standing attention and support for SF Holding in H1 of 2026 faced with a complex and volatile internal experiments and in pursuit of sustainable and housing operations. Our strategy is centered on 2 core themes: Resilience for the long-term and AI-driven innovation. First of all, in China regarding the resilience for the long term, by moving from product operation to deep scenario cultivation by extending the consumer side to industrial site environment, we continue to deepen our competitive moat and consolidate our core business. The international market with this opportunity arise from the enterprise supply chain upgrades and expansion penetrating from single customer touch points into industrial upstream, downstream, helping Chinese enterprises accelerate overseas expansion from long-term growth. On software side. Actually, the software, AI delivery end-to-end enablement across asset logistics operation and revenue growth, efficiency gain and cost reduction. On the hardware side, we're rolling out cardiac small equipment at ASCO, including automatic housing, unmanned transportation keeping us at the industrial forefront. In terms of the business and -- our profit volume grew by 0.2% against the high prior year revenue exceeding CNY 155.5 billion, up by 5.9% in H1 basis, we keep advancing a second growth curve. Breaking down Express Logistics revenue grew by 3.2%, where supply and internal revenue grew by 50.6%. Organic supply chain and incremental growth as much as 47%. On profit side, last year result included roughly CNY 600 million of from the deconsolidation of the [indiscernible] logistics REIT. We're creating a high comparison base. Profit attributable to the owners of the company after deducting the noncurrent gains and losses better reflects underlying operating performance. In H1, the number reached CNY 5 billion, up 9.3%. Besides the tax, we're also going to continue to improve the dividend payout ratio. Alex, we're going to elaborate on this point further. I'm sure many of you are concerned about the impact of the rising oil price in H1 base year. I'd like to emphasize, oil price population is a short-term headwind, where operationalization and lean management or the direction of the company consistently pursue over long term. In H1 of this year, profit lifting program, the management and the scalability initiative together with a net effect of the AI application, which generates hundreds of millions of positive increase contribution offset earnings pressure brought by the high oil price. Profit attributable to the owner of the company after deducting nonrecurring gains grew by 9%, which demonstrated as operational reliance and meet external disruptions. Over speaking of the year development, asset domestic business continued to hold industrial leading position, for me solitude with continued even more where at the same time, we actively seize opportunities from the enterprise's global expansion, accelerating the momentum of our supply chain national second growth engine. End-to-end AI enablement also across the logistic operation started to deliver tangible results. I will work you step by step. Looking at our revenue structure as a domestic business maintained steady growth. cold chain & pharmaceuticals was affected by resin with reduced yield in summer fresh foods. Meanwhile, both revenue share and the Y-o-Y growth rate of the supply chain international expand further. I will provide you a detailed review of the performance by segment. Let's talk about the time-definite Express. The revenue rose 0.2% in H1 this year, taking into account the core pickup intensity and the value by operation. If we believe the delivery intensity is too high, it's going to impact on the quality of the service. So that's the reason we proactively adjusted our strategy on certain return parcel at the end of last year. Nevertheless, prime time definite Express revenues outpace GDP growth. Joining on the loan accommodated scale leadership self compete beyond the speed. We understand customer needs in depth and keep cultivating niche production side and consumer side use case to further depend our move in the product. Let me just give you 2 cases. Those cases are supporting CNY 100 million in H1. The first one is concert. We served 780 concerts in H1 of this year, providing not only luggage and merchandise sold for audience, but also marketing in actions that deliver emotional value. The second one is exhibition. We help exhibitors ship samples and exhibits, extending service across full move-in and move-out level. In H1 of this year, we moved and served more than 2,000 exhibitions, mainly single event revenue exceeding RMB 1 million. Going forward, we will continue to enrich customer touch points and strengthen multichannel cooperation with culture and tourism groups and event organizing. Economy Express revenue grew by 7.5% in H1 basin. Our core strategy is to optimize business mix and the revenue side and refine per operation on cost side. In terms of the volume, the 2-year compound growth rate of 15%, outperforming the industrial 12%, demonstrating resident volume growth. Building on this, we kept advancing profit lifting program, increased the share of the high-value customers that delivered a 6% growth in parcel ASP, together with intra-city on-demand delivery, we promoted the last mile network segmentation for e-commerce parcel to realize matching between products and resources. The centralized e-commerce part of pickup rate rose from 8% last year to 30% in H1 of this year. Centralized pickup parcel achieving a unit cost saving of RMB 0.2 per parcel. Let's talk about freight. Freight revenue grew by 12.6% on a Y-o-Y basis. Building on the [indiscernible] leadership, combined shipment volume across asset trade as tax rate due network increased by 9%. We strengthened our sales force and targeted the industrial large item market, captured the incremental growth in H1 basis, industrial large item above 100 kilograms accounted for more than 55% of the total freight volume. Volume grew by 20% on the large base. But at the same time, we strengthened our strategic partnership with Dekun in June, average daily integrated freight volume with Dekun exceed 2,100 tonnes, up by 58%. Through synergy across [indiscernible], our freight business has built an LPL network combining scale and differentiated service companies. Gross profit per kilogram improved significantly and further enhanced profitability. For asset intracity, the on-demand delivery, you may refer to separate disclosure from asset intra-city for [ motels ]. I'm not going to elaborate on this. Supply Chain International revenue grew by 5.6%. Organic revenue, excluding KLN reached 47 on YoY basis accelerated from 32% in 2025. Our second growth curve has entered into a phase of a broad-based acceleration driven by 2 pillars. First of all, International Express cross-border e-commerce logistics grew by 60%. For B and International Express, we made further breakthroughs in the heavy cargo segment, such as transportation, the robotic lawn mover. On the C end, we continue to cultivate high-value individual shipments. In cross-border e-commerce logistics. We maintain leading positions on key lines, including China, U.K., China, France. As tariff and regulatory requirement tightened SF end-to-end compliance capacity in main customer preference. Secondly, International supply chain delivered standout performance, with revenue rose by 155%. We fix on team lead enterprises sticking to full scenario clients demand extend service across upstream, the downstream. We also target local key industries. For example, headquarter oriented economy, Care Beauty and Telecom Hi-Tech in South Korea. High precession equipment, transportation demand for AI industrial chains in Singapore and Malaysia. Going forward, we will extend from single product to end-to-end solution and strive to become a preferred logistic partners for Chinese enterprises for global expansion. I have 2 things to share with you. The features our long-term partnership with a global leading high-tech customer, we first engaged the clients. In 2011, with finished goods sales logistics with express delivery. In 2018, we jointly build automatic benchmark warehouse for its global finished products business. 2020, we expanded into procurement logistics. In 2022, we supported its global expansion [indiscernible] with overseas integrated warehousing distribution. In 2024, we deployed the life side warehouse operation and the production side years of calculation. Our system include OTMS, has been integrated with client system to realize end-to-end connectivity. This year, we also built LLP data logistics provider model to orchestrate digital impediment and supply chain service for this customer, we have grown alongside with the customer evolving from a domestic express manager into a strategic partner, helping the clients to grow global resilience. Over the past 10 years, global revenue interested back to increased by fivefold express delivery dominate revenue in early days. Nowadays, Supply Chain International accounted for roughly 70% though international business currently only take a single-digit share it grow by 30% Y-o-Y. Secondly, ample upside from the global expansion opportunities. The second case is that what we support a leading 3C company for its production capacity in Vietnam. The customer has nearly 300 upstream supplier, under the private model, supplier must handle delivery on their own, result in the [indiscernible] and ETA information. End-to-end visibility for cross-border flow was limited. And the flexible resources adoption was required and made volatile production demand. SF has delivered a suit of the tailor solution, we have onboarded more than 8 extreme suppliers for this client. Uptaking unified and pick up, consolidating the transportation, by integrating the customer system, we implemented a single code full chain stability for China, Vietnam cross-border logistics to achieve the full-route-visibility across support transit and in-house workflow by deploying self-operated central house and fleet near major production base, we took over the customer's CMI workhouse operation and pork-based transfer business. Now we have connected full chain workflow covering raw materials, production, finished goods, sales cross-border logistics and multi-category warehousing for these customers. We have a free up over 4,500 square meters for the inside warehouse space, substantially coating material end run time, logistic revenue contributed by this customer was grown by 200% this year. In the near future, we will further extend into the service of the customers downstream partners, upgrading factory logistics fulfillment leveraging the unmanned technologies. Our capacity to deliver end-to-end cross logistics service is underpinned by forward-looking global resources deployment. The 2 slides is going to be skipped by me. However, as we are providing end-to-end solution, this actually has everything to do with our resources. At the end of June, our total overseas warehouse food brand exceeded 2.75 million square meters. Cargo throughput as Ezhou Air Cargo Hub, ranked third among global logistics players cargo hubs. Highlighting evident scale effect driven by the airport oriented industrial cluster. Then let me also talk about our operational foundation, we have deployed a small equipment at scale across every operational link. In digital and intelligent warehousing, we deployed ACR robots and AMR robots. Warehouse operation are empowered by capacities, including high quality inspection and wave planning. We have built multiple industrial benchmark warehouse covering footwear, apparel, beauty and 3C sector, helping customer cut inventory cost by 10% to 20%. And on sorting and transit. We accelerated the construction of the cargo treated transfer center, upper body humanoid robots and robot arms being deployed for small possible feeding and a large pilot letting around 2,400 AGVs being used. Sorting operation efficiency has been grown by 7.4% we pursue [indiscernible] with 5,400 (sic) [ 54,000 ] NEVs and more than 1,400 autopilot trucks being put into operation. Light-duty and heavy-duty unmanned trucks also being deployed in power cargo transfer as well as line-haul and short-haul transportation. For last mile pickup and delivery, what has been regarded as our core competitive assets. We have launched 6 major benefit program. For first-line staff, armored vehicle delivered robots and core AI assistant improve the working efficiency, reduce the labor intensity. For example, armored vehicle can save each courier 1.5 working hours per day, cutting the repeated trips back to the service updates. Going forward, we were keeping still having the application of the carding intelligent technology within logistics and now improving extremely experience to our customers. Let me welcome Geng Yankun to walk you through the technological side.

Thank you. Hello, everyone. AI technology are being rapidly deployed in all industries. I believe you want to know how SF use AI. SF operate a highly complex logistic scenarios with diversified product portfolio, facing strict requirements if we process time definite fulfillment. And we post world-class operation research algorithm across our in-house developed Fengzhi LLM and Fengyu LLM with substantial untapped value from the full [indiscernible] AI enablement, as Sihai mentioned, from the top-level design, targeting end-to-end enterprise-wide intelligence, we have built an AI agent faster or more than 10 co-agents as dozens of the business application agents with initial realization of the agent-to-agent collaboration. We also build an enterprise-grade AI application platform to foster employee driven AI innovation. The total number of the deployed AI agents grew from 5,000 by the end of 2025 to more than 15,000 now. Let me just talk about how we use AI for revenue expansion and the cost reduction. The first case illustrate revenue growth driven by synergy return customer agent and the sales agent, 5 sub-agent cost work in coordination under the customer agent. Opportunity sub-agent automatically mark potential business leads, leveraging internal external market signal, for example, identify enterprises with global expansion impact or sporting extraction cooperation opportunity from public event data. After lead identification, leads are graded and categorized into the sales agent. And we're going to sell those numbers to frontline sales and outlet managers. Meanwhile, AI auto generates a pre-visit on 1 page and sales script Mass import feeds on to be screened by AI outbound holding, AI sales agent tested contract-related message to escalate the [indiscernible] representatives. Furthermore, quality profitability and risks of sub-agents continue to monitor service quality, pricing, reasonability and realized close look management. In H1 lease dispatched by the system achieved a 67% [ bought-up ] rate and 6% conversion rate for frontline team. AI outbound registered around 40% answer rate, 8% contract signing rate create initial revenue of CNY 1.6 billion in incrementally. The business upside will unlock more opportunities in the near future. The second case showcase cost reduction potential unlocked by collaborations between planning agent and fulfillment agents. Taking ground transportation, as an example, the planning agent to deliver volume forecasting, route and resources planning, post-event optimization. After receiving the route requirement, the full-frame agent perform automatic vehicle scheduling and dynamic resources dispatching, supported by the AI agents, the network-wide route re-optimization for peak holidays to be shortened by 3 days to 6.5 hours. Automatic scheduling profits more than 98% of the network, line-haul and short-haul routes. Execution rate of the instruction to exceed 90%. Response time has been further optimized. Network-wide fleet load diagnosis dramatically review the next business day. Greatly improved self-operating fleet utilization. Parcel quality agent safeguards end-to-end fulfillment for our vision large language model across the whole network delivered second-level conclusion for the individual parcel exception diagnosis. Y-o-Y improvement is being identified. Now enabled by planning fulfillment agents, tangible cost savings has already been done in H1 of this year. Let me welcome Alex to talk about financials.

Okay. Thanks for [indiscernible], dear investors, good evening. Just now, Sihai has already given an overview of our interim results. Here, I will focus on the company's second quarter performance. Q2 2026 brought both opportunities and the challenges for SF Holding. We kept advancing lean operations, the profit lifting program and AI-driven efficiency gain. Which partially offset short-term disruptions from the higher oil price and delivered possible growth on the profit attributable to the owners of the company after detecting the nonrecurring gains and losses against geopolitical volatility, supply chain and international business further demonstrate its value and growth potential. Second, growth curve accelerated on the broad-based front. In Q2, possible volume reached 4.1 billion, down by 3.7% Y-o-Y due to the high base last year along with our proactive product optimization to focus on value-based operations. Revenue hit CNY 81.4 billion grew by 5.7%. GP margin reached CNY 10.7 billion, up by 6% and the GP margin rate was 30.2%, improved by 0.4%, affected by the high base from the deconsolidation of the sale rate in the prior year. Profit attributable to the owners of the company fell 50.1%, reaching RMB 3 billion. Excluding C rate [indiscernible], it grew 2.3% on a Y-o-Y basis. Adjusted net profit, which better reflects its only in performance stood at CNY 2.7 billion, up by 3.1% with adjusted net margin of 3.3 million were in terms of the gross profit in H1, gross profit was CNY 20.9 billion, up by 7.7%. Gross margin rate stood at 30.4% grew by 0.2 percentage points. Facing the moderating domestic industrial growth and complex global landscape, the company capped executing several core initiatives. On the revenue side, would adhere to the value-based operation with deepened diverse scenario demand, including into production, corporate, global expansion, continue to optimize product mix to drive high-quality revenue for us. On the cost side, we advanced our premotor optimization, interpreting high-quality resources such as intra-city on demand delivery improved process matching between resources and product and build a more flexible fulfillment network. Meanwhile, we accelerated the large-scale rollout of AI technology and smart equipment. Rich use case and business data feedback into algorithm iteration to raise operation accuracy of the intelligent hardware. This will unlock the full-linked digital intelligence potential for cost reduction and efficiency gain and reinforce our profitability [indiscernible]. Let me talk about the cost for sure. The company pursuing management and capital delivering structural cost optimization, breakdown by cost category can be seen in the following way. Labor cost to revenue ratio down by 1.4 percentage points on a Y-o-Y basis. On one side, we proactively optimized business mix, control the share of the low-margin e-commerce parcel will carry in the high labor intensity. And we also pushed the precise product resources pantry. On the other side, intelligent and unmanned technology is the workforce burden and lifted the operating efficiency, enabling the couriers to devote more energy to high-value customer facing work. The second point, transportation cost to revenue ratio rose 1.9 percentage point on a Y-o-Y basis, mainly driven by the external headwinds of the higher oil price in Q2. In [indiscernible], we scaled up direct approach to [indiscernible] and aided international flight frequency to strengthen our network competitiveness. But at the same time, we accelerated the deployment of NEVs, autonomous driving and unmanned vehicles and leveraged the digital intelligence tools to optimize network planning and improve the operational efficiency. The third point, other operating cost group revenue ratio down by 0.7 percentage points, guided by the mid-term strategy. we increased investment in strategic resources, including the sorting center automation, last mile touch points and overseas warehouse. We also refine resources deployment governance to boost the asset utilization rate. In terms of the expenses ratio, as you can see here, the G&A expense to revenue ratio edged up by 0.1 percentage point mainly attributable to the head count expansion for overseas business rollout. Guided by the link operation and the technology empowerment, we pushed the organizational fettering ratio being effectively declined in Q2. For sales expense, sales team are incentivized by the high-value business expansion KPI, accelerating new staff onboarding, keeping S&M expense to revenue ratio flat year-by-year. Powered by AI algorithm, R&D efficiency kept improving with R&D expense to revenue ratio down by 0.1 percentage points. Meanwhile, the lower average outstanding borrowings reduced interest expense, driving the finance expense to revenue ratio down by 0.2 percentage points. Taking all these factors consider total for expenses ratio down by 0.2 percentage points in H1. Let's also talk a little about the capital structure. In H1 of 2026 asset liability ratio of the company stood at 50%, modest increase versus the end of 2025. From the [ Bridge Bank loans ] to an from the GT strategy equity subscription, excluding this breakdown impact, the asset abated ratio would be dropped to 48.5%, which is very healthy. On cash flow, cash flow from operating activity, OCF reached CNY 11.2 billion, down by 14%. This was jointly driven by shift the timing of the operational recipients and the payment due to business mix change as well as tax payments to consolidate the long-term core competitiveness, we strictly controlled return on investment and capital increasing forward-looking investment in sorting hub automation, smart equipment NEVs. Automatic hardware is expected to be continued to lift operational efficiency and accuracy. NEVs will gradually reduce our residence on the fossil fuel. As a result, CapEx in H1 was CNY 6.1 billion, improved Y-o-Y. Well, let's also talk about the shareholder returns. As I've attached great priority to shareholder returns. As you have already seen, we ramped up share purchase since last year. We just fully completed CNY 6 billion repurchase plan for consolidation. While sitting was double at the end of March. Those repurchase share would be canceled afterwards. Under the [indiscernible], HongKong dollar $500 million A-Share repurchase program launched at [indiscernible], HKD 230 million has already been utilized at the end of July on dividends to reward the shareholders and based on our solid confidence in future developments, we lifted the 2026 interim payout ratio from 40% to 45% this year. The expected interim cash dividends amounts to CNY 2.5 billion, up by 8%. And Furthermore, I think you'll probably see our announcement. We propose to revise the 2024 to 2028 5-year shareholder return plan, targeting full year payout ratio of 45% for fiscal year 2026, rising to 50% for fiscal year 2027 and no less than 50%. For financial year 2028. In forward, as for owner or commitment to the share operating gains with the shareholders, keep executing shareholder return initiative to thanks for our shareholders for your long-term. This concludes our prepared remarks. I will hand over to [indiscernible], please.

Thank you, Alex. Now let's move into the Q&A session. [Operator Instructions] [indiscernible] audience number ended with 343. Please identify yourselves.

Thank you. Hello, everyone. My name is [indiscernible] from CICC Transportation. So now I have a question congratulate on the company for such a good performance in the futile external environment especially, I say that gross profit and also the net profit also see stable growth. My question is regarding the time definite part, especially the prime time-definite parcel in H1 of this year still are going to see a very nice growth. So how the company looking to H2 of this year would like to plan to tap into the growth of the potential prime time definitely expressed? And how does the company view full year growth?

Let me help to answer the question. Our time-definite express business led to the industry in scale. Its revenue market share ratio is already rising to 66% last year. On this basis, our prime time definitely expresses still achieved revenue growth of 5.3%. How are you seeing the 4.7 GDP growth. Our competitive mode capital deeply demonstrating the growth rate guidance. The growth of still standing primarily from the 2 levers, including scenario expansion and service upgrades. Regarding in the scenario expansion, we continue to push for scenario express screws, shifting from passively taking order to proactively creating demand. I was talking to my team all the time with superior positioning in the core channel. For culture and tourism scenario, besides the answer I mentioned in the prepared remarks, SF has also aligned with China's multi-tier policies to boost the culture and the tourism industry. Because different provinces and cities are promoting culture and the tourism industry will adopt a 3-day strategy, broad coverage specialized execution and broad-based impact. We will deploy outlet at airport, high-speed [indiscernible] station, hotels and [indiscernible]. I think on your business trip, you may see many of our outlets over there. But at the same time, we also focus on 6 categories of the partners, including culture and tourism group airlines and OTA and pools and performing auto organizations. For example, we launched the East are floated with China Eastern Airlines without shipments supporting close to $20,000 in H1 of this year. Our strategic cooperation with China Tourism Group covers 60 [indiscernible] ports nationwide. In H2, we continue to expand into various culture and tourism sub scenarios to consolidate our leading position. Where at the same time, we're also deeply -- how do we in channels like residential communities, campuses and [ CPTs ] intensifying the touch points, such as community stations, university outdates and on-site presence at the landmark office building. We're also exploring emerging business such as gifting [indiscernible] and the circular economy. In addition, we continue to strengthen our penetration into industrial zones, leveraging high time-definite transportation capacity to take on the accelerated shipments for factory raw material replenishment, spare parts and process samples, ensuring our customers' production life and continuously and effectively. Where secondly, we continue to upgrade our service capacity. Effective from August 8, asset time-definite express product system underwent another comprehensive operate within it should introducing diversified product metrics, for example, as of Sunday, next morning and next day delivery, redefining product and service standards through the certainty of our time definite capacities. We also extend our late delivery composition service nationwide, covering all 3 time-definite products so that the speed has benchmark. [indiscernible] has a guarantee among which has a same-day leverage, optimal resources and making sure the delivery could be done with as fast at 4 hours covering more than 300 [indiscernible] new airports and high-speed rail station across Mainland China continue to literate on benchmark for prime time-definite express and enhancing customer experience. So I hope you can try our product because you're going to get the compensation if any delay happens. We hope by leveraging this service commitment, we can also support the whole industry to achieve the higher efficiency and better service really compete on the service. Looking ahead to H2, the current micro landscape still remain divergent. GDP growing driven by export and domestic retail sales is capital at a moderate pace. Against the high business base in the same period of last year. Numbers draw on the multi-scenario penetration and the literation of the prime time definite express. We hope we'll be confident in driving healthy growth of our time line business, please. Thank you.

I hope that in the near future, we'll be able enjoy the quality service from SF. Thank you.

Now let's welcome the second question. The phone number and gateways 8663. Please identify yourself.

Thank you. My name is Shen Xiaofeng coming from Huatai Securities. I have a question regarding the industrial transformation. The company continued to advance industrial-specific transformation, how the new recruited salesperson performed there any assessment metrics. Will you increase in size? If yes, what would be your target headcount? How much revenue and profit can it contribute.

I'm Yankun. Let me just help to respond to the sales question. The salespeople recruited last year after more than 1 year integration has already been deeply embedded into our base line, create value for our industry-specific transformation. At the end of June of this year, the sales team already stabilized it at around 4,000 people, among which industrial sales focus on customized supply chain solution for major clients, industrial zone sales cultivated incremental growth and also the well-invested cross-border business like the customer clearance and declaration, overseas warehouse, the sales team and also continue to refine the tiered customer management, delivering specialized and process empowerment. Efficiency of the team continued to improve. Average time for new hires being close to their first order shortened from 73 days to 61 days. At the same time, we have upgraded our assessment system and the last place elimination mechanism, guiding the sales to focus on long-term value across dimensions. For example, in customer profitability, payment collections, circle. And in H1 of this year SF organic supply chain incremental revenue accelerated to 47%. Where supply chain service revenue in subsegment like electronics component, telecommunication equipment and consumer electronics grow from 27% to 53%. Under the vigorous assessment mechanism, the size of the company's sales team will have some dynamic changes in line with the pace of the business development. Following the principle of a selective recruitment. We're going to focus on strengthening our industrial zone sales and the international sales capacity. We're also planning stricter based upon the core efficiency metrics and the profit per capital to improve the sales team's imprudent output ratio.

Thank you. Thank you, which can actually boost my confidence and understanding your sales team much better. I really hope that you are going to have a good business and with wonderful scorecard.

Next, let's welcome the next investor. The phone number ended with 2317.

Hello, everyone. I'm Tso Fan from Bank of America. Supply chain and national revenue growth was very strong in H1 of this year. How much do International Express international freight and forwarding, cross-border e-commerce logistics and integrated supply chain, each contributor? What about the profitability? We would like to understand the mid- and long-term strategy and financial targets. Thank you.