On Monday at 10:09 AM (Bangkok time), the share price of Delta Electronics (Thailand) Public Company Limited (SET: DELTA) rose by 4.27% or THB 3.50 to THB 85.50, with a trading value of THB 729.93 million.
In the first quarter of 2025, DELTA delivered a strong earning record with net profit amounting to Baht 5,488 million, a rise of 27.4% year-on-year, representing a net profit margin of 12.8% and EPS at Baht 0.44, up from Baht 0.35 in 1Q24.
Following an analyst meeting, CGS International Securities (CGSI) noted that DELTA’s management reaffirmed their USD sales growth target at 10-15%, attributing this momentum largely to the robust demand for data centre products. However, despite maintaining a Gross Profit Margin (GPM) forecast of 25%, the company exercised caution regarding the selling, general, and administrative (SG&A) expenses for the latter half of 2025.
Data centre-related products proved to be a key growth driver for DELTA, constituting 40% of the company’s 1Q25 sales. New project acquisitions propelled sales of both existing products and DC power solutions, which represented 23% and 10% of sales, respectively.
Meanwhile, Data Centre Infrastructure Solutions saw a remarkable year-on-year growth of over 50%, now comprising 5% of the company’s total sales. Although some pre-emptive inventory actions were noted in response to looming tariffs, these did not significantly affect shipment levels, and DELTA reported operating near full capacity.
As for the electric vehicle (EV), the segment experienced a slowdown, with sales dropping quarter-on-quarter and year-on-year. EV products now make up 23% of overall sales, with projections indicating a dip to the low-20% range by the full-year 2025.
While European EV sales increased by 34% year-on-year, the US market suffered a stark 42% decline, pivoting the customer base to 68% European dominance. The company’s revised mobility sales growth from mid-single-digit to low-single-digit reflects growing hurdles, and disclosures on GPM for the EV sector have ceased due to pricing sensitivity.
DELTA’s 4Q24 gross margin was impacted by approximately 300 basis points due to factors like foreign exchange gains, data centre rebates, and warranty provisions. Nevertheless, the management remains confident in their full-year 25% GPM forecast.
Inventory management remains well-regulated, with new provisions of approximately THB 300 million in 1Q25. While relocations for AI and non-AI products are slated to increase from the second half of 2025, the management maintains a conservative stance on royalty forecasts.
Administrative costs showcase effective restraint, with ongoing legal fees under THB 100 million, though no further updates on legal issues were disclosed. R&D investments are poised to rise to 3.5% of sales, with plans to boost the team from under 300 to around 500.
DELTA plans to expand its power supply product lines, launching new AC-DC converters and enhancing their solutions for cooling and thermal management by 2H25. Although expectations are positive for 2Q25, detailed guidance is not provided, and sales visibility into the second half remains uncertain.
Given the mixed signals and persistent challenges, CGSI re-affirms the ‘Reduce’ view, highlighting cautious optimism amid a complex market environment.
