Funeral industry “business” : gross profit margin continues to high, a tomb type a year price rise of 22,000
Sino – Singapore Jingwei client on April 3 (Dong Wenbo) to one year Tomb-sweeping Day. When “sky-high price tomb”, “luxury tomb” and “graveyard loan” frequently stimulate people’s nerves, the funeral industry is still with a continuous high gross profit margin, a year more expensive tomb price, strong occupy the seller’s market.
Gross margins continue to be high
“The real death is that no one in the world remembers you.” This famous line from Coco provides a glimpse into why people are so concerned about the afterlife. Yes, buying a tomb is just as necessary as buying a house. In the traditional view, people have to have a house when they die. The deceased die a good death, and the giver is kind to leave.
In addition to visiting Babaoshan People’s Cemetery and Badaling Cemetery in Beijing during the three-day Qingming Festival, people may also visit Lingshan Pagoda Cemetery in Sanhe City, Hebei Province.
In 2015, Fucheng, as A supplier of McDonald’s, Xibei and IKEA, acquired the Lingshan Pagoda Cemetery owned by the major shareholder through private placement, making it the first A-share “funeral share”. On the evening of March 25, Fucheng disclosed its annual report that affected by the epidemic, the funeral service industry, one of the “two main businesses”, will achieve an operating income of 82.386,000 yuan in 2020, down 55.47% year-on-year. The production and sales of tomb sites were 1857 and 1823, down 20.84% and 31.57% respectively compared with the same period last year. Fucheng shares said, “the customer attendance rate has dropped a lot, even the worship is mostly taken online cloud worship way.”
During the reporting period, the gross margin of Fucheng Funeral Services remained high. Although the gross profit margin of the business decreased by 6.13 percentage points year on year, it was still 81.01% in 2020, data showed. Since records began in 2016, the gross profit margin of Fucheng Funeral Services 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 enterprises as an example, in 2020, the gross profit rate of Evergrande, Country Garden and Vanke in China will be 24.2%, 21.80% and 22.6% respectively. In other words, the gross profit from the sale of the cemetery is more than three times that of the sale of the house.
Fushouyuan (Hong Kong Stock Market), the largest listed funeral enterprise in China, achieved revenue of 1.893 billion yuan in 2020, a year-on-year growth of 2.3%; Net profit attributable to the parent was 620 million yuan, up 7.2 percent year on year. For performance growth, Fushouyuan said, “in the face of great changes in the social environment, corporate crisis as an opportunity to maintain a steady growth in performance.”
Revenue Pillar Cemetery services achieved revenue of 1.579 billion yuan, accounting for more than 80% of the total revenue. The sale of tomb Spaces is the largest part of the revenue from cemetery services. The total sales volume of operational and public cemetery Spaces for the whole year was 14,393, which decreased by 1,452 compared with that in 2019. However, the realized revenue was higher than that of 1.42 billion yuan in 2019, reaching 1.432 billion yuan.
Source: Fushouyuan 2020 Annual Report
During the reporting period, the operating profit margin of Fushou Garden Cemetery Services (the gross profit margin is not disclosed because the Hong Kong and A-shares are required to disclose different items) also showed an upward trend, increasing from 54.4% in 2019 to 57.1% in 2020, which the company said was “mainly benefited from effective cost control of Cemetery Services.”
Rising unit price
Cemetery space is sold less, but revenue is increased. Quite simply, the unit price has gone up.
Fushouyuan said in its annual report that the average unit price of commercial graves will rise by about 9.7 percent in 2020. The main reason is that affected by the epidemic, the purchase demand for tombs has been delayed, the company has increased the service content, improved the cultural connotation contained in the service, and enhanced the service value, and the average unit price of the original cemetery has increased.
Source: Fushouyuan 2020 Annual Report
Fucheng shares, Lingshan Pagoda Cemetery official website shows that there are currently 18 tomb types, including 6 economic tombs, 9 fine tombs, 2 art tombs, 1 Christian tomb, tower burial column is blank, the price is 19800 yuan -168000 yuan. By the same time in 2020, 24 types will be available.
In contrast, the most expensive Demen Jiqing tablet is priced at 168,000 yuan this year, up 22,000 yuan from 146,000 yuan in 2020. The cheapest eco-burial costs 19,800 yuan, up 3,000 yuan from last year. This year, the price of the only Christian tomb evangelical tablet is 42,800 yuan, up 6,000 yuan compared with 36,800 yuan last year. The Bible tablet, which sold for 9,900 yuan last year, does not appear on the current display.
Part of the tomb type in the Lingshan Pagoda Cemetery in 2021
Part of the tomb type of Lingshan Pagoda Cemetery in 2020
Even so, there is no shortage of business.
Lingshan Pagoda Cemetery is only 50 kilometers away from the downtown area of Beijing. It is the largest cultural and ecological memorial cemetery in Jingdong. It is reported that 80% of customers are from Beijing. “Benefiting from the national strategy of integrating the Beijing-Tianjin-Hebei region, the construction of the cemetery is standardized, the environment is good and the potential customer base is large,” Fucheng said.
“Rising per capita disposable income in China, the government’s efforts to promote the inheritance of traditional Chinese culture and virtues, accelerated urbanization, the trend of an aging population and the public’s pursuit of personalized funeral services have created huge demand,” Fushouyuan said in its annual report.
Promotion of ecological burial
“Burying in the grave is a way to show filial piety” is a traditional way of showing respect for the deceased. According to the Ministry of Civil Affairs, by the end of 2019, a total of 5.227 million bodies had been cremated nationwide, with a cremation rate of 52.4 percent. That means nearly half of the bodies will still be buried in the traditional way; Even after cremation, ashes are buried in a second coffin.
However, with the advancement of funeral reform and the change of customs, ecological burial has become more and more well-known. After cremation, ashes are disposed of with no or less land area, such as “water burial” or “tree burial”, which has the characteristics of environmental protection, energy saving and low cost.
The China Funeral and Burial Association (CMA) said in a proposal on improving the service of Tomb Sweeping Day in 2021 that the public should adopt green, humanistic and environment-friendly funeral activities for the purpose of promoting a new type of burial method. Publicize new burial methods, interpret ecological interment methods, introduce new burial methods such as sea scattering of ashes, natural burial, and life SPAR, so as to deepen the understanding and understanding of ecological interment.
As early as in 2016, the Ministry of Civil Affairs is jointly issued by the National Development and Reform Commission (NDRC) “civilian career thirteenth five-year plan”, which put forward actively promote practicing cremation ashes SaHai, how, planting trees, flowers, grass, three-dimensional storage, covers an area of less than the provisions of the state standard land type’s tomb and burial area without body buried deep reform, covers an area of less than the standards prescribed by the state land type ecological buried in the tomb of a section such as form, realize land ecological burial rate above 50%.
In September 2018, the Ministry of Civil Affairs (MCA) drafted the “Regulations on the Administration of Funerals (Draft Amendment for Comments)”, which intends to substantially revise the Regulations on the Administration of Funerals, which came into force in July 1997. Local people’s governments at or above the county level can give appropriate incentives and subsidies to ecological burials that do not take up land or retain ashes, such as sea burials, tree burials or lawn burials, according to the draft guideline.
So far, many cities across the country have distributed subsidies to promote ecological burials, including Tianjin, Zhengzhou, Henan, Foshan, Shenyang, Liaoning, Chengdu, Sichuan and Changde, Hunan. Take Tianjin as an example, Tianjin “Ecological Burial Award and Compensation Measures” clearly, in the case of meeting the conditions, the deceased body cremation within 60 days after the selection of ecological burial, the deceased can receive a maximum subsidy of 2420 yuan. (Xin Xin Jingwei APP)
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