HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<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> has a solid 1H23 with net profit jumped 78% YoY. Its margin reached the highest level, reflecting resurgance in demand and good cost control.</li>
<li>Both volume and ASP growth led us to believe there is positive room for profitability improvements. Its balance sheet has also strengthened with net cash equals 17% of share price.</li>
<li>A 18.4% increase in pre-need contracts signed suggests encouraging underlying demand. More M&amp;As are added drivers to earnings prospects.</li>
</ul>



Fu Shou Yuan (1448 HK) has a solid 1H23 with net profit jumped 78% YoY. Its margin reached the highest level, reflecting resurgance in demand and good cost control.
Both volume and ASP growth led us to believe there is positive room for profitability improvements. Its balance sheet has also strengthened with net cash equals 17% of share price.
A 18.4% increase in pre-need contracts signed suggests encouraging underlying demand. More M&amp;As are added drivers to earnings prospects.


Fu Shou Yuan (1448 HK): More than Just a Recovery from Low Base

<ul>
<li>After a dip in earnings in FY22, <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> guides for an encouraging rebound in FY23 with at least 35% revenue and 30-35% net profit growth.</li>
<li>We think the 12.7% growth in earnings in 2H22, against -28.9% in 1H22, showed that pandemic impact has faded. It is still very well positioned to benefit from aging population. </li>
<li>Net cash equals 19% of its share price and its 13.9x PER for FY23 is not expensive relative to peers. We estimate, ex-cash, ROE is at a high of 24%. </li>
</ul>


After a dip in earnings in FY22, Fu Shou Yuan (1448 HK) guides for an encouraging rebound in FY23 with at least 35% revenue and 30-35% net profit growth.
We think the 12.7% growth in earnings in 2H22, against -28.9% in 1H22, showed that pandemic impact has faded. It is still very well positioned to benefit from aging population. 
Net cash equals 19% of its share price and its 13.9x PER for FY23 is not expensive relative to peers. We estimate, ex-cash, ROE is at a high of 24%. 


Fu Shou Yuan (1448 HK): Key Takeaways from Post-FY22 Call

External reports (aggregated public sources), Value Investors Club

Value Investors Club (VIC)

External reports (aggregated public sources)

Value Investors Club

Service Corp International / Equity Bottom-Up

<ul><li>SCI is the largest owner of funeral homes and cemeteries in North America with a 15% market share</li><li>The company strategically positions itself for growth by repurchasing shares, making value-enhancing acquisitions, and anticipating a demographic bubble</li><li>Despite valuation divergences, SCI trades at an attractive 12x EBITDA multiple and is expected to continue compounding earnings per share at a mid-teen rate</li></ul><p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.</em></p>

SCI is the largest owner of funeral homes and cemeteries in North America with a 15% market shareThe company strategically positions itself for growth by repurchasing shares, making value-enhancing acquisitions, and anticipating a demographic bubbleDespite valuation divergences, SCI trades at an attractive 12x EBITDA multiple and is expected to continue compounding earnings per share at a mid-teen rateThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Service Corp Intl (NYSE:SCI) - Friday, Aug 9, 2024

<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 net profit grew 20.1% in FY23; and if not a withholding tax of Rmb87.4m, its net profit would have increased by over 30%.  </li>
<li>Including a special DPS of HK$0.2139, full-year payout ratio reached 98.5%. Still, it has net cash of Rmb2.7bn or 24% of its market capitalisation.</li>
<li>Profitability outlook is encouraging - structural demand increase, higher ASP, and well-contained costs. Its land reserve is enough to be consumed for 82 years.</li>
</ul>



Fu Shou Yuan (1448 HK)'s net profit grew 20.1% in FY23; and if not a withholding tax of Rmb87.4m, its net profit would have increased by over 30%.  
Including a special DPS of HK$0.2139, full-year payout ratio reached 98.5%. Still, it has net cash of Rmb2.7bn or 24% of its market capitalisation.
Profitability outlook is encouraging - structural demand increase, higher ASP, and well-contained costs. Its land reserve is enough to be consumed for 82 years.


Fu Shou Yuan (1448 HK): As Solid as It Goes

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/invocare-ltd" target="_blank" data-smartkarma-citation="entities:9044:1" rel="noopener">Invocare Ltd (IVC AU)</a> has entered a SID with TPG at A$12.70 per share, a modest -2.3% discount to the previous non-binding offer of A$13.00 per share.</li>
<li>The price cut was justified by a trading update which noted a challenging near-term macro-environment and softening in market volumes. The median peers’ share prices have also derated.</li>
<li>The offer requires shareholder, FIRB and OIO approval. At the last close and for the end of November payment, the gross and annualised spread is 1.8% and 5.7%, respectively. </li>
</ul>



Invocare Ltd (IVC AU) has entered a SID with TPG at A$12.70 per share, a modest -2.3% discount to the previous non-binding offer of A$13.00 per share.
The price cut was justified by a trading update which noted a challenging near-term macro-environment and softening in market volumes. The median peers’ share prices have also derated.
The offer requires shareholder, FIRB and OIO approval. At the last close and for the end of November payment, the gross and annualised spread is 1.8% and 5.7%, respectively. 


InvoCare (IVC AU): TPG’s Binding Proposal at A$12.70

United States

Service Corporation International provides death care services worldwide.  The Company operates funeral service locations, cemeteries, and crematoria.  Service also sells prearranged funeral services in most of its service markets.

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Service Corp International (SCI US)

Fu Shou Yuan (1448 HK): More than Just a Recovery from Low Base

We like Fu Shou Yuan for its sustained quality earnings stream and solid position in capturing the demand of China's aging population. The strong...

Osbert Tang, CFA

Fu Shou Yuan (1448 HK): Key Takeaways from Post-FY22 Call

Guidances for at least 35% revenue and 30-35% net profit growth in FY23 look encouraging to us. Net cash amounted to 19% share price and valuations...

Osbert Tang, CFA

Service Corp Intl (NYSE:SCI) - Friday, Aug 9, 2024

The company strategically positions itself for growth by repurchasing shares, making value-enhancing acquisitions, and anticipating a demographic...

Value Investors Club (VIC)

Fu Shou Yuan (1448 HK): As Solid as It Goes

Fu Shou Yuan sees 20.1% net profit growth in FY23, hindered by withholding tax. Its outlook is strong with high cash reserves and long-term land...

Osbert Tang, CFA

InvoCare (IVC AU): TPG’s Binding Proposal at A$12.70

Despite the price cut, the offer is attractive in the context of challenging trading and derating of peers. At the last close and for the end of...

Arun George

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Market Cap (USDm)

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Fu Shou Yuan (1448 HK): More than Just a Recovery from Low Base

We like Fu Shou Yuan for its sustained quality earnings stream and solid position in capturing the demand of China's aging population. The strong...

Osbert Tang, CFA

Fu Shou Yuan (1448 HK): Key Takeaways from Post-FY22 Call

Guidances for at least 35% revenue and 30-35% net profit growth in FY23 look encouraging to us. Net cash amounted to 19% share price and valuations...

Osbert Tang, CFA

Service Corp Intl (NYSE:SCI) - Friday, Aug 9, 2024

The company strategically positions itself for growth by repurchasing shares, making value-enhancing acquisitions, and anticipating a demographic...

Value Investors Club (VIC)

Fu Shou Yuan (1448 HK): As Solid as It Goes

​Fu Shou Yuan sees 20.1% net profit growth in FY23, hindered by withholding tax. Its outlook is strong with high cash reserves and long-term land...

Osbert Tang, CFA

InvoCare (IVC AU): TPG’s Binding Proposal at A$12.70

Despite the price cut, the offer is attractive in the context of challenging trading and derating of peers. At the last close and for the end of...

Arun George

Fu Shou Yuan sees 20.1% net profit growth in FY23, hindered by withholding tax. Its outlook is strong with high cash reserves and long-term land...