TSM Stock Forecast and Price Target 2021

Today, I will analyze TSMC stocks in-depth with you.

In the semiconductor sector, TSMC has always been my most promising stock. TSMC has just announced its results for the fourth quarter of 2020. At the same time, there are new developments in the entire chip industry recently. Therefore, today I will combine the financial report and chips. The latest developments in the industry to analyze the trend of TSMC stocks,

First of all, we analyze TSMC’s fourth-quarter and full-year 2020 financial reports to see what are the key points worthy of investors’ attention.

First, TSMC’s fourth-quarter revenue and profitability are very good.

Compared with the outlook for Q4 in Q3, the outlook at that time was US$12.4-12.7 billion, and the actual revenue was US$12.68 billion. Actual revenue As the upper limit of the outlook, the gross profit margin outlook is 51.5%-53.5%, while the actual gross profit margin is 54%, which is better than the outlook.

The operating net profit margin is expected to be 40.5%-42.5%, and the actual operating net profit margin is 43.5%, which is much better than the outlook. Then compared with the same period of the year, revenue increased by 22% month-on-month and gross profit margin increased by 3.8%. Earnings per share increased by 23%,

At the same time, compared to the third quarter, regardless of revenue, gross profit margin, operating net profit margin, or earnings per share, all are positive growth, so I think this is a very good financial report.

TSMC’s gross profit margin increased from 50.2% in the fourth quarter of 2019 to 54% in the fourth quarter of 2020, indicating that TSMC’s high-end process demand is strong.

Looking at the full year of 2020, revenue increased by 31.4%, while earnings per share increased by 50%. Earnings growth was much faster than revenue growth. This shows that although TSMC has been increasing capital expenditures, due to the near-monopoly of high-end manufacturing processes, Taiwan Semiconductor Manufacturing Co., Ltd. can easily cover the cost by increasing the foundry price,

Second, TSMC’s outlook for the first quarter of 2021 is also very good.

TSMC’s revenue outlook is between US$12.7 billion and US$13 billion. The revenue for the first quarter of 2020 is US$10.31 billion. The upper limit of 130 million is estimated that its growth is 26.1%,

TSMC did not give a forecast for earnings per share. Taking into account the increase in its profit margin, it is expected that earnings per share will grow by about 30%. TSMC’s full-year EPS in 2020 is 3.39 US dollars. The current price of ADR in the US stock market is 126 dollars, so the P/E ratio is 126 divided by 3.39, which equals 37 times the P/E ratio.

And if we are a little bit ahead, we use the EPS of Q4 in 2020, that is, the EPS per quarter is 0.97 US dollars, and we estimate that the full-year EPS of 2021 will be 0.97*4=3.88 US dollars. Therefore, the P/E ratio can be estimated as 126/3.88. It is equal to 32.5 times the price-earnings ratio. I think this estimation method is relatively conservative.

Another estimation method is that if it is assumed that TSMC’s earnings per share can increase by 30% in 2021, the current price-to-earnings ratio of the stock price relative to the 2021 earnings is 29 times.

If you compare horizontally with American technology companies, even if the price of TSMC has risen considerably in the past few months, looking to the future, TSMC’s current stock price is still within a reasonable range.

Third, TSMC’s high-end process demand is strong,

In revenue, the proportion of revenue from 5 nanometers increased from 8% in the previous quarter to 20%.

The revenue share of 7nm decreased from 35% in the previous quarter to 29%.

The revenue contributed by the 16nm and below 16nm processes will increase from 50% in 2019 to 58% in 2020.

Because the proportion of advanced process revenue is higher, this can explain why TSMC’s profit growth is much faster than revenue growth, and why the gross profit margin continues to increase.

Fourth, compared with the company’s capital expenditure of approximately US$17.2 billion last year, TSMC announced that this year’s capital expenditure will reach US$25 billion to US$28 billion, far exceeding market expectations.

TSMC said that about 80% of its expenditures will be used in chip manufacturing with advanced processes such as 7nm, 5nm, and 3nm, as well as the 5nm wafer fab that the company will build in Arizona, USA,

I don’t think investors need to worry about the substantial increase in capital expenditure, because we see that the main reason for the increase in capital expenditure is the increase in demand for chip foundry. At the same time, the increase in capital expenditure can strengthen TSMC’s technical barriers. To widen the gap with Samsung, these capital expenditures are necessary.

The biggest beneficiary of the competition between TSMC and Samsung on capital expenditure will be the upstream ASML company.

On the other hand, with the evolution of the process to 3 nanometers and 1 nanometer, EUV lithography machines are already standard configuration, so ASML, which monopolizes EUV lithography machines, is also worthy of special attention by investors.

After talking about TSMC’s fourth-quarter quarterly report and looking at industry trends, there is still much good news from TSMC shortly. One is that Qualcomm’s latest Snapdragon 888 chip has unexpectedly encountered some problems. As some reviewers got it equipped with Snapdragon The Xiaomi Mi 11 with 888 chip, some reviewers found that Xiaomi Mi 11 had problems such as overheating and dropped frames in the test. This inevitably makes people worry that the Snapdragon 888 may repeat the mistakes of the Snapdragon 810 with too high power consumption.

The Snapdragon 888 is produced by Samsung with a 5nm process, because now only Xiaomi Mi 11 phones are equipped with the Snapdragon 888 chip. The evaluation results may not be representative. As more and more high-end mobile phones equipped with the Snapdragon 888 chip are launched, there will be more tests that have come out, if Qualcomm’s chips go wrong again, there is a high probability that Qualcomm will abandon Samsung in the future.

Turning to TSMC again, investors must pay attention to the extent to which this matter will ferment. Also, Intel has changed its CEO, and the new CEO will be able to drastically change Intel’s existing structure. I think Intel is gradually abandoning chip manufacturing. And seeking foundry is a high probability event,

At this stage, Intel must contact Samsung and TSMC at the same time, to increase the weight of the negotiation.

Because of TSMC’s leading process, the chance of TSMC winning Intel’s orders is very high. Even if Intel is declining, Intel is still a big customer. Therefore, if the news of Intel looking for TSMC foundry is released in the future, TSMC will usher in another round of surges.

It is also possible that because of the confidentiality of customers, Intel does not say, and TSMC can not actively release the news. If so, investors need to think for themselves to conduct an in-depth analysis of the ins and outs. No matter what, the stock price of TSMC is down. The trigger point of a big rise may be related to Intel.

Therefore, whether you look at TSMC’s latest financial report or the recent trends of Qualcomm and Intel, TSMC’s good news continues. Now that the epidemic will not pass immediately, and the digital transformation of mankind is still accelerating, so the entire chip industry Will still be thriving and full of life in 2021,

According to my preliminary estimation, TSMC’s stock price is still within a reasonable range. I expect that even if TSMC has risen a lot from the beginning of 2021 to now, TSMC’s stock price will continue to follow the performance of TSMC in the future. The growth is realized and the tide rises,

At the same time, the growth of chip demand has driven the growth of TSMC, and the growth of TSMC and the competition with Samsung will greatly benefit ASML, so ASML also deserves special attention.

If the chip industry is too obscure for you, and you believe in the overall development of the chip industry, you can consider ETFs, such as the ETF that tracks the Philadelphia Semiconductor Index, coded as SOXX. Of course, I have to emphasize that the overall semiconductor market has risen recently. It's too fast and too fierce, please be careful not to chase the risk,

The conclusions mentioned here and the conclusions obtained are all long-term trends. Put a long line to catch big fish. There are opportunities. Sometimes you need to be patient and wait for a good opportunity to enter the market.

Comments

Will China's economy recover as the epidemic is under control?

During the Chinese Spring Festival, novel coronavirus broke out in Wuhan, and the Chinese stock market was hit hard. Subsequently, the Chinese government quickly took strict measures to block Wuhan, a city with a population of tens of thousands of people, to prevent the further spread of the epidemic, and to take corresponding epidemic prevention measures in other cities. When the worst of the epidemic had already occurred, the Chinese stock market quickly rebounded. As the number of infections continues to decline, China's Shanghai Composite Index is expected to rise further. Sars Period Looking back on similar events in the past, the SARS epidemic in 2003, the stock market also made a short-term decline, and then the SARS epidemic was brought under control, the stock market immediately went up for a long time. According to past historical data, the impact of the novel coronavirus epidemic on the stock market may be short-lived. China Fund Capital Flow Howeve...

VRTX stock forecast 2025: Vertex is undervalued

Let's look at some biotech companies with stable cash flow and currently undervalued value stocks as targets for diversified portfolios. The company I shared today, called Vertex Pharmaceuticals (VRTX), is dedicated to the development of rare diseases, especially Cystic Fibrosis (CF). I have always had high respect for the rare disease group of pharmaceutical companies in the disease category. In addition, in the future, gene and cell therapies are subverting the role of rare diseases in the pharmaceutical industry, making rare diseases no longer uncommon. It's tasteless, but a field full of the future. Vertex Pharmaceuticals Inc. was established in 1989 by Joshua Boger and Kevin Kinsella. is headquartered in Boston. At that time, several very good research and development companies were established in the United States, including the aforementioned Regeneron, Gilead, and today's Vertex. Vertex In the past, he devoted himself to the development of small molecule drugs, wh...

Three stages of bull and bear markets!

The bull and bear markets of the stock market are traditional indicators of the business cycle. As an investor, distinguishing bull and bear markets in the stock market and grasping the long-term development direction of the market can avoid the impact of short-term market fluctuations and the impact of complex market information. For example, the market fluctuations brought by news information, the sudden and sharp drop in market prices, and the impact of investor sentiment have led to making wrong investment trading decisions. The stock market is in a bull market, most asset prices will continue to rise, and the stock market is in a bear market, most asset prices will continue to fall. Both bull and bear markets are divided into three stages, so how to tell whether the stock market is in a bull or bear market, and at what stage. S&P500 Index What is a bull market? In the first stage of the bull market, after the market economy was in recession, the stock price fe...

Shopify stock forecast 2025：Is it worth buying?

In the last year, the stocks rose relatively well. Another sector is e-commerce. Whether it is Amazon, Alibaba, JD.com, Pinduoduo, SEA or vertical e-commerce platforms Etsy and Chewy, all of them have experienced huge gains, while another category has benefited from the e-commerce sector. The company is a website building tool company such as Shopify BigCommerce Holdings. Today I will talk about shopify, the leader of website building tools. First, let's briefly talk about shopify's business model. To put it simply, shopify is a fool-like website building platform. In the past, when a company wanted to build a corporate website, it generally needed to find a dedicated person to design and maintain the website. If you want to add shopping functions to the website, the cost of building the website will also increase. This is true for many small businesses and individual businesses. A very difficult thing. Shopify uses the SAAS model to provide websit...

Will the Great Depression make a comeback?

the Great Depression On March 21, 2020, the United States already had initial unemployment data. Exceeding market expectations, the number of applicants reached 3.28 million, a record high. The current unemployment situation in the United States. Before March 7, employment in the United States was not affected by the epidemic. In the week of March 7, the number of people applying for unemployment benefits for the first time in the United States was 211,000, a decrease of 4,000 compared to the previous week. It is still healthy. This shows that the United States is in a good employment track range. The actual data began to fluctuate, that is, the data for the week of March 14, the number of people applying for relief reached 282,000, a slight increase. On March 21, the number of people applying for unemployment benefits soared to a record high this week. 1.7 million people have far exceeded expectations, and market expectations are about 1.5 to 1.7 million people. It can be said...

Bear market coming, gold(GLD) assets become essential

The economic data of the global economic powers have been deteriorating, entering the bear market stage of the economy, and people have become more cautious when choosing asset investment. We should choose investment products with a low correlation coefficient with economic performance and investment products suitable for the current economic cycle. Investors should pay more attention to foreign exchange and commodity markets so that they can add value to your assets. Among many assets, anti-inflation commodities such as gold have become essential assets. Take gold as an example. For many years, gold has been regarded as an anti-inflation commodity by international capital markets and has been regarded as an important asset hedging tool by investors. There is also a saying, "The world bought gold during turbulent times." From basic political theory, we know that gold is not currency, and the currency is naturally gold and silver. Although gold has withdrawn from ...

Why has international oil(USO) prices plummeted?

As OPEC and Russia failed in negotiations and could not reach an agreement to reduce production, Saudi Arabia issued a comprehensive production increase announcement. Russia followed Saudi Arabia to increase production. Due to the sharp increase in oil supply, international oil prices plummeted, and US stocks were affected by the spread of the epidemic, and international oil prices The plunge, the U.S. stock market plummeted, triggering multiple fuses. S&P500 Index Oil is a commodity whose price is affected by supply and demand. When oil production increases, supply increases, prices fall, and at the same time affected by the epidemic, demand decreases, and prices also fall. Oil supply increases and demand decreases, which is the main cause of the plunge in international oil prices. In terms of oil supply, since the United States developed shale oil, US oil production has become the world's largest. The production cost of shale oil is more than US $ 40, which is the ...

The stock market entering a bear market？

On March 6, 2020, the US stock market continued its decline today after a few days of rebound. Is this the beginning of a bear market in the stock market? Next, let's analyze one important indicator of entering the bear market, Treasury bonds yield. What is the yield of Treasury bonds? Treasury bonds are a tool issued by the state to raise funds. When the bonds are issued, they promise to repay the principal and interest on a specified date. The ratio of the return of Treasury bonds to the principal invested is the return of Treasury bonds. The main factors affecting bond yield include coupon rate, maturity, face value, holding time, purchase price, and sale price. Rising bond yields and falling bond prices mean investors are selling bonds, turning to invest activities, or entering the stock market. In a healthy economic environment, the longer the Treasury bonds, the higher the bond yield. Because short-term bonds are more liquid, investors are willing to accept lower ...

4 George Soros advice to investors!

Who is George Soros? George Soros is a Hungarian-born Jewish businessman. It is one of the most influential investors in the world. In 1969, the Double Eagle Fund was established for Arnhold & S. Bleichroeder, an investment management company. In 1973, Soros and his assistant Rogers left Bleichroeder to co-found Soros Fund Management. In 1979, the well-known Quantum Fund was established and continued to make profits. In the Asian financial turmoil in 1997, George Soros sniped the Thai baht and the Hong Kong dollar, which was frightening. Learning from the experiences of successful people can benefit a lot. Here are 4 tips George Soros gave investors. First, to be successful, you must have ample free time. Most people want to be rich, but not everyone realizes the importance of free time. Many people spend a lot of time working to accumulate wealth, sleep, and forget. Set the goal to complete the work indicated by the superior, or the needs of business partners. But they hav...

XPEV stock forecast 2025: can selling software make money?

The new energy vehicle industry has a relatively high degree of attention, that is, Xiaopeng(XPEV) released its first-quarter 2021 financial report. The general performance data of XPEV are as follows: The total delivery volume reached 13,340 units, a year-on-year increase of 487.4%. Total revenue was USD 450 million, a year-on-year increase of 616.1%. Auto sales revenue was US$429 million, an increase of 655.2% year-on-year. The gross profit margin was 11.2%, compared with -4.8% and 7.4% in the same period last year and the fourth quarter of 2020, respectively. The gross profit margin of automobile sales was 10.1%, compared with -5.3% and 6.8% in the same period last year and the fourth quarter of 2020. To be honest, this data itself is not eye-catching in comparison with Weilai and ideals. Although for officials, this quarter’s financial report has ushered in two major milestones. One is that gross profit margin continues to improve and ...

FinanceLinkway

Search This Blog