Thank you so much. Welcome to attend the 2023 interim results corporation presentation from SINOTRANS. Please mute yourselves while attending today's meeting. Now we are going to let the moderator to start the presentation. Distinguished organizers, distinguished guests, good afternoon. Welcome to the 2023 interim results corporation presentation from SINOTRANS . I am the representative from SINOTRANS . Today's meeting is going to be held online, and we are going to present our interim results, as well as answer the questions from investors. At the same time, we are also going to upload our information on the official website of our company. Today, we are going to give the floor to Mr. Song, who is the executive president of our company, Mr. Song Rong, to address us.
We are also here together with Ms. Li Qing, independent non-executive director, as well as Mr. Wang Jiu Yun, chief financial officer, as well as Ms. Li Shichu, vice president, to participate in today's meeting. Today's presentation is going to be divided into two parts. The first part is the presentation of our company. The second part is going to be the Q&A session. Now we are going to give the floor to President Song to address us.
Distinguished investors, ladies and gentlemen, good afternoon. First and foremost, on behalf of the executives, I'd like to extend my warmest welcome to all the participants today. Last Friday, our company has released the 2023 interim results. We can also say that despite the complicated and ever-changing situations in the overall economy, the under pressures of the freight rates as well as the harsh situations in the logistics industry.
Through the unswerving effort from SINOTRANS, we have transferred the incremental factors to the market, to the increases in the shares, and we have underperformed the general situations in the market, demonstrating the resilience as the leading company in the logistics industry in China. At the same time, we have a key highlight on the dividends of the shareholders. We have to have the interim dividends per share of RMB 1.4, with a dividend yield of 48%, creating a historic record. Now I'm going to give you a brief introduction toward the company. In the first half of this year, driven by a sluggish demand as well as uprisings in the freight sectors, the containers as well as the air freight has entered a huge downward trend.
Currently, the levels and the index of the freight rate in the sea and in the air is approaching the same levels in the year 2019. From the supply side, according to the estimates mentioned, this year, 2023, we are going to create a new record in the global sea freight container capacity, while at the air freight sector, in 2023 and 2024, we are going to enter into a new period for the general deliveries while releasing the capacity shortages for the transportation. From the demand side, we estimated that in the year 2023, the global demand for the sea freight is going to be dropped by 0.8% year-on-year. That is, the sea freight and air freight market is going to have pressure in a short period of time in the future.
Facing this ever-changing market situation, our company has tried our best to transform the inventories in the market to the incrementals in the market, upgrading our business structures, keeping a great control of the risk, and demonstrating a very strong resilience in our operations. In the first half of the year 2023, our company has registered a revenue of RMB 47.8 billion , and RMB 2.2 billion is net profit attributing to the parent companies. We have achieved a year-on-year growth in terms of the interest rate as well as the net profit reach, as well as improving the operation capacities. The net cash flows as well as the balance sheet, among other different financial sectors, have been kept a very good momentum. This kind of result is benefited from our evermore pursuit for upgrading customer structures and promoting the companies to enter into the development channels.
Our company has also put an insight on the key sectors and the emerging sectors, and have organized a three focus in the new energy vehicles, the green energies, as well as the medical care sectors. Our core business has been improving our customer revenue further with improved customer structures. The steam price has seen an increase in the service trains, while we are also seeing increases in the multiple chambers deliveries. The divisional purpose is also achieving a further incremental performance. We have also finished the incremental business for the SINOTRANS and CSC, further enhancing our business structures in the transportation sectors alongside the Yangtze River. At the same time, we have further enhanced the cooperation with the ship owners, further increasing our capacity in the Yangtze River waters among other different transportation lines.
In terms of the air transportations, we have worked on the strategic part to work on the new types of models for the new types of carriers. Optimizing our in the global demand with a downward trend in the global air freight demand. In the first half of this year, the total transportation of our achieving 1,600 tons of the capacity, while the air freight capacity has been reaching 42,000 tons with an 8.4% year-on-year rate. The cross-border e-commerce logistics has been working really hard and achieving the new markets in Africa, Middle East as well as Latin America. We have put forward multiple different packages for the cross-border portal and the cross-border portfolios as well as developed China transport portal to Mexico.
In terms of the railway transportation, the growing opportunities in the market, we have registered growth of 15%, 30%, and 50% respectively in the railway transportation, railway agency revenues, as well as the divisional profit, among which we are seeing a 43% growth in the international railway transportation. For the vehicle transportations, we try to optimizing our structures and enhancing our transportation capacity. In the first half of the year 2023, we have worked on the segmented market. We are also seeing a specialized logistics department divisional profit grew by 23% year-on-year. In the cosmetic and sales sectors, we have built a cross-regional integrated logistics solutions are heavily enhancing our building capacity in these areas. We have nearly increased 10 million of the users as well as grabbing, grasping the new opportunities in the new energy sectors. The science and the electronics industries has also enhancing our capacity.
We are also working on the transformation solutions in the medical sectors. In terms of the chemical sectors, we are enhancing our client bases while seeing an increase in the revenues as well as the profit. In 2023, we have taken a deep dive in Hong Kong, focusing on the Southeast Asians as well as developed in Middle East and Latin America, focusing on world development in overseas and cross-border development. In terms of the deep dive in Hong Kong, we have built an incremental development in areas focusing on the customer portal as well as the connections between these areas. In terms of focusing on the Southeast Asia areas, we have been working on the three different channels, meaning the air, railways, and also the seas, working on enhancing the cooperation between Vietnam and Thailand, including six different air freight.
While working in developing the Middle East and Latin Americas, we are trying to focus on the cross-border e-commerce, small package portfolios. In terms of enhancing the European business, we have opened up the railways and the chartered flights between Ningbo and Gera. We have also built new sub-operating businesses in Hungary, enhancing our overall layouts in Europe while keeping a new high-quality operations in the KOG groups. In 2023, by working together through the digital transformations and working on the platform businesses, we are going to enhance our capacity in the zero-carbon areas. Let's look at the specific performance. The specialized logistic revenues have achieved RMB 14.8 billion , with a divisional profit of RMB 560 million , among which the contractual logistic revenue is RMB 11.4 billion , 8% growth year-on-year, and divisional profit of RMB 430 million with a 17% growth year-on-year.
It is the greatest contributor for our profit. Although we are seeing a downward trend in terms of business revenues in the logistic sectors, because of the first half of this year, we have achieved a very record high interest rate . The divisional profit has achieved a 27% growth year-on-year, while the chemical logistics has been achieving a 17.41% year-on-year. In terms of our agency businesses, it is the cornerstones of the companies. In the first half of this year, the revenue is RMB 28.3 billion, while the divisional profit is RMB 120 million . The sea freight rate has been seeing a downward trend because of the shrinking demand, but we have extended our service change in increasing our overall agency sectors, making the sea freight divisional profit reach RMB 400 million .
The air freight is seeing a growth of 8.4% growth year-on-year, but due to the downward trend in the freight rates, the revenues and divisional profit is seeing a downward trend. But they leverage in the performance in 2019. The railway transportation has achieved a record high in terms of the business revenue as well as the divisional profit. In the e-commerce platforms, in the first half of this year, as well as the divisional profit, we are seeing a downward trend year-on-year. This is because the cross-border e-commerce trade has been greatly affected by the air freight sectors. Looking forward into the second half of this year, we are still going to suffer from the insufficient demand domestically as well as risk trends in the international market and the oversupply in the supply chains.
We are going to deal with these evermore challenge from the following four sectors. First, we are going to stabilize the overall performance and trying to de-risk proof. This is going to be our priorities. We are trying to make sure that our effort is going to turn into stable operations in the company's overall operations throughout the year. First, we are going to stabilize our customers. With a deep dive in terms of the trend in the sectors, as well as the insight of the smart customer demand, we are going to innovate the strategic customer cooperation. Second, we are going to highlight and prioritize our main key business sectors. The contracts business is going to focusing on the high growth customers while working on expanding the new customers in the sectors.
In terms of the sea freight sectors, we are going to work together with the shipping companies, create the terminal-to-terminal logistics service products. In terms of the air freights, we are going to work on the new different models for the new types of carriers, enhancing the operations in the European and American lines, enhancing the operations and coordinating the efforts. In terms of the railway business, we are going to work together with the resources owners. Thirdly, we are going to increase our capacities to deal with the potential enhancing our positions in the markets. Helping Chinese companies to go to overseas is going to become one of the priorities for SINOTRANS. Enhancing SINOTRANS' capacity in the domestic logistics sectors.
Secondly, we are going to enhance the operations in the incremental sectors, and we are also going to working on the increasing of the cost-using efficiencies, as well as optimizing our operations, as well as optimizing the business structures. Thirdly, we are going to use the finance innovation to be the engine for the further development, as well as enhancing the finance and technological innovations, focusing on the smart logistics technologies and its result applications. At the same time, we are also going to build the green logistics, trying to optimize the dual carbon management systems, trying to translate the green logistics pilot areas. Fourthly, we are going to promote the overseas capacity buildings, and we are also going to work on the Southeast areas as well as Middle East in terms of the customer clearance, transportations, inventories, as well as the deliveries on this.
At the same time, we are also going to enhance the results of investment in overseas. Thirdly, we are also going to focusing on the operations and the transformations. In the second half of this year, we are going to consolidate our conferences, enhancing our investments, accelerate our speed, as well as focusing on the digital transformations and top-level designs. Trying to make sure the transformations of the digital commissions to be a reality, making sure that the digitalization is going to be really deeply rooted in our company. Fourthly, we are going to cultivate the talents and build different capitals of these talents. We are going to focusing on promoting the 200 targets, building the two talents inventories, focusing on the overall workforce sectors of our talent, and enhancing the overall talent capacity building in the overseas companies and providing the high-quality talent support for the companies.
Moving into the second half of this year, we are going to work harder with ever more focus for the high quality and high dimensional development of SINOTRANS in order to give a feedback in terms of the support to the distinguished investors.
Thank you so much, Mr. Song, for your kind support. Now, we are going to open up our floor to the questions. Please identify your place, your institutions, and introduce yourselves before the questions. Now, the floor is open up for questions. Thank you. The first question is Mr. Yan Hai from Shenwan Hongyuan.
Executives , I am Shenwan Hongyuan. I would like to congratulate SINOTRANS for achieving such a good result. This is above our expectations. Recently, I have also seen the results in the sectors. I am seeing that after digitalizations, there is an upward trend in terms of these revenues.
I would also say there is a huge upward trend in terms of the contractual logistics performance. My question is directly to the contractual logistics sectors. What is the reason behind this huge growth? What is going to be the reason supporting it? Second, although we are doing a good job in this sector, we still keep a low key. I believe in terms of this, cargo transportation, we are the biggest player in China. Could you tell us about the actual usage of these digital platforms as well as the role it plays in terms of the facilities in our business?
Thank you so much. One question is about the contractual logistics. Another question is about Y2T. I am going to take the first question, and I am going to direct the second question to my colleagues.
In terms of the contractual logistics, we have very good development momentum. I think no matter from the performance or the profit, we have kept a very good momentum. This is because starting from the previous three years, in the sectors of the contractual logistics, we managed our content and improving our performance, applying the TMO tools, as well as increasing the management capacity. These series or the portfolios of the tools helps us to improve the operational efficiencies and lower down the operational cost. This is one side. On the other side, the overall performance of the contract for logistics is in line with our strategies. We are trying our best to serve the top 500 companies, and because of the increases in terms of these efficiencies, we have strengthened the customer loyalty, making sure the customer is going to bring more results to our final performance.
Thirdly, internally speaking, in the contractual logistics, we have reorganized and restructured our contractual logistics business, making it a very integral sector of our business. Moving to the future, we are going to integrate more resources, coordinating more customers, and try our best to renew the contractual business with a not that optimistic background of the market. I am quite optimistic about the future of the outlook of the contractual business. This performance of the contractual business sector in the past two years is also due to our strategic priorities. We provide the fulfillment services of the logistic solution to our customers. We are also applying the digitalization solutions in terms of this sector. There are some of the pre-arrangements in this sector. This is also helping us a lot in terms of this business sector. Thank you so much for your question.
The second question, I am going to direct to Mr. Xiang, who is going to answer your question about the Y2T.
I am going to give you a brief introduction towards the Y2T. Y2T is a digital logistics platform for SINOTRANS. It is undertaking digital solutions in this sector. The Y2T was a project that we have built through the year 2019. Currently, it is a multi-layered platform helping us to achieve these operations in the high-level executives. This year, we have finished the first round of the capital raisings of the Y2T project. In terms of the development of the Y2T, we have grabbed the digital transformation opportunities from our industry, providing the whole industrial chain solutions to the customers as well as the 4PL solutions. We have connected the digital connections and enhancing our digital performance. In the year 2022, the Y2T has registered a revenue of RMB 3 billion .
This is not the revenue, it is the profit. In the first half of this year, we are accelerating the layout in the Y2T and registered an 80% growth in the Y2T sectors in the first half of this year year-on-year. The daily visit of Y2T platform is reaching over 80,000. This is a huge leapfrog compared with the last year. In terms of the business sectors, we are working together with the overall layout of SINOTRANS, trying to achieve overall SKUs of about 10,000 customers in the day-to-day operations. Y2T is a very important platform for the digital transformations of the final. We believe the priorities could be enhanced. For example, with the digital transformations of our Y2T, more and more logistic products can be demonstrated in this area.
At the same time, we are working together with our online and offline team, trying to provide the fourth-party plus the third-party solutions to the end customers, boosting the positions in this sector. Thank you so much for your kind question.
Thank you so much. Now the question is coming from HUAXI Securities, Lisa Ling. Could you please speak louder?
Thank you. I have two questions. The first one is about the agency business in the air freight and the sea freight. We have noticed that there is a downward or decrease in the sea freight, but we were also seeing that in terms of the pre-order profits, there is a huge difference between the sea freight and the air freight. What is the difference between the performance of the sea freight and the air freight in the first half of this year?
Second, what is your outlook to the two sectors throughout the year? Thank you.
I am going to take your question. You are focusing on the sea freight as well as the air freight, as well as the gross profits per order. This is due to the different operational models in terms of the sea freight and the air freight. Sea freight surpasses the levels of the air freight. Although we are seeing a downward trend in the sea freight this year, the business sectors remain stabilized. In terms of the air freight, starting from the year 2019, we are trying to push a revolution in the air freight side in order to integrate it with the digital platform. That is to say, its overall operational capacity is better than we estimated, and it is also closely related to our operations this year with this downward trend.
I think it's creating some of the pull in the general performance. The trend in their gross profits is due to these different business models.
Second, let's talk about the policy. From the general operations and the general performances of our company. In order to pay the investors back, the company's executives decided to increase our dividends per share. Moving to the future, based on the performance of our company, we are going to better arrange the dividends for the investors. I am not going to give you very clear numbers about the dividend yield, but I believe the numbers that we have given in the first half of this year is representing the determination and efforts of the executives. Thank you so much.
Thank you so much for your kind information and answer.
Now we are going to give the floor to Hu Junwen from Changjiang Securities. Exactly.
I am Hu Junwen from Changjiang Securities. With the complicated overall performance, we have achieved very good results in SINOTRANS. I have two questions for you. The first one is the freight rate of the containers is reaching the same levels compared with 2019. My question is what is your outlook for the second half of this year? How can you define the demand? Second, as well as the pricing. Second, with the U.S. economy coming back to the regular performance, while Chinese economy is also recovering back, does it mean that in the second half of this year, we are going to see a turning point in the performance of SINOTRANS? These are the two questions.
The first question is about the freight rates, right? The estimations about the demand and the freight rate in the air freight, sea freight, as well as the railway freight.
The second question is about whether are we estimating a turning point in the overall performance? I am going to take your question. The first question is about the freight rate in terms of the sea freight and also the air freight. We can see it from the demand and supply side. Generally speaking, until June this year, the freight capacity of the containers across the world is 27,000 TEU, a 47% increase compared with last year. Development institutions is making an estimation that in the year 2023 and 2024, the demand is going to increase by 7%. From the demand side, in the second half of this year, in Europe and in Americas, because of the high inflations as well as the energy crisis, the general consumer capacity in the EU market and U.S. market was quite weak last year.
In the first half of this year, Chinese companies were trying to increase the freight capacity for the containers. Although we are seeing some of the bouncing back in the second half of this year, including the transportation freight in Europe and in America. Actually, this is a result achieved by the companies by building the alliance and controlling different factors. This situation is not going to be continued in the long term. According to our estimations from the demand side and the supply side, we are going to keep a very conservative attitude to the performance in the second half of this year. There is not going to be a very huge rebound about the performance.
Although we are trying to keep the performance in a very stable trend, our estimation in the freight rate is that we are going to stabilize the number in the second half of this year. This logic also applies in the air freight. The transportation capacity in the first half of this year is approaching 9.9%. Compared with three years ago, in the year 2019, I would say the performance is 3.7% higher. Some of the international air freight is coming from the civil aviation sector. Based on the previous estimates, the air capacity in China is increasing all the time. We have estimated that in the second half of this year, the transport capacity is going to be further unleashed, creating some of the extra rooms for the international commercial air freight.
From the demand side, according to this logic, the demand about this freight rate in the first half of this year is going to be increasing by 8.5% this year. We estimated this rising trend is because of the overseas market, as well as our huge demand in this sector. We are also quite familiar with the real freight sector. The current pricing mechanism is approaching the same level as in the year 2019. We believe the real freight rate to Europe is decreased by 42%, and to other countries, it decreased by 30% this year. We are estimating that there might be some of the turning points during the Christmas seasons.
Overall speaking, no matter for the pricing mechanisms in the air freight, the sea freight, and rail freight, because of these reasons in these two sectors, we estimated that there is going to be some of the fluctuations in terms of the demand, and there is not going to be a very huge increase in terms of the demand. But for the turning point that we might going to see in the second half of this year, I am not going to use the turning point as the precise description towards it. You have mentioned that the second half of this year, we are going to have to see a really complicated and ever-changing situation. I think that in our report, we have mentioned that we are going to immerse ourselves in the high-growth period of the second half of this year.
At the same time, we are going to experience the structural adjustment with the overall locations of the digital revolution. We are also going to enhance the market supplying capacity and optimizing our operational structure, increasing the operational efficiency, lower down the cost, providing a stable, highly efficient solution to our end customers. I am quite confident to our performance in the second half of this year.
Now the question is from Han Jun with Zhongxin Jiantou.
I am Han Jun with Zhongxin Jiantou. I have several questions. The first question is about the air freight period. It means that we cannot charter the flight by ourselves if this means a ship. Are we asking that there is going to be a lower price or not? Are we estimating a lower pricing compared to some of the price offered in terms of the pricing gap?
I am only trusting that in January this year, we have signed several different huge customers with tens of millions of orders. Previously, we believe. My question is that, are these customers willing to pay us? Sometimes the customer is competing really fiercely in terms of pricing. For these customers who have registered tens of millions of the revenues, are we going to see a better performance? Are we going to estimate a better revenue with these customers? These are my questions.
Thank you so much for your question. Question is about the new types of carriers for the air freight. This is a good question. I am going to pass on to Mr. Gao Xiang. Second question is going to be answered by me.
Thank you so much. I am going to take the first question. Think of a new type of t he carrier.
This is a new type of business facing the market and new types of the customers. The logic is that we are going to control the prioritized core interest while providing the one-off solution to the key customers. Just as you have mentioned, starting from the year 2019, we are using all kinds of channels, including the chartered airplanes and also other different business models to increase our business capacity. We have also included this part in our report. This has once again testified our company's judgment to the market performance while trying to promote the business sectors in the air freight. This is going to help with the customers. In the future, we are also going to enhance our controlling capacity in this sector. In terms of the signing date, because we have different judgment towards the markets with the different times of the signing.
We signed this contract with the different carriers in the different dates. We are also trying to explore the new business cooperation methods. That is my answer to your question.
I am going to take the second question about the contractual logistics. This is a really complicated question. Our customers can be divided into the strategic customers, core customers, as well as the newly added billions of the categories of the customers. Facing the new situations, everybody is expecting a lower cost. But what we are providing is not a simple operation. Not a simple operation for the logistic infrastructure. We provide the solution for the logistics solutions. I believe the majority of this newly increased customer is from the Fortune 500. They are posing other know towards the 50s and above the supply chain. We also came up with a higher requirement in terms of the transportations and logistics.
This is where SINOTRANS is in. We are creating values for our customers different with the other competitors. Under the same cost, we can provide better solutions to other customers with a stable, more secure supply chain services to the customer.
There are two follow-up questions. First question, the Ukraine conflict. China impacted by the Russia-Ukraine conflict. Companies like Poland have closed some of the railway stations, decreasing border final Europe railway transportation from Europe freight. What is your outlook toward the China-Europe Railway Express freight? New question.
Since the breaking out of the Russia-Ukraine conflict, there is a huge shift between the China-Europe Railway. We believe the western part of the China-Europe Railway is accounting to 20%-30% of our overall performance. Right now, it is only accounting for 10%.
With the exports, there is this poses some of these questions affecting the overall performance in the China-Europe Railway. The labor pressure of the China-Europe Railway from the challenges of the market. In the previous three years, China-Europe Railway edges and the cost is going to disappear in the future. We should admit that as a part of the reality and trying to increase the efficiency, lower down the cost, and making them the competitive advantage of our company.
This is going to be very helpful in terms of the operational cost of our company. Generally speaking, I would say the plan for the China-Europe Railway is very stable. Generally speaking, the China-Europe transportation has kept a double-digit growth since the beginning of this year. This is not because the lacking capacity in terms of the operations. To some of the extent, it is related to the other sectors.
We are still going to keep a close look into the future.
I have another further question. We are going to transport a lot to the Russia railway, but what is going to be the freight rate? Is it going to be still very high? I believe this is a very accurate description. I have a final question.
For the cross-border business sector. Although I believe the terminal-to-terminal business is going to be the future trend. But in the destination countries, we are still relying on the local companies to expand our business. Yes, you take it correctly. We are working with the local agencies and several agencies in the local countries.
Have we undertaken some of these clients, including clients from Pinduoduo?
Yes.
Can you give us information including the gross profits? Is it going to be the double digits?
Sorry, we are not going to disclose information in this sector.
Thank you so much for your kind answer. We are working together with the famous e-commerce platforms. Could you tell us about the SKUs of the cooperation?
We have so many customers. Let me give you some of the conceptual answers. Mr. Han, are you with us online?
Yes. What are some of the conceptual answers towards the cross-border e-commerce platforms daily order?
I think the daily order is enhanced level.
Now the question is directed from Luo Xinyu from CIC.
Thank you so much. I am Luo Xinyu from CIC. I would like to congratulate SINOTRANS for your good performance in the first half of this year. I have two questions about the air freight. In the first half of this year, we are seeing a downward trend in the air freight.
We are creating a historic high record. Could you give us a briefing about the reasons behind it? Second, we are seeing that although there was a 10% decrease in the air freight pricing, we are still registered a very good performance in the first half of this year. Could you please elaborate the reasons behind it?
For air freight, I think that we have answered some of the similar questions before. Generally speaking, in the first half of this year, oil freight decreased. But this decrease in the pricing is within our expectation. This increase in the overall revenues is closely related to our long-term layout in this sector. No matter in the informatinization, as well as the overall consumption and the optimizations of these sectors. Generally speaking, with a weakening or sluggish performance in the market the business, the revenue still keeps a growing momentum.
I am going to take the first question. The first question. Let us talk about our understanding into the first question. With the upgrading of China's industrial link, air freight is going to account for a large proportion. That is the reason why we have changed our overall strategies in the market. That is the reason why we have kept a very resilient momentum in the market, allocating more resources in the market, providing a stable and lower pricing, lower cost in the overall performance. That is the reason why we have kept a close tie with our strategic customers, and they have provided us a very strong support because of the stable services. A lot of new customers have been introduced with our market. To some of the extent, it boosted our understandings in the market. That is the two reasons behind the growth in terms of the revenues.
Thank you so much for the answer.
Now the question is from Chen Hua with Diyi Caijing.
I am Chen Hua from Diyi Caijing . I have two questions. My first question is about the division of profits from the contractual logistics and other sectors. What is the reason behind it? Second question is that, what is your take on the profits in the second half of this year and the beginning of the next year?
Let me answer the first question. In the first half of the year 2023, the company is under a very quick growing momentum. This growing momentum in the railway freight sector is due to our operational capacity. China-Europe Railway has a substation distributed across the country. The profits that we get is not simply coming from the governmental subsidies.
It is because of our smart allocations of the resources. While we are serving the customers in terms of the overseas supply, we are trying to provide a three-dimensional solution with the air freight, sea freight, as well as the railway freight. For those of the goods with high values, we suggested the air freight, and for those of the goods with the large volumes, we suggested the sea freight. Compared with other companies, we have advantage in terms of our skills and the services that we provided. In the first half of this year, with the increase of the contractual logistics and specialized logistics, we are also seeing an increase in terms of the profits. I think I have told the previous in my We believe the downward trend is at our options. We understand the overall economy is complicated and ever-changing international trade with.
That is the reason why we have allocated more resources in efforts in the from the general performance in the previous three years. The increase in version with a slowing pace in it. I think that moving into the growing pace is easy as high as the three years. But we still keep a very optimistic outlook in our profitability as well as our customer loyalty.
Thank you so much. That is my question.
Now the question is coming from Yu Shu with Northern Assets.
I have two questions. The first question is about the overseas layout. What is your take on the overseas layout? Are there any specific regions you are quite optimistic we procured KOG before?
The second question is that, the state-owned expressions of the state-owned assets, as well as the State Council, have put forward the idea that we are going to increase the qualities and volumes of the state-owned enterprises. What is going to be the changes? Are there going to be any shift for the China Merchants Group?
My understanding toward your question, the first line is about the overview layout of our company. The second question is about the development of the KOG. The third question is the arrangement from China Merchants Group toward SINOTRANS, right? Thank you so much for your question. For the overview layout, we are seeing 64 different subsidiaries in 42 countries and regions. Moving to the future, the subsidiaries and divisions is going to help us with the supply chains that will serve the customer's demand.
With the general layout in the Chinese industry, we are going to arrange it. Second, we are also working together with the ASEAN region as well as the Middle East, trying to relocate the resources in these emerging markets. At the same time, we are also seeing other countries, the emerging countries, allocating more resources in these countries and regions, focusing on these areas and countries, regions. Second, I think at the very beginning of this today's session, Mr. Song has introduced you about the increased integrated business of the SINOTRANS. I believe our businesses are also going to bring a lot of opportunities to the Europe market. In the first half of this year, we have kept a very good momentum, while the Europe economy was not that stabilized in the first half of this year. The third question is about the evaluation mechanisms from China Merchants Group.
I believe the parent company, as well as the market, has a very reasonable expectations towards the performance of the functions and a very good profitability. I believe no matter for our parent company or the market, we are still going to be very optimistic about ourselves. We have increased in the first half of it, and I believe this kind of action is definitely going to give more optimism into the market.
Thank you so much. You have also mentioned the arrangement from China Merchants Group. From the China Merchants Group, they have given us more support. I am really confident that China Merchants Group is going to build SINOTRANS as a world-class company in the logistics sector.
This is a boost for SINOTRANS, no matter from the policy part, from the profitability part, from the cost part, we are going to achieve a high-quality development with the support of China Merchants Group.
Thank you so much for your kind questions. In the interest of the time, we are only having the time for the final question. Let's give the floor to the final analyst or investor. The question is directed to Mr. Zhang Ji with Ping An.
My question is that, against the background of the evermore competing and ferocious market situation in the air freight and rail freight . What is going to be the strategies with the executives? Could you please request more specifically?
Thank you. Mr. Zhang, could you please give us a more precise description as to where is your question?
My question is about the growing growth points in the e-commerce, in the logistics, as well as the agency business.
I think this is quite a macro policy. I am not going to answer the question, either you know type. From the business sector, the company looking for digital revolution in the company. From the presentations of our organizations, from the structures of our business, we are going to enhancing our capacity to deal with these situations and increasing our competitiveness in these sectors and deliver more processes to the customers. This is a very important way to increase our core competitiveness as well as our future business. Second, in terms of the resources allocation. Although the market was not very optimistic currently, we are also under huge pressure. But in these situations, in terms of this resources allocation, we are going to enhance our capacity.
For these two regions, we are going to allocate more resources. Third and foremost, we are going to enhance our ties with the strategic partners and strategic customers. Not only maintaining them in a very traditional way, but we are also going to work with our customers in building a resilient supply chain. That is to say, no matter for the strategic business sectors or the contractual business sector, it is aligned with our expectations for the future. At the same time, starting from last year up until now and moving into the future, we are going to keep honing our product portfolio in order to make sure the mainstream business as well as the side business are going to keep our growth in momentum.
Thank you so much for your kind answer. No further questions from my side.
Here we conclude the 2023 interim result announcement with SINOTRANS. Thank you so much for the kind participation.