Throughout the past few decades of commercial history, every time the old and new business forms are transformed and replaced, it is a period of rapid technological iteration. It is not so much that commercial demand is leading technological research and development; rather, scientific innovation is disrupting the old business order and creating new demand.

As the artificial intelligence boom led by ChatGPT sweeps the world, the traditional funeral industry ecology is also quietly undergoing subtle changes.

A new type of enterprise represented by Fushouyuan is relying on the power of technology to achieve digital transformation and create a new funeral and life technology service provider.

Both net revenue and profit increased significantly, and profitability was strong

Recently, Fukujuyuan announced its 2023 results.

During the reporting period, Fushouyuan's revenue in 2023 reached 2,628 billion yuan (RMB, same unit), an increase of 21.0% compared with last year. The company's net profit during the year was 976 million yuan, an increase of 20.4% over the previous year.

These two figures not only show that Fushouyuan's performance has grown steadily over the past year, but also reflects its leading position in the industry. Furthermore, profit attributable to shareholders in 2023 (also known as net profit attributable to shareholders) was 790 million yuan, an increase of 20.1% over the previous year, further confirming the company's strong profitability and continued growth momentum.

In terms of the balance to debt ratio, the company performed well. According to financial reports, the total amount of loans at the end of each fiscal year divided by total shareholders' equity ratio was only 3.5% in 2023. With such a low debt ratio, it can be seen that in terms of business model, Fushouyuan is far superior to companies in other industries.

According to the company's financial report, the balance ratio for 2020-2023 was 1.0%, 0.5%, 0.5%, and 3.5%, respectively.

At the business level, the cemetery business maintained rapid growth in 2023, with revenue growing from $1,748 billion to $2.165 billion, a growth rate of 23.8%. Fushouyuan enhances product value by combining traditional funeral services with modern technology services. In terms of quantity, the sales volume of operating tombs increased by 23.6%, and the average consumer unit price increased by 1.4%. Judging from the sharp increase in volume and price, it shows that the quality of service provided by the company has been recognized by the market, and also shows that the company's competitive advantage in the high-end market is still strong.

The dividend policy highlights the company's strength and shows sincerity in giving back to shareholders

In terms of dividend distribution, Fushouyuan sent a positive signal to the market and shareholders this year.

During the reporting period, the company paid a final dividend of HK6.86 cents per share and a special dividend of HK21.39 cents per share. In addition to the mid-term payment of HK9.06 cents per share, the annual dividend reached HK37.31 cents per share. The annual dividend payment rate was close to 100%, showing the sincerity and importance that the company management attached to shareholders, as well as the company's confidence in continued profits. In addition, including dividends during the reporting period, Fushouyuan has accumulated dividends of HK$2,424 billion since listing.

The company's special dividend will further enhance shareholder returns while taking into account the company's long-term sustainable development. Fushouyuan is expected to become a high-growth and high-return enterprise.

Figure below: Fukushouyuan's dividend payout over the years

Photo Credit: Tono Flush

Judging from the net cash generated by the company's operating activities, it reached 1,225 billion yuan in 2023, an increase of 40.8% over the previous year, indicating that the company has sufficient cash flow and sufficient capacity to support its dividend policy and future expansion plans.

From a cash flow perspective, Fushouyuan has an excellent business model. It is a “laid-back” industry, and the company is a leading enterprise in the industry, and its competitive advantage is expected to last quite a long time. Excellent cash flow and a sound balance sheet guarantee the company's long-term sustainable development in the future.

Digital transformation to reshape life science services

As technological changes brought about by artificial intelligence sweep through, and standing at the intersection of technological progress and the future of humanity, the funeral industry has been given a new unique mission, namely to explore the nature and form of life and push society into a new stage of development.

At this historic moment, Fushouyuan reviews the current situation, digitally transforms, further upgrades its business, and embraces historical opportunities. Last year, the company's strategic positioning was upgraded to a “life science service provider” and the “life” attribute was reconsidered from a philosophical perspective.

According to the form of life, it can be divided into carbon-based life and silicon-based life.

The so-called carbon-based life refers to physical life with five major sensory experiences, thoughts, emotions, and cognition. When people die, they become carbon elements and return to the soil.

The so-called silicon-based life, or spiritual life, is similar to chip technology that relies on silicon elements. Life in the virtual world, such as presenting a deceased person in the form of an AI digital person, restoring the events of their predecessor and afterlife. To put it bluntly, it relied on science and technology to use silicon-based carriers to give the deceased their vital properties.

Recently, the company's president said at the performance meeting that Fushouyuan has gone deep into this business. By building a cultural park, the company gathers a large amount of physical and spiritual information on carbon-based life, then integrates this physical and spiritual information, and relies on modern technology to digitally preserve life information, such as biological genes, life stories, ideology and culture on a large scale.

The company seems to have a more ambitious vision and mission to collect and preserve individual life information, including physical and spiritual information such as physiology, genetics, and even personal stories and family history through more comprehensive and detailed collection and preservation. This vital information is essential for future restoration or understanding of human history. Through the exploration of life, the company can help scientists design silicon-based carriers that mimic or surpass human biological functions.

Management confessed at the performance meeting that after integrating life information, Fushouyuan will use big data analysis and other methods to transform life information into perceptive and cognitive digital information, that is, silicon-based information, to build a huge silicon-based information database.

Currently, Fushouyuan has joined hands with the Hong Kong University of Science and Technology to establish Lingjing Company to provide diverse application scenarios for the continuation of carbon-based life and the generation of silicon-based life. Through the creation of technology clouds, data clouds, and scenarios, a new era of development of Fushuyuan will be realized.

Ultimately, Fushouyuan Company wanted to use the vision of a “digital intelligence cemetery” to build a “space on the cloud” to provide life inheritance and family cultural services, integrate yuan into the park, and ultimately achieve the digital immortality of carbon-based life.

Unlike traditional funerals, the company relies on the power of technology to help all people build a digital society that respects both the past and the future, realizes the digital development of the funeral industry, and enhances people's deep understanding and respect for life.

Generally speaking, the company is working hard to carry out technological transformation.

Currently, the company is fully transforming from the traditional funeral industry to a modern life science service industry to create a high-tech “life science service provider”. To this end, the company will provide customers with technological services such as funeral AI digital humans, metaverse, and big data, perform digital storage, and connect carbon and silicon bases to create new quality productivity.

At the performance meeting, management revealed that three years ago, Fushouyuan had begun transformation, carried out business layout, and was preparing to build a data center in Hefei. Currently, the company is the first leading company in the industry to explore this business. To this end, the company's management is ambitious and determined to turn Fushouyuan into a century-old enterprise.

The company's ambitions are not small. At the performance meeting, when looking at future business prospects, the company said it would not be ruled out that it would lay out foreign markets. Currently, the company focuses on the domestic market and has established a digital family culture inheritance service system for 400 million Chinese families, covering burials, funerals, sacrifices, memorials, etc. The future will not rule out penetrating the business into overseas markets farther away, such as Southeast Asia, etc., until time will be decided.

Overall, the traditional funeral industry, empowered by technology, uses innovative ideas and technical strength to open up a new racetrack, transform the funeral industry, and develop new quality productivity. The company has found the future direction of digital technology development, relied on deep industrial transformation and upgrading, relied on digital innovation, breaking away from traditional economic growth methods and productivity development paths, and shaping a high-tech, efficient and high-quality corporate image.

Reichy College: Building a Talent Training Base for the Modern Funeral Industry

In April 2023, Liji University, a subsidiary of Fushouyuan Company, was officially inaugurated. The company cooperated with a number of higher vocational colleges to establish the first batch of two modern funeral industry colleges in China, dedicated to the integration of obstetrics and education.

With the integration of obstetrics and education as the core, Liji College brings together relevant resources from within and outside the national funeral industry to form an organic community. Through aggregation, division of labor, and cooperation, the goal of learning to be applied and used to promote learning is achieved, so that obstetrics and education can be integrated into serving economic and social development, and exerts a superposition effect.

In terms of cultivating industry talents, Liji University cooperates with colleges of industry to jointly promote the integrated development of industry, education and research in the funeral industry. Through cooperation with universities, colleges can introduce more educational resources to improve the quality of teaching and the level of scientific research. Li Ji College provides a practical teaching base for students to improve their skills, promote continuous education for employees, and become an incubator for industry talent training.

In addition, Rei Chee College is also actively providing life education to the public to raise society's awareness and sense of identity with the funeral industry. By holding life education courses and activities, the college conveys correct views and values on life and death to the public, and guides people to respect and value life.

In the future, with the further deepening and development of the integrated model of obstetrics and education, I believe Liji University will continue to play a greater role in cultivating talents in the funeral industry and inject new vitality into the sustainable development of the industry.

epilogue

Since Fushouyuan entered the capital market, it has become a star in the eyes of investors in the secondary market.

Its unique business model is comparable to Maotai in the industry. Its gross margin and net profit margin are superior to many industries. Its abundant cash flow and generous dividend payment policy make other companies look down on it. In terms of financial report processing, Fushouyuan also showed an excellent and steady development concept with a prudent attitude of putting expenses ahead and profit behind.

Ancient people said, “Life and death are too big”. Life services are an unavoidable part of everyone's life journey, even though consumption is infrequent. Therefore, for the valuation and performance prediction of this industry, we can draw on the consumer goods evaluation model.

Fushouyuan, as a leader in the industry, has a broad market space in the process of building a new life science service system. With the global explosion of artificial intelligence technology in the past two or three years, it is time for the company to carry out digital transformation.

Although Fushouyuan is already a leader in the industry, there is still huge room for improvement in its market share. This undoubtedly provides a broad stage for the company's further development and shows its great potential as a growth stock.