Bubble warning: People visit the Great Wall Motor booth in Thailand. As of early March, about 23% of Delta Thailand’s shares were publicly traded, according to the company. — Reuters
BANGKOK: Thailand’s biggest publicly listed company will meet with the bourse next month over its surging stock that its chief executive officer (CEO) attributed as “not healthy”.
Delta Electronics (Thailand) Pcl’s shares soared 165% between March and November, prompting the Stock Exchange of Thailand (SET) to introduce trading curbs last month.
The shares dropped 16%. Bourse chairman Kitipong Urapeepatanapong criticised the stock over its small free float.
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 its 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 (EV) 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 made Delta Thailand the most valuable company in Thailand, with a market capitalisation of about US$55bil.
Delta Thailand 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 (AI).
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. Delta Thailand maintains it is well positioned to benefit from expanding AI projects in Thailand. The South-East Asia data centre market is expected to grow from US$10.24bil in 2023 to US$17.73bil in 2029, driven partly by increased demand for cloud computing and AI services, according to the company.
It plans to complete construction of Wellgrow 3 and Wellgrow 4 factories in the third quarter of next year to support increased production of power supply, fan and thermal management products, Cheng said. Delta Thailand will invest about US$300mil in its facilities and equipment in 2025.
The company 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.
Delta Thailand’s largest generator of revenue is its data centre products, which contributes 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 company, it has been diversifying production in Slovakia, India and North America.
The manufacturer doesn’t plan to raise cash through a share sale at current valuations because operating income is sufficient to fund growth, Cheng said.
Taiwanese parent company Delta Electronics Inc, which holds 63% of its Thai unit, hasn’t given any indication it plans to reduce holdings, according to Cheng.
“We do take coordinated action with each other like production allocation and also development of product lines,” he said.
Still, “financials are run fairly independently”, he said. — Bloomberg
