At the end of the trading session on Monday, the share price of Delta Electronics (Thailand) Public Company Limited (SET: DELTA) plummeted by 6.96% or THB 9.50 and closed at THB 127.00, with a trading value of THB 3.28 billion.
CGS International Securities (Thailand) projects a slowdown in DELTA’s earnings per share for 2025 to 4%, attributed to the deceleration in the capital expenditure of hyperscalers from 36% to 17% in 2025. Additionally, the analyst also expected an increase in tax rate from 3% to 10%, alongside modest growth projections ranging from 5% to 10% for other segments.
DELTA’s net profit for the third quarter of 2024 amounted to THB 5.91 billion, showing a 9% year-on-year surge but a 10% quarter-on-quarter decline. However, after excluding non-recurring items, the core net profit for the same period is anticipated to reach THB 6.2 billion, reflecting a remarkable 23% year-on-year increase and a modest 4% quarter-on-quarter uptick. These figures surpass both CGSI and Bloomberg consensus estimates by 5% and 7%, respectively.
Although facing challenges such as weaker-than-anticipated sales and a robust THB/US$ exchange rate in the third quarter of 2024, DELTA saw a significant increase in its gross margins, rising by 70 basis points quarter-on-quarter to reach 27.6%. This jump surpassed both CGSI estimates and Bloomberg consensus forecasts by 52 and 70 basis points, respectively.
The company’s robust gross margin performance is believed to be driven by substantial profitability from its data center-related products, particularly power supplies for high-power-intensity servers, along with the reversal of the reduction to the net realizable value of its inventories.
The analyst downgrades DELTA’s rating from ‘HOLD’ to ‘REDUCE’, with a target price of THB 108 per share.
