The "business experience" of the funeral and interment industry: gross profit margin continues to be high, and the price of tombs increases by 22,000 a year

  China-Singapore Jingwei Client, April 3rd (Dong Wenbo) It's Ching Ming time again.

While "expensive tombs", "luxury tombs" and "cemetery loans" are frequently stimulating people's nerves, the funeral and interment industry still dominates the seller's market with consistently high gross profit margins and the price of tombs that are more than a year more expensive.

Gross profit margin continues to be high

  "The real death is that no one in the world remembers you anymore." This classic line from "Dream Travels" can give a glimpse of the reasons why people pay attention to "following things".

Yes, buying a tomb is just as necessary as buying a house. In traditional concepts, people have to have a house when they die, and those who die will die well, and those who give it away will be goodbye.

  During the three-day Qingming holiday, in addition to the Babaoshan People’s Cemetery and Badaling Cemetery, the grave-sweeping in Beijing may also have to rush to the Lingshan Pagoda Cemetery in Sanhe City, Hebei Province.

  In 2015, Fucheng shares, a supplier of McDonald's, Xibei, and IKEA, acquired the Lingshan Pagoda Cemetery of the major shareholder through a fixed increase, and became the “first funeral share” of A-shares.

On the evening of March 25, Fucheng shares disclosed its annual report showing that due to the impact of the epidemic, the funeral service industry, one of the "dual main businesses", achieved operating income of 82.386 million yuan in 2020, a year-on-year decrease of 55.47%; the production volume and sales volume of graves were 1,857. 1823, a year-on-year decline of 20.84% ​​and 31.57% respectively.

Fucheng shares stated that "the rate of customer admissions has dropped greatly, and even the sacrifices have mostly adopted online cloud sacrifices."

  During the reporting period, the gross profit margin of Fucheng's funeral services industry remained high.

The data shows that in 2020, although the gross profit margin of this business has decreased by 6.13 percentage points year-on-year, it is still 81.01%.

Since the record in 2016, the gross profit margin of Fucheng shares in the funeral service industry has been maintained at more than 80%.

  In contrast, this value far exceeds the vast majority of A-share listed companies.

Taking leading real estate companies as an example, the gross profit margins of China Evergrande, Country Garden, and Vanke will be 24.2%, 21.80%, and 22.6% respectively in 2020.

In other words, the gross profit of selling a cemetery is more than three times more than selling a house.

  From the perspective of Fushouyuan (Hong Kong stocks), the largest listed funeral and interment company in China, the company realized revenue of 1.893 billion yuan in 2020, an increase of 2.3% year-on-year; net profit attributable to the parent company was 620 million yuan, an increase of 7.2% year-on-year.

Regarding the performance growth, Fu Shouyuan said, "Faced with the huge changes in the social environment, the crisis of corporatization is an opportunity to maintain steady growth in performance."

  The income pillar cemetery service realized annual income of 1.579 billion yuan, accounting for more than 80% of the total income.

The sale of cemeteries is the largest component of the revenue from cemetery services. The total sales volume of operating cemeteries and public cemeteries in the whole year was 14,393, a decrease of 1,452 from 2019, but the realized revenue was higher than 2019's 1.420 billion yuan, reaching 1.432 billion yuan. yuan.

  Source: Fu Shou Garden 2020 Annual Report

  During the reporting period, the operating profit margin of Fushouyuan Cemetery Services (the subject required to be disclosed for Hong Kong stocks and A-shares is different, and gross profit margins are not disclosed) also showed an upward trend, increasing from 54.4% in 2019 to 57.1% in 2020, the company said "Mainly benefited from the effective cost control of the cemetery service."

Increased unit price

  The cemetery has been sold less, but the income has increased.

Quite simply, the unit price has risen.

  Fu Shou Yuan stated in its annual report that the average sales price of operating graves in 2020 will increase by about 9.7%.

The main reason is that due to the impact of the epidemic, the demand for the purchase of tombs has been delayed. The company has increased the service content and the cultural connotation contained in the service, and the value of the service has increased. The average unit price of the original cemetery has risen.

  Source: Fu Shou Garden 2020 Annual Report

  For Fucheng shares, the official website of Lingshan Pagoda Cemetery shows that there are currently 18 types of tombs, including 6 economic tombs, 9 fine tombs, 2 art tombs, and 1 Christian tomb. The column for tower tombs is blank, and the price is 19,800 yuan- 168,000 yuan.

In the same period of 2020, there are 24 types to choose from.

  In comparison, the price of the most expensive Demen Jiqing Monument is 168,000 yuan this year, an increase of 22,000 yuan compared with 146,000 yuan in 2020; the cheapest ecological burial price is 19,800 yuan, an increase of 3,000 yuan from last year. yuan.

The price of the only Christian tomb gospel stele this year is 42,800 yuan, which is 6,000 yuan higher than last year (36,800 yuan); the bible stele that sold for 9900 yuan last year did not appear on the current display page.

  Some tomb types in Lingshan Pagoda Cemetery in 2021 Source: official website

  Part of tomb types in Lingshan Pagoda Cemetery in 2020 Source: official website

  Even so, there is no worries about running out of business.

  Lingshan Pagoda Cemetery is only 50 kilometers away from Beijing city. It is the largest cultural and ecological memorial cemetery in Jingdong area. It is reported that 80% of customers are from Beijing area.

Fucheng shares stated that “benefiting from the Beijing-Tianjin-Hebei integration national strategy, the construction of the (cemetery) is relatively standardized, the environment is better, and the potential customer base is huge.”

  In its annual report, Fu Shou Yuan stated bluntly, “As China’s per capita disposable income increases, the government vigorously promotes and inherits Chinese traditional culture and virtues, accelerates the process of urbanization, the trend of population aging, and the public’s pursuit of humanized funeral services, It has spawned huge demand."

Ecological burial promotion

  "Being in the land for security" and "bearing filial piety" is the respect for the dead in traditional concepts.

According to statistics from the Ministry of Civil Affairs, as of the end of 2019, 5.227 million corpses had been cremated nationwide, with a cremation rate of 52.4%.

This means that nearly half of the remains will still be placed in traditional burial methods; even after cremation, there are even second coffins with ashes.

  However, with the advancement of funeral and interment reforms and changes in customs, ecological burials are becoming more and more well-known. After the remains are cremated, the ashes are disposed of by means of "water burial" and "tree burial" that do not occupy or occupy less land, which is environmentally friendly, energy-saving, and cost-effective. Low-level characteristics.

  The China Funeral and Interment Association recently issued a proposal on doing well in the 2021 Qingming Festival Sacrifice and Sweeping service. It is proposed to promote and recommend the public to adopt green, humanistic and environmentally friendly funeral activities for the purpose of implementing a new type of funeral method; publicize the new type of funeral method Interpretation of the burial method of ecological burial, introduce new burial methods such as scatter of ashes, natural burial, life spar, etc., to deepen the people’s understanding and knowledge of ecological burial.

  As early as 2016, the Ministry of Civil Affairs issued the "Thirteenth Five-Year Plan for the Development of Civil Affairs" to the National Development and Reform Commission of the United Nations, which proposed to actively promote the scattering of ashes in the cremation area, scattering of ashes, planting trees (flowers and grass), three-dimensional storage, and land occupation. Land-saving cemeteries that are smaller than the national standard and the remains of the burial reform area are buried without graves, and land-saving cemeteries that occupy less than the national standard, such as land-saving ecological burial methods, achieve a land-saving ecological burial rate of more than 50% .

  In September 2018, the Ministry of Civil Affairs drafted the "Regulations on Funeral and Interment Management (Draft Revision for Solicitation of Comments)" and planned to substantially revise the "Regulations on Funeral and Interment Management" that came into effect in July 1997.

The draft opinion proposes that the local people's government at or above the county level may provide appropriate incentives and subsidies for ecological burials, such as sea burials, tree burials, and lawn burials that do not occupy land and do not retain ashes.

  At present, many places across the country have distributed subsidies to promote ecological burial, including Tianjin, Zhengzhou, Henan, Foshan, Guangdong, Shenyang, Liaoning, Chengdu, Sichuan, and Changde, Hunan.

Taking Tianjin as an example, Tianjin’s "Land-saving and Ecological Burial Rewards and Supplementary Measures" clarified that, if the conditions are met, the deceased’s body can be selected for ecological burial within 60 days after cremation, and the funeral member can receive a subsidy of up to 2,420 yuan.

(Zhongxin Jingwei APP)

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