SHANGHAI, March 28, 2024/PRNewswire/ -- On March 28, Eneng Logistics, a leading express company, held the “Leading Express High Quality Growth” 2023 performance conference in Shanghai. Qin Xinghua, founder, co-chairman of the board, Chen Weihao, executive director and chief operating officer Jin Yun, chief financial officer, and Xu Hao, chief financial officer, and business department executives were all present to have in-depth exchanges with investors and media.

The data performance is impressive, and profitability has been greatly enhanced

Anneng Logistics previously released its 2023 results announcement, showing that after advancing strategic transformation with “quality and profit” as the core, it achieved landmark results, achieving total revenue of 99.17 billion yuan, up 6.2% year on year; gross profit of 1,268 billion yuan, up 73.6% year on year; adjusted EBITDA reached 1,730 billion yuan, up 57.8% year on year; adjusted profit before tax reached 654 million yuan, achieving a significant transformation of loss into profit; the number of service terminal customers was about 5.5 million, an increase of about 17% year on year; operating cash flow increased to 1.706 billion yuan In yuan, the total LTL freight volume reached 1.04 million tons, which is basically the same as last year. The number of service terminal customers is about 5.5 million, an increase of about 17% over the previous year.

Overall, against the backdrop of uncertainty in the external environment and increased competition among leading express companies last year, Eneng Logistics continued to firmly promote strategic transformation, focusing on effective scale growth. It not only achieved fruitful results, consolidated the company's ability barriers to high-quality growth, but also achieved industry leadership in terms of volume scale, profit level, network coverage, and cost control capabilities, and “high-quality growth” became its key word of the year.

Industry insiders believe that the demonstration effect brought about by Eneng's successful transformation may lead the express industry into a new stage of sustainable development.

Deep transformation to consolidate the foundation for high-quality growth

Back in September 2022, Qin Xinghua said in an open letter that the express shipping industry had moved from a dispute of scale to a dispute over service quality, and Eneng Logistics must make drastic changes. Subsequently, Eneng took the lead in starting a brand strategy transformation centered on quality and profit in the industry based on five major directions, including pricing optimization, lean operation, network empowerment, organizational restructuring, and reduction of leverage. Eneng's determination to reform is firm. In 2023, the company also declared that year as a “deep year” of transformation, and proposed the “five biggest” development goals with the best cost, the best quality, the most stable timeliness, the fastest service response, and the tightest network coverage.

Over the past year, Eneng has continued to practice internal skills, make deep changes, and consolidate the foundation for high-quality growth.

In order to focus on effective scale growth, Eneng actively optimized the supply structure in 2023. The average weight of annual tickets fell from 106 kg in 2022 to 93 kg in 2023, a year-on-year decrease of 12.3%. Among them, the volume of mini small tickets with higher profit margins and partial share of small tickets increased by 9.1% and 2.4%, respectively. This means that Eneng is replacing the part with lower profit margins and negative gross profit margins with better quality and higher gross profit margins to achieve continuous expansion of effective scale. With the adjustment of the cost structure and the improvement of the pricing system, the competitiveness of the Eneng market gradually became apparent, and the volume of goods increased 10% year-on-year in the Q4 quarter of 2023.

On the distribution side, the company optimized the distribution structure and lean planning of the storage area, focusing on people, fields, and equipment. The unit distribution center cost was 156 yuan/ton in the second half of 2023, a decrease of 17.1%. On the transportation side, Eneng made many efforts to reduce transportation costs by straightening transportation routes, optimizing lane planning and production configuration, and upgrading the fleet management system. In the second half of 2023, the transportation cost per trunk line was 310 yuan/ton, a decrease of 5.1% over the previous year.

Eneng's overall cost savings have also been fed back into the market. In Shiyan, Hubei, China's “truck capital”, Eneng has enabled merchants in the automobile supply chain to further reduce logistics costs and increase efficiency, reducing comprehensive logistics costs by about 30%.

In addition, the service capability of “best quality”, “most stable service response”, and “fastest service response” is also one of the victors of the Eneng system. In 2023, Eneng released a new brand concept of “use Eneng to deliver good goods” to boost customer service. The average annual delivery time was reduced by 10.1% year-on-year, and the timeliness delivery rate increased by 12 percentage points year over year. Take Jinhua Transportation to Guangzhou as an example. By optimizing routes to improve the connectivity rate, the average time saving 2 to 3 days compared to the previous time. In terms of overall service quality, Eneng optimized the loss rate of 100,000 pieces by 83.2%, the damage rate of 100,000 pieces by 33.6%, and the number of complaints about 100,000 tickets by 64.4%, and the service level improved significantly in 2023.

On the online ecosystem side, Eneng is committed to transforming the platform ecosystem to a good atmosphere of fairness, deep coverage, sustainable profit, and common prosperity, and the scale and stability of the entire network continues to improve. By the end of 2023, the entire network had more than 28,000 freight partners and agents, with a township coverage rate of 98.2%, ranking first in the express industry. Even in remote Tibet, Eneng has set up 30 outlets, covering 74 counties and cities throughout the country, making it the first express shipping network covering all of Tibet in China. The data also shows that in 2023, the retention rate of Aneng's leading freight partners reached 98.2%, an increase of 2.5 percentage points over the previous year. The end of the network express delivery is in the channel, and those who win the channel will win the world. The increase in channel cohesion and centripetal strength will inevitably bring more support to the core competitiveness of Eneng Logistics.

Promote the four major upgrades and seek long-term growth with the “Five Greatest”

As Qin Xinghua said at the results conference, qualitative growth comes from efficient business efficiency and organizational efficiency. At this performance conference, Eneng also announced for the first time the “cheats” of the organization that has been transformed for more than a year. That is, to establish organizational management principles based on power lines and professional lines to form a “collaborative-platform-based” organizational structure and a flat organizational system. Qin Xinghua said, “To make the organization as flexible as water, we stimulate organizational vitality through “authorization, activation, and empowerment”, authorize the operating area, and let people on the front line who can hear the gunfire make decisions.” The benefit of this is that the entire organization is more grounded and more responsive to market changes and customer needs.

Under this logic, Eneng has a clear idea of the next development plan: it will continue to be guided by the “Five Greatest” goals and achieve long-term growth through four major upgrades. At the same time, it continues to provide a strong and accurate impetus for the continuous deepening of change by promoting the implementation of a plan management system that runs through strategy, goals, organization, execution and evaluation at the level of management, process, and organizational upgrading.

Next, Eneng will also take “major operational transformation” as the center to create the most competitive products and the healthiest network ecosystem, promote the improvement of business efficiency, cultivate new quality productivity of Eneng through innovative pilots, continue to explore cost reduction space, and respond positively to market competition. Through pilot automated distribution lines to reduce costs and increase efficiency, pilot intelligent driving vehicles to improve safety, and carbon neutrality and fuel-saving emission reduction management, the competitiveness of Eneng products has been further enhanced, and a moat far from simple price competition has been built for Eneng.

At the same time, the company will also further build a healthy online ecosystem. On the one hand, we help achieve “the most stable timeliness” and “best cost” by continuously improving the efficiency of distribution networks; on the other hand, through a series of network empowerment policies, including digitization of outlets, the Iron Triangle, etc., the network is empowered to continue to refine services, achieve “the best quality”, “the fastest service response”, and ultimately achieve the goal of “the most dense network coverage”.

Eneng said that starting in 2024, Eneng will increase voluntary disclosure of quarterly results data to communicate the company's development more closely with the market.

In addition to the performance plan, Eneng also revealed its ESG work plan. In 2024, Eneng will continue to adhere to sustainable development, gradually accounting for the scope of greenhouse gases while improving the level of climate change management. It is worth mentioning that in 2023, Eneng will dig deeper into new ways to develop green energy, and cooperated with Zhijia Technology, Geely Remote New Energy Commercial Vehicle, and Ningde Era to promote the first implementation of autonomous heavy duty trucks in China, as well as the exploration of new energy green capacity.

The trillion dollar space has huge potential, and Eneng has deepened into the “Five Greatest” to accelerate growth

Logistics is the backbone of the real economy, connecting production and consumption, domestic trade, and foreign trade. According to the McKinsey report, China's 1.5 trillion LTL market will continue to develop along with economic transformation and upgrading, and the overall market size growth rate is slightly higher than the GDP growth rate. In the context of the transformation and upgrading of the domestic economy, benefiting from China's new commercial supply chain — the production side, retail side and e-commerce side — all tend to be “high-frequency” and “small-batch” transportation requirements. With its advantages such as wide coverage and high standardization, full-network express shipping will grow at a higher growth rate than the dedicated line and regional LTL market, and its share will gradually increase. Full network express is the market with the highest long-term growth and scale efficiency value in the domestic LTL industry. It is also the most mature and the most promising racetrack to run the 50 billion dollar leaderboard.

The huge industry space is also accompanied by top-level policy guidance. The Central Economic Work Conference held at the end of last year clearly called for effective reduction of logistics costs for the whole society. At this point, Eneng's transformation path has been verified once again by top-level policies: only logistics companies with the ability to “continuously reduce costs and increase efficiency” can adapt to economic development trends and occupy an advantageous position in industry integration and competition.

Earlier, CICC released a relevant research report, giving Eneng Logistics a “outperforming industry” rating, and stated that since Eneng Logistics's cost reduction results exceeded expectations, providing space for further optimization of the franchisee ecosystem; Guohai Securities also covered Eneng Logistics for the first time and gave it an “increase in holdings” rating in the research report; at the same time, the internationally renowned agency J.P. Morgan Chase also gave Eneng Logistics a “gain” rating, confirming the recognition of Eneng Logistics's business performance in 2023.

It has received positive reviews from three leading brokerage agencies, showing that the market has widely recognized the strategic transformation achievements of Eneng Logistics with “quality and profit” as the core. Some industry insiders said that as a leading domestic franchise express company, in the short to medium term, the results of Eneng Logistics's strategic adjustments and management improvements are initially showing; in the medium to long term, the company is expected to benefit from the growth space brought about by the accelerated penetration of LTL, and is optimistic that the company's performance will continue to improve.