Xinao Energy is one of the largest gas distributors in China. With a compound revenue growth rate of 42% in the 15 years since its launch, Xinao Energy is currently one of the largest gas distributors in China. Currently, the number of projects in China has reached 152, covering a connected population of 71.54 million. Xinao Energy was listed in Hong Kong in 2001. The revenue scale for that year was 240 million yuan. By 2015, Xinao's revenue had risen to 32.124 billion yuan, with a compound growth rate of 42% from 2001 to 2015. The number of projects it manages increased from 5 when it was launched in 2001 to 152 in 2015, and the scope of business has also expanded from the initial residential gas to industrial and commercial gas and transportation gas. The expansion logic of gas distributors: utilities naturally rise in volume and price under the regional monopoly framework. Urban gas distribution in China was mainly monopolized by state-owned enterprises until 2000, and was a welfare business operated by local governments. Xinao Energy is one of the private enterprises that have entered the industry in a market-based manner. Xinao Energy's expansion strategy is to continuously develop surrounding urban markets along major natural gas pipelines, and increase the coverage area of the gas business by participating in tenders, alliances, and mergers and acquisitions of government organizations. On the one hand, since the gas distribution industry has utility attributes and a good competitive pattern brought about by natural regional monopoly, Xinao can exclusively enjoy the increase in local gas consumption after obtaining management rights. On the other hand, the increase in the share of industrial and commercial gas and transportation gas, which is less regulated and has a higher sales price compared to household gas consumption, has brought about an increase in the unit sales price of Xinao Energy Gas. The nature of graveyard services is similar to gas distribution, and development opportunities for integrators have only just begun. The graveyard services currently provided by Fucheng Co., Ltd. are very similar to the gas distribution industry in the 2000s. Judging from the historical development of the industry, both were dominated by the public sector in the past. As local welfare undertakings, the level of participation of the private sector was very low. In terms of industry attributes, due to the nature of utilities, there is a natural monopoly in the region. Local gas distribution and operation rights and operating cemeteries are scarce, so it is very unlikely that new entrants will worsen the competitive landscape. Judging from the way the industry expands, both need to use project mergers and acquisitions and alliances to expand the scope of business coverage. The expansion direction of cemetery services is commercial cemeteries. Investors are overly concerned about reliance on local government approval. Currently, graveyard services are divided into public service cemeteries and commercial cemeteries. The former is invested and operated by the government due to the nature of public welfare, while the latter is owned and managed by the private sector. The future direction of integration of Fucheng Co., Ltd. is operational cemeteries with clear private ownership. Currently, there are 1,900+ operating cemeteries nationwide. The integration of such cemetery assets is a market act, and there is no high dependence on local government approval. A good competitive pattern brings stable returns. As the only A-share listed company engaged in graveyard services, Fucheng Co., Ltd. is expected to use the listed company platform to integrate the currently highly concentrated domestic cemetery industry. The current balance ratio of 23.87% of Fucheng shares and the 62.33% shareholding ratio of the majority shareholders and their co-actors also provide more diversified means and more space for epitaxial acquisitions. According to our profit forecast, the EPS of Fucheng Co., Ltd. in 2016 to 2018 was 0.23 yuan, 0.28 yuan, and 0.32 yuan, respectively. Using the segmented valuation method, Fucheng Co., Ltd. was given a target market value range of 120 to 13 billion yuan for 6 months, corresponding to the target price range of 14.66 to 15.88 yuan, maintaining a “buy” rating. Risk warning: Funeral industry regulations have been strengthened, and the direction of marketization has been reversed; food safety issues.