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Brokerages issue high target prices on TSMC shares

2018/01/20 20:32:33

Taipei, Jan. 20 (CNA) Several brokerages have issued high target prices on shares of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and have urged investors to pick up the stock after they expressed optimism toward TSMC's sales outlook for 2018.

One Asia-based brokerage said it is upbeat about TSMC share prices as the world's largest contract chipmaker is expected to benefit from wider use of new applications, including high performance computing devices, automotive electronics and the Internet of Things, which will help the Taiwanese firm offset the impact of a slower mobile device market.

The brokerage said TSMC's sales generated from the new applications are expected to grow 50 percent-70 percent from a year earlier in 2018, while rising demand for Bitcoin mining applications will also boost TSMC's sales for this year by four percentage points.

Bitcoin mining is a peer-to-peer computer process used to secure and verify Bitcoin transactions, referring to payments from one user to another in a decentralized market.

As a result, the Asian brokerage has left a target price of NT$300 (US$10.17) for TSMC shares unchanged, the highest target price among the foreign brokerages that cover the chipmaker, while maintaining a "buy" recommendation on the stock.

On Friday, TSMC, the most heavily weighted on the Taiwan stock exchange, rose 2.82 percent to close at the day's high of NT$255.50, following a 2.69 rise the previous day. The broader Taiex closed up 0.72 percent at 11,150.85.

The strong showing came after TSMC gave a better-than-expected sales growth forecast for 2018, in the expectation that its revenue will grow 10 percent-15 percent from a year earlier in U.S. dollar terms, compared with an earlier market estimate of a 5 percent-10 percent increase.

Meanwhile, a brokerage from Europe has raised a target price on TSMC shares to NT$300 from NT$280 and left a "buy" rating on the stock unchanged as the securities house said strong demand for Bitcoin mining is expected to boost the chipmaker's shipments of chips made on its 12 nanometer and 16nm technology.

The European brokerage said it has also raised its forecasts of TSMC's earnings per share (EPS) by 1 percent-2 percent to NT$15.68 in 2018, NT$18.47 in 2019, NT$22.58 in 2020 and NT$26.02 in 2021. In 2017, TSMC's EPS stood at NT$13.23.

A U.S. brokerage, which has faith in TSMC's advanced 7nm process, which is expected to launch mass production later this year, said it has raised its target price on the chipmaker's shares to NT$285 from NT$265, while maintaining an "overweight" rating on the stock.

TSMC shares have risen 11.33 percent since the beginning of the year, increasing the company's market value by about NT$675 billion during the period to NT$6.63 trillion as of Friday. It continues to have the highest market capitalization of any company listed in Taiwan.

CNA cannot identify the brokerages because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price forecasts for specific stocks and fluctuations in the index.

(By Jeffrey Wu and Frances Huang)