Delta Electronics
FY2013 dividend yield at 5.1%p.a BUY
Delta Electronics Plc (DELTA)
- 4Q13 net profit shrinks after high season
DELTA's 4Q13 net profit was B1.1bn, falling 33.3%qoq but growing 29.6%yoy
(close to our expectation), due to the following factors: 1) Total sales was
B10.7bn, declining 5.2%qoq. Overseas order decreased temporarily due to
worldwide low season for electronic part sector. 2) Gross margin dropped from
27.2% in 3Q13 to 24.8% in 4Q13. As DELTA made additional inventory
provision, benefit from THB depreciation was totally negated. 3) SG&A/Sales
increased from 13.7% in 3Q13 to 15.4% in 4Q13 due to usually high late-year
expense (seasonal effect). 4) Fx gain fell from B101m in 3Q13 to B69m in 4Q13.
Overall, DELTA's FY2013 net profit was B5.4bn, growing 23.7%yoy, making a
record high for the second year.
- Power supply business strong from telecom and auto businesses
We maintain FY2014-2015 earnings forecast. FY2014 net profit is projected to
grow by 14.6%yoy to B6.2bn, making a new high, owing to: 1) Power supply
products needed for data center and telecom businesses; and 2) Auto part
products, especially power charger products for hybrid cars. Meanwhile, DELTA
has been controlling its expense by keeping its SG&A/Sales under 15.0%.
Moreover, DELTA has additional investment budget of US$50-100m for the
acquisition of external businesses. DELTA is possibly aiming for overseas product
distribution business in solar power industry to support solar inverter business
and immediately boost sales volume. If we have clear information about this, we
might revise up earnings forecast.
- FY2013 dividend yield at 5.1%p.a
We reiterate "BUY". FY2014 fair value (DCF, 11.58% WACC) is B70.40, implying
33% upside. FY2013 dividend is B2.70/share (5.1%p.a dividend yield, as
expected). XD date is 28 February 2014, and dividend will be paid on 9 April
2014. However, as THB has been appreciating and the announcement of
dividend payment has been absorbed substantially in the share price, we
recommend buying gradually when price weakens for short-term investment.
