Taiwan Semiconductor Manufacturing Co Ltd

Section 1: Company Overview and Fundamentals

1.1   Company Overview:

Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) is a Taiwan-based company mainly engaged in the provision of integrated circuit manufacturing services. The integrated circuit manufacturing services include process technology, special process technology, design ecosystem support, mask technology, 3DFabricTM advanced packaging and silicon stacking technology services.

Kalkine’s American Tech Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Price Performance:

·         TSM's share price has been corrected by 14.31% in the past three months. On the other hand, in the long term, the stock has given a return of 4.83% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 226.40 and 52-week low price of USD 125.78, with the current price near an important support area of USD 160.00-USD 170.00, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 33.52, recovering from oversold zone, with expectations of bullish divergence.

1.2 The Key Positives, Negatives, and Investment summary   

1.3 Top 10 shareholders:

The top 10 shareholders together form ~5.08% of the total shareholding, signifying diverse shareholding. Fidelity Management & Research Company LLC, and Sanders Capital, LLC, are the biggest shareholders, holding the maximum stake in the company at ~1.09% and ~0.81%, respectively.

1.4   Key Metrics:

Taiwan Semiconductor Manufacturing Company Limited (TSMC) showcases exceptional financial growth from FY23 to FY24, with gross profit margin rising from 54.36% to 56.12%, EBITDA margin from 67.24% to 68.58%, and operating margin from 42.63% to 45.68%, reflecting enhanced efficiency despite 3nm dilution challenges. The income before tax margin improved from 45.30% to 48.57%, net margin from 38.75% to 40.51%, and return on invested capital from 20.13% to 23.86%, with return on equity surging from 25.76% to 30.02%, demonstrating superior capital efficiency and shareholder value. Supported by a 14.3% Q4 2024 revenue increase to USD 90.192 billion and USD 41.198 billion in operating profit, driven by 74% wafer revenue from advanced technologies, TSMC’s robust performance justifies a premium valuation over peers.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of FY24:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Technical Summary:

 Price Performance:

·         TSM's share price has been corrected by 14.31% in the past three months. On the other hand, in the long term, the stock has given a return of 4.83% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 226.40 and 52-week low price of USD 125.78, with the current price near an important support area of USD 160.00-USD 170.00, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 33.52, recovering from oversold zone, with expectations of bullish divergence.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 10, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.