Equity Analysis /

Thailand: Electronics - Entering inventory correction phase

  • Supply checks

  • Demand checks

  • 2H22 should still grow YoY

Napon Jaisan
Napon Jaisan

Equity Research Analyst

Bualuang Securities
21 September 2022

ELTRON stocks are vulnerable to risks linked to the global economic slowdown. A semi-inventory correction already began in 2Q22, and going forward we see a significant impact of inventory correction in 1H23. Therefore, the ELTRON 4Q22-1H23 outlook is uncertain. The potential cycle peak and limited upward earnings revision breadth may create downside risks into 4Q22-2023.

Supply checks

The world continues to grapple with persistent semiconductor shortages. Moreover, COVID lockdowns in China have caused shipping delays for a wide range of products and have continued to harm supply chains. Chip shortages are likely to persist in 2H22. However, Thai ELTRON firms had their contingency plans in place, such as diversifying suppliers and maintaining high levels of inventory. Although, rising costs of transportation and logistics could lead to higher prices across the board, the baht depreciation against the green back (by 10% YoY and 5% QoQ) mitigated their margin risks.