I Update My Taiwan Semiconductor Buy Recommendation | TSM Stock Analysis

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TSMC 1분기 실적은 순이익·EPS 8.9% 증가, 매출 18.87%(원문 표기 기준 수치 일부 자동인식 오류 가능) 증가. 영업이익률 42%, 고성능컴퓨팅(AI) 비중 46%, 스마트폰 16% 감소, 자동차 평탄. 2분기 매출 가이던스 196~204억달러, 하반기 강세 예상. 반도체 시장 성장률 전망 하향(10% 이상→약 10%)으로 주가 약 3.7% 하락. 적정 PER 17배, 기존 매수 의견 유지.

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※ 자동 자막 원문(다듬기 전)

01. hey everyone Taiwan semiconductor reported its first quarter 2024 earnings results that sent the stock price down a couple of percent following the announcement in this video I'll review its latest quarterly results and I'll coming into this quarterly update I had the stock rated as a buy so you're going to want to tune in to see if I'm changing that recommendation upgrading downgrading or keeping it as a so let's get aiwan semi saying that net income and diluted earnings per share both increased by 8.9% for the quarter first quarter Revenue came in at 18.87% year-over year now usually companies that report 133% increase in Revenue will have earnings per share that grow faster than Revenue grows that's because most costs remain fixed while some costs increase with higher Revenue but Taiwan semiconductor is investing aggressively to expand output to expand manufacturing and so that's why its earnings grew slower than Revenue did in the quarter now management saying that their business in the first quarter was impacted by smartphone seasonality partially offset by Contin Ed high performance Computing related demand that's artificial intelligence demand there and that's growing significantly while smartphone and the automotive Market semiconductors for automotive Market is uh was flat for the quarter now for its next quarter management is expecting revenue between 19.6 billion and 20.4 billion which would be an incremental increase of roughly 1 billion from the first quarter management did say that the second half of the year is going to be stronger than the first half operating profit margin expected to remain excellent at between 40 and 42% Taiwan semiconductor has some of the best operating profit margins of any industry in the world of any company in the world it's among the leaders now looking at the overall cost structure of its income statement you could see its gross profit margin at 50 3.1% is excellent for a company that makes mostly Hardware it's operating profit margin of 42% in the first quarter of 2024 was above the midpoint of between 40 and 42% is at the high end of that forecast for Taiwan semi its return on Equity came in at 25.4% which is solid to be sure now if you look at the first quarter of 20 24 versus the first quarter of 2023 its operating profit margin improved by 0.4% points so solid growth there in the metric that's critical for Taiwan semi Taiwan semi broke down it's Revenue growth by platform and you could see high performance Computing consisted of 46% of its business while smartphone consisted of 38% of its business high performance Computing is where the artificial intelligence sales are contained and smartphone Revenue fell 16% in the quarter that's what the company meant by seasonality smartphones are likely to sell better in throughout the rest of the year as folks who purchased cell phones or smartphones in 2020 and 2021 really need to start to upgrade those phones as they become outdated now Automotive 0% growth in the automotive segment primarily led by declines in the electric vehicle segment remember I've been saying for over a year now electric vehicle sales are decelerating as people now have more options and the supply of internal combustion engine Vehicles is rebounding people are more than nine out of 10 times choosing the internal combustion engine Vehicles those vehicles have lower amounts of semiconductors in them and so that led to a little bit of a decline for Taiwan semi in that segment or roughly flat year-over-year quarter over quarter I should say looking at its balance sheet Taiwan semi has a strong balance sheet $1.9 billion in cash and long-term Investments of 138 billion inventories of 267 million are solid not increasing too much up by just 4.6% year-over-year the inventory turnover days at 90 is improved from 96 days in the first quarter of 2023 now I've been saying this for a while now the semiconductor industry was under pressure because of the rapid change in consumer behavior in 2020 and 2021 people were spending a lot more money on electronics that contained semiconductors things like laptops smartphones um personal computers and anything that had to do with being home spending more time at home but in 2022 2023 when economies reopened consumer Behavior shifted rapidly and that left the industry out of whack many companies had too much inventory and so they lowered orders they lowered production so that they could work through that elevated inventory balance in 2024 it's expected that there will be a recovery in that industry in 2023 for instance personal computer sales were down significant ly in 2024 companies like Intel and Micron are forecasting that the personal Computing industry will rebound by the low to mid single digits in 2025 that rate of growth is likely to be faster so the industry is recovering it's bouncing back from the lows of 2022 and 2023 although it's not really taking hold just yet it's on the cusp of rebounding it's getting underway but it's not fully in full swing just yet now if we look at Taiwan semis cash flow from operating activities it improved to 436 billion in NT and that was up from 385 billion in the same quarter the prior year so a solid Improvement there in its cash flow from operating activities so all of this good news why is the stock price down following the results I highlighted it's down 3.69% following the results and it's mainly due to the company lowering the expectations so they cut their expectations for 2024 semiconductor market growth that excludes memory chips to about 10% previously they had stated it was going to be 10% or above or at least 10% and now they're saying it's going to be 10% so they removed a lot of that upside from the company's prospects in 2024 investors were taking it it to mean at least 10% it could be 12 it could be 14 could be 16% right but now that the company is saying it's going to be about 10 now some of that upside it's not going to be 16 it's not going to be 14% the highest that might be now is 11 maybe 12% at the highest point and then at the lower and maybe 9% maybe 8% so by saying about 10% changing that from above that figure changed the expectations for Taiwan semi and so that's what drove the stock price down the current quarter was excellent It's just that forecast for the rest of the year Taiwan semi thought the recovery was going to be stronger towards the back half of the year and they've kind of tamped down those expectations based on what they saw so far in the first quarter now the 7 now following the stock price decline this morning I had the stock rated as a buy coming into this quarter and I'm keeping Taiwan semiconductor stock rated as a buy trading at a relatively cheap valuation I already highlighted the excellent cash flow from operations and the strong operating profit margin of the business strong competitive advantage and a rebounding semiconductor industry all bolds well for Taiwan semiconductor stock I'm keeping it rated as a buy if you like the video you just saw and you want to see more just like it please subscribe to the channel I can't keep this Channel free without the support of viewers like you and if you're already subscribed thank you and I appreciate your support