HK 第2部分; Anxian Yuan and Fu Shou Yuan
Next up in the series on HK stocks; two stocks in the death care service industry. Rarely are two twins valued so differently.
Twins
Like the twin brothers in the 1988 movie - starring Arnold Schwarzenegger and Danny DeVito - Anxian Yuan China Holdings Ltd ($922.hk) and Fou Shou Yuan International Group Ltd ($1448.hk) show little ressemblance.
At HK$ 0.15, microcap Anxian currently trades around its HKD 322m net cash position as of September, 30th 2023, with a close to 15% trailing dividend yield.
Fu Shou looks several times more expensive on any valuation multiple.
Death care services
Both companies provide burial, funeral, and auxiliary services throughout China. With about HKD 3bn trailing 12 month revenue, Fu Shou is about 10 times larger than Anxian (HKD 291m). In 2022, Fu Shou organised about 73,000 funeral services. That is less than 1% of the 10.4 million deaths in that year.
The ageing society in China, implies a solid growth tailwind for the death care services industry. The age group of 80 years and older is expected to increase more than four-fold from 32 million in 2020 to 135 million in 2050, giving a CAGR of c5%. This development will probably be the main factor leading to a growing number of mortalities in China in the upcoming years. Due to the natural and regulatory limitations to expansion, existing funeral sites should serve the dominant part of that additional demand.
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