Stock Code: 600057 Stock Abbreviation: Xiamen Xiangyu
Xiamen Xiangyu Co., Ltd.
2022 ANNUAL REPORT (Summary)
To Shareholders
In 2022, which marks the 10th year of the new era, China is full of oscillation and flowering. In the
context of the high-quality development of China’s economy, Xiangyu ushered a crucial year of
"the 6th Five-Year Plan”. In this year, the total revenue target of 500 billion yuan was achieved
ahead of schedule, with a net profit exceeding 3.7 billion yuan, and a net profit attributable to
parent shareholders beyond 2.6 billion yuan, and a ROE was over 18%. We have achieved a
development 'acceleration', and also demonstrated to the market the vigorous and youthful image
of Xiangyu.
”Different paths may converge at the same goal”. We firmly believe that investment is a two-way
rush between enterprise and the investors and that partners who believe in long-term value will
eventually meet unexpectedly at the peak. Therefore, we are grateful for the long-term support
and trust of our shareholders. To return gratitude, we have been continuously issue bonus to our
shareholders for many years, and this year a new record breaking amount of over 1.3 billion yuan
will be allocated for cash dividends. This not only represents our willingness to share growth
dividends with investors, but also demonstrates that the Young Xiangyu has always been sincere
and unwavering.
The current of the age is magnificent with hard challenges and severe risks. At present, momentous
changes unseen in a century are accelerating across the world. China's development has entered
a period where strategic opportunities and risks coexist. The era has given bulk commodity supply
chain enterprises a new historical mission since the " Industrial and Supply Chains " concerned
national interests and security. Service manufacturing enterprises are moving towards the goal of
high-quality development. Xiangyu should think about how to understand and meet the changing
service needs more deeply. This represents a crucial competitive advantage for industry leaders,
as well as a reflection of the intellectual capabilities and innovative ideas of Xiangyu's personnel.
Just as water retains no constant shape, so in warfare there are no constant conditions. While
benchmarking the leading foreign supply chain enterprises, we also emphasize on forging our
unique advantages and taking the path of " logistics and trade linkage, industry and finance linkage"
with Xiangyu unique characteristics. The industry-leading logistics infrastructures enable us to have
more scenarios to adapt the application of digitalization and intelligence technology in the supply
chain service field, thus evolving advanced service models such as the "Yu Lian Tong Service" and
"Industry-level Agricultural Service", allowing customers from different fields and industries to
receive high-quality and high-efficiency responses within the Xiangyu service system.
Only in hard times can courage and perseverance be manifested, and only after polishing can a
piece of jade be finer. On the new journey filled with glories and dreams, all Xiangyu people will
firmly anchor the new direction of China’s own development, with a strong spiritual power of
momentum, forging ahead with enterprise and fortitude, and strive towards the vision of
"Become the leader of the bulk supply chain industry and the world class supply chain service
enterprise", to create greater values and benefits for all shareholders!
Xiamen Xiangyu Co., Ltd.
Qidong Deng
April 29, 2023
I. Key Accounting Data and Financial Indicators
1.Key Accounting Data and Financial Indicators over the Past Three Years
Unit: 10K, RMB
2021 2020
Change
2022 After Before After Before
（%）
Adjustment Adjustment Adjustment Adjustment
Revenue 53,814,806.41 46,251,623.01 46,251,623.01 16.35 36,021,478.35 36,021,478.35
Net Profit
Attributable to
263,690.20 219,418.69 216,026.82 20.18 132,244.85 129,966.68
the Company’s
Shareholders
Net profits
Attributable to the
Company’s
Shareholders 265,599.34 218,020.51 214,628.64 21.82 132,762.37 130,484.20
before
Nonrecurring Gains
and Losses
Net Cash
Generated from 622,299.28 542,000.06 542,000.06 14.82 127,950.55 127,950.55
Operating Activities
The End of 2021 The End of 2020
The End of Change
2022 After Before （%） After Before
Adjustment Adjustment Adjustment Adjustment
Owners' Equity
Attributable to the
1,709,156.57 1,721,425.75 1,721,425.75 -0.71 1,496,468.80 1,496,468.80
Company's
Shareholders
Total Assets 11,505,640.89 9,583,422.06 9,583,422.06 20.06 8,736,465.96 8,736,465.96
2.Major Financial Indicators
2021 2020
Change
2022 After Before After Before
（%）
Adjustment Adjustment Adjustment Adjustment
Basic Earnings Per Share (EPS)
1.10 0.93 0.93 18.28 0.54 0.54
(RMB/share)
Diluted Earnings Per Share (EPS)
1.10 0.91 0.91 20.88 0.54 0.54
(RMB/share)
Basic Earnings Per Share (EPS)
Excluding Non-Recurring Items 1.10 0.92 0.92 19.57 0.54 0.54
(RMB/share)
Weighted Average Return on Net Increased 0.92
18.06 17.14 17.14 10.76 10.76
Assets (%) percentage points
Weighted Average Return on Net
Increased 1.18
Assets Excluding Non-Recurring 18.20 17.02 17.02 10.80 10.80
percentage points
Items (%)
Explanation of the Company's Major Accounting Data and Financial Indicators over the last three
years at the end of the reporting period
□√ Applicable □ Not applicable
The net profit attributable to the shareholders of the listed Company in this reporting period
includes interest of RMB 170 million attributable to perpetual bond holders. After deducting this
amount, the net profit attributable to the shareholders of the listed company in this reporting
period was RMB 2.47 billion. Basic earnings per share, diluted earnings per share, basic earnings
per share after deducting non-recurring gains and losses, weighted average return on net assets,
and weighted average return on net assets after deducting non-recurring gains and losses were all
calculated after deducting perpetual bonds and interest.
The non-public offering of A shares by the Company in 2022 will not have a dilutive effect on the
earnings per share of the company before the completion of the share registration for the project.
The Company implemented the accounting treatment related to income tax effects on financial
instruments classified as equity instruments by the issuer according to Interpretation No. 16 of the
Enterprise Accounting Standards, and retrospectively adjusted the profit and loss items of the
income statement for 2021 and 2020.
The decrease in net assets attributable to the shareholders of the listed Company at the end of this
reporting period compared to the same period last year was mainly due to the Company's decision
not to exercise the renewal option and proactively redeem the perpetual bonds.
II. Bulk Supply Chain Market Development History and Future Trends Analysis
1.Industry Development History
Since the emergence of modern business civilization, the exploration of how to solve the problem
of temporal and spatial allocation of resources to better match, stabilize and timely meet demands
and supplies has been an ongoing endeavor. Different enterprises from different eras have
provided different solutions, which have not only created a group of great enterprises but also
promoted the progress of modern business civilization. Essentially, bulk supply chain services
optimize the temporal and spatial allocation of various resources to help all partners improve
efficiency, reduce costs, create value, and thus share benefits.
In the early stages of China's reform and opening-up, major supply chain enterprises primarily
engaged in agent services such as freight forwarding, customs clearance, and simple trading to
expand their market presence. However, with China's accession to the WTO in 2001, its
manufacturing industry became one of the main driving forces behind the world's economic
development. As a result, the scale of the major supply chain market rapidly expanded, and the
business model quickly iterated, gradually developing into a group of major supply chain
enterprises with nationwide and even global influence.
Through benchmarking with overseas leading bulk supply chain companies, we have found that:
(1) The concentration of China's bulk supply chain industry is showing an accelerating trend, with
the top enterprises' business scale continuously expanding.
The concentration of overseas bulk supply chain market is much higher than that of the domestic
market, and an oligopoly competition pattern has basically taken shape. Among them, the top five
comprehensive trading companies in Japan accounted for 31% of Japan's total external trade
volume in 2021, and the four major international grain traders have controlled 80% of the global
grain trade. The four major crude oil and mineral traders had a revenue scale of over trillions of US
dollars in 2022. In the past five years, the scale of China's bulk supply chain market has remained
relatively stable at around 40-50 trillion yuan, however, the combined revenue scale of the top four
companies in the industry (CR4) has rapidly increased from around 900 billion yuan in 2018 to 2.3
trillion yuan in 2022, corresponding to a rapid growth in market share from 2.19% to 4.19% with
an accelerating upward trend.
70 3.0%
600 538
60 55
51 6% 2.5%
500 463
50
41 41 40 2.0%
40 400 360
4%
30 4.18% 272 1.5%
4.06% 300
3.59% 234
20 2% 1.0%
2.73% 200
2.19%
10 0.91% 0.91% 0.98%
100 0.67% 0.5%
0 0% 0.57%
2018 2019 2020 2021 2022 0 0.0%
Market Size of China's Bulk Supply Chain (RMB trillion) 2018 2019 2020 2021 2022
CR4 Market Shares of China's Bulk Supply Chain XIANGYU's Revenue (RMB bn) XIANGYU's Market Shares
Chart1: China's Bulk Supply Chain Market Scale and CR4 Market Chart2:the Total Operating Revenue and Market Share of
Share the Company
(2) China’s bulk supply chain industry is upgrading from traditional trade to industrial chain
services and operations, leaving significant room for improvement in profit margins.
In terms of business models, overseas large-scale supply chain giants have a high degree of
integration and involvement in the industrial chain. To illustrate, ADM has established an industrial
chain operation model of "Farm-Storage-Processing-Transportation-Sales", while Glencore and
Trafigura Group have taken "Upstream Mining Rights Resource Control" and "Industrial Chain +
International Logistics Resource Integration" as the development main line, with the profit margin
above 2%, significantly higher than that of domestic supply chain leading enterprises. China’s bulk
supply chain industry experienced events such as the "Financial Crisis" and " Steel Trade Incident",
which unveiled systemic risks in the traditional trade model. As a result, leading supply chain
enterprises have begun to transform from traditional "single-point services" to "comprehensive
services" and then to "full-industry chain services", and have practiced the "industrial chain
operation" model in some areas, with significant marginal improvement room for profit margins.
(3) Internationalization brings new opportunities to China's bulk supply chain industry
In terms of internationalization, overseas bulk supply chain giants mainly operate in the form of
multinational corporations and global resource deployment, while domestic bulk supply chain
enterprises are accelerating their international presence and expanding their import and export
business on the basis of deepening the domestic market. With the continuous deepening of the
"Belt and Road" initiative and the deepening trend of global supply chain restructuring, the
internationalization of China's bulk supply chain is ushering new opportunities.
(4) China's bulk supply chain industry is building its own distinctive competitive advantages.
Based on specific historical foundations and national differences, overseas leading companies in
the bulk supply chain industry improve their market competitiveness through global resource
integration, upstream resource control, and industrial chain operations. In contrast, China's leading
companies in the bulk supply chain industry rely on the huge demand from China's manufacturing
industry and build their own distinctive competitive advantages through integrated service
capabilities (such as multimodal transport solutions, supply chain finance, secure logistics, and cost
management) and technological applications.
2.Industry Development Trends
Over the past few years, the bulk supply chain industry in China has been influenced by various
factors, including global geopolitical situations and changes in the macro environment. As a result,
we predict that the industry will rely more heavily on technology-driven models in the future, with
a greater focus on supply chain security and stability, in response to the evolving demands of
manufacturing enterprises.
(1）The importance of bulk supply chain security and stability will be further highlighted
Given the unpredictable nature of the international situation and the growing complexity of the
global economic environment, the security and stability of bulk supply chains are becoming
increasingly crucial for economic growth. Both the 20th National Congress of the Communist Party
of China and the "14th Five-Year Plan" for the development of modern logistics have outlined the
need for more resilient and secure industrial and supply chains, with an emphasis on the
development of a bulk supply chain service platform that can seamlessly connect production,
logistics, and trade. With the leading state-owned bulk supply chain industry playing a crucial role
in ensuring resource acquisition and logistics security, its importance will continue to be
highlighted going forward.
(2) The elevation of customer demands in the manufacturing enterprise will upgrade the supply
chain industry to a new level
As China's economy growth shifts from high-speed growth to high-quality development,
manufacturing enterprises are becoming more specialized and large-scale. Consequently, they are
placing greater emphasis on the safety and efficiency of supply chains, demanding higher standards
in the integration of raw and auxiliary material supplies, efficient distribution of finished products,
optimized logistics costs, convenient financing channels, inventory safety, and improved turnover
efficiency. Evolving customer demands have propelled supply chain enterprises to upgrade their
service models from "single-category, single-link services" to "multi-category combination, link
integration, chain extension, regional coordination, and other diversified services". This has led to
diversified product combinations and logistics infrastructure becoming crucial factors, and "trade-
logistics linkage" combining diverse commodity operations with multimodal transportation
services has emerged as a core capability.
`
Against this backdrop, supply chain enterprises with supply chain solution design and integrated
comprehensive service capabilities based on "trade-logistics linkage" have the opportunity to
intervene in more service links of the industrial chain, and deepen customer stickiness, enhance
market share and profitability levels through efficient resource allocation and networked logistics
service capabilities.
Changes on Trading Changes on Client Needs Underlying
Company Reasons
Trading Company Core
Cost-effective
Procurement
Distribution
Consulting
Demands
Financing
Inventory
Efficiency
Logistics
Combo
Supply
Safety
Client
Needs
Traditional Traders Cost-
oriented
Past
Supply Chain
Comprehensive Safety &
Service Providers Efficiency
Present
Chart3: Changes in Customer Demand and the Evolution of Service Providers
(3) Digital intelligence has the power to drive innovation in domestic bulk supply chain models.
In recent years, digital technologies such as cloud computing, big data, artificial intelligence,
blockchain, and others have been rapidly expanding and infiltrating the bulk supply chain service
industry. By incorporating online supply chain solution design with digital capabilities at its core,
and offline integrated service capabilities, it can effectively enhance the collaborative efficiency of
various links in the bulk supply chain. This will result in a platform-based sharing of logistics,
commercial, information, and capital flows, and greatly expand the service space of the supply
chain industry.
III. Business Model
The Company places emphasis on fulfilling the fundamental requirements of its manufacturing
enterprise clients, consistently refining its product mix, enhancing its business approach, and
bolstering its profitability framework, with the ultimate aim of becoming a frontrunner in the
industry through model leadership.
1. Commodity Mix
To cater to both market demand and its own business philosophy, the company applies three
criteria in selecting commodities. Firstly, the product must have high liquidity. Secondly, it must be
highly standardized, with facilities for easy storage. Lastly, the product must experience high
demand and there must be long supply chains within the industry, enabling comprehensive
services across multiple levels.
Currently, the company mainly participates in bulk commodities market, forming four major
categories under operations: metallic minerals, agricultural products, energy and chemicals, and
new energy, including six core products - ferrous metals, aluminum, stainless steel, grains, coal,
and new energy, which reflect the company's diversified business scope.
The Company is continuously expanding its range of products, and building its ability to provide a
diversified portfolio of bulk commodities. It also actively adjusts its product mix in response to
industry fluctuations, with better growth potential and cycle hedging capabilities.
Ferrous
Grains
27%
12%
Agricultural
Products
16%
Chemical & Metal
Oil Energy & Minerals
6% Chemical 61%
18%
Steam Coal
12% Stainless
Steel
19%
Aluminum
12%
Chart4: 2022 Gross Profit Breakdown (Considering Effect of Hedging on Gross Profit with Usage of Future)
The Company has been strategically concentrating on key product categories, establishing a
competitive edge in scale and market influence. The market shares for our core commodities within
the supply chain is as follows:"
Stainless Steel
Stainless Steel 19.3%
Supply Chain
Aluminium Oxide 10.3%
Aluminum Aluminum Ingot 7.7%
Supply Chain
Bauxite 2.7%
Coking Coal 3.9%
Ferrous Coke 1.4%
Supply Chain Iron Ores 1.2%
Steel 0.9%
Coal Supply
Steam Coal 1.2%
Chain
Corn 4.7%
Grain Supply
Chain Soybean 0.4%
Lithium Carbonate 4.4%
New Energy Lithium Ores 1.3%
Supply Chain
Photovoltaic Module 0.9%
Chart 5: 2022 Supply Chain Core Product Market Share (Volume-Based)
Note:
① Market share is calculated as the company's operating volume divided by the total domestic production and
import volume. The company’s operating volume excludes entrecote trade.
② The market size of stainless steel is estimated by the sum of crude stainless steel production and import volume.
2. Customer Structure
Leveraging its brand reputation and top-notch service, the Company has successfully broadened
its customer base through a dedicated sales team. As of December 31, 2022, the Company boasts
over 14,000 loyal customers, reflecting a CAGR of 13% over the last three years. Of these customers,
more than 400 are medium to large-sized businesses with annual business scale exceeding 300
million yuan, showing impressive expansion with a CAGR of over 30% across the same period.
An Increase CAGR of +30%
408
337
235
2020 2021 2022
Chart6: Number of Medium to Large-sized Customers of the Company in the Last Three Years
Notes: The medium to large-scale customers referred to in this report are those whose annual business scale
exceeds 300 million yuan.
In recent years, the Company has been consistently optimizing our customer structure by elevating
the percentage of manufacturing enterprise customers and scaling up our service offerings. As of
2022, manufacturing enterprise customers make up more than 50% of our customer base and
contribute 60% of our commodity business. Notably, the proportion of manufacturing enterprise
customers in the new energy supply chain surpasses 90%, and this figure is over 60% in the black
metal, stainless steel, aluminum, and coal supply chains. In addition, service provision to grain and
raw materials supply chain customers surpasses 50%.
3. Operating Mode
In stage 1.0, the Company transitioned from a "Single-point Service" model to an "Integrated
Service" approach, offering one-stop comprehensive services such as raw material procurement,
finished product distribution, inventory management, warehousing and logistics, and supply chain
finance. Through customizing and providing procurement and sales plans, cross-regional
transportation, and other comprehensive services, the company successfully resolved the issue of
spatial and temporal disparities for bulk commodities.
A prime illustration of this model is the virtual factory initiative, wherein the Company plays a full-
fledged role in the critical manufacturing supply chain, furnishing customers with raw material
procurement and supply, product distribution, as well as ancillary services such as logistics, finance,
consulting, among others, thereby generating profit from the services we provide..
In stage 2.0, the Company had established customer loyalty and channel advantages by offering
"Integrated Services" in a specific industrial chain segment. Building on this success, the Company
extended its "Integrated Services" upstream and downstream along the industry chain, and
initiated "Full-industry Chain Service Model". The model expands range of goods and growth
potential.
In stage 3.0, after forming service and advantages of industry research throughout the full industry
chain, the Company capitalized on the opportunity to enter the productive manufacturing links
with value-adding potential, forming an industrial chain operation mode of "Supply Chain Services
+ Production Manufacturing", further improving the profitability of comprehensive revenue and
smoothing cyclical fluctuations.
XIANGYU Service Model
Traditional Supply Chain Service Model
Phase1.0: Integrate needs, and provide
Connecting multi-party, while serving single link
comprehensive services
Raw Material Raw Material
Supplier A Supplier B Supplier C Supplier D Supplier A Supplier B Supplier C Supplier D
Procurement Transport Warehousing Financing Distribution XIANGYU Supply Chain Comprehensive Service
Supplier A Supplier B Supplier C Supper D Supper E Procure Transport Store Finance Distribute Consult
Producer A Producer B Producer C Producer D Producer A Producer B Producer C Producer D
Production Production
XIANGYU Service Model XIANGYU Service Model
Phase3.0: Industry Chain Operation Phase2.0: Complete Industry Chain Services
Supply Chain Procure Finance
Raw Material Services Providers
Transport Distribute
Circulation Supply Chain
Services Store Consult
XIANGYU
Leading Area
Supply Chain Service
Manufacturing Clients amid Chain
Process with
empowered Link 1 Link 2 Link 3 Link N
Supply Chain Xiangyu
value Services Cut-in Area Producer A Producer A Producer A Producer A
Producer B
Supply Chain Producer B Producer B Producer B
Manufactured Services
Producer C Producer C Producer C Producer C
Goods Supply Chain
Circulation XIANGYU
Services Providers …… …… …… ……
Leading Area
XIANGYU Service Model
Phase4.0: Digital Intelligence Services
Clients amid
Chain
Link 1 Link 2 Link 3 ......
Producer A Producer A Producer A
Producer B Producer B Producer B
Producer C Producer C Producer C
...... ...... ......
XIANGYU Digital Intelligence
Services System
Needs Integration
数据平台模块Credit mgt.
AI Tech Module Combos Quality Process Logistics Risk mgt. Inv. mgt. ……
Algorithm Module
算法策略模块 Region Quality
optimization
算法策略模块 Replacement Replacement Integration Optimization ……
Data Platform Module
Customized Supply Chain Services Solutions
Chart7: The Evolution of the Company's Operating Mode
In the 4.0 phase, the Company has established a diverse range of comprehensive service
capabilities, full-industry chain service capabilities, and industrial chain operation capabilities in
the previous three phases. These services are provided either separately or in combination to cater
to the needs of customers from various industries, regions, scales, and business natures.
In order to cater to the needs of our customers, the Company has established a range of service
capabilities, including networked logistics, digital supply chain, risk management, global resource
integration, as well as multidimensional industrial research capabilities and dedicated promotion
service teams. These capabilities are interwoven, connected, and integrated onto a platform, which
is continuously evolving into the "Xiangyu Smart Supply Chain Comprehensive Service Platform".
Through leveraging a vast array of service cases and data gathered from specific business scenarios,
our platform gains a profound understanding of the demands and needs of manufacturing
enterprise customers. This enables us to swiftly analyze and integrate this information to
recommend suitable products and services. By tailoring and customizing our output to each
individual client, we deliver personalized supply chain solutions that are perfectly attuned to their
unique requirements.
The "Xiangyu Smart Supply Chain Comprehensive Service Platform" has a core advantage in that it
combines diverse commodity supply with efficient logistics services through its unique "trade-
logistics linkage" system. By seamlessly integrating with the purchasing and sales systems of
manufacturing enterprises, the Company utilizes multimodal transportation logistics capabilities,
multi-channel commodity supply and sales channels, and big data mining and analysis to accurately
predict customer inventory levels, match supply channels to products, and achieve seamless
regional warehouse cross-region distribution and cross-period replenishment. This enables us to
accurately and efficiently resolve all kinds of "time and space mismatch" issues, making us a leader
in the industry.
4. Profit Model
The Company's profit model is centered on generating revenue from services and scale aggregation.
This provides a solid foundation for stable profitability. By expanding into new regions, customer
segments, and commodity categories, as well as stacking services, the Company is able to
consistently grow their business performance. Additionally, the Company leverage price
differences to maximize profitability during commodity price fluctuations.
Table 1 Profit Structure and Definitions
the
Correlation
Source of Revenue Interpretation with Proportion
Commodity
Prices
By leveraging the benefits of platformization and scaling
our operations, the Company offer customers
comprehensive services across the entire industry chain.
The Company offerings include agency procurement and
sales, processing, logistics and distribution, supply chain
finance, and information consulting, for which the
Company earn service fees (including Financial Service
Weak
Service Revenues Revenue). Through the "Yuliantong" digital supply chain ＞70%
Correlation
service platform, the Company upgrade supply chain
finance service model, charging customers stable service
fees without assuming guarantee responsibilities.
By procuring directly from upstream sources and
integrating services throughout the chain, the Company
enhance circulation efficiency between links, reduce
operating costs, and boost revenue levels.
Leveraging our extensive business volume, we strive to
Scale achieve cost advantage through centralized procurement
Transaction Collective and specialized operation, thereby reducing operational Weak
＜30%
Revenue Bargaining costs across all segments and contributing to trading Correlation
Profit revenue. As the Company continue to enhance our scale
advantage and professional expertise, the sensitivity of
the
Correlation
Source of Revenue Interpretation with Proportion
Commodity
Prices
the Company‘s trading revenue to price fluctuations in
commodities has also decreased. The Company strive for
consistent and sturdy growth, improving revenue levels
through physical-commerce and trade-trade linkage.
By leveraging the Company‘s expertise in professional
analysis and judgment, the Company conduct trades by
studying the trends of commodity price changes over
Profiting time and the spatial differences in pricing across different
Strong
from Price regions to generate profitability. With a vast customer
Correlation
Disparities network and robust logistics infrastructure, the Company
enhances its capabilities in industry research and supply-
demand analysis, strategically managing positions to
maximize returns.
5. Innovation and Dimension Ascending
The Company focuses on the needs of manufacturing enterprises and leverages the "Xiangyu Smart
Supply Chain Comprehensive Service Platform" to participate in more service processes, while
addressing the long-standing pain points in the supply chain field. To address the difficulties faced
by manufacturing enterprise clients in seeking financial support, such as difficulty in financing, high
financing costs, and slow financing, the Company have introduced an external financial ecosystem
and created the "Yuliangtong" Digital Supply Chain Service Platform, solving the problem of credit
transmission within the bulk supply chain financial industry. Additionally, to address the long-
standing problem of information asymmetry, multiple circulation links, and low efficiency in the
agricultural sector, the Company have introduced information technology for internet
transformation and built the Xiangyu Industry-level Agricultural Internet Platform.
(1) “Yu Lian Tong” Digital Supply Chain Service Platform
The “Yu Lian Tong” service platform leverages cutting-edge technologies like blockchain, artificial
intelligence to establish a secure logistics ecosystem. It ensures complete visibility into
transportation and warehousing operations, providing continuous tracking of goods on-the-way
and within storage facilities, along with tamper-proof digital asset credentials. By bridging the
credit gap between fund suppliers and demand side, the platform ensures the safety of goods and
the reliability of transactions. The company could charge customers a stable service fee without
assuming any guarantee responsibility.
Chart8: Operating Mode of the "Yu Lian Tong" Service Platform
Chart9: Business Value of "Yu Lian Tong" Service Platform
As of the end of 2022, the "Yu Lian Tong" service platform has obtained special credit of nearly 9
billion yuan for its clients, with a cumulative credit usage of over 11 billion yuan. With the rapid
development of "Yu Lian Tong" service platform business, the Company's asset-liability structure
and overall income level are expected to continually improve, and the supply chain is anticipated
to bring significant changes to the existing supply chain finance industry ecosystem.
（2）Industry-level Agriculture Internet Platform
The digital transformation journey of China's agricultural sector has faced significant hurdles in
terms of information asymmetry, numerous intermediaries along the food supply chain, and
overall inefficiencies. To address these challenges, the Company has joined forces with top-tier
firms such as Alibaba to develop the "Xiangyu Industry Level Agriculture Internet Platform " This
groundbreaking platform has enabled end-to-end digitalization of all key phases in the process,
including planting, warehousing, transportation, and processing. As a result, the Company has
established an integrated service framework that encompasses critical offerings such as advice on
planting, financial support, storage options. By achieving differentiated competitive advantages in
areas such as primary grain acquisition, diversified grain operations, proprietary logistics
infrastructure, and complete end-to-end industrial chain management, our company has
positioned itself at the forefront of the industry.
In the front section, the Company has formed a grain planting industry alliance and launched the
"XingXing XiangNong" app to offer farmers an array of crucial services, including agricultural
material procurement and sales, agricultural technology consulting, and product storage solutions.
This move aims to address the industry's common problems such as primitive channels, multiple
trade links, and information asymmetry, thereby strengthening our ability to control first-hand
sources of grain and expand our variety.
In the middle section, the Company has strategically built a grain warehouse point alliance in the
midstream, consolidating various third-party storage nodes in other regions. This approach has
significantly increased the Company's grain procurement network density, expanded coverage, and
further penetrated deep into the industry. Moreover, with the resolution of the long-standing
problems of selling and warehousing difficulties in the industry, the alliance is poised to
successfully serve a wider clientele, stretching from Heilongjiang to Jilin, Liaoning, and beyond.
In the later phase, the Company successfully established a highly efficient grain distribution
industry alliance, which, in turn, enabled us to establish an extensive North-South transportation
logistics service system, allowing us to achieve seamless cross-regional adjustments of diversified
quality raw materials - effectively meeting the needs of feed, breeding, and deep processing
enterprises within various regions. Our company supplies over ten million tons of raw materials
annually to clients such as Wen's Foodstuff Group Co., Ltd., Shuangbaotai Group Co., Ltd., Haida
Group Co., Ltd., and Yihaikerry Group Co., Ltd., making us the largest corn industry chain service
provider in the A-share market.
Upon establishing a comprehensive service and channel infrastructure spanning the entire
industrial chain, the Company decisively delved into the production manufacturing arena, setting
up soybean crushing facilities and enhancing our operational competence throughout the
industrial chain.
Front Section Middle Section Later Section
Grain Planting Industry Grain Warehouse Grain Circulation
Alliance Alliance Industry Alliance
Chart10: Industry-level Agriculture Internet Platform
IV Analysis of Core Competitiveness in Reporting Period
1.Networked Logistics Service Capability
Ranking 3rd among China's top 100 warehousing enterprises, the Company holds a coveted 5A
rating as a national logistics powerhouse. The Company’s three logistics entities, Xiangyu Express,
Xiangdao Logistics, and Xiangyu Agricultural Produce, are bolstered by a highly competent and
market-savvy logistics service team of over a thousand professionals.
The Company have pioneered a networked logistics service system that centers on "highway,
railway, waterway, and warehouse" and links domestic and overseas markets. This system
comprises a railway transportation network that spans the east-west and north-south axes, a
nationwide road transportation network, an ocean-bound water transportation network
connecting to major domestic ports and countries along the "Belt and Road" initiative, a
warehousing cluster that blankets the coastal areas in the east and the commodity hubs in the
central and western regions, and logistics service capabilities in international chartering and block
train services that bridge to overseas markets. Our customers can expect high-quality, customized,
and full-process bulk commodity logistics services and multimodal transportation solutions.
The Company have also elevated its logistics service system's operational efficiency and market
competitiveness by creating multiple multimodal transportation routes, like the "cross-province
circulation of aluminum products," "north-to-south grain transportation," "west-to-east coal
transportation," and "north-to-south coal transportation."
Table2 Logistics Resources and Capabilities
Category Resources Capability
The Company boasts 14 state-of-the-art railway freight terminals, comprising 11 that are
self-owned, two of which are leased, and one managed facility. These terminals are
strategically located in central and western regions, and serve as pivotal distribution hubs
Railway for bulk commodities. The Company’s infrastructure is further enhanced by its
comprehensive network of 47 railway dedicated lines, a vast expanse of container yards
and warehouses close to 2.2 million square meters, and an impressive fleet of more than
25,000 self-owned containers. With annual shipping capacity exceeding 35 million tons,
Category Resources Capability
we are the undisputed industry leaders in this domain, paving the way for high-quality
coal and aluminum product transportation routes such as "Shandong/Henan-Xinjiang"
and "Shaanxi-Yunnan/Guizhou/Sichuan".
The Company currently boasts an impressive fleet of over 1,300 self-owned
transportation vehicles, which are utilized to ensure seamless and efficient transportation
of goods. In addition to its self-owned vehicles, the Company have also employed a state-
of-the-art freight online platform, which seamlessly integrates with over 56,000 social
Highway
vehicles to deliver exceptional transportation services. Through these combined efforts,
the Company have achieved a remarkable transportation volume exceeding 9 million tons
in 2022, further solidifying its position as industry leaders in the domain of logistics and
transportation.
To further enhance our capabilities in the maritime shipping sector, the Company has
forged strategic partnerships with renowned port enterprises such as China
Merchants Port Group Co., Ltd., Shandong Port Group Co., Ltd., COSCO, Qingdao Port
Group Co., Ltd., Lianyungang Port Group Co., Ltd.,, Rizhao Port Group Co., Ltd., and others.
By integrating shipping capacity and leveraging the strengths of its partners, the Company
have achieved an impressive annual shipping volume of approximately 25 million tons
Waterway along the domestic coast and the Yangtze River basin.
As part of its efforts to bolster its maritime logistics capabilities, the Company have also
invested in one self-owned ship for collection and distribution. Furthermore, in 2022, the
Company unveiled a new online waterway platform that integrates more than 80 social
vessels, with a commissioned volume of 1.3 million tons. Through this strategic
combination of self-owned vessels and cooperative partnerships, the Company have
established a robust waterway capacity configuration that is second to none.
In the area of grain procurement, our company has established a strong presence with 10
highly efficient procurement platforms that rank among the top in the industry. We also
boast a significant self-owned storage capacity that exceeds 13 million tons, with the
support of advanced equipment that includes 9 railway dedicated lines. In addition, we
have built a network of 45 self-owned and leased warehouses, spanning close to 1.5
Warehousing
million square meters, providing ample storage space for our clients. To further enhance
our storage capabilities, we have also established 8 storage yards, covering an area of
nearly 450,000 square meters. Through these investments, we are well-equipped to
support our clients' grain procurement, storage, and transportation needs, and to provide
them with end-to-end supply chain solutions.
By relying on the global international chartering capacity for bulk dry cargo and the service
International capabilities of international train logistics channels, the Company have established
channels such as the "China-Indonesia Logistics Channel," "China-Vietnam & Thailand
Logistics Logistics Channel," and the "China-Europe Train" to develop international multimodal
transportation capabilities and strengthen its overseas logistics localization capabilities.
Chart11: The Company's Networked Logistics Services System Connects Domestic and Overseas Markets
Establishing a networked logistics service system is a key competence of the Company in serving
clients within the manufacturing industry, while also representing a vital foundation for the
Company's ability to exercise control over cargo rights, and to upgrade their business dimensions
through digital empowerment.
2.Digitalized Supply Chain Service Capability
The Company's primary focus revolves around three core principles: expanding incremental
markets, improving service efficiency, and upgrading maintenance business models. This is
achieved through the utilization of extensive business data, an abundance of customer resources,
and various applicable scenarios to construct an intelligent information technology system. The
digitalization and implementation of intelligent systems within the Company is divided into three
primary categories:
One of the critical aspects of the Company's digitalization and intelligence construction is the
modernization of logistics infrastructure. This involves the transformation of warehouses into
intelligent facilities, the establishment of a smart logistics service platform, the optimization of
logistics management processes to improve efficiency, the strengthening of cargo ownership
control capabilities, and the development of multi-link series integration for multimodal
transportation systems. The Company is committed to utilizing cutting-edge technology and
advanced systems to ensure that its logistics operations are streamlined, efficient, and fully
optimized.
Another crucial aspect of the Company's digitalization and intelligence efforts is the drive towards
business model innovation. Leveraging its intelligent logistics platform, the Company has
developed the "Yu Lian Tong" Digital Supply Chain Service Platform, which facilitates efficient
connections between capital and customer needs. Additionally, in collaboration with the Alibaba
team, the Company has established an " Industrial-level Agricultural Internet Platform" to promote
integration and connectivity across the entire grain industry value chain, comprising the core
alliances of the Grain Planting Industry, Grain Warehouse, and Grain Circulation Industry. Through
these innovative business models, the Company is actively driving digitalization and intelligence-
powered growth and fostering the development of an ecosystem that benefits all industry
stakeholders.
Furthermore, the Company's information technology system provides robust functional protection
and enhances management efficiency. A comprehensive guarantee system has been established
to cover vital modules such as financial control, human resource management, customer
relationship management, risk management, equipment and asset management, and others, thus
providing all-round support for business operations. Additionally, through the utilization of
enterprise operation analysis systems, customer analysis tools, and big data operations systems,
the Company is able to sort, analyze, and strategically utilize vast amounts of business data and
customer resources, to better serve its operational policies. In summary, the Company's
sophisticated information technology systems empower it to achieve functional protection,
streamline its operations, and capitalize on valuable data insights in a proactive and effective
manner.
3.Systematic Risk management Capability
The Company has established a strong foundation for its risk control system by targeting extensive
manufacturing enterprises as its main customers, and focusing on highly liquid and easily
convertible bulk commodities as its primary products. Through the use of a multi-dimensional
commodity portfolio, the Company is able to effectively mitigate systemic risks.
The Company has implemented a comprehensive three-line risk management approach, consisting
of the first-line business department, headquarters risk control department, and headquarters
audit department. To ensure stable operation, the Company focuses on pre-control system
construction, in-process management, post-summary and system optimization, and creates risk
management maps for major identified risks. These risks are then classified, layered, and managed
through a hierarchical approach, with particular emphasis on areas such as credit risk and price
risk. By leveraging digitalization, the Company also strengthens its approach to business model
innovation.
In recent years, the Company has demonstrated a strong financial performance, with credit
impairment losses as a proportion of total operating profits remaining below the industry average.
Additionally, the Company has effectively controlled non-recurring gains and losses, resulting in a
steadily increasing net profit attributable to parent shareholders and a continuously improving
return on equity (ROE) level. These positive trends have led to a significant enhancement of profit
stability, and the Company's risk management effectiveness has been demonstrated sustainably.
4.Global Channels and Resource Integration Capabilities
The Company has strategically partnered with a select group of high-quality industry leaders in
metal minerals, agricultural products, energy and chemical, new energy, and other sectors,
creating a sophisticated and stable global distribution network. Through close collaboration with
upstream and downstream clients, fund providers, technical support, and logistics service
providers - both domestically and internationally - the Company has accumulated a wealth of
industry experience, information, logistics, and financial resources. The Company's resource
advantages are steadily strengthening, and its business model continues to mature, as evidenced
by its increasing bargaining power upstream, improved distribution power downstream, and
comprehensive supply chain service capabilities.
5. Multidimensional Industrial Research Capabilities
The Company has instituted a cutting-edge research framework, which includes a "headquarters
research institute," dedicated subsidiary research departments, and frontline business entity
research teams. These accomplished researchers provide insights on macroeconomic trends,
industry sectors, and segmented products. Additionally, the Company has established a strategic
partnership with the renowned investment research institution, Kaifeng Investment, creating a
robust collective of research talent. To support its operations, finance, logistics, risk control, and
human resources, the Company has meticulously constructed a comprehensive supply chain
database, amassing massive data and empowering data processing models. The Company has also
continuously strengthened its data mining capabilities to proactively prevent industry risk events,
successfully navigate market price fluctuations, and ensure the smooth and efficient operation of
the Company. The Company's industry research capabilities are fundamental to maintaining its
competitive edge and fulfilling its operational objectives.
6.Professional Supply Chain Service Team
With a strong focus on talent cultivation and team building, the Company has established a series
of market-oriented and highly specialized supply chain service teams. These teams possess rich
operational experience, formidable market development abilities, and a high degree of
professional expertise, granting them the capacity to design customized and professional supply
chain solutions in response to clients' requirements. The Company's team management and
incentives are keenly adapted to the market, with the launch of Stock Incentive Plan in 2020 and
2022, refining the company's long-term incentive structure to reward and motivate key talents.
The total incentive grants amounted to almost 8% of the total share capital and are tilted towards
core management personnel and frontline business teams, serving to attract and retain top-tier
talent, and fully stimulating the enthusiasm of core personnel in the Company.
V. Management Discussion and Analysis
1.Business Performance in 2022
In 2022, in the face of the complex and challenging domestic and foreign environment, as well as
the unexpected impact of multiple factors, the Company adhered to the principles of prioritizing
the supply chain, fostering a service industry chain, and generating value through the creation
chain. Through adherence to the guiding tenets of the "6th Five-Year Plan," the Company persisted
in pursuing innovation and transformation, relentlessly expanding the boundaries of its service
offerings, extending its reach across multiple service chains, augmenting its capabilities to deliver
top-tier service, and sustaining a robust operating environment.
The company's brand influence continues to grow, as evidenced by its inclusion in the Fortune
China 500 list for 11 consecutive years, with its ranking rising to 28th place. Additionally, the
Company has been awarded several prestigious honors, including the 2022 National Supply Chain
Innovation and Application Demonstration Enterprise, 5A-level Supply Chain Service Enterprise,
Pioneer Award of Industrial Internet Digital Intelligence, and GoldenBee 2022 CSR China Honor Roll
ESG Competitiveness Responsible Procurement Award List. In addition, the Company's main credit
rating has been maintained at the AAA level.
(1) Major Financial Data
In 2022, the company achieved a business revenue of 538 billion yuan, an increase of 16.35% YoY;
a net profit of 3.78 billion yuan, an increase of 37.18% YoY; a sales net profit margin of 0.70%, an
increase of 0.10 percentage points YoY; a net profit attributable to shareholders of the parent
company of 2.64 billion yuan, an increase of 20.18% YoY; and a net asset return rate of 18.06%, an
increase of 0.92 percentage points YoY. At the end of 2022, the company's asset-liability ratio was
68.37%, an increase of 1.06 percentage points YoY.
In the past three years, the Company's business revenue, net profit, and net profit attributable to
shareholders of the parent company have maintained a steady growth momentum, with a
compound growth rate of 22.23%, 51.30%, and 41.21% respectively. Additionally, the net asset
return rate and sales net profit margin have continued to improve, achieving a reasonable growth
in quantity and a steady improvement in quality.
538 3.8
463
360 2.8 2.6
2.2
1.7
1.3
2020 2021 2022 2020 2021 2022
Net Profit (RMB bn)
O p eratin g R even u e (R M B b n ) Net Profit attributed to Parent Company (RMB bn)
Chart12 ： Three-Year Total Operating Revenue: A Detailed Chart13: Three-Year Net Profit and Net Profit Attributable to
Overview Parent Shareholders: A Detailed Overview
0.70%
17.14% 18.06%
0.60%
10.76% 0.46%
2020 2021 2022 2020 2021 2022
Chart15: Three-Year Gross Profit Margin: A Detailed
Chart14: Three-Year ROE: A Detailed Overview
Overview
Notes: In order to drive growth, the Company sought new business opportunities and strategic partnerships with
other leading companies within the industry. By doing so, the Company was able to access high-quality resources
and expand their business channels. However, due to the formation of minority shareholders' rights and interests
resulting from those partnerships, net profit attributable to parent shareholders was impacted, resulting
(2) Primary Business Data
The Company has entered into a Blanket Purchase Agreement with its customers to furnish them
with a comprehensive range of supply chain services encompassing procurement and distribution,
logistics, supply chain finance, information consulting, processing, and so forth. In line with
industry norms and practices, all aforesaid services were dependent on the bulk commodity supply
as the primary carrier, and their corresponding revenue and profits were manifested in the
operating performance of core commodities, as articulated below:
Unit: 100M, RMB
Gross Profit (Considered
Total Operating Gross Profit Margin
Total Operating Revenue hedging impact of
Traded Volume (Considered hedging impact of future)
Category future)
Number
YOY Amount YOY Amount YOY Value YOY
(10K tons)
Metallic Mineral 11,665 -5.65% 3,491 8.02% 54.90 30.85% 1.57% Increase 0.27 percentage points
Among: Ferrous Metal 7,675 -10.40% 1,171 -14.17% 24.21 19.85% 2.07% Increase 0.59 percentage points
Stainless Steel 1,606 19.07% 1,122 44.61% 17.29 15.47% 1.54% Decrease 0.39 percentage points
Aluminum 2,174 -8.18% 1,033 4.89% 10.96 102.12% 1.06% Increase 0.51 percentage points
Agricultural Products 1,764 19.39% 520 12.45% 14.12 -22.19% 2.72% Decrease 1.21 percentage points
Among: Raw Grains 1,446 29.44% 341 26.87% 10.13 3.34% 2.97% Decrease 0.68 percentage points
Energy and Chemical 6,345 19.56% 919 34.87% 16.25 13.60% 1.77% Decrease 0.33 percentage points
Among：Coal 5,396 24.00% 467 68.98% 11.15 14.04% 2.39% Decrease 1.15 percentage points
New Energy 21 22.21% 251 176.23% 4.76 162.65% 1.90% Decrease 0.10 percentage points
Others - - 27 18.25% - - - -
Total 19,795 3.29% 5,207 16.00% 90.13 16.87% 1.73% Increase 0.01 percentage points
Notes: ①The recategorization of coking coal and coke, which are supplementary materials for steelmaking, from
the energy and chemical supply chain to the ferrous metal supply chain, has led to their inclusion in the black metal
supply chain. Consequently, last year's data has been adjusted accordingly. ②The company hedges commodity
price fluctuations with futures instruments, which may lead to gains or losses from fair value changes and disposals.
By combining futures and spot profits and margins, the overall profit margin is determined, and gains and losses
from hedging activities are factored in. This adjusted data represents the period's profits and profit margins.
Despite a decline in operating volume and revenue, the black metal supply chain achieved a
significant increase in overall gross profit and gross profit margin by optimizing procurement
channels and gradually increasing the proportion of coking coal and coke. After hedging on futures
contracts, the aluminum supply chain doubled its gross profit, however, changes in product mix
led to a decline in overall operating volume. Due to the increased proportion of market-oriented
procurement of raw materials and a decrease in the proportion of competitive bidding, the
agricultural supply chain experienced a slight decrease in gross profit and gross profit margin. The
coal supply chain aggressively expanded domestic and international customer resources to
increase market share, resulting in a slight decrease in gross profit margin but a significant increase
in operating volume and revenue.
In addition to fulfilling the needs of internal supply chain operations, our company's logistics
system also offers market-driven services to external clients. This segment's financial performance
is accounted for separately and includes the following services:
Unit: 100M, RMB
Operating Revenue Gross Profit Gross Profit Margin
Category
Amount YOY Amount YOY Value YOY
Integrated Logistics 63.97 9.79% 6.38 21.78% 9.97% Increase 0.98 percentage points
Agricultural
3.12 -16.08% 1.89 -0.08% 60.76% Increase 9.73 percentage points
Products Logistics
Railway Logistics 9.79 -15.33% 0.81 10.60% 8.31% Increase 1.95 percentage points
Total 76.88 4.53% 9.08 15.47% 11.81% Increase 1.12 percentage points
Notes: Integrated logistics, agricultural logistics, and railway logistics refer to the market-oriented logistics services
provided by three subsidiaries of Xiangyu, namely Xiangyu Express, Xiangyu Farming, and Xiangdao Logistics.
Integrated logistics mainly includes international routes, international trains, inland water transportation, road
transportation, domestic and overseas warehousing, while agricultural logistics mainly includes grain national and
provincial storage services.
The sector of agricultural product logistics has experienced a decline in operating volume and
revenue, triggered by the decrease of the national grain storage business. However, the rapid
expansion of higher gross margin provincial grain storage and futures delivery storage businesses
has offset some of the revenue loss, leading to an increase in gross profit margins. On the other
hand, railway logistics have suffered a significant revenue decline due to reduced demand in the
construction material market and congestion in the domestic logistics. Nonetheless, the
optimization of the business structure has resulted in remarkable growth in gross profit and gross
profit margins.
2.Key Operating Results Overview for 2022
In 2022, the Company made ongoing efforts to optimize its customer structure and enhance its
core competitiveness in comprehensive supply chain services through the elevation of its level of
"Platformization, Internationalization, And Digitization".
(1) Optimization of Customer Structure
The Company is dedicated to targeting manufacturing enterprises as its primary customer, with the
proportion of manufacturing enterprise clients and service volumes increasing to over 50% and 60%
respectively. Furthermore, it also places special emphasis on securing strategic clients in the
resources and industry sectors, having recently secured long-term agreements with major
companies such as China Huadian, ADM, Rio Tinto Group, and Cargill, among others.
(2) Improvement of Platform Capabilities
The company emphasized on the construction of integrated platform capabilities, providing
customers with a better comprehensive and one-stop supply chain service experience through the
capacity building of channel, logistics, risk control and other aspects.
①Channel Resource Capability
In the field of metal mineral supply chain, the Company‘s full-service supply chain management
project (virtual factory) has promoted quality and efficiency. With its channel advantage, the
stainless steel supply chain has enriched the Company‘s product structure and maintained high-
quality growth in its operations. The aluminum supply chain has maintained its market advantage
in mature products like alumina and electrolytic aluminum while continuously exploring new
products and new markets, with petroleum coke and alumina ranking among the top five imports
in the industry. The Company‘s aluminum products' export value has also surpassed $100 million
for the first time, expanding its business to North America, the Middle East, Europe, and Southeast
Asia.
In terms of agricultural product supply chain, the business layout has been accelerated through
the asset-light cooperation model, and the number of peripheral warehouses increased by 50% to
more than 160, covering many provinces in Northeast, North, Northwest and East China. For the
first time, the purchase of summer grain wheat in North China was launched, and the purchase
volume jumped to the third place in Henan Province, achieving a double breakthrough in regions
and varieties, gradually forming a bipolar storage pattern in Northeast China and North China, and
the total purchase volume of autumn grain in the 2021-2022 season reached 12 million tons. The
Company has signed reserve agreements with Guangdong Provincial Reserve and Fujian Provincial
Reserve to extend business space. The soybean crushing business capacity has been improved,
with a production utilization rate of 94% and an annual processing capacity of more than 750k
tons, increased by more than 90% YoY.
The Company’s bold ventures into energy and chemical supply chains have taken us upstream and
downstream, where the Company leverage an innovative and agile operating structure to
maximize profitability. The Company’s coal supply chain commands a 8% share of the national
market, with a staggering year-on-year growth rate exceeding 115%. The Company have also
increased the business contribution from non-electricity customers to 45%, solidifying the
Company’s position as the leading first-tier coal supplier in China, as recognized by the Chinese
government. In the plastic supply chain, the Company have expanded its trans-continental and
cross-oceanic channels, resulting in a remarkable 60% year-on-year increase in export volume.
In terms of new energy supply chains, the Company continue to specialize in the lithium-ion
battery and photovoltaic supply chains. In the lithium-ion battery and nickel-cobalt plate segments,
the Company have achieved full coverage of cooperation with mainstream producers of lithium
iron phosphate cathode materials. The Company’s market share of lithium carbonate ranks among
the top five in the country, and its lithium salt operation volume is the third largest in China. The
Company’s cobalt import volume also occupies over 10% of the national market. In the
photovoltaic segment, the Company provide multi-variety auxiliary materials for the entire
industry chain. Using multi-link and full-product services, the Company have formed a multi-
dimensional business ecosystem covering domestic and international procurement and sales, EPC
channels, power station development, and logistics services.
②Logistics Service Capability
The Company has taken the lead in the industry by building a networked logistics service system
centered around " highway, railway, waterway, and warehouse ", and accelerating its global
logistics layout to provide strong support for building a global supply chain service system.
In domestic logistics, the Company’s achievements include integrating 57,000 social vehicles for
road transport, with a transportation volume surging more than 160% year on year. In terms of
rail transport, the Company completed a shipment volume of 5.5 million tons with a year-on-year
growth of 8%, and an arrival volume of 8.87 million tons with an annual growth of 15%. The
Company have also established new stations in Xinjiang and Inner Mongolia and built stable
outbound business for coal. For water transport, the Company have made progress in building
inland waterway transport capacity, forming core domestic transport routes around the Yangtze
River basin and the Beijing-Hangzhou canal. The Company’s annual transport volume in coastal
and Yangtze river basin exceeds 25 million tons, including a 90% year-on-year increase in the
carrying capacity of Yangtze bulk shipping. In addition, the Company have launched an online
water transport platform, combining self-owned and cooperation-based water transport capacity
configuration. In warehousing development, the Company have introduced new approved
designated delivery warehouses for pulp, industrial silica, and corn starch, with a total of 16
futures/commodity delivery warehouses, with an overall capacity exceeding one million tons.
In terms of international logistics, the Company have improved the capabilities of its international
air routes and international train operations. The Company’s international routes and trains
include "China-Vietnam," "China-Thailand," and "China-Indonesia," with an annual volume
exceeding 27,000 TEUs, 4.6 million tons, and a year-on-year growth of around 150% in export
shipment volume of the "China-Europe" train route. The Company have also expanded new trans-
oceanic routes to Northern Europe, North America, and West Africa, as well as several new
international train routes, including "China-Europe" and "China-Laos."
③Risk Control Capability
In 2022, the Company operated in a challenging domestic and foreign economic environment,
marked by significant industry events such as the failure of aluminum ingot futures delivery
warehouses and defaults on Qinhuangdao copper concentrate. These incidents created negative
pressure on the bulk supply chain industry. Additionally, major political and economic changes,
including geopolitical conflicts, international economic sanctions, and temporary export bans on
Indonesian coal, had a profound impact on global commodity prices and supply-demand patterns.
Despite these circumstances, the Company was able to navigate these complex economic
conditions successfully. This achievement was largely due to the comprehensive risk control system
and rapid response capabilities that have been established over the years. These measures enabled
the Company to weather the challenges and operate smoothly, with only minimal impact on the
business.
(3) Expansion of Regional Layout
By focusing on core industry chains and expanding its presence in domestic and international
markets, the Company has continued to enhance its supply chain network and service capabilities.
Firstly, the Company’s multifaceted approach includes spearheading regional platforms, such as
the establishment of its premium Hubei Chuxiang Supply Chain Group, as well as nurturing and
optimizing its Southwest and Northwest headquarters platforms, and harnessing the potential of
its American and Vietnamese platforms by leveraging the Company’s overseas business incubation
functionalities.
Secondly, the Company remain committed to delving deep into its stainless steel supply chain,
leveraging the 2.5 million-ton stainless steel smelting project of the Xiangyu Group to cement its
long-term contracts for raw materials with a stellar supply capacity of exceeding 23.3 million tons
and burgeoning the Compay’s distributive channels with more profound efficiency.
Thirdly, having successfully expanded its international business with total international business
volume of nearly USD 24.7 billion, the Company have emerged as a key player exporting to over
100 countries and regions with export business volume scaling a whopping 56%, with its aluminum
supply chain exports witnessing a phenomenal year-on-year surge of more than 360%, while its
black metal supply chain exports proliferated by 67%, plastic supply chain exports escalated by 60%,
and its agricultural product supply chain imports surged twofold.
(4) Breakthroughs in Digital Innovation
The Company has been committed to implementing digital innovation from a strategic perspective,
systematically promoting a series of digital projects, and establishing a supportive digital
transformation system to empower enterprise development.
The Company's innovative use of cutting-edge technologies to establish a comprehensive grain
planting industry alliance is a testament to its forward-thinking vision and strategic agility. The
HuiNong Mall, Order System, Insurance, and Grain Chain Communication System represent a
game-changing development for the industry. The success of the "Xing Xing Xiang Nong" app, with
its registration of 38,000 planting households and input of 6.894 million acres of land, has
reinforced the Company's position as a leader in the agricultural technology sector. Additionally,
the WaaS system has proven to be an outstanding solution for data management, quality tracking,
risk control, and on-site operation efficiency improvement, achieving remarkable results in
enhancing harvesting efficiency in pilot areas such as Fujin and Suihua.
The second area of focus for the Company has embarked on a strategic trajectory with the launch
of the cutting-edge "YuLianTong" app, which has significantly augmented the already diverse
product matrix of "Yu Cang Rong", "Yu Cai Rong", and "Yu Tu Rong". This exceptional and
innovative move has greatly accelerated the pace of the Company's business expansion,
cementing its position as a leader in logistics and supply chain finance. As a result, the Company
has obtained special credit of nearly 9 billion yuan for its esteemed customers. Ultimately, their
commitment to providing top-notch services and unparalleled customer satisfaction has been
recognized and rewarded, as evidenced by the prestigious recognition from the China Federation
of Logistics and Purchasing, who awarded the platform the title of "Excellent Case of China's
Logistics and Supply Chain Finance in 2022".
The Company's third focal area has centered on the incessant refinement of its intelligent logistics
service platform, coupled with an expeditious upgrading of its logistics stations to an intelligent
mode. By integrating stations located in Shaanxi and Anyang into the intelligent logistics system,
the Company has attained greater cargo management and control, resulting in significantly
reduced costs and enhanced efficiency. The Company has also accomplished the transformation
of 16 warehouses into intelligent facilities, causing the total number of digitally-optimized
warehouses to surge to 34. Intrinsic to this is the augmentation of the firm's cargo management
ability and customer experience.
Likewise, in the Company's focus area, the implementation of its 4A-grade network freight
platform has taken center phase, complete with payment, risk control, location services, and an
electronic fencing feature. Operating on a centralized technology architecture, this innovative
platform has provided the Company with an overarching view of the entire logistics transportation
process, as well as comprehensive monitoring and early warnings for its business operations. This
has served to address the shortcomings of traditional freight markets in terms of information lag,
cargo safety and risk control punctuality. Additionally, the Company has introduced a network
water transport platform which has realized more than 90 successful transactions thus far.
3.Business Plan for 2023
In 2023, it is expected that international commodity prices will experience high volatility, and
inflationary pressures from imports will continue to exist. However, the Company’s country's
economy has a solid foundation for steady growth. The Company will continue to adhere to the
steady improvement of quality and reasonable growth in quantity, striving to achieve a revenue of
612.4 billion yuan, while controlling costs within 606.2 billion yuan. the Company will focus on the
following key tasks:
In terms of digital transformation, the Company will establish a technology subsidiary responsible
for the research and operation of the "Yulian Tong" Digital Supply Chain Service Platform. The
Company will set up a professional sales team and vigorously expand customer and financial
institutions, seeking to achieve exponential growth in customer loan volume. Drawing from
experience in operating Industry-level Agricultural Internet Platforms, the Company will accelerate
the construction of an industrial alliance ecosystem on the basis of a stable profit model. the
Company will make the food planting and warehouse alliance a reality in Suihua, the surrounding
areas of Yian and Fujin, and promote the landing of the grain circulation alliance platform.
With respect to international expansion, on the one hand, the Company will closely focus on
policies and situations related to the "Belt and Road," "BRICS," and "RCEP" initiatives to expand
overseas channels and the scale of international business. On the other hand, the Company will
deepen the full supply chain service of the "Xiangyu Group's Indonesia 2.5 million-ton stainless
steel smelting-integrated project." The Company will upstream build stable overseas procurement
channels for nickel, chromium, and coal, and downstream further expand overseas incremental
customers. In addition, the Company will enhance international logistics channel construction and
promote overseas warehouse layout expansion, thereby enhancing comprehensive service
capabilities.
With regards to capital operations, the Company aim to strengthen its reserves by conducting a
private placement of A-share stocks, while enhancing the contribution of its net profit attributable
to shareholders to the Company‘s overall net profit figures.
In order to elevate its abilities, the Company intend to refine its systems for cultivating project-
based businesses, driving productivity gains and value optimization. Furthermore, the Company
plan to develop specialized, all-in-one supply chain logistics platforms, drawing upon both
domestic and international logistics resources. In this vein, the Company will also shore up its risk
management capabilities by advancing its digital risk control apparatus, embedding procedures for
risk control, and establishing automated risk alerts.
Xiamen Xiangyu Co., Ltd.
April 27, 2023
