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TSMC shares up on upbeat outlook, but gains capped
Central News Agency
2014-01-17 12:07 PM
Taipei, Jan. 17 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) moved higher Friday morning after the world's largest contract chip maker gave an upbeat assessment for its sales growth in 2014 at an investor conference held a day earlier, dealers said. The gains, however, were capped as investors locked in recent gains in the company's shares, with the stock moving closer to the nearest technical resistance at around NT$110.00, they said. As of 11:27 a.m., TSMC had added 0.47 percent to NT$107.50 (US$3.58) with 31.73 million shares changing hands. The weighted index of the Taiwan Stock Exchange was down 0.12 percent at 8,602.01 points. "TSMC is taking advantage of a lead over its peers in the global semiconductor foundry business. That's why the company boasted that it would outperform the foundry industry by posting higher sales growth this year," MasterLink Securities analyst Tom Tang said. At the investor conference Thursday afternoon, TSMC chairman Morris Chang said he expected the world semiconductor foundry business to see sales rise 10 percent in 2014, but he predicted his company would surpass the industry trend to post double digit sales growth. Tang echoed the optimism. "TSMC will continue to benefit from its efforts in developing high-end technology processes to secure large orders and further strengthen its bottom line," the analyst said. The chip maker has kicked off production of chips made with the advanced 20 nanometer process this month, expecting them to account for 10 percent of 2014 sales. The company has plans to launch production of chips made with the more sophisticated 16nm process next year. Commenting on the first quarter, TSMC said its sales could fall 5-7 percent from the fourth quarter last year as slow season effects continued to impact its operations. "The 5-7 percent sequential drop has been widely anticipated by the market. Now investors have set sights beyond that and expect TSMC to make a strong comeback in the second quarter," Tang said. In a research note, Daiwa Securities said it expects TSMC's consolidated sales for the second quarter to grow about 21 percent from the first quarter. The fourth and first quarters are a traditional slow season for the global IC industry. Amid optimism over the company's shipments, Barclays Capital analyst Andrew Lu has left unchanged an "overweight" recommendation and a target price of NT$139 on TSMC shares. Barclays's target price for the shares has been the highest among the foreign brokerages so far. Goldman Sachs raised its forecasts of TSMC's earnings per share to NT$8.26 from a previous estimate of NT$8.23, while the brokerage has also lifted a target price on the stock to NT$132 from NT$130. "TSMC is one of the favorites of foreign institutional investors in the local bourse. I expect they will continue to maintain large holdings in TSMC shares," Tang said. According to the TWSE, foreign investors owned a 76.45 percent stake in TSMC as of Thursday. Tang cautioned investors to be aware of stiff technical resistance at around NT$110 for TSMC shares in the short term. "The stock has gained significantly in recent sessions amid investor optimism. It could undergo some consolidation before taking another takeoff," Tang said. (By Jackson Chang, Esme Jiang and Frances Huang)
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