[ACCESSWIRE]
Upcoming AWS Coverage on Skyworks Solutions
LONDON, UK / ACCESSWIRE / April 20, 2017 / Active Wall St. announces its post-earnings coverage on Taiwan Semiconductor Manufacturing Co. Ltd (NYSE: TSM). The Company reported its first quarter fiscal 2017 results on April 13, 2017. The world's largest contract chipmaker missed earnings and sales expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Taiwan Semiconductor Manufacturing's competitors within the Semiconductor - Integrated Circuits space, Skyworks Solutions, Inc. (NASDAQ: SWKS), is estimated to report earnings on April 27, 2017. AWS will be initiating a research report on Skyworks Solutions following the release of its next earnings results.
Today, AWS is promoting its earnings coverage on TSM; touching on SWKS. Get our free coverage by signing up to: http://www.activewallst.com/register/
Earnings Reviewed
For the three months ended March 31, 2017, TSM announced consolidated revenue of NT$233.91 billion up 14.9% on a y-o-y basis, but down 10.8% on sequential basis. In US dollars, the Company's reported quarter revenue was $7.51 billion, which decreased 9% from the previous quarter, but increased 22.2% on a y-o-y basis. TSM's revenue number missed the lower-end of its guidance of between T$236 billion and T$239 billion provided in January due to a strong Taiwan dollar.
For Q1 FY17, TSM reported net income of NT$87.63 billion, and diluted earnings per share of NT$3.38 (US$0.54 per ADR unit), both up 35.3% on a y-o-y basis, while it represented a 12.5% decrease in net income on sequential basis. The Company's earnings numbers missed analysts' consensus of NT$88.26 billion.
"Due to a stronger than expected appreciation of the NT dollar against the US dollar during the first quarter (31.16:1 actual vs. 32:1 expected), relative to our January 12th guidance for 1Q, our first quarter revenue was reduced by approximately NT$6 billion while our gross margin and operating margin was reduced by about 100 basis points," said Lora Ho, SVP and Chief Financial Officer of TSM.
For Q1 FY17, TSM's gross margin was 51.9%, slightly lower sequentially, primarily due to lower level capacity utilization and the Company's unfavorable foreign exchange rate partly balanced by continued cost improvement. Operating expense ratio rose to 11.1% as R&D as a percentage of revenue increased by 70 basis points. TSM's operating margin decreased 1.1% sequentially to 40.8% in the reported quarter.
Segment Results
During Q1 FY17, TSM's consumer and computer segment's revenue increased 30% and 1% respectively on a q-o-q basis, while communication and industrial standard decreased 18% and 5% respectively due to mobile product seasonality. On a technology basis, the Company's combined revenue from 16-nanometer and 20-nanometer was 31% of total wafer revenues in the reported quarter, while 28-nanometer represented 25% of total wafer revenue. Advanced technologies, which TSM defines as 28-nanometer and below accounted for 56% of total wafer revenue in Q1 FY17.
Balance Sheet
TSM ended Q1 FY17 with cash and marketable securities of NT$659 billion, an increase of NT$27 billion sequentially. The Company's current liabilities slightly increased by NT$3 billion. TSM's accounts receivable turnover days increased two days to 47 days, while days of inventory increased three days to 44 days. During the reported quarter, the Company generated approximately NT$161 billion cash from operations and spent NT$103 billion in capital expenditure, and as a result generated free cash flow of NT$58 billion. TSM also repaid 10 billion corporate bonds and net purchase of about 7 billion fixed income securities. Overall, the Company's cash balance had increased by NT$23 billion to reach NT$565 billion at the end of the reported quarter. In US dollar terms, TSM's Q1 FY17 capital expenditure was US$3.3 billion and full-year capital budget remained at about US$10 billion.
Outlook
TSM expects Q2 FY17 demand to be weaker than the first quarter due to supply chain inventory management during the upcoming quarter and mobile product seasonality. Based on the Company's current business outlook and exchange rate assumption of US$1 to NT$30.5, TSM is forecasting Q2 FY17 revenue to be between NT$213 billion and NT$216 billion, which represents 8% to 9% sequential decline. Growth profit margin is expected to be between 50.5% and 52.5% and operating margin to be between 39% and 41%. The margin guidance reflects a higher utilization level for working process building to support a strong 10-nanometer shipment in the third quarter. Also, in Q2 FY17, TSM stated that it will again need to accrue the 10% tax on undistributed retained earnings, which will result in the Company's tax rate to be about 23%.
Stock Performance
At the closing bell, on Wednesday, April 19, 2017, Taiwan Semiconductor Manufacturing's stock marginally fell 0.57%, ending the trading session at $31.61. A total volume of 4.74 million shares were traded at the end of the day. In the last three months and previous twelve months, shares of the Company have surged 7.19% and 30.35%, respectively. Moreover, the stock rallied 9.95% since the start of the year. The Company's shares are trading at a PE ratio of 14.86 and have a dividend yield of 2.97%. At Wednesday's closing price, the stock's net capitalization stands at $162.28 billion.
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