Delta Taiwan has declared that Delta International Holding (DIH), its subsidiary, will launch exchangeable bonds valued at $525 million (around THB 18.3 billion).
These are structured as zero-coupon bonds maturing in five years, with a conversion feature into Delta Thailand (SET: DELTA) shares at THB 187.6 each. This conversion rate has a 40% premium on the reference price of THB 134.
Holders of these bonds will have the option to convert in 2028, the third year post-issuance. If all bonds are exchanged, this could potentially amount to around 98 million DELTA shares, representing 0.8% of the company’s stock.
FSS International Investment Advisory (FSSIA) stated that the news is expected to lift market sentiment regarding DELTA shares, considering the conversion price is 26.3% higher than the trading price as of January 13. To drive the put option conversion, the share price needs to exceed the conversion benchmark.
However, there remains a three-year wait before conversion becomes possible. Evaluating from the conversion price of THB 187.6 and applying a target P/E ratio of 50x, DELTA is projected to achieve a profit of THB 40 billion by 2028. This requires a compound annual growth rate (CAGR) of 25% from the anticipated THB 24 billion in 2025.
FSSIA’s price target for 2025 remains at THB 100, with a recommendation to undertake speculative positions with prudence.
