The triple resonance behind the stock price limit-up: Koyo Electronics(1785) with increased chip concentration and record-high fundamentals

Koyo Tech(1785) today( 23rd) reached a intraday limit-up at NT$69.3, setting a new high in over a year and a half since July last year, demonstrating a strong momentum to break through prolonged consolidation. This stock rebound is not purely a technical rebound but driven by three forces: international gold prices approaching historic highs, rigid demand for high-capacity storage in AI servers, and the supply chain opportunities from domestic semiconductor front-end processes.

Market Sentiment and Buying Signals

Post-market data that warrants attention are the changes in foreign institutional and major player positions. According to disclosed information, foreign investors made a large net purchase today. Previously, their holdings in Koyo Tech were relatively reserved, but driven by revenue hitting new highs and significant gold price increases, institutional funds have clearly flowed back. Even more noteworthy is the significant increase in the concentration of chips held by major institutional players, indicating a strengthening of the chip structure. If the margin loan balance remains low, it suggests higher stability of chips and less susceptibility to short-term volatility.

From a technical perspective, today’s volume-driven gap-up broke through the 60-64 NT$ range, a major six-month consolidation zone, forming a clear breakout gap, indicating that recent trapped pressure has been largely absorbed. The trading volume increased to over 44,000 lots, showing capital inflow rather than false signals. KD and MACD indicators are both trending upward, confirming a bullish pattern.

Valuation Logic of the Precious Metals Cycle Economy

International spot gold prices today approached the historic high of US$4,500 per ounce, with an astonishing year-to-date increase. As Taiwan’s leading precious metals recycler and the largest revenue scale company in this sector, Koyo Tech’s stock price trend is significantly positively correlated with gold prices.

The sharp rise in gold prices brings two bullish factors for Koyo Tech. First is the appreciation of inventory assets—Koyo maintains a certain level of precious metal turnover inventory in its daily processes, and soaring gold prices directly reflect on the valuation on the balance sheet. Second is the expansion of profit margins—when gold prices are high, the willingness of the public and enterprises to recycle precious metals increases. Leveraging its leading refining and recycling technology, Koyo can capture more substantial processing spreads.

Market funds, amid rising risk aversion, prefer Koyo Tech with stable revenue structure and concepts of precious metals cycle economy as a key holding, which directly ignited today’s limit-up.

Dual Fundamental Drivers: Record Revenue and Explosive Demand for AI Hardware

Koyo Tech recently announced its November consolidated revenue of NT$3.816 billion, up 14% month-on-month and 26.39% year-on-year, setting a new monthly record and continuing a nearly 10-year record for the first 11 months. The core driver of this performance is the “VAS business” (technical service income after deducting precious metal raw material prices), which has a gross margin much higher than precious metal trading and better reflects the company’s true competitiveness.

The most critical growth driver is the exploding demand for high-capacity storage in AI data centers. AI model training and inference generate massive data, maintaining high demand for high-capacity hard drives over 30TB. The new HAMR (Heat-Assisted Magnetic Recording) technology requires more precise target materials, extending order visibility for Koyo Tech in the hard drive sector to over 12 months. As the proportion of high-margin products increases, the third-quarter EPS reached NT$1.17, reflecting a significant improvement in profitability. Market expectations suggest that the fourth quarter through the first half of next year will remain strong.

Long-term Supply Chain Strategy for Semiconductor Localization

Koyo Tech’s most anticipated long-term growth engine is its layout of front-end semiconductor target materials. Historically, Taiwan’s wafer industry relied on Japanese (e.g., JX Metals) and American (e.g., Honeywell) suppliers for sputtering targets. With rising geopolitical risks and leading foundries promoting localized supply chains, Koyo Tech has successfully secured key positions. Currently, in Taiwan’s most advanced 3nm and 5nm processes, some copper, aluminum, titanium, and tantalum targets have been verified and supplied stably.

This trend of domestic substitution has high entry barriers. Once certified by wafer fabs, supply relationships typically last for years. Koyo Tech’s semiconductor division, launched at the end of 2024, aims to enable more flexible R&D and capital operations. As AI chip capacity continues to expand, revenue from the semiconductor front-end is expected to double over the next two years, serving as a solid foundation for long-term stock appreciation beyond gold price fluctuations.

Competitive Advantages over Zhongsha

In Taiwan’s semiconductor materials sector, Koyo Tech is often compared with Zhongsha(1560). Zhongsha’s core strength lies in diamond disks for CMP processes, with a gross margin exceeding 30%, but its revenue scale is relatively small. Koyo’s advantage is its broad application of metal materials science, covering storage devices, displays, semiconductors, and precious metals recycling ecosystems.

Compared to Zhongsha’s close ties to advanced processes, Koyo’s investment logic is more resilient, benefiting from both the circular economy trend of electronic waste recycling and the rigid demand for AI server hardware. Against the backdrop of global emphasis on green supply chains, Koyo’s closed-loop supply chain—recycling and refining electronic waste into semiconductor-grade targets—builds a unique technological barrier in international competition.

Mid- to Long-term Investment Outlook and Risks

In the medium to long term, if the stock price can hold above NT$65-66, the bullish pattern can continue. In the short term, investors should be cautious of profit-taking pressure after today’s limit-up, and chasing the high involves risks.

Key indicators to monitor include: whether international gold prices can stay high, whether foreign and institutional investors continue to buy, and whether the visibility of semiconductor orders remains extended. These factors will directly determine if the wave can extend beyond NT$75 resistance.

Looking ahead to 2026, Koyo Tech has the potential to transform from a traditional precious metals recycler into a high-tech semiconductor materials and AI hardware supplier, which is the core narrative driving long-term stock growth.