The share price of Delta Electronics (Thailand) Public Company Limited (SET: DELTA) plunged 5.23% to THB 77.00 per share in the morning session on March 10, 2025.
Kiatnakin Phatra Securities (KKPS) is initiating its analysis of Delta Electronics (Thailand) with an Underperform rating and a price target set at THB 50.00 per share.
Currently priced at THB 81.25 (as of Friday, March 9), the assessment reflects KKPS’ concerns that the company is transitioning out of a period of exceptional growth. KKPS forecasts reduced benefits from ongoing U.S. trade policies under “Trump 2.0” compared to “Trump 1.0,” compounded by an overstretched valuation. This price target of THB 50 results from a blend of discounted cash flow (DCF) analysis and target price-to-earnings metrics. With Delta Thailand’s significant market premium over its global peers and Delta Taiwan, the current valuation appears unjustifiably high.
Delta Thailand, part of Delta Taiwan, a renowned power electronics manufacturer, experienced extraordinary growth from 2019 to 2024, fueled by Delta Taiwan’s strategic response to mitigate the effects of the Trump 1.0 trade war. By increasing its stake from 20.93% to 63.78% in April 2019 and shifting production to Thailand, Delta Taiwan aimed to bypass U.S. tariffs on exports.
However, KKPS anticipates that this phase of rapid growth has ended. The projected compound annual growth rate (CAGR) in earnings is expected to decelerate from 44% (2019-2024) to 13% (2024-2029), hindered by slower capacity expansion. Moreover, with the Global Minimum Tax (GMT) implementation in 2025, nearly a fourfold increase in the effective tax rate is anticipated, reducing earnings growth to 2% versus 5% in 2024.
Potential upside factors include: 1) exceeding expectations in DC product demand, 2) substantial expansion in EBIT margins, and 3) further production relocation from Delta Taiwan. Downside risks involve: 1) potential U.S. tariffs on Thai exports, 2) possible reduced weighting or exclusion from the Stock Exchange of Thailand indices, and 3) possible weakened product demand due to economic slowdown.
