HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>Fu Shou Yuan had a sharp decline in performance in 2024. The performance in recent years has often missed management guidance, which makes us question the integrity of management.</li>
<li>The “crisis” of Fu Shou Yuan has evolved from a short-term headwind to the failure of its long-term business model. Good dividends cannot conceal the problem of gloomy outlook.</li>
<li>Valuation logic is undergoing a transformation - from a leading company with "high growth/stable cash flow" to a struggling company with "weak growth/questionable profit model". 2025 performance may remain lower-than-expected.</li>
</ul>


Fu Shou Yuan had a sharp decline in performance in 2024. The performance in recent years has often missed management guidance, which makes us question the integrity of management.
The “crisis” of Fu Shou Yuan has evolved from a short-term headwind to the failure of its long-term business model. Good dividends cannot conceal the problem of gloomy outlook.
Valuation logic is undergoing a transformation - from a leading company with "high growth/stable cash flow" to a struggling company with "weak growth/questionable profit model". 2025 performance may remain lower-than-expected.


Fu Shou Yuan (1448.HK) - 2025 Outlook May Remain Sluggish Despite the Ugly 2024 Results

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fu-shou-yuan-international" target="_blank" data-smartkarma-citation="entities:18168:1" rel="noopener">Fu Shou Yuan (1448 HK)</a>'s share price rebound over the last two days may have well-reflected the special dividend proposal. It has, however, opened up the room for disappointment. </li>
<li>Assuming the same special DPS as last time, it is sitting on a 9% yield. The dividend sustainability is uncertain, and without this, it will be only 4.7% for FY25.</li>
<li>Earnings have been cut by 32.5% over the last six months on consumption downgrade. This near-term headwind will overshadow its long-term story.  </li>
</ul>



Fu Shou Yuan (1448 HK)'s share price rebound over the last two days may have well-reflected the special dividend proposal. It has, however, opened up the room for disappointment. 
Assuming the same special DPS as last time, it is sitting on a 9% yield. The dividend sustainability is uncertain, and without this, it will be only 4.7% for FY25.
Earnings have been cut by 32.5% over the last six months on consumption downgrade. This near-term headwind will overshadow its long-term story.  


Fu Shou Yuan (1448 HK): Another Special Dividend Proposal

<ul>
<li>The special dividend actually exceeded investors' expectations. As long as the dividend yield is higher than the risk-free rate, then Fu Shou Yuan is worth holding for the long term.</li>
<li>Fu Shou Yuan's 2024 full-year performance could fall short of expectations. As the business model is not as excellent as previously imagined, long-term growth rate would fall to single digit.</li>
<li>Since high valuation is unsustainable without the support of strong future growth momentum, investors who pursue for capital gains could consider taking profits by taking advantage of share price rally.</li>
</ul>


The special dividend actually exceeded investors' expectations. As long as the dividend yield is higher than the risk-free rate, then Fu Shou Yuan is worth holding for the long term.
Fu Shou Yuan's 2024 full-year performance could fall short of expectations. As the business model is not as excellent as previously imagined, long-term growth rate would fall to single digit.
Since high valuation is unsustainable without the support of strong future growth momentum, investors who pursue for capital gains could consider taking profits by taking advantage of share price rally.


Fu Shou Yuan (1448 HK) - The Special Dividend Beat Expectations, but Concerns Remain

<ul>
<li>Fu Shou Yuan's performance in full-year 2024 is likely to fall short of expectations. The current pain point is declining performance growth due to difficulty of expanding beyond Shanghai region.</li>
<li>If Fu Shou Yuan's dividends/stock buybacks are lower-than-expected, we don't think the stock is worth holding for the long term, since long-term revenue growth rate would fall to single digit.</li>
<li>Since high growth is difficult to achieve, it’s better to buy at a low price (e.g. PE of 10x).When valuation bounces back to 15x PE, investors could consider taking profits.</li>
</ul>


Fu Shou Yuan's performance in full-year 2024 is likely to fall short of expectations. The current pain point is declining performance growth due to difficulty of expanding beyond Shanghai region.
If Fu Shou Yuan's dividends/stock buybacks are lower-than-expected, we don't think the stock is worth holding for the long term, since long-term revenue growth rate would fall to single digit.
Since high growth is difficult to achieve, it’s better to buy at a low price (e.g. PE of 10x).When valuation bounces back to 15x PE, investors could consider taking profits.


Fu Shou Yuan (1448.HK) - Investment Strategy May Need to Be Adjusted

<ul>
<li>The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.</li>
<li>Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn't require too much capital, which means the Company would have greater motivation to distribute dividends.</li>
<li>The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.</li>
</ul>


The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.
Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn't require too much capital, which means the Company would have greater motivation to distribute dividends.
The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.


Fu Shou Yuan (1448.HK) - The Business Model Has "Flaws"

China

Fu Shou Yuan International Group, Ltd. is a death care service provider in China.  The Company operates cemeteries and funeral facilities.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Fu Shou Yuan (1448 HK)