2019 annual results€¦ · e-commerce business 2,983 2,366 26.08% segment profit** (rmb million)...

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Stock Code: 0598HK 601598SH

2019 Annual Results

APRIL 2020

CORPORATE PRESENTATION

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Forward-Looking Statement Disclaimer

This presentation and subsequent discussions may contain forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forward-looking terminology such as believe, expect, anticipate, estimate, plan, project, target, may, will or may be expressed to be results of actions that may or are expected to occur in the future. You should not place undue reliance on these forward-looking statements, which reflect our belief only as of the date of this presentation. These forward-looking statements are based on our own information and on information from other sources we believe to be reliable. Our actual results may be materially less favorable than those expressed or implied by these forward-looking statements which could depress the market price of our shares.

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Content

1 Macro Economy and

Company Highlights

2 Segments and Resources

3 2019 Financial Performance

4 2019 Segment Review

6 Management Strategy of 2020

5 Major Events in Second-half of 2019

4

Macro Economy and Company Highlights

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Trillion RMBTrillion RMB

Macro Economy - Global Economic Downturn and Trade Growth Slowdown

27.79

30.51 31.54

14.2%

9.7%

3.4%

-10.0%

10.0%

30.0%

50.0%

0

5

10

15

20

25

30

35

2017 2018 2019

23,68025,100

26,107

8.3%

5.3%4.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

5,000

10,000

15,000

20,000

25,000

30,000

2017 2018 2019

Container Throughput of China^

820.47 817.80 823.53

15.6%

-0.3% 0.7%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

0

100

200

300

400

500

600

700

800

900

2017 2018 2019

China Containerized Freight Index^

YOY growthYOY growth

YOY growthYOY growth Point

*Source：Website of the Government of People's Republic of China ^Source：Ministry of Transport of the People's Republic of China

82.08

90.03

99.09

6.8% 6.6%6.1%

0.0%

5.0%

10.0%

15.0%

20.0%

0

20

40

60

80

100

120

2017 2018 2019

GDP Of China* Total Value of Import and Export of China*

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Industry Trend

Globalized Markets and

Fragmented Demand

Digital Transformation and

Personalized Services

Ecosystem-oriented

Development and Platform-

based Competition

The market ushered the fragmentization trend

featured by “fast delivery” and “customization

on demand”. In the context of faltering growth

in other trade modes, the fragmented

business still maintained continuous double-

digit growth

Tailored personalized experience has become

the focus of competition. Digitalization is

changing the operation and management of

the logistics industry, and then changing its

business models

By building a platform, a wide range of market

entities can be directly access to, and the

relationship between logistics practitioners is

shifting from a “competition and cooperation”

relationship to an “symbiosis” relationship

Short Term Impact from

COVID-19

The outbreak of COVID-19 in early 2020 will

inevitably have a short-term impact on

economy. However, the impact of the

epidemic will not change the fundamentals of

China’s stable and long-term economic

improvement

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Combating COVID-19 :

When the Country is in Need, Sinotrans Delivers

Acted on the “Emergency Delivery”, an emergency logistics platform, to deliver

epidemic prevention materials

Provided logistics services of construction materials, medical equipment and

medical protective equipment for Huoshenshan and Leishenshan hospitals

Mobilized cross-border resources of the whole network, from overseas

procurement, pick-up and dispatch, air freight channel guarantee to domestic

delivery, to provide whole chain logistics for the flow of rescue materials between

China and various overseas countries and regtions

Secured the charter flights between Liege and Hangzhou with five shifts a week

under the situation of huge cut of the air cargo transportation between China and

Europe, became an important air freight channel to ensure the transportation of

materials between Asia and Europe at different stages of the global fight against

the epidemic

Resumed operation actively with safety measures in place, and made every effort

to complete this year's business targets

Sinotrans Assumed the Mission of the National Logistics Team with High Efficiency

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Quality and

efficiency

enhancement

with steady

growth in

operating

results

Business

transformation

and

advancement

with trinity

business

mode

In-depth

integration with

pattern of five

major regions+

five specialized

subsidiaries

taking shape

Cross-border

acquisition to

refine overseas

operating

networks

Innovation-

driven

approach with

remarkable

achievements

in smart

logistics

“A+H”

dual-listing

platform to

opened a

new

chapter of

Sinotrans

Company Highlights

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Business and Resources

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Three Major Segments With Trinity Model

Forwarding

and Related

Business⚫ Sea freight forwarding

⚫ Air freight forwarding

⚫ Railway freight forwarding

⚫ Shipping agency

⚫ Storage and Terminal

Services

Traditional Business

Logistics

Business⚫ Contract Logistics

⚫ Project Logistics

⚫ Chemical Logistics

⚫ Cold-chain Logistics

Core Business Innovation Drive

E-commerce

Business⚫ Cross-Boarder E-

Commerce Logistics

⚫ Logistics e-commerce

platform

⚫ Logistics equipment

sharing platform

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0

50

100

150

200

250

Land Area

Extensive Domestic Network and Resources

Total Domestic Land Area

Appr. 12 million square meters

The most extensive integrated logistics network in China

900+ subsidiaries and branches cover all the important cities and areas

Construction area（m²）

Owned 4,000,000 +

Leased 3,000,000+

Total 7,000,000 +

10,000m²

8 Terminals

Shoreline length 3,700 m

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• Russia

• Belarus

• Belgium

• British Virgin Islands

• Brunei

• Myanmar

• US

• Brazil

• Germany

• UK

• Turkey

• Egypt

• UAE

• Saudi Arabia

• Djibouti

• Kazakhstan

• Pakistan

• Mongolia • Viet Nam

• Japan

• South Korea

• Cambodia

• The Philippines

• Indonesia

• Thailand

• Bangladesh

• India

• Australia

• Congo, Rep • Netherlands

• Ethiopia

• Tanzania

• Guinea

• Sri Lanka

• Malaysia

Overseas Network

• Romania • Panama

• The acquisition of 80% equity

interests of KLG Group has

completed in December 2019, which

marked the first step in expanding

self-owned network in Europe

Overseas branches73

Countries and regions37

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2019 Financial Performances

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73,158

77,312 77,650

2017 2018 2019

1,2251,106

2,073

2017 2018 2019

2,491

2,181

2,309371

2017 2018 2019

(RMB million) (RMB million)

Total Segment Result*

**

*Segment Result：Operating Profits minus Investment Income from Joint Ventures and Associates

**Segment Result from Loscam in 2018

2,552

(RMB million)

Net Profits Net of Non-recurring Gains or Losses

Attributable to Shareholders of the Company

2,304

2,803

2017 2018 2019

(RMB million)

2,704

Net Profit Attributable to

Shareholders of the Company

Operating Results Achieved Steady Growth

Revenue *

*The revenue of Loscam in 2018 is 1,508 million

Excluding the impact from Loscam in 2018, the revenue of the Company increased 2.4% YOY

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(RMB) 2019 2018

Earnings Per Share (Yuan/Share) 0.38 0.45

Earnings Per Share, Net of Non-recurring

Gains or Losses (Yuan/Share)0.28 0.18

Return on Equity (%) 10.86 12.11

Return on Equity, Net of Non-recurring

Gains or Losses (%)8.03 4.95

Proposed Annual Dividend (Yuan/Share) 0.12 0.13

Key Financial Ratio

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(RMB million） 2019 2018 Change

Sales Expense 851.74 931.06 -8.52%

Administrative Expense 2,595.38 2,812.08 -7.71%

R&D Expense 73.44 23.93 206.95%

Financial Expense 288.53 436.51 -33.90%

Continuous Optimization of Expense Structure

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（Core Direct Customer ：Revenue Contribution above RMB 5 million） 2019 2018

Number of Core Direct Customer 779 698

Core Direct Customer Contribution to Revenue 33% 33%

Customer Satisfaction（point） 92

779

33%

92

2019

Core Direct Customer Grew Steadily

High-level Service Quality Provided Fuel for Development

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2019 Segment Review

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Segment Revenue and Profit

**Segment profit: Segment Operating Profit minus Investment Income from Joint Ventures and Associates

Segment Revenue

(RMB million)2019 2018 Change

Forwarding and Related

Business54,828 54,140 1.27%

Exclude the impact

from Loscam in 201852,632 4.2%

Logistics Business 19,839 20,806 -4.64%

E-commerce Business 2,983 2,366 26.08%

Segment Profit**



Business1,559 1,864 -16.33%

Exclude the impact

from Loscam in 20181,493 4.4%

Logistics Business 679 618 9.80%

E-commerce Business 71 70 1.37%


Business71%

Logistics Business25%

E-commerce Business

4%

Revenue

Contribution

in 2019

Forwarding and

Related Business

68%

Logistics Business29%

E-commerce Business

3%

*Total segment profit does not include undistributed items

Segment

Profit

Contribution

in 2019*

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Forwarding and Related Business

70.9%

8.5%

4.6%

5.7%

4.5%5.9%

37%

6%3%

26%

23%

5%

Sea Freight Forwarding

Air Freight Forwarding

Railway Freight Forwarding

Shipping Agency

(RMB

million)2019 2018 Change

Sea Freight

Forwarding

External

Revenue42,132 40,526 3.96%

Segment

Profit575 613 -6.27%

Volume

(in ten

thousand

TEUs)

1,313.4 1,304.2 0.7%

Air Freight

Forwarding

External

Revenue5,067 4,931 2.8%

Segment

Profit96 93 4.0%

Volume

(in million

Kilograms)

502.0 530.1 -5.3%

Railway

Freight

Forwarding

External

Revenue2,731 1,343 103.3%

Segment

Profit53 24 126.3%

Volume

(in ten

thousand

TEUs)

11.2 7.1 57.7%

2019 2018 Change

Shipping

Agency

External

Revenue3,356 3,741 -10.3%

Segment

Profit411 347 18.36%

Volume

(in ten

thousand

TEUs)

2,674.9 2,654.9 0.8%

Storage and

Terminal

Services

External

Revenue2,662 2,783 -4.3%

Segment

Profit357 367 -2.8%

Volume

(in million

tons)

16.0 15.8 1.3%

Forwarding

and Related

Business

External Revenue

Segment Profit

Storage and Terminal Service

Others

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Launched the first unified

standardized LCL product,

Sinotrans E-LCL

✓ Provide one-stop, end-to-end

and online and offline

integrated LCL logistics

services and solutions for LCL

freight forwarding companies

and related parties

✓ The product has been initially

expanded nationwide

Strengthened the full-chain

construction of air transport

channel

✓ Operated 26 full-process

visualized supply chain

products in five ports, namely

Beijing, Shanghai, Guangzhou,

Chengdu and Zhengzhou

Newly added round-trip routes

between China and Europe,

China and Central Asia

✓ Over 1,000 trips of trains was

under operation throughout the

year, and return trips

accounted for 50% of total

shipments ， which optimized

import and export ratios

✓ The proportion of ports self-

operate of China Railway

Express Business was 100%

Forwarding and Related Business: Transfer to Whole-Process,

Strengthen the Construction of Product System and Channel

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Logistics Business

69%

13%

8%

3%

7%

81%

17%

11%

3%-12%

Contract Logistics

Project Logistics

Chemical Logistics

Cold Chain Logistics

External Revenue

Segment Profit

(RMB million) 2019 2018 Change

Contract

Logistics

External

Revenue13,815 13,945 -0.9%

Segment

Profit553 478 15.8%

Volume

(million

tonnes)

38 41.2 -7.8%

Project

Logistics

External

Revenue2,720 3,719 -26.9%

Segment

Profit115 153 -24.9%

Volume

(million

tonnes)

6.2 10.3 -39.8%

Chemical

Logistics

External

Revenue1,709 1,710 -0.02%

Segment

Profit72 70 3.3%

Volume

(million

tonnes)

3.3 3.3 -

Cold

Chain

Logistics

External

Revenue570 518 10.0%

Segment

Profit22 -14 258.8%

Volume

(million

tonnes)

1.3 1.1 18.2%

Logistics

Others

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Logistics Business: Continued to Optimize the Business Structure,

Extended to the Customers in Whole Process Industry Chain

• Adjusted the business structure and took

the initiative to exit from businesses with

low profit margin and high risks

• Contract logistics business are under

clustered management by target industries,

extended to the customers in whole

process industry chain, extended from

traditional warehousing + transport

services to the whole-process value chains

services

Consumer

Products

Medical and

Health

International Supply

Chain Procurement

Automobile

Retail

High-tech

Target Customer by Industry Clusters

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E-commerce Business

93.5%

3.7%2.9%

43.2%

55.5%

0.5%


Cross-border

E-commerce

Logistics

External Revenue 3,328 2,495 33.4%

Segment Profit 31 31 -

Volume

(in ten thousand units)17,979.5 11,495.8 56.4%

Logistics E-

commerce

Platform

External Revenue 101 16 525.4%


Volume

(in ten thousand TEUs) 4.7 - -

Logistics

Equipment

Sharing

Platform

External Revenue 130 132 -1.4%


Volume

(ten thousand TEUs/day)8.2 8.4 -2.4%

Cross-border E-commerce Logistics

Logistics Equipment Sharing Platform

Logistics E-commerce Platform

External Revenue

Segment Profit

E-commerce

Business

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E-commerce Business: Enhanced Cross-industrial Connection Capabilities,

Continued to Strengthen the Full-chain Construction

Enhanced cross-industrial connection

capabilities, focused on the two main lines of

logistics e-commerce and e-commerce

logistics to develop to platformization, and

established the “Y2T( 運易通 )“platform to

provide customers with public services such

as visual and traceable information services,

handling services, settlement services and

technology services.

The cross-border e-commerce logistics continued

to strengthen the construction of full-chain, taking

Liège, Belgium as the bridgehead, the Group

initially opened the full-chain channel of Sino-

Euro cross-border e-commerce; through

cooperation with postal system, the Group has

built the whole chain capability from China to

South America and launched the whole chain

service of Weihai-Japan and Korea.

“Y2T” platform webpage screenshot

Charter flights from Liège

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Major Events in the Second-half of 2019

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Recent Major Transaction – Successfully Acquired KLG and

Complemented the Company’s Overseas Operation Network

（Note: Basing on Accounting Standards，seven logistics subsidiaries of KLG

Group were not included in consolidated financial statement of the Company of

2019）

By the successful acquisition of KLG, Sinotrans practiced its overseas

strategy and further refined the overseas channel, which also marked the

first step in international mergers and acquisitions. The acquisition will

help the Company to enhanced the operational capabilities in the European

Union, help to provide end-to-end international logistics services and

match the layout of important strategic customers in Europe.

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Share Option Incentive Scheme – Drive the Company to Achieve

High-quality Growth of Profitability

The First Tranche

（2022）*

The Second Tranche

（2023）*

The Third Tranche

（2024）*

Exercise Period

Commence after the 24-

month period from the Grant

Date and ending on the last

trading day of the 36-month

period

Commence after the 36-

month period from the Grant

Date and ending on the last

trading day of the 48-month

period

Commence after the 36-month

period from the Grant Date and

ending on the last trading day

of the validity period of the

Share Options

Performance

indicators

for the

preceding

financial

year when

the first

tranche

becomes

exercisable

ROE

attributable to

owners of the

Company

No less than 11.4% and

the 75th percentile of peer

benchmarking companies of

the same period when the

first tranche becomes

exercisable





second tranche becomes

exercisable





third tranche becomes

exercisable

Compound

growth rate of

net profit

attributable to

owners of the

Company**

no less than 9.75% and the

75th percentile of peering

benchmark companies of the

same period




the same period




the same period

*Subject to the approved at 2019 Annual General Meeting

**Based on the results of the preceding financial year of the year of the Grant

The Company announced the Share Option Incentive Scheme (draft) on December 27, 2019.

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Management Strategies of 2020

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Strengthen the

quality and

efficiency

enhancement

and promote the

implementation

of measures

Strengthen

business

transformation

and improve

product system

Strengthen

resource

integration and

improve the

two strategic

arrangements

Strengthen

technology-driven

approach and

accelerate digital

transformation

Strengthen

capital operation

and exploration

on different

capital operation

modes

Making Active Adjustments and Steady Progress

The spread of the epidemic has had a significant uncertain impact on the economy, and the

macroeconomic situation this year is still difficult. But in the long term, the impact of the

epidemic will not change the fundamentals of China’s long-term economic positive trend. The

Company will focus on the following aspects strategically.

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Becoming a world-class intelligent logistics platform enterprise

In 2019, driven by digitization and innovative technology, remarkable achievements have been made in

smart logistics.

In 2020, the Company will perform well in promoting the application of technology to help reduce costs

and increase efficiency and intelligence-oriented operations.

• Smart logistics

technology center

• Innovation &

Technology

company as the

operating platform

for Internet-based

products

The application and

promotion of logistics

technology “ABCDT”• AI

• Block chain

• Cloud computing

• Big data

• Internet of Things

• Smart container

inspection

• Smart voice

customer service

• Smart loading

algorithms

• Unified online

logistics platform,

“Y2T“(運易通)

Carrying out the

sorting out of orders

• Setting up

customs sharing

centers

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Investor Relations Contact

Investor Relations Department

Tel: +8610 5229 5721

Email: [email protected]

Website: www.sinotrans.com

2019 annual results€¦ · e-commerce business 2,983 2,366 26.08% segment profit** (rmb million)...

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