Taiwan Semiconductor Manufacturing Company.ppt

Agenda Case Overview Country Risk Analysis Company and Industry Overview Market Analysis Financial Analyses Ratios Discounted Cash Flows Comparable Companies Black-Scholes Options Pricing Conclusions Questions Answers Case Overview “Things are not always as they seem” Managed Funds Performance Case Overview Assist investment manager in determining whether to invest in Taiwan Semiconductor Manufacturing Company Is the current stock price an attractive entry level for investors? If so, Decisions to make – invest in equity (Taiwan or ADR), or wait and purchase call options Does the Shanghai foreign direct investment add to the Company’s intrinsic value? Agenda Case Overview Country Risk Analysis Company and Industry Overview Market Analysis Financial Analyses Ratios Discounted Cash Flows Comparable Companies Black-Scholes Options Pricing Conclusions Questions Answers Taiwan Country Overview Taiwan, Republic of China Governmental System Multiparty democratic regime headed by popularly-elected president (Chen Shui-bian) Major Political parties are the Democratic Progressive Party (DPP), Kuomintang (KMT), and People First Party (PFP) GDP: US$ 281,300 Million Current Account Balance: US$ 18,861 Million Foreign Reserves (excl. gold): US$ 122,211 Million External Debt: US$ 18,900 Million Inflation Rate: 0.5% GDP Growth Export Partners Country Risk Analysis Political Alleviated political tension with Mainland China Government (DPP) strongly advocates for foreign investment Alliance between Kuomintang and People First Party looks promising in next Presidential election in 2004 Economic Strong Current Account Balance and Foreign Reserves Free and liquid capital market with high trading volume To stabilize market, daily price fluctuation is limited: Stocks and convertible bonds: 7% Bonds: 5% …of the closing price of the preceding business day Country Risk Analysis Intangibles Chairman/CEO Morris Chang Advice is highly regarded and valued by the government as well as