Group 1: Regulatory Changes and Industry Trends - The Ministry of Civil Affairs has released a draft for the revised Funeral and Interment Management Regulations, expanding the original regulations to 8 chapters and 57 articles, focusing on public welfare and clarifying government responsibilities [1] - The revisions aim to establish a basic public service system for funerals, curb industry chaos, and reinforce the government's commitment to safeguarding public welfare [1] Group 2: Company Strategy and Digital Transformation - Fushouyuan is embracing industry changes and focusing on balancing public welfare with market efficiency, aiming to create long-term sustainable social value [1] - The company is undergoing a transformation from traditional funeral services to becoming guardians of life value, driven by the increasing demand for spiritual and cultural services [2] - Fushouyuan's digital transformation includes upgrading management systems and enhancing customer experience through technology and data-driven approaches [2][3] Group 3: ESG and Sustainable Development - Fushouyuan has achieved a significant milestone by upgrading its MSCI rating from AA to AAA, placing it in the top 1% of the MSCI China investable market index [3] - The company has implemented initiatives such as achieving 97% smoke-free parks and increasing the proportion of eco-friendly products, reflecting its commitment to sustainability [3] - Fushouyuan is pioneering a "digital life + life education" service model, promoting industry value reconstruction through the integration of ESG factors into its core business [3] Group 4: Shareholder Returns and Financial Strategy - Since its listing in 2013, Fushouyuan has maintained a dividend payout ratio of over 25%, with a commitment to increase the payout ratio to at least 35% and gradually to 60% or more starting from 2022 [4] - The stable cash flow characteristic of the funeral industry supports the company's high dividend policy, reflecting confidence in its internal growth and consideration for shareholder interests [4] - Fushouyuan is leading the digital transformation of the traditional funeral industry, utilizing technology to preserve memories and convey emotions, thereby redefining life services in modern society [4]

Financial Performance - The company reported a revenue of RMB 2,077.5 million and a net profit of RMB 497.3 million for the fiscal year 2024[10]. - The company recorded a total comprehensive income attributable to shareholders of RMB 373.1 million for the fiscal year 2024[10]. - The total revenue for the company in the current year reached RMB 2,077.5 million, a decrease of approximately 20.9% compared to the previous year[42]. - The profit attributable to shareholders and comprehensive income was RMB 373.1 million, down about 52.8% year-on-year[42]. - Revenue from cemetery services amounted to RMB 1,709.2 million, accounting for 82.3% of total revenue, while revenue from funeral services was RMB 339.2 million, representing 16.3% of total revenue[43]. - The number of operating graves sold decreased by 3,816 units or 23.3%, leading to a revenue decline of RMB 435.1 million or 22.2% in cemetery services[45]. - The company achieved sales of 16,504 burial plots and provided various funeral services to 65,143 families, generating a total revenue of RMB 2,077.5 million and a net profit of RMB 497.3 million, with RMB 373.1 million attributable to shareholders[114]. - The company faced risks related to strict government regulations in the funeral industry, which may impact business expansion and operational flexibility[115]. Dividends and Shareholder Returns - Shareholders will receive a final dividend of HKD 0.0954 per share, totaling an annual dividend of HKD 0.5474 per share, in line with the company's dividend policy[10]. - The company declared a special dividend of HKD 0.3882 per share, to be paid in three installments: HKD 0.1724 on April 25, 2025, HKD 0.1079 on July 25, 2025, and HKD 0.1079 on October 31, 2025[133]. - The company plans to distribute at least 35% of annual distributable net profits to shareholders starting from the fiscal year ending June 30, 2022, with annual reassessment of the dividend policy[133]. Market and Industry Trends - 2024年中國60歲及以上人口達到31,031萬人，佔比22.0%，顯示人口老齡化加劇[20]. - 2024年中國的死亡人口為1,093萬人，遺體火化率達到58.8%[20]. - 隨著城鎮化率提高至67.0%，將催生對殯葬基礎設施的廣泛需求[20]. - The cremation rate in China is increasing, driven by rising disposable income and urbanization, leading to a higher demand for diverse and quality funeral services[28]. - The ongoing reforms in the funeral sector are expected to raise entry barriers for new and existing participants, fostering a more competitive environment[25]. Corporate Strategy and Transformation - The company is transitioning from a traditional funeral service provider to a life technology service provider, emphasizing digital transformation and innovation[11]. - The company aims to enhance its international presence by sharing experiences and exploring cooperation at the 2024 International Funeral Association Conference[14]. - The company plans to transform from a funeral service provider to a provider of funeral and life technology services, focusing on high-quality life services and memorial services[88]. - The company aims to expand its market share by integrating resources in the highly fragmented Chinese funeral industry and actively seeking development opportunities[87]. - The company is committed to advancing its standardization efforts and maintaining compliance with regulatory frameworks to support sustainable growth[25]. Social Responsibility and Community Engagement - The company actively participated in social welfare activities, earning the title of "2023 Annual Chinese Public Welfare Enterprise" for its charitable efforts[13]. - The group made charitable donations of approximately RMB 1.75 million for the fiscal year ending December 31, 2024[147]. - The company is committed to achieving carbon neutrality and promoting green funerals, utilizing eco-friendly materials and constructing century-old ecological cemeteries[179]. Governance and Management - The board of directors consists of three executive directors, three non-executive directors, and four independent non-executive directors, complying with listing rules regarding board composition[185]. - The board has the discretion to determine eligible participants for the Restricted Share Incentive Plan and the number of shares to be granted[158]. - The company has established a remuneration committee to formulate remuneration policies, with directors' remuneration subject to shareholder approval at the annual general meeting[155]. - The company has adopted a corporate governance code to enhance transparency and accountability, aiming for high standards in corporate governance[181]. Innovation and Technology - The company introduced the first domestic virtual and interactive digital ancestral hall, "Yuan Family Hall," integrating various digital memorial functions[12]. - The introduction of new industry standards emphasizes the integration of technology in funeral services, including the development of an IoT-based information system for funeral management[26]. - The company aims to leverage technological innovation to enhance the dignity and quality of funeral services, aligning with modern consumer expectations[26]. - The company is focused on transforming from a funeral service provider to a life and memorial technology service provider, enhancing the quality of life services offered[119]. Employee and Operational Insights - The company has 2,198 full-time employees as of December 31, 2024, down from 2,471 in 2023, indicating a focus on optimizing workforce efficiency[126]. - Employee costs decreased by RMB 19.6 million or 3.9%, primarily due to a decline in sales services and one-time costs related to personnel optimization[55]. - The company emphasizes the importance of customer satisfaction and conducts monthly surveys to gather feedback and improve service quality[127]. Financial Health and Cash Flow - Cash generated from operating activities was RMB 731.6 million, a decrease of RMB 490.9 million or 40.2% year-on-year, primarily due to reduced revenue and increased tax payments on dividends[68]. - The debt-to-equity ratio as of December 31, 2024, was 0.5%, significantly lower than 3.5% the previous year, indicating strong cash generation capabilities[75]. - The company had no outstanding bank loans as of December 31, 2024, and maintained a comprehensive credit facility of approximately RMB 10 billion[73][74].

Summary of Conference Call Records Company and Industry Overview - The conference call discusses a company in the life sciences and memorial services industry, focusing on its strategic transformation and digitalization efforts to enhance service offerings and operational efficiency [3][5][8]. Key Points and Arguments 1. **Financial Performance**: - The company achieved a revenue of approximately RMB 20 billion in the fiscal year, maintaining a low cost burden of only 0.5% [1]. - Total return on investment has approached 14%, reinforcing the company's position as a preferred long-term investment [2]. - The operating income from various segments reached RMB 4.97 billion and RMB 3.73 billion, with operating margins of 30.2% and 23.9% respectively, showcasing strong profitability [2]. 2. **Strategic Transformation**: - The company aims to become a leading provider of life sciences and memorial services in China, emphasizing the importance of digital transformation to standardize consumer value through technology [3]. - The integration of AI and data analytics is enhancing customer demand forecasting and operational efficiency [3]. 3. **Market Trends**: - The aging population in China is driving demand for memorial services, with the elderly population expected to reach 400 million by 2030 [7]. - Despite cautious consumer spending, there remains a strong potential for growth in the industry, particularly in high-quality and personalized services [6][7]. 4. **Government Policies**: - Recent government initiatives aim to optimize the business environment and stimulate market vitality, which is expected to boost consumer confidence and economic stability [5][6]. - The government is also focusing on enhancing service industry standards, which presents opportunities for the company to improve its service offerings [6]. 5. **Digitalization and Innovation**: - The company is leveraging digital tools to enhance customer experiences, including AI-driven memorial services and online platforms for service delivery [3][44]. - A significant increase in the sales of digital products was noted, with a 204% rise in specific service offerings compared to the previous year [44]. 6. **Challenges and Responses**: - The company faces challenges from a cautious consumer environment and increased competition, leading to adjustments in sales strategies and service offerings [42][43]. - The management is focused on maintaining high service standards while adapting to changing consumer preferences and economic conditions [42][43]. Other Important but Overlooked Content - The company is actively working on enhancing its supply chain management to ensure sustainable development and operational efficiency [18]. - There is a strong emphasis on community engagement and educational initiatives to promote life sciences and memorial services, which is seen as vital for long-term growth [9][16]. - The company is committed to maintaining a balance between profitability and social responsibility, ensuring that its services meet the evolving needs of society [39][48]. This summary encapsulates the key insights from the conference call, highlighting the company's strategic direction, financial performance, market dynamics, and the impact of government policies on its operations.

Core Viewpoint - The funeral industry is undergoing a green transformation under the national "dual carbon" strategy, with Liaoning Guanyin Mountain Fushou Garden initiating carbon neutrality certification, potentially becoming the first carbon-neutral ecological cemetery in Northeast China [1][2]. Group 1: Carbon Emission Management - Liaoning Guanyin Mountain Fushou Garden reported a total greenhouse gas emission of 561 tons CO2 equivalent for 2023, covering direct emissions, energy indirect emissions, and transportation indirect emissions [2]. - The emission data has been verified to meet the ISO14064-1:2018 international standard, achieving a "reasonable assurance level" with no substantial deviations, reflecting the company's commitment to transparent carbon emission management [2]. Group 2: Ecological and Cultural Integration - The garden adopts a "park-like cemetery" concept, restoring vegetation on barren mountains, achieving over 85% greenery in the park, and integrating ecological and cultural landscapes [5]. - It features various memorial sites and cultural attractions, combining natural scenery with humanistic memorials, thus creating both ecological benefits and cultural value [5]. Group 3: Sustainable Construction Practices - The park utilizes new types of paving materials instead of traditional stone, promotes biodegradable urns, and implements solar-powered lighting systems to reduce resource consumption and environmental pollution [6]. - These initiatives aim to harmonize cemetery construction with environmental protection [6]. Group 4: Innovative Operations and Services - Over the past decade, the garden has promoted over 1,000 eco-friendly burial methods, such as green burials and flower burials, significantly reducing land use and carbon emissions [8]. - The park enforces a "no burning, no fireworks" policy, advocating for low-carbon memorial practices, preserving emotional connections while protecting the environment [8]. - Digital technologies are introduced to provide low-carbon services, enhancing the memorial experience while supporting sustainability goals [8][14]. Group 5: Industry Implications - The carbon neutrality practices of Liaoning Guanyin Mountain Fushou Garden offer a replicable low-carbon pathway for the traditional funeral industry [15]. - The management emphasizes the integration of ecological, artistic, and intelligent elements to create a "zero-carbon cemetery" model, reflecting a growing societal responsibility towards future generations [15].

Core Viewpoint - The company, Fushouyuan, is transitioning from a funeral service provider to a provider of funeral and life technology services, demonstrating resilience despite short-term economic fluctuations and aiming to become a cultural innovation benchmark in the global funeral industry, thereby creating sustained excess returns for shareholders [1] Group 1: High Dividend Returns and Cash Flow Management - Fushouyuan declared a final dividend of HKD 0.0954 per share for 2024, with total dividends reaching HKD 1.269 billion, representing 311% of the company's attributable profit, significantly higher than the average in the Hong Kong stock market [2] - The company generated net cash from operating activities of HKD 731.6 million in 2024, with total cash and bank balances amounting to HKD 2.0566 billion, showcasing a robust financial strategy with a negative net debt ratio [3] Group 2: Business Structure and Market Opportunities - The dual cash flow model of Fushouyuan's cemetery business, combining one-time sales with long-term services, provides a stable income stream, supporting its high dividend policy [4] - The aging population, increasing cremation rates, and tight supply of burial plots create a strong growth environment for the company, with the elderly population in China projected to exceed 400 million by 2035 [5][6][7] Group 3: Innovative Service Models - Fushouyuan's pre-contract service model is expected to drive growth over the next 20 years, with a 14.2% year-on-year increase in signed pre-contracts in 2024 [8] - The company has introduced the "3JI" concept, integrating cultural elements into its services, and has successfully implemented this model in 17 parks, enhancing customer experience through technology [9] Group 4: ESG Leadership and Corporate Governance - Fushouyuan has established a robust governance structure and has been recognized for its sustainable development efforts, achieving an A+ rating in the Hang Seng Index for three consecutive years [10] - The company actively engages in corporate social responsibility, with initiatives in various fields, including the notable "Shanghai Grandma" digital memorial project, enhancing its brand value [13] Group 5: Long-term Value Creation - Fushouyuan is focused on cultural empowerment within the industry, achieving significant milestones in talent development and standard output [11][12] - The company aims to redefine its value proposition by integrating technology and culture, with potential market capitalization growth from HKD 10 billion to HKD 40 billion, driven by innovative services [17][18]

Investment Rating - The investment rating for the company is "Accumulate" [1][7]. Core Views - The company's performance in 2024 is under pressure, but there is potential for sales recovery driven by product structure optimization [2][3]. - The company plans to adjust its product structure to increase the supply of mid-range priced products and enhance technological services to boost sales [7]. Financial Summary - In 2024, the company's revenue was 2,077.48 million RMB, a decrease of 20.9% year-on-year [6]. - Operating profit for 2024 was 709.89 million RMB, down 48.3% year-on-year, with an operating profit margin of 34.2%, a decline of 18.0 percentage points [7]. - Net profit for 2024 was 373.13 million RMB, a decrease of 52.8% year-on-year, with a net profit margin of 18.0%, down 12.1 percentage points [7]. - The company plans to distribute a final dividend of 0.0954 HKD per share for 2024 [7].

Group 1: Financial Performance - The company reported a revenue of 2.077 billion RMB and a net profit attributable to shareholders of 373 million RMB for the fiscal year ending December 31, 2024 [1] - Basic earnings per share were 16.4 cents, and a final dividend of 9.54 HKD cents per share was proposed [1] Group 2: Brand Development and Recognition - The company was recognized as one of the "Top 500 Innovative Brands in China" at the "2024 Brand Strong Country Forum," with a brand value of 13.995 billion RMB and a brand index of 431.64, ranking 233rd among the 500 [1] - At the 2025 Davos World Brand Summit, the company was awarded the title of "2024 World Innovative Brand 500," with a brand value assessed at 2.916 billion USD according to Asiabrand [1] Group 3: Digital Transformation Initiatives - The company is advancing its digital transformation strategy, integrating AI technology into its services, including the launch of a virtual digital human for its 2024 Qingming Festival event [2] - The introduction of the "Meta Family Shrine," the first interactive digital shrine in China, combines features like digital memorials and AI family heritage, presented in a 3D exhibition format [2] Group 4: Social Responsibility and Community Engagement - The company actively participated in various social welfare activities, covering areas such as charitable assistance, mental health support, and environmental protection, earning the title of "2023 Annual Chinese Charity Enterprise" [3] - A new initiative was launched to support late-stage cancer patients, marking the first remote support project of its kind in China, aimed at raising awareness and providing comprehensive assistance to patients and their families [3]

Financial Performance - The total revenue for the year ended December 31, 2024, was approximately RMB 2,077.5 million, a decrease of about 20.9% compared to the previous year[4] - The profit attributable to the owners of the company for the year was approximately RMB 373.1 million, representing a decrease of about 52.8% year-over-year[4] - Basic earnings per share for the year were approximately RMB 16.4 cents, down approximately 52.9% from the previous year[4] - Operating profit for the year was RMB 709.9 million, down from RMB 1,372.2 million in the previous year[5] - The total comprehensive income for the year was RMB 497.7 million, compared to RMB 975.9 million in the previous year[7] - The pre-tax profit for 2024 was RMB 373,134,000, down 52.9% from RMB 791,240,000 in 2023[26] - The group declared a total dividend of approximately RMB 735.8 million for the year, including a special dividend of HKD 21.39 per share[48] - The group plans to propose a final dividend of HKD 9.54 per share for the fiscal year 2024, subject to shareholder approval[49] - The company plans to distribute a final dividend of HKD 0.0954 per share, totaling an annual dividend of HKD 0.5474 per share, in line with its dividend policy[53] Revenue Breakdown - Cemetery services revenue decreased to RMB 1,709,205,000 in 2024 from RMB 2,165,253,000 in 2023, representing a decline of 21.0%[21] - The company reported a decrease in revenue from funeral services to RMB 339,191,000 in 2024 from RMB 397,886,000 in 2023, a decline of 14.7%[21] - Revenue from cemetery services was RMB 1,709.2 million, accounting for 82.3% of total revenue, a decline from RMB 2,165.3 million (82.4%) in the previous year[91] - Revenue from funeral services was RMB 339.2 million, representing 16.3% of total revenue, compared to RMB 397.9 million (15.1%) last year[91] Asset and Liability Management - Non-current assets totaled RMB 4,624.2 million, slightly down from RMB 4,634.2 million in the previous year[9] - Current assets decreased to RMB 3,556.9 million from RMB 4,033.6 million in the previous year[9] - The net asset value of the company was RMB 6,155.8 million, down from RMB 6,573.9 million in the previous year[10] - The company reported a significant increase in lease liabilities, rising to RMB 111.5 million from RMB 29.2 million in the previous year[10] - Trade receivables decreased to RMB 98,215,000 in 2024 from RMB 139,113,000 in 2023, reflecting a decline of 29.4%[34] - The total value of goodwill decreased to RMB 1,106,076,000 in 2024 from RMB 1,129,049,000 in 2023[28] - Trade payables increased to RMB 319,760,000 in 2024 from RMB 306,832,000 in 2023, with an average credit period for purchases of 181 to 365 days[41] Cash Flow and Financing - Net cash generated from operating activities was RMB 731.6 million, down from RMB 1,222.5 million in the previous year[122] - Cash used in financing activities was RMB 1,078.2 million, compared to RMB 387.5 million in the previous year[122] - Net cash inflow from investing activities was RMB 107.7 million, mainly from net recoveries of investments totaling RMB 169.3 million and interest income of RMB 59.3 million, offset by capital expenditures of RMB 78.7 million for construction and upgrades[124] - The debt-to-equity ratio as of December 31, 2024, was 0.5%, significantly lower than 3.5% a year prior, indicating strong cash generation capabilities[130] - The company held approximately RMB 10 billion in comprehensive bank credit facilities as of December 31, 2024[129] Market and Industry Trends - The demand for funeral services is expected to continue growing due to the aging population in China, with a focus on enhancing service quality and digital transformation[63] - By the end of 2024, the urban population in China is projected to reach 943.5 million, an increase of 10.83 million from 2023, with an urbanization rate of 67.0%[65] - The population aged 60 and above is expected to reach 310.31 million by the end of 2024, accounting for 22.0% of the total population, an increase of 13.34 million from 2023[65] - The cremation rate in China reached 58.8% in 2021, with 5.966 million bodies cremated, indicating a rising trend in funeral service demands[65] - The Ministry of Civil Affairs has initiated the revision of the Funeral Management Regulations, which aims to enhance the regulatory framework and promote the healthy development of the funeral industry[70] Strategic Initiatives and Innovations - The company successfully applied AI technology in creating digital personas, showcasing its digital capabilities during the 2024 Qingming Festival launch[56] - The company launched the first domestic interactive digital ancestral hall, integrating various digital memorial functions in a 3D exhibition format[56] - The company is transitioning from a comprehensive funeral service provider to a life technology service provider, implementing the "3JI" concept across various cemeteries[78] - The company launched new emotional integration products combining burial services and innovative offerings, enhancing customer experience[78] - The company is focusing on technology-driven management and digital systems to improve operational efficiency across its cemetery businesses[80] Corporate Governance and Compliance - The company has adopted a corporate governance code to ensure high standards of transparency and accountability[153] - The audit committee has reviewed the group's accounting principles and annual performance in collaboration with external auditors[156] - The company operates multiple cemeteries across China, including locations in Jiangsu, Liaoning, and Chongqing, among others[160] - The company has established subsidiaries in various provinces, such as Guizhou and Inner Mongolia, enhancing its operational footprint[161] Awards and Recognition - The company was recognized with multiple awards, including the "Annual Education Public Welfare Contribution Award" and "Outstanding Brand Image Award" in 2024[90] - The company's brand value was assessed at RMB 13.995 billion, ranking 233rd among the "2024 China Innovation Brand 500"[55] - The brand value of the company was assessed at USD 2.916 billion (approximately RMB 21.2 billion), ranking 380th in the "2024 World Innovation Brand 500" list[90]

Financial Performance - For the six months ending June 30, 2024, the company recorded revenue of RMB 1,100.0 million and a net profit of RMB 363.1 million[4]. - Shareholders' profit and comprehensive income reached RMB 298.8 million, with an interim dividend of HKD 0.0638 per share proposed[4]. - Total revenue for the period reached RMB 1,100.0 million, a decrease of approximately 27.8% compared to the same period last year[28]. - Net profit attributable to shareholders was RMB 298.8 million, down about 35.7% year-on-year[28]. - Revenue from cemetery services was RMB 906.1 million, accounting for 82.4% of total revenue, a decline of RMB 381.1 million or 29.6% from RMB 1,287.2 million in the previous year[31]. - Revenue from funeral services was RMB 184.1 million, representing 16.7% of total revenue, down RMB 39.9 million or 17.8% from RMB 224.0 million year-on-year[31]. - Operating profit decreased by RMB 332.9 million or 39.4% compared to the same period last year, with a significant drop in operating profit margin from 55.4% to 46.6%[48]. - The operating profit margin for cemetery services fell from 62.3% to 54.4%, influenced by a decline in sales volume and fixed costs[48]. - The company reported a decrease in pre-tax profit to RMB 542,737,000 for the six months ended June 30, 2024, compared to RMB 865,486,000 in the same period last year, reflecting a decline of approximately 37.2%[99]. Market Trends and Demographics - As of the end of 2023, China's urban population reached 932.67 million, an increase of 11.96 million from the end of 2022, with an urbanization rate of 66.16%, up 0.94 percentage points year-on-year[12]. - The population aged 60 and above reached 296.97 million by the end of 2023, accounting for 21.1% of the total population, an increase of 16.93 million from the end of 2022[12]. - In 2023, the total number of deaths in China was 11.1 million, an increase of 690,000 compared to 2022[12]. - The national cremation rate reached 58.8% in 2021, up 3.1 percentage points from 2020, indicating a growing demand for funeral services[12]. - The demand for diversified and high-quality funeral services is increasing due to rising disposable incomes and an aging population in China[17]. Strategic Initiatives and Innovations - The company is focused on digital transformation to enhance service quality and meet the growing demand in the funeral and life services market[4]. - Fushouyuan has actively responded to national digital economy initiatives, leading the continuous iteration of digital funeral services and expanding application scenarios[6]. - The company introduced the "3JI Life Service Concept" and launched various initiatives including life aesthetics products and digital ancestral halls during the 2024 Qingming Conference[6]. - The company aims to innovate and optimize its products and services to meet the growing demands of customers, ensuring a high-quality service experience[11]. - The company is transitioning from a comprehensive funeral service provider to a life technology service provider, emphasizing innovation and emotional integration in its offerings[21]. - The company is committed to improving its technological innovation capabilities and accelerating digital transformation in funeral services[16]. Corporate Social Responsibility - The company emphasizes its commitment to corporate, social, and public responsibilities in its operations[4]. - Fushouyuan has received multiple awards for its contributions to public welfare, including the "2023 Annual Education Public Welfare Contribution Award" and recognition as a "2023 Annual Chinese Public Welfare Enterprise"[6]. - The company held a collective digital funeral ceremony for 57 deceased individuals, including 23 body donors, demonstrating its commitment to public service[8]. - The company emphasizes the importance of social responsibility and aims to guide society in valuing life and death through its public welfare initiatives[9]. Operational Efficiency and Management - The company is committed to enhancing operational efficiency through lean management practices while responding proactively to external challenges[4]. - The company continues to optimize its management system to improve overall operational efficiency[4]. - Fushouyuan aims to enhance corporate governance and implement sustainable development strategies, focusing on ecological protection and low-carbon operations[9]. - The company is focusing on enhancing operational efficiency through the implementation of digital management systems across its cemetery businesses[22]. - The company has implemented a human resource management reform to ensure efficient resource allocation and maintain competitiveness in a complex market environment[25]. Financial Position and Investments - As of June 30, 2024, the company's bank balance and cash totaled RMB 2,247.2 million, with term deposits of RMB 267.3 million and non-listed cash management products of RMB 890.6 million[60]. - The company's debt-to-equity ratio was 3.4% as of June 30, 2024, indicating a low level of debt relative to equity[61]. - The company had no significant acquisitions or disposals of subsidiaries during the period[64]. - The company has approximately RMB 19.7 million in capital commitments for the acquisition of subsidiaries and other investments as of June 30, 2024[65]. - The company reported a significant increase in fixed-term deposits, rising to RMB 471,888,000 as of June 30, 2024, compared to RMB 367,746,000 on December 31, 2023, representing a growth of approximately 28.3%[143]. Shareholder Information - The company declared an interim dividend of HKD 0.0638 per share for the six months ending June 30, 2024, to be paid on October 31, 2024[70]. - The interim dividend declared for the six months ended June 30, 2024, is HKD 0.0638 per share, a decrease from HKD 0.0906 per share in the same period of 2023[83]. - The company reported that major shareholders include FSG Holding with 320,360,000 shares, representing approximately 13.81% of the issued share capital[76]. - Perfect Score holds 483,000,000 shares, accounting for about 20.82% of the company's issued share capital[76].

Investment Rating - Maintains an "Overweight" rating for the company [5][6] Core Views - The company's H1 2024 performance fell below expectations due to cautious consumer behavior and a high base effect from the previous year [5] - Revenue for H1 2024 was RMB 1.1 billion, a year-on-year decrease of 27.8%, with operating profit at RMB 512 million, down 39.4% year-on-year [5] - Net profit attributable to shareholders was RMB 299 million, a year-on-year decrease of 35.7%, with a net profit margin of 27.2%, down 3.3 percentage points year-on-year [5] - The company is focusing on product optimization and sales strategy adjustments, with pre-need contracts showing strong growth, up 28.6% year-on-year [5] Financial Summary - Revenue for 2024E is projected to be RMB 2.319 billion, a year-on-year decrease of 11.8%, with net profit expected to be RMB 713.72 million, down 9.8% year-on-year [8] - For 2025E, revenue is expected to grow by 11.3% to RMB 2.581 billion, with net profit increasing by 12.9% to RMB 805.54 million [8] - In 2026E, revenue is projected to reach RMB 2.862 billion, a year-on-year increase of 10.9%, with net profit expected to grow by 12.1% to RMB 902.89 million [8] - The PE ratio for 2024E is 12.13x, decreasing to 10.75x in 2025E and 9.59x in 2026E [8] Business Performance - Cemetery services revenue for H1 2024 was RMB 906 million, a year-on-year decrease of 29.6%, with operating profit at RMB 493 million, down 38.5% year-on-year [5] - Funeral services revenue for H1 2024 was RMB 184 million, a year-on-year decrease of 17.8%, with service volume down 16.3% and average selling price down 1.8% [5] - The company is actively adjusting its sales strategy to address changes in consumer behavior and economic conditions [5] Market Data - The stock price range over the past 52 weeks was HKD 4.09 to HKD 6.01 [7] - The current market capitalization is HKD 9.488 billion, with 2.32 billion shares outstanding [7]