Sky-high cemeteries are no longer selling, the highly profitable funeral industry model has ended

Article | Node Finance, Author | Zero Degree

A few months ago, a team restructuring shifted industry focus back onto “China’s Moutai of the funeral industry”—Fushouyuan.

Fushouyuan announced that Wang Jisheng will no longer serve as President. To further improve operational efficiency, the company will establish a “Co-President” system, with Jin Leiyi and Ma Jianting sharing the role.

As the undisputed leader in China’s funeral industry, Fushouyuan has been regarded by the capital market as a “long-term, high-margin” profit model since its listing in 2013.

However, the mid-2025 financial report delivered a shocking answer: a net loss of 260 million yuan. This is the first loss in Fushouyuan’s 12 years of listing. Meanwhile, the average price of operational graves was cut in half from 121,200 yuan to 63,400 yuan.

The industry’s “funeral Moutai” leader is starting to lose money?

This financial report not only shows Fushouyuan’s slowdown from rapid growth but also raises concerns that “consumer downgrade” has begun to invade the funeral industry.

Is it that graves are no longer selling, or that young people no longer believe in “feng shui”?

Is the era of “lying down and winning” in funeral business over?

Founded in 1994, Fushouyuan is China’s first compliant private funeral enterprise, operating across more than 40 cities in 19 provinces, autonomous regions, and municipalities. Its core businesses are mainly cemetery services (primarily selling graves, accounting for about 80% of revenue) and funeral services.

It’s important to note that the funeral industry has long been considered a “lying down and winning” track. Between 2013 and 2018, domestic grave speculation heated up, with prices in first-tier cities generally exceeding 100,000 yuan per square meter—far above local housing prices. Coupled with Fushouyuan’s high margins and scarcity, it attracted various investors, earning it the nickname “Moutai of the funeral industry.”

The reason this business is profitable boils down to two factors: First, under the influence of traditional filial piety culture, funeral expenses are socially regarded as an important measure of children’s filial duty. Frugal funerals are seen as unfilial. Under this moral pressure, many families feel compelled to buy “sky-high graves,” and many filial children want to “buy a better grave to give their deceased loved ones a proper send-off.”

Second, consumers in the funeral sector often hold superstitious beliefs, trusting folk notions of “hiding wind and gathering qi,” “dragon veins,” and other feng shui concepts, linking grave choices to descendants’ fortunes. Some “good feng shui” graves thus fetch sky-high prices.

These factors combined have allowed Fushouyuan to enjoy smooth sailing since its founding. Its 2013 listing on the Hong Kong Stock Exchange made it the “first mainland funeral stock.”

Post-listing, its revenue continued to grow.

From 2020 to 2023, revenue was 1.893 billion, 2.326 billion, 2.172 billion, and 2.628 billion yuan respectively, with net profit attributable to shareholders reaching 620 million, 720 million, 659 million, and 791 million yuan!

However, the mid-2025 interim report poured cold water: a net loss of 260 million yuan.

This is not just a decline in numbers but a signal: the “consumer downgrade” in the funeral industry is more intense than we imagined.

The “Three Moves” of Losses: Accidental or Inevitable

Although Fushouyuan attributes its losses to macroeconomic factors, tax costs, and asset impairments, according to Node Finance, this is not just a simple accounting change but a concentrated eruption of deep-seated contradictions.

First, the “last stronghold” of consumer downgrade has been lost.

Once considered a necessity with strong anti-cyclical properties, funeral services are now seeing a significant decline in high-priced grave sales.

As “frugal funerals” shift from slogans to consumer choices, and eco-burials, sea burials, and even digital memorials begin to divert demand from traditional land burials, Fushouyuan’s reliance on high-ticket sales faces impact.

In essence, Fushouyuan’s business model is fundamentally “real estate-like.” It profits from land appreciation and scarcity.

In the past, Fushouyuan acquired scarce land in core cities, using “rising grave prices” to offset limited land supply.

Now, with changing consumer attitudes, an average price of 100,000 yuan per grave has become a psychological barrier for the public.

Second, the decline of tax benefits and policy red envelopes.

The mention of “rising tax costs” hints at increased industry regulation. Historically, the funeral industry enjoyed complex local incentives or operated in gray areas. As transparency improves and regulations tighten, the excess profits of past years are being forcibly leveled.

Third, the “gossip” of goodwill impairment.

Fushouyuan expanded through large-scale acquisitions over the years. During boom periods, high premiums paid for cemetery assets were seen as a halo; during downturns, these assets fail to meet profit expectations, turning into huge goodwill impairments.

All these factors have led to Fushouyuan starting to lose money.

The Resilience in the Dilemma: Does the Landlord Still Have Residual Funds?

Despite short-term pressure on financials, Fushouyuan’s “franchise” attributes and resource barriers remain solid. Node Finance believes that although the books look bad, Fushouyuan is not on the brink of collapse; it still holds three key cards.

Hard Assets: The core of the funeral industry is land. Fushouyuan owns over 2.8 million square meters of land nationwide, nearly half of which is in high-value Shanghai and surrounding areas.

In the context of strict land approval policies, these graves in first-tier cities are “non-renewable gold.” Their presence in top cities ensures a long-term basic foundation.

Cash Flow: Despite reported losses, Fushouyuan maintains a very low debt ratio. Even with a loss in mid-2025, the company announced a mid-term dividend of HKD 0.07 per share. Its ability to distribute dividends in adversity stems from a high proportion of advance payments and ample cash reserves.

Brand Premium: Compared to small and medium-sized cemeteries, Fushouyuan has transformed its “death business” into a “cultural business,” maintaining influence in the high-end market.

Even amid consumer downgrade, its brand still holds advantages in serving high-net-worth clients and large-scale memorial parks.

Ending the “Land Wholesale” Era: The Second Half of the Funeral Industry

Fushouyuan’s “first loss” is not an accidental decline but a turning point driven by changes in Chinese social attitudes, consumption patterns, and regulatory environment.

Optimists believe that with an aging population, demand remains, and after the pain, industry leaders will regroup through market consolidation. Pessimists argue that the era of high profits is over, and high valuations will normalize as gross margins return to mediocrity.

So, is this still a good business? Node Finance believes yes. But it’s undeniable that Fushouyuan’s first loss marks a return to industry common sense.

The industry’s watershed has already appeared:

In the past: companies were “land wholesalers,” selling scarcity and face value.

In the future: companies must become “emotional connection providers,” selling service and soul.

If the net profit “halving” in 2024 signals the industry’s winter, then the official loss in 2025 marks the end of the “land banking and price hike” golden era.

Node Finance sees that the ultimate metric for funeral assets is shifting from “gross profit margin” to “land inventory turnover rate.”

Simply put, if a high-end customized grave priced at 200,000 yuan cannot sell, the accumulated land becomes a heavy financial burden.

According to accounting standards, if expected sales cannot cover development costs, assets must be impaired. The loss in this financial report is essentially a “big financial cleanup” of past land acquisitions and high-premium mergers.

However, it’s worth noting that, asset-wise, although Fushouyuan recorded its first loss, its cash flow remains positive. This indicates that the company’s “bleeding” is on paper, not operational collapse.

Fushouyuan is currently facing a “structural pain”: the old model’s dividends are fading, and the new model has yet to take off.

The report mentions that consumers are becoming more cautious about funeral spending. With urbanization and digitalization, young people rely less on traditional land burials. While older generations are willing to pay for feng shui, the new generation prefers “digital memorials.”

Additionally, regulatory crackdowns on illegal charges and high-priced graves are forcing Fushouyuan to find a more fragile balance between profit margins and compliance.

The current losses are more like a “proactive squeeze.” Through large one-time asset impairments, the company is paying for past expansion and freeing up financial space for future digital transformation.

Fushouyuan’s advantage lies in its “stock” (abundant land, cash, and brand reputation), while its challenge is in “increment” (difficult land sales, strict policies, cultural shifts). Whether it can maintain its industry dominance depends on whether its digital products can, within 3-5 years, transform single grave sales into continuous “life data services.”

Node Finance believes that the future challenge for the funeral industry is that as the older generation’s willingness to pay for feng shui diminishes and the new generation values “life data,” Fushouyuan must break free from its land-selling mindset.