Company Coverage
Delta (Thailand) (DELTA TB): 2Q26 Earnings Lower Than Expected Due To A Greater- Than-Expected Impact From Raw Material Shortage
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Bt285.00
Bt300.00
4.2%
Bt320.00
Analyst
Analyst
Sirithat Prasertwuti
Highlights
DELTA reported 2Q26 net profit of Bt6.08b (+31% yoy, -33% qoq). The negative surprise came from a greater-than-expected impact from raw
material shortages.
Earnings should recover in 2H26, supported by a healthy order pipeline and orders that were delayed from 2Q26, although the 2% increase in COGS will persist.
Maintain HOLD with a lower target price of Bt300.00.
Analysis
- Lower-than-expected earnings as raw material shortage caused order fulfilment to be delayed from 2Q26 into 2H26. Delta (Thailand) (DELTA)
reported 2Q26 net profit of Bt6.08b (+31% yoy, -33% qoq), below our and Bloomberg estimates by 35% and 33%, respectively. Sales came in at
Bt65.2b (+46.5% yoy, +6.2% qoq), below our and Bloomberg estimates by 2%.
- Raw material shortages and higher royalties hit 2Q26 margins harder than expected. Gross margin declined significantly to 26.8% in 2Q26, down
4.9ppt (from 31.7% in 1Q26), due to: a) higher raw material costs, which reduced gross margin by 2.0ppt; b) higher costs from urgently sourcing
materials in the secondary market to fulfil customer deliveries, which reduced gross margin by 0.5ppt; c) an unexpected inventory provision of Bt800m-1,000m, which reduced gross margin by 1.5ppt, as delays in customers’ racklevel assembly orders required DELTA to hold inventory for longer; and d) other factors, including an unusual product mix caused by raw material shortages and overhead costs from two factories.
- 2H26 earnings should improve, but higher raw material costs will weigh on gross margin in 2H26. We believe DELTA’s earnings should improve in
2H26, driven by three key factors. First, sales should benefit from a healthy order pipeline. The 5% sales shortfall in 2Q26 due to raw material shortages is expected to be recovered through deliveries in 3Q26-4Q26. Order visibility remains solid for the next 3-6 months, suggesting that the issue in 2Q26 was execution rather than demand. Second, gross margin should recover toward 30% in 2H26, improving by 2-3ppt, driven by: a) the normalisation of inventory provisions (1.5ppt) in 2H26, b) an improvement in product mix from 2Q26 onwards.
Highlights
DELTA reported 2Q26 net profit of Bt6.08b (+31% yoy, -33% qoq). The negative surprise came from a greater-than-expected impact from raw
material shortages.
Earnings should recover in 2H26, supported by a healthy order pipeline and orders that were delayed from 2Q26, although the 2% increase in COGS will persist.
Maintain HOLD with a lower target price of Bt300.00.
Analysis
- Lower-than-expected earnings as raw material shortage caused order fulfilment to be delayed from 2Q26 into 2H26. Delta (Thailand) (DELTA)
reported 2Q26 net profit of Bt6.08b (+31% yoy, -33% qoq), below our and Bloomberg estimates by 35% and 33%, respectively. Sales came in at
Bt65.2b (+46.5% yoy, +6.2% qoq), below our and Bloomberg estimates by 2%.
- Raw material shortages and higher royalties hit 2Q26 margins harder than expected. Gross margin declined significantly to 26.8% in 2Q26, down
4.9ppt (from 31.7% in 1Q26), due to: a) higher raw material costs, which reduced gross margin by 2.0ppt; b) higher costs from urgently sourcing
materials in the secondary market to fulfil customer deliveries, which reduced gross margin by 0.5ppt; c) an unexpected inventory provision of Bt800m-1,000m, which reduced gross margin by 1.5ppt, as delays in customers’ racklevel assembly orders required DELTA to hold inventory for longer; and d) other factors, including an unusual product mix caused by raw material shortages and overhead costs from two factories.
- 2H26 earnings should improve, but higher raw material costs will weigh on gross margin in 2H26. We believe DELTA’s earnings should improve in
2H26, driven by three key factors. First, sales should benefit from a healthy order pipeline. The 5% sales shortfall in 2Q26 due to raw material shortages is expected to be recovered through deliveries in 3Q26-4Q26. Order visibility remains solid for the next 3-6 months, suggesting that the issue in 2Q26 was execution rather than demand. Second, gross margin should recover toward 30% in 2H26, improving by 2-3ppt, driven by: a) the normalisation of inventory provisions (1.5ppt) in 2H26, b) an improvement in product mix from 2Q26 onwards.
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Bt285.00
Bt300.00
4.2%
Bt320.00
Analyst
Analyst
Sirithat Prasertwuti
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at the following link: https://research-api.uobkayhian.com/assets/disclaimer/df64a6ea-7980-447c-ae9e-fd19b93257dc, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
