Delta Electronics jumps nearly 10 per cent amid analyst warnings

Shares of Delta Electronics (DELTA) surged by 9.57 per cent to 355 baht on Friday, the most actively traded in the morning session, amid cautions from analysts that it is over-valued.

Delta’s transaction value was more than 3.38 billion baht at the mid-day break.

KGI Securities recommended ‘Sell’ on Delta following their adjusted target price of 215 baht. However, KGI revised up Delta’s earnings forecast by 5 and 6 per cent in 2021 and 2022, respectively, driven by an increase in sales assumptions.

The company is expected to report 1.6 billion baht of core profits in the first quarter of 2021, rising 152 per cent year-on-year, backed by low base in the first quarter last year from lockdowns in China, and by global demand growth, especially from data centers and electric vehicles.

Nomura Securities also put a ‘Sell’ rating on Delta with a target price of 257 baht, despite favorable fundamentals covering both telecommunication and automobile businesses.

Delta’s price was too expensive considering its price-to-earnings ratio, said the research team, pointing that the reasonable price to collect this stock should be 210-230 baht.

In January, Delta soared to more than 700 baht per share, prompting the Stock Exchange of Thailand to put it under the trading alert list with “cash balance” symbol, allowing only full amount of cash paid prior to trading.

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