Delta Electronics: Comprehensive Financial Analysis and Downgrade Insights
Date: February 17, 2025
Broker: UOB Kay Hian
Overview of Delta Electronics
Delta Electronics, a leading electronics exporter and manufacturer, specializes in power supplies, cooling fans, EMI filters, solenoids, and other electronic components. Despite its strong market presence, the company faced significant challenges in 2024, leading to a stock downgrade and a revised outlook for 2025.
Stock Performance and Downgrade
Delta Electronics has been downgraded from “HOLD” to “SELL” by UOB Kay Hian, with a revised target price of Bt99.00, down from the previous Bt128.00. The current share price stands at Bt113.00, indicating a downside of -12.39%.
Key shareholders include Delta Electronics International (Singapore) Pte. Ltd. (42.9%), Delta International Holding Limited (15.4%), and Delta Electronics Inc. (5.5%).
4Q24 Earnings Report: A Major Miss
Delta’s 4Q24 results revealed a significant earnings miss, with net profit plunging to Bt2.2 billion, a 54% year-on-year (YoY) and 64% quarter-on-quarter (QoQ) decline. This figure was 60% below both UOB Kay Hian’s and market consensus estimates. The earnings shortfall was attributed to several factors:
- Lower-than-expected gross margin, which fell to 22.5% (down 2.1 percentage points YoY and 2.1 percentage points QoQ).
- Higher-than-expected SG&A-to-sales ratio of 16.9% (up 5.4 percentage points YoY and 3.2 percentage points QoQ).
- A one-time tax expense from operations in India.
Revenue and Business Segment Performance
Delta reported 4Q24 revenue of Bt41.7 billion, reflecting a 10.6% YoY increase but a slight 3.4% QoQ decline. The revenue growth was primarily driven by strong performances in the power electronics, fan, and thermal management segments, as well as robust demand for artificial intelligence (AI) applications.
Key Financial Metrics
| Metric |
4Q24 |
4Q23 |
3Q24 |
YoY Change (%) |
QoQ Change (%) |
| Net Turnover (Bt) |
41,747 |
37,759 |
43,225 |
10.6 |
-3.4 |
| Gross Profit (Bt) |
9,376 |
9,264 |
11,927 |
1.2 |
-21.4 |
| Net Profit (Bt) |
2,155 |
4,711 |
5,911 |
-54.3 |
-63.5 |
2024 Performance Highlights
For the full year 2024, Delta reported a net profit of Bt18.8 billion, a modest 3% YoY increase. Revenue grew by 11% YoY to Bt164.7 billion, supported by strong demand in data centers and DC power systems. Despite this, SG&A-to-sales rose to 13.7% from 10.6% in 2023, driven by higher royalty fees and AI-related technical support costs.
Dividend Announcement
Delta announced a dividend payment of Bt0.46 per share for 2024, implying a dividend yield of 0.41%. The ex-dividend date is February 27, 2025, with payment scheduled for April 28, 2025.
2025 Earnings Revision
UOB Kay Hian revised down Delta’s 2025 earnings forecast by 18%, citing the impact of the Global Minimum Tax (GMT) by the OECD, which is expected to reduce the bottom line by 10%. Additional challenges include lower gross margins and higher SG&A-to-sales ratios due to multiple uncertainties.
Valuation and Recommendation
UOB Kay Hian has downgraded Delta from “HOLD” to “SELL” with a target price of Bt99.00, based on a 64x 2025F PE ratio. This valuation is pegged to +1SD of its four-year mean PE, excluding the downward cycle of 2020. The downgrade reflects concerns over slower earnings growth and margin pressures.
Environmental, Social, and Governance (ESG) Initiatives
Delta Electronics has demonstrated a strong commitment to ESG principles:
- Environmental: Delta focuses on energy-efficient innovations, aligning with global trends such as EV charging and renewable energy.
- Social: The company promotes an inclusive workplace, emphasizing health, safety, diversity, and social responsibility.
- Governance: Delta prioritizes transparency to sustainably add value for shareholders.
