The low valuation is probably related to the high country risk associated with Taiwan, given its tensions with China. I see no reason why this risk should come down. So the valuation could probably stay depressed for quite a long time.
War risk is genuine but extremely remote. I don't want to say people are lazy but I think they are less informed. I tweeted so many times on this issue. In short, to conduct an amphibious operation and transport 1 milllon troops across Taiwan Strait is extraordinary difficult. CCP rules with an iron fist and the presence of a full-scale war they are not going to keep everyone fed, thus there will be so many uncertainties for them too.
War risk defies the logic as TSMC practically +100% this year when everyone knows there is a great geopolitical risk. It has a $1T market cap. And on 6807 the valuation didn't say depressed for too long. Since 4/2 this idea generated 112% in total return.
It had some capex on plants in Thailand in 2022. Also dividends 3 years in a row. Since it is registered in Cayman Islands their dividends are tax-free(there is a limit of course) for Taiwanese so dividend is not a bad capital allocation strategy. A tax-free 6.25% dividend yield is pretty handy, given the overnight rate is like 0.81%.
The low valuation is probably related to the high country risk associated with Taiwan, given its tensions with China. I see no reason why this risk should come down. So the valuation could probably stay depressed for quite a long time.
Michael,
War risk is genuine but extremely remote. I don't want to say people are lazy but I think they are less informed. I tweeted so many times on this issue. In short, to conduct an amphibious operation and transport 1 milllon troops across Taiwan Strait is extraordinary difficult. CCP rules with an iron fist and the presence of a full-scale war they are not going to keep everyone fed, thus there will be so many uncertainties for them too.
War risk defies the logic as TSMC practically +100% this year when everyone knows there is a great geopolitical risk. It has a $1T market cap. And on 6807 the valuation didn't say depressed for too long. Since 4/2 this idea generated 112% in total return.
Are there any plans to use the considerable balance sheet strength (implied from EV < Market cap)?
It had some capex on plants in Thailand in 2022. Also dividends 3 years in a row. Since it is registered in Cayman Islands their dividends are tax-free(there is a limit of course) for Taiwanese so dividend is not a bad capital allocation strategy. A tax-free 6.25% dividend yield is pretty handy, given the overnight rate is like 0.81%.