The Shanghai Stock Exchange has witnessed a notable surge in several technology‑focused stocks during the last trading session on 28 October 2025. The rally was largely propelled by two intertwined narratives that have captured investor attention: the rapid progress in quantum‑technology research and the accelerating momentum behind domestic software replacement initiatives. Although Koal Software Co., Ltd. (KOAL) is not a constituent of the quantum‑tech group, its core business in public‑key infrastructure and cryptographic solutions positions it squarely at the intersection of these trends.

1. Quantum‑Technology Momentum

Recent announcements from the Anhui Province Quantum Information Engineering Technology Research Center have declared that China has produced the world’s first mass‑produced four‑channel, ultra‑low‑noise semiconductor single‑photon detector. The breakthrough signals that Chinese single‑photon detection technology has entered a “leading‑stage” phase, and analysts are already extrapolating the implications for secure communications, quantum key distribution, and high‑speed data encryption. As a result, a cluster of stocks—Electronic City (600658), Gere Software (603232), Sheng’an Security Century, Tengjing Technology, Hengbao (002104), GuoDun Quantum, and Keda Guochuang (300520)—all experienced substantial gains, with several hitting the daily limit‑up.

For KOAL, the quantum‑technology wave represents both a challenge and an opportunity. The company’s product portfolio of cryptographic software could be leveraged to protect the data traffic generated by quantum sensors and communication nodes. Conversely, the advent of quantum‑enabled security solutions may pressure KOAL’s traditional cryptographic offerings, prompting a reassessment of its research and development strategy.

2. Domestic Software Replacement Surge

Parallel to quantum developments, the domestic software concept has been re‑energised by a government‑driven push for Chinese substitutes in key sectors. A research note from Goldman Sachs’ research division projected that by 2027, the domestic software replacement market, primarily driven by government procurement, would reach 12 trillion CNY with a compound annual growth rate of roughly 18 %. This projection underscores a shift from “opt‑in” to “must‑adopt” for Chinese software solutions, particularly in critical infrastructure and data‑security domains.

In this environment, KOAL’s focus on public‑key infrastructure places it within a growing segment of the software ecosystem that is likely to receive preferential treatment in procurement cycles. Investors in KOAL may view the company as a beneficiary of this macro‑policy shift, even if the company’s market capitalization remains modest at 4.549 billion CNY relative to its peers in the sector.

3. Trading Dynamics and Liquidity

The day’s trading activity revealed a highly active market for technology stocks. According to Securities Times data, 78 shares recorded an increase in average trade volume exceeding 50 %, a metric that often signals heightened institutional interest. While KOAL itself was not highlighted in the volume‑surge statistics, the overall bullish sentiment among its industry peers—especially in software and security—could indirectly support the company’s liquidity and price discovery process.

4. Valuation Snapshot

KOAL’s price‑to‑earnings ratio stands at 356.1, reflecting the high expectations that investors hold for companies in the information‑security space. The current close price of 19.43 CNY (as of 23 October 2025) sits at the upper end of its 52‑week high, suggesting that the stock has been on an upward trajectory amid the broader market rally. However, the steep P/E also signals that future earnings growth will need to accelerate substantially to justify the valuation, especially if quantum‑enabled security products begin to displace legacy cryptographic solutions.

5. Strategic Implications for KOAL

  • Product Innovation: Aligning cryptographic software with quantum‑secure protocols could safeguard KOAL’s competitive edge.
  • Policy Advocacy: Engaging with government procurement cycles may unlock preferential contracts, capitalising on the projected 12 trillion CNY market.
  • Capital Allocation: A re‑allocation of resources toward R&D in quantum‑resistant cryptography could mitigate the risk of obsolescence.
  • Investor Communication: Transparent updates on how the company is preparing for the quantum era may reinforce investor confidence and support the current valuation.

In summary, the recent market movements in quantum technology and domestic software replacement highlight an evolving ecosystem that directly touches KOAL’s core business. While the company has not yet participated in the headline‑grabbing quantum sector, the confluence of policy momentum and technological evolution presents both strategic imperatives and opportunities for growth.