Is This the Buying Opportunity for Zhongmei Crystal? Justice Restored for Taiseng Light, Next Undervalued Growth Stock to Follow!

I. Market Structure and Interpretation

Today's Market: 'Opened Lower, Volatile, Rapid Recovery'

The index plunged nearly 660 points intraday to 44,970.

However, strong buying emerged early, closing down only 6.61 points.

Trading volume shrank to approximately NT$902.6 billion, indicating a consolidation phase with reduced volume and stabilized positioning.

Reasons for Volatility:

Escalating geopolitical risks in the Middle East (U.S. pressure on Iran)

Margin debt up nearly 80% YoY, amplifying volatility due to high leverage

Short-term profit-taking at elevated levels

Key Observations:

Rapid stabilization after sharp sell-off → strong underlying support

Index held above the 20-day moving average → medium-term bullish structure remains intact

II. Three Core Reasons Why Taiwan Stocks 'Can't Fall Further'

1. Robust AI Fundamentals (Most Critical)

Listed and OTC companies reporting explosive revenue growth:

June Revenue: +6.81% MoM, +46.62% YoY

Q2 Revenue: +38.9% YoY

H1 Revenue: +31.55% YoY (record high)

Exports positive for 32 consecutive months, indicating strong external demand

AI-driven growth across:

Semiconductors

Servers

Entire electronics supply chain

Conclusion: Fundamentals reflect a 'structural bull market,' not a short-term theme

2. Global Tech Earnings + Capital Expenditure Explosion

TSMC (2330-TW) earnings call significantly exceeded expectations:

Q2 EPS: NT$27.25, +77% YoY

Gross margin: 67.7% (high-end)

Raised full-year revenue growth forecast to over 40%

Capex projected at $60–64 billion (record high)

Key AI Demand Signals:

C.C. Wei: Demand 'extremely strong'

U.S. expansion (Arizona investment of $100 billion)

Tech giants joining in:

Google / Microsoft / Meta / Tesla / Intel

Estimated capex reaching $1.1 trillion by 2027

Conclusion: AI = the largest growth engine in the global capital market

3. Domestic Capital Dominance (Structural Shift)

ETFs + Asset Managers + Government-backed funds forming support

Equity ETF assets reach NT$7.2 trillion (up NT$3 trillion YoY)

Reduced foreign influence:

Foreign investors have been net sellers over the past three years, yet Taiwan stocks hit new highs

Key Shift:

Market transitioned from 'foreign-dominated' → 'domestic-dominated'

III. Industry Trends and Leading Sectors

1. Semiconductor Equipment (Long-Term Growth Confirmed)

Equipment market to reach $229.5 billion by 2028

Testing equipment to grow 31% YoY in 2026

Explosion in advanced packaging demand

Beneficiaries: Equipment, packaging & testing, electronic materials, specialty chemicals

2. ASIC / Cloud AI (Agentic AI)

AI entering 'Agentic AI' new phase

CSPs (e.g., AWS) expanding in-house chip development

Beneficiaries:

ASIC design

Servers

Networking equipment

3. ASML Production Expansion Effect

Strong EUV equipment demand

30% capacity increase over next two years

Beneficiaries: Semiconductor equipment supply chain

4. CPO Optical Communications (Mid-to-Long-Term Explosion)

High-speed growth phase post-2028

Solves AI server power consumption bottleneck

Key sectors: Optical communications, switches

5. AI Hardware Material Upgrades (PCB / CCL)

NVIDIA's new architecture driving demand for high-end materials

Rise of high-speed transmission materials (Q-Glass)

6. Traditional Industries Strengthening (Catch-up Rally)

Electronic chemicals (price increases)

Bicycles (inventory digestion complete)

IV. Technical Analysis and Market Outlook

Moving Average Structure:

20-day / 100-day / 200-day MAs → all upward sloping

Bullish trend remains unchanged

Range Outlook:

Support: 20-day MA

Resistance: 48,000 level

Short-term pattern:

'High-level consolidation → position stabilization → next leg up'

V. Investment Strategy (Key Points)

Recommended Sectors:

AI large caps (TSMC, server chain)

Advanced semiconductor processes

Optical communications / CPO

PCB / ABF / high-speed materials

Electronic chemicals

Recovery plays in traditional industries (bicycles)

Sectors to Avoid:

High-margin small/mid speculative stocks

Overvalued stocks with stretched valuations

Stocks without fundamentals or themes

Core Principles:

Buy the dip, don't chase (most important)

Gradual position building, leverage control

Focus on stocks with fundamentals and institutional backing

Watch for turning point at end of July to August correction

VI. Conclusion (One-Sentence Investment Thesis)

Taiwan's market is in a high-level consolidation phase driven by 'AI long-term growth + domestic capital support.' Short-term volatility exists, but medium-to-long-term trajectory remains upward toward 50,000 points. The key is stock selection, not index timing.

Sharp sell-offs are gifts from heaven.

They are opportunities for the informed to 'buy cheap.'

In this kind of market, the worst thing to do is watch from the sidelines.

Actively restructure your portfolio and rotate into better stocks.

Current operational focus:

Don't chase overheated popular stocks

Beware of short-term volatility from foreign selling

Focus on stocks with earnings turnaround in H2

Pullbacks are not risks, but setup opportunities

Markets may fluctuate on news in the short term,

But will revert to fundamentals in the medium-to-long term.

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Source: Chen Xuejin, Analyst, Lun Yuan Investment Advisory

Our recommended securities have no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and bear investment risks on their own.