The demand for AI hard drives and domestic replacement benefits jointly support the market. Guangyang Technology (1785) breaks through consolidation and hits the daily limit with a surge to 69.3 yuan.

Multiple Catalysts Jointly Triggering a Rally

Taiwan’s leading advanced materials and precious metals recycling company, Koyo Electronics (1785), today (23rd) surged after hitting a record high in international gold prices, strong demand for AI data center hard drives, and progress in domestic semiconductor target production. The stock price quickly rose after opening, hit the daily limit-up during trading, and closed at NT$69.3. This not only breaks a record unseen since July last year, exceeding one and a half years, but also signifies a formal breakthrough from a long-term consolidation pattern. After hours, there are still tens of thousands of buy orders queued, indicating market confidence in its future prospects has shifted from cautious observation to active optimism.

Dual Drivers of Fundamentals, Revenue and Order Visibility Soar

Koyo’s strong performance is primarily based on solid fundamentals. The company’s latest consolidated revenue for November reached NT$3.816 billion, up 14% month-over-month and 26.39% year-over-year, setting a new monthly record high. The cumulative revenue for the first 11 months also hit a near 10-year high for the same period. This achievement reflects the success of the company’s business transformation, especially the contribution from value-added services (VAS).

VAS refers to the actual technical service income provided by the company after deducting precious metal raw material costs. This gross margin far exceeds that of precious metal trading itself and more accurately reflects the company’s core competitiveness. Meanwhile, the rigid demand for high-capacity HDDs (over 30TB) in AI data centers has entered an explosive phase. The new generation HAMR (Heat-Assisted Magnetic Recording) technology requires more precise target materials, and Koyo’s order visibility in this field has extended beyond 12 months. The third quarter EPS of NT$1.17 already demonstrates the recovery momentum in profitability.

Geopolitical and Supply Chain Reshaping, Domestic Substitution Establishes Growth Path

In the long term, Koyo’s layout in the front-end semiconductor target materials is a key growth driver. Traditionally, Taiwanese wafer fabs have relied on Japanese (e.g., JX Metals) and American (e.g., Honeywell) suppliers for sputtering targets. However, with rising geopolitical risks and the push for local supply chains in wafer foundries, Koyo has successfully entered the verification and supply of copper, aluminum, titanium, and tantalum targets for advanced 3nm and 5nm processes.

This trend of domestic substitution involves high technical barriers. Once certified by wafer fabs, supply relationships tend to remain stable for several years. The company’s semiconductor business group split plan, starting at the end of 2024, aims to enhance R&D flexibility and capital operation capabilities. Market expectations are that, as AI chip capacity gradually ramps up, revenue from the front-end semiconductor segment could potentially double within the next two years.

Differing Logic from Zhongsha: Resilience and Closed-Loop Supply Chain

In Taiwan’s semiconductor materials sector, Koyo is often compared with Zhongsha (1560). Zhongsha’s strength lies in CMP process “diamond disks,” with gross margins exceeding 30%, but its revenue scale is smaller than Koyo. Koyo’s advantage is its broad application of “metal materials science,” covering storage, displays, semiconductors, and precious metal recycling. Compared to Zhongsha and TSMC’s close ties to advanced processes, Koyo’s investment logic is more resilient, benefiting from the circular economy trend of electronic waste recycling and the rigid demand for AI server hardware. Under the ESG-driven global environment, Koyo’s “closed-loop supply chain” model, recycling and refining electronic waste into semiconductor-grade target materials, creates a unique technological barrier in international competition.

Gold Price Surge Coupled with Hedging Buying, Asset Value and Recycling Space Both Rise

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 largest and most advanced precious metals recycler among the “Golden Triumvirate,” Koyo’s stock price shows a high correlation with gold prices. The rise in gold prices brings two major benefits: first, “asset valuation appreciation” as Koyo maintains inventory of precious metals during processing, with rising gold prices directly reflected on the balance sheet; second, “expanded recycling profit margins,” as high gold prices increase the willingness of private and corporate entities to recycle precious metals. Leveraging advanced refining and recycling technology, Koyo can capture more substantial processing and trading spreads.

Technical and Chip Data Provide Converging Bullish Signals, Bullish Pattern Confirmed

On the technical side, Koyo performed remarkably today. The stock price broke through the 60 to 64 NT$ range with a volume breakout, forming a clear breakout gap. This pattern generally indicates that short-term trapped positions have been fully digested, and the bullish attack momentum is strong. Both KD and MACD indicators show synchronized upward bullish alignment. Today’s trading volume exceeded 44,000 lots, confirming genuine capital inflow rather than false hype.

On the fundamental side, the data provides the most convincing bullish signal. After hours, foreign institutional investors showed a large net buy, reversing their previously cautious stance. Driven by record-high revenue and soaring gold prices, institutional funds have clearly flowed back. More critically, the concentration of major institutional holdings has significantly increased. If margin debt remains low, it indicates stable chips less susceptible to short-term fluctuations, which is an important reference for the continuation of the rally.

Outlook and Risk Warning

In the medium to long term, if the stock price can hold above NT$65-66 support, the bullish pattern will be maintained. In the short term, caution is advised, as the recent limit-up with a large divergence may trigger profit-taking selling pressure. Investors chasing the rally should be aware of risks.

Subsequent monitoring of international gold price trends, as well as whether foreign and institutional investors continue their buying momentum, will be key indicators to determine if the wave can extend beyond NT$75 resistance zone.