Shares of TSMC down on cash dividend proposal
Central News Agency
2014-02-19 11:59 AM
Taipei, Feb. 19 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) moved lower Wednesday after the world's largest contract chip maker proposed to issue the same cash dividend for 2013 as for 2012 even though net income hit a record high last year, dealers said. The cash dividend proposal disappointed some investors who had expected TSMC to issue a higher dividend, but the selling was expected to be short-lived as the market remains upbeat about the company's earnings prospects, they said. As of 11:09 a.m., shares of TSMC had fallen 0.46 percent to NT$107.50 (US$3.54), with 105.80 million shares changing hands. The weighted index on the Taiwan Stock Exchange was down 0.07 percent at 8,550.24. "The cash dividend proposal showed that TSMC wants to keep more cash on hand for future production expansion and technology upgrades," Hua Nan Securities analyst Henry Miao said. "While the proposal has dampened the sentiment of some investors this morning, the move to hoard more cash for future development is the right thing for TSMC to do to maintain its lead over its rivals," Miao said. At a board meeting Tuesday, TSMC proposed to issue a cash dividend of NT$3 per share for 2013, lower than the NT$3.5 some foreign institutional investors had anticipated due to the chip maker's record high net income. The dividend yield was 2.77 percent, based on TSMC's Tuesday close of NT$108.00. The dividend payout ratio, which measures the percentage of earnings per share distributed in dividends, was 41.32 percent, compared with 46.80 percent in 2012. TSMC had earnings per share of NT$7.26 in 2013. "The impact from the cash dividend proposal will be temporary as many investors still have high hopes that TSMC's bottom line will further improve in the future as the company is fundamentally healthy," Miao said, referring to its intensified efforts to upgrade its production technology to secure more orders. TSMC is beginning commercial production of chips using the sophisticated 20 nanometer process in the first quarter and is scheduled to launch mass production on the even more advanced 16nm process next year. The analyst said his brokerage expects that TSMC's EPS for 2014 will rise to at least NT$8.0, which would set another record if realized. The chip maker is expected to issue about NT$77.79 billion in cash dividends to its shareholders for 2013. As of the end of 2013, TSMC was sitting on NT$245.34 billion in cash and cash equivalents, compared with NT$150.92 billion recorded at the end of 2012.. "The high cash reserves are targeted at meeting demand for big capital expenditures," Miao said. TSMC is expected to spend US$9.5 billion-US$10 billion in capex in 2014, little changed from a year earlier. Miao said TSMC is planning to build an 18-inch wafer plant that could cost as much as NT$400 billion, "so keeping more cash on hand will be critical to the chip maker." As a favorite of foreign institutional investors, TSMC shares are likely to see strong technical support at around NT$105.00, Miao said. As of Tuesday, foreign institutional investors had a 76.27 percent stake in TSMC. (By Jackson Chang and Frances Huang)
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