Update – DELTA shares surge 25% after it reports profit rise of 158% in Q2

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Shares of Delta Electronics Plc (DELTA), one of Thailand’s leading electronics makers, was one of the most active shares traded on the Stock Exchange of Thailand during the morning session with the stock rising by as much as 24% after the company announced its 2nd quarter net profit that saw its profit surge by nearly 158% year-on-year (YoY).

Shares of DELTA were trading up 92 Baht or 25% at 460 Baht a share on very active trade of more than 4.3 billion Baht worth of shares traded.

DELTA, which is the Thai arm of the much larger mothership listed in Taiwan, reported a net profit of 4.26 billion Baht a rise of 157.6% YoY and 53.4% quarter-on-quarter, was one of the best results that the company has reported in years.

“DELTA’s growth outlook is solid, driven by technology trends—EVs, data centers, and the IOT. However, its 2Q22 core earnings were pressured by several factors. And the stock is expensive—a 2022 PER of 52x and a PEG ratio of 1.1x. We de-rated our PER pegged from 60x to 50x, which derived to our new target price of 370 Baht (from 450 Baht). Our call shifted from HOLD to SELL,” Napon Jaisan, sector analyst for Bualuang Securities said in a note to clients this morning.

The ‘sell’ rating by Napon comes despite the fact that the broker expects DELTA to report profits that would grow by at least 37% for the year 2022 and another 16% projected growth in 2023.

Napon says that DELTA also benefited from the nearly 10% deprecation of the Thai Baht against the greenback as most of the company’s revenues are recorded in US$.

DELTA informed the Stock Exchange of Thailand (SET) that its sales revenue and service income of this quarter totaled 28 billion Baht, represented an increase of 35.7% YoY based on a strong growth momentum in Power Electronics business group, thanks to rising demand in server & cloud storage, and data center-related products especially the Custom Design Power as well as Electric Vehicle Power, Fan & Thermal Management Solution, along with Industrial Automation spanning machine automation and industrial motion system.

Shares of DELTA, which has been one of the most volatile stocks on the SET due to the low liquidity has jumped from a 52-week high of 790 Baht to a low of 287 Baht a share. The stock trading at 368 Baht a piece is still trading at multiples of 60.41x.

DELTA’s stock performance on July 26 2022

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