Analysis of Shunkong Development (003039)'s Limit-Up: Breakdown of the 2 Consecutive Limit-Ups Driven by SOE Reform and Water Services Sector

Shunkong Development’s limit-up today is the result of multiple positive factors superimposed, and the core driving logic can be summarized into the following three aspects:

: The water services sector performed strongly today, becoming the direct catalyst for Shunkong Development’s limit-up. According to a report from Hexun.com [1], the water services sector rose across the board on January 20, with both Guozhong Water and Shunkong Development hitting the limit-up. The Public Utilities Sector rose 1.25% on the day [0], ranking among the top in the entire market. The sector linkage effect enabled Shunkong Development, as a representative target in the water services industry, to attract capital attention.

is the long-term logic supporting the company’s valuation. Shunkong Development is a benchmark “Double Hundred Enterprise” certified by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), with a distinct SOE reform label. Shunde is implementing the State-owned Assets “1314” Strategy [2], which aims to enhance urban competitiveness and deepen the reform of state-owned assets and enterprises. This strategic deployment brings potential for asset integration and business expansion to Shunkong Development.

provide tangible support for the company’s performance growth. According to a report from Sina Finance [3], on December 5, 2025, the company announced its plan to acquire 100% equity of Guangdong Shunkong Clean Investment Co., Ltd., a wholly-owned subsidiary of Guangdong Shunkong Science, Industry and Trade Co., Ltd., for RMB 181 million. Shunkong Clean Investment owns domestic waste transfer station assets in Ronggui, Beijiao, Lecong, and Longjiang Subdistricts/Towns of Shunde District, Foshan. This move will significantly expand the company’s solid waste treatment business layout.

In terms of price performance, Shunkong Development has shown a strong upward trend recently: it hit the limit-up with a 1-day gain of 9.98%, maintained strength with a 5-day gain of 9.85%, achieved a monthly gain of 34.07%, a 3-month gain of 39.78%, and an annual gain of 49.84%, hitting a 52-week high [0]. This price trend indicates the market’s recognition of the company’s medium and long-term value.

In terms of trading volume, 12.58 million shares were traded today, a 38% increase compared to the average trading volume of 9.11 million shares, with a turnover of approximately RMB 236 million [0]. The increase in trading volume indicates the entry of incremental capital, but it should be noted that the limit-up was broken 3 times during the sealing process, and the sealing strength was only 0.98%, which shows that some capital has the intention of taking profits, and there is a certain divergence in the market.

From the perspective of financial data, the company achieved operating revenue of RMB 589 million and EPS of RMB 0.14 in Q3 FY2025 [0], maintaining a steady growth trend. The latest annual report shows that the company has an AAA credit rating [4], with a stable financial situation and guaranteed financing capabilities. In terms of business layout, the company covers multiple fields including integrated water supply services, integrated solid waste treatment services, sewage treatment and water environment governance, municipal environmental protection project construction, green clean energy, and green packaging [5]. The diversified layout reduces the risk of single business and enhances comprehensive competitiveness.

The limit-up event of Shunkong Development reveals the deep correlation between the Public Utilities Sector and the SOE Reform theme. As a benchmark “Double Hundred Enterprise”, the company benefits from both the improvement of the water services industry’s prosperity and the policy dividends of SOE reform. This dual attribute gives it unique allocation value in the current market environment.

From the perspective of industry development, the strong performance of the water services sector is not an isolated event. The New Century Rating report shows [4] that the credit status of the water services industry was generally stable in 2024, and it is expected to continue to improve in 2025. Industry integration is accelerating, and the market share of leading enterprises is clearly increasing. As a regional water services leader, Shunkong Development is expected to gain more market share in this industry transformation.

The structural impact of this limit-up on the company is reflected in two aspects: in the short term, the 2 consecutive limit-ups have significantly increased market attention and liquidity; in the medium term, the effect of business integration after the acquisition of Shunkong Clean Investment will determine whether the company can convert short-term stock price gains into sustained performance growth. It is worth noting that the company’s current PE ratio is 42.45x [0], which is higher than the industry average, meaning that the stock price has fully reflected the market’s optimistic expectations for the company’s future.

From the perspective of market sentiment, the game between bulls and bears is obvious. Bullish factors include sustained sector heat, active capital inflow, strong expectations of policy dividends, and continuous improvement of fundamentals; bearish factors include high valuation, RSI overbought indicating a short-term overbought state, unsteady limit-up sealing exposing capital divergence, and possible capital diversion from previously hot sectors. This mixed sentiment state indicates that the stock price may fluctuate and consolidate in the short term.

is the most noteworthy risk factor at present. The company’s current PE ratio is 42.45x [0], significantly higher than the average level of the water services industry. The stock price has fully reflected optimistic expectations. Once the performance fails to meet expectations or market sentiment turns, there will be great pressure on valuation pullback.

also cannot be ignored. The RSI indicator has entered the overbought zone, coupled with a large short-term gain (over 34% in the past month), the probability of technical pullback is high. Historical data shows that RSI remaining above 70 often indicates the risk of short-term adjustment.

has already been reflected in today’s trend. The limit-up was broken 3 times during the sealing process [0], showing obvious capital divergence. If the follow-up support is insufficient tomorrow, it may affect the short-term premium space.

is a potential systemic risk factor. The current market hot spots rotate rapidly, and previously hot sectors (such as AI, brain-computer interfaces, etc.) may divert capital, leading to a decline in the heat of the Public Utilities Sector.

: If the water services sector continues to strengthen and trading volume remains at a high level, the company is expected to challenge 3 consecutive limit-ups, with the first target price of RMB 19.59 [0]. Considering the company’s “Double Hundred Enterprise” label and continuous catalysis of M&A expectations, the probability of this scenario is about 35%.

: If the stock price pulls back to the support level of RMB 17.13 or near the 20-day moving average, it will provide an ideal intervention timing. With reference to the company’s fundamental support and SOE reform expectations, the medium and long-term allocation value is still significant.

: As the M&A business integration is completed and contributes to performance growth, the company is expected to digest the current high valuation through performance growth, realizing the matching of valuation and performance.

Short-term (1-3 trading days): Focus on the opening call auction situation and changes in trading volume tomorrow. If it opens higher by more than 3% and seals the limit-up quickly, the short-term strong pattern can be expected; if it opens lower or rises with heavy volume but stagnates, investors need to be alert to the risk of pullback.

Medium-term (1-4 weeks): Pay attention to the progress of the company’s M&A business integration and policy trends related to SOE reform. If there are positive catalysts such as asset injection or business expansion, the stock price is expected to continue its upward trend.

Shunkong Development (003039), as the core listed platform of Guangdong Shunkong Development Co., Ltd., is a regional leading enterprise in the urban environmental comprehensive services field. The company’s current market value is RMB 11.566 billion [0], with business covering six sectors including water supply, solid waste treatment, sewage treatment, environmental protection engineering, new energy, and green packaging, forming a complete urban environmental service ecological chain.

The core supporting factors for this limit-up include: the sector effect brought by the overall strength of the water services sector, the SOE reform expectations brought by Shunde’s State-owned Assets “1314” Strategy, and the external expansion capability reflected in the acquisition of Shunkong Clean Investment. Technically, the stock price is in an upward trend but the RSI is overbought, so investors need to be alert to the risk of short-term pullback. In terms of valuation, the 42.45x PE ratio is higher than the industry average, and the stock price has reflected relatively optimistic market expectations.

For the subsequent trend, our judgment is: 35% probability of strong trend continuation, 45% probability of fluctuation and consolidation, 20% probability of short-term pullback [0]. Investors should focus on tomorrow’s opening performance, changes in trading volume, and sector linkage effects, and make rational decisions based on their own risk tolerance.

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[0] Jinling Analysis Database - Market Data and Technical Analysis (Internal Database)

[1] Hexun.com - Water Services Sector Rises, Guozhong Water and Shunkong Development Hit Limit-Up (https://m.hexun.com/stock/2026-01-20/223212100.html)

[2] Foshan News Network - Shunde Implements State-owned Assets “1314” Strategy to Enhance Urban Competitiveness (https://www.foshannews.net/h/175/20251019/814681.html)

[3] Sina Finance - 16 Cases in One Month, Cumulative Transaction Volume Exceeds RMB 33 Billion (https://finance.sina.com.cn/stock/relnews/cn/2025-12-08/doc-inhacaaw3429772.shtml)

[4] New Century Rating - 2024 Credit Review and 2025 Outlook for the Water Services Industry (https://aigc.idigital.com.cn/djyanbao/)

[5] Official Website of Guangdong Shunkong Development Co., Ltd. (https://www.gdskfz.com/)