On the evening of August 29, Fu Shou Yuan (01448) released its 2025 interim financial results. This report initially presents a company under earnings pressure, but actually conceals strategic long-term considerations. Analysis reveals that behind the significant deviation from the company's historical operating trajectory lies Fu Shou Yuan's proactive strategic clearance of "one-time" factors, effectively reducing historical burdens while potentially creating greater development space for the future.

The interim report shows that Fu Shou Yuan, based on current operating conditions and full consideration of market expectations for the future, made prudent decisions to create impairment provisions for goodwill and related assets of certain cemetery projects, totaling 217 million yuan. Undeniably, Fu Shou Yuan's "one-time" clearance actions amplified short-term performance volatility, but this represents strategic choices made for long-term high-quality development goals. As the saying goes, "take a long-term view," and Fu Shou Yuan, now unburdened, can focus on key areas such as branding, technology, and cultural innovation, continuously strengthening its development resilience foundation. From this perspective, Fu Shou Yuan at this stage is arguably closer to achieving high-quality development.

**Confidence to Maintain High Dividends Despite Short-term Volatility**

Facing the complex economic situation of 2025, Fu Shou Yuan fully exercised its initiative to address external environmental challenges. During the reporting period, Fu Shou Yuan achieved revenue of 611 million yuan. Breaking down the revenue structure, cemetery services, as the company's largest revenue source, contributed 477 million yuan in the first half, accounting for approximately 78.1%.

In the first half, to respond to changes in local economic environments, funeral consumption behaviors, competitive landscape evolution, and the impact of value-added tax on tomb sales services, Fu Shou Yuan proactively adjusted its strategy. On one hand, Fu Shou Yuan continued deepening product innovation and continuously enriching its product matrix, while proactively reducing average product prices to enable more customers to enjoy high-quality cemetery services. On the other hand, Fu Shou Yuan developed additional product categories across different price ranges for incremental customer groups, based on existing price-point products, to enhance market share.

In the first half, Fu Shou Yuan's funeral services generated revenue of 122 million yuan, accounting for approximately 20%. Additionally, the company has a small portion of revenue from other services, which generated 14.628 million yuan during the period, accounting for 2.4%.

Meanwhile, under "stress testing," Fu Shou Yuan's profitability indicators maintained considerable resilience. Data shows that during the reporting period, the company's non-GAAP net profit attributable to shareholders was 198 million yuan, remaining at industry-excellent levels.

What deserves particular praise is that despite currently facing stagflation difficulties, Fu Shou Yuan continues to reward shareholders with high dividends. According to the financial report, Fu Shou Yuan proposes to distribute an interim dividend of 7 HK cents per share, with an interim payout ratio of 75.5% after excluding non-recurring profit and loss items. This reflects Fu Shou Yuan's high regard for shareholder returns while reaffirming management's confidence in the company's long-term development.

The confidence behind Fu Shou Yuan's generous dividends stems partly from the company's still-healthy financial condition. According to the interim report, although goodwill impairment provisions in the first half affected current profits, this matter did not cause actual cash outflows, and the company's cash flow remained at healthy levels during the period. Additionally, as of the end of the reporting period, Fu Shou Yuan's cash reserves remained as high as 2.32 billion yuan, with sufficient financial strength to support long-term development.

Beyond healthy financial conditions providing a foundation, another important reason supporting Fu Shou Yuan's consecutive years of high dividends is the company's clear long-term development path. Based on the financial report, Fu Shou Yuan is further strengthening the foundation for long-term development around three key dimensions: branding, technology, and cultural innovation. Such a Fu Shou Yuan presumably has considerable growth potential.

**Building Momentum Across Three Key Dimensions**

Given the current complex and severe external environment, insufficient domestic effective demand growth momentum, the need to consolidate the foundation for sustained economic recovery, and the need to further enhance residents' consumption capacity, customer consumption behavior in funeral scenarios has become more cautious, with industry competition showing trends of further intensification.

To respond to new trends in the macroeconomic environment and customer consumption behavior changes, Fu Shou Yuan continues to enhance its core competitiveness around three major dimensions: branding, technology, and cultural innovation.

Regarding brand building, Fu Shou Yuan understands that in Chinese society, which values filial piety and respect for elders, people's aspirations for a better life extend beyond "life" to "afterlife matters." Therefore, the brand IP that Fu Shou Yuan strives to create must have high recognition while carrying considerable emotional weight. During the reporting period, Fu Shou Yuan's original short video series "I Am a Tree (Sichuan-Chongqing, Qilu, and Central Plains editions)" won the Outstanding Work Award in the "Civil Affairs China" section of the 15th Beijing International Film Festival. This work deepened public understanding and respect for life values while providing more concrete and profound perception of Fu Shou Yuan's brand cultural connotations.

Furthermore, in the first half, Fu Shou Yuan appeared on giant screens at core urban landmarks including Shanghai's Nanjing East Road and Huaihai Middle Road, and reached deep promotional cooperation with cross-industry partners like Spring Airlines, achieving innovative cross-border marketing for brand breakthrough communication.

In terms of periodic results, Fu Shou Yuan's branding efforts have clearly achieved outstanding success. In the first half, Fu Shou Yuan, alongside well-known brands like Mengniu, Hengyuanxiang, and Ping An Leasing, won the "Annual Responsibility Brand Award" at the 14th Public Welfare Festival. Additionally, Fu Shou Yuan was selected for the "2024 World Innovation Brand 500" list at the Davos World Brand Summit, with a brand value of $2.916 billion, brand index of 492.45 points, and global ranking of 380th.

As an important implementation point for Fu Shou Yuan's deepening positioning as an "innovation leader in funeral and life technology services," Fu Shou Yuan continued advancing digital transformation in the first half of this year. On one hand, Fu Shou Yuan created a digital life service system centered on "digital ceremonial halls, AI memorial services, Fu Shou Online, and Memorial Family Elements," integrating cutting-edge technology into all business processes of cemeteries and funeral services, comprehensively covering users' diverse scenario needs. On the other hand, Fu Shou Yuan effectively implemented the 3JI concept of "making marks beautiful, records substantial, and memorials lasting" through technological means, enhancing service experience and operational efficiency.

For example, in product design, Fu Shou Yuan further intensified design and development of ecological, land-saving, and artistic products based on the 3JI concept, integrated digital technology, and actively promoted market introduction to meet diverse demands of broader and more diversified customer groups in products and services, demonstrating respect and reverence for each unique life.

According to Fu Shou Yuan management statements at the company's earnings conference, as of the end of August this year, registered users and online orders on the "Fu Shou Yuan Online Services" platform increased significantly year-over-year. The trends in these two data sets indicate that online consumption habits are gradually forming while confirming that Fu Shou Yuan's digital transformation has achieved fruitful periodic results.

Cultural innovation is also an important lever for Fu Shou Yuan to enhance its competitiveness. In the first half, Fu Shou Yuan deeply explored and promoted humanistic history and cultural sage resources, continuously reaching broader audiences through new media methods like short videos and live broadcasts to enhance cultural influence and strengthen social connection effectiveness.

Additionally, Fu Shou Yuan focuses on creating communication platforms that integrate Shanghai culture with revolutionary emotions, actively "empathizing with memory, resonating with history, and vibrating with the times," gathering social resources and forces from all sectors to enhance corporate cultural depth.

**Conclusion**

Overall, Fu Shou Yuan's 2025 interim report represents a seemingly contradictory but actually strategically far-sighted report card. Undeniably, due to proactive goodwill impairment, Fu Shou Yuan endured short-term earnings pressure pain. However, as management stated at the earnings conference, based on current project reviews, the risk of similar impairments occurring again in the future is relatively low.

More importantly, Fu Shou Yuan is actively building momentum across three major dimensions: branding, technology, and cultural innovation. From an investment perspective, Fu Shou Yuan, now unburdened, not only has high dividends as a foundation but also considerable earnings rebound potential from a low base. Therefore, Fu Shou Yuan's current performance volatility may represent the "deep squat" before the next "jump."