Fucheng Hehui bought 60% of the shares in Longshu Cemetery in Yixing for 200 million yuan, and the first off-site expansion project was launched. Fucheng Co., Ltd. issued an announcement on October 10, receiving the “Capital Increase and Share Transfer Agreement for Yixing Longshu Cemetery Co., Ltd.” signed by Fucheng Hehui Industrial M&A Fund with Yixing Longshu Cemetery and Yixing Yunze Culture and Art Development Co., Ltd. on September 28, 2016. According to the agreement, Fucheng Hehui Industrial M&A Fund will acquire 60% of the shares of Yixing Longshu Cemetery Co., Ltd. at a price of 200 million yuan. Entering the Yangtze River Delta market is of great significance, and the style of industry integrators is beginning to show. There is a specific historical background for Fucheng to acquire assets from the pagoda cemetery. The market is concerned about the offsite expansion of Fucheng cemetery service business. At the same time, the market has not been able to completely distinguish the differences between operating cemeteries and public service cemeteries, and there are doubts about the attitude of local governments in the process of enterprise expansion from other locations. The implementation of the Yixing Longshu project will completely dispel market concerns at these two levels, and is expected to strengthen the market's recognition of Fucheng Co., Ltd.'s long-term development position as an integrator in the graveyard service industry. Since Yixing is located within Jiangsu Province, the implementation of this project also marks Fucheng's entry into the Yangtze River Delta market, which in the past was a radiation zone of influence of Shanghai's Fushouyuan, and the successful integration of Longshu Cemetery highlights the unique advantages of Fucheng Co., Ltd. in terms of extended expansion. Reorganization of the industry's investment logic: growth is benchmarked against gas distributors, and profitability is benchmarked against high-end liquor. In terms of growth, the current graveyard service is very similar to the gas distribution industry in 2000. Both have been dominated by the public sector in the past. At the same time, due to the characteristics of public utilities, there is natural monopoly in the region, both require the use of mergers and acquisitions and alliances to expand the scope of business coverage. Fucheng is expected to replicate the expansion process of Xinao Energy. At the level of profitability, graveyard services have something in common with high-end liquor. Funeral culture and table culture are all components of traditional Chinese culture. The support behind the demand for high-end liquor is China's “social” culture, and the support behind the demand for high-end and personalized graveyard services is China's “filial” culture. The attributes of cultural consumption determine that consumers have low price sensitivity and are willing to pay high premiums for marginal product improvements, which can lead to a sustainable high net interest rate. Fucheng's advantages as an industry integrator: the systematic valuation premium of A-shares and the high shareholding ratio of major shareholders. The regional characteristics of the graveyard service industry determine the growth pattern of the expansion of enterprises in the industry through external expansion. In the development model of epitaxial expansion, the valuation level of the enterprise itself determines the cost of equity acquisitions, while the majority shareholders' shareholding ratio determines the upper limit of equity acquisition growth. The systematic valuation premium of A shares and Fucheng's shareholding ratio of 62.33% gave Fucheng a unique advantage in epitaxial expansion. Raise profit forecasts and maintain “buy” ratings. Without considering mergers and acquisitions, but after taking into account the impact of selling dairy cows, we slightly raised our profit forecast. It is estimated that Fucheng's 2016-2018 revenue scale will reach 1,438 billion yuan, 1,641 million yuan and 1,793 million yuan, respectively, up 7.0%, 14.1% and 9.3% year on year; net profit attributable to the parent company in 2016-2018 will reach 204 million yuan, 226 million yuan and 263 million yuan respectively, up 22.86%, 10.80%, and 16.34% year on year, respectively. The first off-site expansion project was launched, and expectations for continued integration were strengthened thereafter. The target price range was raised to 17.70 to 18.93 yuan, maintaining the “buy” rating. Risk warning: regulation of the funeral industry has been strengthened, and there has been a reversal in the direction of marketization; food safety issues.