Core Viewpoint - The leading company in the funeral industry, Fushouyuan, is experiencing a significant decline in performance, with a reported revenue of 2.078 billion RMB in 2024, down 20.9% year-on-year, and a net profit of 373 million RMB, down 52.8% year-on-year [2][5]. Revenue Breakdown - Fushouyuan's revenue is primarily derived from three segments: cemetery services, funeral services, and others, all of which are experiencing a downward trend in 2024. Specifically, cemetery service revenue decreased by 22.2%, funeral service revenue decreased by 14.8%, and the average sales price for funeral services dropped by 269 RMB or 4.9% [4][6]. Market Conditions - The decline in performance is attributed to a high base from the previous year, overall market conditions, and cautious consumer behavior. The average profit margin for cemetery services has also decreased from 60.2% in 2023 to 41.3% in 2024 [5][6]. Industry Characteristics - The funeral industry is generally considered a market necessity with high margins and low price sensitivity. However, the approval for new cemeteries has been restricted, raising the entry barriers for new competitors [6][7]. Business Model Challenges - Fushouyuan's business model relies on long-term land leasing, but the current downturn in the real estate market has negatively impacted sales. The average price of graves has dropped from a peak of 121,500 RMB to 117,300 RMB, with a significant reduction in sales volume [8][11]. Acquisition Strategy - Fushouyuan has engaged in numerous acquisitions, totaling 2.06 billion RMB from 2014 to 2022, but the returns from these acquisitions have not met expectations, leading to a decline in profitability [8][9]. Digital Transformation Efforts - To counteract declining sales, Fushouyuan is pursuing a digital transformation strategy, including the introduction of AI technology and new digital services. However, the market response has been lukewarm, and the cost of innovation has not yielded significant revenue [10][12]. Future Outlook - The company anticipates a 15% increase in service volume in 2025, but expects the average price of graves to decrease by approximately 25%, potentially down to around 90,000 RMB [11]. Analysts suggest that without a shift towards mid-range offerings and asset-light restructuring, Fushouyuan's challenges will likely intensify [12].