Equity Analysis /

Thailand: Electronics - Strong 2Q22 earnings, but clouds on the horizon for 2H22

  • Strong sales in 2Q22 lead to …

  • … strong earnings but …

  • … uncertain 2H22-2023 outlook

Napon Jaisan
Napon Jaisan

Equity Research Analyst

Bualuang Securities
25 July 2022

Predicting the exact starting and ending points of cycle inflections for the electronics sector is a challenge, so we should build portfolios that hold up against the inevitability of down cycles. Three ELTRON stocks are expected to post strong 2Q22 earnings, however, their 2H22 outlooks are still uncertain. Therefore, we believe that it is better to be more conservative than generous on valuations and more cautious than optimistic on earnings.

Strong sales in 2Q22 lead to …

The world continues to grapple with persistent semiconductor shortages. Moreover, COVID lockdowns in China caused shipping delays for a wide range of products and have continued to harm supply chains. However, Thai ELTRON firms have 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.