The Stock Exchange of Thailand (SET) is closely monitoring the volatility of Delta Electronics Thailand's shares, which have surged 250% in one month, 400% in three months and 1,400% in a year.
The SET is keeping an eye on shares with low free float and small supply that have increased exponentially in value over the past year.
In one day, Delta shares reached an all-time high of 838 baht, up 22% in the morning before dropping an hour before the market closed to end the day at 560 baht, down 18.1% from the previous day, in trade worth 12.2 million baht.
Total trade volume on Monday was 15.7 million shares, or 5.4% of 279 million free-float shares estimated based on data on the book closing date of March 2.
It reported free-float shares contributed 22.4% of total Delta shares this year, with 1.247 billion total paid-up shares.
Delta's free-float stocks as of March 2, also declined by 37.7% from the same period last year.
"The low supply, or lower number of free-float shares circulating in the market, can drive the price to fluctuate drastically even when there is little change in demand," said a source at the SET who requested anonymity.
Anakepong Putthapibal, an analyst at Asia Plus Securities, recommends a sell-off as the price is overshot.
He said the projected fundamental price given in October at 150 baht per share already included this year's operating result and next year's projection.
"The price climbed unreasonably. The price/earnings [P/E] ratio is 129 times at the current price of about 800 baht. Our target price at 150 baht is just a P/E of 24 times," Mr Anekpong said.
ASP projects Delta's profits to grow by 127% this year and by 15.2% in 2021.
Revenue this year is expected to grow by 11.4%, up from 51 billion baht in 2019 to 57 billion baht in 2020, and by 7.4% to 61 billion baht in 2021 thanks to the company's higher gross profit margin.
"The projection includes driving factors such as the growing demand for data centre and electric vehicles whose market share is quite small at the present," he said.
Delta Electronics Thailand on Monday attributed the share price surge to its right business direction, which matches the global trend for advanced technologies.
The company is a key provider of power management solutions and electronics.
Anusorn Muttaraid, executive director of Delta Electronics Thailand, said on Monday the company's core businesses are related to 5G wireless technology and other digital and electronic equipment which are playing a more increasing role in people's lifestyles.
He said the company is "lucky" to make a right decision on technological trends.
"We started this business plan even before the Covid-19 outbreak," Mr Anusorn told the Bangkok Post.
Behind the soaring share prices is the business plan set in early 2020 without any other special projects, he said.
