Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Asset World Corporation / Index Rebalance

<ul>
<li>The market cap review period for the December rebalance of the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> started on 1 September and will end 30 November.</li>
<li>We currently see one high probability change and two lower probability changes to the index at the upcoming rebalance.</li>
<li>There are a couple of lower probability adds/deletes that will have between 3-5 days of ADV to trade from passive funds and could be interesting from a trading angle.</li>
</ul>


The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) started on 1 September and will end 30 November.
We currently see one high probability change and two lower probability changes to the index at the upcoming rebalance.
There are a couple of lower probability adds/deletes that will have between 3-5 days of ADV to trade from passive funds and could be interesting from a trading angle.


SET50 Index Rebalance Preview: Three Potential Changes in December

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

<ul>
<li>We had a call with <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a> management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.</li>
<li>Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.</li>
<li>Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. </li>
</ul>


We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.
Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.
Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. 


Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Delta Electronics Thailand  / Equity Bottom-Up

<ul>
<li>We downgrade to HOLD from BUY and raise TP to Bt475, up 12% from previous TP, based on 38.6xPE’23E (average of 5-year trading). Analyst meeting came with a neutral tone. </li>
<li>2Q22 should be the highest of the year We believe its quarterly earnings already peaked in 2Q22 as the USD/THB will unlikely depreciate further, gains from FX will be limited </li>
<li>However, we believe the company will see significant earnings growth in 22E. 2H22 sales should contribute 53% of full-year 22E sales,due to the robust demand in EVs and data centers. </li>
</ul>


We downgrade to HOLD from BUY and raise TP to Bt475, up 12% from previous TP, based on 38.6xPE’23E (average of 5-year trading). Analyst meeting came with a neutral tone. 
2Q22 should be the highest of the year We believe its quarterly earnings already peaked in 2Q22 as the USD/THB will unlikely depreciate further, gains from FX will be limited 
However, we believe the company will see significant earnings growth in 22E. 2H22 sales should contribute 53% of full-year 22E sales,due to the robust demand in EVs and data centers. 


DELTA :  Growth Potential in 2022 Priced In

<ul>
<li>We maintain our BUY rating but roll-over our TP by 1%to Bt423 based on38.6xPE’23E (5-Year average trading).Our rating reflects neutral outlook on DELTA’s23Eearnings growth due to a high 22E base.</li>
<li>Outstanding 2Q22 earnings should be unsustainable Net profit in 2Q22 was at Bt4.3bn (+53% YoY, +158% QoQ), which was 60% above our forecast, as well as consensus. Copper dropping </li>
<li>Sales in 2Q22 was at Bt28bn (+36% YoY,+14% QoQ),driven QoQ and YoY by continued strong growth in EV power,thermal fan, and data center segments,which should be the trend going forward.</li>
</ul>


We maintain our BUY rating but roll-over our TP by 1%to Bt423 based on38.6xPE’23E (5-Year average trading).Our rating reflects neutral outlook on DELTA’s23Eearnings growth due to a high 22E base.
Outstanding 2Q22 earnings should be unsustainable Net profit in 2Q22 was at Bt4.3bn (+53% YoY, +158% QoQ), which was 60% above our forecast, as well as consensus. Copper dropping 
Sales in 2Q22 was at Bt28bn (+36% YoY,+14% QoQ),driven QoQ and YoY by continued strong growth in EV power,thermal fan, and data center segments,which should be the trend going forward.


DELTA : Outstanding 2Q22 Earnings Leads to High 22E Base and Limited Growth in 23E

<ul>
<li>We maintain our BUY rating and TP of Bt419 based on based on 51.7xPE’22E. Business update meeting last Friday came with positive news on improving shortage situation by 4Q22 </li>
<li>2Q22E earnings to decline QoQ: We believe that 2Q22E net profit will be at Bt2.7bn (+61% YoY, -4% QoQ).</li>
<li>We expect 2Q22E sales to be at Bt24bn (+15%YoY, -4% QoQ). QoQ decline is mainly due to lockdown issues in China and longer holidays during 2Q22.</li>
</ul>


We maintain our BUY rating and TP of Bt419 based on based on 51.7xPE’22E. Business update meeting last Friday came with positive news on improving shortage situation by 4Q22 
2Q22E earnings to decline QoQ: We believe that 2Q22E net profit will be at Bt2.7bn (+61% YoY, -4% QoQ).
We expect 2Q22E sales to be at Bt24bn (+15%YoY, -4% QoQ). QoQ decline is mainly due to lockdown issues in China and longer holidays during 2Q22.


DELTA: Shortage Issue Still Persists Despite Concerns on Weakening Demand in 2022

Thailand

Delta Electronics (Thailand) PCL designs and manufactures electronic equipment. The Company produces power systems for telecommunications, medical equipment, and industrial automation.  Delta also produces fans, electromagnetic interference filters, and solenoids.

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Delta Electronics Thailand (DELTA TB)

SET50 Index Rebalance Preview: Three Potential Changes in December

There could be 3 changes to the SET50 at the December rebalance. One is a high probability change while two others are potential adds/deletes. Some...

Brian Freitas

Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing...

Vincent Fernando, CFA

DELTA : Growth Potential in 2022 Priced In

We downgrade to HOLD from BUY and raise TP to Bt475, up 12% from previous TP, based on 38.6xPE’23E (average of 5-year trading). Analyst meeting...

Pi Securities PCL, Thailand

DELTA : Outstanding 2Q22 Earnings Leads to High 22E Base and Limited Growth in 23E

We maintain our BUY rating but roll-over our TP by 1% to Bt423 based on 38.6xPE’23E (5-Year average trading). Our rating reflects neutral outlook...

Pi Securities PCL, Thailand

DELTA: Shortage Issue Still Persists Despite Concerns on Weakening Demand in 2022

We maintain our BUY rating and TP of Bt419 based on based on 51.7xPE’22E. Business update meeting last Friday came with positive news on improving...

Pi Securities PCL, Thailand

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