Taiwan Semiconductor Co LTD (TSM)

(3 November 2016)

TSM Business Overview

TSMC is the world’s first dedicated semiconductor foundry. As the founder and a leader of the Dedicated IC Foundry segment, TSMC has built its reputation by offering advanced and “More-than-Moore” wafer production processes and unparalleled manufacturing efficiency. From its inception, TSMC has consistently offered the foundry segment’s leading technologies and TSMC COMPATIBLE® design services.

TSM Fundamentals

  • Price to Earnings: 24.07
  • Earnings Per Share: $1.70
  • Market Cap: 159.6B
  • Current Ratio: 2.14
  • Return on Equity: 23.54%
  • Dividend Yield: 2.71%
  • Total Debt to Equity Ratio: 20.23

Balance Sheet ($ in NT Billions)

  • Total Assets decreased $85.8.
  • Total Current Liabilities decreased $141.18.
  • Total Equity increased $86.56.
  • Inventory Turnover Days decreased from 54 days to 44 days.

Income Statement ($ in NT Billions)

  • Net Revenue increased $38.6, or 17.4%
  • Net Income increased $24.25, or 33.4%.
  • Basic Earnings Per Share increased from $2.80 in 2Q to $3.73 in 3Q.
  • Return on Equity increased by 7.8% from 23.4% to 31.2%.

Cash Flow Statement ($ in NT Billions)

  • Net Cash provided by operating activities increased $19.73.
  • Capital Expenditures increased $30.19.
  • Cash Dividends were paid out in amount of $155.58, which is significant compared to last quarter where they did not pay a dividend.
  • Free Cash Flow is down $10.46.

Highlights from 10-Q & News

  • Renesas Electronics and TSMC Announce 28nm MCU Collaboration for NextGeneration Green and Autonomous Vehicles ( 2016/09/01 )
  • TSMC’s Board approved the acquisition from VisEra Holding Company of 86.9% shareholding in VisEra Technologies Company Ltd. and 6.9% shareholding in Xintec Inc. to simplify investment structure ( 2016/08/02 )

Entry and Exit Points

Entry Points

  • $28
    • It has good support at the $28 level.

Exit Point

  • $50
    • It currently is around its all time high, with that being said, I can’t give a good estimate on what I believe the “this-is-way-overvalued-get-out” number, but given consistent balance sheets, continued growth, and a solid dividend, I’m going to go with $50.
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