This supply chain giant has released its report for the first half of 2023! The business volume is growing against the trend, and the customer credit of the digital supply chain service platform "Yulintong" has increased by over 150% year-on-year

On the evening of August 29th, Xiamen Xiangyu disclosed its 2023 semi annual report. Data shows that in the first half of 2023, the operating revenue was 233.549 billion yuan, and the net profit attributable to shareholders of the listed company was approximately 891 million yuan, a year-on-year decrease of 35.77%; Basic earnings per share of 0.37 yuan; Return on equity of 5.50%; Sales net profit margin 0.42%; The asset liability ratio at the end of the reporting period was 70.20%.

Xiamen Xiangyu stated that in the first half of 2023, there was insufficient domestic and international demand, and overall commodity prices were under pressure, leading to certain pressure on industrial production. In this context, the company's manufacturing customers' demand for raw and auxiliary materials is insufficient, inventory positions are reduced, delivery cycles are prolonged, and profitability is under pressure. Affected by this, the company's operating performance experienced a year-on-year decline.

However, the operating volume of bulk commodities reached 102.05 million tons, a year-on-year increase of 13.72%; Among them, the operating cargo volume of the black metal supply chain reached 40.72 million tons, a year-on-year increase of 9.50%; The operating cargo volume of the coal (power coal) supply chain reached 26.57 million tons, a year-on-year increase of 18.26%; The operating cargo volume of the oil supply chain reached 2.66 million tons, a year-on-year increase of 229.23%; The operating cargo volume of the new energy supply chain reached 150000 tons, a year-on-year increase of 115.26%. At the same time, the "Yu Chain Tong" digital supply chain service platform has accelerated business expansion, with customers using approximately 1.4 billion yuan of credit, a year-on-year growth of over 150%.

Industry demand is under short-term pressure, and business volume is growing against the trend

From January to June 2023, the revenue composition of Xiamen Xiangyu was as follows: bulk commodity procurement, supply, and comprehensive logistics accounted for 97.75%, while other products accounted for 1.94%. Faced with the complex and ever-changing macro environment, the company has always adhered to the "6th Five Year Plan" strategic guidance, anchored the needs of manufacturing enterprises, firmly supported various types of customers in the same boat, persisted in innovation and transformation, improved service capabilities, and continuously achieved results in business and customer expansion. The operating volume of bulk commodities reached 102.05 million tons, a year-on-year increase of 13.72%; Among them, the operating cargo volume of the black metal supply chain reached 40.72 million tons, a year-on-year increase of 9.50%; The operating cargo volume of the grain supply chain reached 6.06 million tons, a year-on-year increase of 9.97%; The operating cargo volume of the coal (power coal) supply chain reached 26.57 million tons, a year-on-year increase of 18.26%; The operating cargo volume of the oil supply chain reached 2.66 million tons, a year-on-year increase of 229.23%; The operating cargo volume of the new energy supply chain reached 150000 tons, a year-on-year increase of 115.26%.

In the first half of 2023, Xiamen Xiangyu firmly established its business innovation and transformation, anchored core customer needs, and focused on "platformization, internationalization, and digital intelligence" to continuously improve its comprehensive supply chain service capabilities, providing customers with a better one-stop supply chain service experience.

In terms of metal mineral supply chain, we focus on building core capabilities and extending upstream and downstream chains. In terms of stainless steel supply chain, we will continue to integrate the channels of upstream ore sources and downstream steel mills to ensure the supply chain services of the "Xiangyu Group Indonesia 2.5 million ton stainless steel smelting integration project". In terms of aluminum supply chain, expand overseas mining direct mining channels, strengthen the integration of upstream and downstream channels throughout the entire chain, and innovate transit business models. In terms of the black metal supply chain, we will enhance the integrated service capabilities of raw material supply chains such as coking coal, coke, iron ore, silicon manganese alloy, and provide value-added services such as price management to end customers to enhance service revenue.

In terms of agricultural product supply chain, the total amount of autumn grain purchased during the 2022-2023 production season exceeds 11 million tons; Add national soybean regulatory reserve business; Promote international business layout, establish offices in the Central Asian region, and launch the first barley procurement and sales business; Deepen the operation mode of the industrial chain and continue to expand the layout of soybean crushing.

In terms of energy and chemical supply chain, we will closely grasp upstream resources and explore diversified end customers. In terms of coal, we will strengthen the direct mining capacity at the mine entrance, optimize the customer structure, and continue to explore non electric terminal customers. In terms of oil products, the upstream has newly developed international suppliers, and the downstream has established good cooperative relationships with multiple domestic refining and chemical integration groups. In the field of plastic and chemical engineering, we continuously deepen the stickiness of core customer cooperation and enhance our overseas sales capabilities.

In terms of the new energy supply chain, the key customers and nodes of Chain Connect are increasingly prominent in terms of international competitiveness. In terms of lithium battery and nickel cobalt, relying on the full industry chain service model, we have deepened our cooperation with leading customers, maintained a stable operation of lithium battery products, and achieved a year-on-year increase of over 100% in nickel product sales. In terms of photovoltaic, we continued to deepen cooperation with domestic leading enterprises, used our overseas warehouse advantages, served factory customers in Türkiye, India, Europe and other countries or regions, and increased the export volume of main and auxiliary photovoltaic materials. In terms of energy storage, we will firmly adhere to the collaborative development strategy of optical storage and lithium storage, utilize the advantages of battery supply, enter the supply chain system of energy storage system integrators, and focus on creating new growth poles.

In terms of expanding international business, the company has accelerated the construction of an international guarantee system and made efforts to expand international business. Firstly, in order to align with the trend of global supply chain restructuring, we are steadily building localized platforms and gradually implementing multi product localized businesses such as plasticization, aluminum ingots, nickel ore, petroleum coke, etc. in emerging platform regions such as Vietnam, Indonesia, and the United States. Secondly, strengthen the construction of operational capabilities for international routes and international trains to ensure the advancement of overseas business; Expand overseas warehouse resources and radiate to countries and regions such as Europe, South Africa, Brazil, and Southeast Asia, effectively improving comprehensive service capabilities for industrial customers. The third is to vigorously expand international business, with a total amount of international business of approximately 15.5 billion US dollars, a year-on-year increase of 41%, of which the total import amount is nearly 10 billion US dollars, a year-on-year increase of 50%. The customs clearance volume of Inner Mongolia Coal increased by over 240% year-on-year, ranking at the forefront of the industry; The import volume of direct mining of bauxite increased by 7 times year-on-year; The progress of crude oil import business is stable; The export revenue of photovoltaic products was 21 times that of the same period last year.

In addition, in terms of breakthroughs in digital intelligence innovation, Xiamen Xiangyu practices digital intelligence innovation development from a strategic perspective, orderly promotes the construction of a series of digital projects, constructs a digital transformation support system, and empowers enterprise development. Firstly, Xiangyu Iron Army has deeply cultivated the three major production areas of Suihua, Yi'an, and Fujin, steadily promoting diversified business development and model optimization such as order return, Huinong Mall, and "Grain Chain Connection"; The second is to establish Xiamen Yulintong Supply Chain Technology Co., Ltd., responsible for the research and operation of the "Yulintong" digital supply chain service platform, accelerating business expansion, with customer credit of about 1.4 billion yuan, a year-on-year growth of over 150%; The third is to improve the smart logistics service platform and continuously improve the level of cargo ownership control and customer experience. The fourth is to continuously optimize the functions of the online freight platform, improve customer experience, increase online port relocation and transfer services for water transportation, and enrich service scenarios.

Four stages of the evolution of Xiangyu business model

Xiamen Xiangyu focuses on the core demands of manufacturing enterprise customers and continues to provide "comprehensive, multi-level, and wide-ranging" services. By optimizing product portfolios, upgrading business models, and improving profit structures, it strives to lead the industry in model leadership.

Starting from customer needs and our own business philosophy, the criteria for selecting products in Xiamen Xiangyu are: ① strong liquidity and easy to monetize; ② High degree of standardization and easy storage; ③ Large demand, long industrial chain, able to provide comprehensive services in multiple links. The company currently mainly engages in bulk commodities such as metal minerals, agricultural products, energy and chemical engineering, and new energy, covering six core categories: "ferrous metals, aluminum, stainless steel, new energy, coal, and grain raw materials". Xiamen Xiangyu continuously enriches its commodity portfolio, meticulously cultivates important sub categories, forms scale advantages and market discourse power, forges the supply capacity of bulk commodity portfolio, and dynamically adjusts the commodity composition in accordance with industry cycle changes, so that the commodity structure under different cycles is always balanced, with better growth potential and cycle hedging ability.

In recent years, Xiamen Xiangyu has continuously optimized its customer structure and increased the proportion of manufacturing enterprises and service volume. As of the end of the first half of 2023, the number of customers and service volume of the company's manufacturing enterprises have remained at over 50% and 60%, respectively. Among them, the customer service volume of the new energy supply chain manufacturing industry accounts for over 90%, and the customer service volume of the black metal, aluminum, coal, and grain supply chain manufacturing industry accounts for over 60%.

Specifically, the evolution of Xiamen Xiangyu's business model includes the following four stages:

In Phase 1.0, Xiamen Xiangyu upgraded its "single point service" to "comprehensive service", providing a comprehensive package of services from single link services to raw material procurement, finished product distribution, inventory management, warehousing logistics, supply chain finance, etc. By formulating procurement and sales plans, cross regional transportation, and providing other comprehensive services, we can effectively solve the problem of mismatch in time and space of bulk commodity materials. A typical case of this model is the virtual factory project, where the company fully participates in the core supply chain of manufacturing enterprises, providing customers with raw and auxiliary material procurement and supply, product distribution, as well as supporting logistics, finance, consulting and other services, earning comprehensive service income.

In the 2.0 stage, after outputting "comprehensive services" to customers at a certain stage of the industrial chain, forming customer stickiness and channel advantages, the company extends "comprehensive services" upstream and downstream along the industrial chain, establishing a "full industry chain service model" with Xiamen Xiangyu characteristics. The product categories are more diverse, and the service volume is also rapidly increasing.

In the 3.0 stage, after forming service and research advantages throughout the entire industrial chain, the company takes advantage of the situation to enter into production and manufacturing links with empowering value, forming an industrial chain operation model of "supply chain service+production and manufacturing", further improving the level of comprehensive income and smoothing out cyclical fluctuations.

In Stage 4.0, with the deepening development of the first three stages, the company has successively formed a comprehensive service model, a full industry chain service model, and an industry chain operation model, providing the above services separately or in combination for customers of different industries, regions, scales, and properties.

Analysis of Xiangyu's Core Competitiveness

Xiamen Xiangyu is a comprehensive supply chain service provider under the Xiamen State owned Assets Supervision and Administration Commission, providing customers with comprehensive services including information consulting, logistics warehousing, supply chain funds, etc. The profit source has shifted from a "price difference" to a "service fee" model. In order to meet customer needs, the company has built network logistics service capabilities, digital supply chain service capabilities, systematic risk control capabilities, global channel and resource integration capabilities, multi-dimensional industry research capabilities, and professional service promotion capabilities. Through integration, linkage, and leveling, the company has gradually evolved into a "Xiangyu Digital Intelligence Supply Chain Comprehensive Service Platform", and takes this as the lead to continuously strengthen its core competitiveness.

Based on a large number of service cases and empirical data accumulated in business scenarios, the "Xiangyu Shuzhi Supply Chain Comprehensive Service Platform" can have a deeper understanding of the needs of manufacturing enterprise customers, quickly reflect, analyze and integrate them, select goods and match services, and customize personalized supply chain solutions. The core advantage of the "Xiangyu Digital Intelligence Supply Chain Comprehensive Service Platform" lies in the combination of diversified commodity combination supply and efficient logistics services, which is the unique advantage of Xiangyu's "material trade linkage". On the basis of deep integration with the customer procurement and sales system of manufacturing enterprises, through multimodal logistics capabilities, multi-channel commodity procurement and sales capabilities, and big data mining and analysis capabilities, the company can predict customer demand, inventory, and other situations, match commodity supply channels, and achieve seamless connection between cross regional distribution and replenishment through regional warehouses, accurately and efficiently solving various "spatiotemporal mismatches".

（1） Networked logistics service capabilities. As a national 5A level logistics enterprise, Xiamen Xiangyu has cultivated three major logistics operation entities (Xiangyu Express, Xiangdao Logistics, and Xiangyu Agricultural Products), with a group of professional, market-oriented, and international logistics service teams.

Xiamen Xiangyu has built a networked logistics service system centered on "public transportation, rail transportation, water transportation, and warehousing", including railway, highway, and waterway transportation networks and warehousing clusters. This system provides high-quality, full process, customized bulk commodity logistics services and comprehensive multimodal transportation solutions. Xiangyu improves operational efficiency and market competitiveness by creating multiple multimodal transportation routes; The networked logistics service system is one of the core capabilities of Xiamen Xiangyu Service Manufacturing Enterprise customers, and is also an important cornerstone of spot ownership control and business digital transformation.

（2） Digital supply chain service capabilities. Xiamen Xiangyu focuses on the three core goals of "expanding the incremental market, improving service efficiency, and upgrading the maintenance business model", relying on massive business data, huge customer resources, and rich application scenarios to build an intelligent information technology system.

The digital and intelligent construction of Xiangyu can be mainly divided into three levels: first, the digital and intelligent construction of logistics infrastructure. The company actively carries out intelligent transformation of warehouses, builds a smart logistics service platform, improves logistics management efficiency, enhances cargo ownership control capabilities, and improves the multi link series integration of multimodal transportation systems. The second is the innovation of business models driven by digital intelligence. Based on the smart logistics platform, Xiangyu has developed and constructed the "Yu Chain Tong" digital supply chain service platform to effectively connect the funding side with customer needs. In addition, we will collaborate with the Alibaba team to connect the front, middle, and back stages of the grain industry, and create an "agricultural industry level internet platform" centered around the "Grain Planting Industry Alliance, Grain Warehouse Alliance, and Grain Circulation Industry Alliance". Thirdly, digital intelligence helps improve operational efficiency. Through an integrated guarantee system covering modules such as financial control, human resource management, customer relationship, risk management, equipment and asset management, comprehensive support is provided for business operations. Through the enterprise business analysis system, customer analysis, and big data operation system, sort out, extract, and mine massive business data to serve business decision-making.

（3） Systematic risk management and control capabilities. Xiamen Xiangyu focuses on manufacturing enterprises as its customers, mainly selling commodities with strong liquidity, high liquidity, and high standardization. The company has established three risk prevention lines (frontline business department, headquarters risk control department, and headquarters audit department), focusing on risk management work around pre control, in process management, and post optimization. For major risks, a risk map is formed for classification, layering, and hierarchical management, and digital means are used to strengthen key risk warning and ensure business stability.

（4） Global channels and resource integration capabilities. Xiamen Xiangyu has accumulated a batch of high-quality customer resources in multiple industrial chains such as metal minerals, agricultural products, energy and chemical engineering, and new energy, building a mature and stable global business channel. The company has formed close cooperative relationships with domestic and foreign upstream and downstream customers, fund providers, technical support providers, logistics service providers, etc., accumulating rich industrial resources, information resources, logistics resources, and financial resources. The company's resource barriers are increasingly strengthening, its business model is becoming more mature, and its upstream bargaining power, downstream distribution power, and comprehensive supply chain service capabilities are constantly improving.

（5） Multidimensional industrial research capabilities. Xiamen Xiangyu has established a three-level research system consisting of a headquarters research institute, professional research subsidiaries, and frontline business entity research departments. It has a group of dedicated researchers who conduct research and tracking from macro, industry, and product dimensions. The company has completed the construction of supply chain databases for operations, finance, logistics, risk control, and human resources, accumulated massive data, established data processing models, and continuously improved data mining capabilities.

（6） A professional supply chain service team. Xiamen Xiangyu focuses on talent cultivation and team building, and has a market-oriented, professional, and international supply chain service team. The company implements a highly market-oriented and institutionalized team management and incentive mechanism, and has launched an equity incentive plan, with a total incentive amount of nearly 8% of the total share capital at the time of grant. It leans towards core management personnel and frontline business teams, long-term locking in excellent talents, and fully stimulating the sense of ownership.

Business Plan for the Second Half of 2023

In the second half of 2023, facing a complex and severe external environment, China's economic development still has resilience and potential, and the long-term trend of positive fundamentals remains unchanged. But in the short term, fluctuations in the bulk supply chain market may continue. Xiamen Xiangyu stated that in the second half of the year

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