Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

Delta Electronics Thailand  / Equity Bottom-Up

<ul><li>We maintain an Underperform rating, as the stock’s valuation appears stretched, with very limited tactical upside.</li><li>However, the long-term outlook on DELTA’s earnings remains strong, driven by robust demand growth in AI-related businesses.</li></ul><ul><li>DELTA reported a 3Q24 net profit of Bt5.91bn (+8.9% YoY but -10.0% QoQ), exceeding market expectations by 3.8%. </li></ul>

We maintain an Underperform rating, as the stock’s valuation appears stretched, with very limited tactical upside.However, the long-term outlook on DELTA’s earnings remains strong, driven by robust demand growth in AI-related businesses.DELTA reported a 3Q24 net profit of Bt5.91bn (+8.9% YoY but -10.0% QoQ), exceeding market expectations by 3.8%. 

Delta Electronics (Thailand) - Strong 3Q24 Net Profit but Share Price Fully Valued

<ul><li>We switch our rating to Underperform (from Neutral) due to a weaker tactical outlook compared to the view presented in our previous report.</li><li>Despite potential upward revisions to our 2024-26E earnings projections to reflect the strong 2Q24 results, our current valuation based on the fundamentals is unlikely to become more attractive.</li><li>DELTA reported a 2Q24 net profit of Bt6.57bn (+40.6% YoY and +52.4% QoQ).</li></ul>

We switch our rating to Underperform (from Neutral) due to a weaker tactical outlook compared to the view presented in our previous report.Despite potential upward revisions to our 2024-26E earnings projections to reflect the strong 2Q24 results, our current valuation based on the fundamentals is unlikely to become more attractive.DELTA reported a 2Q24 net profit of Bt6.57bn (+40.6% YoY and +52.4% QoQ).

Delta Electronics - Record-High Net Profit in 2Q24 but Share Price Fully Valued

<ul><li>We initiate our coverage on DELTA with a Neutral rating and a 12M fair value of Bt60.25, based on a required rate of return of 2.29%, as we view the current valuation to be unfavorable.</li><li>However, our model suggests that an upward rerating is possible in the medium term — our FY2025E and FY2026E fair values are Bt79.25 and Bt96.00, respectively.</li><li>We expect flat core profit growth YoY in FY2024E at Bt17bn, as the increase in sales will likely be offset by production ramp-up costs, which follows the patterns evident in DELTA’s last two factory openings in 2019 and 2021.</li></ul>

We initiate our coverage on DELTA with a Neutral rating and a 12M fair value of Bt60.25, based on a required rate of return of 2.29%, as we view the current valuation to be unfavorable.However, our model suggests that an upward rerating is possible in the medium term — our FY2025E and FY2026E fair values are Bt79.25 and Bt96.00, respectively.We expect flat core profit growth YoY in FY2024E at Bt17bn, as the increase in sales will likely be offset by production ramp-up costs, which follows the patterns evident in DELTA’s last two factory openings in 2019 and 2021.

Delta Electronics (Thailand) - Potential for Rerating of Valuation in FY2025E and FY2026E

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Delta Electronics Thailand  / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.</li>
<li>Given the big turnover every time <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics</a> is added to and deleted from the index, there could be another go at weighting the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">SET50 Index</a> by free-float market cap.</li>
<li>Deletion from the index will have a big impact on <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> and the passive selling could help narrow the gap with <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a>.</li>
</ul>



Delta Electronics Thai (DELTA TB) has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.
Given the big turnover every time Delta Electronics is added to and deleted from the index, there could be another go at weighting the SET50 Index by free-float market cap.
Deletion from the index will have a big impact on Delta Electronics Thai (DELTA TB) and the passive selling could help narrow the gap with Delta Electronics (2308 TT).


Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

<ul>
<li>The valuation divergence between Delta Electronics Thai (DELTA TB) and its parent Delta Electronics (2308 TT) has hit a new extreme.</li>
<li>Delta Thailand surged 9.3% Thursday on no news, even prompting the Thailand Stock Exchange to query the company.</li>
<li>Delta Taiwan's stake in Delta Thailand is now worth more than all of Delta Taiwan. The valuation divergence would seem unsustainable, however when things revert is uncertain.</li>
</ul>


The valuation divergence between Delta Electronics Thai (DELTA TB) and its parent Delta Electronics (2308 TT) has hit a new extreme.
Delta Thailand surged 9.3% Thursday on no news, even prompting the Thailand Stock Exchange to query the company.
Delta Taiwan's stake in Delta Thailand is now worth more than all of Delta Taiwan. The valuation divergence would seem unsustainable, however when things revert is uncertain.


Delta Taiwan Vs. Thailand Monitor: Valuation Divergence Hits a New Extreme

Thailand

Delta Electronics (Thailand) PCL designs and manufactures electronic equipment. The Company produces power systems for telecommunications, medical equipment, and industrial automation.  Delta also produces fans, electromagnetic interference filters, and solenoids.

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Delta Electronics Thailand (DELTA TB)

Delta Electronics (Thailand) - Potential for Rerating of Valuation in FY2025E and FY2026E

We initiate our coverage on DELTA with a Neutral rating and a 12M fair value of Bt60.25, based on a required rate of return of 2.29%, as we view...

Krungthai XSpring

Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?

DELTA TB has been added to the Market Surveillance Measure List and this increases the probability of SET50 deletion in December. That could help...

Brian Freitas

Delta Taiwan Vs. Thailand Monitor: Valuation Divergence Hits a New Extreme

Delta Taiwan's stake in Delta Thailand is now worth more than all of Delta Taiwan. The valuation divergence would seem unsustainable, however when...

Vincent Fernando, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Delta Electronics (Thailand) - Strong 3Q24 Net Profit but Share Price Fully Valued

We maintain an Underperform rating, as the stock’s valuation appears stretched, with very limited tactical upside. However, the long-term outlook...

Krungthai XSpring

Delta Electronics - Record-High Net Profit in 2Q24 but Share Price Fully Valued

We switch our rating to Underperform (from Neutral) due to a weaker tactical outlook compared to the view presented in our previous report.

Krungthai XSpring

Delta Electronics (Thailand) - Potential for Rerating of Valuation in FY2025E and FY2026E

We initiate our coverage on DELTA with a Neutral rating and a 12M fair value of Bt60.25, based on a required rate of return of 2.29%, as we view...

Krungthai XSpring

Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?

DELTA TB has been added to the Market Surveillance Measure List and this increases the probability of SET50 deletion in December. That could help...

Brian Freitas

Delta Taiwan Vs. Thailand Monitor: Valuation Divergence Hits a New Extreme

Delta Taiwan's stake in Delta Thailand is now worth more than all of Delta Taiwan. The valuation divergence would seem unsustainable, however when...

Vincent Fernando, CFA