Comprehensive Analysis of Listed Companies: Insights from Maybank Securities

Report Date: January 27, 2025

Broker: Maybank Securities (Thailand) PCL

Cal-Comp Electronics (TH): A Long-Term Growth Story

Cal-Comp Electronics (TH) (CCET TB) remains a top pick in the Thai ETRON sector, with Maybank Securities reiterating a BUY recommendation at a target price of THB9.91. Despite a 14% year-to-date decline in share prices, attributed to uncertainties surrounding trade wars and potential AI growth slowdowns, the company’s long-term growth prospects remain intact. This presents an opportunity for investors to accumulate shares.

Key Growth Catalysts

• Factory Expansion: The completion of four new factories has increased capacity by 87%, with 25% of the new capacity already secured with customers for FY25. Additionally, the opening of a new factory in Brazil by 1H25 (ahead of previous guidance) further enhances growth prospects.
• Automation and Partnerships: A formalized memorandum of understanding (MOU) with Delta Electronics PCL is expected to reduce costs through further automation across CCET’s factories.
• New Customers: The company forecasts 10% year-on-year growth in FY25 core earnings, driven by higher revenues from new facilities in Mahachai and Phetchaburi. Secured customers account for approximately 25-27% of the new capacity, with additional upside expected as utilization rates climb to 40% by FY28.

Financial Performance

CCET’s 4Q24 core earnings are projected at THB880m, reflecting a 158% year-on-year increase. Gross profit margins are expected to remain steady at 5.5%, benefiting from an improved product mix and lower interest expenses. The company has demonstrated resilience, with significant growth in demand for HDD/SSD products driven by increased capital expenditure in AI and data centers.

Valuation and Upside Potential

A scenario analysis reveals a potential fair value of THB13.4 per share if CCET achieves an 80% utilization rate in its new factories by FY28. The company’s geographical neutrality, particularly in Thailand and the Philippines, positions it favorably amidst trade tensions between the US, China, and Vietnam.

Key Metrics

• Revenue Growth: FY25 revenue is projected at THB163.4b, representing a 10.1% year-on-year increase.
• Core EPS Growth: Expected to grow by 9.9% in FY25, with a projected EPS of THB0.35.
• Dividend Yield: A net dividend yield of 2.5% is anticipated for FY25.

Environmental, Social, and Governance (ESG) Insights

CCET has made significant strides in sustainability, focusing on reducing greenhouse gas emissions and electricity consumption. The company’s transition to renewable energy sources and efficient machinery reflects its commitment to sustainable practices. However, challenges remain, including past labor rights violations, which have since been rectified.

Recommendation

Maybank Securities maintains a BUY recommendation for Cal-Comp Electronics (TH), citing robust growth prospects and a favorable valuation aligned with its long-term outlook.

Delta Electronics PCL: A Contrasting Perspective

Delta Electronics PCL (DELTA TB) is another key player in the Thai technology sector. However, Maybank Securities assigns a SELL recommendation with a target price of THB119, significantly below its current price of THB138.

Key Concerns

• Valuation Challenges: The stock’s valuation appears stretched, trading at levels that exceed its historical averages.
• Limited Upside: With a target price implying a downside potential, DELTA’s current valuation does not align with Maybank’s growth expectations for the company.

Strategic Developments

Despite its challenges, DELTA continues to innovate, leveraging its expertise in electronics manufacturing. However, the company faces headwinds from global trade tensions and competitive pressures, which may impact its financial performance.

Recommendation

Maybank Securities advises investors to SELL Delta Electronics PCL, citing valuation concerns and limited growth visibility.

Conclusion

This comprehensive analysis underscores the contrasting prospects of Cal-Comp Electronics (TH) and Delta Electronics PCL within the Thai technology sector. While CCET offers significant growth opportunities and remains a top pick, DELTA faces valuation challenges that warrant a cautious approach. Investors are encouraged to consider these insights as part of their broader investment strategy.