In the face of the irreversible digital wave, the aging population and urbanization rate increase in China, as well as the people's yearning for a better life and the desire for spiritual satisfaction, Fu Shou Yuan is at the forefront of change and experiencing unprecedented development opportunities.

In recent years, the company has been actively promoting its own transformation, striving to move from a traditional funeral comprehensive service provider to a provider of life science and technology services, and proposing a development strategy from the physical world of 'Fu Shou Yuan' to the spiritual world of 'Fu Shou Yuan'. The difference of one word from Fu Shou Yuan to Fu Shou Yuan represents the beginning of an era, redefining life, complete cultural inheritance, and perfect integration with technology. Fu Shou Yuan not only bears the ultimate respect for the deceased, but also explores the digital continuation of life as an industry leader.

Through technological empowerment and cultural innovation, Fu Shou Yuan provides people with more humane, technological, and environmentally friendly services, leading the industry towards a better future.

In the performance report for the first half of 2024, Fu Shou Yuan demonstrated its leadership position and innovative capabilities in the funeral service industry. The Group recorded revenue of 1.1 billion RMB, achieved a net profit of 0.363 billion RMB, and the shareholder's share of profits and full income reached 0.299 billion RMB.

This achievement is due to Fu Shou Yuan's continuous innovation and upgrading of products and services, as well as its active response to digital transformation. It also stems from the company's continuous multi-dimensional efforts, focusing on meeting the diverse and differentiated consumption needs of customers, especially on the spiritual level, and constantly polishing and enhancing the core competitiveness of products and services.

Taking a long-term and broad perspective, through in-depth analysis of Fu Shou Yuan's strategic layout in technological empowerment practice, market prospects, policy support, company's fundamental stability, and industry exchange and cultural training, it is possible to deduce the evolutionary path and sustainable development of Fu Shou Yuan, which has multiple determinants and guarantees.

It also means that Fu Shou Yuan will have the opportunity to continue to lead the funeral industry, further consolidate its market position, achieve long-term and stable development, provide long-term and reasonable returns to shareholders, undertake social responsibilities, and unleash long-term value.

First, technological empowerment is the core of the transformation, and the innovation and practice of the '3JI' concept

Technology empowerment is the core of Fu Shou Yuan's transformation. Through the development of technology-empowered services, Fu Shou Yuan has not only improved the quality of service, but also broadened the boundaries of service. Its essence is reflected in the company's creative introduction of the "3JI" concept in recent years—"beautifying memories", "thickening records", and "lengthening commemorations" as a guide, integrating technology and life services deeply.

Fu Shou Yuan's "3JI" concept is closely linked to the concept of life. It is not only a manifestation of a profound understanding of the essence of life, but also a forward-looking exploration of the diversity of life and the integration of technology.

From the perception and cognition of carbon-based life to the conception and realization of silicon-based life, Fu Shou Yuan continuously promotes the integration of technology and humanities, explores the mysteries of life, and preserves and inherits valuable life information and cultural heritage. Through this approach, Fu Shou Yuan not only provides support and comfort for people at the end of life, but also becomes an important force in promoting social progress and bridging the past and the future for humanity. Here is how Fu Shou Yuan combines the "3JI" concept with the exploration of the concept of life:

1) Beautifying memories: beautification of humanistic parks and life marks

In the process of exploring life, Fu Shou Yuan has transformed life marks into a form of beauty by building humanistic parks and gathering the physical and spiritual information of carbon-based life. This is not only a sign of respect for the deceased, but also a celebration of the diversity of life. Through this approach, Fu Shou Yuan showcases the differences in the perception and cognition of life in an art form, providing a space full of beauty for the commemoration of carbon-based life.

2) Thickening records: digital preservation and integration of life information

Fu Shou Yuan uses modern technological means to digitally preserve life information on a large scale, including biological genes, life stories, and cultural thoughts. This recording is not only comprehensive, but also detailed, covering individual physiology, genetics, and personal and family history. This in-depth exploration and integration of life information provide valuable data and insights for the future recovery or understanding of human history, and also offer important references for the design and evolution of silicon-based life.

3) Lengthening commemorations: silicon-based information and digital immortality

Through techniques such as big data analysis, Fu Shou Yuan has transformed life information into silicon-based information and built a massive information database. Cooperation with top players in the global tech industry, such as Professor Guo from Hong Kong University of Science and Technology, has provided diverse application scenarios for the continuation of carbon-based life and the generation of silicon-based life. Ultimately, through the construction of the "Smart Cemetery," Fu Shou Yuan has not only provided a digital immortality for carbon-based life, but also created new possibilities for the inheritance of family culture and the extension of life value.

In terms of technology-enabled management, Fu Shou Yuan has fully implemented a digital system that covers engineering, security, cleaning, and park management, among other aspects. This initiative not only improves operational efficiency, but also establishes a solid foundation for the company's long-term development.

With the support of technology, Fu Shou Yuan has demonstrated a profound understanding of life diversity and life value.

Through technological means, Fu Shou Yuan not only provides richer and more diverse ways of commemoration for life, but also offers endless possibilities for the continuation and innovation of life. If this transformation is successfully completed, Fu Shou Yuan will define a new industry and become a representative of innovation in China.

Second, the dual endorsement of market and policy certainty

In China, the funeral service industry is at a new starting point - with the intensification of population aging and the continuous increase in cremation rates, the growth of demand in the funeral service market has become an indisputable fact.

According to data from the National Bureau of Statistics, as of the end of 2023, the population aged 60 and above in China was 296.97 million people, accounting for 21.1% of the total population, an increase of 1.3 percentage points compared to the end of 2022. Among them, the population aged 65 and above was 216.76 million people, accounting for 15.4% of the total population, an increase of 0.5 percentage points compared to 2022. According to international standards, a population aged 65 and above exceeding 15% means that China has entered a deeply aging society.

With the continuous advancement of funeral reforms and the change of customs, the cremation rate of bodies in China has been increasing in recent years.

According to the latest data released by the National Bureau of Statistics, the number of deaths in China in 2023 was 11.1 million, an increase of 0.69 million compared to 2022. In 2021, the national number of cremated remains reached 5.966 million, with a cremation rate of 58.8%, an increase of 3.1 percentage points compared to 2020.

In addition, at the end of 2023, the urban resident population in China reached 932.67 million, an increase of 11.96 million compared to the end of 2022. The urbanization rate of the resident population was 66.16%, an increase of 0.94 percentage points compared to 2022. In the past five years, the annual average increase in the urbanization rate in China was 0.93 percentage points, with more than 10 million rural residents entering cities each year. The steady improvement of urbanization will stimulate the demand for funeral and burial infrastructure, multi-level funeral services, and related life science and technology industries by the increasing urban population.

Overall, the trend of population aging, the increase in the cremation rate, and the steady improvement of urbanization, the combination of these three factors indicates a continuous increase in the total demand for funeral services by the public and an increasing visibility.

With its profound cultural heritage and excellent service attributes, Fu Shou Yuan has also launched innovative products and services that meet the requirements of the times and culture, striving to meet people's spiritual needs in funerals and other related aspects. It can be seen that its market and track have shown relatively sufficient certainty.

Another point worth noting is that the policy certainty has also provided strong support for Fu Shou Yuan. For example, the national "14th Five-Year Plan" for civil affairs and the spirit of the 20th Third Plenary Session of the Central Committee clearly stipulate the dual requirements of social security and industry innovation.

The introduction of these policies not only provides a solid foundation for the innovative development of the funeral industry, but also provides broad development space for companies like Fu Shou Yuan. Fu Shou Yuan actively responds to national policies, increases service supply, stimulates industry vitality, achieves the organic integration of public welfare and the market, and promotes the standardization, specialization, and humanization of funeral services.

In terms of social security, Fu Shou Yuan is committed to providing high-quality funeral services to meet the basic needs of the people for the burial of the deceased. The company optimizes service processes and improves service quality to ensure that every deceased person receives a respectful and dignified farewell and every family member feels warmth and comfort.

In terms of industry innovation, Fu Shou Yuan is constantly exploring and practicing the application of new technologies and concepts in funeral services. The company has launched new services such as online memorial services and virtual memorials using digital means, providing people with more convenient and personalized ways of commemoration. At the same time, Fu Shou Yuan is actively expanding emerging businesses such as pre-contracting and hospice care, providing comprehensive life care services for the elderly.

In addition, Fu Shou Yuan also focuses on cooperating with the government and social organizations to promote the healthy development of the funeral industry. The company participates in the formulation of industry standards, promotes service standardization; participates in public welfare activities, disseminates funeral culture, and enhances the public's awareness and acceptance of funeral services.

In summary, in the funeral service track where Fu Shou Yuan is located, not only is the market demand continuously growing, it also receives strong support from national policies. The company responds actively to policy calls, continuously improves service quality and innovation capabilities, makes positive contributions to meeting the people's aspirations for a better life, and promoting the modernization of the funeral industry.

3. Fundamental certainty: Long-term stability and consolidated potential for sustainable growth

Although the economic environment in the first half of this year and the high base of the same period last year may pose some short-term pressure on Fu Shou Yuan, the company's business is steadily developing. Its balance sheet has strong risk resistance, efficient management and operation capabilities, especially forward-looking strategic planning, driving the company's continuous transformation and upgrading, thus ensuring its long-term growth potential.

In the long term, the company's revenue growth is steady, with an overall upward trend. Fu Shou Yuan's revenue has gradually increased from 0.795 billion RMB in 2014 to 2.628 billion RMB in 2023, with a compound growth rate of 14.20% during this period, which is more than twice the compound growth rate of the GDP during the same period.

As of June 30, Fu Shou Yuan's business scope has expanded to cover 19 provinces in China, and is steadily advancing expansion plans in other important provinces, provincial capitals, and blank areas. According to the announcement, the company has stated that, with prudent and steady steps, it screens appropriate targets, integrates diversified business resources, acquires high-quality assets at fair and reasonable prices, and further consolidates and expands its market share.

In addition to the expected expansion of market share, the consolidation of the company's long-term growth potential is also reflected in the strong growth of the pre-need contract business in adverse environments.

Against the backdrop of rapid aging in society, pre-need contract business has become a key pillar of fu shou yuan's strategic layout. This service has not only successfully attracted numerous customers who wish to properly arrange their affairs in advance, but also gained wide recognition and support from government agencies and elderly service organizations. In the first half of 2024, fu shou yuan signed a total of 11,923 pre-need contracts, a year-on-year growth of 28.6%. This significant growth rate highlights the strong driving force of pre-need contracts in meeting market demand.

Over time, fu shou yuan has not only maintained a stable operational trend, but also achieved shared interests with shareholders through continuous high cash dividends, which has become a highly prominent intrinsic characteristic of the company.

The company's development bonus is closely linked to the long-term interests of shareholders, demonstrating fu shou yuan's commitment to shareholders and its long-term consideration for sustainable development.

Despite facing certain market pressures and external challenges in the first half of 2024, fu shou yuan's board of directors proposed a mid-term dividend of HKD 0.0638 per share, which also reflects the company's full confidence in achieving long-term performance and operational stability.

According to public data, since its listing, the dividend payout ratio has been maintained at over 30% and increased to 45% in the first half of 2024. Management expects to pay a dividend of HKD 0.3463 per share for the full year. Based on the latest stock price of HKD 4.70 as of August 23, the dividend yield of the stocks is approximately 7.4%, providing long-term investors with a high-quality investment choice that combines growth potential and returns. As shown in the chart below, the dividend yield provided by fu shou yuan to its shareholders entered an accelerated stage starting from 2023, which is worth paying attention to.

(Data source: Wind, compiled by gleaming)

In the long term, the company's solid fundamentals are also reflected in its emphasis on talent cultivation, industry exchanges, and cultural training.

At the same time, the government pays great attention to industry education in terms of policies, which is reflected not only in the investment of funds and resources, but also in the legal guarantee for industry education. For example, Fu Shou Yuan's investment and operation of the Civil Affairs University, as the first private funeral vocational education institution in China with non-degree higher education qualification, is a concrete manifestation of policy support.

In the special and profound field of the funeral industry, Fu Shou Yuan not only actively explores business transformation, but also regards cultural inheritance as the company's important mission and responsibility. As a pioneer in industry education, the LiJi College under Fu Shou Yuan plays a crucial role. It is a core member of the national funeral industry production-education integration community, dedicated to promoting the development of industry education and culture.

This year, the LiJi College successfully hosted the second council meeting of the national funeral industry production-education integration community and the first China Funeral Governance Forum, and further took the lead in establishing the Yangtze River Delta Integration Life Service Think Tank. These initiatives not only promote in-depth communication between the government, industry, academia, and research institutions, but also provide strong intellectual support for improving and developing the funeral governance system with Chinese characteristics.

In terms of international exchange and cooperation, the LiJi College also plays an active role. The college organized international study tours, participated in the 2024 American ICCFA Annual Convention and Expo, as well as the 2024 Asian Funeral and Cemetery Expo and Conference. In addition, the college hosted the first AFE 2024 sub-forum named after an institution, the "LiJi Global Forum", providing a platform for communication and cooperation in the global funeral industry.

In addition, policy research and standard setting are also one of the focuses of the LiJi College's work. As the main drafting unit, the college participated in the formulation of the "Construction and Service Standards for Non-profit Burial (Cremation) Facilities", which has been included in the 2024 annual plan for the first batch of standardized guiding technical documents in Pudong New District, Shanghai, reflecting the important role of the college in promoting the standardization and normalization of the industry's development.

Through these activities and achievements, Fu Shou Yuan has undoubtedly once again demonstrated its leadership position in the funeral industry and its firm commitment to cultural inheritance, while also demonstrating its positive influence in the exchange and cooperation in the funeral field both domestically and internationally. Through these educational activities, industry training, domestic and international exchange activities, Fu Shou Yuan not only improves its own service quality, but also contributes to the progress of the entire industry.

The so-called "focus on capabilities, connectivity and integration, professional level, and service quality" in the funeral service industry refers to the need to achieve these through continuous external practice, industry communication, cultural training, and close integration with policies. Through the aforementioned practical actions of "focus on capabilities, connectivity and integration, professional level, and service quality", Fu Shou Yuan has not only established a good brand image in the funeral service industry and become an industry benchmark, but also provides high-quality services to customers, thus promoting the company's long-term and sustainable development goals.

Fourth, Fu Shou Yuan never follows the "ordinary path".

At the 2024 Brand Strong China Forum, with its innovative achievements in brand building over the past 30 years, it was selected as one of the "2024 Top 500 Innovative Brands in China" along with Huawei, State Grid Corporation, Tencent, Alibaba, and Douyin. The brand value of the company was evaluated at 13.995 billion yuan, and the brand index reached an impressive 431.64 points, ranking 233rd among the top 500, demonstrating its leadership position in the funeral industry and its outstanding performance in innovation and service quality.

Through the above events, Fu Shou Yuan once again proves its determination and ability to take a different path. It is precisely its continuous self-innovation and innovative practice that has created the extraordinary foundation of the company's brand.

Fu Shou Yuan's transformation path is not an ordinary one, but a path that combines technology and humanity and requires experiencing hardships and setbacks. Nevertheless, through the empowerment of technology, Fu Shou Yuan has not only improved the quality of service, but also expanded the boundaries of service. With the dual support of the market and policies, the future of Fu Shou Yuan is full of infinite possibilities.

At the same time, there is reason to believe that Fu Shou Yuan will continue to lead the future development of the funeral industry with its solid fundamentals and innovative spirit, providing people with more suitable, respectful, and meaningful life farewell services.

Finally, under multiple certainties, the mission-like task of Fu Shou Yuan can be summarized in one sentence: it must not only interpret innovation breakthroughs in cultural inheritance, but also seek growth in times of change. Investors can start here and gradually deepen their understanding of the value of Fu Shou Yuan.