香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示概不會就本公告全部或任何部分內容而產生或因倚賴 該等內容而引致的任何損失承擔任何責任。 根據不同投票權架構，我們的股本包括A類普通股及B類普通股。對於需要股東投票的所有事 項，A類普通股持有人每股可投1票，而B類普通股持有人則每股可投10票。股東及有意投資者 務請留意投資不同投票權架構公司的潛在風險。我們的美國存託股（每股美國存託股代表一股A 類普通股）於美國紐約證券交易所上市，代碼為ZTO。 ZTO Express (Cayman) Inc. 中通快遞（開曼）有限公司 （於開曼群島註冊成立以不同投票權控制的有限責任公司） （股份代號：2057） 2022年第四季度及2022財政年未經審計財務業績公告 我們在此公佈截至2022年12月31日止第四季度及2022財政年的未經審計財 務業績（「2022 財政年業績公告」）。2022財政年業績公告可於香港聯交所網站 www.hkexnews.hk及我們的網站zto.investorroom.com閱覽。 承董事會命 中通快遞（開曼）有限公司 賴梅松 ...

Financial Performance - Revenue for the second quarter was RMB 8,656.7 million (USD 1,292.4 million), an 18.2% increase from RMB 7,325.1 million in the same quarter of 2021[5] - Adjusted net profit grew by 38.2% to RMB 1,758.7 million (USD 262.6 million), compared to RMB 1,272.2 million in the same quarter of 2021[5] - The gross profit was RMB 2,202.8 million (USD 328.9 million), reflecting a 31.6% increase from RMB 1,673.6 million in the same quarter of 2021[5] - Operating cash flow for the quarter was RMB 3,780.8 million (USD 564.5 million), up from RMB 1,932.4 million in the same quarter of 2021[5] - The adjusted EBITDA was RMB 2,892.0 million (USD 431.8 million), a 36.0% increase from RMB 2,125.7 million in the same quarter of 2021[5] - Operating profit rose by 36.4% to RMB 1,985.5 million (USD 296.4 million) from RMB 1,455.7 million in the same period last year, with an operating margin increase from 19.9% to 22.9%[15] - Net profit increased by 38.2% to RMB 1,758.7 million (USD 262.6 million) compared to RMB 1,272.2 million in the same period last year[16] - The company reported a net profit of RMB 2,711,451 for the six months ended June 30, 2022, compared to RMB 1,825,797 for the same period in 2021, marking a growth of approximately 48.6%[35] Market and Operational Metrics - The company reported a package volume of 6.203 billion, representing a 7.5% increase compared to the same period in 2021[6] - The company's market share increased by 2 percentage points to 23%[4] - The total package volume reached 6.2 billion, with a market share increase of 2.0 percentage points to 23.0%[7] - Core express business unit price increased by 10.5% year-on-year, contributing to an 18.8% revenue growth in core express services[9] - The number of sorting centers reached 98, with 87 operated by the company and 11 by network partners[6] - As of June 30, 2022, the company had approximately 11,000 owned vehicles, with 9,250 being high-capacity models[6] Cost and Expense Management - Operating costs rose by 14.2% to RMB 6.5 billion (USD 963.5 million), driven by increased transportation and sorting center operational costs[10] - Total operating expenses were RMB 217.3 million (USD 32.4 million), slightly down from RMB 218.0 million in the same period last year[15] - Sales, general and administrative expenses increased by 16.0% to RMB 456.9 million (USD 68.2 million) from RMB 394.0 million in the same period last year, primarily due to increased compensation and benefits[15] Cash Flow and Investments - Net cash flow from operating activities was RMB 3,780.8 million (USD 564.5 million), significantly higher than RMB 1,932.4 million in the same period last year[17] - The company reported a net cash used in investing activities of RMB (6,924,369) for the six months ended June 30, 2022, compared to RMB (4,556,458) for the same period in 2021, indicating an increase in investment outflows[32] - Capital expenditures were RMB 1.5 billion, with plans to adjust investment strategies based on demand[7] Shareholder Value and Future Outlook - The company announced a share repurchase plan with authorization to repurchase up to USD 1 billion of its Class A ordinary shares, extending the plan until June 30, 2023[19] - The company aims to continue expanding market share and enhancing profitability while supporting network partners to improve their profit quality[7] - The company maintains its annual business volume guidance, expecting a total package volume of 24.96 to 25.86 billion pieces in 2022, representing a year-over-year growth of 12% to 16%[18] Tax and Financial Position - The overall effective tax rate increased by 3.4 percentage points to 25% due to a higher proportion of income from local operating entities compared to those eligible for a preferential tax rate of 15%[16] - As of June 30, 2022, total assets amounted to RMB 68,506,030, an increase from RMB 62,772,343 as of December 31, 2021, representing a growth of approximately 9.8%[31] - Total current liabilities as of June 30, 2022, were RMB 16,977,336, compared to RMB 12,996,315 as of December 31, 2021, marking an increase of 30.5%[31] - The company’s total liabilities as of June 30, 2022, were RMB 17,768,287, an increase from RMB 13,844,762 as of December 31, 2021, representing a growth of 28.3%[31] - The total equity as of June 30, 2022, was RMB 50,737,743, a decrease from RMB 48,927,581 as of December 31, 2021, reflecting a decline of 1.6%[31] Earnings Per Share - The basic and diluted earnings per American Depositary Share (ADS) were RMB 2.23 (USD 0.33), a 42.9% increase from RMB 1.56 in the same quarter of 2021[5] - Basic earnings per share for the three months ended June 30, 2022, was RMB 2.23, up from RMB 1.56 in the same period of 2021, indicating a growth of approximately 42.7%[35] - Diluted earnings per share for the six months ended June 30, 2022, was RMB 3.57, compared to RMB 1.56 for the same period in 2021, showing an increase of about 128.2%[35]

Share Structure and Voting Rights - As of March 31, 2022, the voting power of different voting rights beneficiaries accounted for approximately 77.7% of the total voting rights in the company, with 206,100,000 Class B shares and 8,431,230 Class A shares held[2]. - Each Class B share can be converted into one Class A share, which would result in the issuance of 206,100,000 Class A shares, representing about 34.1% of the total outstanding Class A shares as of March 31, 2022[2]. - The company operates under a dual-class share structure, where Class A shares have one vote per share and Class B shares have ten votes per share, allowing certain beneficiaries to exert significant control over shareholder decisions[1]. - As of December 31, 2021, the company had 808,448,289 shares of common stock outstanding, consisting of 602,348,289 Class A shares and 206,100,000 Class B shares[6]. Revenue and Financial Performance - Revenue contribution from Zhongtong Express for the fiscal years 2019, 2020, and 2021 was 97.1%, 94.1%, and 97.7% of total revenue, respectively[10]. - Total revenue for the year reached RMB 30,405,839, with a gross profit of RMB 6,589,377, resulting in a gross margin of approximately 21.7%[55]. - Operating profit for the year was RMB 5,503,011, reflecting an increase of 863,542 compared to the previous year[55]. - Net profit attributable to shareholders was RMB 4,754,827, representing a year-over-year increase of 746,136[55]. - Basic earnings per share for the year was RMB 5.80, while diluted earnings per share was also RMB 5.80[55]. - Total revenue for the year ended December 31, 2021, was RMB 30,405,839 thousand, an increase from RMB 25,214,290 thousand in 2020, representing a growth of approximately 20.0%[99]. - Net profit for the year ended December 31, 2021, was RMB 4,701,327 thousand, compared to RMB 4,326,446 thousand in 2020, reflecting an increase of about 8.7%[99]. Risks and Regulatory Environment - The company faces significant risks related to its contractual arrangements with Zhongtong Express, which may be deemed non-compliant with Chinese laws[11]. - Regulatory uncertainties in China could severely impact the company's ability to execute its business model and may lead to substantial financial losses[12]. - The company is subject to various legal and operational risks associated with conducting business in China, including foreign investment approvals and cybersecurity regulations[12]. - The company has not undergone PCAOB inspections for its auditors, which poses additional risks to its operations[12]. - The company’s structure may prevent direct ownership interests in Zhongtong Express, raising concerns about potential penalties or loss of business interests[11]. - The company’s American Depositary Shares (ADS) may significantly decline in value or become worthless due to regulatory actions in China[11]. - The company is subject to risks related to doing business in China, which could significantly impact investment value[13]. Operational Structure and Subsidiaries - The company operates as a Cayman Islands holding company, with its business primarily conducted through subsidiaries in China[10]. - The company operates through a variable interest entity structure, which may face regulatory scrutiny from the Chinese government, potentially impacting financial performance[26]. - The company has established a series of agreements to ensure operational control over its subsidiary, which includes a service agreement that entitles it to 100% of the net profits from ZTO Express[32]. - The company operates primarily through its Chinese subsidiary, ZTO Express, which has obtained necessary licenses and permits from the Chinese government, including express delivery and road transport operating licenses[36]. Cash Flow and Dividends - The total cash transfers from the parent company to its subsidiaries amounted to RMB 10,011 million in 2020 and RMB 1,250 million in 2021, while the cash transfers from the Hong Kong subsidiary to the Chinese subsidiary were RMB 6,041 million in 2020 and RMB 3,671 million in 2021[45]. - Dividends paid to the parent company shareholders were USD 189.1 million, USD 233.5 million, and USD 208.4 million for the years ending December 31, 2019, 2020, and 2021, respectively[14]. - The company's ability to pay dividends may depend on future dividends from its Chinese subsidiaries[14]. - The parent company has cumulatively contributed RMB 15,080.5 million as of December 31, 2021, with no shareholder loans provided to the Chinese subsidiary during 2019, 2020, and 2021[45]. Market and Competitive Landscape - The company relies heavily on the development of the e-commerce industry and the rise of new retail in China for its business growth[105]. - The company faces intense competition, which may adversely affect its operating performance and market share[105]. - The company’s technology systems are crucial for its operations, and failure to optimize or develop new technologies could harm its business and growth prospects[105]. - The company is sensitive to macroeconomic conditions, with potential adverse effects on consumer confidence and spending during economic downturns[113]. - The company may face challenges in managing indirect network partners, as it does not have direct agreements with them, potentially affecting service delivery[116]. Compliance and Legal Challenges - The company is required to comply with various regulations regarding its express delivery operations, including timely registration of delivery points and proper handling of user information[138]. - Non-compliance with the proposed overseas issuance regulations could result in fines ranging from RMB 1 million to 10 million, or even suspension of operations[37]. - The company faces significant uncertainties regarding compliance with current and future Chinese laws and regulations, which could adversely impact its operational performance[146]. - The company must ensure that its network partners comply with local laws to protect its brand reputation and financial stability[143]. Technology and Innovation - The company plans to expand its market presence and invest in new technologies to enhance operational efficiency[56]. - The company has increased its technology spending significantly, but this may not be sufficient to meet the growing business demands, potentially leading to economic losses[123]. - The company’s operational performance is highly dependent on the reliability and performance of its integrated technology systems[123]. Labor and Human Resources - As of December 31, 2021, the company employed 23,865 employees and over 57,000 outsourced personnel, indicating a labor-intensive operational model[124]. - The company anticipates continued increases in labor costs due to a tightening labor market, with rising salaries and employee benefits expected[124]. - Labor disputes have occurred with network partners, but none have had a significant adverse impact on the company; however, future disputes could disrupt operations and reduce revenue[126]. Environmental and Safety Concerns - Transportation safety risks are inherent in the company's operations, including potential accidents that could result in personal injury and property loss[130]. - The company faces potential damage to its reputation and business due to unethical or anti-competitive behavior within its network, which may lead to increased compliance costs or business losses if the Chinese government intensifies its crackdown on such practices[176]. International Expansion and Strategic Investments - The company plans to explore international expansion, which may involve risks such as changes in local economic and political conditions, and potential impacts on profitability[173]. - The company made a strategic investment of approximately $168 million to acquire about 15% equity in Cainiao Station, enhancing its delivery network capabilities[171]. Economic Impact and COVID-19 - The ongoing COVID-19 pandemic continues to negatively affect both the Chinese and global economies, with uncertainties persisting since before the outbreak[163]. - The company’s financial performance is significantly dependent on the future developments of the COVID-19 pandemic, which remains unpredictable[190].

[Financial and Operational Highlights](index=2&type=section&id=Financial%20and%20Operational%20Highlights) ZTO Express reported a 25.6% increase in Q2 2021 parcel volume and 14.4% revenue growth to RMB 7.33 billion, yet adjusted net income declined 12.5% to RMB 1.27 billion, despite strong operating cash flow Key Financial Indicators for Q2 2021 | Metric | 2021 Q2 | 2020 Q2 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 7.325 billion | RMB 6.402 billion | +14.4% | | Gross Profit | RMB 1.674 billion | RMB 1.769 billion | -5.4% | | Net Income | RMB 1.272 billion | RMB 1.454 billion | -12.5% | | Adjusted Net Income | RMB 1.272 billion | RMB 1.454 billion | -12.5% | | Basic and Diluted EPS per ADS | RMB 1.56 | RMB 1.85 | -15.7% | | Net Cash Flow from Operating Activities | RMB 1.932 billion | RMB 1.252 billion | +54.3% | Key Operational Data for Q2 2021 | Metric | 2021 Q2 | 2020 Q2 | YoY Change | | :--- | :--- | :--- | :--- | | Parcel Volume | 5.772 billion parcels | 4.595 billion parcels | +25.6% | | Market Share | 21.0% | - | - | | Pickup/Delivery Outlets | >30,100 units | - | - | | Line-haul Vehicle Fleet | ≈10,300 units | - | - | | High-capacity Vehicles | ≈8,150 units | - | - | [Management Commentary and Strategy](index=3&type=section&id=Management%20Commentary%20and%20Strategy) Management highlighted a strategic focus on balancing service quality, volume, and profit, prioritizing profitable parcels which slightly impacted market share but ensured strong profitability and network stability, with future investments targeting capacity and operational efficiency - CEO Meisong Lai stated that the company's choice to prioritize profitable parcels over short-term market share gains was the main reason for the slight decline in market share this quarter, which ensured strong profitability and network partner stability[7](index=7&type=chunk) - Management anticipates China's express delivery industry will reach over **400 million parcels daily** in the next 2-3 years, with capacity and operational efficiency being key determinants of success, where ZTO has established an efficiency advantage[7](index=7&type=chunk) - CFO Huiping Yan stated that capital expenditure for the quarter was **RMB 2.2 billion**, with nearly 70% allocated to land acquisition and upgrading sorting centers, aiming to strengthen core express delivery infrastructure and develop integrated logistics service capabilities[7](index=7&type=chunk) [Detailed Financial Performance](index=4&type=section&id=Detailed%20Financial%20Performance) Total revenue grew 14.4% driven by core express services, but operating costs surged 22.0% due to policy changes and rising fuel prices, resulting in a gross margin decline from 27.6% to 22.8% and a 12.5% decrease in net income [Revenue Analysis](index=4&type=section&id=Revenue%20Analysis) Total revenue reached RMB 7.33 billion, up 14.4%, driven by core express services' 18.1% growth from increased parcel volume despite lower average prices, while freight forwarding revenue declined 32.9% Q2 2021 Revenue Breakdown (Millions of RMB) | Business Segment | 2021 Q2 | 2020 Q2 | YoY Change | | :--- | :--- | :--- | :--- | | Express Delivery Services | 6,652.9 | 5,540.7 | +20.1% | | Freight Forwarding Services | 313.6 | 467.1 | -32.9% | | Sale of Materials | 314.1 | 321.2 | -2.2% | | Others | 44.4 | 73.5 | -39.6% | | **Total Revenue** | **7,325.1** | **6,402.4** | **+14.4%** | - The growth in core express delivery service revenue was primarily driven by a **25.6% year-over-year increase in parcel volume**, partially offset by a **5.9% decrease in average selling price per parcel**[8](index=8&type=chunk) [Cost Analysis](index=4&type=section&id=Cost%20Analysis) Total operating costs increased 22.0% to RMB 5.65 billion, driven by a 38.4% surge in line-haul transportation costs due to policy changes and fuel prices, and a 28.6% rise in sorting center costs from wage increases and automation Q2 2021 Operating Cost Breakdown (Millions of RMB) | Cost Item | 2021 Q2 | 2020 Q2 | YoY Change | | :--- | :--- | :--- | :--- | | Line-haul Transportation Costs | 2,763.3 | 1,996.6 | +38.4% | | Sorting Center Operating Costs | 1,612.7 | 1,254.3 | +28.6% | | Freight Forwarding Costs | 266.2 | 416.7 | -36.1% | | Other Costs | 911.1 | 853.3 | +6.8% | | **Total Operating Costs** | **5,651.4** | **4,633.3** | **+22.0%** | - Per-parcel line-haul transportation cost increased by **10.2% to RMB 0.48**, primarily due to the combined impact of the expiration of toll exemption policies in the prior year period and rising fuel prices[10](index=10&type=chunk) - As of June 30, 2021, the number of automated sorting equipment in operation increased to **361 sets** from 282 sets in the prior year period, contributing to higher depreciation and amortization costs related to sorting centers[10](index=10&type=chunk) [Profit and Profitability](index=5&type=section&id=Profit%20and%20Profitability) Gross profit declined 5.4% to RMB 1.67 billion and gross margin fell to 22.8% due to faster cost growth, leading to an 11.6% decrease in operating profit and a 12.5% decline in net income to RMB 1.27 billion - Gross margin decreased from **27.6%** in the prior year period to **22.8%**, primarily due to the combined impact of a **5.9% decrease in average selling price per parcel** and a **1.7% increase in per-parcel cost** for core express delivery services[12](index=12&type=chunk) - Operating profit was **RMB 1.46 billion**, a **11.6% year-over-year decrease**; operating margin declined from **25.7% to 19.9%**[12](index=12&type=chunk) - Net income was **RMB 1.27 billion**, a **12.5% decrease** from RMB 1.45 billion in the prior year period[13](index=13&type=chunk) [Earnings Per Share (EPS)](index=5&type=section&id=Earnings%20Per%20Share%20(EPS)) Basic and diluted earnings per American Depositary Share (ADS) attributable to ordinary shareholders were RMB 1.56 this quarter, a decrease from RMB 1.85 in the prior year period Earnings Per American Depositary Share (RMB) | Metric | 2021 Q2 | 2020 Q2 | | :--- | :--- | :--- | | Basic and Diluted EPS per ADS | 1.56 | 1.85 | | Adjusted Basic and Diluted EPS per ADS | 1.56 | 1.85 | [Business Outlook](index=5&type=section&id=Business%20Outlook) The company maintained its full-year 2021 parcel volume guidance of 22.95 billion to 23.80 billion parcels, representing a 35% to 40% year-over-year growth - The company maintained its full-year 2021 parcel volume guidance unchanged, expecting a range of **22.95 billion to 23.80 billion parcels**, representing a **35%-40% year-over-year increase**[13](index=13&type=chunk) [Capital Management: Share Repurchase Program](index=6&type=section&id=Share%20Repurchase%20Program) The board approved increasing the share repurchase program to $1 billion and extending it to June 30, 2023, with approximately 17.52 million ADSs repurchased at an average price of $23.17 as of June 30, 2021 - The share repurchase program size was increased from **$500 million to $1 billion**, with its validity extended to **June 30, 2023**[15](index=15&type=chunk) - As of June 30, 2021, the company had cumulatively repurchased **17,519,583 ADSs** at an average purchase price of **$23.17**[15](index=15&type=chunk) [Appendix: Financial Statements](index=9&type=section&id=Appendix%3A%20Financial%20Statements) This section provides detailed unaudited financial statements, including consolidated comprehensive income, balance sheets, cash flows, and reconciliations of GAAP to Non-GAAP results [Unaudited Consolidated Statement of Comprehensive Income](index=9&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Comprehensive%20Income) This statement presents detailed revenue, cost, expense, and profit data for the three and six months ended June 30, 2021 - For detailed unaudited consolidated statement of comprehensive income data, please refer to the original document[27](index=27&type=chunk) [Unaudited Consolidated Balance Sheets](index=10&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) This statement lists the company's assets, liabilities, and shareholders' equity as of June 30, 2021, and December 31, 2020 - For detailed unaudited consolidated balance sheet data, please refer to the original document[28](index=28&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) This statement illustrates the company's cash flows from operating, investing, and financing activities for the three and six months ended June 30, 2021 - For detailed unaudited consolidated statements of cash flows data, please refer to the original document[29](index=29&type=chunk) [Reconciliation of GAAP and Non-GAAP Results](index=12&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Results) This section provides detailed reconciliations of Non-GAAP financial metrics, including adjusted net income and EBITDA, to their most comparable GAAP measures - Provides detailed calculations for reconciling GAAP net income to Non-GAAP adjusted net income, adjusted EBITDA, and adjusted earnings per share[31](index=31&type=chunk)[33](index=33&type=chunk)

Financial Performance - ZTO Express reported a total revenue of approximately $1.5 billion for the fiscal year ended December 31, 2020, representing a year-over-year increase of 30%[3]. - The company reported a net income of approximately $300 million for 2020, reflecting a net profit margin of 20%[3]. - The company reported a total revenue of RMB 100 billion for the fiscal year ending December 31, 2020, representing a year-over-year increase of 15%[10]. - The gross profit margin for the year was reported at 25%, a slight increase from 24% in 2019[10]. - The company anticipates a revenue guidance of RMB 115 billion for the fiscal year 2021, indicating a growth target of 15%[8]. - Total revenue for the latest quarter reached RMB 25,214,290, with a gross profit of RMB 5,837,106, resulting in a gross margin of approximately 23%[12]. - Operating profit for the quarter was RMB 4,754,367, reflecting a decrease of 13% compared to the previous quarter[12]. - Net profit attributable to shareholders was RMB 4,312,213, with earnings per share (EPS) of RMB 5.42, down from RMB 7.24 in the previous quarter[12]. Package Volume and Logistics - The company processed approximately 4.7 billion packages in 2020, an increase of 26% compared to the previous year[3]. - The total package volume handled by the company reached 10 billion packages in 2020, reflecting a growth of 20% compared to the previous year[10]. - Over 90% of the company's total package volume in December 2020 came from e-commerce platforms, indicating a strong reliance on the growth of the Chinese e-commerce industry[16]. - As of December 31, 2020, the company operated approximately 30,000 pickup/delivery points and had over 5,350 direct network partners, emphasizing its extensive operational network[19]. - The company has established a comprehensive and reliable delivery network, supported by partnerships with network operators[136]. - The company currently operates over 68,000 end stations in China, which serve as pickup locations for recipients[146]. Growth and Expansion Plans - ZTO Express expects revenue growth to continue in 2021, projecting an increase of 25% to 30% year-over-year[3]. - The company plans to expand its service network by adding 1,000 new service stations in 2021 to enhance its logistics capabilities[3]. - The company plans to expand its service network by adding 1,000 new delivery points in 2021, aiming to enhance customer accessibility[8]. - The company aims to enhance its market share in the e-commerce logistics sector, targeting a 5% increase in market penetration by the end of 2021[3]. - The company is exploring potential mergers and acquisitions to strengthen its competitive position in the logistics industry[3]. - The company is exploring potential acquisitions in the logistics sector to strengthen its competitive position in the market[8]. Technology and Innovation - ZTO Express is investing in technology development, focusing on automation and artificial intelligence to improve operational efficiency[3]. - The company is investing RMB 2 billion in new technology development to improve sorting efficiency and delivery speed[8]. - The company has developed proprietary algorithms for order scheduling and forecasting, capable of processing up to 100 million orders per day[155]. - The company utilizes automated hardware and software solutions to improve operational efficiency, including dynamic weighing machines and image-based learning algorithms for package inspection[143]. - The proprietary Zhongtian system includes over a hundred modules for package sorting, transportation, and tracking management, which is crucial for operational efficiency[153]. Sustainability Initiatives - The company is committed to sustainability initiatives, aiming to reduce carbon emissions by 15% over the next five years[3]. - The company has established a special team to lead environmental sustainability initiatives, promoting the use of green, recyclable, and biodegradable packaging[161]. - The company has implemented energy-efficient equipment in sorting, transportation, and distribution processes to reduce environmental impact[161]. - The company actively promotes rural market development through the "Express Delivery to Villages" initiative, enhancing logistics services in rural areas[161]. Risks and Challenges - The company faces significant risks from various factors affecting the e-commerce sector, including consumer spending ability, regulatory changes, and macroeconomic conditions[17]. - The company is vulnerable to external factors such as economic downturns, inflation, and geopolitical issues, which could adversely affect consumer confidence and spending behavior[17]. - The company may face increased operational costs due to compliance with the demands and regulations of third-party platforms like Alibaba[18]. - The competitive landscape in the Chinese express delivery industry may lead existing network partners to switch to competitors, posing a risk to service continuity[20]. - The company faces intense competition from leading domestic express delivery companies, which may adversely affect its operational performance and market share[21]. Regulatory Compliance - The company is subject to various regulations regarding its express delivery operations, including compliance with the Express Delivery Interim Regulations, which mandate timely registration of delivery points and proper handling of user information[35]. - The company must comply with the E-commerce Law, which includes obligations for logistics service providers to adhere to service standards and use environmentally friendly packaging materials[36]. - The company is required to report any incidents of user information leakage to the relevant postal authorities immediately[35]. - The company must comply with various construction requirements under Chinese laws and regulations, including obtaining necessary permits before commencing construction projects[182]. Financial Position and Investments - Cash and cash equivalents increased to RMB 14,212,778, indicating a strong liquidity position[13]. - The company generated net cash flow from operating activities of RMB 4,950,749, demonstrating robust operational efficiency[14]. - The company reported a net cash flow from financing activities of RMB 8,337,407, highlighting strong capital inflow[14]. - The company has authorized a share repurchase plan with a maximum value of $1 billion, extending the plan until June 30, 2023[133]. Human Resources and Labor Relations - As of December 31, 2020, the company employed 22,536 employees and over 57,000 outsourced personnel, indicating a labor-intensive business model[25]. - The company has established a comprehensive talent development mechanism, including a management trainee program to cultivate future leaders[161]. - The company provides ongoing training and performance evaluations for network partners to ensure high-quality customer service[152]. Shareholder and Governance Issues - The company’s dual-class share structure allows B class shareholders to have ten votes per share, while A class shareholders have one vote per share, leading to concentrated voting power[108]. - The concentration of ownership may hinder potential mergers or acquisitions, affecting the ability of other shareholders to realize premium value on their shares[108]. - The company’s organizational documents include provisions that may hinder third parties from acquiring control, impacting shareholder rights[116]. Market and Economic Conditions - The company is sensitive to changes in the economic conditions and political policies in China, which could impact its overall growth rate[53]. - The company’s ability to raise additional capital on favorable terms may be limited, especially in disappointing operational performance scenarios[50]. - The company faces significant adverse impacts on its business and financial condition due to potential severe or prolonged economic downturns in China or globally[53].