Stanley Lim of Slimhawk Partners presented his in-depth investment theses on Taiwan Semiconductor Manufacturing (Taiwan: 2330) and Tencent Holdings (Hong Kong: 0700) at Best Ideas 2018.
TSM is a large-cap stock with a high degree of pricing power. It is the largest semiconductor manufacturing foundry in the world and holds 50+% global market share. TSMC has compounded net income by ~30% annually since 1991, with net income margin consistently above 30%. The company retains growth potential as the foundry business continues to consolidate and technology sectors such as the “internet of things”, cloud computing, and artificial intelligences are emerging. TSMC is an example of what Buffett terms a “wonderful company at a fair price”.
Tencent is the largest technology company in China. It has two key platforms with close to one billion monthly active users each: QQ and WeChat. Tencent is also a key platform in China for services such as mobile news, video streaming, music, online publishing, and mobile app store. Tencent has seen strong growth, with revenue and net income up 71% and 74%, respectively, annually from 2001-2016. The company continues to find ways to grow as it becomes the dominant platform in China. It also pursues international expansion, both organically via WeChat and through acquisitions.
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