Executives of Delta Electronics Plc will meet with Stock Exchange of Thailand officials next month over the surge in its share price, which the company’s chief executive officer has described as “not healthy”.
Shares of Delta soared 165% between March and November, prompting the SET to introduce trading curbs last month. The shares dropped 18% on the day of the announcement.
SET chairman Kitipong Urapeepatanapong criticised the company for its small free float of shares. As of early March, about 23% of Delta Thailand’s shares were publicly traded, according to the company.
The stock’s trading volume was “reasonable”, Delta Thailand CEO Victor Cheng said in an interview in Bangkok on Tuesday, but acknowledged that increasing share liquidity “would probably help the situation”.
He did not say why the meeting is being held, but expects the company’s share price to be one of the topics of discussion he will have with the exchange. The exchange did not immediately respond to a request for comment.
The manufacturer of components for electric vehicles and data centres is trading at about 78 times 12-month forward earnings, more than five times higher than the benchmark SET Index. The recent share surge has made Delta Thailand the most valuable company in the country, with a market capitalisation of 1.88 trillion baht.
Delta has also drawn scrutiny from analysts, who are expecting its share price to trend 25% lower from the last close of 151 baht amid a struggling global EV market, despite growing opportunities in artificial intelligence.
The price-to-earnings “ratio has gone through the roof”, Cheng said. “So all of a sudden too high of a value is not healthy.” He doesn’t know the reason for the share rally, he said, though the shares have been popular with speculators for well over a year. (Story continues below)
Delta Electronics (Thailand) Plc 12-month share performance (Source: Morningstar)
Eyes on AI
Delta maintains it is well positioned to benefit from expanding artificial intelligence projects in Thailand. The Southeast Asia data centre market is expected to grow from $10.24 billion in 2023 to $17.73 billion in 2029, driven partly by increased demand for cloud computing and AI services, according to the company.
Delta plans to complete construction of Wellgrow 3 and Wellgrow 4 factories in Chachoengsao province in the third quarter of next year to support increased production of power supply, fan and thermal management products, Cheng said.
The company will invest about $300 million in its facilities and equipment in 2025. It is also working on a plan to build new facilities to accommodate production of liquid cooling systems, he said.
EV component manufacturing represents about 28% of its business, the company said. The largest generator of revenue is data centre products, which contribute approximately 30% to total revenue.
With a new tariff era on the horizon with the incoming Trump administration, Delta Thailand expects to secure more customers, Cheng said. Together with its Taiwanese parent, it has been diversifying production in Slovakia, India and North America.
The manufacturer doesn’t plan to raise cash through a shares sale at current valuations because operating income is sufficient to fund growth, Cheng said. The Taiwanese parent Delta Electronics Inc, which holds 63% of its Thai unit, hasn’t given any indication that it plans to reduce holdings, according to Cheng.
“We do take a coordinated action with each other like production allocation and also development of product lines,” he said. Still, “financials are run fairly independently”, he said.
