DELTA: Shortage Issue Still Persists Despite Concerns on Weakening Demand in 2022

DELTA : Outstanding 2Q22 Earnings Leads to High 22E Base and Limited Growth in 23E

DELTA :  Growth Potential in 2022 Priced In

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

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

Equity Bottom-Up

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