Delta Electronics Inc (台達電), the nation’s top supplier of power supply units, is expected to forecast high single-digit year-on-year growth in revenue this quarter, supported by growing demand for industrial automation equipment from China and rising orders for hot-pressed power chokes from Apple Inc, analysts said.
Delta is set to release its third-quarter net profits and give its business guidance today.
Delta is expected to post net profit to grow 5 percent to NT$4.47 billion (US$152 million) for last quarter, from the second quarter’s NT$4.26 billion in net profit, Daiwa Capital Markets analyst Christine Wang (王琦清) said.
Wang’s forecast is 6 percent less than the consensus, according to a report released on Thursday. She did not provide detailed figures.
This quarter, revenue is expected to grow 9.26 percent annually to NT$46.23 billion from NT$42.31 billion a year ago, Wang forecast.
“This [year-on-year growth] should be largely triggered by strong demand in the passive components business, especially smartphones and tablets, and better demand for industrial automation than that during last quarter,” Wang said.
The forecast represented a slight quarter-on-quarter increase from NT$46.14 billion.
As hot-pressed power chokes would remain “a seller’s market,” with strong demand for the products used in products, such as smartphones and tablets, Delta is more than likely to enjoy economies of scale during this quarter, Wang said in the report.
With current yield rate improved to more than 90 percent and equipment fully utilized for hot pressed power chokes, Delta’s passive component sales were forecast to account for more than 11 percent of the company’s total sales this quarter, up from 10 percent last quarter, she added.
Operating margin was forecast to be lifted to 11.5 percent for the current quarter from 10.8 percent during the first half of the year, Wang said.
UBS Securities analyst Arthur Hsieh (謝宗文) said in a report released on Friday that Delta is currently the exclusive hot pressed power choke supplier to Apple’s new iPhone 5S and 5C, as well as the new iPad Air and iPad Mini with Retina screen.
Hsieh said Delta had started mass producing its hot pressed power choke and produced 300 million units a month since June, adding that Delta has also been able to come up with new design of hot pressed power choke ahead of its Japaneses rivals such as TDK Corp and Murata Manufacturing Co Ltd.
“We believe Delta’s sound strategy and high commitment to the industrial design business should lead the company to deliver above industry performance,” Hsieh said.
As HSBC’s recently released Purchasing Managers’ Index (PMI) for China reached a seven-month high of 50.9 this month, up from 50.2 last month, Hsieh said that he forecast Delta’ industrial automation business would outperform the industry due to growing demand for the product in China.
Wang upgraded her target price for Delta’s shares to NT$164 from NT$155 with an unchanged rating of “outperform,” while Hsieh upgraded his target price to NT$168 from NT$160 with a rating of “buy.”
Delta’s shares closed up 0.33 percent at NT$150 on Friday, outperforming the TAIEX, which fell 0.8 percent.