Dazhong Public Utilities (01635.HK): Analysis of Value and Risks as a Shadow Stock of Shenzhen Venture Capital's IPO

Dazhong Public Utilities becoming a hot stock in the Hong Kong stock market is driven by its strategic equity investment in Shenzhen Venture Capital (SZVC). As a leading player in China’s venture capital industry, SZVC’s expected listing on the Hong Kong Stock Exchange provides a significant value revaluation opportunity for Dazhong Public Utilities[1]. According to market analysis, Dazhong Public Utilities directly holds 10.80% equity in SZVC and indirectly holds 3.4589%, with a total shareholding ratio of over 14%, corresponding to an equity value of approximately HK$22.3 billion. This figure is close to Dazhong Public Utilities’ total market capitalization (HK$9.92 billion), creating a clear valuation discount[1].

SZVC’s listing application on the Hong Kong Stock Exchange has been accepted, and it is expected to complete the listing in Q2 2026, with a current valuation of approximately RMB160 billion[1]. The market generally expects that after SZVC’s listing, the equity held by Dazhong Public Utilities may see a 30%-50% appreciation upside. It is worth noting that there is a deep binding relationship between Dazhong Public Utilities and SZVC: the company has appointed its vice chairman to participate in SZVC’s daily management, and this dual binding of “equity + management” is more stable than pure shareholding[1].

From a technical perspective, Dazhong Public Utilities has recently shown a “breakdown below the lower track of a range” pattern, with its stock price breaking below the bottom of the consolidation range, indicating weak short-term technical momentum[2]. Price data shows that the current stock price is around HK$3.36-3.44, with a 52-week price range of HK$1.591-4.950, and a year-to-date performance of -9.66%, significantly underperforming the Hang Seng Index’s corresponding gain of +3.56%[2]. This weak performance is clearly inconsistent with the positive expectations of SZVC’s listing, and some investors suspect “market manipulation to suppress the stock price”[5].

In terms of capital flow, Southbound Capital has shown strong preference for Dazhong Public Utilities. As of December 24, 2025, Southbound Capital holds as much as 68.82% of the stock, ranking among the top of the 248 Stock Connect constituent stocks, far exceeding the average holding ratio of 19.37% for all Stock Connect constituent stocks[3]. This highly concentrated shareholding structure not only reflects the market’s recognition of the company’s venture capital attributes but also means that if Southbound Capital conducts large-scale profit-taking, it may trigger stock price fluctuations.

In the first three quarters of 2025, Dazhong Public Utilities recorded operating revenue of approximately RMB4.596 billion, a year-on-year decrease of 2.65%; however, its net profit was approximately RMB520 million, a year-on-year surge of 205.14%[6]. The sharp growth in net profit was mainly driven by increased investment income, reflecting the profit release from the company’s participating venture capital projects. The company’s main business covers two segments: public utilities (gas sales, sewage treatment, municipal tunnel operation) and financial venture capital, forming a dual-drive model of “stable operation + flexible investment”[5].

From a valuation perspective, the company’s current price-to-earnings ratio (P/E) is 39.40 times, which is relatively high, mainly reflecting the market’s expected value of its venture capital assets, especially its equity in SZVC[1].

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Dazhong Public Utilities’ current market capitalization is approximately HK$9.92 billion, while the value of its equity in SZVC is approximately HK$22.3 billion, theoretically resulting in a significant valuation discount. Once SZVC is successfully listed, this discount is expected to gradually narrow or even disappear. This situation where “the value of equity held by a listed company exceeds its own market capitalization” is relatively rare in the Hong Kong stock market, providing a unique entry opportunity for value investors. However, investors should note that this value realization depends on the successful completion of SZVC’s listing and the correct pricing of venture capital assets by the market.

The 68.82% shareholding ratio of Southbound Capital is a double-edged sword. On one hand, it reflects the recognition of domestic institutional investors of Dazhong Public Utilities’ medium- and long-term value, providing strong liquidity support for the stock price; on the other hand, such a high shareholding concentration means that the actual free float outside the held shares is small, and the stock price may be highly sensitive to changes in capital flows. If SZVC’s listing progress falls short of expectations, or if the overall capital liquidity of Stock Connect tightens, some capital may choose to take profits, triggering short-term fluctuations.

SZVC’s project pipeline covers well-known enterprises such as Century Huatong and Biren Technology. As a GPU unicorn, Biren Technology’s indirect investment is expected to benefit from the continuous growth in AI computing power demand[5]. After a period of adjustment, the prosperity of China’s venture capital industry is gradually recovering, which provides a favorable external environment for SZVC and Dazhong Public Utilities[7].

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: The stock has shown a “breakdown below the lower track of a range” pattern, with weak short-term momentum. The key support level is HK$3.31, and a break below this level may lead to further decline[2].

: The P/E ratio of 39.4 times is relatively high. If the market’s enthusiasm for venture capital assets cools down, the valuation may face compression pressure.

: SZVC’s listing schedule may still change. Factors such as the HKEX’s review progress and the capital market environment may affect the final listing time[1].

: The Hong Kong IPO market may face a wave of share unlocks in 2026, and the overall market sentiment may affect SZVC’s valuation performance after listing[7].

: The stock’s year-to-date performance of -9.66% has significantly underperformed the Hang Seng Index’s +3.56%, so investors need to pay attention to whether market capital continues to outflow.

: The listing expected to be completed in Q2 2026 will bring significant equity appreciation for Dazhong Public Utilities, with an attractive expected upside of 30%-50%[1].

: The prosperity of China’s venture capital industry is recovering, and SZVC, as an industry leader, is expected to fully benefit from this.

: The 68.82% holding ratio by Southbound Capital reflects high recognition from institutional investors, providing liquidity support for the stock price.

: The company has recently won multiple honors at the Gelonghui Golden Grid Awards and received recognition from the China Association for Public Companies, highlighting its outstanding performance in ESG (Environmental, Social, and Governance) and IR (Investor Relations)[4].

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The core investment value of Dazhong Public Utilities (01635.HK) lies in its attribute as a shadow stock of SZVC’s IPO. The company holds over 14% equity in SZVC, worth approximately HK$22.3 billion, which is close to its own market capitalization, resulting in a significant valuation discount. SZVC’s listing on the Hong Kong Stock Exchange is expected to be completed in Q2 2026, which may trigger a value revaluation. Southbound Capital holds as much as 68.82% of the stock, showing high recognition from institutional investors.

Technically, the stock shows short-term weakness, and investors need to pay attention to the key support level of HK$3.31. The company’s net profit surged 205% in the first three quarters of 2025, providing certain fundamental support. Investors need to closely monitor the progress of SZVC’s listing review, the flow of Southbound Capital, and technical stabilization signals.

This stock is suitable for investors who are optimistic about SZVC’s listing prospects and can tolerate short-term fluctuations. Investors should pay attention to changes in the overall environment of the Hong Kong IPO market and the risk of valuation correction.

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[1] Hardcore Selection of IPO Shadow Stocks in H1 2026! Holding 5%+ Exclusive Binding, Full Listing Expectations - NetEase Finance, 2026-01-04

[2] Dazhong Public Utilities (01635.HK) Shows “Range Breakdown” Technical Chart Pattern - AASTOCKS, 2026-01-07

[3] 248 Hong Kong Stocks Held in High Proportions by Southbound Capital - Securities Times, 2025-12-26

[4] Dazhong Public Utilities Stock News - Sina Finance, January 2026

[5] Dazhong Public Utilities (SH600635) Stock Price - Xueqiu

[6] Dazhong Public Utilities: Net Profit Approximately RMB520 Million in First Three Quarters, Up 205.14% YoY - Tencent Securities

[7] Has the Hong Kong IPO Market Changed? - Wall Street CN