First, the conclusion
Grave closure is a theme in which spending shifts from the construction and maintenance of general graves to their removal, administrative procedures, transportation of remains, permanent memorial services, and tree burials. However, increased demand does not necessarily translate into increased profits for listed companies.
While demolition work is a one-off project and there is strong competition with local companies, companies that capture the point of consultation and connect customers with reburial sites, inheritance, and funerals can obtain multiple profit opportunities from a single project.
176,105 items are not directly linked to market size
According to the Ministry of Health, Labor and Welfare's health administration report, the number of reburials in 2024 is 176,105. Although an increasing trend indicates the direction of demand, the market size cannot be determined by ``number of cases x average cost'' for the following reasons.
- There may be multiple remains in one grave
- There are cases where reburials do not involve removal of gravestones.
- Removal costs and costs for a new burial site are likely to be mixed together.
When analyzing a company, we prioritize the number of consultations, closing rate, customer acquisition cost, unit price, gross profit, and cash flow over statistics.
Position of the three related companies
| Code | Company | Point of contact with the theme | Number you want to check |
|---|---|---|---|
| 6184 | Kamakura Shinsho | Gateway for end-of-life information and consultation | Inquiries, contract closing, advertising efficiency, cross-use |
| 7578 | Nichiryoku | Grave closure, charnel house, funeral | Orders, gross profit, operating CF, dilution |
| 8230 | Hasegawa | Gravestones, Buddhist altars, and tree funeral planning | Lot sales, development costs, and reduction in existing businesses |
Kamakura Shinsho: Seize the door to consultation
Kamakura Shinsho operates ``Ioi Graves'' and other sites that help people search for cemeteries and cemeteries and introduce grave removal companies. Our strength is not that we handle a large amount of construction work ourselves, but rather that we have a customer base that connects users and businesses.
What we should be looking at here is not the number of reburials. The question is whether you can maintain profitability even if search advertising costs rise, or whether you can connect to other services such as funerals, inheritance, and nursing care. Even if the market grows, if customer acquisition costs increase at the same rate, profit margins will not increase.
Nichiryoku: High theme purity, but heavy capital policy
Nichiryoku directly handles grave closures, reburials, columbariums, and funerals. The company has a high level of theme purity in that it can be involved from the entrance to the reburial site.
However, with small-cap stocks, you need to look at financing before sales. Without confirming the potential shares due to stock acquisition rights, operating cash flow, and borrowing burden, it is impossible to judge whether increased demand will lead to an increase in earnings per share.
Hasegawa: Shrinking general graves and growing tree burials together
While Hasegawa handles Buddhist altars, Buddhist utensils, and tombstones, we also propose plans for tree funerals for religious organizations. While we are able to capture the demand for graves after graves are closed, the decline in demand for general gravestones and Buddhist altars is a headwind.
It is necessary to look at not only the plots for sale of tree funerals, but also development costs, sales speed, advertising costs, and the amount of profit that can compensate for the decrease in revenue from existing businesses.
Bullish/bearish scenarios
Bullish scenario: Demand for reburials will continue, and the contract rate and unit price per customer will increase for companies that provide comprehensive services from consultation to removal, interment locations, and inheritance.
Bearish scenario: Price competition for removals, rising advertising costs, shrinking general graves and Buddhist altars, and dilution from capital raising offset growth in new services.
Wrap-Up
Grave closure is a demand theme supported by the social structure, but as a listed stock, its purity is low, and existing businesses are shrinking at the same time. This is a theme that should be looked at, not just ``the number of reburials has increased,'' but also which process companies are generating gross profit and cash from.