Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

<ul>
<li>Delta Taiwan has outperformed Delta Thailand, but remains at a historically low relative valuation.</li>
<li>China concerns, which may have impacted Delta Taiwan on a relative basis, appear to be incrementally improving.</li>
<li>We continue to favor Delta Taiwan vs. Delta Thailand, historical data implies Delta Taiwan is more likely to outperform Delta Thailand than vice-versa.</li>
</ul>


Delta Taiwan has outperformed Delta Thailand, but remains at a historically low relative valuation.
China concerns, which may have impacted Delta Taiwan on a relative basis, appear to be incrementally improving.
We continue to favor Delta Taiwan vs. Delta Thailand, historical data implies Delta Taiwan is more likely to outperform Delta Thailand than vice-versa.


Delta Taiwan Vs. Thailand Monitor: China Concerns Easing, EV in 2023 Favor Delta Taiwan

<ul>
<li>Delta Electronics (2308 TT) reported its earnings on October 28th, after its subsidiary Delta Electronics Thai (DELTA TB) had reported on October 25th.</li>
<li>Sales grew 33% YoY and gross margin expanded sequentially, which outperformed Delta Thailand's margin performance.</li>
<li>Delta Taiwan shares have outperformed Delta Thailand since having dropped to a historically-extreme relative market cap below 1.0x. However, Delta Taiwan remains historically cheap on a relative basis.</li>
</ul>


Delta Electronics (2308 TT) reported its earnings on October 28th, after its subsidiary Delta Electronics Thai (DELTA TB) had reported on October 25th.
Sales grew 33% YoY and gross margin expanded sequentially, which outperformed Delta Thailand's margin performance.
Delta Taiwan shares have outperformed Delta Thailand since having dropped to a historically-extreme relative market cap below 1.0x. However, Delta Taiwan remains historically cheap on a relative basis.


Delta Taiwan Vs. Thailand Monitor: Delta Taiwan Reports Better Margin Trend, Rel Valuation Reverts

<ul>
<li>Delta Electronics Thailand shares rose sharply ahead of its earnings result, where profit beat expectations. Delta Taiwan shares fell the same day, thus we see an opportunity.</li>
<li>Delta Taiwan to report on October 28th. Delta Taiwan is now smaller in market cap than its subsidiary despite earning substantially higher levels of net profit.</li>
<li>2023E growth expectations are relatively similar for both, supporting Delta Taiwan to revert vs. Thailand. Trade opportunity into the Delta Taiwan October 28th results.</li>
</ul>


Delta Electronics Thailand shares rose sharply ahead of its earnings result, where profit beat expectations. Delta Taiwan shares fell the same day, thus we see an opportunity.
Delta Taiwan to report on October 28th. Delta Taiwan is now smaller in market cap than its subsidiary despite earning substantially higher levels of net profit.
2023E growth expectations are relatively similar for both, supporting Delta Taiwan to revert vs. Thailand. Trade opportunity into the Delta Taiwan October 28th results.


Delta Taiwan Vs. Thailand Monitor: Major Disconnect Post Thai Earnings, Trade Taiwan Into Earnings

<ul>
<li>ASML and Lam Research beat estimates last week and provided some relief to the semiconductor space.</li>
<li>Major global industry earnings coming this week include -- Samsung, SK Hynix, Texas Instruments, KLA Tencor, Apple, and Intel.</li>
<li>Major Taiwan earnings this week -- AUO, UMC, ASE, Realtek, Delta Electronics, Mediatek.</li>
</ul>


ASML and Lam Research beat estimates last week and provided some relief to the semiconductor space.
Major global industry earnings coming this week include -- Samsung, SK Hynix, Texas Instruments, KLA Tencor, Apple, and Intel.
Major Taiwan earnings this week -- AUO, UMC, ASE, Realtek, Delta Electronics, Mediatek.


Taiwan Tech Weekly: ASML & Lam Provide Industry Optimism, Wave of Earnings This Week

Taiwan Semiconductor (TSMC) - ADR / Equity Bottom-Up

<ul>
<li>Taiwan’s tech space fell hard last week, with the tech sector down 5.4%, compared to a 4.9% drop for the overall market. Semiconductors performed the worst, down 6.2%.</li>
<li>Hon Hai, Delta, Lite-On -- EV a major theme for the first-ever Taiwan Expo USA coming October 12th.</li>
<li>Taiwan wafer exports were at an all-time high in August. We note that wafer names have underperformed TSMC.</li>
</ul>


Taiwan’s tech space fell hard last week, with the tech sector down 5.4%, compared to a 4.9% drop for the overall market. Semiconductors performed the worst, down 6.2%.
Hon Hai, Delta, Lite-On -- EV a major theme for the first-ever Taiwan Expo USA coming October 12th.
Taiwan wafer exports were at an all-time high in August. We note that wafer names have underperformed TSMC.


Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines

Taiwan

Delta Electronics Inc. manufactures power supplies and video display products. The Company's products include switching power supplies, telecom power systems, uninterrupted power supply (UPS), variable speed alternating current (AC) monitor drives, high resolution color monitors, and projectors.  Delta also manufactures magnetic and networking components.

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Delta Electronics (2308 TT)

Delta Taiwan Vs. Thailand Monitor: China Concerns Easing, EV in 2023 Favor Delta Taiwan

China concerns, which may have impacted Delta Taiwan on a relative basis, appear to be incrementally improving. Despite recent Delta Taiwan...

Vincent Fernando, CFA

Delta Taiwan Vs. Thailand Monitor: Delta Taiwan Reports Better Margin Trend, Rel Valuation Reverts

Delta Taiwan shares have outperformed Delta Thailand since having dropped to a historically-extreme relative market cap below 1.0x. However, Delta...

Vincent Fernando, CFA

Delta Taiwan Vs. Thailand Monitor: Major Disconnect Post Thai Earnings, Trade Taiwan Into Earnings

Delta Taiwan to report on October 28th. Delta Taiwan is now smaller in market cap than its subsidiary despite earning substantially higher levels...

Vincent Fernando, CFA

Taiwan Tech Weekly: ASML & Lam Provide Industry Optimism, Wave of Earnings This Week

Earnings season is now in full swing with a wave of results to be released this week for both the global industry and within Taiwan.

Vincent Fernando, CFA

Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines

AU Optronics stock suspended, Intel's Mobileye IPO is back, Samsung takes share from TSMC, Taiwan wafer exports are at an all-time high.

Vincent Fernando, CFA

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