Investors cautioned against buying shares of Delta as price skyrockets
Experts have advised investors to avoid the shares of Delta Electronics, as its price was higher than the fundamentals.
On Monday, the price of Delta shares hit a new high of Bt838 per share before closing at Bt560 per share, down Bt124 or 18.13 per cent with total transactions of Bt12.36 billion.
Supachai Wattanavitheskul, an analyst at Yuanta Securities, said Delta's share price rose sharply because it was listed in the SET50 Index, while it gained positive sentiment from rising electric vehicle (EV) share price and the easing trade war.
"Besides, investors expected Delta's profit to rise by 100 per cent year on year and rise even more next year," he said.
He said the price of Delta shares had risen by four times its fair value of Bt197 per share, while the share's price-to-earnings ratio was over 100 times the company's next year's profit forecast of Bt8.2 billion.
"To maintain the rise in share price, Delta's profit must hit Bt15 billion next year. However, it depends on the growth in EV and Internet of Things businesses whether it can support the company's growth or not," he said.
He advised investors to avoid investing in the shares of Delta.
Therdsak Taweeteeratham, executive vice president of research at Asia Plus Securities, said the price of Delta shares rose sharply from investors' hopes of the company's growth and the change in technology.
He said it depends on investors' speculation whether Delta's share price would rise further or not, as there would be high risks when the share price hits a new high.
"We advise investors who have Delta shares to set up a good profit-taking point, but those who do not have such shares must consider thoroughly before speculating because they would face losses," he said.
Nuttachart Mekmasin, a research analyst at Trinity Securities, said the price of Delta shares had almost hit its highest point.
