Equity Analysis /
Thailand

Delta Electronics Thailand PCL: Bt520, Bt690, Bt1,000—place your bets

  • Growth momentum through 3Q22

  • What’s the possible trajectory for this rally round?

  • But what if we're wrong? —2020 to repeat itself?

Napon Jaisan
Napon Jaisan

Equity Research Analyst

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Bualuang Securities
2 August 2022

In 2020, DELTA’s stock price surged 1,400% YoY to its all-time high of Bt838 (5SD). Behind the crazy run was its >100% EPS growth and its premium status in a COVID-hit market. We now assume its 2022 core EPS growth at 115%. However, our base case TP is Bt520 (2SD), with the best bet price at Bt690 (3SD). Our call has shifted from TRADING BUY to HOLD. We recommend postponing profit taking until the price passes Bt690. 

Growth momentum through 3Q22

DELTA posted a 2Q22 core earnings of Bt3.9bn, up by 174% YoY and 74% QoQ. Despite supply disruptions, DELTA’s raw materials inventory should stay well-managed in 3Q22. Demand remains solid, particularly for high-end data center products (continuing from 2Q22). Overall, 3Q22 sales (in US$) should be as strong as in 2Q22 (higher growth in baht terms, due to baht depreciation). Overall, we expect its core profit to rise 200% YoY but be flattish QoQ in 3Q22. DELTA’s 1H22 core profit accounts for 54% of Bloomberg’s consensus forecast of Bt11bn (against our core profit assumption of Bt13bn). The firm’s 2H core profit is typically higher than in 1H. Therefore, we expect to see the flow of consensus earnings upgrade of about 20% in the foreseeable future.