What's KEX's expected revenue growth and the roadmap & the investment plan of 2022?

The company expectes the parcel volume to grow by 30% in response to aggressive pricing strategy and the expansion of service access. The cost per parcel is expected to be driven down by 20%, given the resource optimisation and efficiency enhancement through the industrialisation of KEX. The company yearly allocates approximately THB 1,500 - 2,000 million for investments, which will be mainly for business & network expansion and platform efficiency enhancement. The company will continue to focus on volume growth in pursuit of economies of scale, maintaining market leadership and generate sustainable returns in the medium to long term.

The pandemic situation during the second half of 2021 was considered relatively severe and affected many areas in Thailand. Such circumstance complicated resource planning, especially labour supply. However, the company prioritise the safety of our employees & customers, and will continue to uphold service excellence and resource preparation for operations in the pandemic environment. The company expects that the cost impact, as seen in Q3 and Q4, to gradually decline as the pandemic situation tones down and volume acquisition grows. The company expects to be able to return to profit within the second half of 2022.

Thailand is a medium-sized country and will be able to accommodate only a few players, similarly found in similar-sized countries and other industries like telecom, convenience store, energy drink,etc. In medium term, we expect market consolidation within the express industry as we have witnessed the market exit of a few players in the past 1-2 years. In 2021, KEX was the only profitable express company. We pay close attention to price management, service quality and cost improvement. We will be looking for firms with similar corporate culture and business & quality focus if there is any merger.

According to the company's diversification strategy, the company will expand the businesses surrounding express-related area to diversify and welcome additional profit and revenue streams, creating additional value to our shareholders. The company has developed business initiatives, both done in-house & through partnerships with market leaders, e.g. Kerry Cool and Kerry XL. Similarly, the company continuosly seek M&A opportunities, and expects 1-2 deals per year with yearly budget allocation of THB 1,000 million. However, with our potential financial statements, sufficient cash and zero debt, together with remarkable support from shareholders, there are yet plenty investment opportunities in both debt and equity financing.

The market value of cold and frozen delivery is worth THB 3 billion. There are no price-competitive players and also service preference unserved, which present great business opportunity for Kerry Cool. Our JV partner, Betagro Group, Thailand’s leading agro-industrial and food company, provides a promising demand from the first day of busines operations. Kerry Cool will initially serve B2B customers and will gradually expand to C2C market by Q222. The company expects to see relatively more significant revenue contribution in 2023 onwards, and in medium-long term, the revenue contribution is expected to be 20% of total revenue, with good profit margin.

KEX also formed a JV with Central Retail to operate Thailand’s first less-than-truckload (LTL) delivery platform under the brand KERRY XL driven by world-class technology, process engineering and ultimate user-experience. Given Central Retail’s various assortments of brands and nationwide customer base, this LTL service will jumpstart with a promising demand and brand reliability. The service is expected to be availble by Q322.

Given tremendous growth of online market, increasing number of players in the past 1-2 years and e-commerc platforms' inability to provide sales information, the market valuation is becoming more complex and difficult. However, the company estimates that the number of express parcels is around 3-4 million parcels per day, and is projected to grow steadily by 30% per year, in line with consumer behavior and market growth of e-commerce and social commerce. And KEX is progressing as a market leader, amidst fewer palyers left in the express market.

Short-term investment must generate higher returns than general deposits but still maintain the principal and high liquidity. KEX thus invests in mony market funds and short-term fixed income of less than 1 year. Another small portion is invested in corporate bonds of 2-3 years maturity with market price returns. However, the interest rates are currently rising so the company still considers investments that are not too long with worthwhile returns.

Kerry Wallet is currently being tested by certain group of customers. And it is expected to be available nationwide by the second quarter of 2022, subject to system testing for the ease of user experience.

The portion of D2D customers is relatively small and highly concentrated in cities, compared to service used in parcel shops. However, the company observes increasing trends of service used in both channels. The physical service points is expected to grow and become more accessible in response to the collaboration with 4PL (fourth-party logistics) agents. The D2D service is also expected to grow given KEX's collaboration with GRAB to provide instant and express pick-up services, extending KEX's D2D service coverage.

We mostly outsource both individuals and company entities. The procurement process is governed by KEX's standard and pre-screened by hiring agencies.

The company pursues strategic investment and partnership by maintaining a “carrier neutral” concept. And strategically invest & seek synergistic partnerships that sustainably support our growth & assurance for our shareholders. There are no e-commerce platform-related business initiatives at the moment. In terms of financial loans, the company has partnered with Rabbit Cash to initially serve Kerry Express members, and the service is still in the trial phase.