Dazhong Public Utilities (01635.HK) Hot Stock Analysis: Southbound Capital and Earnings Drivers

Dazhong Public Utilities (01635.HK) is the H-share of Shanghai Dazhong Public Utilities Group, with main businesses covering public utilities (gas supply, sewage treatment) and financial venture capital [3]. The core drivers behind its becoming a hot stock this time include two major aspects: First, the high involvement of Southbound Capital. Data disclosed on December 22, 2025 shows that its Southbound shareholding ratio reached 69.09%, ranking third in the Stock Connect shareholding ratio, reflecting strong attention from mainland investors to this stock [2]. Second, the better-than-expected Q3 performance. In October 2025, the company disclosed that its first three quarters’ net profit increased by 205.14% year-on-year to 520 million yuan. Although the news was released in October, the market’s expectation for continued growth in subsequent performance is still fermenting [3].

From the perspective of price and trading volume, as of December 28, 2025, the A-share (600635.SS) closed up 4.07% to 6.90 yuan, showing a trend of rising with shrinking volume (daily trading volume 860,300 lots, lower than the 3-month average of 2.5416 million lots) [0]; the H-share (01635.HK) closed at HK$3.34 as of December 24, 2025, with an obvious valuation discount (A-share/H-share premium rate of about 39.17%), which may attract the attention of Hong Kong stock investors [3].

1. Southbound Capital Dominates Market Sentiment
   : A high Southbound shareholding ratio of 69.09% indicates that mainland investors are the main driving force behind this stock, and their investment preferences have an important impact on the stock price trend [2].
2. Combination of Defensiveness and Growth Potential
   : The company’s business covers public utilities and financial venture capital. The former is less affected by economic cycles and has defensiveness; the latter provides growth space for the company. This combination is favored by capital against the backdrop of increasing macroeconomic uncertainty [1].
3. Early Layout for Full-Year Performance Expectations
   : The ultra-high growth of Q3 net profit has driven the market’s optimistic expectations for the full-year 2025 performance, and some investors have chosen to layout in advance (the company’s annual report will be released on March 31, 2026).

• High Valuation
  : The A-share has a P/E ratio of 34.5x and the H-share has a P/E ratio of 39x, which are at high levels for public utility companies, with the risk of valuation correction [0][3].
• Liquidity Pressure
  : The latest quarterly data shows that the company’s current ratio is only 0.69, lower than the industry average, with certain short-term liquidity risks [0].
• Sustainability of Performance
  : The high growth in Q3 may be affected by non-recurring factors, so it is necessary to pay attention to whether the full-year performance can maintain the growth momentum.

• H-share Valuation Discount
  : The H-share has an obvious discount compared to the A-share, which may attract more Hong Kong stock investors to intervene.
• Increased Demand for the Sector
  : As macroeconomic uncertainty increases, the defensive characteristics of the public utilities sector may attract more risk-averse capital.

The core driving factors behind Dazhong Public Utilities (01635.HK) becoming a hot stock include high holdings by Southbound Capital, better-than-expected Q3 performance, and its business structure that combines defensiveness and growth potential. Investors need to pay attention to the company’s valuation level, liquidity status, and the sustainability of its performance, while keeping an eye on the investment opportunities brought by the H-share’s valuation discount.

• A-share
  : Support level 6.64 yuan (Dec 28, 2025 low), Resistance level 8.40 yuan (52-week high)
• H-share
  : Support level HK$3.32 (Dec 24, 2025 low), Resistance level HK$4.95 (52-week high)