Good day, welcome to the ZTO Express Q2 financial results 2022 conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Sophie Li. Please go ahead.
Thank you operator. Hello everyone, and thank you for joining us today. The company's results in the investor relations presentation were released earlier today and are available on the company's IR website at ir.zto.com. On the call today from ZTO are Mr. Meisong Lai, Chairman and Chief Executive Officer, and Ms. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights, followed by Ms. Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows. I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such statements are based on management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filing with the US Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of the new information, future events or otherwise, except as required under law. It is now my pleasure to introduce Mr. Meisong Lai. Mr. Lai will read through his prepared remarks in their entirety in Chinese before I translate for him in English. Meisong?
大家好，感谢各位参加今天的电话会议。2022年二季度，中通完成了62亿件的业务量，同比增长7.5%，市场份额比去年同期提升了两个百分点，达到23%。同时我们实现了17.6亿的调整后净利润，同比增长38.2%。在面临疫情挑战和经济增长低于预期的大环境下，中通取得了量价双收的良好业绩。
在严格执行疫情防控要求的同时，中通响应了国家稳固经济和安全发展的号召，带头做好复工复产，积极调整帮扶政策，捕捉市场机会，通过业务量和盈利两方面的均衡贡献，有效地推进了我们的长期战力。首先我们从多方位来专注市场份额的提升。一、我们借助率先复工复产的势头，持续保障疫区至地的通畅，切实提升了品牌形象和服务口碑，增加了客户粘性。二、依据数字化平台提供的数据，从实际入手，我们一边排查低负增长的主观原因，一边梳理成本和报价结构的合理性，寻求业务增量。三、我们对焦细分市场和渠道，拓展新业务，比如加大乡村驿站门店的建设来服务农村场景，丰富时效产品分层，提高特殊产品和服务的揽约能力。
同时我们通过精细化管理来提升盈利能力。一、我们对遮阴市场部的客户进行了梳理，在落实网点政策和公开透明和公平性的同时，清除了不合理的亏损。二、我们进一步完善了中心和车间成本与收益的实时数据监控及分析，从而更加及时地调整路由、优化排班，提升效能，不断优化自动化设备、自运车辆和人力资源的配备。三、全国各转运中心标准化运营得以进一步推广。我们通过对岗位职责的梳理，制定超出标准，优化薪资配置，从而提升人效。四、在不断深化执业方面，我们力争减少快件流转节点，比如中心带网点建包和末单分解、精细化等操作，都能提高中心产能的利用率，实现全链路的降本增效。
进入下半年，在坚持安全生产的同时，我们会继续围绕高质量发展、提升领先优势、加强差异化竞争能力建设来落地以下具体的工作。第一，继续提升平台转运效能，让转运各个环节有操作标准和规范，通过数字化工具让过程有跟踪，结果可衡量，能考核，提高人员和场地设备的使用效率。第二，继续深化网络治理，真正把一手价格落实到业务员手里，激发获客单的主观能动性。
同时我们要帮助网点根据实际能力和需求部署产能，并通过中心赋能来分担网点操作压力和提升分解十大全单的能力。第三，加快末端建设，集结末端资源，降低揽派成本，不断提升服务品质，更好地满足消费者多样化个性化需求，增加客户粘性。第四，进一步细化优化服务质量考核指标和奖罚机制，从收转运派各环节质量问题的源头入手，解决根本问题，提升全链路时效，并减少问题件或破损件。第五，做好人才建设工作，广泛吸纳人才，破格竞聘，进行全网储备，保障人组织能力与业务发展不脱节、不断层。强化省、总中心负责人等管理干部的过程管理和业绩考核，实行末位淘汰。第六，持续提升快运、云仓、国际、冷链、freight适五大物流生态板块的业务拓展，结合金融和商业的赋能，强化中通生态在业务、资源、信息、科技和管理上的协同。
各板块建立独特竞争优势的同时，统筹塑造以综合物流能力为核心的生态优势。尽管从短期来看，疫情和外部环境的不确定性仍然较大，但从中长期来看，行业发展韧性好、潜力足、空间大的特征并没有改变，长期向好的基本面没有改变。中通的战略一贯是在保障服务质量与客户满意度，以及完成既定利润目标的前提下，持续扩大市场份额。历史证明我们的战略方向和策略实施方面的优势，比如公平透明的加盟网络利益分配，稳中求进的同步提高业务量和盈利水平，不断创新迭代科技和信息研发与应用，有序并多样化打造物流生态优势等。未来我们会时刻保持时不我待的使命感和不进则退的危机感，做好自己的工作，把握机会，奋起而上，支持与赋能加盟合作伙伴，共同加速扩大中通的领先优势。接下来我们请严总给大家介绍中通的财务业绩和状况。谢谢。
Hello everyone and thank you for joining us today. In the second quarter of 2022, ZTO delivered a parcel volume of 6.2 billion, which increased by 7.5%, expanding our market share by two percentage points to 23%. The adjusted net income grew 38.2% to RMB 1.76 billion. Despite pandemic impacts and weaker economic outcomes, ZTO delivered strong performances in both market share and profit. While ZTO strictly implemented prevention and control measures, we actively responded to the nation's call of stabilizing and growing the economy without compromising safety. Being among the first to resume operations, we proactively adapted our strategies to seize market opportunities through a balanced approach to parcel volume growth and profit expansion. We are actively advancing our long-term strategies.
Firstly, we continue to focus on expanding our market shares through comprehensive means. First, taking advantage of early resumption of operations, we restored uninterrupted parcel volume in COVID-affected regions and enhanced our brand recognition and reputation with improved customer stickiness. Second, we leverage insights from in-depth analysis provided by our digital platform to discover execution flaws that underpin the low or negative growth problems. We reexamine the cost compensation against the effectiveness of pricing structure to stimulate incremental volume. Third, we align the resources towards varied demand forms of markets to establish new business. For example, we increased our build out of two stores to serve customers, enriched our time definite product offerings, and enhanced our fulfillment capabilities in specialized products and services. At the same time, we improved profitability by implementing process management measures.
First, we conducted thorough reviews of KA customer accounts and eliminated unjustifiable loss-making contracts in accordance with the principles of granting fair and transparent policies to network partners and outlets. Second, we further enhanced our real-time data monitoring and analytics of cost and pricing of sorting centers and line haul routes. This allowed us to optimize route and shift planning in a timely manner, which improved resource allocation around automation and transportation equipment, as well as human resources. Third, we furthered implementation of standardization in operating procedures across all sorting centers. Through clearer definition of job responsibilities and the standardized operating protocols, we were able to better align compensation and incentives to drive labor productivity. Fourth, we continued our effort to delayer our network by reducing the number of stops a parcel makes as it flows from end to end.
Helping outlets to process parcel aggregation or enabling destination segregation at earlier stages of sortation are examples to achieve improved capacity utilization and cost efficiency across our entire network. Stepping into the second half of the year, while we insist on pro-production safety, we will continue to focus on high quality growth to widen competitive leads, to strengthen differentiated capabilities, and implement the following work priorities. First, continue to improve the efficiency of our transit platform. We will standardize every step with digitalization that allows tracking, measuring, and evaluation in order to improve the utilization of resources. Second, further implement partner network management. We must ensure that couriers have access to full market pricing associated with incremental volume so that they are incentivized to acquire new customers. We can assist our network partners to install capacity that meets on-site demands.
We can lend our capacity to help network partners and share their workload and enhance the ability to sort for final instead of interim destinations. Third, accelerate the development of last mile presence and consolidate last mile resources to further reduce pickup and delivery costs. We will continue to improve our service quality that meets diversified and personalized customer demands and improves customer loyalty. Fourth, further refine KPIs and improve rewards and recommend mechanisms for quality of services. We will tackle root causes of service quality issues all throughout the stages of pickup, sortation, transportation, and delivery, aiming to improve timeliness and minimizing problems, including parcel damages. Fifth, strengthen human capital development by talent attracting, retaining, and fast-track promotion for a broad range of functions or positions. We will ensure our talent reserve as sufficient to support our business development.
We will further emphasize performance evaluation of our provincial general managers and the sorting center managers under a lower risk ranking elimination framework. Sixth, continue to expand the businesses in five key logistics segments within our ecosystem, namely LTL, cloud warehousing, international, cold chain, and 2C. Supported by financing and commerce, we aim to develop cross-selling, information technology integration, and sharing of managerial know-how. We aim to establish stand-alone competitive advantage by each of these segments while cultivating synergistic ecosystem advantage that are built around comprehensive logistics service offerings. Even though the short-term outlook is filled with uncertainties due to pandemic and other external factors, we believe that in the mid to long term, the logistics industry is resilient and has great market potential. We believe that longer term positive prospects and room for upside are still in place.
ZTO's consistent strategy is to achieve continuous market share expansion and profit targets while maintaining high quality of service and customer satisfaction. Our track record has proven our competitive advantage in terms of strategic direction and execution. For example, fairly and transparently aligning interests among our network partners, simultaneously attaining growth in parcel volume and the profit, continuous iteration of technology and information systems and its application, and strengthening our diversified logistics ecosystem in an orderly manner. Looking ahead, we focus on our mission with a strong sense of urgency. We will be left behind if we don't progress. We will be the best we can. This momentous opportunity support and empower our network partners and accelerate the widening of our competitive speed. Now let's have Ms. Huiping Yan take us through the financials.
Thank you, Sophie Li. Hello to everyone on the call. As I go through our financials, please note that unless specifically mentioned, all numbers quoted are in RMB, and percentage changes refer to year-over-year comparisons. Detailed analysis of our financial performance unit economics and cash flow are posted on our website, and I'll go through some of the highlights here. In the second quarter, despite the headwind caused by COVID outbreak, ZTO delivered solid growth results. Parcel volume increased 7.5% to 6.2 billion, advancing the quarterly market share by two points to 23%. The adjusted net income grew 38.2% to CNY 1.76 billion. Total revenue increased 18.2% to CNY 8.7 billion. ASP for the core express delivery business increased 10.5% or $0.13.
Normalized competitive environment supported and helped maintain second half 2021 price increases. In addition, our internal efforts to optimize customer base is also generating meaningful-
I'll say Mark.
Hello? Operator, can you check if everybody's sound is okay?
Yes, you may proceed.
Thank you. I'll just repeat the last sentence. In addition, our internal effort to optimize customer base is also generating meaningful results. Total cost of revenue was CNY 6.5 billion, which increased 14.2%. Overall unit cost of revenue for the core express delivery business increased 6.2% or $0.06. More specifically, line haul transportation cost per parcel increased 2% to $0.49 as a combined result of surging fuel costs and lower than expected volume offset by cost productivity gains through usage of higher capacity trailer trucks, improved load rate and better route planning. We estimated the negative impact from fuel cost hike was $0.04 per parcel for the quarter. Unit sorting cost increased 9.1% to $0.30, driven by increased labor salary and higher depreciation and amortization costs associated with a higher installed base of automation equipment.
Gross profit increased 31.6% to CNY 2.2 billion, given increased volume in ASP against still relatively stable cost structure. Gross profit margin rate increased 0.6 points to 25.4%. SG&A expense as a percentage of revenue dropped 0.1 points to 5.3%, demonstrating a lean corporate cost structure. Income from operations increased 36.4% to CNY 2 billion and associated margin grew 3.1 points to 22.9%. Operating cash flow grew 95.7% to CNY 3.8 billion. Capital expenditure totaled CNY 1.5 billion. Being an increasingly integral part of the economic revitalization and daily livelihood, the express delivery industry has shown strong resilience throughout lockdowns and facing economic uncertainties. We believe that the industry's long-term growth potential and value prospects remain strong.
By enhancing core capabilities, calibrating revenue mix, and refining cost management, ZTO continues its consistent strategies to achieve sustainable, high-quality growth. Furthermore, with continued efforts on developing integrated logistic ecosystem, we aim at providing comprehensive logistics services to meet diversified and tailored demands, forging synergy and enhancing our leading position. Based on current market and operating conditions, the company maintains its previously stated annual volume guidance, which is in the range of 24.96 billion- 25.86 billion, representing a 12%-16% increase year-over-year. These percentage increase estimates, meaningfully above anticipated industry average, reflects company's commitment to further our growth strategy and confidence in our ability to deliver despite macro uncertainties that still exist in the marketplace. These estimates represent management's current and preliminary view, which are subject to change. This concludes our prepared remarks.
Operator, please open the call for questions. Thank you.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then two. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Lu Xiu with Citi. Please go ahead.
Hey,
义乌已经部分地区解除了这个静默管理了。并且通告里有提到说要有序开放物流、电商等企业生产经营。那能否请教一下管理层一些具体实施上的一些细节，比如有哪些地区可以开始逐渐恢复运营了，那是否还需要再办理一些通行证等一些其他的手续？那未来咱们对这个整个恢复的一个进度是如何预期的，预计可能多久可以恢复到一个疫情前的这么一个尽量水平。
那我们这一次就是之前的就是大概有七天的这个业务的这个暂停嘛，给咱们就是总体的这个日件量的一个数带来的一个影响大概有多少？ 然后我的第二个问题是有关那个单价、单票一个价格走势的问题。那今年就是我们大家也看到，就整个行业的话，价格走势算都还比较平稳，尤其是到了淡季，也没有一个太明显的一个下滑。那能不能跟我们分享一下，就是除了前面就是刚刚赖总前面有提到说赖总和严总有提到是有自己内部，就是公司有在不断地优化整个客户结构的这个问题之外，就是一些外部因素，就是您觉得说就是有什么原因，比方说有那个政策的监管啊，然后高位油价，还有一些区域性的，这个疫情反复，或者是一些其他的原因啊，我们都不知道这个，咱们的目前的这个价格走势，但它的这个可持续性有多久。
然后在我们往后看的话，到三四季度甚至往更长远点去看，公司咱们对这个整个单票价格的一个走势又是怎么判断的？然后短期内您觉得是否会有一些就是票价下行的一些压力，尤其考虑到现在国内的油价之前也四连降了嘛，然后未来就是这个义乌地区马上也要开始恢复这个运营。 那另外的话，还有一个小问题，就是那个关于就是咱们友商在七月底的时候，在义乌地区有略微的价格有上调，但我们好像没有，我不知道这个背后的逻辑是什么，未来的话我们是不是会跟进。谢谢。
My first question is regarding to the service operation in Yiwu according to the latest local COVID measures that was announced last night. Yiwu lifted the closed off management in some region. It also mentioned that the logistics, e-commerce and other enterprises shall resume operation in an orderly manner. Could the management kindly share more color on the implementation details, for example, to start with what region, whether it requires access pass, how should we anticipate the overall recovery pace? When would the parcel volume return back to normal? What would the parcel volume impact during the prior seven days service suspension period in Yiwu? My second question is regarding to the ASP trend. The whole industry, overall, ASP were relatively stable this year, even during the slow season.
Aside from previously mentioned some internal customer based optimization and what do you think are some like external factors behind that, such as policy, high fuel price, the COVID resurgence, or some other factors? Going forward, how do we foresee the ASP trend in the third and fourth quarter or even in longer period? Do you see any short term price pressure from the recent domestic fuel price drop and the service resumption in Yiwu? Meanwhile some of our peers slightly increased the ASP in Yiwu at end of July. Since then, what would the logic behind that and whether we would follow their steps going further? Thank you very much.
你好，这义乌的情况是从11号开始静默。确实，今天开始，这个国际商贸城一到五城已经开始营业，但快递这个转运呢，还要等政府通知，这个接证要等接证的放开通知。预计这一两天呢，会逐步逐步恢复。我们站点呢，今天已经有些已经开始揽派快件了。
那它的影响呢，义乌大概占我们中通的体量大概10%，一天也就是六七百万件这样的影响。你同时还提到就是义乌的这个价格的问题，因为中通一直在这个电商类快递，我们的价格一直是在通达乃至极兔里面，我们一直是最高的。所以这个我没有太去关注，就是你说同行在七月底涨价，有可能就是前期这个同行的价格跟中通差距比较大，所以我们还是保持我们一贯的策略，这个义乌的情况。
Thank you for your question. First of all, relating to Yiwu, indeed started the eleventh of this month. There are lockdowns and it's gradually resuming. However, for express delivery businesses, we need to stay coordinated with the government's inspection because it is a concerted effort across all industry as well as logistics. Some of our outlets have already started picking up packages. It's a good indication that things will return to normal. Yiwu represents about 10% of our total volume, so it's about 6-7 million packages a day. Now the question regarding pricing. ZTO has always had a level of premium against all the other Tongda pricing. We think that it has something to do with the recent price increases.
Our price is already slightly higher, so we are not preparing or anticipating any changes at this moment. Second half of the year, we think that the overall theme is it's stabilizing for the pricing. Typically in the industry, you know, there is a normal variation from month to month. For example, from August to September, there's about 6-7 points increase. From September to October, and so on and so forth, all the way through November. The increase in volume demand, and it's associated also with the price gradual increase. Overall, for the second half of the year, we think the price will go up slightly for that fourth quarter. Third to fourth quarter, will hike up about 20 points or so.
It's a stabilizing increases. If I may supplement to the longer term, the industry is with significant growth potential and because it is indeed part of the day-to-day life with varied channels of e-commerce development, for example, video streaming and all that. We think that the overall pricing will continue to stabilize and being the such a low starting point for express delivery because it's associated largely with e-commerce, cost being the largest concern. Going forward, we think the upper increases is very much likely. Thank you.
Our next question comes from Tian X. Hou with TH Capital. Please go ahead.
The first one is, I saw the margin in second quarter was really good. Much better than, you know, all the quarters in the last year. Earlier this year, management did give the guidance for the full year, the profits. I would like to hear more about the margin trends for the second half of 2022. That's number one. Number two is, among all the parcels, what's the portion from e-commerce? And, as we grow into new business.
Maybe e-commerce portion is going to be less than before? Also, among e-commerce, what's the portion of, you know, from the new platform such as TikTok? Okay, that's all my question. Thank you.
Thank you, Tian, for the question. Let me try to answer these questions. First question relating to the margin, why are the good reasons for the margin increase? As we stated earlier, the price for first of all, we are able to sustain the price that was increased from the past year that we have. Because of the competitive environment is stabilizing. For the second half of the year, we think because the price hike was started in second half of last year, so the relative ASP increases will be tapering off. That leads to the comment on profit. Profit second half of the year relative to the first half of the year, the pace of expansion will be slower certainly because of the base ASP.
If I may comment a little bit more on the qualification behind your question, although I don't think I can give you the specific numbers. The revenue increases driven by ASP, we've explained, but I think most importantly is what we are doing on the cost side. The cost side initiatives are including addressing specific loss-making transactions, improving our mix, and advancing our volume so that we could improve the utilization of our capacities. So all these are impacting in place, and with the labor cost increases, we have automation, we have better route planning so that the transportation costs will also be reduced. I think if you recall, we had addressed the overall cost, productivity gain.
It really is associated with our total sort of delayering or shortening the distance from package flow for package flow. In other words, reducing the number of sortation for a particular package as it goes through all the stages of the transit. These are structural improvements that will give us longer-term pricing productivity gain. Third quarter, fourth quarter, the businesses so far what we have observed is still relatively stable. That answers your first part of question. Second part relating to the e-commerce as a proportion of our total business, it has been stable and, as ZTO being the largest player in the express delivery industry, we have maintained a high level of market presence, and that applies the same to existing traditional or new e-commerce into the e-commerce space.
Our proportion is consistent with our total market presence.
Okay. Thank you, Huiping.
Thank you.
Our next question comes from Ronald Keung with Goldman Sachs. Please go ahead.
谢谢赖总、严总，接受我的问题。非常恭喜今年二季度非常亮眼的业绩啊。我有两个小问题。第一个问题是关于这个资本开支和产能的。就是说，考虑到现在...
第一方面就是整个行业的增速其实是比预期要稍微慢一点，但是咱们的增速其实还是显著快于市场。就想问一下，第一关于这个资本开支的指引，有没有新的调整？或者说最新的这个指引是怎样？第二个就是在这样的资本开支的指引之下，我们到年底的这个最优产能，大概达到一个什么样的水平？
然后第二个问题是关于这个成本的这个技术的优化。就是我也看到，就是比如说这个transportation cost，如果把这个油价的影响扣掉的话，其实这个efficiency gain还是非常的亮眼的。就是想问一下，如果不考虑通货膨胀的因素，那么在下半年这个单位成本方面，有一个怎么样的目标或者指引？So I'll translate for myself. I have two questions.
The first question is about CapEx and daily capacity. Considering a slowdown in industry volume growth, do you have any adjustment or new guidance on the full year CapEx? And also what's the daily handling capacity by the end of the year? My second question is about the cost. We have seen that, if we exclude impact from inflation, actually in the second quarter, unit cost optimization has continued. Wondering, is there any guidance on cost efficiency improvement in the second half of the year? Thank you.
Oh.
资本开支是哪个？
资本开支 Let me answer the question for the CapEx.
Indeed, our goal and target for growth is significantly above the industry average. Because it's reflected in our strategy, we believe that growing volume, growing our market share is crucial for considering the nature of our business, right? It is a scale-driven business. Our CapEx spending, although with that said, is very much managed against the demand and what we have anticipated the overall growth. We don't want to overinvest ahead of the time too much, but yet we don't want to stay behind because we are, with our focus, growing our volume. The current CapEx goal is still kept somewhere around CNY 9 billion. We're not going to exceed that.
I think the likelihood is probably somewhere around RMB 6 billion-RMB 7 billion. We wanna make sure that we capture the market opportunities. This range is pretty wide. However, it is gonna be managed closely. The second part of the question is, indeed we have put in a lot of effort in addressing our cost productivity gain. With that, also considering the second half of the year, the seasonality, the volume changes, we think that the cost will continue to have leverage. Let me further translate for the chairman. It is consistent to what I had just described. The
In relation to the first half of the year, because the volume is below our expectation, our scale leverage is not necessarily fully demonstrated. We indeed have significant capacity preparedness. In the second half as the volume for the whole industry, which is anticipated higher than first half, we think our scale leverage will further demonstrate, and the cost per unit will decrease.
Thank you very much.
Our next question comes from Thomas Chong with Jefferies. Please go ahead.
Thanks management for taking my questions. We have seen a very impressive earnings in the second quarter. I just want to get some color about investment strategies. How should we think about the investment in new initiative going forward? With that, would we use some of our earnings to invest for the future? My second question is about our market share. Given that we have increased our market share by two percentage points during the quarter, just want to get some color about our long-term target in terms of the market share gain story. Thank you.
One moment.
Thank you for your question. The first question relating to our investment. I think I understand that you're referring to both our new products within our core businesses as well as the investment perhaps in our ecosystem. Now, I'll just answer to those two areas of investment strategy. The first part, we think that to differentiate ourselves from the rest of the Tongda, we are and we have been investing in time and energy in developing differentiated products to allow consumers or customers to have a different experience, and also allowing them to receive individualized services for their diversified needs. Our capability of fulfilling these commitment are requiring investments. Indeed, that is part of our strategy and plan.
Although the volume as of now is not significant, we are carefully and prudent in investing on those part of the new capabilities development. The second part to our ecosystem. The ecosystem, if you look back to our past, our approach has always been rather it's an extension of our existing capabilities and resources, because our goal is to fully utilize or double and triple usage of our existing investment and existing resources. The growth of our ecosystem is also very coordinated and it has its own pace. If you're referring to invest in new initiatives that could add to our existing capabilities or capabilities that are missing, then it refers to our normal M&A businesses.
Yes, we will continue to look and we'll continue to see, based on the opportunities that are there for us to expand our comprehensive capabilities. We'll look inward to say, "What do we have, what we don't have?" That's all part of the normal M&A, but we're not saying that we will be deviating from our traditional, our established way of investment discipline. Market share longer-term goal, as we had anticipated the overall potential in the industry, the growth prospects, we think that we are in a very good position to reach 30% or even 40% of the overall market in the next 5-10 years. Again, that's a very loose range. However, as we mentioned, it is a scaled business. Scale, leverage is important.
As the demand is there, as the growth potential is there, we have the best competitive advantage. We are in the better, most favorable position to achieve a higher market share, and that is indeed what we are trying to achieve. Hope that answers your question.
Yes, thank you.
Our next question comes from Frank Yip with Daiwa Capital. Please go ahead.
Two questions. The first related to the more longer-term industry parcel volume and the ASP growth target. The second one is related to do you consider to do a dual primary listing on the HKEX? Thank you.
Let me translate for Chairman the first question, in the next 2-3 years, the growth of the industry. We are remaining confidence in the entire industry's longer term growth because the potential is deep and the ability to expand is still very strong, particularly seeking the penetration into rural agriculture as well as manufacturing opportunities are just starting to present itself. We expect the industry will continue to grow, especially when you have this concentration in the top players continue to increase, the scale and the leverage will further support and propel the healthy growth of this industry. The second part of the question relating to a dual primary listing, including in the US, in Hong Kong.
We have been researching and I think the company has no hurdle, so therefore it is an option for us to achieve such in due time.
行业价格总体趋势肯定是稳中有升。因为这个行业的特性就是，份额会越来越集中，这个经营主体其实是会分化，所以大概率肯定是向上走的。谢谢。
Let me translate. Our overall view is that the industry pricing will be stabilizing and slightly and gradually increase. It is determined by its nature, and the current development trend as the players, the market share becomes more and more concentrated. In other words, the pricing power will be there. We believe the pricing going higher and increasing is very much likely. It has a high probability of increasing.
好的，谢谢。
Thank you.
Again, if you'd like to ask a question, please press star then one. Our next question comes from Lin Chen with JP Morgan. Please go ahead.
赖总、严总、Sophie，你们好。我有一个很简单的问题，就是关于咱们的数字化转型，因为刚才赖总也提到说，咱们的一个重点是靠这个提升数字化的这个水平来提高运营效率吧。那我不知道说能不能请管理层对咱们和其他同行，特别是比较接近的同行，像圆通或者韵达的这个数字化水平做一个比较。I would like to have management to make a comment on the difference in digitalization level with its peers, especially with its closest peers such as YTO and Yunda Express. Thank you.
科技是未来快递的核心竞争力。中通在IT投资规模是规模最大，通达系里面我们是投资是最多的。我们致力于通过人工智能及大数据实现业务的降本增效。那么今年呢，我们有两个重点项目，一个是将科技赋能拓展到网点，实现网点、操作运营、政策财务全面线上管理，来提升末端的管理能力。第二个呢是量本利，这个将业务数据量化，将业务流程标准化，从而实现经营成果实时反馈，守住经营底线，不断优化经营过程。谢谢。
Uh-
好的。
Relative to the other industry peers, technology has always been a core competency or core focus of our business. We have invested consistently and, amongst the Tongda, we invest the largest amount. Also we are the most innovative. There are many applications of the technologies originated from ZTO. This year we will continue to strive for this competitive advantages development. For example, the initiatives include one, expanding our technology empowerment and extend that capability to our outlets, helping them carrying out more online and real-time management of their operations, ensuring their policy-making, financial analysis are all done with digitized solutioning. Also it includes the end-to-end management capabilities all the way extending to the couriers.
The second part, which is also a very effective initiative that is generating significant results for us, meaning we are focusing more on real-time, more frequent, in time visibility to the data, and so that we could find issues, find problems as soon as we can, and resolve them as soon as we can. This extends to our operations, all the segments, including the sortation, the transportation, the route planning, the labor utilization, labor productivity and so on and so forth. This will further our ability to gain productivity in all fronts.
That is something we are. I don't think we want to try to compare with all the other players, because each has a different starting point and each has different resources and capabilities and focus. They are doing well, and then some of them are what we are able to learn from and some that we are able to do better.
谢谢。好，谢谢赖总，谢谢严总。
This concludes our question and answer session. I would like to turn the conference back over to Mrs. Huiping Yan for any closing remarks.
Thank you again for joining us for the call, and we look forward to speaking with you further if you have any more questions.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.