Delta Electronics shares plunge 20%, triggering 1% drop in Thai Stock Exchange

Delta Electronics saw its shares plummet by approximately 20% recently, negatively impacting the Stock Exchange of Thailand (SET) after the implementation of market surveillance measures due to irregular price increases. Analysts from Krungsri Capital Securities (KCS) and Maybank Securities identified the primary cause of the 1% drop in the SET index as Delta’s share price decline, as the electronics parts and the component manufacturer make up 25 points of the Thai bourse.

The SET applied market surveillance measures on Delta Electronics, excluding the security from credit limits and stipulating that investors are required to pay the complete cash amount before trading the stock. These measures, prompted by unexpected price movements and trading volumes, are effective until July 10, Bangkok Post reported.

“The main factors used as criteria for the restrictions are the turnover ratio, trading value and price not corresponding with fundamental factors such as P/E [price-to-earnings] ratio,” the SET explained.

According to Suwat Wattanapornprom, an analyst with KCS, demand prospects and the possibility that the US Federal Reserve is nearing the end of an interest rate hike cycle have recently benefited electronics firms.

“Fundamentally, Delta Electronics has better growth prospects than its peers, thanks to its data centre and electric vehicle businesses,” he said. However, he also noted that Delta’s share valuation is high, with no clear reason to purchase the stock at its current price.

Suwat highlighted that the SET has imposed the cash balance measure on Delta three times this year and warned that the firm could be removed from the SET50 index if the measure is applied again in 2021.

In response to the SET’s request for information clarification, Delta Electronics stated that it had “no significant changes or developments that have not been disclosed” and promised to notify the public of any information or developments impacting the stock price’s fundamentals.

As a result of these events, Delta’s shares closed at 96 baht, falling 18.3% in trade worth 4.38 billion baht, while the SET experienced a 1.24% reduction, concluding at 1,537.59 points in trade worth 46 billion baht.