Summary:
1. In the first half of the year, the company achieved 4.48 billion yuan in revenue, an increase of 20.8% over the same period last year, of which the revenue from distribution services in the same city increased from 2.27 billion yuan in 1H21 to 2.93 billion yuan in 1H22, an increase of 29.2% over the same period last year. Non-food income was 1.05 billion yuan, up 32.4% from the same period last year; income from low-line cities was 1.04 billion yuan, up 41% from the same period last year; revenue from near-field e-commerce / near-field services increased by 104.3% and 47.8% year-on-year; income from express consumers in the city was 770 million yuan, up 50.1% from last year; and revenue from distribution services for the last kilometer increased from 1.44 billion yuan in 1H21 to 1.53 billion yuan in 1H22, an increase of 6.8% over the same period last year.
two。 The company said that the macro-environmental challenges are relatively large, and may adopt a relatively cautious strategy to pursue profitability as a higher priority. On this basis, it will continue to pursue high-quality growth and make some improvements in unit price and business structure. The company is confident that the growth in the second half of the year is higher than that in the first half of the year, and believes that the current market share is not high, and there is still a huge market and customer demand. In addition, from the point of view of small and medium-sized B, it probably accounted for more than 10 points of the total income in the first half of the year, but the gross profit margin is still losing money. Will carry on some business structure optimization, some businesses that do not have much value will be cut off slowly, and focus on the business that has a positive impact on the overall strategy.
3. The company recently handled the full circulation of some shares, about 8.5%, corresponding to about 79 million shares. In terms of process, the China Securities Regulatory Commission has been approved and is currently in the approval process of the Hong Kong Stock Exchange. If all goes well, the circulation can be expanded to about 33%, and now it is 25%, corresponding to about 300 million shares. The company said that at present, the pressure on the whole market is still very great, and what the company can do is to try its best to deliver good results.
Management made a statement:
Affected by repeated epidemics and macroeconomic situation, the first half of this year is a very challenging period. Shunfeng city management and employees, riders together to overcome many difficulties, but also achieved a good performance. Our total income maintained a steady growth, reaching 4.48 billion yuan, an increase of 21% over the same period last year. Revenue from external customers reached 29%, a year-on-year growth rate of 28%.
Our energy is mainly focused on high quality and efficient growth. But the good news is that while the core business has maintained steady growth, we have further achieved steady improvement and improvement in profitability through measures such as optimizing business structure, continuously improving scientific and technological capabilities, driving network efficiency and fine management.
The gross profit margin and net profit margin of Shunfeng city have been improved for several years in a row. In the first half of this year, our gross profit was 180 million yuan and our gross profit margin was 4%, an increase of 4.4% over the first half of last year in 2021. The net loss was 1.4 billion yuan, an improvement of 7.8% compared with the same period in 2021. Earnings per share also increased by 0.46 yuan. Despite the challenges in the first half of the year, our overall financial situation remains healthy, our free cash flow is relatively abundant, and our net cash reserves are also quite sufficient. We now have about 2.29 billion net cash reserves.
During the epidemic, we actively supported anti-epidemic protection to help businesses and consumers solve the problem of the last kilometer. During the epidemic, we also saw the entire local life services, as well as the long-term value of prefectural and municipal distribution services. As the largest third-party real-time distribution service platform in China, we are also trying to expand our service boundaries, capture the development opportunities of the whole industry, and bring us some opportunities. We also continue to improve our solutions to meet the compliance needs of all kinds of customers, including B-end customers, C-end customers, different industries and various emerging channels, and create more value for customers through differentiated and professional services.
Looking to the future, the direction of our strategy is to continue to emphasize high-quality and healthy growth, full-scene, omni-channel coverage, specialization, differentiated services, and further building a lean and efficient operating chassis.
Operation:
First, our income is growing by more than 20%, and our external income is a little over 28%. In fact, we have been adjusting the structure to ensure that our growth is not supported by a customer or a scenario, but to make our structure more balanced and risk-resistant. So the external growth rate of about 28% is that while we are tuning, our leading position in third-party services is still solid.Structural optimization is the first bright spot.
The second bright spot is the continued increase in the permeability of third parties. It is true that there are great challenges in the macro environment in the first half of the year, but these challenges have precisely promoted the core changes of the entire industry. The biggest change is that more and more players may end up, and the channel traffic will gradually begin to show a decentralized trend. Merchants will also have a variety of needs. Therefore, the demand of the third party is gradually spreading, the penetration rate is also increasing, and the non-food category is also increasing. You can also see that some big players in the industry may not talk about food and beverage, but more about non-food.
The third bright spot is throughout the first half of the year, in the face of industry competition and various challenges, we are more thinking about our value to the client, more will be based on the industry carding. Throughout the first half of the year, we put more emphasis on the development of the industry, and we took a look at every industry to form differentiated selling points and value points with our competitors, so as to improve our competitiveness in the industry. Gradually take the various service customization of the industry as the growth model of competitiveness. In the first half of the year, many industries, especially medicine, flower cake, 3C digital and so on, grew very rapidly. Some industries have also achieved the daily order volume of 100000 or more.
The fourth is the structure of the whole scene. Since it was proposed in 21 years, we have been practicing the maximum value of the whole scene to improve our resistance to risk. This comes not only from the competition, but also from the uncertainty risk of the general environment. For example, during the epidemic, the more simple the business structure, the greater the impact. The whole scene of the business structure makes us more risk-resistant in the city. Our structural model and business model in the city not only improve the efficiency of profitability and the integration of resources, but also improve the ability of the business side to face the challenges of competition and uncertainty.
The fifth bright spot is that our own personal C-side business continues to maintain high growth. The business basically started from scratch, and we were able to maintain a growth rate of more than 50% in the first half of the year and doubled last year. On the one hand, it is because we continue to improve the quality of service, forming the reputation of service and the mind of users. On the other hand, the penetration rate of express delivery continues to increase. The last point is that because the built business growth model is committed to cash, toB forms a network advantage, and we will open toC as soon as we can. So we have opened more and more cities, and the growth of investment comes from the competitiveness of products, the penetration of express delivery and the coverage of the network.
The sixth bright spot is our network ability, such as sinking market and medium-and long-distance coverage. Not only includes the coverage of the number of cities, but also includes the distance coverage within the city and 24-hour coverage and so on, the coverage of compliance capacity has made great progress, the network is irreversible.
The seventh is continuous technological innovation and digital operations that empower our ecosystems. In addition to the advantage of scale and the optimization of business structure, the improvement of gross profit margin also comes from operational efficiency to a large extent, one on the marketing side and the other on the performance side. The most important part of this is the role played by technology, which is now basically taken over by online technology, which has greatly improved our operational efficiency and ROI; in terms of scheduling. We can do both toB and toC. Most of the opponents are in a single scenario, but our system scheduling is scheduled together. On the performance side, with the increase in scale and diversity of business scenarios, the optimal solution is actually very dependent on technology, so a large number of our cost optimization comes from the improvement of the ability of science and technology.
The eighth point is about the capacity chassis. In order to support the business development, the process and management of the rider in the chassis is very important. Both the service quality and the efficiency improvement of the skilled rider depend on the management of the rider team. In the face of the epidemic, we are basically the only one that can run on the market in many extreme cities, testing our front-line team management and some operational management in extreme risk situations.
The ninth bright spot is the coordination between us and SF Express. Although the epidemic will have a certain impact on the business of our express delivery network in the first half of this year, we have recovered very well after the end of the epidemic. With the improvement of our business service capacity in ToC, we gradually connect ToC services with more than 3 million active monthly customers in express delivery. There were more than 86 million in this area in the first half of this year, and a large number of Shunfeng business customers, who are most willing to pay in China, began to use our enhanced service. Companies in the real-time logistics industry are basically infiltrating the local life scene. We are infiltrating business products. The business scene is actually a deep docking of our products and services with millions of SF business customers. The revenue growth of this part is very fast. 1H22 has reached about 86 million, which has become a very important growth point. Once infiltrated, they will become very dependent and habitual products and services.
It is indeed a great challenge in the first half of this year. Basically, when every city was in an epidemic, we never left. During the epidemic, there were no places that were not done together, or where they were not managed properly, or were criticized and punished by government supervision. So in the face of challenges, in a more stringent environment, the entire internal operating system has withstood the test.
Corporate strategy review: our value line is to improve services and value, and to broaden the scene. What we do most is to use industry thinking to iterate over the past division of customer types. In the past, most of our understanding of business logic and business is customer-oriented, such as KA customers, small and medium-sized B customers, and then we will iterate over it again to become an industry thinking. The core competitiveness of Shun Feng City is toB. We should find the ability that is different from other large business flow platforms in terms of professionalism and personalization, and find another way to provide businesses with different choices, which is the direction that our core needs to solve.
Financial situation:
1H22 revenue increased 20.8% year on year to 4.48 billion yuan, compared with 3.71 billion yuan in the same period last year.
1) the revenue from distribution services in the same city increased from 2.27 billion yuan in 1H21 to 2.93 billion yuan in 1H22, an increase of 29.2% over the same period last year. Of this total, non-food income was 1.05 billion yuan, up 32.4% from the same period last year; income from low-line cities was 1.04 billion yuan, up 41% from the same period last year; revenue from near-field e-commerce / near-field services increased by 104.3% and 47.8% over the same period last year; and the income from express consumers in the city was 770 million yuan, up 50.1% from the same period last year. 2) the revenue from the last kilometer distribution service increased from 1.44 billion yuan in 1H21 to 1.53 billion yuan in 1H22, an increase of 6.8% over the same period last year.
The basic structure is to maintain a relatively healthy state. Now there is more than 2 billion in cash (plus financial management) on the account, with a cash ratio of 2.8, which is also a very healthy figure; the current ratio is 4.1.
Among toB and toC, the fastest growing is the personal business of toC. In addition, our toB has increased by 23%. The growth rate of about 7 points in the last kilometer is mainly due to the containment of the epidemic, and the trend has returned to normal in recent months, maintaining double-digit growth.
With regard to the drivers of profitability, our business goal this year is to maintain healthy growth, mainly around fine management. Separated from several parts, the first is that we can see the structural tuning from the business side, such as the rapid growth of non-food business, the proportion growth; in addition, the midfield distance, and the customization of some merchants, are the direction of our structure tuning. In addition, the fine operation of the user structure, but also through science and technology to identify some accurate user portraits, there are some high and low peak pricing and so on. In terms of operation, we also have other measures, including hierarchical management of transport capacity, such as some medium-and long-distance transport capacity, and so on, as well as a good proportion of resident riders, and so on. We have also introduced some incentives for riders.
From a management point of view, we will strictly control the cost, so we can see a sharp drop in the expense rate. The input side will also pay attention to ROI. We have a life cycle in the city, the first is the pioneering period, the second is the climbing period, our scale is growing rapidly, the chassis is growing rapidly, and the business is refined; from the third stage to puberty, as competitors come in, the investment structure of the business will be adjusted accordingly; finally, in the stable period, we reach a certain scale and then form barriers.
The absolute value of sales expenses increased slightly compared with the same period last year, mainly because some costs, including transfer fees, call service charges, and so on, will increase as the size of the business increases. But on the whole, our expense rate is still more than 7%, and we expect the proportion to decline steadily.
With regard to the results of the improvement in profitability, we may see a relatively significant improvement in the gross profit margin and an improvement in the net profit margin. Therefore, with the improvement of gross margin and the decline of expense rate, there will be a relatively good slope.
Summarize several identified trends:
The first is the habit of consumption in the industry, the penetration rate will be higher and higher, and the demand will certainly be increasing. The second is that more players enter the arena, and the decentralization of business flow channels is bound to come. Third, no matter in all kinds of competition or uncertainty, the certainty of the whole internal company management and the stability of service is the key to go further. So we do our own things well, according to our own pace, so that the company's service is better, and the reputation among consumers is better.
Qroomamppac A:
Q: what is the situation of each plate warming up after the epidemic? In the retail industry as a whole, what is the impact of increased competition on us?
A: judging from the latest data, we should be quite optimistic. All types of business have recovered very well, and the pull in the growth rate is quite obvious. Detailed data are difficult to disclose.
With regard to the industry, the trend has become more and more obvious in the past six months, and the flow (e-commerce) players will slowly form a decentralized trend. This is of great benefit to us. As an independent third party and as a logistics platform, the development space on toB depends on the voice of the merchants. The greater the discourse power of merchants, the better our prospects; the more concentrated the flow, the worse the ecological environment of discourse power, the lower our ceiling. So we are optimistic. In fact, no matter which new player is the first time to cooperate with us to pilot, because there is no partner on the market who is more involved in their design, process, capacity supplement, and reliable partner.
Q: what is the current growth of the company's various business lines and the situation of UE? is there any change in the expectation of becoming a regular employee at the profit level?
A: the growth rate of the last kilometer distribution is relatively slow because it is also affected by the epidemic. But others, including some toB and toC, are growing well, especially ToC can see 50% growth in the first half of the year, which is also in line with the direction of our overall strategy.
From the perspective of UE, there is still a good trend as a whole. ToB still has a very good UE growth, compared with the same period last year KA is only break-even, this year actually has a median growth, or even a good situation. ToC has broken even and made a little more money, and the last kilometer distribution has always been a relatively stable business. Although the growth rate is not so fast, UE and gross profit margin are actually relatively stable.
Judging from the profit logic of our business structure, we cannot rely solely on the business of SF. Shunfeng's internal business share and growth rate came down in the first half of the year, but the gross profit improved significantly, which shows that the gross profit of our external business has improved greatly. We are actually quite confident about making great progress in external business, and we also have more room to improve profits. From a macro point of view, we think we should adopt a healthier business strategy.
Q: we have seen cooperation with Douyin and others. Is there any possibility of further cooperation with other platforms when we get customers on KA clients in the second half of the year or the year after next?
A: there are only two core strategies in our business, one is to cultivate our own traffic (to develop C business), so that it is half C and half B, just like the parent company SF, so that both cash flow and business security are good. So we will push C as a core strategy and a high priority strategy. Starting from scratch, our income should be more than 2 billion this year.
On the other hand is to embrace the platform, embrace several platforms. Basically, there are new players in the industry, and we are basically the first of all the early process design and system docking. We take the initiative to hug them on every platform, so tell us that the more players and the better the traffic, the better we are, so we are confident. Strategically speaking, in terms of ability, we are the only ones who can cover toB, toC, medium-distance, short-distance, long-distance, all kinds of games, all kinds of cities, and no strategic conflicts.
Q: has the penetration rate of landing distribution business reached a stable level in Shun Feng big network? Will there be an increase in subsequent permeability? What is the unit growth rate of the large net landing fee?
A: this question is actually asking where the ceiling of our internal business with SF is. There must be a lot of room for improvement in the penetration rate of landing distribution business. What we are doing now is to help SF complete various scenarios, and we are now helping each other to make a complete system. You can see that Shunfeng will be responsible for some of the lines and products on the morning and night of the weekend. We are flexible in these businesses, and the whole group wants us to do 30-50%, because the more flexible we are, the higher our penetration rate will be in the face of holidays, weekends, morning and evening shifts.
Just taking SF as a customer, we have begun to do the logic of taking orders together with all the businesses of SF. The most famous one is Maotai ice cream. After Maotai was taken off the plane, it is the way of cold transport + SF full-process solution in the same city. Suppose a customer express fee is 100000 / month, Shunfeng may only account for 16 million, and in this 16000, our current penetration rate is only 10 points, possibly in 1600. On the whole, the total amount is not high, but the base is large, once all infiltrate these customers, they will be inseparable.
Q: what is the trend of unit price and gross margin of to B and to B for the second half of the year, especially under macroeconomic pressure? To C is a relatively high-value service, will you see pressure on the growth rate? Is the gross profit margin of SMEs in To B still negative?
A: the macro-environmental challenge is relatively large. We may adopt a relatively cautious strategy to pursue profit as a higher priority, and continue to pursue high-quality growth on this basis. This means that we have to make some improvements in unit price and business structure to free up the cage and change the bird. We will make tuning in industry, category and so on.
In terms of our growth expectations, we are very confident that we are higher than in the first half of the year. After all, our market share is not high, there is a huge market, huge customer demand. It's not that we don't have needs, but we don't have the ability to digest them well. So the biggest challenge now is not a demand ceiling.
In addition, from the point of view of small and medium-sized B, it probably accounted for more than 10 points of the total income in the first half of the year, but the gross profit margin is still losing money. Compared with the double-digit losses in the same period last year, today
The first half of 2008 was a loss of multi-digit gross profit margin. We will optimize some business structure, slowly cut off some businesses that do not have much value, and focus on some businesses that are good for our overall strategy.
Q: did you see the one-time impact of the epidemic on costs and expenses in the first half of the year?
A: this kind of cost may be very small. In a city with a heavy epidemic, you may have to put in a little protective clothing, as well as some care fees for riders. However, the demand is even greater under the epidemic. For example, only we can do it in Lhasa now, and the government only allows us to do it. We are also under great pressure. On the contrary, we think the epidemic will have a little benefit to the cost, mainly on the demand side. The epidemic helps to deepen the mind, more companies will come to register, and the costs of getting passengers and riders are falling sharply. Frankly speaking, the impact on costs and profits is basically negligible. During the epidemic, we will also have some new business scenarios, including nucleic acid distribution, and we will see that the gross margin is still good.
Q: gross margin has improved both year-on-year and month-on-month. Is there any change in pricing strategy? What is the more stable profit level in the medium and long term?
A: the simplest algorithm for gross margin is for the customer to place an order to subtract the rider's allowance, which is affected by two factors. First, there will be a marketing discount in the customer's order; in the rider's provision, the rider needs to increase the price when the scale is not enough, so the gross margin is about four points. The price difference in the middle is about 20 points, if the front end does not discount, the back end does not increase the price, there are 20 points to send orders, which is very difficult to do.
Now we are thinking more about what is the difference between the positioning of those platforms with business flow and those with business flow. We should gradually raise our prices. At present, most of our customers' prices are our highest. No matter which brand is grabbing our customers, the reason is to hold down the price. At this point, we will insist on doing better on our road of value. Since we dare to quote the highest price in the industry, we must have some of our own understanding of value. We want to raise the unit price higher.
From the point of view of Q:to C orders, other competitors in the same city distribution do not seem to emphasize the business of to C. In the current to C orders, according to the type of demand, how many are short-distance errands and how many are long-distance delivery?
A: we don't have a business flow platform, so in the case of to B, we are destined to wait for business flows to be dispersed, or to specialize and differentiate, so that the platform also feels that we need such a partner to help ecology and serve better. So it is destined to be very difficult for us to compete with others in the matter of to B.
In terms of to C, Shun Feng is essentially a little more to C brand, and the logistics users in China who are willing to pay the highest fees are in SF C. The second can also be extended to the business scenario, which is insensitive to price and highly sensitive to service, so the reason for making this strategy is actually our choice according to our own situation, capabilities and resources.
If the market is simply divided into three types, there should be three types, one is the transactional order of local life, the second is pure individual, and the third is that the enterprise uses city express to fulfill the contract. These three types of users constitute our definition of the C market, the current strong must be the trading platform, the second personal scene, this aspect we will slowly improve. In the third business scene, I think no one is better than us. According to the annual report of Shunfeng Group, there are more than 3 million active merchants. China's total express delivery volume is about 300 million daily orders, of which the same city accounts for about 50 million. If there is a 10% market share, there should be more than 5 million orders. This is our simple deduction logic.
Q: what do you think of the size of the distribution market of to C? In the previous economic conditions, in fact, many of these services are not included in GDP, we are now monetizing it, how should we measure the potential market size? How high is the profit margin of To C in theory?
A: individual C is a long-distance order, which is usually more than 7 kilometers, so our unit price is very high, all above 25 after discount. Profit actually depends on how to balance the relationship between growth and income. These lists are actually more attractive in terms of earnings per hour. Therefore, in terms of the structure of the order, the revenue per hour is much higher than that of other orders. But now we have to cultivate our own market share, cultivate our own customers, not to pursue more gross profit, but to control a certain reasonable gross profit margin to improve the penetration, experience, network extension level. We think that this market should be able to support a relatively large logistics company in terms of revenue.
I think the profit margin is more the natural result of our judgment of our own market share. In terms of revenue, it must have a higher gross margin.
Will Q:KA customers rely more on third-party distribution, or do they prefer to build their own logistics?
A: the more the epidemic period, the more reliable Shun Feng City showed among its customers in KA. We must be the strongest in terms of matching degree and strength to allow customers to start business normally. Our good social communication, anti-risk ability and control of all kinds of accidents with Shunfeng brand will definitely be better than those franchisees.
Now there are fewer and fewer self-built companies in KA, and it is basically impossible to have them. If any KA encounters an uncertain environment of the epidemic, the more it is built by itself, the more likely it is to have its own mine.
Q: in terms of the income of to C and to B after the epidemic, what is the endogenous growth rate if it is not affected by the epidemic?
A: the data can't be disclosed, but the growth rate is recovering very well.
Q: judging from the current trend, why do you think that the business flow of the industry will be more and more scattered?
A: the better the environment, the calmer the merchants will pay the channel money; the worse the economy, the greater the pain of channel control. Therefore, from the perspective of merchants, the more downward time, the more calls for diversified channel competition, there will be the possibility of the game. In addition, most of the growth rates of traditional e-commerce will face increasing challenges, everyone is moving into local life, and real-time logistics has become an easy infrastructure like express delivery. the cost of trial and error and the cost and threshold of opening up new growth points are getting lower and lower. When the increment is less, people will grab a larger share of the wallet stock.
People want more scenes, and the line of local life is a very important main line. This main line makes those business flows very painful, but for those platforms with supply chain and traffic, it is nothing more than opening a category and opening a scene, as long as infrastructure is added. When the user growth dividend reaches the bottleneck, multiple scenarios are the growth categories and growth sectors that all platforms are not willing to give up.
Q: the company's application for full circulation of H shares has been approved. how does this help us with liquidity? What other measures will the company take to improve liquidity after that?
A: the company has recently handled the full circulation of some shares, about 8.5%, corresponding to about 79 million shares. In terms of process, the China Securities Regulatory Commission has been approved and is currently in the approval process of the Hong Kong Stock Exchange. If all goes well, the circulation can be expanded to about 33%, and now it is 25%, corresponding to about 300 million shares. Liquidity also depends on trading, on the one hand, it also has something to do with stock prices. Of course, we can not control the market, the pressure on the whole market is also very great, what we can do is to deliver a good performance, the rise in stock prices will further stimulate trading volume.
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