Tuesday, August 11, 2020

Thai electronics shares surge on weakening baht, European demand

Jul 11. 2020
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By The Nation

The value of Thai electronics stocks has risen almost 20 per cent over the last month as European countries promote electric vehicles and the baht weakens, say analysts.

Among the beneficiaries is Delta Electronics (Thailand) (DELTA), whose share price has risen 14.68 per cent to Bt69.50.

Anekpong Putthapiban, assistant director at Asia Plus Securities, said electronic stocks gained positive sentiment from the baht falling to Bt31.2 against the dollar, European countries' measures to promote use of electric vehicles, and moves around the world to ease disease controls.

"After many countries eased lockdown measures, investors may be thinking that the price of electronic stocks has bottomed out," he said. "However, we advise people to avoid investing in these stocks because their price has reached maximum value, while these companies' second-quarter performance is likely to drop."

Meanwhile, a stock analyst at Capital Nomura Securities noted the price of Delta shares had risen by over 150 per cent from their low point in March this year, adding that the company's performance is likely to recover faster than its competitors.

"We expect the company's second-quarter net profit to be about Bt681 million, up 8 per cent quarter on quarter, but down 30 per cent year on year," the analyst said.

"The company's sales will increase by 4 per cent thanks to growth in telecommunications infrastructure and the European auto industry's move to buy materials for electric vehicle manufacturing. Meanwhile, the company's net profit in the second half of this year would increase in line with seasonal factors."

The analyst added that Capital Nomura Securities has adjusted Delta's net profit forecast from 16 per cent to 15 per cent in 2020 and from 12 per cent to 21 per cent in 2021.

"Aside from the recovery in automotive and telecommunication industries, the company also benefited from the weakening baht, so we expect Delta's gross profit to increase from 20.5 per cent in 2019 to 21.2 per cent in 2020 and 22.4 per cent in 2021," the analyst added.

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