An in-depth technical and financial analysis. As a long-term investment case it will be indispensable to pay attention to:
1. Evaluation of suitable internal management structure for a seamless succession plan, post era of the visionary founder Morris Chang, with Berkshire Hathaway as a blueprint !
2. In view of the criticality of Applied Materials and ASM International to the ecosystem of TSMC, monitoring of the financial performance of these two companies, parri passu, will be essential. A comfortable continued level of innovational drive and profitability of these suppliers will enhance the confidence level, similarly for TSMC projected performance achievement.
3. Firming up of the several estimates of (non-disclosed) costs, as opportunity arises.
Thank you for providing this paper, I can’t imagine how long it must’ve taken you! One question, on your dcf how did you get the exit multiples? Thank you - Awdy
Hi Awdy, the 23x exit multiple For TSMC is a judgement call on its long term quality and growth. The better/higher the quality and expected earnings growth (16% CAGR over 5 years), the higher the exit multiple I'd pay for shares. My rule is the average listed company is 15x (or 6.67% earnings yield) so TSMC being 23x is a judgement call that its earnings and growth is much higher than the average listed company globally. Hope that helps?
awesome read!!!
Thanks!
An in-depth technical and financial analysis. As a long-term investment case it will be indispensable to pay attention to:
1. Evaluation of suitable internal management structure for a seamless succession plan, post era of the visionary founder Morris Chang, with Berkshire Hathaway as a blueprint !
2. In view of the criticality of Applied Materials and ASM International to the ecosystem of TSMC, monitoring of the financial performance of these two companies, parri passu, will be essential. A comfortable continued level of innovational drive and profitability of these suppliers will enhance the confidence level, similarly for TSMC projected performance achievement.
3. Firming up of the several estimates of (non-disclosed) costs, as opportunity arises.
Welldone for the Jenga Quality Checklist and Scorecard to aide final investment decisions.
I'm glad it was useful, hoping to apply it more in future deep dives
Thank you for providing this paper, I can’t imagine how long it must’ve taken you! One question, on your dcf how did you get the exit multiples? Thank you - Awdy
Hi Awdy, the 23x exit multiple For TSMC is a judgement call on its long term quality and growth. The better/higher the quality and expected earnings growth (16% CAGR over 5 years), the higher the exit multiple I'd pay for shares. My rule is the average listed company is 15x (or 6.67% earnings yield) so TSMC being 23x is a judgement call that its earnings and growth is much higher than the average listed company globally. Hope that helps?
Makes sense, thank you for explaining! I might try and incorporate this into my next research paper.
Anytime!