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

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.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.</li><li>Our recommended stocks are CBG and SCGP.</li><li><div><div><p>The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.</p></div></div></li></ul></div></div></div></div>

We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.Our recommended stocks are CBG and SCGP.The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Delta Electronics Thailand  / Equity Bottom-Up

<ul>
<li>We downgrade to SELL from HOLD and lower TP to Bt434 (-9% from previous TP) from Bt475, based on 38.6xPE’23E (average of 5-year trading).Analyst meeting came with a neutral tone. </li>
<li>Analyst meeting details Raw material shortage situation has improved,but some areas (MOSFETs,ICs, high-voltage materials) remain tight.The situation is unlikely to return to pre-Covid levels until at least end of 1H23</li>
<li>Factory 8, the new facility dedicated to support EV product segment growth, will likely be up and running by 2H23. In addition to more sales contribution DELTA’s gross margin</li>
</ul>


We downgrade to SELL from HOLD and lower TP to Bt434 (-9% from previous TP) from Bt475, based on 38.6xPE’23E (average of 5-year trading).Analyst meeting came with a neutral tone. 
Analyst meeting details Raw material shortage situation has improved,but some areas (MOSFETs,ICs, high-voltage materials) remain tight.The situation is unlikely to return to pre-Covid levels until at least end of 1H23
Factory 8, the new facility dedicated to support EV product segment growth, will likely be up and running by 2H23. In addition to more sales contribution DELTA’s gross margin


DELTA : Expensive Valuation and Recession Impact

<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

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

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth...

Krungthai XSpring

DELTA : Expensive Valuation and Recession Impact

We downgrade to SELL from HOLD and lower TP to Bt434 (-9% from previous TP) from Bt475, based on 38.6xPE’23E (average of 5-year trading). Analyst...

Pi Securities PCL, Thailand

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

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