Overview of Delta Electronics
Delta Electronics, a prominent electronics exporter and manufacturer, specializes in power supplies and electronic components, including cooling fans, EMI filters, and solenoids. Its primary focus lies in the Information Technology sector, with a strong emphasis on AI and data center products.
Despite its potential, the company is currently facing several challenges that could hinder its growth trajectory. UOB Kay Hian has maintained its SELL recommendation for Delta Electronics, with a revised target price of Bt75.00, down from the previous Bt99.00, indicating an upside of 24.0% from the current share price of Bt96.50.
Key Financial Highlights
Delta Electronics saw its revenue grow by 12.5% in 2024, with an anticipated 12% growth in 2025 driven by AI and data center-related products. However, gross margins are expected to only slightly improve to 24.9% in 2025 due to currency effects, product mix, and warranty provisions. The company’s net profit is forecasted to remain flat in 2025, with costs such as royalties, R&D expenses, and legal fees exerting pressure on its earnings.
| Year |
Net Turnover (Btm) |
EBITDA (Btm) |
Net Profit (Btm) |
EPS (Bt) |
PE (x) |
Dividend Yield (%) |
| 2023 |
146,371 |
22,529 |
18,423 |
1.4 |
81.7 |
0.4 |
| 2024 |
164,733 |
24,598 |
18,939 |
1.4 |
78.2 |
0.4 |
| 2025F |
185,035 |
28,779 |
19,012 |
1.6 |
70.8 |
0.4 |
Challenges and Revenue Drivers
AI and Data Center Products
Delta Electronics aims to capitalize on the growing demand for AI and data center-related products. Management expects revenue growth of 10-15% in 2025, supported by a 50-60% increase in AI-related products and a 10-15% improvement in non-AI data center products. AI-related products are projected to contribute 15% to total revenue in 2025, up from 10% in 2024.
Fluctuating Gross Margins
The gross profit margin is expected to improve slightly to 25% in 2025, up by 0.4 percentage points year-over-year. However, various factors such as currency fluctuations, product mix, and provision expenses could add volatility to margins.
Pressure on SG&A-to-Sales Ratio
Delta Electronics targets a SG&A-to-sales ratio of 13.0% in 2025, a 0.7 percentage point improvement year-over-year. However, costs related to royalties, R&D, and legal fees remain significant challenges. The company is also addressing ongoing litigation, further contributing to financial uncertainty.
Q4 2024 Performance
Delta Electronics’ Q4 2024 results fell significantly below expectations. Net profit dropped by 54.3% year-over-year and 63.5% quarter-over-quarter to Bt2.1 billion. Key factors included lower-than-expected revenue, squeezed margins, higher SG&A-to-sales, and increased tax expenses from its India operations.
| Metric |
4Q24F |
4Q23 |
3Q24 |
YoY Change (%) |
QoQ Change (%) |
| Net Turnover (Btm) |
41,747 |
37,759 |
43,225 |
+10.6 |
-3.4 |
| Gross Profit (Btm) |
9,376 |
9,264 |
11,927 |
+1.2 |
-21.4 |
| Net Profit (Btm) |
2,155 |
4,711 |
5,911 |
-54.3 |
-63.5 |
Valuation and Recommendation
UOB Kay Hian maintains its SELL recommendation for Delta Electronics, with a revised target price of Bt75.00. This valuation is based on a 64x 2025F PE, aligned with the company’s four-year mean PE. The downward adjustment reflects the expected slower earnings growth and uncertainties affecting gross margins and SG&A-to-sales ratios.
Environmental, Social, and Governance (ESG) Initiatives
Environmental
Delta Electronics is committed to energy-efficient innovations and greener solutions. Its initiatives align with global megatrends like EV charging and renewable energy.
Social
The company fosters an inclusive workplace, emphasizing health, safety, diversity, and social participation.
Governance
Delta strives for systematic transparency to add sustainable value for shareholders.
