Delta Electronics Inc (台達電) is to benefit from recent improvements in global purchasing managers’ indices (PMIs) readings, which showed that demand for industrial automation (IA) is likely to remain robust across various industrial sectors in the second half of the year, analysts forecast last week.
The nation’s top supplier of power supply units is also expected to receive a boost from solid demand for data center and cloud-related power, component and energy-saving solutions, thanks to the strength of enterprise spending and demand from Internet service providers worldwide, they added.
“Given the improving PMIs in Taiwan, China and the US, Delta’s IA business [which accounts for up to 10 percent of the firm’s revenue] will gain momentum in the second half of the year, due mostly to the company’s diversified product lines, client base and more direct accounts,” said Kevin Chang (張宜立), head of the research team at Fubon Securities Investment Services Co (富邦投顧).
Delta’s high-margin passive component business — such as high-performance power chokes and inductors — is also forecast to gradually pick up steam in the second half amid the launch of Apple Inc’s new product cycle, Chang said.
Along with continued demand for electronic components, telecom power and networking for 4G long-term evolution (LTE) systems, as well as for display solutions for large-scale commercial projects, Delta’s revenue could increase by 10 percent this quarter from NT$47.6 billion (US$1.58 billion) last quarter, Chang said in a research report on Wednesday last week.
JPMorgan Securities Ltd forecast Delta’s revenue would increase by 12 percent to NT$53.53 billion this quarter, on the back of an IA demand recovery and strong telecom power system orders in China.
Meanwhile, Fubon Securities said Delta is set to leverage its core competence in power electronics and automation technologies to drive long-term growth in its automatic, electric vehicle and hybrid electric vehicle-related businesses, though these are expected to account for only 1 to 2 percent of its overall revenue this year and the next.
JPMorgan agreed, saying Delta has capabilities strongly conducive to tapping the growing electric vehicle market and could grow its business in the sector to generate revenue of US$1 billion by 2020.
“Delta’s core competencies in power, energy storage, motor drives and fans should help drive quick share gains in in-car chargers, charging stations, power inductors, as well as fans and blowers,” JPMorgan analysts led by Gokul Hariharan wrote in a client note on Tuesday last week.
The brokerage said Delta is already seeing success with global vendors like Nissan Motor Co, Tesla Motors Inc and General Motors Co, adding that the company is in the process of qualifying with a European automaker.
Delta shares closed up 1.49 percent at NT$204.5 in Taipei trading yesterday, outperforming the benchmark TAIEX, which rose 0.69 percent.
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