Analysis on Digital Finance Transformation and Risk of Being Removed from Stock Connect of DL Holdings (01709.HK)

The core driver behind DL Holdings’ rise to popularity is the substantial progress made in its digital finance strategy. On December 29, 2025, DL Securities (Hong Kong) Limited, a subsidiary in which the company holds a 70% equity interest, obtained conditional approval from the Securities and Futures Commission (SFC) of Hong Kong to provide virtual asset trading services under a combined account arrangement, becoming one of the first batch of brokers in Hong Kong approved to offer such services[2][3][4]. This milestone approval marks a key step in the company’s layout in the virtual asset space. DL Securities formally accepted the relevant conditions on December 29, 2025, and will launch virtual asset trading services after obtaining official approval. In addition, the company is also applying for an upgrade to its Type 4 (Securities Advisory) regulated activity license, which is expected to further expand its business scope[3].

While laying out its virtual asset business, the company has also made notable progress in its Bitcoin mining business. According to the company’s announcement, Bitcoin production in December 2025 was 25.2107 coins, with an average daily output of approximately 0.8404 coins, and the ending Bitcoin holdings reached 31.1914 coins[5]. In terms of miner acquisitions, the company has successfully completed the purchase of 9,148 Bitcoin miners with a total hash rate of approximately 3.993 EH/s. The actual hash rate increased from approximately 0.84 EH/s on December 1, 2025, to approximately 2.83 EH/s on December 30, 2025, indicating rapid business expansion[5][6]. Management expects the full-year Bitcoin production in 2026 to be approximately 600-700 coins, providing a stable expectation of mining revenue for the company[5].

Driven by the positive news of the approval for virtual asset trading services, DL Holdings’ share price surged 13.73% in the afternoon session on January 2, 2026, closing at HK$2.32[2]. The cumulative increase over the past 5 days exceeded 45%, reflecting a strong market response to the news[7]. However, the share price has been highly volatile, plummeting over 74% from its 52-week high of HK$5.780 to its 52-week low of HK$1.480[1]. As of the close on January 5, 2026, the share price was HK$2.13, down 6.58% on the day. The current price is between the 10-day moving average (HK$1.85) and 30-day moving average (HK$2.03), and technical indicators show that the share price is still in a downward trend, with the 250-day moving average at HK$3.43, indicating a weak long-term trend[1].

The case of DL Holdings reveals the typical path and coexisting potential risks of digital transformation for Hong Kong brokers. From a positive perspective, the company’s strategic layout to seize the first-mover advantage in Hong Kong’s virtual asset trading services is forward-looking. The gradual improvement of Hong Kong’s virtual asset regulatory framework as an international financial center has created a new business blue ocean for compliant brokers. However, from a risk perspective, the company’s aggressive transformation while its traditional brokerage business is not well-established, coupled with the crisis of being removed from Stock Connect and its history of share placements, casts doubt on its strategic execution capabilities. Of particular concern is the fact that 96% of its net profit comes from one-off ‘other income’[8], which reflects a serious lack of profitability in its core business, and whether the transformation has sustainable performance support requires in-depth consideration.

: According to analysis, the company has a 100% probability of being removed in the regular Stock Connect adjustment in September 2026[8]. Its current market capitalization is approximately HK$4.27 billion, which is close to the HK$4 billion threshold for removal. The average monthly decline is approximately 15-20%, and if the share price falls below the critical level of HK$2.08, the removal condition will be triggered. Based on the current trend, the market capitalization may drop to approximately HK$2.65 billion in March 2026[8]. Being removed from Stock Connect will prevent mainland investors from buying the stock, which may lead to liquidity depletion and further share price decline.

: The 2025 interim report shows that among the HK$202 million net profit, 96% comes from one-off ‘other income’, while core operating revenue is only HK$118 million, resulting in an abnormally high net profit margin of 170.8% that seriously deviates from industry norms[8]. This profit structure indicates a lack of profitability in the company’s core business, and the sustainability of its performance is questionable.

: The cumulative amount of share placements in the 5 years since listing has reached HK$3.445 billion, far exceeding the HK$196 million listing cost[8]. Two large-scale placements were conducted in August and October 2025, raising HK$653 million and HK$973 million respectively. After each placement announcement, the share price plummeted by an average of over 10%[8]. Frequent large-scale placements have severely diluted shareholder equity, triggering market doubts about the company’s corporate governance and financing purposes.

: After a cumulative increase of over 45% in 5 days, the share price pulled back by 6.58%[1][7], creating technical pullback pressure due to excessive short-term gains. In addition, the virtual asset trading license is still a ‘conditional approval’, with the official operation time to be determined, leading to uncertainty in business implementation[2][3].

: As one of the first brokers in Hong Kong approved to provide virtual asset trading services, the company has seized a market first-mover advantage under the regulatory framework. If the business is launched smoothly, it is expected to benefit from the overall development of Hong Kong’s virtual asset market.

: The acquisition of 9,148 miners has been completed, and the business has achieved actual output. The 2026 production guidance of 600-700 Bitcoins provides certain support for the company’s performance[5].

DL Holdings (01709.HK) is currently at a critical juncture of digital finance transformation, with the approval of virtual asset trading services and the expansion of Bitcoin mining business serving as short-term share price catalysts. However, the company’s structural problems cannot be ignored, including the risk of being removed from Stock Connect (100% probability), a history of frequent placements (cumulative placements of HK$3.445 billion in 5 years), and questionable financial quality (96% of profits from one-off income). Its current market capitalization of approximately HK$4.27 billion is close to the HK$4 billion threshold for removal, and if the share price falls below HK$2.08, the Stock Connect removal mechanism will be triggered, potentially leading to liquidity depletion. Investors should closely monitor key time nodes including the official approval window for virtual asset trading services by the end of January 2026, the quarterly review by Hang Seng Indexes Company in March 2026, and the Stock Connect adjustment in June-September 2026. This stock is a high-volatility, high-risk target, suitable only for investors with extremely high risk tolerance.