The Investment Analysts Association (IAA) recommended investors to avoid investing in DELTA, while recommending “sell” if holding the share in the portfolio as the share price surpassed its fundamental factors by a large margin. Furthermore, the association also stated that the movement of DELTA caused volatility for SET Index and expected that DELTA could face a huge selloff in January next year.
Federation of Thai Capital Market Organizations (FETCO) revealed DELTA’s forward P/E, citing data from Bloomberg Consensus, for 2021 and 2022 as high as 89.1x and 79.0x. The forward P/E is also much higher compared to its parent company in Taiwan at 22.4x and 19.4x.
Mr. Koraphat Worachet, Strategic Analyst of Capital Nomura Securities, as a representative of the IAA, stated that the share price of DELTA has been trading on an overestimation of the company’s future outlook, and the price would begin to decline after January 2021 to reflect its real fundamental factors.
The analyst expected the passive fund from institutional investors around 3,371 million baht that traded in SET50 to slow down after a few days, coupled with an estimation of a huge profit taking after the share was listed in SET50.
Furthermore, Mr. Worachet expected the listing of DELTA in SET50 could post a volatility in the index as well as the funds due to its weight in the index around 6.5%. If DELTA’s share price faced a sharp plunge, the falling will also drag SET50 down as well.
IAA estimated DELTA’s earnings in 2021 at 8,000 million baht, resulting in its P/E to drop to 77x next year, but still higher than its peers which averaged at 37x. Thus, the association came to a conclusion to avoid investing in DELTA and wait for the share price to decline or look out for any new orders for the company that could result in gaining higher earnings than what IAA estimated.