Delta Electronics shares up after target price raised
Central News Agency
2014-06-19 11:50 AM
Taipei, June 19 (CNA) Shares of Delta Electronics Inc., one of Taiwan's leading power management system suppliers, moved higher Thursday morning after financial services company BNP Paribas raised its target price on the stock amid optimism toward the company's bottom line, dealers said. The current interest was also sparked by a large chunk of foreign institutional net buying in Delta Electronics shares a session earlier, as investors had high hopes that foreign investors will continue to raise their holdings in the stock, the dealers said. As of 11:15 a.m., shares of Delta Electronics had added 1.52 percent to NT$201.00 (US$6.7) with 3.0 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.18 percent at 9,296.29 points. "The upgrade by BNP Paribas showed that Delta Electronics remains one of the foreign institutional investors' favorable large-cap stocks in the local bourse on the back of the company's sound fundamentals," Hua Nan Securities analyst Henry Miao said. In a research report, BNP Paribas said it had raised its target price on Delta Electronics shares to NT$225 from NT$200, while expecting the Taiwanese company to report higher profit margins due to its efforts to diversify its product portfolio. The brokerage said Delta Electronics could report a gross margin of 27 percent and an operating margin of 12.5 percent for the second quarter, compared with the first quarter's 26 percent in gross margin and 11.9 percent in operating margin. BNP Paribas's estimates beat a market estimate of 26.1 percent in gross margin and 11.8 percent in operating margin. BNP Paribas expects Delta Electronics to post NT$2.18 in earnings per share (EPS) for the April-June period, up from the first quarter's NT$1.87. "I think BNP Paribas's forecast has merit, as Delta Electronics has been adjusting its product mix by extending its reach to turf other than power management system supplies, such as green energy products, to strengthen its profitability," Miao said. For example, Miao said, Delta Electronics has been kicking off production of batteries for electric cars. After U.S.-based electric car supplier Tesla Motors announced earlier this week that it will share its patents with its competitors, a move that could lower electric car prices and eventually boost sales, the market widely anticipates that Delta Electronics, a supplier to Tesla, could be one of the beneficiaries. In terms of its core power management system business, BNP Paribas said Delta Electronics is expected to witness growing shipments as several countries, such as Taiwan, China and Japan, are gearing up to develop their 4G mobile networks. Miao said he expects Delta Electronics will post about NT$8 in EPS for 2014, compared with NT$7.32 recorded in 2013. "The company has been enjoying stable profit growth and it is no surprise that foreign institutional investors have continued to pick up the stock," he said. According to the TWSE, foreign institutional investors served as net buyers of 5.72 million Delta Electronics shares a day earlier, when foreign investors held 74.69 percent of the firm's outstanding shares. (By Frances Huang)
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