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.2024 Interim Report (Summary)
I. Explanation of the company's industry and main business during the reportingperiod
1. Analysis of the Industry’s Operating Conditions
In the first half of 2024, China’s economy showed overall stability, with steady progressin transformation and upgrading, and a stable recovery in the performance of large-scale industrial enterprises. However, the complexity and uncertainty of theinternational environment continued to rise, domestic effective demand remainedinsufficient, and the recovery foundation of industrial enterprise performance stillneeded consolidation.Facing the complex and ever-changing external environment, the bulk commoditysupply chain industry encountered several challenges in the first half of the year: First,influenced by expectations of Federal Reserve rate cuts, the prices of certain bulkcommodities with strong financial attributes increased, leading to a divergence betweenliquidity factors and supply-demand fundamentals, thereby complicating commodityprice management; second, due to insufficient domestic effective demand, procurementneeds from some downstream industrial enterprises remained sluggish; third, continuedprofit declines in certain industries increased the difficulty of managing customer creditin the supply chain, affecting the expansion of business scale.Leading bulk commodity supply chain enterprises have responded to industrychallenges by adjusting their product mix to counteract industry cycles, expanding theirinternational customer base to explore incremental markets, optimizing their customerstructures, and diversifying upstream and downstream channels.Looking ahead to the second half of the year, the Central Committee of the CommunistParty of China has proposed “to accelerate the implementation of the determinedpolicies, to reserve early and launch a batch of incremental policy measures in a timelymanner.” With subsequent measures to stabilize growth being intensified, the recoveryfoundation for industrial enterprise performance is expected to continue to consolidate,bulk raw material procurement demand is anticipated to further release, and customercredit risks are expected to gradually decrease. The bulk commodity supply chainindustry is poised for marginal improvements in demand and profits.
2. Industry Development Trends
(1) Cyclical Fluctuations Drive Market Concentration as Leading EnterprisesExpand
The heightened volatility in global commodity prices, compounded by cyclical andstructural issues in some industries, has increased the operational challenges for thebulk supply chain enterprises. By leveraging their resources, services, and risk controladvantages, the top-tier enterprises have proactively expanded their distributionnetworks and captured a larger market share, demonstrating significant capabilities forcounter-cyclical growth. According to measurements based on cargo volume, the CR5
market share
in China’s bulk supply chain sector has experienced a considerableincrease 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.
| 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 a Key Driver of CompetitivenessAs the domestic economy shifts from high-speed growth to high-quality development,manufacturers are increasingly demanding for specialized and integrated supply chainservices. In response, leading supply chain enterprises are rapidly elevating theirbusiness models, with persistent efforts on product combination, link integration, chainextension, and regional collaboration. Notably, a critical element of this evolution isthe ability to seamlessly integrate cross-category operations between the entireupstream and downstream channels and logistics, which has become a competitive edge.By capitalizing on this “trade-logistics linkage”, top supply chain enterprises are ableto engage in more service segments of the industrial chain through efficient resource
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 and importvolumes of major bulk commodities.
Due to the fact that certain companies have not disclosed their 2023 operating volume data, it is currentlyimpossible to calculate the CR5 market share for the bulk supply chain in China for 2023.
allocation and networked logistics services, to enhance customer loyalty, andfurthermore to consolidate their market position across the industry chain.
Figure 3: Changes in Customer Demand and the Evolution of Service Providers
(3) Deepening “Belt and Road” Initiative Expands Chinese Companies’ GlobalReach in Supply Chains and Unlocking New “Blue Ocean” of Global SupplyChainAs the “Belt and Road” initiative continues to deepen, Chinese enterprises are speedingup their global outreach, which gives rise to significant demand for overseasprocurement and sales, international logistics, cross-border e-commerce, informationconsulting, and other supply chain services.Those supply chain enterprises, who lead in overseas procurement, logistics channelconstruction, and international team development, are poised to leverage their servicecapabilities and geographical advantages to undertake the substantial overseas supplychain demands from Chinese enterprises, thereby tapping into the new “blue ocean”markets.
(4) New Development Stage Requires Accelerated Digital Transformation, whileAI Empowers Supply Chain OptimizationChina’s economy is shifting from “high-speed growth” to “high-quality development”,leading to escalating demands from the manufacturing industry for improving thequality and efficiency of the supply chain. In the meantime, as industry defaultssporadically occur, the importance of supply chain security continues to be highlighted,making the process of industry digital transformation increasingly urgent. Leadingsupply chain enterprises are responding by intensifying their investment in digital
transformation, including initiatives such as the digitization of logistics facilities,establishment of secure warehouse systems, integration of multi-modal transportationsystems, consolidation of freight resources, implementation of digital solutions forsupply chain finance, integration with clients’ purchasing and sales systems, and thedevelopment of industry chain service systems.Benefiting from the boom in cloud computing, big data, artificial intelligence, blockchain, and other technologies, as well as their gradual infiltration into the bulk supplychain service industry, there will be effective enhancement of coordination efficiencyacross all segments of the bulk supply chain. This will enable platform-based sharingof logistics, commerce, information, and capital flows, thereby promoting theoptimization of the industry chain and supply chains.II. Business Analysis During the Reporting PeriodThe Company is engaged bulk supply chain services, with manufacturing enterprisesas its core customers. It provides comprehensive supply chain services such asprocurement of bulk raw and auxiliary materials, product distribution, logistics anddistribution, supply chain finance, and information consulting, etc. The Company iscommitted to becoming a world-class supply chain service enterprise.
1. Product Combination
Based on customer needs and its own business philosophy, the Company employs thefollowing criteria for product selection: ① strong liquidity and easy monetization; ②high standardization and easy storage; ③ large demand, long industrial chain, andability to provide comprehensive services at multiple stages. The Company currentlymainly deals in bulk such as metallic minerals, agricultural products, energy andchemicals, and new energy, covering seven core categories: “ferrous metals, aluminum,stainless steel, new energy, oil, coal, and grain”.By vertically extending and horizontally replicating along the industrial chain based onindustry cycles, the Company consistently enriches and optimizes the product portfolio.Meanwhile, we diligently focus on important niche categories to establish scaleadvantages. These compounded initiatives forge our ability to provide a comprehensivepackage of bulk supply.
Figure 4: Breakdown of Combined Futures and Spot Gross Profit in the first half of 2024
2. Customer Structure
The Company targets manufacturing enterprise clients and continuously optimizes itscustomer structure. In the first half of 2024, manufacturing enterprise customers havecontinuously contributed more than 60% of our commodity business. Notably, theproportion of manufacturing enterprise customers in the new energy supply chain isabove 80%, and this figure is above 70% in the ferrous metal and aluminum supplychain, and above 60% in the stainless steel supply chain, the coal supply chain, and theraw grain supply chain.
3. Regional Presence
The Company has established 10 platform companies in China, expanding its businesspresence to cover 34 provincial-level administrative regions. Its core business area isgradually extending inland from the coast, with a focus on tapping the supply chaindemand of modernized industrial clusters in the central and western regions.In recent years, the Company has strategically positioned itself along the “Belt andRoad” countries and regions, actively exploring international markets. It has establishedplatform companies in Singapore, the United States, Vietnam, Indonesia, and othercountries. Its cooperative partners span over 100 countries, with an emphasis onconnecting with high-quality procurement and sales channels abroad and exploring theoverseas supply chain demands of large Chinese enterprises.
Figure 5: Company’s Global Business Footprints
4. Operating Mode
The Company transitioned from a “Single-point Service” to an “Integrated Service”model, offering one-stop comprehensive services such as raw material procurement,finished product distribution, inventory management, warehousing and logistics, andsupply chain finance. Following this, the Company extended its “Integrated Services”upstream and downstream along the industry chain, and initiated “Full-industry ChainService Model”. Having established service advantages across the entire industry chain,the Company capitalized on the opportunity to enter the productive manufacturing linkswith value-adding potential, forming an industrial chain operation mode of “SupplyChain Services + Production Manufacturing”, further improving comprehensiverevenue profitability and buffering cyclical fluctuations.In the era of digital intelligence, the Company has accumulated a vast array of servicecases and data gathered from specific business scenarios, which enables us to swiftlyrespond to customer needs and recommend suitable products and services. Leveragingthe advantages of our distinctive “trade-logistics linkage”, we achieve regionalwarehouse cross-region distribution and logistics integration and deliver customizedsupply chain solutions
Figure 6: the Company's Operating Model
5. Profit Mode
The Company prioritizes service revenue and scale-driven profitability, and alsocapitalizes on price differentials to generate profits. For a detailed breakdown of theCompany’s profit, please refer to the table below.
Table 1: Profit Structure and Definitions
| Type 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 |
| Type of Profit | Interpretation | |
| 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. | |
III. 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 keylogistics operating entities (Xiangyu Superchain, Xiangdao Logistics, XiangyuAgricultural Products) and boasts a team of specialized, market-oriented, andinternationally experienced logistics service professionals. The Company has taken thelead in constructing a networked logistics service system that revolves around“highway, railway, waterway, and warehouse” linking markets both domestically andinternationally. This system includes a railway transportation network that connects theeast and west regions and links the north and south regions, a highway transportationnetwork that radiates throughout the country, a waterway transportation network thatextends from major domestic ports to the “Belt and Road”regions, a warehouse clusterthat covers the coastal areas in the east and the bulk distribution areas in the central andwestern regions, and international logistics channels such as international charteringand international freight trains that link overseas markets.The Company leverages the advantages of multiple multi-modal transport routes toprovide customers with high-quality, end-to-end, and customized bulk commoditylogistics solutions, successfully creating 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 Companyin serving manufacturing industry clients and also serves as an important cornerstonefor the Company’s cargo rights control and business digital transformation.During the reporting period, the company was awarded the second place among the top50 logistics enterprises in China in 2024, the second place among the top 100 nationalgeneral warehousing enterprises in 2023, and an advanced unit in the construction ofChina's digital warehousing standard system in 2023.
Table 2: Logistics Resources and Capabilities
| Category | Resources Capacity |
| Railway | The Company operates 11 railway cargo stations (10 self-owned, 1 managed), 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 over 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 self-owned transport vehicles and integrates more than 130k 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 10 million tons. |
| Warehousing | The top 7 grain procurement platforms boast a combined storage capacity of over 13 million tons, accompanied by the presence of 9 dedicated railway lines. The Company’s 50 warehouses (self-owned or leased) cover an expansive area of approximately 1.7 million square meters. Furthermore, there are 8 yards, with a cumulative expanse surpassing 500k square meters. Additionally, it has 18 qualification licenses for futures delivery warehouses, with a total capacity of around 1 million tons. |
| International logistics | By leveraging global capabilities in bulk and break-bulk international chartering and international rail logistics corridors, the Company are establishing the China-Indonesia logistics corridor, the China-Vietnam& Thailand logistics corridor, and the China-Europe bi-directional transportation corridor, etc. Through these channels, we aim to enhance our international multi-modal transportation capabilities and strengthen our overseas localized logistics services. |
Figure 7: 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 service efficiency, and elevating the business model. Leveraging vastbusiness data, extensive customer resources, and diverse application scenarios, it hasconstructed an intelligent information technology system. Based on its smart logisticssystem, the Company continuously improves its data-driven service system, integratesinternal and external transport resources, effectively aligns funding sources withcustomer needs, enhances service efficiency for clients, and supports businessdevelopment.Furthermore, by establishing an integrated support system that encompasses moduleslike financial control, human resources management, customer relations, riskmanagement, and equipment & asset management, it offers comprehensive support forbusiness operations. Through enterprise management analysis systems, customeranalysis, and big data operation systems, it extracts and analyzes extensive businessdata to support business decision-making.
3. Systematic Risk Management Capability
The Company firmly grasps the foundations of risk control by targeting manufacturingenterprises as its core clients and focusing on highly liquid, easily convertible,standardized, and storable bulk as its main products. It adapts the composition of theseproducts dynamically based on industry cycle changes to strengthen its ability to hedgeagainst cyclicality.
The Company has always maintained a reverent attitude towards the market,prioritizing risk control over profit and scale. It has currently established three lines ofdefense for risk management (i.e. frontline business departments, headquarters riskcontrol departments, and headquarters audit departments). It implements a multi-departmental joint, collective prevention and control mechanism, around theconstruction of pre-control management systems, in-process management, post-eventreview, and system optimization and strengthens the mutual empowerment betweenindustry research and operational management. Identified major risks are mapped,categorized, and managed through a hierarchical and stratified approach, implementingclassification, layering, and grading management.
4. Global Channel and Resource Integration Capability
The Company has cultivated a strong customer base consisting of top-tier enterprisesin the metal minerals, agricultural products, energy and chemicals, and new energyindustries, forming a robust and well-established global business network. Throughclose collaboration with customers from upstream and downstream at home and abroad,fund providers, technology support providers, and logistics service providers, theCompany integrates abundant industry resources, information resources, logisticsresources, and financial resources to provide customers with integrated supply chainsolutions. As a result, the Company's resource barriers are increasingly strengthened,its business model is becoming more mature, and its upstream bargaining power,downstream distribution capabilities, and comprehensive supply chain servicecapabilities are continuously enhanced.
5. Multidimensional Industry Research Capability
The Company has set up a three-tier research framework consisting of the GroupHeadquarters Research Institute, the Industry Research Department of the Corporation,and Research Departments within front-line operating entities. It has a dedicatedresearch team with an international perspective that conducts research across multipledimensions, including macroeconomic trends, industry, products, businessdevelopment, and risk management. This team continuously iterates researchmethodologies across various industrial chains. The Company has also successfullybuilt comprehensive supply chain databases covering operations, finance, logistics, riskmanagement, and human resources, thereby accumulating extensive data. Meanwhile,it enhances the collaboration and synergistic effects between industry research andoperational management, supporting the Company’s high-quality development.
6. Specialized Supply Chain Service Team
The Company places a strong emphasis on talent development and team building,assembling a market-driven, specialized, and globally oriented supply chain serviceteam that is capable of designing professional supply chain solutions tailored tocustomer needs. Meanwhile, the Company consistently enhances its internationalhuman resources system through a dual strategy of external recruitment and internaltraining, cultivating an elite talent pool with an international perspective and serviceexpertise. Its services now cover multiple regions, including Southeast Asia, Africa,Europe, and the Americas. Additionally, the Company’s team management andperformance evaluation mechanisms are highly market-oriented, continuouslyinnovating incentive schemes to fully engage and motivate core management personneland frontline business teams.Ⅳ. Management Discussion and Analysis of Business Operation
1. Key Operating Results and Business Data for the first half of 2024
(1) Key Operating Results
In the first half of 2024, China’s economic performance remained generally stable withsome progress, meanwhile, the adverse impacts from changes in the externalenvironment have increased. Downstream manufacturing clients still exhibit weakprocurement demand, and commodity prices are under pressure. The Company facedmarket changes when its sensitivity to industry development trends, flexibility instrategy adjustments, and proactive risk management for clients remained insufficient.During the reporting period, the Company achieved operating revenue of RMB 203.5billion, a year-on-year decrease of 12.87%; net profit attributable to shareholders wasRMB 779 million, a year-on-year decrease of 12.60%.The company has always adhered to the strategies of platformization,internationalization and digital intelligence. It conducts strategic reviews according tomarket changes and flexibly adjusts business strategies. By strengthening positionmanagement, adhering to "taking small steps but moving quickly", controlling low-efficiency and high-risk businesses, and screening high-risk business partners, thecompany's business strategy correction has achieved phased results and furtherstabilized the business fundamentals. During the reporting period, the company'smarket advantages in segmented categories such as aluminum, Mongolian coal, andnew energy have been further consolidated, and the overall business volume hasremained above 100 million tons. The agricultural product supply chain has reversedthe downward trend in profitability and achieved a positive Combined Futures and Spotgross profit. In the shipbuilding sector, the ship delivery and production volume and
the amount of orders on hand at the end of the reporting period have reached historicalhighs, contributing continuous and stable profits to the company.Since 2023, the company's operating performance has been impacted. However, thebusiness model centered on serving manufacturing customers has demonstrated strongself-repair ability and development resilience. With the strengthening of governmentmacro-control efforts and a more stable and positive operation of the macro economy,by continuously optimizing commodity portfolios, customer structures and businessstructures and strengthening risk control, the company is confident that it can breakthrough development bottlenecks, stabilize the business fundamentals and return to thepath of high-quality development amid fluctuations in the industrial cycle.
(2) Key Business Data
① Bulk Commodity Trading
The Company leverages bulk commodities as its core business, entering intocomprehensive agreements with clients to offer integrated supply chain servicesencompassing procurement, distribution, logistics, supply chain finance, informationconsulting, and processing. The revenue and profitability from this segment arereflected in the results of core commodity trading, as outlined below:
Unit: billion, RMB
| 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 Changes | |
| Bulk Commodity Trading | 101.46 | -0.58% | 193.1 | -14.11% | 3.03 | -7.94% | 1.57% | Increase by 0.11 percentage points |
| Including: Metallic Minerals | 64.67 | 6.43% | 123.2 | -16.83% | 2.25 | -9.21% | 1.83% | Increase by 0.15 percentage points |
| Agricultural Products | 5.67 | -30.10% | 19.4 | -26.72% | 0.15 | Not applicable | 0.78% | Not applicable |
| Energy and Chemical | 30.86 | -6.55% | 44.4 | 9.84% | 0.30 | -50.25% | 0.68% | Decrease by 0.82 percentage points |
| New Energy | 0.25 | 71.61% | 5.8 | -39.02% | 0.30 | 4.97% | 5.23% | Increase by 2.19 percentage points |
Note: The Company provides integrated supply chain services and engages in spot trading to support its operations.
It utilizes futures instruments to hedge against price volatility in the commodity markets, resulting in changes in fairvalue and gains or losses from the disposal of such instruments. The combined gross profit and gross profit marginof the futures and spot trading are calculated after accounting for the hedging gains or losses.
In the metallic minerals supply chain sector, the company has consolidated theadvantages of Mongolian coal imports and strengthened overseas business cooperationin steel, expanded overseas bauxite and ferrochrome resources, the operating volumeof international business has increased year-on-year. Due to weakened downstreamdemand for stainless steel and downward trend of ferrous metals, both operatingrevenue and the gross profit from futures and spot transactions have decreased year-on-year.In the agricultural product supply chain sector, by proactively adjusting businessstrategies, enhancing flow management and rolling warehouse operations, andcontrolling inventory exposure, the turnover efficiency has increased year-on-year, andthe gross profit has turned into a profit.In the energy and chemical supply chain sector, weak demand and price pressure in thecoal industry chain have led to a year-on-year decrease in both operating volume andprofitability. However, operating revenue has increased year-on-year, driven bysignificant growth in the international business such as Singapore's territorial bunkerfuel business.In the new energy supply chain sector, the Company has focused on developingchannels for lithium resources in Australia, America, Africa, and Jiangxi, China, andestablishing overseas channels for nickel-cobalt salts. This resulted in significant year-on-year growth in operating volume and profitability. However, due to the downwardtrend of the commodity prices, operating income has declined year-on-year.
② Bulk Commodity Logistics
In addition to serving the internal supply chain business team, the Company's logisticssystem also provides services to external customers in the open market. The operatingresults of this segment are independently accounted for, as detailed below:
Unit: million, RMB
| Category | Operating Revenue | Gross Profit | Gross Profit Margin | |||
| Amount | YOY | Amount | YOY | Value | YOY | |
| Bulk Commodity Logistics | 4,256 | 24.39% | 354 | -8.72% | 8.32% | Decrease by 3.02 percentage points |
| Including: Integrated Logistics | 2,957 | 6.75% | 268 | -0.58% | 9.05% | Increase by 0.67 percentage points |
| Agricultural Product Logistics | 101 | -32.30% | 50 | -44.16% | 49.59% | Decrease by 10.53 percentage points |
| Railway Logistics | 1,198 | 138.37% | 36 | 25.07% | 3.04% | Decrease by 2.75 percentage points |
Note: Integrated logistics, agricultural logistics, and railway logistics refer to the market-oriented logistics servicesprovided by three subsidiaries of Xiangyu, namely Xiangyu Superchain, Xiangyu Agricultural Products, andXiangdao Logistics. Integrated logistics includes international routes, trains, inland water transportation, roadtransportation, and domestic and overseas warehousing, while agricultural logistics mainly includes grain nationaland provincial storage services.
In the integrated logistics sector, the Company continuously has optimized the layoutof warehousing resources, improved the futures delivery warehouse system, andextended the logistics service chain. The inbound and outbound volume and inventoryof warehousing business have increased by 25% year-on-year. At the same time, thecompany promotes the improvement of the operation of the China-Indonesia logisticscorridor and create high-quality international block train routes.In the agricultural products logistics sector, the business volume of provincial reserves,temporary reserves, and futures delivery has increased, but the business volume ofnational reserves has decreased, and the operating income and gross profit havedecreased year-on-year.In the railway logistics sector, the Company has focused on large industrial customers,deeply cultivated the business of transporting coal from Xinjiang, optimized the transferroute of self-provided containers. The business volume of transporting coal fromXinjiang has increased by more than 150% year-on-year, and the logistics businessvolume of multiple categories such as aluminum products and lithium products hasincreased. The total business volume has increased by more than 35% year-on-year,driving the increase of operating income and gross profit year-on-year. Affected by thecontainer leasing business, the gross profit margin has decreased year-on-year.
③ Production & Manufacturing
After establishing a service advantage throughout the industry chain, the Companystrategically ventured into the value-added production and manufacturing sector. Thismove resulted in the development of an integrated industrial chain operating model thatcombines supply chain services with production and manufacturing. The objective is toenhance overall revenue levels and mitigate the impact of cyclical fluctuations in theindustry. The operating results in the production and manufacturing segment for thisperiod are as follows:
Unit: million, RMB
| Category | Operating Revenue | Gross Profit | Gross Profit Margin | |||
| Amount | YOY | Amount | YOY | Value | YOY | |
| Production & Manufacturing | 5,664 | 28.03% | 718 | 106.02% | 12.68% | Increase by 4.80 percentage points |
| Category | Operating Revenue | Gross Profit | Gross Profit Margin | |||
| Amount | YOY | Amount | YOY | Value | YOY | |
| Including: Shipbuilding | 3,359 | 73.48% | 611 | 98.61% | 18.19% | Increase by 2.30 percentage points |
Note: The Company's manufacturing segment includes shipbuilding, beneficiation and oil processing , of which theshipbuilding business is operated by the Company's subsidiary, Xiangyu Shipbuilding & Offshore Engineering, ofwhich the company’s shareholding has increased from 36% to 51% as of the date of issuance of this report.In the shipbuilding sector, the Company has leveraged the favorable ship market cycle.On the one hand, the company enriches its product structure. While consolidating itsmarket position in advantageous bulk carrier models, it has received orders for 16stainless steel chemical tankers. At the end of the reporting period, the order bookreached 81 ships. On the other hand, it improves the level of lean production, savesproduction costs, and shortens the shipbuilding cycle. In the first half of the year, theship delivery and production volume reached a historical high. In August 2024, thecompany acquired the core assets of Jiangsu Hongqiang Ship Heavy Industry Co., Ltd.through judicial auction. Once in full production, the annual production capacity of theshipbuilding sector is expected to increase by 60%.
2. Key Initiatives and Accomplishments for the first half of 2024
(1) Optimizing Business Strategies and Solidifying the Operational FoundationIn response to the complex and intricate market environment, the Company haspromptly optimized its business strategies and adjusted its business model to solidifyits operational foundation. First, it has enhanced traffic flow and rolling warehouseoperations, using a “Small steps, Big Gains” approach to reduce risk exposure andimprove turnover efficiency. Second, the Company has strengthened business reviews,controlled inefficient and high-risk operations, adjusted its product mix, optimized itscustomer base, and maintained a manufacturing industry customer share of over 60%.Third, the Company has explored new growth drivers by improving internalcoordination, nurturing new teams, and developing new product categories and markets,which has led to successful expansion in steel and aluminum exports, iron ore andsoybean imports businesses.
(2) Linking Trade and Logistics for Global Expansion: EnhancingComprehensive Service CapabilitiesIn the first half of 2024, the company achieved a total import and export volume of
7.753 billion U.S. dollars. Benefiting from the continuous enhancement of theinternational order-taking ability of the shipbuilding sector (12 exported ships) and thegrowth in exports of steel, aluminum and other categories, the company achieved a total
export volume of 1.466 billion U.S. dollars, an increase of 33.27% year-on-year.Affected by fluctuations in the international political and economic environment andthe “inverted” import prices of coal, iron ore and other commodities, the company'simport business scale decreased year-on-year.At the same time, the company accelerates the construction of international logisticschannels, expands nearly 100 new overseas logistics suppliers, and continuouslyenhances the international logistics capabilities in regions such as Southeast Asia,Africa, and the Eurasian Continental Bridge. During the reporting period, the businessvolume of the China-Indonesia logistics channel increased by more than 45% year-on-year, and the combined business volume of the China-Vietnam and China-Thailandlogistics channels increased by more than 10% year-on-year.
(3) Integrating Internal and External Resources: Upgrading with DigitalIntelligence EmpowermentFirst, the digital intelligence service system has been improved by continuouslyintegrating internal and external resources to develop industrial clients and enhance theefficiency of matching and cooperation between fund providers and customer demands.Additionally, socialized freight and water transportation resources have been utilizedto increase the operational capacity and strengthen cargo ownership control.Second, the digital intelligence management system has been upgraded, resulting in a35% increase in smart logistics picking efficiency. The operational efficiency of onlineprocesses such as order pickup, confirmation, and invoice acquisition for clients hasimproved by 20-40%.
(4) Strengthening Customer Management and Consolidating Risk Control LoopsIn the first half of 2024, the Company re-evaluated risk control elements such ascustomer credit, business models, and trade sanctions. It optimized the management ofthe customer lifecycle and strengthened the synergy between industry research and riskcontrol to consolidate the risk control loop.
3. Key Business Plans for the second half of 2024
In the second half of 2024, despite ongoing uncertainties in industry development,intensified macroeconomic policy adjustments, supply-side reforms, and improvingeconomic conditions will boost long-term growth momentum. This will highlight thefavorable factors for economic development. The Company will proceed with renewedconfidence and determination, focusing on the following key priorities:
International Expansion: We will consolidate our international business advantagesin regions such as Southeast Asia, Africa and South America, strengthen thecoordinated development of international logistics capabilities and commoditymanagement, accelerate the construction of international logistics channels betweenChina and Africa and the acquisition of African mineral resources, and enhance ourglobal supply chain integration services. We will also consolidate and enhance theinternational advantages of industrial chains such as aluminum, stainless steel,Mongolian coal, and new energy, and intensify the international expansion of industrialchains such as steel, and agricultural products.Digitalization: We will strengthen the mutual empowerment and coordinateddevelopment of digital and intelligent service systems with commodity managementand logistics services. Through digital and intelligent management systems, we willfurther improve the efficiency of upstream and downstream business collaboration.Agricultural Product Sector: We will continue to focus on flow management androlling warehouse operations, reduce inventory exposure, expand our service-orientedbusinesses, and enhance our ability to stabilize growth.Manufacturing Sector: We will seize the prosperous cycle of the ship market, improveproduction capacity and lean management level, and increase research anddevelopment and expansion efforts for the second main ship type.Risk Management: We will strengthen the credit risk control of business partners,closely monitor customer dynamics, and improve forward prediction and managementcapabilities. Sort out and control high-risk businesses, strengthen hierarchical andclassified management of businesses, and further optimize business structure andoperation mode. Cooperate with the controlling shareholder to complete the transferprocedures of the creditor's rights of Jiangsu Delong as soon as possible.
Xiamen Xiangyu Co., Ltd.
August 28th, 2024