Sinotrans Limited (601598.SS) Earnings Call Transcript & Summary

[Abrupt Start] the 2024 interim results investor teleconference. I am the moderator for today's session. And before this meeting, we have already sent you the summarization of the interims results, investor results. So today, we welcome the management, Mr. Song Rong, the Executive Director and President of Sinotrans, Mr. Li Shichu, Vice President and Board Secretary and also Mr. Gao Xiang, Vice President and Chief Digital Officer. At the same time we have also invited Madam Wang Xiaoli and Madam Ning Yaping as well as Mr. Cui Xinjian to join us on today's meeting. For today's meeting, it is going to be divided into 2 parts. The first part is going to be an introduction towards today's interim results, and second part is going to be the Q&A. Now we are going to give the floor to the Mr. Song Rong.

Ladies and gentlemen, friends, I welcome you from the capital market. First off, on behalf of the Sinotrans management, I'd like to extend my warm welcome to all of you. Investors who keep following the company should note that the company's operating revenue increased by 70% year-on-year to RMB 56.4 billion in the first half of this year. In the second quarter, the company [ withdrew ] the pressures by competing with the market and we have undertaken the pressures from the market. The net profit attributable to the parent company increased by 42% month-to-month about USD 1.14 billion. At the same time, another pressure for the medium-term purpose, the company adhered to the principle of always focusing on the shareholders' return. And for the dividend payment ratios, we are reaching 54.17%. Let's review the logistics situation in the first half of the year. From the perspective of the supply side of the shipping market in the first half of this year, the tension in the Red Sea regions has never been eased and the deviations of the liner companies has led to a tighter supply of capacity on the issue, European route. The international container shipping market is once again facing a tight supply capacity. On the demand side, the experts moment are on the high-end, intelligent and green product on the Chinese enterprises remains good. The gross cross-border e-commerce is strong. The in balance between supply and demand lead to a 34% year-on-year increase in the average composite index of the China's export container freights in the second quarter. The -- from the supply side of the air market, the global air cargo supply will increase by 12% year-on-year in the first quarter of the year 2024. On the demand side, driven by the lack of the shipping capacities and the various developments of the cross border e-commerce, the total global air cargo demand in the first half of the year is record high with a year-on-year input of 30.4%. In terms of freight rates, the average price of the European routes and American routes in the first half of this year increased by 33% and 47% year-on-year respectively. In the first half of this year, the company actually sees the market shares and opportunities. While we are seeing 90% increase in the shipping agencies, 25% increase in the air freight increase and 30% in the new region fixed business, as well as a 15% increase in the contract logistics market. Now let me introduce you the different factors of the company's operations. In the professional logistics sector, the external revenues of the professional logistics in the first half of the year was RMB 50.2 billion, an increase of 3% year-on-year. However, due to the lower price of the new and renewed supply contract, we are seeing the segment profit worth [ RMB 410 million ] and an increase of 27% over the same period last year. According to the data in June in the 41 key logistics cities across the country it builds by 4.94% year-on-year in June. The warehouse vacancy rate increased by 2.41 percentage points year-on-year. The lack of effective domestic demand has brought customers to further to seize logistic costs which brought unprecedented challenges to the overall market, but we could also see that challenges also means the opportunities. In the first half this year, the company have insight into the changes in their customers' demand, effectively expand the customers in domestic and the freight market, integrated its own supply revenues to carry on joint bidding and won the bid for the new business for the fewer, strategic customers. The resilience of the overseas supply chains continues to be enhanced and we have also built end-to-end resilient supply chain network in covering 48 countries in Europe and also service coverage to more than 20 countries in Latin America and improved the full length capacities of the overseas terminations. In the first half of this year, the [ agency ] segment achieved operating income of RMB 35 billion and year-on-year increase of 22%, mainly due to the increase in business volumes and year-on-year increase in the freight rates and the significant growth of the shipping and the air freight agency business revenues, which operated by 27.9% and 32.6% respectively. The profit of the segment was RMB 1.23 billion which was basically the same as that of the period last year. In terms of this agency business, the company has favorably promoted transformations to the new carrier models and built and controlled the core capacity pool and the key logistics resulted in various forms. The water transforming channels gradually improved controls of the channel resources by means of the catering, pricing lockings and joint operations. The air sectors operate by 10 [ old ] freight rates, achieving controllable capacity of 132,000 tonnes a year-on-year increase of 24.5% and the air freight channel business volumes were 533,000 tonnes. And for the e-commerce business, it's majorly being generated from the cross-border e-commerce business. In the first half of this year, the business grew by 25% year-on-year. The corporate dividend is growing by 17% and 58% respectively. At present, a new round of scientific and technological revolutions has taken place featured by artificial intelligence. The international strategic presence is moving at an accelerated pace in the face of the complicated international situation, combined with other unfavorable factors such as insufficient domestic effective demand, differentiated economic operations, Sinotrans is working on both qualities and [ quantitates ] as well as changing the old and new development patterns working on the new production forces and comprehensively promote the key areas. In the upcoming second half of this year, we are going to be focusing on the following fronts. First of all, we should pay attention to both quantity and qualities and increasing effort to implement the key topic of the year. In the first half of this year, since we had a rapid income, this is also creating an increase in the account receivables. At the same time, we also had expansions of the trends in the charter flight leading to the temporary pressures on the company's cash flow. In the second half of this year, we will fully implement the controls of our accounts receivable and cash flow and promote the improvement of the relevant financial factors. The second is to strengthen the market on the basis of an in-depth insights into customers' need, perhaps the [ high ] customers stabilizing the market, optimizing cost to meet the demands of the customers in small and medium size. Second, we are going to accelerate the development pace and also the digital transformation. For the second half of this year, we are also going to work on the project management and also the customer delivery systems. The customer management systems will be fully applied and the online units will be no less than 45% of the company's business revenue within this year. The product management systems will be completing the pilot of the productizations of the main business lines to realize the closed loop of the business management process. The delivery management systems will continue to promote the release of the business standards and the online applications of the logistic control tower model. The third is to gradually roll out and promote the new carrier model. The air freight will continue to improve the effectiveness of the new carrier model. On the capacity side, we are also going to focus on the Central and Eastern Europe, Central and South America, Southeast Asia and Middle East. In China, we are going to focus on the core areas of the Jiangsu, Zhejiang and Shanghai and Guangdong, Hong Kong and then the Greater Bay. And overseas around we are going to focusing on the Belgium and the Budapest in Hungary. In terms of the water transportations, we are going to focusing on the Southeast Asia, Middle East as well as Japan and South Korea. In the 2 terminals we are going to enhance the key resources investment. And in terms of land transportation, we are going to enhance the operations of the platforms in the key lines, enhance the total controllability capacities and lower down the cost and increasing the efficiency at the same time. For the [ bulk ] transportation, we are going to continue to focusing on the skills and the controllability trying to work on the market capacity. And we are going to make sure that the dynamic operating units of the [ SDCC ] platform is going to reach 225,000 units. In terms of the results of the allocations, we are going to follow the Chinese companies to go abroad and lay on the foundation where we are going to have these key focusing areas as well as the last focused areas. Fourthly, we are going to depend on reform and promote in-depth operational reforms. In terms of these operational support, we are going to promote the top level designs of the business organization and want the implementations on the product systems and the growth that will strengthens the overall operations. We are also going to focus on the new carrier models. In terms of the integrations, we are going to improve the strategic development models in Hong Kong and promote the allocation of the resources in the professional logistics sectors. In terms of the regional optimization, we will promote the integrations of the results in the region. Fifthly, we are going to work on the different channels. First and foremost, we are going to work together with the company's customers in improving our logistic service capacities. Second, we are going to work on the planned artificial intelligence technologies R&D applications in generating and open platforms in all parts of business solutions. Thirdly, we are going to build self-initiated key technology systems. In the second half of this year, we are going to concentrate our effort to work harder throughout to completely establish business objectives in key tasks for the full year and make every effort to promote a steady and far-reaching development on the channel trends. And return to our investors with high quality development. This is my sharing. I hope everybody could continue our support for the company. Thank you.

[Operator Instructions] Now, we are going to give the floor to [indiscernible] from the Yangtze River Securities.

I'm [indiscernible] for the Yangtze River Securities. I would like to congratulate you for achieving such good results with the relatively sluggish macroeconomy. The first one is that we would see that the investment in the capital market has been declined by 5% in the first half of this year. What is going to be your strategy on the second half of this year? The second question is about the dividend. I would say that it is remained the same. But I think the cargo volume is also growing quite rapidly, but we -- what is going to be the outlook for the future of the capital market? What is going to be the pace for the future development of the capital market?

Thank you so much for your support on Sinotrans. I'd like to answer your questions. And for the Sinotrans subsidiary, we would say that its dividend is -- the property is being declined by 2% and we controlled it within the difference of 5%. I think that performance of the second quarter is better than the performance of the first quarter.

The second part is about the governmental subsidies. Actually in our business sectors, in the different lines and also the air freight we have the governmental subsidies. I'm seeing the subsidy volumes are seeing a slight decrease compared with the numbers of last year. There are so many changes for the liner management and also the supply chain because of the COVID-19 pandemic and also the provision and control management measures. This kind of subsidy policy is under negotiation. That's the reason why we have got less than around RMB 200 million compared with the last year. And as for the subsidy per unit, the policy remains quite stable. I would say the total subsidy is not very different compared with the subsidy last year.

Now the floor is going to be given to [indiscernible] Securities.

Obviously, congratulate Sinotrans for achieving such a good [ result ] under the domestic and international pressures. This is also demonstrating the company's resilience to the turbulence of the market. I have a question quite similar to the investors before me. It is about the subsidies in the air price. Compared with last year some of these subsidies contract has not been fulfilled. For example, if we have fulfilled the contract in these subsidies, what is going to be the subsidy range? At the first half of this year the ratio is growing quite rapidly. The second part is about the contract logistics. The profitability, what is the outlook on the second year -- half of this year's profit?

I'm going to answer the second question and Mr. Xiang is going to answer the first question.

Thank you so much. Let me answer the first question, which is the air freight ratios in the first half of this year. In terms of financial management, the total subsidy is less than RMB 200 million. And also for the air freight line routine subsidies, after 1 year's experience -- actually last year we enjoyed 1 year's subsidy. But the subsidy was finished at the end of the year 2023. Sinotrans is going to be focusing on the operational routine. And currently, we are working together with the local government and negotiating with the local government to proceed the subsidies. We think that for these proportions of the local government subsidies, we would be very optimistic. In the second half of this year, once we have more negotiations with us, we are going to enhance our performance in the airfreight sector. Let me talk about the contract logistics sector. And in my report I have also mentioned that in the different business sectors, our contract logistics undertakes the most pressure from the market in this year. From the second half of this year, the customers continued their contract and we would say that the customers have a low total risk price in terms of -- for us to lower down the price, the customers opt for a 5% decrease in our price quoted and even sometimes they can go to 25%. Before the timing of the need from the market, the price pressure is going to continue to exist. At the same time, from the second half of last year, we have adopted a series of the measures, improving our own operational quality and improving the efficacy. The market shares of the companies and also the profitabilities of the companies remains at our leading position against a declining market and this could be seen by our qualities in services that we provided to the customers.

I wish the company could be better in the future.

The next investor is going to be given to the [indiscernible].

In terms of the interim results of the company in the first half of this year, we do see that although there are some declines to the company's performance in the second half of this year, the dividend to the shareholders is still quite good. So what is going to be the future strategies for the dividend? Do we have any guidelines for the future dividend attributable to the shareholders?

Thank you so much. Sinotrans has always attached its great importance to the returns of the investors and we also want to thank the investors for their support. We would like to have a very good dividend payout amount in order to be grateful to our market. But actually, although the market -- the company is facing another declining situation, our financial performance is very good. Our balance sheet is also seeing a very good performance. So that's the reason why in the first half of this year, although we are seeing decline on the performance, we remained same. Moving to the future, from the general financial situations of the company, we are confident to keep the same dividend policies to the investors in order to give them the returns that they deserve.

The floor is given to [indiscernible] from [ CIC ].

I have a questions. I'm from CIC. So the first question is from the second quarter, we would say that net profit and also the gross profit is being declining in the second half of -- second quarter of this year. What is the reason for the changes of this performance? Is it because of this revenues or is it because of the profitability? What is going to be the outlook of the second half of this year? The second question is about the returns. We would also say that there are some of the buyback revenues. Is it possible for us to have the buyback revenues?

Buyback plans. In terms of these buybacks, actually in the past 2 years in the each share market -- in the each share market we have buy some -- in a very stable place in the past 2 years and we are going to make some of the arrangement. But for the specific way, we are going to announce it to you according to the company.

Could you give us more introduction towards the performance of the outlook of the second quarter of this year? Because from the management perspective, we have the investments, we also have some of these pressures that we have undertaken. Because the revenues have been increased by 32% and the returns have been declined by 42%. And we are also promoting the record development from the cost perspective. Could you tell us the growth momentum in the second half of this year?

Thank you so much.

Now, we are going to give the floor to Lin Shan from Huatai Securities.

I'm Lin Shan from Huatai Securities. First and foremost, we'd like to congratulate Sinotrans for the performance of the first half of this year. I'd like to ask some questions about the export outlook in the second half of this year in the air freight and also in the exports. So what is going to be your outlook for the exports in the second half of this year? Do you have any foreseeable results at this point? Second point is about the cross-border e-commerce. Everybody is waiting for the results of the presidential elections results of the year 2024. So could you share with us some of your thoughts in the potential risk of the -- risks and what is going to be the measures to deal against it?

I'm going to take the first question and Mr. Xiang is going to take the second question. In the second half of the year, we should consider several different elements including the specialty export containers. The first part is about the operational capacity. We are increasing our operational capacities with the increases of the operational capacities keeps high. And in the future there is going to be an overcapacity in terms of the operational metrics. Second question is about the instability of the global geopolitics. This is also going to trigger a lot more pressures on our export in terms of the market. There are so many influences, but the element remains. The third part is about the sluggish or divided global economic market. This means that we are facing a fierce competition in terms of the external market. So, it is about our views towards the international market. No matter for the exports, the structural changes, it includes the exports of this business contracts. It also includes the export of our business mix structure. It is all going to be affecting the fourth quarter and even the next year's export performance in terms of the volumes and also the operational quality. All of this is going to be affected.

I'm going to take the second question about the cross-border e-commerce. In the second half of this year, we have keep a very close communications with our end customers. The increase of this business revenue is because we have expanded the cross-border e-commerce. In terms of this cross-border e-commerce, we are going to keep a revenue, a massive scale increases. But you could also say that with the increase of these cabins in terms of the passenger transportation, but because of these requirements of the time efficacies, the requirement or the -- the demands required higher. So, it is we -- our perspective towards the changes of this U.S. policy that for the cross-border e-commerce it is going to match with the future market consumption market wise. Actually, we have also experienced some of the changes in the European market. We do not have specific business changes. Definitely the companies are working together with our market and our company. Through the changes of our operational revenues, we are working together with the [ undertakers ]. We are going to block all kinds of the potential risks in order to maintain a very stable growth.

The next question is from [indiscernible] Investment.

First and foremost, I'd like to congratulate the management about this performance in the first half of this year. I have 2 questions. The first part is about the operational revenues in the first half of this year. So what is the reasons for the input of the operational revenues? Second question is about the cash flows. What is going to be the measures for the cash flows that you are going to take in to guarantee the stable cash flows in the second half of this year? And another part is about the cost management. We are under a huge pressure in terms of its cost revenues. What is going to be the future outlook for the second half of this year?

Cash flow is presenting a quite important spillover in the first half of this year. This is related to the company's skilled up in the first half of this year. The company is increasing by 70% in the first half of this year. Second, under the current macroeconomic background, our supplier is presenting a longer, closer cycles against this economic background. There are also going to be some of the increases in the prepayment. To deal with it, the second half of this year, we have a consensus that we are making all kinds of the allocations. We have upheld the meetings and we are going to work on the different specific areas. From this -- we are going to work from the demand and the supply side where we are going to improve the cash flows. The second question is about the cost, cost control. We have some of the similar questions in terms of the cost control. For one part, we are going to increase the revenue. This high-end action means that we are going to control the cost. In terms of the operations of the cost, the company is going to take in all the measures we could take. And we are also going to use all kinds of swaps in order to reduce the cost. The company is going to work at all of our efforts in the cost control momentum.

The next question is [ Yan Hai ] from Shenwan Hongyuan.

We could see that all the business sectors, no matter from the contract logistics to the e-commerce sectors, it is increasing very rapidly. But compared with the same time last year, this is also increasing quite quickly. But this year's macroeconomic performance is posing a lot of pressure. So what is the reason for this rapid growth? Is it because we made some of the breakthroughs in this half of this year in terms of our production capacity? Do we work on the digitalization of the market that may improve the results? What is the reason behind it? Should we keep the same momentum in the per-unit cost?

This is a very key issue. Actually, if you noticed, in the past 2 years, in the strategic development of the companies, we have experienced on several fronts, one concept is about the cross-market development. That is to say, with the rapid development of the economy, without the -- we need to grab the market shares with our own capabilities. In the past 2 years, actually in the first half of this year, Sinotrans's team undertakes these operations. Actually, we are very active in the market. We are -- this is the first reason. Second reason is that the digital transformation. Although, the digital transformation is a long-term strategy for us, but through the past 2 to 3 years' effort, the digital transformation changes our traditional business sector. And we are also guiding more and more inputs in the market share. Thirdly, from the air freight to the new organization of the market, we have already changed the trading patterns. This has also strengthened our profitability, and also we are seeing a greater expansion in terms of the market signals and market operations. The fourth reason is that in terms of this overseas, we are enhancing our overseas delivery rate capacity, and also business operational sectors. This enables our business to be growing better and faster. On the other side, we could also notice that with the input of this business, we should also pay attention to the skills of this business. Do we have more increase -- with the increase of the skills, we should also mention about the cash flows and also the cost control matters. This year, we just have over half a year's meetings, and we are using 3 years' time to think about one aspect, which is the transformation of the old and new momentum, the development of the qualities and the quantities. So please be reassured -- the investors, please be reassured that no matter for the inventories or the incrementals, no matter for the qualities or the quantities, we are at a very good momentum.

The next question is from [indiscernible].

Dear investors, I have a question about the investment market. The first question is that what is the company's view about the market -- the cargos in the market in the second half of this year? We have this momentum in the first half of this year. We continue the momentum. Compared to the second quarter, are there any changes? The second question is about the sea transportation in the company. We all know that the sea agency business in the company sector has been transformed from the 3 sectors to 2 sectors. Do we have any quantitative data which I can refer to?

For the first question, I think Mr. Xiang has already answered your questions. The business operation remains a very stable momentum with the returns of the Chinese exports and imports of the economy. Obviously, a very stable momentum in the second half of this year, especially in the past several years. The inventory trend in the European and American markets has been soft before the U.S. election. Obviously, everything will be stabilized. In the fourth quarter of this year, the U.S. election result comes. It's also going to be the season for Christmas. So it's also going to be the boom season. In the second half of this year, with the returns of the market, especially with the more operational capacities, the imbalance between supply and demand is also going to be increased. And we would also see that the sea freight prices is also going to be -- we are also seeing some of declines in terms of the sea freight. This is also going to be a very good thing. I would like to say from 2 points. And in terms of the sea agent perspective, in the single round operations, Sinotrans has also been operating at a very good momentum. We have continued our momentum in this round. We are also working together with the strategic clients. In terms of liners and the shipping operations, we are operating from a single round business sector to an all-round business sector. The ratio is rising. This is also going to be the development for the future momentum. We have some of the special investments this year. This also includes what Mr. [indiscernible] has mentioned, that we are balancing the quantity with the quality. And through the changes of the market, we are also going to change the performance in the growth profitability. Just as Mr. Xiang mentioned, we are definitely going to increase the quality with the quantities, we are going to move into the healthy momentum as we are moving into the second half of this year.

So now we are going to invite [indiscernible].

I have a few questions. The first one is that for last year, the single change you mentioned is seeing a very good performance. What is the actual situation for the first half of this year and what is the outlook for the second half of this year? Could we keep the same momentum? The second question is that in the air freight agencies, there might be some of this lost in the internal practitioners. So this is also posing a lot of pressure. So recently, I've seen the investors provided a single [ CUI to DUI ] accounts. In the recent few years, the multiple round logistic is also increasing. Do we have a very simple quantitative method to deal with it?

Single chain and also the -- let me answer the questions about the air freight. Actually, from the air freight channel, we are focusing on the customer's structure. Because of these changes of the cross-border e-commerce business, the massive skills of the business in the cross-border business sector, it should be within 50% to 60%. Because of these operational revenues, our end client is -- we have more and more diverse customers. We are also hoping to work on the long-term operations, the long-term high revenues. The first question is about the increases in the railway revenues from the Sino-Europe railways. I would say that this year we have achieved a very remarkable results because of the series of these outbreak in the Red Sea and other different areas. In the first half of this year, the business structure changed. The railway to Europe is also increased. And in terms of these China to Russian railway lines, the demand increased. And in terms of the average price, because of this air freight construction, the pricing remained the same. But for the Sino-Russian transportation, I would say that from the pricing, we are facing a lower down price and more competition from the market.

What is the ratio for the sea agent business?

We are not going to say that the sea freight business is only a simple sea freight business. It's representing all the segmented markets. So the business sector is being focusing on the -- I would say it's around 40%. But this number cannot define us because we are going to divide the sea business into the agencies, cold chains, undertakers, among other different business sectors. I would say that you are asking questions for the air freight. It is because of some of these small agents and medium agents, they are seeing their bankruptcies. But if you have going through multiple rounds of these transportations and the cycles, we are going through so many rounds of these cycles swapped. I've seen that several times. As a long, as a company with over 70 years history, we are having -- we have full capacity to offset markets, bankruptcies and also all kinds of these adversities. We are confident and we are capable and we also have the experience to deal with it.

The next question is from [indiscernible].

I'm [indiscernible]. I have 2 questions for you. The first one is that, what is the difference of the rates and also the development of the rates? Do we fulfill the mission this year? If we fulfilled, what is our expectations of the profitability ratios this year? Second question is about the railway business sectors for the first quarter of this year. We maintain a very good momentum, but the data is demonstrating more slides, so could you answer the reasons for it and why does it happen? What is your outlook for the international freight?

And I would say the rates, we are still under negotiation with NDRC. After the negotiation of NDRCs, we are going to work together with the CSRC. And after the fulfillment of the negotiations, we are going to give you the results. The second question is about the gross profit. In Mr. Song's report, the decline of the gross profit is coming from the contractual logistics sector. We are liking the efficiencies and the customers are always asking in the bidding process for us to lower down the price. That is creating the decrease in this sector. This is the huge cost for the decline of the cost -- decline of the performance.

I'm going to take the second question as a railway sector. The investors before me have also seen this question. In terms of the railway line, in the first quarter of this year, the China-Russian railway is declined -- has seen a decline in the first quarter of this year. And because of our arrangement in the railway line, we have also increased the numbers of the imported liners because this has also triggered a decrease in the net profit. For the second half of this year, we are estimating a return in the performance. We are quite confident about the performance in the second half of this year. You are asking me some of the policies about subsidies. The subsidy polices ended at the year 2023. We have a massive subsidies in the different sectors, but the subsidy is only accounting for 10% in the overall business. We are still observing the whole market. I'd say the market is going to be the same.

The next is [indiscernible].

I'm [indiscernible]. Just as you have told me, in the second half of this year, we have achieved a very remarkable result. So from the business sector, we are very stable. And after the contractual logistics business is a under larger pressure from the first half of this year. But the price decrease essentially started from the second half of the last year. We also have some of the cost changes and also some of the subsidies from the business perspective. Could you give me some of the outlooks in the second half of this year? Are we going to be more optimistic compared with the performance last year?

I think you have answered my question -- my answer in your question. We will see the air freight and railway freight is going to be stable. The market is going to be under operation -- under a lot of pressure in the second half of this year. We have already adopted a series of systematic and structural changes. We believe that our effort is not going to be wasted. The contractual business party is under huge pressure from the second half of this year. The measure has always taken its root. And our overall development -- our overall perspective on the second half of this year is that we are using all kinds of effective measures to improve the quality at the same time. We are also going to work on the business structures and we are also going to be enhancing the technologies in order to improve the quality. And actually, for the final time, we are going to better serve our customers in the overseas performance. Actually, we are very optimistic but we should look at the whole market. And also, we are also going to look at the general situation in the environment, some of the systematic risks still exist.

For the interest of time, we are only open for the last question. Now, the floor is going to be given to [indiscernible].

I am [indiscernible]. Obviously, the performance is very optimistic and very fulfilling. But, obviously, the return is seeing a slight decrease. What is going to be the changes in terms of this contractual business? What is going to be the reasons behind this? Moving to the future, do we have any questions or are there any supporting policies to deal with the volume decrement ratio?

Sorry, I think the question is not very clearly heard. I think it is also -- I am going to answer your question from my perspective. I think it is about the rapid increase in this ratio. And this year, we are seeing a decrease in terms of the freight rates, but I would say the decrease is within the controllable volumes. Moving into the future, we are focusing on the international cost freight ratios, which is related to the e-commerce platforms exports. And from the management perspective, we are very confident about the future of our business.

Is it possible for you to illustrate the total volume of the performance in the first half of this year? What is the reason behind it? Do we lack the customer orders or are there any specific reasons?

Actually, [ Zohua ] is a joint venture that we have built together with Deutsche Bank. But we have not announced the results yet for the first half of this year. I would say that in the previous years, we have a lot of support from the policies and from the environment. But actually, without any supporting policies, the joint venture with Deutsche Bank still remains a very good performance. But we are going to return back to the normal. Second, for the [ EDHL ], it is being affected by multiple factors, air freight means that you have the cost from 2 sides. The undertaking prices, the price of the oil, and also the fluctuations of the exchange rates. I think this is belong to the normal range, which can be understandable. The volume is increasing because my judgment into the performance of the market is that there is going to be a very sharp decrease in terms of these packages.

Thank you so much for the investors. Thank you so much for the management. The 2024 interim results announcement wraps up here. If you have any questions, please contact our IR team. Thank you so much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]