Robust Server Demand Powers Delta Electronics’ Q2; We Like its Recent Long-Term-Oriented Moves

We retain our fair value estimate of TWD 285 for narrow-moat Delta Electronics , corresponding to 22 times 2023 P/E. Delta is fairly valued in our view, having priced in most long-term prospects in electric vehicles, or EV, automation, infrastructure, and energy storage system, or ESS, businesses. As a result of its diversified operations, we think Delta will outperform other cyclical stocks that are more exposed to consumer electronics markets should sentiment continues to sour. We believe the share price implies worries of Delta’s short-term outlook in the industrial automation market after China reported lackluster GDP. Economic stimuli from China, and additional progress in Delta’s EV business are short-term catalysts to watch for, in our opinion.