How does Full Truck Alliance create a "model" for digital freight growth with top long-term institutional holdings and multiple indicators hitting new highs?

During the US stock earnings season, as most Chinese concept stocks have successively handed in their 2023 fiscal year reports, the outstanding performance of companies with both high quality and high growth, known as "double high", has attracted market attention. Full Truck Alliance, known as the "number one stock in digital freight", has shown excellent financial and business performance, worth exploring.

On March 7th, before the US stock market opened, Full Truck Alliance released its fourth quarter and full-year financial results as of December 31, 2023. In the fourth quarter of 2023, the company achieved a revenue of 2.41 billion yuan, a year-on-year increase of 25.3%, and a net profit of 730 million yuan under non-US accounting standards, a year-on-year increase of 64.4%. Looking at the whole year, it achieved a revenue of 8.44 billion yuan, a year-on-year increase of 25.3%; and a net profit of approximately 2.80 billion yuan under non-US accounting standards, a year-on-year increase of 100.4%, both reaching historical highs.

The financial report also shows that in Q4 2023, Full Truck Alliance's monthly active shipper users reached 2.24 million, an increase of nearly 19% year-on-year, hitting a historical high. Among them, the number of direct shipper users continued to grow, with the majority of the increase coming from the rapid growth of low-frequency direct shippers, namely non-member shippers.

At the same time, as the platform's penetration rate of high-quality direct shippers increases, the structure of shipper users continues to optimize, driving the fulfillment rate to continuously improve. In the fourth quarter, the proportion of fulfillment orders from direct shippers exceeded 45% for the first time, reaching a historical high.

Furthermore, since the fourth quarter, benefiting from the continuous enhancement of the network effect of the Full Truck Alliance platform, the activity of driver users has also continued to grow, with the number of active drivers fulfilling orders in the past 12 months reaching 3.88 million, and the scale of driver users continues to expand.

As is well known, China's road freight market is extremely non-standard, with obvious pain points such as dispersed supply and demand, low matching efficiency, and information asymmetry. The emergence of digital freight platforms represented by Full Truck Alliance has promoted the onlineization of information, allowing road freight to enter the digital era of high-quality development.

Through years of deep cultivation, Full Truck Alliance has gained a large and stable user base. Even in the current environment where the internet traffic dividend is gradually fading, the Full Truck Alliance Group can still maintain a sustained high growth momentum. Obviously, the platform is an absolute "must-have" for users on both the driver and shipper sides, gradually proving that the platform has established strong user mindshare and brand awareness, thereby driving the company to show long-term high-quality growth characteristics.

Of course, from a deeper perspective, the ability of the Full Truck Alliance Group to achieve such investment value is not accidental, but is built on multiple dimensions.

On one hand, the Full Truck Alliance Group has formed a strong barrier by deeply exploring customer needs, thereby ensuring a "stable and broad" user base for the company The management of Full Truck Alliance revealed during the performance conference call that in 2023, Full Truck Alliance will take industry pain points as the "soil for growth", conforming to the major trend of improving efficiency and reducing costs in the freight industry. The company will continue to promote the online, digital, and intelligent development of the road freight industry. At the same time, the company will further explore customer needs, adopt a more proactive customer acquisition strategy, continuously upgrade product features, and improve freight matching efficiency, attracting more high-quality users and laying a solid foundation for the company's sustainable development.

It is worth noting that the significant increase in shipper and driver user data demonstrates the company's effective customer acquisition and user retention methods.

On the other hand, Full Truck Alliance is strengthening its core competitiveness through product operations, capacity supply, one-stop services, and other dimensions, forming a powerful flywheel effect.

Management disclosed that in 2023, in terms of product operations, Full Truck Alliance has provided new direct customers with simple and efficient product features for shipping and transactions, effectively reducing the threshold for new users and further driving strong growth in new users. In terms of capacity supply, the company has upgraded the driver tiered operation system, continuously optimizing transaction efficiency through equity traction and precise matching, leading to continuous improvement in capacity scale and driver stickiness. In terms of one-stop services, the penetration rate of the company's value-added services such as ManYunBao, finance, insurance, energy, and ETC continues to expand, forming a synergistic effect with the transportation business to enhance user and driver stickiness and satisfaction.

Furthermore, from the perspective of supply and demand relationships, in this quarter, Full Truck Alliance has seen an increase in driver effective supply, leading to improved matching efficiency. From bargaining to fixed price and entrusted goods, the fulfillment rates of various types of transactions, from long-haul full truckload to short-haul less-than-truckload, have all shown varying degrees of improvement this quarter.

The synergy of major business collaborations not only helps the company rejuvenate the "flywheel effect", but also invisibly enhances the competitiveness of the company's platform, greatly increasing the stickiness of shippers to the platform, providing a continuous source of growth vitality for Full Truck Alliance's performance growth.

These arrangements, like gears on a flywheel, interlock and closely connect with each other, collectively driving the "growth flywheel" of Full Truck Alliance to accelerate. Looking at the fulfillment data, in the fourth quarter of 2023, the company's fulfillment orders reached 45.8 million, a year-on-year increase of over 40%, with a fulfillment rate of 32%, reaching a historical high. For the full year of 2023, fulfillment orders reached 160 million, a year-on-year increase of 33.4%.

Overall, as a leading digital freight platform, Full Truck Alliance has strong customer acquisition barriers by tapping into customer needs. At the same time, by continuously improving the company's operations and one-stop service capabilities, it possesses strong core competitiveness. These two advantages together ensure the company's leading position, drive high-quality performance growth, and demonstrate the accuracy of the company's strategic layout and the efficiency of its execution It is worth noting that this also reflects the Full Truck Alliance's precise grasp of the digital freight trend.

According to data from the Ministry of Transport, China's road freight volume will reach 40.3 billion tons in 2023, an 8.7% year-on-year increase. The freight volume in the fourth quarter of 2023 is expected to be 10.6 billion tons, a 11.9% year-on-year increase. It can be foreseen that benefiting from the increasing digital penetration rate in the industry, Full Truck Alliance will continue to achieve high growth while pursuing cost reduction and efficiency improvement.

From the above, it is evident that both the external market space and internal growth potential have significantly added to the investment attractiveness of the Full Truck Alliance group. The current increase in holdings by top institutions clearly validates this point.

According to the latest 13-F filings disclosed by institutions, among the list of institutions that increased their holdings in Full Truck Alliance in the fourth quarter, Norway's bank (whose investment institution NBIM is one of the world's largest sovereign wealth funds) has re-established positions in Full Truck Alliance and increased its holdings to approximately 1%. Invesco remains optimistic about the business prospects of Full Truck Alliance this quarter and has been consistently adding to its holdings for three consecutive quarters, with the total holdings of these two top long-term institutions amounting to nearly USD 3 billion.

After the financial report was released, Full Truck Alliance also announced a dividend and extension of the repurchase plan last week. A cash dividend of USD 0.1444 per ADS will be distributed, and the repurchase plan originally scheduled to expire on March 12, 2024, has been extended for one year until March 12, 2025, with a maximum repurchase amount of USD 3 billion in ADS. This reflects Full Truck Alliance's emphasis on shareholder returns and management's confidence in the company's future development prospects and growth value recognition.

In conclusion, Full Truck Alliance has built a high-growth curve model for digital freight platforms through precise strategic direction, strong execution, and effective operations based on user insights. Whether Full Truck Alliance's potential can be better realized as the platform's flywheel effect expands remains to be seen