Original title: Virtual Immortality and Cultural Inheritance: The financially stable Fushou Garden, shuttling between change and tradition
Exploring the redefinition of death in the funeral industry.
Author | The death knell of Bourgeois
Edit | Xiaobai
Fushouyuan, located on the 13th floor of the Shengai Building, No. 88 Caoxi North Road, Shanghai, overlooks the Cathedral of St. Ignatius.
Designed by the British architect William Doyle and built by the French Catholic Jesuits in 1896, the church was the first church in China to be built in full accordance with Western architectural styles.
The French Catholic Society of Jesus believes that spirituality means finding God in all things and serving others in life. In their eyes, death is not the end, but part of a spiritual journey, a transition to eternal life.
Fushouyuan and the Jesuits' attitude towards death coincides: the end of life is the beginning of the next stage.
Interestingly, "13" is seen as an ominous number in many cultures, and even Roman Catholics, who are willing to face the issue of death, shy away from it. However, the fact that Fushouyuan has its office on the 13th floor may be the difference between Fushouen and the Jesuits: in Fushouyuan's view, doom and end are nothing more than subjective and artificial definitions.
Steady progress: post-pandemic recovery
"Knocking on the ancestral hall is magnificent, the deceased is Chang'an, it is said to be blessed; ”
——Chen Jieru's heir thanked Fushouyuan
In 2022, Fushouyuan's revenue will be 2.172 billion (-6.6% year-on-year) and the net profit attributable to the parent will be 659 million (-8.5% year-on-year), while in the first half of 2023, the revenue will be 1.525 billion (+68.20% year-on-year) and the net profit attributable to the parent will be 465 million (+77.99% year-on-year).
(Source: Market Cap App)
The fluctuation of revenue and net profit attributable to the parent company in 2022 and the first half of 2023 is mainly due to the impact of the epidemic.
From mid-March to the end of May 2022, Shanghai, the company's main source of revenue (2019-22, accounting for 50.5%, 46.9%, 44.5% and 45.8% of total revenue, respectively), as well as the weighted cemeteries in cities such as Liaoning and Heilongjiang, were affected due to special reasons, resulting in the operation of the traditional and early peak season.
This situation led to a significant year-on-year decline in revenue from March to May, including a 63% year-on-year decline in April.
However, with the rebound in the second half of 2022, it brought a record high revenue (1.264 billion, +6.76% year-on-year) and net profit attributable to the parent company (398 million, +12.75% year-on-year), which partially made up for the poor performance in the first half of the year.
Similarly, in the first half of 2023, cemetery services saw a year-on-year increase of 77%.
Overall, except for the temporary fluctuation in 2022, the company's revenue and net profit attributable to the parent company have shown a steady growth trend in the remaining fiscal years since its listing. At the operational level, the company has its unique robustness.
In the first half of 2023, cemetery services will remain the company's largest source of revenue, reaching 1.287 billion, with a revenue contribution of 83.82%. Among them, the main income of cemetery services comes from operating tombs, which is 1.183 billion.
(Source: Market Cap App)
From the operational level, Fushouyuan should be talked about by the compound growth and profitability of the company's revenue.
Some private investors jokingly call its business model the real estate industry, but in fact there is a clear difference between the two: Fushouyuan's revenue CAGR since its listing is 15.1%, and it has maintained an interest-bearing debt ratio of less than 5%, and has remained below 1% in the past three years. This is a world away from the long-term highly leveraged and highly indebted real estate industry.
In fact, in the classification of the national economy, the funeral industry and wedding, hotel, bath and other industries belong to the same life service industry, and the revenue model is completely different from that of real estate.
In terms of profitability, operating margin and net profit margin remained stable. As of the first half of 2023, these two indicators are 58% and 38%, respectively.
(Source: Market Cap App)
The company's net present ratio has also remained above 1 for a long time. As of the first half of 2023, the indicator is 1.14, and the quality of earnings is reliable.
(Source: Market Cap App)
Stable operation is the main theme of the company's development path. Since its listing, the number of cemeteries has increased from 6 to 33, the number of tombs sold each year has increased from 7,700 to 13,300, and the business coverage has expanded from the original 8 cities to the current 47 cities, covering 19 provinces.
In addition to its stable operation, Fushouyuan is also stable in terms of shareholder returns.
Since its listing, the dividend rate has been maintained at more than 30%, and it will be increased to 40% in 2022. Since its listing, it has paid a total of HK$1.558 billion in dividends.
(Source: Market Cap App)
The mystery of scarcity: the supply and demand of cemeteries are not equal
"Knowing is emptiness, that is, there is no reincarnation, and there is no body and mind subject to life and death"
- "Yuanjue Sutra"
Since I just mentioned the business tombs, here Feng Yunjun will talk about one of the most concerned focuses of Fushouyuan: the supply and demand of the business tombs.
Let's start with the current state of the industry.
In the mainland, due to limited land resources, the government encourages the use of land-saving ecological burials.
(Note: The so-called land-saving ecological burial is to use tree burial, sea burial, flat deep burial and other modes, less use of non-degradable materials, and the principle of not occupying or occupying less land to bury ashes or remains.) ）
As a result, the policy imposes strict restrictions and management on private cemeteries, discouraging or not allowing the existence of private cemeteries. Therefore, at present, the main ways of placing remains or ashes are public welfare cemeteries and commercial cemeteries.
In rural areas where available land resources are temporarily sufficient, cemetery resources are relatively abundant, but in cities where land is scarce, considering that birth, old age, sickness and death are inevitable natural laws, how to meet the huge demand for cemeteries in these cities has become a thorny problem.
Even if an available vacant land is found, there are regulations for its selection. According to Article 4 of the Interim Measures for the Management of Cemeteries, "the establishment of cemeteries shall be based on barren mountains and barren land, shall not occupy cultivated land, and shall not be built on scenic spots, dams of reservoirs, lakes and rivers, as well as on both sides of railways and highways." ”
In order to cope with the scarcity of cemeteries, nine ministries and commissions including the Ministry of Civil Affairs have also issued the "Guiding Opinions on the Implementation of Land-saving Ecological Burial", which clearly states that "actively promote the recycling of tombs" and "encourage family members to use joint burials to increase the utilization rate of a single tomb".
This is not only a problem unique to China, but also Japan, for example. Japan's land resources are extremely scarce, and the population is aging, and the resettlement of the deceased has become a major problem.
Cremation leaves only a small amount of ashes, so this method not only satisfies the cultural Xi demands of the Japanese people for the burial of the deceased, but also has practical significance in reducing environmental occupancy. Since 2012, the cremation rate in Japan has reached 99.9%.
However, despite this, Japan still attaches great importance to burials, and the scarcity of cemetery resources is still very serious. Due to the limited number of public cemeteries, a lottery system has even been adopted to allocate grave places.
Against this backdrop, cemeteries with concepts such as "Seven Mile Hamaki Temple Cemetery Tree Burial" have emerged in Japan.
Located in the southwest of Kamakura City, Kanagawa Prefecture, the Shichirihama Cemetery is only 60 square meters and can accommodate no more than 30 tombs if built according to traditional Japanese methods, and today it has housed thousands of deceased people, and there is still a lot of room for it.
As of November 2023, the price of a single tomb here is about RMB 15,900. Because the area of each tomb is less than 1/30 of the traditional tomb. The ping effect of this land is more than 500,000 yuan.
(Source: e-ohaka)
Similarly, the United States faces the societal challenge of how to accommodate the deceased. In response, the U.S. government has chosen to let the forces of the market economy push people to make choices. For example, in general, cremation consumes less social resources than burial, so it is more economical, which encourages Chinese people to choose cremation with less environmental impact.
In addition, the location of the cemetery also needs to consider cultural factors.
In China, the funeral industry is inevitably ethical, ceremonial, and mystified. Therefore, funeral practitioners not only need to complete industrialization and technology, but also provide humanistic care. Therefore, the location of the cemetery should also consider traditional cultural factors such as feng shui.
Considering multiple constraints such as land scarcity, Xi needs, and humanistic considerations, it is particularly difficult to locate a cemetery in a densely populated city like Shanghai.
The early history of Fushouyuan can be traced back to 1994, when it was located in Qingpu, Shanghai, which also stemmed from careful consideration of traditional culture.
The location is adjacent to Songjiang, located in the center of the nine peaks, and is the place where the ancients called "three and nine peaks", that is, "the fan axis of the nine peaks". It is only one step away from the Songze site, the earliest cultural relics in Shanghai.
However, after meeting the policy requirements and taking into account the traditional culture, Fushouyuan also needs to consider modern aesthetics and environmental taste. In this regard, Fushouyuan incorporates its new understanding and redefinition of the cemetery.
In the history of the company's operation, Fushouyuan has always implemented the idea of "if you want to build a cemetery, first build a park". High cost investment in greening maintenance and operation.
The aforementioned Japanese Rose Garden Ecological Burial also adopts this idea of "building a tomb without seeing a tomb": the tomb is hidden in the surrounding landscape, and from a distance, the tombstone and vegetation merge into one, minimizing the impact from a visual and ecological perspective.
However, it will take time for various land-saving ecological burials with small footprints to be widely rolled out.
Coupled with the industry's sales model (i.e., covering the management and maintenance costs of the later 20 to 50 years through upfront fees), as well as the public's demand for cemetery aesthetics and traditional culture, in the context of the scarcity of cemetery resources, the market supply and demand are still mismatched, and the price of tombs across the country continues to rise.
Dual-track growth: ultra-micro land occupation and digital exploration
The resurrection is mine, and the life is mine. Whoever believes in me, though he dies, will be raised, and whoever lives and believes in me will never die. Do you believe this?
—John 11:25-26
Currently, land available for burial mounds has become a scarce resource. There are about 10.4 million people who die every year in the country, and according to the cremation rate of 58% announced by the Ministry of Civil Affairs, the area of columbarium burial is 0.8 square meters, and the burial area of remains is 4 square meters, and the area used to build cemeteries may exceed 23 million square meters.
This scale is equivalent to the amount of land we consume every year in the area of more than 30 Forbidden City.
Despite this, Fushouyuan still has a sufficient land bank, and the reserve area continues to increase. As of the first half of 2023, the remaining area of the company's licensed land that can be used for tomb sales is 2.6 million square meters, and its annual increment continues to lead the industry.
(Source: 2023 Interim Results Release)
The risk that Fushouyuan's investors are most concerned about is the impact of policy changes on the company's ability to use its land bank to realize returns in the future.
In other words, investors usually focus on how policies affect important factors such as pricing and profitability.
Considering the current national conditions, the demand for tombs among mainland citizens is almost rigid, and any major policy adjustments may have adverse effects. So, while market fears of a policy adjustment have been discussed for years, these investors' worries have not really happened.
In addition, the characteristics of the industry have caused certain restrictions on the company's cross-regional development. In recent years, the cost of expanding a business through acquisitions has also gradually increased.
Taking 2022 as an example, Fushouyuan signed a contract to acquire the remaining 10% equity of Liaoning Guanlingshan Art Garden Cemetery Co., Ltd. in March, and increased the capital of Zhuolu Longhui Tianfu Yuanbaoshan Development and Management Co., Ltd. in June, and after the transaction was completed, it obtained a controlling stake with a total of 51% of the equity.
In the first half of 2023, Fushouyuan acquired 100% of Yan'an Hongfu's shares.
However, this is not limited to Fushouyuan, the entire industry is facing this situation. The challenges that Fushouyuan faces today are the same as those of its competitors.
Considering that Fushouyuan has a leading cemetery reserve in the industry, its leading position in the industry will continue to be reflected, and the stock effect will continue to be highlighted.
At present, Fushouyuan is also exploring other models to develop its business, such as the BOT model ("build-operate-transfer" model), contract operation or entrusted management model, etc.
In order to solve the problem of hardening of traditional cemeteries, Fushouyuan is exploring new solutions. (Hardening: The relocation of cemeteries due to cultural taboos in China, if the cemeteries contain non-degradable materials such as stone, tiles, and plastics, it means that the land corresponding to these cemeteries cannot be reused or used for other purposes.) ）
Minimizing the use of the environment and increasing the circularity of cemeteries would be an effective way to address land scarcity.
In 2021, Fushouyuan launched an ultra-micro land occupation solution called "Zangjing Yuan", which occupies an average of only 0.005 square meters per life crystal. This is not only a response to the call to reduce the use of cemeteries, but also to explore whether society can accept the concession of the demand for traditional cemetery space.
For consumers, this is a lower unit price option.
Kevin Kelly, the author of "Out of Control", put forward a theory: in the development of any industry, if new technologies emerge, they will quickly disrupt the best companies that have done before.
For the future development of the company, the management plans to build "Fushouyuan" into "Fushouyuan", so that the word "yuan" can break through the box limit of "囗" and become "yuan", which means that the company jumps out of the physical scope of limitations, develops towards the spiritual world, and explores the digital world of the metaverse.
Fushouyuan was transformed into Fushouyuan, transforming from a comprehensive funeral service provider to a life science and technology service provider. Focusing on life science and technology, the mission of Fushouyuan is to preserve the digital information of life, establish data assets, and realize the data immortality of life. In other words, funeral work realizes the eternity of the human spirit through life technology.
The company's vision is to use the metaverse, large language models and other technological means to digitally preserve the memory of the deceased, so that it can be connected to the present world, and realize the function of traditional cemeteries in terms of memory inheritance and cultural significance.
Behind this behavior is the company's further promotion of the "tombstone slimming commemorative expansion". If this digital transformation is widely recognized by the market, it will become another new driving force for Fushouyuan's performance growth.
In general, the company's digital transformation covers but is not limited to the following four aspects:
1. Digital system: Establish a digital middle and back office (such as business management system, supply chain management system, etc.) to realize the comprehensive digitization of company information, and copy offline entities online through digital twins and other means;
2. Digital management: The purpose is to improve operational efficiency and bring the company's business online. As of the first half of 2023, the company's online channel revenue has exceeded 100 million yuan;
3. Digital Cemetery: Since the first half of 2022, Fushouyuan has launched the "Digital Cemetery - Huixin Valley" project, which not only reflects Fushouyuan's determination to enter the field of digital life services, but also indicates that digital assets will become the company's core competitiveness in the future.
4. Digital products and applications: In June 2023, Fushouyuan launched the "3JI" innovative iteration product that integrates "marking, commemorating, and recording" at the digital transformation conference. The company designed the immersive experience concept of the "Healing Garden" in Shanghai and applied it to the memorial service.
In addition, the company preserves heritage through digital technology and uses AI technology to recreate deceased people. Including digital genealogy, digital family ancestral hall "Yuanjiazai" mobile phone WeChat applet, as well as digital museums, etc.
Combining tradition and technology, Fushouyuan has established educational institutions to nurture industry talents and expand the online reach of its digital services through platforms such as JD.com.
In addition, Fushouyuan has also cooperated with a number of universities to obtain support from the academic community to promote the company's digital transformation. These included in-depth exchanges with Guo Yike, Provost of the Hong Kong University of Science and Technology and academician of various academic institutions.
Professor Guo Yike's research interests include machine Xi, data science, and large-scale scientific data management. Professor Guo Yike gave positive feedback and appreciation for the company's current digital model plan.
Fushouyuan's future products and services will pay more attention to non-material aspects such as humanistic commemoration, family style inheritance and spiritual continuation, and plans to establish new digital services such as memory storage, digital genealogy, and even the life metaverse, so as to provide people with a spiritual haven and spiritual home.
The American sci-fi comedy "Upload a New Life" tells the story of a programmer named Nathan Brown who uploads his consciousness to the virtual world, exploring Western culture's thinking about the afterlife from the perspective of technology and the digital world in a humorous way.
Our existence and identity are essentially the product of memory and culture. If, on the other hand, consciousness and memory are preserved, can we break through the shackles of birth, old age, sickness and death, and allow the transmission of ideas to be almost infinite? Perhaps everyone may have a different understanding of this issue.
People are afraid of cemeteries, but they happily go to memorial sites such as the pyramids, the Taj Mahal, the Qin Tombs, the Vatican Basilica, and the Martyrs' Cemetery, although both also carry the remembrance and contemplation of the deceased. The stark difference between these two reactions reflects the fact that people's perception of the boundaries between life and death is the result of the formation of thoughts and concepts.
Despite the cycle of life and death, all things return to their roots, but the people who visit St. Ignatius Cathedral come and go, and the Mass bell still rings on time.
If the mark of the departed remains, life will still end.
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