Analysis of Popular Stock Dazhong Public Utilities (01635.HK): Technical Pressure Coexists with Fundamental Support

This analysis is based on technical analysis reports from AASTOCKS [1][2], concept sector adjustment information from Futu NiuNiu [4], and margin financing data from Sina Finance [5], released on January 7, 2026. On that day, Dazhong Public Utilities closed at HK$3.360, with a decline of 2.33% to 2.89%, and trading volume reached 23.1 million shares, significantly lower than the 5-day average (approximately 13.4 million to 16.0 million shares), indicating relatively limited selling pressure during the day’s decline [1][2][6].

The core driving factors for the stock becoming a popular stock on the day include: two bearish technical patterns of “triangle breakdown to the downside” and “breakdown of the lower boundary of the range” appearing on the technical front, being newly added to the “Small-cap Stock” concept sector on January 6, increased margin financing activity, and a strong performance with a year-on-year surge of 205.14% in net profit for the first three quarters of 2025 [1][2][4][5].

According to technical analysis data from AASTOCKS, Dazhong Public Utilities has recently shown two key bearish technical patterns [1][2]:

: After a previous rally, the stock’s volatility gradually narrows, forming a triangular consolidation pattern on the chart, before breaking down below the lower support line of the triangle. This pattern usually indicates the exhaustion of bullish momentum, with bears taking control, leading to a weak technical trend [1].

: After consolidating within a certain price range, the stock breaks below the lower support line, creating a technically pressured situation. This signal further confirms short-term downward pressure [2].

From a trading volume perspective, the 23.1 million shares traded on January 7 were significantly lower than the 5-day average, indicating limited active selling pressure during the day’s decline, which is more likely a technical correction rather than panic selling [1][2][6]. The 52-week price range is HK$1.63 to HK$4.95, and the current stock price has retraced approximately 32% from the 52-week high, with valuation relatively digested compared to the previous high [6].

Key price levels: The day’s fluctuation range was HK$3.360 to HK$3.440; HK$3.30 is a psychological support level at an integer threshold; the range of HK$3.44 to HK$3.50 is the recent rebound resistance zone; there is pressure from the 50-day moving average around HK$3.60 [6].

Dazhong Public Utilities delivered outstanding performance in 2025, achieving net profit attributable to shareholders of RMB 520 million in the first three quarters, representing a year-on-year surge of 205.14% [5][8]. This growth mainly benefited from two factors: first, the stable development of the core business, with gas sales contributing the main source of revenue; second, the positive impact from changes in the fair value of held financial assets [8].

However, it should be noted that the company’s operating revenue in the first three quarters was RMB 4.596 billion, a year-on-year decrease of 2.65% [5]. This phenomenon of “increasing revenue but not increasing profit” reflects that the company has achieved remarkable results in business structure optimization and investment income recognition, but faces certain pressure on the main revenue side.

In terms of business composition, gas sales account for a high 89.67% of the company’s business, making it the core business segment; sewage treatment accounts for 4.17%; and construction engineering accounts for 1.80% [8]. This business structure rooted in public utilities provides stable cash flow for the company, while the addition of venture capital business brings the possibility of highly flexible returns.

In terms of valuation, the current price-to-earnings ratio (TTM) is 15.56x, and the price-to-book ratio is approximately 0.87x, which is within a reasonable range for the public utilities sector [6]. The company has a dividend yield of 1.14% and has committed to using more than 30% of its annual distributable profit for dividends [8].

Dazhong Public Utilities’ unique dual-drive model of “Stable Cash Cow + High-Elasticity Venture Capital” is the core support for its long-term investment value [8].

: As a city gas supplier, the company benefits from the long-term development of the natural gas industry. The advancement of the price adjustment mechanism for residential gas helps restore profit margins, providing policy guarantees for the stable development of the core business [8]. The non-cyclical nature of public utilities business provides a safety cushion for the company amid market fluctuations.

: The company holds a 10.8% equity stake in Shenzhen Capital Group [8]. Shenzhen Capital Group is a leading venture capital institution in China with a large management scale and a rich investment portfolio. As the capital market rebounds, the exit returns from Shenzhen Capital Group’s projects are expected to be continuously released, bringing highly flexible investment returns to Dazhong Public Utilities. However, it should be noted that venture capital business income is highly correlated with capital market sentiment, which may lead to performance fluctuations [8].

: The company holds approximately 1,338 mu of land assets in Hainan. With the advancement of the closed operation of the Hainan Free Trade Port, the land assets have potential for value reassessment, which may bring one-time gains to the company [7].

: Net profit in 2025 increased by more than 200% year-on-year, with solid fundamentals; the unique dual-drive model combines the stability of public utilities with the high elasticity of venture capital; the value of Shenzhen Capital Group’s equity and Hainan land assets are undervalued by the market, with potential for reassessment; the high dividend commitment provides dividend protection; benefits from natural gas price reforms to restore profit margins [5][7][8].

: Weak technical patterns, with bearish signals such as triangle breakdown to the downside and breakdown of the lower boundary of the range; short-term retracement of over 30% from the 52-week high of HK$4.95; 2.65% year-on-year decrease in first three-quarter revenue; diversified business structure may lead to valuation discount; investment income is highly correlated with capital market sentiment, posing cyclical fluctuation risks [1][2][5][8].

: As of September 30, 2025, Hong Kong Securities Clearing Company Limited held 20.2103 million shares, a decrease of 0.2470 million shares from the previous period; Southern CSI 1000 ETF held 17.3627 million shares, a decrease of 0.5164 million shares from the previous period [5]. Some institutional shareholders have reduced their holdings.

: On January 5, Dazhong Public Utilities received margin purchases of RMB 60.0803 million, with a margin balance of RMB 941 million, indicating a high level of leveraged capital participation [5]. Fluctuations in margin positions may amplify short-term stock price fluctuations, and attention should be paid to margin call pressure amid weak technical conditions.

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In terms of technical risks, the triangle breakdown to the downside and breakdown of the lower boundary of the range patterns suggest a weak short-term trend [1][2], and stock price fluctuations may intensify. In terms of price fluctuation risks, the 52-week volatility reaches 203%, indicating high volatility, and investors need to manage risks properly [6]. In terms of policy risks, public utilities are strictly regulated by the government, with pricing and returns greatly affected by policies [8]. In terms of venture capital cycle risks, investment income is highly correlated with capital market sentiment, which may lead to performance fluctuations [8]. In terms of business understanding discount risks, the diversified business structure may lead to insufficient market understanding, affecting valuation levels [8].

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In terms of technical rebound opportunities, the current stock price has retraced approximately 32% from the 52-week high, and if it can receive effective support around HK$3.30, a technical rebound may occur. In terms of valuation repair opportunities, the value of Shenzhen Capital Group’s equity and Hainan land assets are undervalued by the market, with potential for value reassessment [7][8]. In terms of annual report catalysts, the annual report is expected to be released in March-April 2026, which will verify full-year performance growth, and the market may react in advance [8]. In terms of concept capital inflows, the newly added “Small-cap Stock” concept may attract capital attention from relevant thematic funds and quantitative strategies [4].

Dazhong Public Utilities (01635.HK) became a popular stock due to the combined effect of multiple factors including technical signals, concept sector adjustments, active margin financing, and fundamental support [1][2][4][5].

: Technical patterns indicate downward pressure, and the shrinking trading volume on January 7 indicates limited selling pressure, which is more likely a technical correction rather than a trend decline. It is recommended to pay attention to the effectiveness of the HK$3.30 integer threshold support, as well as changes in trading volume as a verification signal [1][2][6].

: The company’s unique dual-drive model of “Public Utilities + Venture Capital” provides an investment framework that balances stability and growth. The potential value reassessment opportunity of Shenzhen Capital Group’s equity, the strategic value of Hainan land assets, and the profit margin restoration space brought by natural gas price reforms form the core support for medium- to long-term allocation [7][8].

: The current technical pattern is weak, and stock price fluctuations are large, so it is not recommended to take heavy positions for short-term speculation. For investors with low risk appetite, they can wait for the technical pattern to stabilize before entering; for investors focusing on medium- to long-term value, they can build positions in batches near key support levels and set strict stop-loss rules. Continuous attention should be paid to catalysts such as the revitalization plan of Hainan land assets, the progress of project exits by Shenzhen Capital Group, and changes in natural gas price policies [7][8].