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The first report card after the adjustment of Best strategy

The first “report card” of Best Group was released after the strategic adjustment.

The first report card after the adjustment of Best strategy

On March 11, Best Group (BEST.US) released its unaudited financial results for the fourth quarter of 2020 and the full year of 2020.

The financial report shows that Best Group’s operating income in the fourth quarter of 2020 was 9.26 billion yuan (RMB, the same below), a year-on-year decrease of 8.9%. The annual operating income was 30 billion yuan, a year-on-year decrease of 7.3%, and the net loss was 2.051 billion yuan. The net loss in the same period last year was 219 million yuan. Among them, the annual operating income of Best Express and Best Express was 19.42 billion yuan and 51.6 billion respectively. 100 million yuan. Best Group’s annual gross profit was 240 million yuan.

November 2020 is a key node for Best Group. Best Group announced the strategic adjustment plan this month, including four major aspects of main business (express, express, supply chain), non-main business, management team and cost optimization. After the start of the strategic adjustment, Best has comprehensively optimized its business operations and achieved phased results. The financial report shows that Best Express’s net profit will return to profit in December 2020.

However, the performance of Best Express in December cannot reverse the decline of Best Group’s overall performance in 2020. The effect of Best’s strategic adjustment may require a relatively long and relatively complete cycle to be reflected.

Best Express re-turned to profit in December last year, and express express annual growth rate exceeded 20%

Although the overall performance is relatively flat, the effect of the strategic focus on the main business (express delivery, express delivery, and supply chain) has already appeared.

The “Daily Economic News” reporter noted that a series of measures such as optimizing the structure of express delivery products and stabilizing terminal outlets have brought positive feedback in December 2020-the weight of single express tickets decreased by 14% from the previous month, and the cost of single tickets decreased by 8.4 from the previous month. %, the efficiency has improved significantly, and the overall loss was turned into profit in December. In addition, Best Express actively adjusted the “last mile” distribution fee to provide financial support for franchise outlets, which relatively enhanced the stability of franchise outlets.

The express freight volume of Best Express in the fourth quarter exceeded 2.62 million tons, an increase of 25.1% year-on-year; the annual freight volume was 8.39 million tons, an increase of 20.2% year-on-year. In addition, in the fourth quarter, Best Express’s gross profit margin was 5.5%, an increase of 4.5% from the previous quarter; at the same time, Express recorded considerable net profit and operating cash flow during the quarter.

In terms of Best supply chain, in the fourth quarter, Yuncang fulfilled nearly 140 million orders, a year-on-year increase of 11.7%; Yuncang fulfilled 430 million orders in the whole year, a year-on-year increase of 21.4%. The vehicle logistics network freight platform Best Goods had 255,000 transactions in the fourth quarter, a year-on-year increase of 19.0%; the annual transaction volume was 738,000, a year-on-year increase of 19.2%. As of the end of 2020, there were more than 320,000 registered drivers on the APP of Best Goods Platform, a year-on-year increase of 70.6%.

In terms of international business, compared with other “Tongda” companies, Best’s “going out to sea” step is relatively large, and Best’s international business has also brought a big surprise to Best Group.

The financial report shows that the total amount of express parcels in Southeast Asia in the fourth quarter of Best International reached 27.89 million, a year-on-year increase of 441%. Among them, the volume of parcels in Thailand increased by 25% from the previous month to 12.3 million, and the volume of parcels in Vietnam increased by 35.9% from the previous month to 14 million; in 2020, the total number of express parcels in Southeast Asia was 73.59 million; of which, the annual express delivery of Thailand and Vietnam The volume of parcels increased by 612.8% and 798.2% year-on-year, respectively.

The reporter also noticed that at the end of November last year, Best completed the expansion of its distribution center in Bangkok, Thailand, and launched a new flagship distribution center in Ho Chi Minh City, Vietnam in December. At present, Best has a total of 24 self-operated express distribution centers and more than 1,000 franchise sites in Southeast Asia. In the fourth quarter, Best International’s gross profit margin increased by 7.4% year-on-year.

How can veterans alleviate their worries when recruits enter the ranks?

On January 20, it was reported that as part of the company’s strategic evaluation, Best Group, listed on the New York Stock Exchange, was considering selling. According to the above news, Ali, who owns the equity of Best Group, and the company’s founder and CEO Zhou Shaoning, may eventually sell their shares.

Best Group once responded to the “Daily Economic News” reporter on this news: The market rumors quoted in the report are untrue. Chairman and CEO Zhou Shaoning has no plan to sell the company’s shares. Zhou Shaoning is optimistic about the long-term value of Best’s integrated supply chain and logistics services. Full of confidence in the company’s future development.

Looking back on the development history of Best Group, on September 20, 2017, Best Group was listed on the New York Stock Exchange. However, the performance of Best Group in the capital market has always been “not so good” after the listing, and long-term losses have also caused Best Group’s share price to continue to fall. Especially under the influence of the 2020 epidemic, Best Group’s profits have been hit hard, and its stock price has fallen by nearly 70% in the past year.

In August 2020, it was reported that Best Group was seeking a second listing of its express and freight business on the Hong Kong Stock Exchange to increase the company’s valuation and build an investor base closer to China. Best Group responded to the news at the time: No comment.

At a time when the barbaric competition of low prices for volume in the express delivery industry has not yet dissipated, the deep “price war” quagmire has also exhausted every express company. Not long ago, it was reported that the recruits, Jitu, once again joined the price battle, and the express delivery prices may be lowered again, and market profits are facing the dilemma of further compression. After being renamed, Zhongyou Express merged into JD’s new strategic business group, and together with SF Holdings, which is also a franchise express delivery company, SF Holdings, Fengwang, seized the increase from the sinking market.

“There are chasing soldiers before, and tigers behind”, the volatile express logistics market, where should we go in 2021?

Perhaps as Zhou Shaoning, Chairman and CEO of Best Group, said: “Although market competition is still fierce and Best’s overall performance in this quarter is relatively flat, we are also pleased to see that after adjustments to various businesses, performance has improved significantly, showing The continued upward trend is expected to help the group return to the track of revenue growth and profit improvement.”

At the same time, Best announced its financial guidance for 2021 in its financial report: it is expected to achieve operating income of 34 billion yuan to 36 billion yuan in 2021.

As of the close on March 10, Eastern Time, Best Group rose 1.74% from the previous trading day to $2.34 per share, with a total market value of $901 million.