Fu Shou Yuan studies Hong Kong expansion plan

Fu Shou Yuan, the mainland's biggest provider of funeral services, plans to expand to Hong Kong as its chairman envisions building the company into one of the world's top players in the industry.

Bai Xiaojiang told reporters last weekend that the Shanghai-based firm had begun studying the feasibility of offering burial services in Hong Kong and it was enlisting the help of a professional team to map out a detailed plan.

"China's big population of 1.4 billion has created tremendous opportunities for domestic death service companies," Bai said. "We have the potential to become a global leader as long as we can offer good services."

Fu Shou Yuan received a warm response from investors last month as its US$215 million initial public offering was nearly 700 times oversubscribed, and that was followed by a 44.7 per cent jump in its share price during the Hong Kong listing debut on December 19.

Bai admitted that the successful fund-raising exercise and the explosive debut cemented his belief that Hong Kong was an ideal market to tap as investors understood the company's value.

Benefiting from an inexpensive land bank in coastal cities such as Shanghai, Fu Shou Yuan enjoyed a gross margin of 80 per cent in the burial service business for the first half of last year, which represented 80 per cent of its total revenues.

The mainland has a tight grip on funeral and burial services with the authorities controlling the land supply for cemeteries.