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

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>In this insight, we take a look at the potential index changes for 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">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> between now and the December 2022 Rebalance.</li>
<li>There is an ongoing market consultation with significant implications for constituent selection and there is also a potential intra-review change due to the DTAC-TRUE merger.</li>
<li>Based on the latest available data, there could three or four index changes during the December 2022 Rebalance depending on the outcome of the DTAC-TRUE merger.</li>
</ul>


In this insight, we take a look at the potential index changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) between now and the December 2022 Rebalance.
There is an ongoing market consultation with significant implications for constituent selection and there is also a potential intra-review change due to the DTAC-TRUE merger.
Based on the latest available data, there could three or four index changes during the December 2022 Rebalance depending on the outcome of the DTAC-TRUE merger.


Thailand SET50 Quiddity Leaderboard Dec 22: BJC Is the Most Interesting Name

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

<ul>
<li>Last week we had the implementation of the first two tranches of the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> rebalance with the third tranche to be implemented at the close on Monday.</li>
<li>Thursday saw the NIFTY indices implementation while Friday marked the end of the review period for the December rebalance of the Hang Seng family of indices.</li>
<li>There were large inflows to China, Taiwan, Korea and Hong Kong ETFs during the week while there were some outflows from Japan.</li>
</ul>


Last week we had the implementation of the first two tranches of the Nikkei 225 (NKY INDEX) rebalance with the third tranche to be implemented at the close on Monday.
Thursday saw the NIFTY indices implementation while Friday marked the end of the review period for the December rebalance of the Hang Seng family of indices.
There were large inflows to China, Taiwan, Korea and Hong Kong ETFs during the week while there were some outflows from Japan.


Index Rebalance & ETF Flow Recap: S&P/ASX, China A50, SET50, Bilibili, Leapmotor, Onewo, CALB

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 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

Thailand SET50 Quiddity Leaderboard Dec 22: BJC Is the Most Interesting Name

I expect RATCH to replace DTAC in the SET 50 index prior to the December Rebalance. DELTA, BJC, and COM7 could be added and KCE, BLA, and SAWAD...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: S&P/ASX, China A50, SET50, Bilibili, Leapmotor, Onewo, CALB

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

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