Mon, Jan 21, 2013 - Page 14 News List

Deutsche Bank ups TSMC forecast on mobile demand

Staff writer, with CNA

Germany’s Deutsche Bank AG has raised its earnings forecast for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, because of rising demand for its 28 and 20-nanometer products.

In a research note dated Thursday, Deutsche Bank raised its projections for TSMC’s earnings per share (EPS) by 1 percent to NT$7.53 (US$0.26) for this year and by 7 percent to NT$9.04 for next year.

The bank now expects TSMC’s EPS between this year and 2015 to reach a compound annual growth rate of 18 percent, higher than its previous estimate of 14 percent.

“We forecast TSMC’s increased dominance and growing addressable markets in 28/20 nanometers to drive stronger earnings growth,” Deutsche Bank research analyst Michael Chou (周立中) wrote in the note.

The bank also raised its target price for TSMC from NT$112 to NT$123, the highest among 10 foreign brokerages, and maintained its “buy” rating on the stock.

TSMC’s shares closed 2.22 percent higher at NT$101.5 in Taipei on Friday after the firm announced better-than-expected fourth-quarter results on Jan. 17.

The contract chipmaker reported NT$166.16 billion in net profit for the fourth quarter of last year, a 23.8 percent annual increase, and consolidated sales of NT$506.25 billion, up 18.5 percent from a year earlier.

Both figures were the highest in the company’s history. TSMC had EPS of NT$6.41 last year, compared with NT$5.18 in 2011. US brokerage Goldman Sachs gave TSMC shares a “buy” rating and raised its target price from NT$112 to NT$115, citing improving profitability and a bullish outlook for its 20-nanometer wafer orders.

Bank of America Merrill Lynch disagreed with its more optimistic peers, maintaining its “underperform” rating for TSMC and its target price of NT$94.

The brokerage based its more pessimistic forecast on TSMC’s increase in estimated depreciation for this year, which reflects higher anticipated spending in the first and second quarters to meet robust demand for 28-nanometer mobile chips.

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