Ladies and gentlemen, good day and welcome to ZKH Group Limited's fourth quarter and fiscal year 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jin Li, Head of Investor Relations. Please go ahead. Thank you, Operator. Thank you, everyone. Welcome to our call today. Joining us today on the call are Mr. Eric Chen, our Founder, Chairman, and Chief Executive Officer, and Mr. Max Lai, our Chief Financial Officer. During this call, we will discuss our future performance, which are forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release. A number of potential risks and uncertainties are included in ZKH Group's public filings with the Securities and Exchange Commission. ZKH Group does not undertake any obligation to update this forward-looking information except as required by law. During today's call, we will also discuss certain non-GAAP financial measures for comparison purposes only. Please see the press release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Eric and Max will share our business updates, operating highlights, and financial performance for the fourth quarter and the full year 2023. After the prepared remarks, we will have a Q&A section. With that, I will turn the call over to Eric. Eric, please go ahead. [Foreign language] Hello everyone. Thank you for joining our fourth quarter and fiscal year 2023 earnings conference call, the first since our public listing on the New York Stock Exchange late last year. Our collective team effort and effective execution have gotten us where we are today, and despite macroeconomic uncertainties and challenges throughout 2023, we were able to end the year with solid financial results that placed us on firm ground for future growth. [Foreign language] In 2023, our GMV reached RMB 11.08 billion, an increase of 18.2% year-on-year. In the fourth quarter alone, our GMV increased by 20.2% year-on-year, reaching RMB 3.21 billion. Notably, we achieved this growth amid a downturn in the construction and construction-related industries. This means that we achieved outstanding sales growth, stemming largely from our customers in manufacturing sectors such as new energy and NEV, manufacturing of machinery, as well as chemicals. [Foreign language] Looking at our bottom line, we narrowed our adjusted net loss by RMB 339 million in 2022 to RMB 288 million in 2023, and our adjusted net loss margin improved from -7.5% in 2022 to -3.3% in 2023. Our improving metrics were underscored by our ability to reach break-even in the fourth quarter of 2023 with an adjusted net profit of RMB 27.54 million. [Foreign language] These gains were driven by our investments and efforts over the past year to enhance digital intelligence, product capabilities, and customer service capabilities. [Foreign language] Throughout the year, we focused on strengthening our core competitiveness and improving operational efficiency. To achieve this, we deeply integrated digital and intelligent technologies across our business to systematically build end-to-end digital capabilities spanning the entire value chain. Let's take a closer look at the details. [Foreign language] First, we've automated key customer processes and scenarios for our top 100 customers using RPA technology developed in-house to cover processes from inquiries, order placement, shipment, to reconciliation and invoicing. [Foreign language] Our proprietary ZKH AI Assistant, a chatbot developed based on AI models and the MRO industry knowledge base, has been adopted by 95% of our staff since its launch in May 2023. This tool allows us to respond to a diverse range of business and product inquiries automatically, which significantly improves the efficiency of information gathering and knowledge sharing. [Foreign language] In the pivotal supply-demand matching process, we have greatly improved product matching accuracy across production lines for inquiries and quotes by using machine learning algorithms to incorporate historical transaction data, industry knowledge, and specialist expertise into our IT system. [Foreign language] Digitalization and intelligence play a vital role in improving our organizational capabilities and operational efficiency. Supported by digital and intelligent technologies, a broader range of customers can now directly interface with our systems, resulting in an increasing number of transactions completed online. In 2023, the amount of sales through digital footprint accounts for about 70% of our total GMV. Meanwhile, thanks to our streamlined organizational structure and enhanced operating efficiency, human resources productivity in 2023 increased by approximately 39%, accelerating our path to sustainable profitability. [Foreign language] One of our core competencies is our product capabilities. We are committed to providing our customers with a one-stop purchasing experience, so we are continuing to add SKUs and cast a wide net with broad product lines. Right now, we have reached 17 million SKUs. In addition to expanding our product lines, we are deepening our involvement in product development every step of the way. Notably, we've intensified our efforts to grow our own private label products and offer customers an excellent product selection and recommendations, providing high-value products that are readily available. Currently, private label products account for approximately 5% of our total GMV. [Foreign language] In terms of sales, our strategy is to focus on large corporate customers first and then gradually target and acquire small and medium-sized enterprise customers through online marketing. Over the past year, we have strengthened our ability to centrally develop and cultivate key accounts with large corporate customers and provide regional services to small and medium-sized enterprise customers. We've also greatly improved our customer acquisition capabilities through online marketing. Furthermore, we completed the transformation of our GBB platform into an e-commerce-only platform to reach microenterprise clients. These synchronized efforts propelled our customer base beyond 66,500 in 2023, an increase of more than 8,500 from 2022. [Foreign language] Next, I'd like to share a few of our initiatives and accomplishments on the ESG front. We take our corporate social responsibility very seriously and are actively taking steps to ensure sustainable product development while implementing green and low-carbon practices. We've built a comprehensive ESG management system. In 2023, this included adopting more new energy vehicles in our fleet and retrofitting our offices and warehouses with energy-saving LED lighting. We also promoted ESG standards to thousands of our suppliers by including them in our cooperation agreements and actively gave back to the community through donations and volunteering. These efforts were recognized by the China Energy Conservation Association, which named ZKH as one of the most promising enterprises for carbon neutrality in 2023. We also received the Dual Carbon Innovative Technology (R&D) Case Award from XinhuaNet. [Foreign language] Looking ahead to 2024, our key strategic objectives are to consistently invest in products and digitalization and accelerate our globalization to bolster and expand our leadership in the MRO industry. [Foreign language] First, we will expand the deployment of RPA technologies, with which we aim to cover our top 500 accounts by the end of 2024, further elevating our overall process automation. This year, we'll also launch our ZKH AI Assistant to our customers and suppliers. Additionally, we're looking to develop a large model within the MRO vertical domain to enhance our ZKH AI Assistant's features, improving its efficiency and performance in understanding customer needs, selecting products, responding to requests for quotations, and product matching. [Foreign language] In terms of product capabilities, we will continue to enhance our product quality and lower cost across our product portfolio. Tailoring our approach to each product's distinct features and development stage, we will selectively engage in comprehensive product development, including definition and selection, research and development, and even the smart manufacturing process. We'll create flagship products for each product line and consistently invest in bolstering our private label products. At the same time, we're looking to deepen our partnerships with suppliers, pooling resources, and fostering strategic alliances with compatible supplier partners to realize greater cooperative synergies. [Foreign language] Another area of focus lies in our global expansion aspirations. For 2024, our primary target market is the United States, where we intend to penetrate the market with a product strategy focusing on curated high-value offerings. We are currently advancing towards our goals across product selection, establishing a U.S. company, warehouse site selection, local team recruitment, and the design and launch of a standalone U.S. website. Our team is efficiently executing each of these initiatives, and we expect to officially kick off our U.S. operations during the second half of 2024. Meanwhile, we will actively pursue overseas merger and acquisition opportunities to accelerate our overseas growth trajectory. [Foreign languange] To conclude, we are confident that with our persistent execution and innovation across these areas, we can provide customers with higher-value products and services that will sustain our growth and power our long-term development in the global MRO market. As a public company driven by a passion for improving commerce through transparency and efficiency, we hold a strong and clearly defined sense of purpose and hold ourselves to high social responsibility standards. The greater the challenges, the more committed we are to our mission and values, and the more devoted we must be to pursuing endeavors that we care about and take pride in. As we navigate our evolving, dynamic business environment, we remain true to our foundational aspiration: achieve today, thrive tomorrow. Thank you. Thank you, Eric. And thanks, everyone, for making time to join our earnings call today. I'm Max Lai, CFO of the company. I will provide an overview of our 2023 fourth quarter and year-end financial results. In the interest of time, I will be presenting highlights only. We encourage you to refer to our press release issued earlier today for complete details. For the fourth quarter of 2023, our GMV increased by 20.2% year-over-year to RMB 3.2 billion from RMB 2.7 billion a year ago. By platform, GMV generated from ZKH platform grew 18.3% year-over-year to RMB 2.9 billion, and GMV generated from GBB platform grew 41.8% year-over-year to RMB 300 million. By business model, GMV coming from a product sales model reached RMB 2.3 billion, up 6.8% year-over-year, while GMV from marketplace model was RMB 885.3 million, up 78.6% year-over-year. The proportion of GMV generated from marketplace model was 27.6% for the fourth quarter of 2023, compared with 18.6% in the prior year period. Our total net revenues for the fourth quarter of 2023 were RMB 2.44 billion, representing an increase of 8.2% from RMB 2.26 billion for the prior year period, with increases in all categories of net revenues due to continued growth in MRO market demand. Looking at breakdown of our total net revenues, net product revenues for the fourth quarter of 2023 were RMB 2.32 billion, an increase of 6.2% from RMB 2.19 billion in the prior year period. The increase was mainly attributable to higher revenues generated from ZKH platform and GBB platform, primarily driven by an increase in the number of customers. Net service revenues for the fourth quarter of 2023 account for RMB 98.6 million, an increase of 73.1% from RMB 56.9 million in the prior year period, primarily due to the growth of marketplace model on ZKH platform. Other revenues for the fourth quarter of 2023 were RMB 20.4 million, an increase of 47.2% from RMB 13.9 million in the prior year period, mainly attributable to high revenues generated from our warehousing and logistics services. Gross profits for the fourth quarter of 2023 grew 10.9% year-over-year to RMB 417.2 million, resulting in a gross margin of 17.1%, compared with 16.7% in the prior year period. The increase was driven by the significant growth of marketplace model of ZKH platform, and a lower gross profit margin on product sales model was due to the impact of inventory write-downs. Operating expenses for the fourth quarter of 2023 were RMB 423.9 million, a decrease of 8.9% from RMB 465.3 million in the year before. Operating expenses as percentage of net revenues were 17.3%, compared with 20.6% in the prior year period, demonstrating our improved operating efficiency and leveraging. Fulfillment expenses for the fourth quarter of 2023 were RMB 107.8 million, an increase of 9.8% from RMB 98.2 million in the prior year period. The increase was primarily attributable to higher employee benefits costs. Fulfillment expenses as percentage of net revenues were 4.4%, compared with 4.3% in the prior year period. Sales and marketing expenses for the fourth quarter were RMB 170 million, an increase of 3.2% from RMB 164.7 million in the prior year period. The increase was primarily attributable to the increased travel and as well as marketing and promotion expenses, as business travels and marketing and promotion activities resumed after COVID-19 restrictions were lifted. Sales and marketing expenses as percentage of net revenues were 7%, compared with 7.3% in the year before. Research and development expenses for the fourth quarter were RMB 37.8 million, a decrease of 36.4% from RMB 59.5 million in the prior year period. The decrease was primarily attributable to lower employee benefits costs. R&D expenses as percentage of net revenues were 1.5%, compared with 2.6% in the year before. General and administrative expenses for the fourth quarter of 2023 were RMB 108.2 million, a decrease of 24.2% from RMB 142.8 million in the year before. The decrease was primarily attributable to lower employee benefits costs as a result of reduced average headcount. General and administrative expenses as percentage of net revenues were 4.4%, compared with 6.3% in the year before. Loss from operations for the fourth quarter of 2023 was RMB 6.8 million, compared with RMB 89.1 million in the year before. Non-GAAP EBITDA for the fourth quarter was RMB 43.3 million, compared with negative RMB 56.7 million in the prior year before. Net profit for the fourth quarter of 2023 was RMB 20.2 million, compared with net loss of RMB 53.5 million in the year before. Non-GAAP adjusted net profit for the fourth quarter was RMB 27.5 million, compared with non-GAAP adjusted net loss of RMB 82.2 million in the prior year before. Adjusted net profit margin was 1.1% for the fourth quarter, compared with adjusted net loss margin of 3.6% in the prior year period, marking the seventh consecutive quarter of year-over-year improvement. Now, I would like to briefly walk you through the highlights of our fiscal year 2023 results. For the fiscal year of 2023, our GMV increased by 18.2% year-over-year to RMB 11.1 billion from RMB 9.4 billion in 2022. By platform, GMV generated from ZKH platform grew 18.1% year-over-year to RMB 10.1 billion, and GMV generated from GBB platform grew 19.8% year-over-year to RMB 970.2 million. By business model, GMV of product sales model reached RMB 8.3 billion, up 5.1% year-over-year, with GMV of marketplace model was RMB 2.7 billion, up 90.2% year-over-year. The proportion of GMV generated from marketplace model was 24.8% in 2023, compared with 15.4% in 2022. The total net revenues were RMB 8.72 billion, representing an increase of 4.9% from RMB 8.32 billion in 2022, with increases in all categories of net revenues due to continued growth in MRO market demand. Net product revenues were RMB 8.34 billion, representing an increase of 3.1% from RMB 8.09 billion in 2022. The increase was mainly attributable to higher revenues we generated from ZKH platform and GBB platform, driven by the increase in the number of customers. Net service revenues were RMB 307.4 million, an increase of 71.3% from RMB 179.5 million in 2022, primarily due to the significant growth of marketplace model on ZKH platform. Other revenues were RMB 72.2 million, an increase of 47.8% from RMB 48.8 million in 2022, mainly attributable to higher revenues generated from our warehousing and logistics services. Gross profit was RMB 1.45 billion, an increase of 10.2% from RMB 1.32 billion in 2022. Gross margin was 16.7%, compared with 15.8% in 2022. The increase was driven by the significant growth of our marketplace model on ZKH platform. Lower gross margin of product sales model was due to the impact of inventory write-downs. Total operating expenses were RMB 1.85 billion, a decrease of 7.6% from RMB 2 billion in 2022. Operating expenses as percentage of net revenues were 21.2%, compared with 24.1% in 2022, showing improved operating efficiency and leverage. Loss from operations was RMB 398.7 million, compared with RMB 685.7 million in 2022. Non-GAAP EBITDA was negative RMB 211.9 million, compared with negative RMB 561.3 million in 2022. Net loss was RMB 304.9 million, compared with RMB 731.1 million in 2022. Non-GAAP adjusted net loss was RMB 287.5 million, compared with RMB 626.1 million in 2022. Adjusted net loss margin was 3.3%, compared with 7.5% in 2022. As of December 31st, 2023, we had cash and cash equivalents, restricted cash, and short-term investments of RMB 2.12 billion, compared with RMB 2.01 billion as of December 31st, 2022. Net cash used in operating activities was RMB 59.3 million in the fourth quarter of 2023, compared with net cash generated from operating activities of RMB 31.8 million in the prior year period. Net cash used in operating activities was RMB 567.9 million in 2023, compared with RMB 504.2 million in 2022. With that, I would now like to open the call to Q&A. Operators, please go ahead. Thank you. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star and then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Our first question today will come from Leo Chiang of Deutsche Bank. Please go ahead. [Foreign language] I'll translate myself. Thank you, management, for taking my question and congratulations on the strong results. I have two questions. My first question is regarding the overall industry trend. Could management share the outlook, 2024 outlook for China's MRO procurement service industry and competitive landscape? My second question is, if we look by customer vertical, could management share the 2024 outlook of our customers' spending budget by industry vertical? [Foreign language] [Foreign language] So basically, the MRO landscape in China hasn't fundamentally changed because the manufacturing sector in China is still the largest in the world. If you look to industries like real estate, related industries like construction, concrete, and steel industries, these industries have indeed taken a hit in recent years due to the changes in the Chinese policies and the economy. In 2021, construction accounted for 20% of our GMV, but now it's down to only 5%. Going forward, the impact from the construction sector to us will be minimal. The manufacturing sector in general is still very stable. In the past year in China, sectors like chemicals, coal, machinery manufacturing, cars, EVs, all these have been growing very healthily. MRO is still a very large existing market, and this trend of moving procurement from offline to online has not changed. So this is a great opportunity for quick growth for our industry. And second point is, in times that are challenging, the need for the companies to optimize their costs will become even greater. So this online trend, this moving things online thing hasn't really changed, and that's really beneficial for the entire industry. In terms of Chinese business going abroad, we have seen a lot of Chinese manufacturers moving their facilities and supply chain from inside of China to Southeast Asia, Europe, and Mexico. They're setting up entities there. So there's more and more companies going to these different geographies, and that is a great opportunity for us because we need to keep, if we want to keep meeting their needs, we need to go where they go. And in terms of going abroad and setting up a presence overseas, our selection, our choice is different from other companies. So the order is the U.S. market first, followed by the EU and Japan and other developed Western markets. The logic behind that is the online model suits better with companies, or rather with the markets that are compliant and transparent. [Foreign language] [Foreign language] In terms of market competition in 2023 and 2024, I believe market competition in our industry is getting more stable and more rational. As a market leader, I believe our advantages are becoming increasingly marked because we are enhancing our core competitiveness and our cost advantages and bringing benefits to our customers. [Foreign language] The MRO industry is a large existing market, and different types of companies exist in this market. There's different types of business models, and we believe there's good opportunities for all. As for us, we decide to focus on MRO, and we hope to become the most specialized and professional player in this space. [Foreign language] As for our customers and the different verticals, in 2023, we have seen that the more conventional and stabler industries have seen higher growth. For example, we grew by 46% in the chemicals vertical last year, and with EV, the growth was even faster, 147% there. With the property management, which is a more conventional business and more stable, not as volatile as the real estate industry, the growth there was 49%. And we also saw growth with the food and mining industries. For things like concrete, business did slide, and with the steel industry, the growth there was negative. This year, we believe the negative impact from the construction industry has already been capped, and as people need to go back into construction, so construction needs to continue, we believe there will be some kind of recovery when it comes to construction, the construction business. For industries ranging from transportation, chemicals, food, EVs, property management, coal, telecom, and communications in general, the growth there will be 20%-30% this year. [Foreign language] [Foreign language] So that's it from me for this question. Thank you. Thank you. Our next question today will come from Ella Ji of China Renaissance. Please go ahead. [Foreign language] So my question is regarding the business development plan and the budget and the target for the two growth areas. One is the private label, and the other one is the U.S. expansion. Could management elaborate on the detailed plan for these two growth areas in 2024? Thank you. [Foreign language] Thank you very much for that question. So as for private label, this is definitely a key to our future competitiveness. Our plan is to have 30% of our GMV coming from our private label sales. This figure was 5% last year. When it comes to private label product selection, we will start with the products that are more generic in nature, products that are consumables, and products where our customers don't have a lot of brand loyalty and are insensitive to exactly which brands they're using. Also products where Made in China has a clear advantage in terms of cost. Gross margin from private label last year was over 27% already. Our goal is to hit 30% for private label across the board. For some private label SKUs, the gross margin there might be more than 30%. We believe be it the China market or our overseas markets, private label will be a very potent force. Our expectation for growth for private label in 2024 is threefold or 3x. For overseas market business development, the plan is to start with the U.S., and our first warehouse in Texas will go live in June. Then we will expand to California, then the East Coast in that order. The rationale behind choosing Texas as the first stop is the costs in Texas are generally speaking lower than other states. It's more convenient to cover the Mexico market from a geographical perspective. We're going to use our U.S. market from Mexico to cover the Mexico market from Texas. Specifically, the approach will be different from our China strategy. Our goal in the U.S. is to become a Costco in MRO. So the product selection-wise, it's going to be more curated and cherry-picked because it's going to be hard in the preliminary stage to be all-encompassing, right? So it's going to be easier to build our supply chain with more highly selected SKUs. And in terms of the customers we're going to target, we're going to serve primarily SMEs, and we're going to use purely e-commerce to serve them. [Foreign language] So even though we're going to use the online model to serve SMEs primarily, we also know that a lot of the Chinese companies that currently have a presence in Mexico already, they are already our customers in China. And a lot of U.S. companies are also being served by us in China. So some large companies and customers have already approached us and are in talks with us in terms of hoping that we can serve them in those markets as well, in Mexico and in the U.S. So that's something we're planning on doing as well. [Foreign language] In terms of our supply chain strategies, we're not going to just use Chinese suppliers or suppliers that are located in China. For each SKU we're going to sell, there's going to be a secondary or backup supplier. This is to fend off any potential risks and changes when it comes to supply chain. We're going to use this global sourcing strategy going forward. [Foreign language] In terms of the U.S. MRO market, we understand that there's already some large MRO companies around. But overall, this market is still very fragmented in the U.S. So a big opportunity for us once we get up and running in the U.S. is to hurry up and look to acquire some significant channel companies or intermediaries in this space in the U.S. So having an intermediary in the U.S. combined with the competitive products from China is going to propel us to grow faster in the U.S. [Foreign language] That was it. Thank you. Thank you. Our next question today will come from Brenda Zhao of CICC. Please go ahead. [Foreign language] Good evening, Eric and Max. Thanks for taking my questions. I got two here. One is about the GPM. We've seen that the GPM increased 80 basis points in 2023. May I know your 2024 strategy for GPM improvements? And second, what's your supply chain and fulfillment infrastructure investment plan in 2024? Thank you. [Foreign language] Sure. In terms of improving growth profit margin, there are a number of things that we are working on. First is regarding pricing. In the early days of our business, we priced very aggressively in order to grow our scale. And the capital markets conditions were also quite different back then. But in the past couple of years, we've seen the markets becoming much more rationalized, and greater focus is being placed on financial health. Therefore, we are adjusting our pricing strategy. We still want to maintain our price competitiveness, but we no longer see a need for over-competition or excessively aggressive pricing. [Foreign lang Another thing that we're working on is to deepen our collaboration with our supplier partners in order to further help reduce costs for our customers. The third, which is also extremely important thing that we're working on, is to grow our private label products as a share of our total GMV. In the next 2-3 years, we overall are seeking to grow our gross profit margin by 2%. [Foreign language] We are also benchmarking against our competitors overseas, and we are seeing, in general, our overseas counterparts reaching over 50% in their growth profit margin. As we expand our business internationally, we are hoping to also further increase our overall GPM. [Foreign language] In terms of our supply chain efficiency and cost reduction, this is yet another priority that we're working on. Notably, we are increasing investments in automating our warehouses. This will, we believe, further improve our operational efficiency and reduce operational costs. And coincidentally, we are going to launch tomorrow an automated warehouse for fasteners tomorrow, which I will go and open tomorrow. And I believe that with further warehouse automation, we will be able to further improve our GPM as well. [Foreign language] We are going to continue to rent our warehouses because we believe that there is still an oversupply of commercial warehouses and office spaces here in China, and there is opportunity for us to lower the rents for warehouses. That is my response to your question. Thank you. That will conclude our question and answer session. At this time, I would like to turn the conference back over to management for any closing comments. Thank you once again for joining us today. You can find the webcast of today's call on ir.zkh.com. If you have any further questions, please feel free to contact us. Our contact information can be found in today's press release. Thank you and have a good day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.