The underlying nature of FU SHOU YUAN (1448.HK) has become clear, revealing a significant shift in its investment rationale.
Between 2013 and 2018, speculation in the domestic cemetery market intensified, with grave plot prices in major cities often exceeding RMB 100,000 per square meter, far surpassing property prices in the same areas. FU SHOU YUAN's high profit margins and perceived market scarcity attracted substantial investment, earning it the nickname "the Moutai of the funeral industry."
As recently as 2023, some brokerages were asserting that the company's cemetery assets had a present value of HKD 30.1 billion, suggesting that its total market capitalization of HKD 15.6 billion on January 16, 2023, was a significant undervaluation.
However, this view was later proven incorrect. FU SHOU YUAN's performance declined substantially in 2024, and the company reported a loss of RMB 261 million in 2025.
Its market capitalization fell from a peak of HKD 18.7 billion to HKD 5.9 billion, with its share price retreating to lows not seen in a decade, as of February 4, 2026.
A detailed analysis of the company's business model shows that its funeral services are, in essence, a property business.
The core of the business model is real estate. Examining the composition of FU SHOU YUAN's revenue, the company appears to be a service provider based on category names. Cemetery services account for 80% of revenue, followed by funeral arrangement services.
The specific contents of these services are: (1) Cemetery services focus on the full lifecycle related to physical burial plots and park services, from purchase and burial to visitation and after-sales support. The core is providing a final resting place and ensuring long-term maintenance. (2) Funeral arrangement services cover the entire process from临终 (end-of-life) to burial, including body preparation, memorial services, cremation, and interment. The core is ensuring a dignified farewell for the deceased and efficient, worry-free arrangements for the family.
A more detailed breakdown of cemetery service revenue shows that sales of burial plots (墓穴销售服务) dominate, while other cemetery services like design, decoration, and maintenance contribute very little.
Revenue from the sale of burial plots also constitutes the vast majority of total operating revenue. In 2024, revenue from plot sales was RMB 1.535 billion, accounting for 74% of total revenue for the period.
Therefore, FU SHOU YUAN's business model is fundamentally real estate. Comparing its share price chart with those of property developers like Vanke reveals a remarkably high correlation.
According to the latest financial report (2025 interim report), FU SHOU YUAN operates cemeteries and funeral facilities in strategic locations within major cities across seventeen provinces, municipalities, and autonomous regions. Revenue from the Shanghai area previously accounted for nearly half of the total until 2024, but this proportion decreased to 40% in the first half of 2025.
The company primarily acquires land for cemeteries through four methods: (1) Early acquisition via land grants, similar to property developers, at very low cost. For example, the cost of land acquired early in Shanghai was only RMB 190 per square meter. However, due to stricter approvals, this method's proportion has gradually decreased. (2) Acquisition of peers: Between 2014 and 2022, the company conducted 23 related acquisitions totaling RMB 2.06 billion, purchasing equity in rival cemeteries or projects to quickly gain existing cemetery resources. (3) Cooperative development: Partnering with local governments or peers to build new cemeteries, integrating resources for regional expansion. (4) Acquiring equity in cemetery projects through capital injections.
The investment thesis has changed. Previously, FU SHOU YUAN's share price was highly favored due to what was perceived as a solid investment logic. On the demand side, three factors were cited: (1) The cremation rate continues to rise driven by national policy. It is important to note that FU SHOU YUAN's revenue is based on cremation. (2) Cultural influences of "老有所养，逝有所安" (support for the elderly, peace for the departed), leading to relatively high funeral expenses. A 2020 figure indicated the average funeral cost in China was approximately RMB 37,000, accounting for 5.4% of annual income, ranking second globally. (3) The background of an aging population, with an expected continuous increase in the number of deaths. On the supply side, two factors were noted: (1) Scarcity of supply: Due to policies protecting farmland and the environment, the government strictly controls land for public cemeteries, forcing the company to rely on continuous acquisitions to obtain land resources. (2) From a single-stock perspective: With no pure-play funeral listed companies in the A-share market, FU SHOU YUAN in Hong Kong became the sole稀缺 (scarce) target. As the industry leader, its business model has been replicated elsewhere, and its number of cemeteries far surpasses competitors, fitting both allocation and speculative needs. According to data from a Southwest Securities report, FU SHOU YUAN's market share was 0.83% in 2021, while competitors Fu Cheng Holdings and China Wan Tong Yuan had market shares of only 0.05% and 0.02%, respectively.
From the above analytical framework, the logic indeed resembled that for Moutai, involving cultural factors, scarcity, and the resulting financial attributes (speculation), even the gross profit margin was similar – FU SHOU YUAN's gross margin reached 92.4% in 2021.
However, FU SHOU YUAN's model, which only appeared similar to Moutai but was essentially real estate, has ultimately been revealed. Similar to the "housing is for living, not for speculation" policy in real estate, the traditional model of "hoarding land to drive up prices" has become difficult to sustain. Since October 2024, nationwide regulation has strengthened the public welfare aspect of the funeral industry. Authorities including the Ministry of Civil Affairs have repeatedly acted to curb high-priced graves. In 2025, new funeral management regulations came into effect, restricting the expansion of private funeral institutions.
For example, the Shanghai area took the lead in implementing dual controls on both the price and area of grave plots: the price for a single plot was reduced from approximately RMB 388,800 to RMB 268,800, with the area limited to below 0.66 square meters.
In the first half of 2025, revenue from FU SHOU YUAN's cemeteries in Shanghai plummeted to RMB 241 million from RMB 526 million the previous year, a sharp year-on-year decrease of 54.2%. Revenue in most other regions also declined significantly, directly dragging down overall performance.
Beyond policy reasons, combined with pressures in the current domestic economic environment and insufficient growth momentum in effective demand, customer willingness to purchase high-priced graves has weakened (the previous consumption upgrade logic has faded). Another potential reason is that due to the real estate downturn, some vacant properties might be used as alternatives for placing memorial tablets.
The combined impact of these factors is reflected in the H1 2025 data: (1) The number of operational cemetery plots sold decreased by 451, down 6.7% year-on-year. (2) The average selling price decreased by RMB 57,000 per plot, down 47.5% year-on-year. The average price per plot dropped from RMB 120,000 in 2024 to RMB 64,000 in the first half of 2025.
This is the main reason for the company's loss. Additionally, increased tax costs, and underperformance of some previously acquired cemetery projects led to impairments of related goodwill and other assets. This move also challenged and necessitated a correction in the logic behind its past model of expansion through replication in different regions.
Summary and Outlook FU SHOU YUAN's business model is fundamentally a real estate model. Previously hyped as the "Moutai of the funeral industry," it has recently faced a reversal in its investment logic due to price controls, a shift from consumption upgrade to caution, and the failure of its regional replication model.
The company is aware of the flaws in its business model and is actively attempting to transform from a traditional funeral service provider into a funeral and life technology service provider. This means shifting from profiting from land resources and price increases to focusing on data and services, aiming to earn revenue from digital content, AI interaction, and pre-need contracts. However, the effectiveness of this transition is considered limited.
Overall, some positive factors for FU SHOU YUAN remain, such as cultural rigidity and demand from an aging population. Most importantly, the company does not carry particularly high leverage. As of mid-2025, the company had RMB 1.649 billion in cash on its books, very little borrowing, and a low debt-to-asset ratio, which is a major difference from typical property developers.
Furthermore, the value of cemetery land acquired at low cost in the past remains, suggesting there may still be some potential for positive improvement factors in the future.