维持增持评级 。2023 年业绩低于预期，下调公司2024-2025 年归母净利润分别为8.69（-1.71）、9.59（-2.22）亿元，预计2026 年归母净利润为10.56 亿元。预计2024-2026 年EPS 分别为0.37（-0.08）、0.41（-0.10）、0.46 元，对应PE 分别为13x/12x/11x。Introduction to this report:
Results in 2023 fell short of expectations, and digitalization is expected to improve operational efficiency by empowering traditional businesses.
Summary:
Maintain an increase in holdings rating. The 2023 results fell short of expectations. The company's 2024-2025 net profit was lowered to 8.69 (-1.71) and 9.59 (-222) yuan, respectively. The estimated net profit for 2026 was 1,056 million yuan. EPS is expected to be 0.37 (-0.08), 0.41 (-0.10), 0.46 yuan in 2024-2026, and the corresponding PE is 13x/12x/11x, respectively.
Performance summary: In 2023, the company's revenue was 2,628 billion yuan, +21.0% year on year; operating profit was 1,372 billion yuan, +33.2% year on year; operating profit margin was 52.2%, +4.8pct year on year; net profit to mother was 791 million yuan, +20.1% year over year. Among them, cemetery service revenue was 2.165 billion yuan, +23.8% year on year; funeral service revenue was 398 million yuan, +10.7% year over year. Among them, 2023H2's total revenue was 1.03 billion yuan, -12.8% year on year; operating profit was 527 million yuan, -15.1% year on year; and operating profit margin was 47.8%, -1.3 pct year on year. In 2023, the board of directors plans to pay a final dividend of HK6.86 cents per share and a special dividend of HK21.39 cents per share, together with an interim dividend of 9.06 HK cents per share, and a cumulative dividend of 37.31 HK cents per share for the whole year.
The recovery of cemetery business in some regions fell short of expectations, hampering performance in the second half of the year. ① Northern region:
Affected by “Leap February” in 2023 (Northern tradition believes that “leap February” is inappropriate for burial, etc.), this part of the demand was delayed until the second half of the year, but demand release was blocked due to the cold tide weather in the north; ② Anhui region: Revenue from cemetery services and funeral services in Anhui fell 13.6% year on year in 2023, mainly because the Hefei Dashushan Project is undergoing a digital transformation pilot, and is expected to return to normal in the second half of the year; ③ Shanghai region: The profit margin of mature cemeteries in Shanghai was high, increasing overall profit margins in the second half of the year.
Focus on digital transformation to empower traditional businesses. In 2023, the company actively promoted digital transformation, including building and completing the VR environment system for Shanghai Fushouyuan and completing the implementation of digital human technology. Embedding digital technology into traditional businesses and launching the “Digital Cemetery Huixin Valley” project marks Fushouyuan's official entry into the field of digital life services; it has innovatively developed 3JI's innovative iterative product integrating “marking, commemoration, and recording”, and is committed to the continuous extension and expansion of product content.
The company focuses on building a life service ecosystem with intelligent value creation capabilities and comprehensive resource utilization capabilities, and the online+offline service system is more in-depth.
Risk warning: funeral industry policy risk; macroeconomic cycle downside risk; risk of plan implementation falling short of expectations.
