Kiatnakin Phatra Securities (KKPS) remains cautious on Delta Electronics (Thailand) Public Company Limited (SET: DELTA), maintaining its ‘Underperform’ rating and a price objective of THB 285.00, marking a 9% downside to the current trading price of THB 314.00.
The brokerage anticipates DELTA’s 2Q26 pre-exceptional profit to reach 8 billion baht, representing a 78% year-on-year surge, but down 9% quarter-on-quarter. Revenue is forecast to climb 43% YoY and 5% QoQ—below management’s earlier guidance of 15% sequential growth—mainly due to continued raw material supply constraints.
Raw material shortages, particularly in power modules and PCBs, have emerged as the core headwind. KKPS attributes these shortages to three factors: suppliers prioritizing aluminum-related products amid surging demand, supply constraints within the aluminum supply chain itself, and prolonged procurement lead times caused by elevated demand and ongoing geopolitical tensions, including EU sanctions affecting the China supply chain. These factors have slowed the ramp-up at DELTA’s new factory, delayed deliveries, and limited revenue growth, while inflating manufacturing overheads and pressuring gross margins.
Despite ongoing raw material challenges and high input costs, DELTA has been unable to pass these costs onto customers as prices are typically locked in 6-12 months before delivery. Management anticipates some relief with improved supply chain management from July onward, but it remains uncertain if these efforts will sufficiently alleviate the issues.
