Delta Electronics’ net profit to increase 39% YoY in Q1

Thanks to better revenue and gross margin from a low base, UOBKayHian said.

Delta Electronics is expected to post a net profit increase of 39% year-on-year (YoY) or $1.14m (BT3.9b), according to UOBKayHian.

However, quarter-on-quarter, UOBKayHian is forecasting an 8% drop in net revenue, impacted by softer revenue and squeezed gross margin. This drop is attributed to both seasonal and currency effects.

The report projects sales of $1.08m (BT30.7b) in the first quarter. Despite the expected YoY improvement in sales due to the low base effect, quarter-on-quarter (QoQ) sales are anticipated to drop due to seasonal effects and Baht appreciation. 

It added that gross margin should come in at 23.7%, improving 2.8 percentage points (ppt) YoY due to strong revenue, but dropping 0.8ppt QoQ pressured by the currency effect.

UOBKayHian also observed the potential growth of Delta’s products, especially in the manufacturing of electric vehicles (EV) and as a Data Centre Original Design Manufacturer (ODM), taking advantage of the upward trend in both industries. The report projects that these products would continuously support Delta’s revenue ahead, citing information from Statista that the EV market’s unit sales are expected to reach 7.13 million vehicles in 2023 (+10% YoY). 

“We expect DELTA’s revenue in 2023 to continuously grow by 25% YoY due to potential growth of its products, especially electric vehicles, which accounted for about 30% of total revenue; Data Centre Original Design Manufacturer accounted for about 20% of total revenue. Delta’s management anticipates revenue of EV and data centre ODM to rise 20% YoY and 15-20% YoY respectively in 2023,” UOBKayHian said.