The funeral industry has a scale of nearly 100 billion dollars in 17 years, and is expected to maintain a high growth rate of 16%. Among the four main sub-industries, the funeral-graveyard service industry is the largest. In 2017, the scale of the industry was close to 60 billion, +17%; it is difficult to find an operating cemetery license, which requires gradual approval procedures. There are few new licenses in recent years, and only 4% for graves. Fucheng Co., Ltd. is the absolute leader in the future of the funeral industry. The three 10 billion are worth paying attention to - the first 10 billion: the market capitalization of 12 billion dollars has a net profit of 14 billion dollars, and development was completed within 30 years. The first phase of the Pagoda Cemetery is planned to have 125,000 tombs and 40,000 urns. There are 3 phases, all 400,000 tombs after completion. The unit price of the tomb in H16 was 66,000 yuan (+30%). According to the average price of 70,000 yuan (average annual increase of 20% + in the future) *400,000 units = 28 billion, the net interest rate is 50%, which will reach 14 billion yuan. The calculation is conservative. The company's expense ratio is currently close to 30%. As the scale of revenue increases, it is more reasonable to gradually reduce the cost ratio to 15%. The net interest rate is expected to rise to 65%, and profit of 15.5 billion yuan. The second 10 billion: 10 billion industrial funds have acquired operating graveyard licenses in various regions. The first phase of the 1 billion dollar acquisition project has already been implemented in the Yixing Longshu acquisition project, and it is not ruled out that it will continue to expand in the near future. Through research on the Yixing project, we learned that the project contributes at least 40-60 million in profits every year, the company's acquisition valuation is 5-7 x PE, and the industrial fund is still 800 million. In addition to the listed companies' own capital, we speculate that the profit from subsequent mergers and acquisitions of the first phase of the fund is not less than 150 million, and the size of the subsequent fund is still 9 billion. The industry concentration is extremely scattered and there is huge room for expansion. Referring to Fushouyuan's expansion model, the future development of the funeral industry depends on external mergers and acquisitions of scarce graveyard licenses in various regions. The advantage of merger and acquisition licenses is that they can continue to participate in local government tenders and auctions; they are not a one-time profit from land acquisition. The original license holder did not have sufficient documents for land acquisition procedures in the early years, so now there is a need to supplement the land security deposit, and the funds are insufficient. Fucheng is the only platform where assets can be securitized for A-shares. It has good liquidity, and the return on stock exchange is more obvious. The third 10 billion: The majority shareholders have 10 billion dollars in cash, and the company has plenty of cash. 1H2016 has a book cash of 500 million+ sold of Yanjiao dairy farm 160 million plus Fucheng Group, the majority shareholder, has 10 billion dollars in cash, and has sufficient capital to serve as the poor back-end of industrial funds. The future will focus on the main funeral business, and other businesses will be divested one after another. Since 2015, the number of restaurants has been reduced, 15 stores were shut down on H16, and dairy farming in Yanjiao was sold in September 2006. It is not ruled out that all major non-funeral businesses will be divested in the future. Profit forecast and investment suggestions: A share scarce funeral industry objectives+ epitaxial expansion+continuous mergers and acquisition+sharp rise in volume and price+the only platform for capitalizing graveyard licenses (convertible shares). Refer to the US stock SCi and Hong Kong stock Fu Shou Yuan each for 30xPE, and 50xPE. Diluted EPS is estimated to be 0.24, 0.41, and 0.74 yuan respectively in 16-18. Forecast by business: The beef+food business is expected to contribute 90 million and 100 million in profit in 16-17, giving 20 x PE in 17, with a market value of 2 billion yuan. The funeral industry is estimated to have a net profit of 100 million in 2016. At the same time, assuming a profit of 200 million yuan from episodic mergers and acquisitions, a profit of 300 million yuan in preparation for the exam in '16, the M&A fund will continue to expand to more than 3 billion in '17, and a profit of 500 million in '17. 50xPE was given, corresponding to a market value of 25 billion dollars, for a total market value of 27 billion dollars, and purchased. Risk warning: The merger and acquisition process falls short of expectations, food safety risks.