(Bloomberg) -- The nearly 1,200% share-price leap in Hanmi Semiconductor Co. since the end of 2022 has some investors seeking to cash out amid scorching valuations.

Hanmi Semi is the most expensive stock on a regional gauge of chip-related peers, relative to forward earnings estimates. That makes positives including demand for the South Korean firm’s AI-related chipmaking equipment and buying of the stock by its billionaire chief executive look more than fully priced in.

Foreign investors have started to pare holdings after pouring money into the shares last year. Foreign ownership of Hanmi Semi declined to 13.2% as of Wednesday from 16.5% in mid-February.

“People who bought out of ignorance have left, and now some investors are having second thoughts,” said Yoon Joonwon, a fund manager at DS Asset Management Co. Foreigners may still be attracted to the potential but are less certain now, while local funds “seem to be holding despite doubts.”

The stock has more than doubled this year alone, making it the top performer on the MSCI Asia Pacific Index, largely on excitement over the company’s thermal compression bonders. It supplies these to SK Hynix Inc. for use in making high-bandwidth memory for the likes of Nvidia Corp. Hanmi also recently won an order from Micron Technology Inc.

CEO Kwak Dong Shin has amassed a stake of nearly 36% in the company, worth $3.7 billion, according to data compiled by Bloomberg. His continual share purchases over the past year as well as expectations that Hanmi Semi will be added to the blue-chip Kospi 200 Index in the June review have been two additional positive catalysts for the stock.

“It’s very unique that the CEO keeps buying shares,” said Ahn Hyunsang, chief executive officer at Korea Investment Research Institute. “The stock is very expensive based on the price-to-earnings ratio, so I’m not sure if there are any more legs to this rally.”

Hanmi Semiconductor is trading at around 80 times estimate earnings for the next year, more than all other stocks in the 40-member FactSet Asia Semiconductor Index.

According to DS Asset’s Yoon, the company would need to make 1 trillion won ($730 billion) in annual net income to justify its current valuation. It reported net income of 267 billion won for 2023.

Jay Kwon, an analyst at JPMorgan Chase & Co., notes results were weak last year but that Hanmi projects a “strong recovery” in 2024 with potential upside from additional order wins.

The company expects thermal compression to be the “mainstream” at AI memory makers for the next three years, and that its “superior” technology will help it beat competitors like ASMPT Ltd., Kwon wrote in a note.

For now, some investors are taking profits. The stock closed 0.6% lower Thursday after rising as much as 3.7% earlier in the day after Nvidia’s latest bullish forecast and South Korea unveiled a $19 billion package of incentives to bolster the chip sector.

--With assistance from Youkyung Lee.

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