Maybank IB which met institutional funds in Malaysia last week said the investors were NEUTRAL on the Thai electronic sector due to the lackluster outlook and unattractive valuations in the sector. However, it noted that some maintained a vested interest in Delta Electronics while most showed cautious interest in Cal-comp Electronics.
CCET likely on investor radars going forward
There was plenty of interest in CCET due to it being a new major player in the sector and for its potential inclusion in the SET50 index. However, investors had concerns regarding i) valuation and remaining potential upside after its share price rise of 284% YTD, ii) impact to GPM in FY25E from increased D&A expense from new factories, and iii) likelihood of longterm sustained demand in the HDD and printing space.
Headwinds for DELTA heading into 2025
The key talking points with investors on DELTA were centered around its i) high valuations, ii) timeline of AI-related products, especially the highly anticipated AI liquid-cooling solutions, and iii) potential exclusion from the SET50 caused by the cash balance. Investors who were still holding onto DELTA were mainly doing it to track the SET50 index, but have already reduced their positions due to its high valuation and slowing growth outlook.
In FY25E, the house said it expects that DELTA's growth from AI products (from Delta Thailand's own R&D) will be offset by a decline in GPM (high-base in FY24E caused by inventory revaluation gains) and the Global Minimum Tax impact (bringing DELTA's average effective tax rate to 7-15%, up from its average of 3% between FY19-23). Currently, we expect DELTA's FY24E/25E core earnings at THB22b (+26% YoY)/THB20b (-9% YoY).
KCE and HANA barely a blip on investment radars
KCE and HANA were barely mentioned as most investors are aware of weak outlooks for FY25E, with only a few seeing valuations as potentially attractive. Maybank IB believes there is downside risk to HANA's earnings between FY24-28E due to weaker-than-expected overall demand and continued losses in PMS Korea.
