Delta Electronics (Thailand) Public Company Limited (SET: DELTA) reported robust results for the second quarter of 2026, with sales revenue climbing 46.5% year-over-year to THB 65,191 million. Net profit followed suit, rising 31.3% to THB 6,075 million. While top-line growth was exceptional, the company faced sequential margin pressure as it navigated supply chain bottlenecks and new international tax obligations.
The quarterly performance was fueled by a structural shift toward AI-related applications. Demand for high-performance computing datacenter infrastructure bolstered the Power Electronics and ICT Infrastructure units, which remain the company’s primary growth engines. In contrast, the Electric Vehicle (EV) Power Solutions business remained a laggard, hampered by volatile global demand that resulted in subdued sales.
Earnings quality faced headwinds from operational costs. While volume was high, gross margins slipped to 26.8% from 31.7% in the previous quarter, squeezed by raw material shortages and higher inventory provisions. Profitability was further impacted by a THB 1,032 million “top-up tax” under OECD Pillar Two rules and an impairment loss from Slovakia operations. These were partially offset by THB 526 million in foreign exchange gains.
Delta’s balance sheet reflects aggressive expansion. Inventory levels surged 53.5% to THB 53,312 million to support forecasted demand. Earnings per share (EPS) improved to THB 0.49 from THB 0.37 a year ago, even as cash reserves dipped 10.5% following heavy capital expenditure for new factories in Thailand and India.
According to CLSA and DBS, Delta Electronics (Thailand) reported a softer-than-expected performance for the second quarter of 2026, with both brokerage firms highlighting margin pressures and supply chain challenges, but maintaining a positive long-term outlook.
CLSA noted that DELTA’s net profit for 2Q26 came in at THB 6.1 billion, marking a 31% increase year-on-year but a 33% drop quarter-on-quarter. This result missed consensus forecasts, primarily due to weakened gross profit margins attributed to raw material shortages, inventory provisions, and an unfavorable product mix. Revenue for the quarter increased 6% quarter-on-quarter, as some shipments are expected to shift into 3Q26.
Despite these setbacks, CLSA considers the supply chain issues temporary and not a structural challenge to DELTA’s core businesses in AI power, cooling, or high-voltage direct current (HVDC) technology. CLSA maintains its “OUTPERFORM” rating on DELTA, with a high conviction and a target price of THB 450, anticipating a significant recovery in the third quarter of 2026.
DBS, on the other hand, rates DELTA as “HOLD” with a target price adjustment to THB 298 following a roughly 30% earnings miss against consensus. The brokerage attributed the result to sharp declines in gross margin caused by the same supply chain disruptions, inventory provisions, and inflation in raw material costs. Nonetheless, DBS remains optimistic about the second half of 2026, projecting improvement in the top line, gross margins, and net profit. As a result, DBS has trimmed its earnings forecasts by 3%.
Both brokerages agree that second-quarter challenges are likely temporary, with expectations of a robust recovery in the latter half of the year.
