This report is prepared in both Chinese and English. The Chinese version shall prevail in case of any discrepancybetween the Chinese and English texts.
Stock Code: 600057 Stock Abbreviation: Xiamen Xiangyu
Xiamen Xiangyu Co., Ltd.
2023 Annual Report (Summary)
To ShareholdersIn 2023, the global industrial supply chain has been undergoing unprecedented challenges andrestructuring, presenting market fluctuations as well as a blend of opportunities and obstacles. Wehave remained committed to our long-term vision and tackled difficulties head-on. Despite thecomplex market conditions, we have held our ground amidst the torrential market changes,achieving a counter-trend increase in market share, and boosting our operational volume. However,the pace of our operational adjustments has not promptly kept pace with the rapid market dynamics,and the depth of our current model upgrade remains insufficient, failing to fully exploit and unleashits potential value. For the first time in nearly a decade, we experienced a decline in businessperformance, and the journey towards strategic transformation remains challenging. Here, we wouldlike to extend our sincerest apologies to all shareholders who have consistently demonstrated theirtrust and support for the Company’s development.In the face of the dynamic shifts within the industry, we persistently evaluate and fortify our ownvulnerabilities. By committing to a philosophy of striving for excellence, we rigorously managecosts and risks, optimize our customer structure and product portfolio, deepen our macroeconomicand industrial research, and steadfastly adhere to our basic principle of “Rooted in the Supply Chain,Serving the Industrial Chain, Creating the Value Chain”. Additionally, we challenge ourselves toleave our comfort zones, actively pursuing innovative, sustainable development strategies. As wedeepen our commitment to the domestic market, we also concentrate on collaboratively advancingthe “Belt and Road” initiative with high standards, aiming to achieve a seamless integration ofdomestic-international dual circulation. This will pave the way for a more efficient and smarterglobal supply chain ecosystem. We deeply understand that only by actively embracing change anddiligently promoting open collaboration can we surpass ourselves and realize a more gloriousprospect.The market inevitably faces its tempests, yet we hold an unwavering belief in a radiant future wherepaths are strewn with lush blossoms and opportunities emerge from the shadows. Our confidence is
deeply anchored in the steady, positive direction of China’s economy, the ongoing opportunities insupply chain development, and the enduring advantages of Xiamen Xiangyu’s business model andrich cultural heritage. Firmly planted in the fertile soil of China’s manufacturing sector, we arepoised to explore vast new territories for growth. By capitalizing on the opportunities provided byleading supply chain enterprises, we are expanding our service dimensions and broadening ouroperational horizons. The Xiamen Xiangyu community remains committed to our grassroots spiritand passion for the cause. Every obstacle serves as a stepping stone for growth, and each challengebecomes a driving force that propels us forward. Through unyielding effort and steadfast conviction,we are determined to navigate through challenges and paint a new blueprint for high-qualitydevelopment.As we navigate through the surging waves of a new industrial revolution and globalization, we standfirmly on our cultural roots with the principles of innovation and renewal in mind. Focusing on ourindustrial clients, we lead the way in model innovation by leveraging our resource strengths andintegrated service capabilities. We will march towards our strategic vision of becoming a world-class supply chain service enterprise with unwavering determination. Xiamen Xiangyu will cherishthe trust and expectations of our shareholders, and we will repay the support of shareholders withconcrete actions to forge a brighter future.
Xiamen Xiangyu Co., Ltd.
Chairman: Qidong Deng
April 24, 2024
I. Key Accounting Data and Financial Indicators
Unit: RMB Million
| FY2023 | FY2022 | YoY Change (%) | FY2021 | |||
| After Adjustment | Before Adjustment | After Adjustment | Before Adjustment | |||
| Total Assets | 129,705.19 | 115,119.21 | 115,056.41 | 12.67 | 95,878.86 | 95,834.22 |
| Equity Attributable to the Shareholders of the Listed Company | 20,841.31 | 17,091.57 | 17,091.57 | 21.94 | 17,214.26 | 17,214.26 |
| Operating Revenue | 459,035.45 | 538,148.06 | 538,148.06 | -14.70 | 462,516.23 | 462,516.23 |
| Net Profit Attributable to the Shareholders of the Listed Company | 1,573.94 | 2,636.90 | 2,636.90 | -40.31 | 2,194.19 | 2,160.27 |
| Net profits Attributable to the Shareholders of the Listed Company before Nonrecurring Gains and Losses | 507.30 | 2,655.99 | 2,655.99 | -80.90 | 2,180.21 | 2,146.29 |
| Net Cash Generated from Operating Activities | 5,586.55 | 6,222.99 | 6,222.99 | -10.23 | 5,420.00 | 5,420.00 |
| Weighted Average Return on Net Assets (%) | 9.29 | 18.06 | 18.06 | Decrease by 8.77ppt | 17.14 | 17.14 |
| Basic Earnings Per Share (RMB/share) | 0.63 | 1.10 | 1.10 | -42.73 | 0.93 | 0.93 |
| Diluted Earnings Per Share (RMB/share) | 0.63 | 1.10 | 1.10 | -42.73 | 0.91 | 0.91 |
II. Industry Analysis During the Reporting Period
1. Analysis of the Industry's Operating Conditions
In 2023, the bulk supply chain industry faced a complex and dynamic external environment thatchallenged the industry’s sustainable development and risk resilience. However, opportunities andchallenges coexisted, as the industry ushered in an accelerated trend towards concentration andinternationalization. This shift paved the way for a more robust restructuring of the industrylandscape.With respect to challenges, on one hand, the sluggish recovery of the global economy and escalatinggeopolitical risks have compounded the complexity and severity of the external environment. Onthe other hand, insufficient effective demand has suppressed the procurement demands for bulk rawmaterials and led to a decline in the efficiency of commodity circulation. Furthermore, the mismatchbetween anticipated and actual demand has fueled substantial volatility in bulk commodities prices,
such as for corn and coal, leading to unstable trading profits and occasional industry defaults,thereby challenging the risk resilience of supply chain enterprises.Regarding opportunities, although wide fluctuations in the prices of bulk commodities havesignificantly increased the difficulty of managing merchant credit and commodity price risks,leading players in the bulk supply chain industry could quickly seize the market by capitalizing ontheir comprehensive service offerings and superior risk management capabilities while many smalland medium-sized enterprises (SMEs) in supply chain industry were forced to exit or reduce theirmarket participation. This dynamic has fueled an accelerating trend towards industry consolidation.Moreover, the accelerated pace of Chinese companies going global has promoted supply chaininternationalization, enabling top bulk supply chain enterprises to experience robust growth in theirglobal businesses and progressively explore new avenues for growth.In the face of opportunities and challenges, leading bulk supply chain enterprises continued toelevate their service models, enhance their service capabilities, refine risk management, andaccelerate market capture, contributing to the restructuring of the industry landscape will beexpedited.
2. Industry Development Trends
(1) Cyclical Fluctuations Drive Market Concentration as Leading Enterprises ExpandThe heightened volatility in global commodity prices, compounded by cyclical and structural issuesin some industries, has increased the operational challenges for the bulk supply chain enterprises.By leveraging their resource, service, and risk control advantages, the top-tier enterprises haveproactively expanded their distribution networks and captured a larger market share, demonstratingsignificant capabilities for counter-cyclical expansion. According to measurements based on cargovolume, the CR5
market share
in China’s bulk supply chain sector has experienced aconsiderable increase from 4.81% in 2021 to 5.46% in the first half of 2023. This growth highlighteda significant leader effect, with market concentration continuing to rise.
specifically referring to Wuchan Zhongda Group Co., Ltd., Xiamen C&D Inc., Xiamen ITG Group Corp.,Ltd.,Xiamen Xiangyu Co., Ltd., Zheshang Development Group Co., Ltd.
the CR5 market share = the CR5 business scale/ the scale of China’s bulk supply chain market scale, where theCR5 business scale represents the combined operating (or sales) volume of the supply chain segments of the CR5companies, and the scale of China’s bulk supply chain market scale is the sum of the domestic production andimport volumes of major bulk commodities
| Figure 1: CR5 Operational Volume & Market Share in China's Bulk Supply Chain | Figure 2: XIANGYU’s Operational Volumes & Market Share in China's Bulk Supply Chain |
(2) Evolving Customer Needs Propel Iteration of Supply Chain Service Models: “Trade-Logistics Linkage” Remains as a Key to CompetitivenessAs the domestic economy shifts from high-speed growth to high-quality development,manufacturers are increasingly demanding specialized and integrated supply chain services. Inresponse, leading supply chain enterprises are rapidly elevating their business models, withpersistent efforts on product combination, link integration, chain extension, and regionalcollaboration. Notably, a critical element of this evolution is the ability to seamlessly integrate cross-category channels and logistics, which has become a competitive edge. By capitalizing on this“trade-logistics linkage”, top supply chain enterprises are able to engage in more service segmentsof the industrial chain through efficient resource distribution and networked logistics services,which enhances customer loyalty and consolidates their market position across the industry chain.
Figure 3: Changes in Customer Demand and the Evolution of Service Provider
(3) Deepening “Belt and Road” Initiative Expands Chinese Companies’ Global Reach andUnlocking New “Blue Ocean” of Global Supply ChainAs the “Belt and Road” initiative continues to deepen, Chinese enterprises are speeding up theirglobal outreach, which gives rise to significant demand for overseas procurement and sales,international logistics, cross-border e-commerce, information consulting, and other supply chainservices.Those supply chain enterprises, who lead in overseas procurement, logistics channel construction,and international team development, are poised to leverage their service capabilities andgeographical advantages to undertake the substantial overseas supply chain demands from Chineseenterprises, thereby tapping into the new “blue ocean” markets.
(4) New Development Stage Requires Accelerated Digital Transformation, while AIEmpowers Supply Chain OptimizationChina’s economy is shifting from “high-speed growth” to “high-quality development”, leading toescalating demands from the manufacturing industry for improving the quality and efficiency of thesupply chain. In the meantime, as industry defaults sporadically occur, the importance of supplychain security continues to be highlighted, making the process of industry digital transformationincreasingly urgent. Leading supply chain enterprises are responding by intensifying theirinvestment in digital transformation, including initiatives such as the digitization of logisticsfacilities, establishment of secure warehouse systems, integration of multi-modal transportationsystems, consolidation of freight resources, implementation of digital solutions for supply chainfinance, integration with clients’ purchasing and sales systems, and the development of industrychain service systems.Benefiting from the boom in cloud computing, big data, artificial intelligence, block chain, and othertechnologies, as well as their gradual infiltration into the bulk supply chain service industry, therewill be effective enhancement of coordination efficiency across all segments of the bulk supplychain. This will enable platform-based sharing of logistics, commerce, information, and capitalflows, thereby promoting the optimization of the industry chain and supply chains.III. Business Analysis During the Reporting Period
The Company specializes in bulk supply chain services, targeting manufacturing enterprises as thecore customers. By offering comprehensive services, which include procurement and sales of bulkraw and auxiliary materials, distribution of finished products, logistics and distribution, supply chainfinance, and information consulting, the Company is committed to becoming a world-class supplychain service enterprise.
1. Product Combination
Based on customer needs and its own business philosophy, the Company employs the followingcriteria for product selection: ①Strong liquidity and easy monetization; ②High standardizationand easy storage; ③Large demand and long industrial chain to provide comprehensive services atmultiple stages. The Company currently mainly deals in bulk such as metallic minerals, agriculturalproducts, energy and chemicals, and new energy, covering seven core categories: “ferrous metals,aluminum, stainless steel, new energy, coal, oil and grain”.By vertically extending and horizontally replicating along the industrial chain based on industrycycles, the Company consistently enriches and optimizes the product portfolio. Meanwhile, theCompany diligently focuses on important niche categories to establish scale advantages. Thesecompounded initiatives forge our ability to provide a comprehensive package of bulk supply.
Figure 4: Breakdown of Combined Futures and Spot Gross Profit in 2023
Figure 5: Market Share of Core Products in 2023Note:
a. Market share = Company’s operational volume / (Domestic production + Import volume),where the Company’s operational volume does not include transshipment volume.b. Estimated market size of stainless steel materials = Production of crude stainless steel + Importvolume of stainless steel.
2. Customer Structure
The Company targets manufacturing enterprise clients and continuously optimizes its customerstructure. In 2023, manufacturing enterprise customers contribute more than 60% of our commoditybusiness. Notably, the proportion of manufacturing enterprise customers in the new energy supplychain surpasses 80%, and this figure is above 70% in the ferrous metal and aluminum supply chain,above 60% in the coal and raw grain supply chain, and above 50% in the stainless steel supply chain.Moreover, the Company focuses on developing domestic and international upstream miningchannels to enrich supplier resources, leading to a gradual increase in the proportion of long-termmining agreements and direct procurement.
3. Regional Presence
The Company has established 10 platform companies in China, expanding its business presence tocover 34 provincial-level administrative regions. Its core business area is gradually extending inlandfrom the coast, with a focus on tapping the supply chain demand of modernized industrial clustersin the central and western regions.
In recent years, the Company has strategically positioned itself along the “Belt and Road” countriesand regions, actively exploring international markets. It has established platform companies inSingapore, the United States, Vietnam, Indonesia, and other countries. Its cooperative partners spanover 100 countries, with an emphasis on connecting with high-quality procurement and saleschannels abroad and exploring the overseas supply chain demands of large Chinese enterprises.
Figure 6: Company’s Global Business Footprints
4. Business Mode
The Company transitioned from a “Single-point Service” to an “Integrated Service” model, offeringone-stop comprehensive services such as raw material procurement, finished product distribution,inventory management, warehousing and logistics, and supply chain finance. Following this, theCompany extended its “Integrated Services” upstream and downstream along the industry chain,and initiated “Full-industry Chain Service Model”. Having established service advantages acrossthe entire industry chain, the Company capitalized on the opportunity to enter the productivemanufacturing links with value-adding potential, forming an industrial chain operation mode of“Supply Chain Services + Production Manufacturing”, further improving comprehensive revenueprofitability and buffering cyclical fluctuations.In the era of digital intelligence, the Company has accumulated a vast array of service cases anddata gathered from specific business scenarios, which enables us to swiftly respond to customer
needs and recommend suitable products and services. Leveraging the advantages of our distinctive“trade-logistics linkage”, we achieve regional warehouse cross-region distribution and logisticsintegration and deliver customized supply chain solutions.
Figure 7: Evolution of the Company's Operating Model
5. Profit Mode
The Company prioritizes service and scale-driven profitability, and also capitalizes on pricedifferentials to generate profits. For a detailed breakdown of the Company’s profit, please refer tothe table below.
Table 1: Profit Structure and Definitions
| Types of Profit | Interpretation | |
| Service Profits | By leveraging the benefits of platformization and scaling operations, the Company offers customers comprehensive services across the entire industry chain. The Company offerings include procurement and sales, processing, logistics and distribution, supply chain finance, and information consulting, for which the Company earns service fees | |
| Transaction Profits | Scale Collective Bargaining Profit | Leveraging our extensive business volume, we strive to achieve cost advantage through centralized procurement and specialized operation, thereby reducing operational costs across all segments and contributing to trading revenue. |
| Profiting from Price Disparities | By leveraging the Company’s expertise in professional analysis, the Company conduct trades by studying the trends of commodity price changes over time and the spatial differences in pricing across different regions to generate profitability. | |
Ⅳ. Analysis of Core Competitiveness During the Reporting Period
1. Networked Logistics Service Capability
As a national 5A-level logistics enterprise, the Company has developed three key logistics operatingentities (Xiangyu Superchain, Xiangdao Logistics, Xiangyu Agricultural Products) and owns a teamof specialized, market-oriented, and internationally experienced logistics service professionals. TheCompany has taken the lead in establishment of networked logistics service system that revolvesaround “highway, railway, waterway, and warehouse” linking markets both domestically andinternationally. This system includes a railway transportation network that connects the east andwest regions and links the north and south regions, a highway transportation network that radiatesthroughout the country, a waterway transportation network that extends from major domestic portsto the “Belt and Road” regions, a warehouse cluster that covers the coastal areas in the east and thebulk distribution areas in the central and western regions, and international logistics channels suchas international chartering and international freight trains that link overseas markets.The Company leverages the advantages of multiple multi-modal transport routes to providecustomers with high-quality, end-to-end, and customized bulk commodity logistics solutions,successfully forming multiple premium routes such as “Cross-province Circulation of Aluminum
Products,” “North-to-South Grain Transportation,” “West-to-East Coal Transportation,” and“North-to-South Coal Transportation”.The networked logistics service system is one of the core capabilities of the Company in servingmanufacturing enterprises and also serves as an important cornerstone for the Company’s cargorights control and business digital transformation.
Table 2: Logistics Resources and Capabilities
| Category | Resources Capacity |
| Railway | The Company operates 11 railway cargo stations (9 self-owned, 1 managed and 1 leased), covering major commodity distribution hubs in the central and western regions. It is supported by 47 dedicated railway lines, approximately 2.5 million square meters of container yards and warehouses, and around 30k self-owned containers. The annual transportation capacity exceeds 45 million tons, ranking among the top in the industry. It has also formed high-quality transportation routes for coal and aluminum products, such as “Shandong/Henan-Xinjiang” and “Shaanxi-Yunnan/Guizhou/Sichuan”. |
| Highway | The Company possesses a fleet of around 1,000 vehicles and integrates more than 100k vehicles from the market. |
| Waterway | The Company owns 3 multipurpose vessels, continuously integrating vessels from market to form a combined water transportation capacity of "self-owned + cooperative". During the reporting period, the total transportation volume in domestic coastal and Yangtze River areas exceeded 27 million tons. |
| Warehousing | The 7 grain procurement platforms boast a combined storage capacity of over 13 million tons, accompanied by 9 dedicated railway lines. The Company owns 52 warehouses (self-owned or leased) covering an area of approximately 1.6 million square meters and 8 yards with a cumulative expanse surpassing 500k square meters. Additionally, it has 17 futures delivery warehouses with a total capacity of around 1 million tons. |
| International logistics | By leveraging logistic capabilities in global dry bulk chartering and international rail logistics corridors, the Company is establishing the China-Indonesia logistics corridor (targeting a cargo volume exceeding 17 million tons during the reporting period), the China-Vietnam & Thailand logistics corridor, and the China-Europe bi-directional transportation corridor. Through these channels, we aim to enhance our international multi-modal transportation capabilities and strengthen our overseas localized logistics services. |
Figure 8: Company's Nationwide and International Networked Logistics Service Ecosystem
2. Digitalized Supply Chain Service Capability
The Company focuses on three core goals: expanding the incremental market, improving serviceefficiency, and elevating the business model. Leveraging vast business data, extensive customerresources, and diverse application scenarios, it has constructed an intelligent information technologysystem. The Company utilizes smart logistics systems for warehouse digital management anddevelops the “YuLianTong” digital supply chain service system, which effectively connects fundproviders with customer demands. Additionally, the Company promotes the development ofagricultural industry-level supply chain service system to serve grain producers and achieve mutualwin.Furthermore, the Company establishes an integrated system that encompasses modules likefinancial control, human resources management, customer relations, risk management, andequipment & asset management to support business operation. Through enterprise managementanalysis systems, customer analysis, and big data operation systems, we extract and analyzeextensive business data to support business decision-making.
Figure 9: "YuLianTong" Digital Supply Chain Service System
3. Systematic Risk Management Capability
The Company firmly grasps the foundations of risk control by targeting manufacturing enterprisesas its core clients and focusing on highly liquid, easily convertible, standardized, and storable bulkas its main products. It adapts the composition of these products dynamically based on industrycycle changes to strengthen its ability to hedge against cyclicality.The Company has always maintained a reverent attitude towards the market, prioritizing risk controlover profit and scale. It has currently established three lines of defense for operational risk (i.e.frontline business departments, headquarters risk control departments, and headquarters auditdepartments). It implements a multi-departmental joint, collective prevention and controlmechanism, around the establishment of pre-control management systems, in-process management,post-event review, and system optimization. Major risks identified by the Company are mapped,categorized, and managed through a hierarchical and stratified approach. Additionally, digital toolsare leveraged to strengthen key risk management areas, such as customer credit risks and price risks,through automated warning systems to ensure operational stability.
4. Global Channel and Resource Integration Capability
The Company has cultivated a strong customer base consisting of top-tier enterprises in the metalminerals, agricultural products, energy and chemicals, and new energy industries, forming a robustand well-established global business network. Through close collaboration with customers fromupstream and downstream at home and abroad, fund providers, technology support providers, andlogistics service providers, the Company integrates abundant industry resources, informationresources, logistics resources, and financial resources to provide customers with integrated supply
chain solutions. As a result, the Company's resource advantages are increasingly strengthened, itsbusiness model is becoming more mature, and its upstream bargaining power, downstreamdistribution capabilities, and comprehensive supply chain service capabilities are continuouslyenhanced.
5. Multidimensional Industry Research Capability
The Company has set up a three-tier research framework consisting of Research Institute of theGroup Headquarters, Industry Research Department of the Corporation and Research Departmentswithin front-line operating entities. It possesses a dedicated research team conducting researches onmacroeconomic, industry, and product dimensions. The Company has also built comprehensivesupply chain databases, encompassing operations, finance, logistics, risk management, and humanresources. With the accumulation of extensive data, it has established data processing models tocontinuously enhance its data mining capabilities.
6. Specialized Supply Chain Service Team
The Company places a strong emphasis on talent development and team building, cultivating amarket-driven, specialized, and globally-oriented supply chain service team which could provideprofessional supply chain solutions tailored to customer needs. Meanwhile, the Companyconsistently enhances its international human resources system through a dual strategy of externalrecruitment and internal training, cultivating an elite talent pool with an international perspectiveand service expertise. Additionally, the Company’s team management and performance evaluationmechanisms are highly market-oriented, effectively motivate core management and front-linebusiness teams to demonstrate initiative, proactivity, and creativity.V. Management Discussion and Analysis of Business Operation
1. Key Operating Results and Business Data for 2023
(1) Key Operating Results
In 2023, the external environment presented challenges, with global economic growth momentumfaltering. As the market demand remained sluggish, with overcapacity in certain industries, thecommodity prices experienced downward fluctuations. Despite the Company's sustained efforts todrive model transformation over the years, its predictive and adaptive capabilities, as well as the
flexibility in adjusting operational strategies, still need improvement in the face of market changes.Consequently, the Company’s operational performance was negatively impacted, particularly in theprofitability of the agricultural supply chain. During the reporting period, the Company recordedrevenue of 459 billion RMB, down by 14.70% YOY, and net profit attributable to the parentcompany was 1,574 million RMB, a YOY decrease of 40.31%.Embracing a long-term perspective, the Company adeptly seizes opportunities within industrycycles. Despite market fluctuations, the Company achieved a counter-cyclical increase in marketshare and a total volume of bulk commodity operations reaching 225 million tons, marking a YOYgrowth of 13.74%. Notably, operational volumes for ferrous metals, steam coal, aluminum, andgrain commodities all surged by over 10% YOY, while new energy commodities saw an YOYincrease of over 70% and oil products grew by over 110% YOY.The Company's brand influence continues to grow, evidenced by an impressive streak of 12consecutive years in the “Fortune China 500” list, reaching a remarkable 25th position. It was namedthe top national general warehousing enterprise in 2023 and recognized for pioneering the Chinesedigital warehouse standard system. Moreover, the Company was lauded as a leader in logistics ESGpractices in China for 2023 and secured the second spot in the esteemed "Top 50 Chinese LogisticsEnterprises" list for the same year, all while maintaining an AAA credit rating.Despite the negative impacts on the Company’s operational performance over the past year, it hassuccessfully stabilized its core business amidst cyclical fluctuations. Through adjustments to itsoperational strategy, the business model remains robust and the Company is going to furtherpromote its high-quality development.
(2) Key Business Data
① Bulk Commodity Trading
The Company leverages bulk commodities as its core business, entering into comprehensiveagreements with clients to offer integrated supply chain services encompassing procurement,distribution, logistics, supply chain finance, information consulting, and processing. The revenueand profitability from this segment are reflected in the results of core commodity trading, as outlinedbelow:
Unit: billion, RMB
Note:
a. The Company provides integrated supply chain services and engages in spot trading to supportits operations. It utilizes futures instruments to hedge against price volatility in the commoditymarkets, resulting in changes in fair value and gains or losses from the disposal of suchinstruments. The combined gross profit and gross profit margin of the futures and spot tradingare calculated after accounting for the hedging gains or losses.b. The decline in grain prices, coupled with the seasonal concentration of procurement and phased
sales, has led to a YOY decrease in the combined futures and spot gross profit and gross marginin the agricultural product supply chainc. By improving resource and channel distribution and expanding battery manufacturer customers,the Company has experienced a significant increase in operating volume in the new energysupply chain. However, factors such as industry overcapacity and slowing demand growth haveled to a decrease in operating revenue, combined futures and spot gross profit and gross margin.
② Bulk Commodity Logistics
In addition to serving the internal supply chain business team, the Company's logistics system alsoprovides services to external customers in the open market. The operating results of this segmentare independently accounted for, as detailed below:
Unit: million, RMB
| Category | Operating Revenue | Gross Profit | Gross Profit Margin | |||
| Amount | YOY | Amount | YOY | Value | YOY | |
| Commodity Logistics | 7,085 | -7.84% | 703 | -22.58% | 9.93% | Decrease by 1.89ppt |
| Among these: Integrated Logistics | 5,541 | -13.39% | 550 | -13.71% | 9.93% | Decrease by 0.04ppt |
| Agricultural Product Logistics | 290 | -6.88% | 102 | -46.11% | 35.16% | Decrease by 25.60ppt |
| Railway Logistics | 1,254 | 28.09% | 51 | -37.28% | 4.07% | Decrease by 4.24ppt |
Note:
a. Integrated logistics, agricultural logistics, and railway logistics refer to the market-oriented
logistics services provided by three subsidiaries of Xiangyu, namely Xiangyu Superchain,
| Category | Operating Volume | Operating Revenue | Combined Futures and Spot Gross Profit | Combined Futures and Spot Gross Profit Margin | ||||
| Volume (million tons) | YOY | Amount | YOY | Amount | YOY | Value | YOY | |
| Commodity Trading | 225.15 | 13.74% | 439.2 | -15.64% | 6.14 | -31.84% | 1.40% | Decrease by 0.33ppt |
| Among these: Metallic Mineral | 131.27 | 12.53% | 271.5 | -22.22% | 5.18 | -5.71% | 1.91% | Increase by 0.33ppt |
| Agricultural Products | 20.35 | 15.33% | 60.7 | 16.71% | -0.54 | -138.42% | -0.89% | Decrease by 3.61ppt |
| Energy and Chemical | 73.17 | 15.32% | 86.8 | -5.52% | 1.05 | -35.37% | 1.21% | Decrease by 0.56ppt |
| New Energy | 0.37 | 71.09% | 19.2 | -23.24% | 0.34 | -28.19% | 1.78% | Decrease by 0.12ppt |
Xiangyu Agricultural Products, and Xiangdao Logistics. Integrated logistics mainly includesinternational routes, international trains, inland water transportation, road transportation,domestic and overseas warehousing, while agricultural logistics mainly includes grain nationaland provincial storage services.b. The decrease in national storage business volume has resulted in an increase in fixed costs per
ton, leading to a YOY decline in the gross profit margin of agricultural product logistics.c. By continuously providing services to transport coal out of Xinjiang and expanding logistics
services for various product categories such as aluminum products, steel, and kaolin, railway
logistics revenue has increased on a YoY basis. However, factors like the slowdown in the
growth rate of the railway logistics market, adjustments in policies regarding empty container
return discounts, and significant fluctuations in the coal market have contributed to a YOY
decrease in both gross profit and gross profit margin of railway logistics.
③ Production & Manufacturing
After establishing a service advantage throughout the industry chain, the Company strategicallyventured into the value-added production and manufacturing sector. This move resulted in thedevelopment of an integrated industrial chain operating model that combines supply chain serviceswith production and manufacturing, the objective is to enhance overall profitability and mitigate theimpact of cyclical fluctuations in the industry. The operating results in the manufacturing segmentfor this period are as follows:
Unit: million, RMB
| Category | Operating Revenue | Gross Profit | Gross Profit Margin | |||
| Amount | YOY | Amount | YOY | Value | YOY | |
| Production & Manufacturing | 10,869 | 33.14% | 1,317 | 88.56% | 12.12% | Increase by 3.56ppt |
| Among these: Shipbuilding | 4,737 | 42.62% | 1,069 | 257.56% | 22.56% | Increase by 13.56ppt |
Note:
a. The company’s manufacturing segment includes shipbuilding, beneficiation and oil processing.The business entity of shipbuilding sector is the Company's subsidiary, Nantong XiangyuShipbuilding & Offshore Engineering.b. The shipbuilding sector continues to refine its independently designed 63,500 DWT (Jixiang)series of ships, with the brand gaining traction and leading to order increase. Through innovativeprocess methods and optimized production techniques, the sector has achieved cost leadership,reduced construction cycles, and successfully delivered 23 ships annually, significantly bolsteringoperational efficiency.
2. Key Initiatives and Accomplishments for 2023
In 2023, the Company adhered to the business philosophy of “Rooted in the Supply Chain, Servingthe Industrial Chain, Creating the Value Chain”, leveraged the advantages of platformization,strengthened the integration of resources, innovated the business model, accelerated theinternational expansion, and empowered digitization, so as to consolidate the foundation for ourlong-term development.
(1) Improvement of Platform Capabilities
① Product Operating Capability
In terms of the metal mineral supply chain, the Company has deeply ploughed into the services forthe “Xiangyu Group's integrated stainless-steel smelting and refining project in Indonesia, with aproduction capacity of 2.5 million tons”. Our upstream collaboration involves partnerships withover 50 nickel mines, while downstream efforts include increasing the proportion of long-termagreements to 60% and establishing a platform for stainless steel deep-processing. The volume offerrous metal operation has increased by 16% YOY. We achieved our first breakthrough in bauxitewith the operation volume exceeding 10 million tons, and remained the proportion of the nationwidecirculation in alumina above 15%.In agricultural supply chain, industry profitability was negatively affected by the strategy ofcentralized procurement and batch sales, coupled with the significant fluctuations in corn prices. Inthe face of the unfavorable situation, the Company gradually optimized its business model,accelerated its inventory turnover and diversified its product categories, resulting in the operationvolume of wheat exceeding 1.5 million tons.In the energy and chemical supply chain, the company has actively expanded non-electric terminalclients in cement, paper manufacturing, chemicals, and metallurgy sectors, with the number of non-electric customers surpassed 40. The steam coal operation volume experiences a YOY growth above10%. In response to market dynamics, we vigorously expand overseas crude oil resources andsignificantly increase cooperation with refinery customers, resulting in an over 110% YOY increasein the operation volume of petroleum products.
In the new energy supply chain, the Company has deeply explored supplier resources in Australia,Africa, South America, and other regions, established a collective procurement center in Africa, andachieved over 100% YOY increase in lithium mine operation volume.
② Logistics Service Capability
First, the Company improved the networked logistics service system. In terms of highwaytransportation, there has been an addition of more than 49k vehicles, with a steady growth in thevolume of goods carried. Regarding railway transportation, we have added new sites in Xinjiang,,developed strategic clients, achieved a coal transportation volume of about 20 million tons, andrealizing an increase in the transportation of multiple categories. In the field of water transportation,by integrating social shipping online, we achieved an annual shipping volume of over 10 milliontons. In terms of warehouse, 13 domestic self-operated warehouses and 3 overseas warehouses havebeen established, with 3 future delivery warehouses newly approved.Second, the Company has been strengthening the “trade-logistics linkage” system and developingspecialized logistics routes for the industry chain. Notably, we have formed three main routes inAfrica.
③ Manufacturing Synergy
In the shipbuilding segment, the Company persistently prioritizes brand leadership and hasindependently optimized the design of 63500 DWT (Deadweight Tonnage) bulk carrier. Throughoutthe year, the Company secured new orders for 37 ships and reached a total value of over 8.2 billionRMB, breaking the records in both the order number and gross profit from received orders. By theend of 2023, the company held orders for 64 ships.In the beneficiation segment, the Company continues to expand long-term agreements with foreignmines and core suppliers, building a solid foundation for raw ore procurement. By deepening thesynergy between production, procurement, and sales, the Company advances a dual-strategyapproach of differentiated competition and cost advantage. This strategy has resulted in an increaseof 43% in raw ore procurement volumes; moreover, both the production and sales volumes ofconcentrate have increased by 64% and 57%, respectively.
In the oil processing segment, the Dalian Plant Protein Project has been signed, further refining theCompany’s layout of the fats and oils industry chain.
(2) Acceleration of International Expansion
In 2023, the Company has further developed its overseas platforms and accelerated its internationalexpansion, with a total international business volume of approximately USD 19.1 billion, showinga remarkable YoY growth rate of 16%. The Company’s imports amount to nearly USD 17 billion,with a YoY growth above 30%.In terms of bulk commodities operations, achieved breakthroughs in the international business ofaluminum, agricultural products, coking coal, oil products, and new energy categories. The importvolume of aluminum alloy ingots has increased by over 330% YOY, and the transshipment volumeof scrap aluminum has grown by over 150% YOY. The import volume of Mongolian coal has risenby over 170% YOY, and its share of China’s total imports of Mongolian coal has surpassed 17%.The import value of palm oil has increased by over 120% YOY. The total export amount ofphotovoltaic products has grown by over 100% YOY.In the realm of bulk commodity logistics, the Company purchased SMX vessel in Indonesia. Thevolume of domestic maritime barge business in Indonesia has grown by over 80% YOY, the volumeof maritime business on the China-Indonesia and its extended routes has increased by over 200%YOY, the traffic flow on the China-Vietnam and China-Thailand routes has increased by 7.5% YOY,and the international dry bulk channel reaches thousands of ports, with the number of operatedvoyages increasing by 6 times YOY. The round-trip shipment volume of China-Europe and China-Central Asia trains has increased by 60% YOY.
(3) Promotion of Digital Empowerment
Firstly, the Company has broadened the cooperative banking resources, product accessibility, andbusiness scenarios of its “YuLianTong” digital supply chain service system, thereby enriching itsproduct portfolio with newly launched “YuShuRong”. The whole system has secured special creditamounting to 10.6 billion RMB for its clients, with their annual credit utilization exceeding 2.7billion RMB. The system has been awarded the ‘DingGe Award’ for being a Benchmark in Supply
Chain Transformation and has been recognized as an “Outstanding Example in China’s Logisticsand Supply Chain Finance”.Secondly, the Company has increased the penetration rate of the agricultural industry-level supplychain service system within the three major production areas of Suihua, Yi’an, and Fujin, with over
1.12 million acres of new certified land. Meanwhile, by interconnecting systems such as “Xing XingXiang Nong” app and the WaaS system, we have achieved a comprehensive online solution for thereturn of grain.Thirdly, the Company has refined its freight network risk control system, which gives priority tosystems supported by human oversight, thereby optimizing logistics information sharing andenhancing the safety management of goods in transit.Fourthly, the Company has upgraded the digital management system to promote comprehensiveoperations across all depots through the smart logistics system, which brought a 50% increase indocument efficiency. The Company has built Xiangdao Logistics Smart Park 1.0, with a 65%increase in weighing speed; it has also promoted a pilot project on intelligent driving, which led toa 75% improvement in the efficiency of locating goods and a 50% increase in outbound efficiency.Furthermore, improvements have been made to the “Cloud Supply Chain” customer self-serviceportal, which provides one-stop supply chain operation services and has resulted in nearly a 40%increase in business and document efficiency.
3. Key Business Plans for 2024
The Company maintains a steadfast belief in the unchanged fundamentals of economic recoveryand long-term growth, the enduring strategic opportunities in the development of industrial andsupply chains, and the constancy of the Company’s strategic leadership and competitive advantages.Having endured the severe test of the past year, the Company is fully resolved to learn from pastexperience and has become even more determined to pursue long-term, stable growth.Our strategic focus will be on the following key areas:
International Expansion: We will seize the development opportunities presented by the “Belt andRoad” initiative and embrace the new development pattern of “dual circulation” involving bothdomestic and international markets. We aim to enhance our global supply chain capabilities.
Upstream, we intend to acquire overseas resources. Downstream, our focus is on expandingindustrial customers, and boosting the export advantage of our photovoltaic products. Concurrently,we will fortify our logistics collaboration, enhance the establishment of international logisticschannels, and develop domestic and international specialized logistics routes for industries such asaluminum and agricultural products.Digitalization: We will implement our digital transformation strategy and advance the developmentof key projects. We aim to further enrich the product matrix of the “YuLianTong” digital supplychain service system.. We will also promote the “Cloud Supply Chain” self-service portal forcustomers, drive direct connection with upstream/downstream business partners as well as majorport terminals, achieving efficient collaboration.Agricultural Product Sector: The Company will enhance the scale of service-oriented businessessuch as “LiangLianTong”, futures delivery, and collection and storage services; as well as adjustthe procurement and sales pace, strengthen inventory rotation, and reduce inventory exposure,contributing to steady growth.Manufacturing Sector: The Company will secure a competitive edge with our brand, upgrade ourself-designed ship models, seize market opportunities, and improve operational quality andefficiency.Risk Management: To meet the industry’s regulatory requirements set by government departments,we plan to promote model transformation and optimize our risk management framework.