Yuanta Securities (Thailand) expects Delta Electronics (Thailand) Public Company Limited (SET: DELTA) to see a revenue recovery in 3Q26, forecasting a 12% QoQ growth driven primarily by orders delayed from 2Q26 being produced in the third quarter.
The company’s revenue is projected to continue expanding with a 10% QoQ rise in 4Q26, thanks to further capacity increases in the AI Data Center product segment, which remains the main growth driver. Meanwhile, income from the Liquid Cooling product segment is expected to remain limited for the year. Since the capacity expansion in 2026 is only in its initial phase and comprises a small proportion, the full positive impact on revenue is anticipated from 2027 onwards.
The main risk to revenue recovery assumptions remains raw material constraints, which, despite some improvement versus 2Q26, continue to limit the company’s ability to fully utilize its production capacity. Strong demand persists, but supply limitations restrain revenue growth from reaching its potential.
According to Yuanta, notably higher revenue growth is estimated for Delta Taiwan—21% QoQ in 3Q26 and 17% QoQ in 4Q26—reflecting that the forecasts from the analyst are relatively conservative compared to the Taiwan market expectations.
Regarding profitability, Delta (Thailand) maintained its 2026 gross margin guidance at a minimum of 30%, up from 29.2% in 1H26, expecting a margin recovery in 2H26 because of a higher proportion of revenue from the data center segment and reduced provision expenses. Yuanta projects gross margin will recover to 30.5% in 3Q26 and 32.5% in 4Q26, bringing the 2026 full-year average to 30.3%.
SG&A expenses remain a key pressure point, rising from 12-13% of sales in previous periods to 17.4% in 2Q26, largely due to increased R&D and royalty payments to Delta Taiwan, tied to AI technology investments. Yuanta expects SG&A to Sales to remain elevated for the next 1-2 years, but the rate of increase should slow, possibly passing its peak.
1H26 core profit accounted for 35% of the previous full-year estimate of THB 40 billion (+75% YoY). However, due to ongoing supply limitations and production scaling uncertainties, Yuanta sees downside risk to these estimates, leading to a downward revision of the 2026–2027 core profit forecasts by 10% and 8%, respectively. The new 2026 estimate is THB 36 billion (+57% YoY) and THB 51 billion (+40% YoY) for 2027, with forecast revenue growth in USD at 44% YoY in 2026 and 31% YoY in 2027, and gross margins at 30.3% and 32.3%, respectively.
The revision to a more conservative gross margin reflects risks from persistent raw material constraints and high costs. Should supply issues be resolved faster than expected and capacity reach optimal levels, there is upside potential for profits.
Yuanta has also revised DELTA’s valuation method, aligning the target price year with sector peers and adjusting the PER from +1 SD to +0.25 SD above the five-year average, or 72.2x, to reflect both heightened growth challenges and ongoing supply risks. The new fair value at end-2027 is set at THB 293.00 per share.
Despite ongoing share price declines, Yuanta maintains a ‘Trading’ call, noting that downside risk is now more limited, as valuation has already reflected much of the earnings downgrade, and the current multiple is below the five-year average.
Investors should note, however, that DELTA’s historical valuations carry a high premium, due to the market’s strong growth expectations. While the current share price is below historical averages, this does not guarantee a return to prior multiples unless profit growth meets expectations; further multiple contraction is possible if growth underperforms, according to the brokerage.
Yuanta views DELTA’s upswing as robust enough to support a high multiple for the time being, but given the higher earnings base and slowing growth, a return to prior PER levels of 80–100x is unlikely. Thus, a multiple of +0.25 SD, or 72.2x, is deemed appropriate to capture enduring growth prospects.
