Delta Electronics Defensiveness Shines Amid China Lockdowns and Consumer Electronics Weakness

We retain our fair value Estimate on Delta Electronics at TWD 285, corresponding to 27 times 2022 P/E and 22 times 2023 P/E, after finetuning 2022 forecasts. The company’s sequential increases in gross and operating margins are the best proof that both the company’s clientele and production are very well diversified, a fact that is never more important amid the turbulence catalyzed by China lockdowns, global macro headwinds, and soft consumer electronics outlook. We continue to view Delta as undervalued due to long-term prospects in electric vehicles, or EV, automation, and energy storage system, or ESS, businesses. We think higher margins coming from moderation of raw material costs from mid-2022 may be a catalyst for the stock price.