Delong Composite Energy Group Co., Ltd – Navigating a Turbulent Quarter

Delong Composite Energy Group Co., Ltd (ticker 000593), a Shenzhen‑listed provider of natural gas distribution, liquefied gas supply, and pipeline development, experienced a whirlwind of events during the first nine months of 2025. The company’s trajectory illustrates the delicate balance between operational performance, capital structure, and market sentiment in China’s utilities sector.

1. 2025 First‑Nine‑Month Financial Performance

  • Revenue: ¥12.99 billion, marking a modest +1.56 % year‑over‑year growth.
  • Net Profit: ¥24.78 million, a 41.47 % decline from the same period last year.
  • Basic EPS: ¥0.07.
  • Cash Position: Operating activities generated a net inflow of ¥46.61 million, while cash received from sales and services totaled ¥131.2 million.
  • Assets & Liabilities: Total assets reached ¥1.918 billion, with accounts receivable at ¥123 million. The company’s debt‑service capacity remains average, with operating efficiency rated above industry average.

The revenue uptick is attributable to steady demand for gas supply, yet the sharp profit erosion signals heightened cost pressures, possibly from fuel procurement or capital expenditures associated with pipeline expansion.

2. 3‑Consecutive Limit‑Up Phenomenon

On October 29‑30, 2025, Delong’s shares surged to a record ¥10.54, completing three consecutive limit‑ups (a 33.08 % cumulative increase). The rally was driven by:

  1. Storage‑Sector Momentum – The broader energy‑storage theme was in the spotlight, with peers such as Lan Shi Zhongzhuang and Penghui Energy posting substantial gains.
  2. Liquidity Inflows – The stock attracted significant intraday volume (≈2.31 million shares) and a total trading value of ¥24.32 million, reflecting heightened retail and institutional interest.
  3. Short‑Term Speculation – The rapid price appreciation coincided with a dip in margin financing (−¥5.48 million in the prior day), suggesting that margin traders were pulling back, potentially amplifying volatility.

Despite the bullish short‑term market response, the underlying earnings decline tempers any enthusiasm. Investors should monitor whether the rally reflects genuine operational recovery or speculative excess.

3. Control‑Change Planning and Corporate Governance

Delong disclosed a control‑change plan on October 29, citing the company’s “planning company control‑change matters.” Although the exact parties involved remain unspecified, the announcement aligns with a broader trend of ownership consolidation in the utilities sector. Key considerations include:

  • Strategic Alignment – A new controlling shareholder may bring capital infusion or strategic realignment, potentially addressing the company’s cash‑flow and debt‑service concerns.
  • Regulatory Scrutiny – Any change in control triggers heightened regulatory oversight in China’s energy markets, where state participation is significant.
  • Shareholder Value – The control‑change announcement could influence long‑term valuation, especially if accompanied by a share‑buyback or dividend policy adjustment.

4. Market Context and Outlook

  • Sector Dynamics – The utilities sector remains under pressure from fluctuating fuel costs, regulatory changes, and the gradual shift toward renewable energy. While the sector’s net outflows of ¥1006.37 billion suggest broader capital flight, Delong’s recent limit‑ups indicate that individual stocks can still attract aggressive trading.
  • Financial Health – With a market cap of ¥3.44 billion and a P/E ratio of 275.77, the stock trades at a steep valuation premium, underscoring market expectations of rapid upside. However, the 41.47 % drop in net profit raises concerns about profitability sustainability.
  • Strategic Opportunities – Delong’s involvement in liquefied gas supply positions it favorably for the growing LNG demand in China. Additionally, pipeline development projects could benefit from government incentives aimed at expanding the national gas network.

5. Investment Considerations

  • Risk – High valuation, declining profitability, and pending control‑change create uncertainty. Short‑term price spikes may be more speculative than fundamentals‑driven.
  • Opportunity – The company’s core gas distribution business remains essential, and the sector’s long‑term structural shift toward natural gas could create upside for a resilient operator.
  • Recommendation – A cautious approach is warranted. Investors should monitor the resolution of the control‑change process, the company’s ability to curb cost inflation, and any policy shifts that could impact natural gas demand.

Delong Composite Energy Group’s recent performance underscores the volatility inherent in China’s utilities market. While the stock’s recent limit‑up rallies and control‑change announcement provide catalysts for short‑term trading, sustained value creation will hinge on disciplined cost management, strategic asset deployment, and favorable regulatory dynamics.