FNCE101 - Finance
Class Group: G8
Financial Analysis on Taiwan Semiconductor Manufacturing Company
Academic Year 2021/22 Semester 2
Group Members
Matriculation No.
Sean Shum Yong Wei
01356384
Amelia Quek Jing Ying
01417934
Charlene Teo Xuan Ling
01410245
Chen Wei Li
01409443
Denise Wong Mei Yan
01396352
Wong Jian Han Javier
01372834
Ngo Shaun Meng Reuel
01358643
1. Company Background
2
2. Industry Background
3
3. Financial Ratios Analysis
3-4
4. Weighted Average Cost of Capital (WACC) Analysis
4-5
5. Valuation Analysis
5
6. Conclusion
5
Appendix
6-18
1
1. Company Background
Taiwan Semiconductor Manufacturing Company Limited (TSMC), is a Taiwanese multinational
semiconductor contract manufacturing and design company. It is the largest pure play contract chipmaker
serving customers across industries such as computer, communications, consumer and industrial. TSMC has
some 460 customers worldwide, including the likes of Apple, AMD, Qualcomm and Nvidia. These customers
value TSMC’s services as it helps aggregate demand, R&D, supply chain and operations, allowing TSMC to
reap the economies of scale and pass on savings to customers.
2. Industry Background
Semiconductor manufacturing is inherently capital-intensive; every successive node requires exponentially
more R&D and capital expenditures. Due to technical hurdles, node advancement is becoming more costly,
prompting small players to give up in the race of catchup with industry leaders. In 2015, there were six
companies with cutting-edge nodes when the industry introduced 16/14nm fab. Currently, only Samsung
Electronics and TSMC sell 5nm chips. Fin field-effect transistor (FinFET), is used from 16/14nm onwards,
and is expected to be employed on TSMC’s 2nm and Samsung’s 3nm processes.
Studying the market share of semiconductor companies from 2019 to 2021 and backed by the
Herfindahl-Hirschman Index (HHI) (Appendix 1), it is clear that the industry has a few large firms with a
couple of smaller firms, falling in the range of a highly concentrated industry. This phenomenon might be
attributable to the high barriers of entry, where large capital and highly skilled human capital is necessary to
build and maintain the foundries. Hence, new firms are unable to penetrate the market without large
investments (Hayes, 2021).
Macro Trends
Shortage of Semiconductor Chips
There is currently a semiconductor chip shortage from the sudden rise in demand of semiconductors during
the pandemic. Demand for semiconductors is expected to keep increasing due to emerging technologies such
as 5G, AI and Internet of Things, especially in the high performance computing (HPC) sector.
Changing Competitive Landscape
Many technology companies (Apple, Tesla, Google and Amazon) are developing their own
application-specific integrated circuit (ASIC) chips to cater to their specific products. While these may pose a
threat to pure-play foundries, TSMC’s semiconductor capabilities remain at the forefront of the industry.
Geopolitical Impacts
Governments worldwide are increasingly engaging in industrial policy to encourage semiconductor
investments and strengthen their position in the global semiconductor supply chain. Semiconductor
companies, including TSMC, are expected to set up more factories in traditional manufacturing clusters
located in Taiwan, South Korea, US, China, Israel, Europe, etc., alleviating short-term supply chain concerns.
2
3. Financial Ratios Analysis
Current and Quick Ratio (Appendix 2.1 and Appendix 2.2 respectively)
TSMC’s Current and Quick Ratio saw a steady increase from 1.4 in 2019 to 2.2 in 2021 and 1.3 in 2019 to 1.9
in 2021 respectively. This indicates increasing liquidity, which means that TSMC is able to quickly convert
more of its current assets to cash. To a short-term creditor, a higher ratio is better, and both ratios being greater
than 1 is desirable in the semiconductor industry. For both ratios, TSMC is on par, if not exceeds competitors.
Total Debt Ratio (Appendix 2.3)
TSMC’s total debt ratio is increasing year-on-year from 2019 to 2021, which means that they are financing
more of their assets with debt. However, it is still considered to be in a relatively healthy range, with an
optimal range for investors lying between 0.30 to 0.60. TSMC’s total debt ratio was between 10% to 20%
lower than its competitors in 2019, while it surpassed UMC in 2021.
Times Interest Earned (TIE) Ratio (Appendix 2.4)
The TIE ratio measures the company’s ability to pay off debts using its current income. A higher TIE is
preferred by investors as it indicates a lower risk of investment given relative greater financial stability. In
2021, TSMC’s TIE was 118.9, significantly higher than UMC’s and Globalfoundries', at 52.0 and 14.4
respectively. While an excessively high TIE is not necessarily desirable as this may suggest that excess
income is not used for capacity expansion as they choose to repay their debts quickly, this is not the case for
TSMC where Capex remains high and is expected to continue growing.
Inventory Turnover Ratio (Appendix 2.5)
This ratio shows how efficiently a company is managing its inventory by the number of times sold inventory
is being replaced. However, it can be seen that TSMC’s inventory turnover ratio is decreasing over the years
from 2019 to 2021, which means that TSMC is holding on to its inventory for a longer period. However, this
is not indicative of sales performance which has consistently risen, but a possible greater need for available
inventories in the event of unprecedented supply chain issues due to the Covid-19 pandemic.
Total Asset Turnover Ratio (Appendix 2.7)
The total assets turnover ratio measures how efficient a company’s assets are at creating revenue. For every
dollar in assets, TSMC was experiencing an increase in generated sales from 2019 to 2020, with an increase in
total asset turnover from 47.2% to 48.5%. However, in 2021, TSMC had generated lower sales for every
dollar in assets with a decrease to 42.6%, possibly indicating less productive use of resources. This could also
indicate that TSMC is purchasing larger assets as they are anticipating higher growth, which explains the
lowered ratio. In comparison to its competitors, TSMC is performing relatively similarly in this aspect.
3
Gross Profit Margin (Appendix 2.8)
The gross profit margin is experiencing a general increase between 46% in 2019 to 52% in 2021. This
indicates that the company is retaining a greater amount from every dollar of revenue. When benchmarked
against its competitors, TSMC has a far higher ratio, which highlights that solely based on gross profit margin,
TSMC has better financial health. This could indicate that TSMC’s consumers are very willing to pay at a
high margin or that TSMC is highly efficient.
Return on Total Assets (ROA) (Appendix 2.9)
TSMC’s ROA experienced a steady increase from 15.6% in 2019 to 18.4% in 2021. An increase in ROA
suggests that TSMC has displayed asset efficiency, increasing profits per dollar investment. Compared to
UMC, TSMC’s ROA has consistently outperformed UMC’s (0.8% in 2019 and 7.7% in 2021) year-on-year.
TSMC’s ROA is expected to improve further in 2022, once economic recovery kicks in from the post
COVID-19 pandemic.
Price-Earnings (PE) Ratio (Appendix 2.11)
PE ratio for TSMC has experienced minimal change from 24.85x in 2019 to 26.73x in 2021. Compared with
UMC in the latest year of 2021, the PE ratio of UMC (52.78x in 2021) is significantly higher than TSMC’s
(26.73x in 2021).
DuPont Analysis of Return on Total Ordinary Equity (ROE) (Appendix 2.10 and 2.12 respectively)
Using the DuPont Analysis, it can be inferred that TSMC’s ROE (20.9% in 2019 and 29.7% in 2021)
outperformed UMC’s (4.0% in 2019 and 21.6% in 2021) year-on-year, suggesting that TSMC is more
efficient in generating higher income. The notable distinction in ROE is attributed to the significant difference
in Net Profit Margin. TSMC’s Net Profit Margin has been notably higher than that of UMC’s, while Total
Asset Turnover and Equity Multiplier are somewhat similar for both companies. This suggests that TSMC is
in a stronger position than UMC because of its ability to generate higher income from its sales.
4. Weighted Average Cost of Capital (WACC) Analysis (Appendix 3)
Referring to Appendix 3 Fig 3.1, to compute cost of equity, a risk-free rate of 2.4% was used, based on the 10
Year Treasury Rate as of 29/3/2022. While TSMC is headquartered in Taiwan, the US market was used as the
benchmark given TSMC’s international operations and its key competitors being international players as well.
A beta of 1.02 was employed (Yahoo Finance), suggesting that TSMC’s stock price tends to be slightly more
volatile than the S&P 500. Along with an equity risk premium of 6.0%, this yields a cost of equity of 8.5%
(2.4% + 6.0% * 1.02). To compute the cost of debt, the yield on debt was first calculated using publicly
available information on the bond TSMC Global Ltd. 1.25% 21/26 (Appendix 3 Fig 3.2). Using a current price
4
of 91.84 as of 29 March 2022, par value of 100, duration of 3.973 years and semiannual coupon rate of 0.63%
(1.26% / 2), the yield to maturity was found to be 4.34% (2 * RATE(3.973, 0.63%, -91.84, 100)). With a tax
rate of 10.5% given in the 2021 Q4 earnings call, the cost of debt is thus found to be 3.9% (4.3% * (1 10.5%)). Based on the weights of 78.0% and 22.0% for equity and debt respectively, which was derived from
the total values of TWD 2,170,733,205,000 for equity and TWD 613,379,783,000 for debt, the WACC is
7.5% (8.5% * 78.0% + 3.9% * 22.0%).
5. Valuation Analysis
Discounted Cash Flow (DCF) Method (Appendix 4.1)
The WACC of 7.5% was used as the discount rate in the DCF model. Based on predictions of cash flow for
the next 5 years and a perpetual growth rate of 4%, the IRR of the investment was found to be 28%, with a
target price of TWD 1294.49 upon exit at year-end 2026.
Trading Comps Method (Appendix 4.2)
To supplement the intrinsic valuation method, the trading comparables method compares companies with
similar business activities, focusing on semiconductor foundries as opposed to fabless semiconductor
companies, since TSMC is a contract chipmaker/pure-play foundry unlike integrated device manufacturers
(eg. Intel and Samsung). Employing the EV/EBIT ratio which accounts for depreciation expense and focuses
on core earnings, the median multiple of 23.2x yields a target price of USD 21.04/TWD 603.45, higher than
the current price of 20.54 USD/TWD 589 (29 Mar).
Dividend Growth Model (DGM) (Appendix 4.3)
Given a required rate of return (cost of equity) of 8.53% from above, an assumed 4% constant growth rate in
perpetuity and the value of next year’s dividend being 10.66 TWD, the stock price is TWD 235.32. However,
DGM should not be used given that TSMC is a high-growth tech company and does not have a stable track
record of dividend payments. Hence, the valuation should take into account capital gains of the company as
opposed to merely dividend payments. This renders DGM highly limited and paints a very inaccurate picture
in the context of TSMC.
6. Conclusion
In conclusion, the company, industry and financial analysis are all indicative of continued strong growth of
TSMC, driven by its desirable financial position as well as market factors including significant demand for
high performance computing. TSMC’s most recent earnings call has also provided optimistic projections for
the coming years, including long-term growth expectations of 15-20%. Taking into account these
considerations, both the intrinsic and extrinsic valuation models support investment in TSMC.
5
Appendix 1
Appendix 1.1: Leading semiconductor foundries revenue share worldwide from 2019 to 2021,
by quarter (Trendforce, 2021)
TrendForce. (December 2, 2021). Leading semiconductor foundries revenue share worldwide from 2019 to 2021, by quarter
[Graph]. In Statista. Retrieved March 31, 2022, from
https://www-statista-com.libproxy.smu.edu.sg/statistics/867223/worldwide-semiconductor-foundries-by-market-share/
Samsung
Global
Electronics Foundries
TSMC
In %
UMC
Tower
Jazz
SMIC
VIS
Powerchip Hua Hong
Technology
Semi
Dongbu
HiTek
Other
Q1 2019
48.10
19.10
8.40
7.20
4.50
2.10
1.50
1.70
1.50
0.90
5
Q2 2019
49.20
18
8.70
7.50
5.10
2
1.40
1.30
1.50
0.90
4.40
Q3 2019
50.50
18.50
8.30
6.70
4.40
1.70
1.30
1.30
1.30
0.80
5.20
Q4 2019
52.70
17.80
8
6.80
4.30
1.60
1.20
1.20
1.20
0.80
4.40
Q1 2020
54.10
15.90
7.70
7.40
4.50
1.60
1.40
1.30
1.10
0.80
4.20
Q2 2020
51.50
18.80
7.40
7.30
4.80
1.60
1.40
1.50
1.10
1
3.60
Q3 2020
53.90
17.40
7
7
4.50
1.50
1.30
1.40
1.10
0.90
3.90
Q4 2020
55.60
16.40
6.60
6.90
4.30
1.50
1.30
1.40
1.20
0.90
3.90
Q1 2021
54.50
17.40
5.50
7.10
4.70
1.50
1.40
1.60
2.50
0.90
3
Q2 2021
52.90
17.30
6.10
7.20
5.30
1.40
1.40
1.80
2.60
1
3
Q3 2021
53.10
17.10
6.10
7.30
5
1.40
1.50
1.90
2.80
1
3
Appendix 1.2: Leading semiconductor foundries revenue share worldwide from 2019 to 2021, by quarter
(Trendforce, 2021)
Appendix 1.3: Herfindahl-Hirschman Index of Semiconductor Industry
TSMC
Samsung
Electronics
Global
Foundries
UMC
SMIC
Tower
Jazz
VIS
Q1 2019
2,313.61
364.81
70.56
51.84
20.25
4.41
2.25
2.89
Q2 2019
2,420.64
324.00
75.69
56.25
26.01
4.00
1.96
Q3 2019
2,550.25
342.25
68.89
44.89
19.36
2.89
Q4 2019
2,777.29
316.84
64.00
46.24
18.49
2.56
Q1 2020
2,926.81
252.81
59.29
54.76
20.25
2.56
In %
Dongbu
HiTek
Other
Total
2.25
0.81
25.00
2,858.68
1.69
2.25
0.81
19.36
2,932.66
1.69
1.69
1.69
0.64
27.04
3,061.28
1.44
1.44
1.44
0.64
19.36
3,249.74
1.96
1.69
1.21
0.64
17.64
3,339.62
Powerchip Hua Hong
Technology
Semi
6
Q2 2020
2,652.25
353.44
54.76
53.29
23.04
2.56
1.96
2.25
1.21
1.00
12.96
3,158.72
Q3 2020
2,905.21
302.76
49.00
49.00
20.25
2.25
1.69
1.96
1.21
0.81
15.21
3,349.35
Q4 2020
3,091.36
268.96
43.56
47.61
18.49
2.25
1.69
1.96
1.44
0.81
15.21
3,493.34
Q1 2021
2,970.25
302.76
30.25
50.41
22.09
2.25
1.96
2.56
6.25
0.81
9.00
3,398.59
Q2 2021
2,798.41
299.29
37.21
51.84
28.09
1.96
1.96
3.24
6.76
1.00
9.00
3,238.76
Q3 2021
2,819.61
292.41
37.21
53.29
25.00
1.96
2.25
3.61
7.84
1.00
9.00
3,253.18
Appendix 2
Appendix 2.1: Current Ratio* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
1.4
1.8
2.2
UMC
2.1
2.1
2.2
Globalfoundries
1.5
1.6
1.7
* 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 ÷ 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Figure 2.1: Current Ratio of TSMC, UMC, and Globalfoundries
Appendix 2.2: Quick Ratio* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
1.3
1.5
1.9
UMC
1.7
1.8
2.0
Globalfoundries
1.3
1.0
1.3
7
* 𝑄𝑢𝑖𝑐𝑘 𝑅𝑎𝑡𝑖𝑜 = (𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) ÷ 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Figure 2.2: Quick Ratio of TSMC, UMC and Globalfoundries
Appendix 2.3: Total Debt Ratio* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
28.4%
33%
41.7%
UMC
44.6%
37.5%
39.5%
Globalfoundries
37.8%
41.2%
46.5%
* 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 ÷ 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Figure 2.3: Total Debt Ratio of TSMC, UMC and Globalfoundries
8
Appendix 2.4: Times Interest Earned Ratio* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
118.9
279.9
118.9
UMC
18.3
34.1
52.0
Globalfoundries
5.4
6.5
14.4
* 𝑇𝑖𝑚𝑒𝑠 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑎𝑟𝑛𝑒𝑑 𝑅𝑎𝑡𝑖𝑜 = 𝐸𝐵𝐼𝑇 ÷ 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
Figure 2.4: Times Interest Earned Ratio of TSMC, UMC and Globalfoundries
Appendix 2.5: Inventory Turnover Ratio* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
6.2
5.7
4.6
UMC
6.4
6.2
6.2
Globalfoundries
-
8.8
5.5
* 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝐶𝑂𝐺𝑆 ÷ 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Figure 2.5: Inventory Turnover Ratio of TSMC, UMC and Globalfoundries
9
Appendix 2.6: Average Days Sales in Inventory* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
58.9
64.0
78.5
UMC
57.4
58.8
59.0
Globalfoundries
-
41.8
66.8
* 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐷𝑎𝑦𝑠 𝑆𝑎𝑙𝑒𝑠 𝑖𝑛 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = (𝐸𝑛𝑑𝑖𝑛𝑔 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 ÷ 𝐶𝑂𝐺𝑆) 𝑥 365
Figure 2.6: Average Days Sales in Inventory of TSMC, UMC and Globalfoundries
Appendix 2.7: Total Asset Turnover Ratio* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
10
TSMC
0.472
0.485
0.426
UMC
0.400
0.500
0.500
Globalfoundries
-
0.400
0.500
* 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 = 𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠 ÷ 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Figure 2.7: Total Asset Turnover Ratio of TSMC, UMC and Globalfoundries
Appendix 2.8: Gross Profit Margin* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
46.0%
53.0%
52.0%
UMC
14.4%
22.1%
33.8%
Globalfoundries
9.2%
14.7%
15.4%
* 𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 = (𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐶𝑂𝐺𝑆) ÷ 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
Figure 2.8: Gross Profit Margin of TSMC, UMC and Globalfoundries
11
Appendix 2.9: Return on Total Assets* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
15.9%
20.6%
18.4%
UMC
0.8%
3.5%
7.7%
Globalfoundries
-
7.6%
0.3%
* 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 ÷ 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
Figure 2.9: Return on Total Assets of TSMC, UMC and Globalfoundries
Appendix 2.10: Return on Total Equity* of TSMC, UMC and Globalfoundries
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
12
TSMC
21.3%
28.0%
27.5%
UMC
4.0%
13.2%
21.6%
Globalfoundries
-
16.6%
3.3%
* 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦 = 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 ÷ 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟'𝑠 𝐸𝑞𝑢𝑖𝑡𝑦
Figure 2.10: Return on Total Equity of TSMC, UMC and Globalfoundries
Appendix 2.11: Price-Earnings Ratio* of TSMC and UMC
12 months
Dec-31-2019
12 months
Dec-31-2020
12 months
Dec-31-2021
TSMC
24.85
26.54
26.73
UMC
19.05
19.94
52.78
* 𝑃𝑟𝑖𝑐𝑒 − 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑅𝑎𝑡𝑖𝑜 = 𝑆ℎ𝑎𝑟𝑒 𝑃𝑟𝑖𝑐𝑒 ÷ 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
Figure 2.11: Price-Earnings Ratio of TSMC and UMCE
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Appendix 2.12: DuPont Analysis
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Appendix 3 (Refer to Excel File)
Figure 3.1: Computing WACC
Risk Free Rate
Equity Risk Premium
Beta
Equity
Cost
2.4%
6.0%
1.02
8.5%
Value (TWD '000s)
Weight
2,170,733,205
78.0%
*Yield on Debt
Tax Rate
Debt
4.3%
10.5%
3.9%
613,379,783
22.0%
Total (WACC)
7.5%
2,784,112,988
100.0%
Figure 3.2: Deriving Yield on Debt
*Deriving Yield on Debt
TSMC Global Ltd. 1.25% 21/26
Current Price
Par Value
Duration (Years)
Coupon Rate (Semiannual Payments)
Yield to Maturity (YTM)
91.84
100
3.973
0.63%
4.34%
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Appendix 4 (Refer to Excel File)
Appendix 4.1: DCF Model
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Appendix 4.2: Trading Comparables
Appendix 4.3: Dividend Growth Model
Assumptions
Required Rate of Return (Cost of Equity)
Constant Growth Rate in Perpetuity
Value of Next Year Dividend
8.53%
4.00%
10.66
Stock Price
235.32
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