TSMC(TSM)2025-01-17 09:56Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TT) and TSM (TSM.US) with target prices of NT$1,401.1 and US$256.3 respectively, indicating potential upside of 27% and 24% [1][13]. Core Insights - TSMC is expected to benefit significantly from the ongoing AI demand, which is projected to drive revenue growth in the coming years. The company anticipates a compound annual growth rate (CAGR) of 40% for AI-related revenue over the next five years, contributing to an overall revenue CAGR of 20% [6][9]. - The company has revised its earnings forecasts upward for 2025 and 2026, with a projected net profit growth of 33% in 2025 [1][11]. Financial Projections - Revenue projections for TSMC from 2023 to 2027 are as follows: - 2023: NT$2,161,736 million - 2024: NT$2,894,308 million (34% YoY growth) - 2025E: NT$3,713,586 million (28% YoY growth) - 2026E: NT$4,570,688 million (23% YoY growth) - 2027E: NT$5,509,213 million (21% YoY growth) [2][7]. - Gross margin is expected to remain robust, with projections of 58.3% in 2025 and maintaining above 53% in the long term [6][11]. Earnings and Valuation Metrics - The report forecasts the following earnings per share (EPS) for TSMC: - 2023: NT$32.8 - 2024: NT$45.2 - 2025E: NT$60.0 - 2026E: NT$72.5 - 2027E: NT$86.8 [2][11]. - The target price is based on an EV/EBITDA multiple of 14x under the base case scenario, which aligns with historical averages [13][14]. Recent Performance and Guidance - TSMC's Q4 2024 results showed a revenue increase of 39% YoY and a net profit increase of 57% YoY, driven by strong demand for 3nm and 5nm technology nodes [9][10]. - For Q1 2025, TSMC has provided guidance indicating a revenue growth of 41% YoY, despite a seasonal decline due to smartphone demand [6][10].