Taiwan Semiconductor Manufacturing Company Limited (TSM) Discounted Future Market Cap

Taiwan Semiconductor Manufacturing Company Limited

TSM (NYSE)

(%)

Valuation
Taiwan Semiconductor Manufacturing Company Limited Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	230.8 USD
Estimated net income	69.82 Bil. USD
Estimated market capitalization	1,917 Bil. USD
Market capitalization discounted to present	1,197 Bil. USD
Shares Outstanding	5.19 Bil.
Earnings Per Share (EPS)	9.58 USD
Market Price	323.6 USD
Price to Earnings (PE) Ratio	27.46

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2015", "x": "2015-12-31", "y": 25575299000}, {"l": "2016", "x": "2016-12-31", "y": 29176645176}, {"l": "2017", "x": "2017-12-31", "y": 32890943490}, {"l": "2018", "x": "2018-12-31", "y": 33725530860}, {"l": "2019", "x": "2019-12-31", "y": 35769611922}, {"l": "2020", "x": "2020-12-31", "y": 47613186649}, {"l": "2021", "x": "2021-12-31", "y": 57264408710}, {"l": "2022", "x": "2022-12-31", "y": 73850398097}, {"l": "2023", "x": "2023-12-31", "y": 70416388464}, {"l": "2024", "x": "2024-12-31", "y": 88143255832}, {"l": "2025", "x": "2025-12-31", "y": 102166847834, "oy": 102166847834, "e": true, "d": 2025, "g": 15.91, "og": 15.91}, {"l": "2026", "x": "2026-12-31", "y": 118421593325, "oy": 118421593325, "e": true, "d": 2026, "g": 15.91, "og": 15.91}, {"l": "2027", "x": "2027-12-31", "y": 137262468823, "oy": 137262468823, "e": true, "d": 2027, "g": 15.91, "og": 15.91}, {"l": "2028", "x": "2028-12-31", "y": 159100927613, "oy": 159100927613, "e": true, "d": 2028, "g": 15.91, "og": 15.91}, {"l": "2029", "x": "2029-12-31", "y": 184413885196, "oy": 184413885196, "e": true, "d": 2029, "g": 15.91, "og": 15.91}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2015", "x": "2015-12-31", "y": 9182439288}, {"l": "2016", "x": "2016-12-31", "y": 10210147686}, {"l": "2017", "x": "2017-12-31", "y": 11609192795}, {"l": "2018", "x": "2018-12-31", "y": 11871823290}, {"l": "2019", "x": "2019-12-31", "y": 11832481640}, {"l": "2020", "x": "2020-12-31", "y": 18157970688}, {"l": "2021", "x": "2021-12-31", "y": 21368765780}, {"l": "2022", "x": "2022-12-31", "y": 32390154231}, {"l": "2023", "x": "2023-12-31", "y": 27744578760}, {"l": "2024", "x": "2024-12-31", "y": 35277310610}, {"l": "2025", "x": "2025-12-31", "y": 38680368590, "oy": 38680368590, "e": true, "d": 2025, "g": 9.65, "og": 9.65}, {"l": "2026", "x": "2026-12-31", "y": 44834415232, "oy": 44834415232, "e": true, "d": 2026, "g": 15.91, "og": 15.91}, {"l": "2027", "x": "2027-12-31", "y": 51967570696, "oy": 51967570696, "e": true, "d": 2027, "g": 15.91, "og": 15.91}, {"l": "2028", "x": "2028-12-31", "y": 60235611194, "oy": 60235611194, "e": true, "d": 2028, "g": 15.91, "og": 15.91}, {"l": "2029", "x": "2029-12-31", "y": 69819096935, "oy": 69819096935, "e": true, "d": 2029, "g": 15.91, "og": 15.91}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2025-12-31": 29, "2026-12-31": 30, "2027-12-31": 31, "2028-12-31": 32, "2029-12-31": 33}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2025-12-31	2026-12-31	2027-12-31	2028-12-31	2029-12-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2024 Dec 31	LTM Jan 11	2025 Dec 31	2026 Dec 31	2027 Dec 31	2028 Dec 31	2029 Dec 31
Revenue	88,143	114,831	102,167	118,422	137,262	159,101	184,414
Revenue Growth Rate	25.17%	30.28%	15.91%	15.91%	15.91%	15.91%	15.91%
Net Income	35,277	49,707	38,680	44,834	51,968	60,236	69,819

Monetary values in USD

amounts except #

2024
Dec 31

LTM
Jan 11

2025
Dec 31

2026
Dec 31

2027
Dec 31

2028
Dec 31

2029
Dec 31

Revenue

88,143

114,831

102,167

118,422

137,262

159,101

184,414

Revenue Growth Rate

25.17%

30.28%

15.91%

Net Income

35,277

49,707

38,680

44,834

51,968

60,236

69,819

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 11	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31	2015 Dec 31
Revenue	55,387	114,831	88,143	70,416	73,850	57,264	47,613	35,770	33,726	32,891	29,177	25,575
Cost of Revenue	25,318	47,108	38,675	32,138	29,866	27,700	22,331	19,299	17,445	16,240	14,561	13,132
Gross Profit	30,069	67,723	49,468	38,278	43,985	29,564	25,282	16,471	16,280	16,651	14,615	12,443
Gross Margin	52.49%	58.98%	56.12%	54.36%	59.56%	51.63%	53.1%	46.05%	48.27%	50.62%	50.09%	48.65%
Operating Income	24,235	56,821	40,262	30,016	36,577	23,447	20,150	12,459	12,544	12,974	11,634	9,704
Operating Margin	41.81%	49.48%	45.68%	42.63%	49.53%	40.95%	42.32%	34.83%	37.2%	39.45%	39.87%	37.94%
Net Income	21,759	49,707	35,277	27,745	32,390	21,369	18,158	11,832	11,872	11,609	10,210	9,182
Net Margin	37.86%	43.29%	40.02%	39.4%	43.86%	37.32%	38.14%	33.08%	35.2%	35.3%	34.99%	35.9%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 11	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31	2015 Dec 31
Revenue	55,387	114,831	88,143	70,416	73,850	57,264	47,613	35,770	33,726	32,891	29,177	25,575
Revenue Growth Rate	15.91%	30.28%	25.17%	-4.65%	28.96%	20.27%	33.11%	6.06%	2.54%	12.73%	14.08%	6.43%
Net Income	21,759	49,707	35,277	27,745	32,390	21,369	18,158	11,832	11,872	11,609	10,210	9,182
Net Margin	37.86%	43.29%	40.02%	39.4%	43.86%	37.32%	38.14%	33.08%	35.2%	35.3%	34.99%	35.9%
Net Income Growth Rate	19.81%	40.9%	27.15%	-14.34%	51.58%	17.68%	53.46%	-0.331%	2.26%	13.7%	11.19%	14.63%
Stockholders Equity	79,897	163,899	129,255	111,713	94,699	77,532	65,231	53,946	54,296	50,265	41,832	36,202
Equity Growth Rate	16.17%	26.8%	15.7%	17.97%	22.14%	18.86%	20.92%	-0.644%	8.02%	20.16%	15.55%	12.43%
Return on Invested Capital (ROIC)	32.29%	39.72%	33.44%	25.63%	36.94%	30.56%	33.73%	27.95%	30.33%	31.94%	32.6%	32.35%
After-tax Operating Income	20,819	46,985	33,150	26,083	31,757	20,966	17,609	11,314	11,458	11,300	10,002	8,385
Income Tax Rate	12.98%	17.31%	17.66%	13.1%	13.18%	10.58%	12.61%	9.19%	8.66%	12.9%	14.02%	13.59%
Invested Capital	63,293	118,292	99,142	101,760	85,959	68,611	52,209	40,482	37,781	35,381	30,680	25,922