Summary of Bulk Supply Chain Industry Research Industry Overview - The bulk supply chain industry has a low net profit margin, typically ranging from 0.5% to 0.6%, with state-owned enterprises enjoying significant advantages in funding rates, creating high barriers to entry [1][3][4] - The demand growth driven by urbanization in China allows leading companies to achieve continuous growth by increasing market share, demonstrating resilience through economic cycles [1][3] - Since 2025, commodity prices have stabilized or increased, coupled with anti-involution policies, which are expected to enhance the profitability elasticity of bulk supply chain companies [1][3][6] Core Competitiveness - Key competitive advantages of bulk supply chain companies include: - High dividend yields and low valuations (PE) [5][6] - Thin profit margins but significant profitability elasticity [5][6] - High entry barriers and advantages for state-owned enterprises [5][6] - Broad growth potential, with opportunities to increase market share [5][6] Business Model - Bulk supply chain companies operate on a light asset model, locking in upstream and downstream orders to mitigate price volatility risks and secure stable service fees [1][7] - They generate profits through capital advances and comprehensive logistics services, requiring bank loan support and utilizing futures to hedge risks [1][12] Market Trends - The bulk supply chain market in China is expected to show a trend of concentration among leading companies, which will leverage economies of scale to capture larger market shares over the next decade [1][16] - Despite the current low concentration in the market, leading companies are anticipated to achieve sustained growth and resilience through natural market share concentration [16][17] Financial Performance - The industry has experienced fluctuations in profit margins due to intensified competition, accounting standard changes, and improved resource turnover efficiency [14][15] - Companies like Xiamen Xiangyu have maintained net profit margins around 0.5% to 0.6%, indicating significant elasticity in profitability during favorable market conditions [3][5] Risk Management - Bulk supply chain companies employ various strategies to mitigate price risks, including collecting a 15% deposit from customers and using a combination of futures and spot contracts for hedging [13][24] - Effective risk management is crucial for long-term stability, especially given the low profit margins where any risk event can significantly impact net profits [25] Recent Developments - In the first half of 2025, the profitability of bulk supply chain companies showed improvement, with some companies achieving approximately 30% year-on-year growth through volume increases and customer structure optimization [30][31] - Companies have adapted to industry downturns by lowering service fees for quality clients and focusing resources on stronger operational partners to enhance stability and profitability [29][30] Future Outlook - The bulk supply chain industry is expected to continue evolving towards modernization and specialization, enhancing risk control and capital management [11][26] - The market remains promising, with opportunities for leading companies to expand overseas and optimize customer structures to recover and enhance profitability [31][32]

Summary of Conference Call Records Industry Overview - The conference call discusses the impact of anti-involution policies on the transportation industry, specifically focusing on the aviation, express delivery, and bulk supply chain sectors [1][2][24]. Key Points on Aviation Industry - The aviation industry faces challenges such as inefficient resource allocation, severe homogenization of competition, and excessive low-price competition, leading to high passenger load but low profitability [3][4]. - The Civil Aviation Administration of China (CAAC) has initiated measures to regulate pricing behaviors and prevent predatory pricing, aiming to enhance overall market order and profitability [4][10]. - The anti-involution policy is expected to reduce extreme low pricing in the short term, improve airline revenue management in the medium term, and promote rational capacity planning for sustainable industry development in the long term [1][11][24]. - The aviation industry is projected to see a recovery in profitability over the next two years, with market dynamics improving as ticket prices become more market-driven and fleet growth slows [5][12]. - By the second half of 2024, the aviation industry is expected to achieve record-high passenger load factors, although excessive price competition may hinder the speed of recovery [6][8]. - Airlines such as Air China, Juneyao Airlines, China Southern Airlines, Spring Airlines, and China Eastern Airlines are recommended as investment targets due to their strong positions in the market [13][24]. Key Points on Express Delivery Industry - The express delivery sector has experienced a decline in revenue per shipment due to scale effects and healthy competition, but there is a need to strictly control malicious price wars [14][15]. - The anti-involution policy aims to stabilize the market and improve service quality by regulating competition [2][20]. - The industry has seen a shift towards natural concentration and the rise of leading companies, despite challenges posed by price wars [14][19]. - The National Postal Administration has emphasized the need for enhanced regulation to prevent below-cost competition, ensuring the stability of the express delivery network [16][20]. Key Points on Bulk Supply Chain Operations - The bulk supply chain sector is sensitive to macroeconomic fluctuations, with recent volatility in commodity prices affecting profitability [21][22]. - The anti-involution policy is expected to stabilize commodity prices, which could improve the profitability of supply chain companies [21][22]. - Traditional bulk traders are transitioning to providing financial services, reducing reliance on price differentials, which helps mitigate risks associated with commodity price fluctuations [22]. - The market concentration in the bulk supply chain industry is low, with leading companies expected to gain market share as the industry recovers [23][24]. - Investment opportunities are highlighted in companies like Jianfa Co., Xiamen Xiangyu, Xiamen Guomao, and Zhejiang Zhongtuo, as they are well-positioned to benefit from the anti-involution policies [23][24]. Additional Insights - The anti-involution policies are seen as a long-term strategy to ensure healthy competition across the transportation industry, promoting sustainable growth and profitability [2][12][24]. - The focus on improving revenue management and reducing excessive competition is crucial for the future stability and growth of the aviation and express delivery sectors [10][11][20].

Core Viewpoint - The recent emphasis on "anti-involution" by the central government is expected to promote deeper reforms across various industries, particularly benefiting the transportation sector, including aviation, express delivery, and bulk supply chain operations, potentially improving industry profitability if measures are effectively implemented [1]. Aviation - The "anti-involution" initiative is anticipated to enhance revenue management strategies, ensuring that fleet planning continues to grow at a slow pace. The Civil Aviation Administration of China (CAAC) has highlighted that the essence of "involution" is inefficient, homogeneous competition driven by excessive resource input, leading to low-quality competition [2]. - In 2024, airlines are expected to shift their revenue management strategy from "ticket price priority" to "seat occupancy priority," which could improve fleet turnover and occupancy rates, thereby increasing revenue and reducing costs. However, the historical high occupancy rates in the second half of 2024, coupled with ticket prices lower than those in 2019, may hinder the industry's recovery from losses [2]. - Since 2025, the supply-demand dynamics in aviation have been improving, with early signs of enhanced revenue management strategies observed in April and May. The "anti-involution" measures are likely to reduce excessive price competition, aiding in the recovery of industry profitability and ensuring slow growth in fleet planning [2]. Express Delivery - The "anti-involution" measures are expected to help maintain a healthy competitive pricing environment in the express delivery sector. The State Post Bureau has reiterated its commitment to opposing "involution" competition, as leading companies have engaged in price wars since the second half of 2024, leading to increased competition and pressure on profitability [3]. - There are concerns about the potential for a return to below-cost competition; however, the "anti-involution" stance is likely to foster a conducive environment for natural market consolidation and the rise of leading companies [3]. Bulk Supply Chain - The "anti-involution" approach is projected to stabilize and potentially increase bulk commodity prices, which would benefit profitability in the bulk supply chain sector. These companies, primarily engaged in supply chain finance, have faced challenges due to declining commodity prices and increased risk management requirements over the past two years [3]. - Key industries such as steel and coal are targeted for "anti-involution" measures, which may lead to capacity reduction and stabilization of commodity prices. Consequently, bulk supply chain companies are expected to gradually recover their profitability, with leading firms likely to continue gaining market share [3].

Core Viewpoint - The "anti-involution" policy is expected to promote deeper reforms across various industries, particularly benefiting the transportation sector, including aviation, express delivery, and bulk supply chain operations, potentially improving industry profitability if implemented effectively [3]. Aviation - The "anti-involution" initiative will enhance revenue management strategies, ensuring a slow growth in fleet planning. The Civil Aviation Administration of China (CAAC) has emphasized the need to address low-efficiency, homogeneous competition, which has led to excessive low pricing and capacity deployment [4]. - In 2024, airlines are shifting their revenue management strategy from "ticket price priority" to "seat occupancy priority," which is expected to improve fleet turnover and occupancy rates. However, despite record high occupancy rates in the second half of 2024, ticket prices remain below 2019 levels, which may hinder the industry's recovery [4]. - The ongoing improvement in supply and demand since 2025, along with the initial positive changes in revenue management strategies, suggests that the "anti-involution" policy will help reduce excessive low pricing and support the recovery of industry profitability [4]. Express Delivery - The "anti-involution" policy is anticipated to foster a healthy competitive pricing environment in the express delivery sector. The State Post Bureau has reiterated its opposition to "involution-style" competition, which has led to renewed price wars among leading companies since the second half of 2024, putting pressure on profitability [5]. - The continued enforcement of the "anti-involution" policy is expected to promote natural market concentration and the rise of leading firms in the express delivery industry [5]. Bulk Supply Chain - The "anti-involution" initiative is likely to stabilize and rebound bulk prices, which will benefit profitability in the bulk supply chain sector. Despite the inherent risks associated with price fluctuations, the implementation of capacity reduction measures is expected to support price stabilization in key industries such as steel and coal [5]. - As a result, bulk supply chain companies are projected to gradually recover their profitability, with leading firms likely to continue gaining market share [5].