COMPANY UPDATE

Thailand

Delta Electronic (Thailand) (DELTA.BK/DELTA TB)*

ประมาณการ 2Q61: คาดว่ ากาไรจะออกมาดี

Outperform‧Maintained Price as of 18 July 2018

63.75

12M target price (Bt/share)

74.00

Unchanged/Revised up(down)(%)

Unchanged

Upside/downside (%)

16.1

Key messages

เราคาดว่ากาไรสุ ทธิใน 2Q61 จะอยูท่ ี่ 1.3 พันล้านบาท (+49% YoY และ +19% QoQ) จากยอดขายและอัตรากาไรขั้นต้นที่ เพิ่มขึ้น ซึ่ งทาให้กาไรใน 1H61 อยูท่ ี่ 2.3 พันล้านบาท (+6% YoY) ซึ่ งคิดเป็ น 49% ของประมาณการกาไรทั้งปี ของเรา ยอดขายที่แข็งแกร่ งสอดคล้องกับแนวโน้มที่สดใสของ hyper scale data center ในขณะที่อตั รากาไรขั้นต้นที่ฟ้ื นตัวดีข้ ึนจาก ไตรมาสก่อนก็ช่วยยืนยันถึงสัมพันธภาพที่ดีระหว่าง DELTA กับ supplier เรายังคงคาแนะนา "ซื้ อ" ราคาเป้ าหมายกลางปี 2562 ที่ 74.00 บาท อิงจาก PER ที่ 16.5x (ค่าเฉลี่ยของกลุ่ม +0.5 S.D.) Trading data Mkt cap (Btbn/US$bn) Outstanding share (mn) Foreign ownership (mn) 3M avg. daily trading (mn) 52-week trading range (Bt) Performance (%)

79.5/1.99 1,247 1,116 2 55.5 - 92.8

3M

6M

Absolute

-11.1

-17.2

Relative

-2.40

-7.80

3M 28.2 30.8

Quarterly EPS EPS 2015 2016 2017 2018

Q1 1.25 1.00 1.08 0.85

Q2 1.37 1.07 0.68

Q3 1.40 1.13 1.13

Q4 1.37 1.23 1.07

Event เราคาดว่ากาไรสุ ทธิ ใน 2Q61 จะอยูท่ ี่ 1.3 พันล้านบาท (+49% YoY และ +19% QoQ) จากยอดขายและ อัตรากาไรขั้นต้นที่เพิ่มขึ้น ซึ่ งกาไรในไตรมาสสองจะทาให้กาไรใน 1H61 อยูท่ ี่ 2.3 พันล้านบาท (+6% YoY) ซึ่งคิดเป็ น 49% ของประมาณการกาไรทั้งปี ของเรา lmpact ยอดขายที่โตถึง 16% YoY ในไตรมาสแรกยืนยันแนวโน้ มเชิงบวกของ global server shipment ดังที่เราบอกไว้ในบทวิเคราะห์ Grab or Regret เมื่อวันที่ 4 มิถุนายน 2561 ว่า DELTA น่ าจะได้อานิ สงส์ จากการเติบโตของ hyper scale data center ซึ่ งคิดเป็ นประมาณ 30% ของรายได้รวมของบริ ษทั ได้หนุน ให้ยอดขายในไตรมาสที่สองโตถึ ง 16% YoY ในรู ปสกุลดอลลาร์ เป็ น US$418 ล้าน และส่ งผลให้ ยอดขายใน 1H61 อยูท่ ี่ US$812 ล้าน (+15% YoY) คิดเป็ น 51% ของประมาณการทั้งปี ของเรา อัตรากาไรขั้นต้ นที่เพิม่ ขึน้ 0.5ppt แสดงถึงสัมพันธภาพที่ดรี ะหว่าง DELTA กับ supplier เราคาดว่าอัตรากาไรขั้นต้นใน 2Q61 จะขยับเพิ่มขึ้นจาก 21.8% ซึ่ งเป็ นระดับที่ต่าที่สุดนับตั้งแต่ปี 2549 มาเป็ น 22.3% ใน 2Q61 ถึ งแม้ว่าอัตรากาไรขั้นต้นจะยังต่ากว่าเมื่อ 2Q61 ซึ่ งอยูท่ ี่ 25.4% แต่อตั รากาไร ขั้นต้นที่ฟ้ื นตัวดีข้ ึนจากไตรมาสก่อนก็ช่วยยืนยันถึงสัมพันธภาพที่ดีระหว่าง DELTA กับ supplier ดังนั้น บริ ษทั จึงน่าจะได้รับผลกระทบไม่มากนักจากปัญหาการขาดแคลนวัตถุดิบ ประมาณการกาไรปี นีข้ องเรายังมี Upside อีก ~5 -10% เนื่ องจากรายได้และกาไรสุ ทธิ ในครึ่ งแรกของปี นี้ น่าจะออกมาประมาณครึ่ งหนึ่ งของประมาณการทั้งปี ของเรา ดังนั้น เราจึงคาดว่าประมาณการกาไรปี นี้ ยงั มี upside อีกประมาณ 5-10% Valuation & Action เรายังคงคาแนะนา "ซื้ อ" ราคาเป้ าหมายกลางปี 2562 ที่ 74.00 บาท อิงจาก PER ที่ 16.5x (ค่าเฉลี่ ยของ กลุ่ม +0.5 S.D.) ทั้งนี้ ราคาหุ ้น DELTA ร่ วงลงมาเหลื อแค่ 55.50 บาทตอนสิ้ นเดื อนมิถุนายน ก่อนที่จะ ดีดกลับขึ้ นไปถึ ง 15% ในช่ วงสองสัปดาห์ที่ผ่านมา เราคาดว่าราคาหุ ้นที่ร่วงลงมาก่ อนหน้านี้ เกิ ดจาก ความกัง วลว่ า ผลประกอบการในไตรมาสที่ ส องจะอ่ อ นแอ แต่ อ ย่า งไรก็ ต าม เรายัง คงมองว่ า ผล ประกอบการจะฟื้ นตัวขึ้น และแนะนาให้นกั ลงทุนซื้ อสะสมเพื่อรอการฟื้ นตัวของผลประกอบการ Risks ภัยธรรมชาติ, มีการปิ ดโรงงานนอกแผน, ลูกค้าเปลี่ยนไปสัง่ สิ นค้าจาก supplier รายอื่น และเงินเบาทแข็ง ค่าขึ้นเมื่อเทียบกับดอลลาร์ สหรัฐ (เราใช้สมมติฐานอัตราแลกเปลี่ยนปี นี้ ที่ 30.9 บาท/US$)

Share price chart 100

15

5

90

Key financials and valuations

(5)

80 (15) 70

(25) 60

(35)

50

(45) Jul-17

Sep-17 Share Price

Dec-17

Feb-18

Source: SET

Chananthorn Pichayapanupat 66.2658.8888 Ext.8849 [email protected]

July 19, 2018

May-18

Price performance relative to SET

Jul-18

Revenue (Btmn) Gross Profit (Btmn) SG&A (Btmn) Net Profit (Btmn) Normalized Profit (Btmn) EPS(Bt) Normalized EPS(Bt) DPS(Bt) EPSGrowth (%) Normalized EPSGrowth P/E(X) P/B (X) EV/EBITDA (X) Net Debt to Equity (%) Dividend Yield (%) Return on Average Equity (%)

Dec - 16A 46,887 12,416 7,319 5,516 5,333 4.42 4.28 3.00 (17.8) (15.4) 18.4 3.2 9.1 (62.1) 3.7 17.3

Dec - 17A 49,269 12,547 6,976 4,931 5,806 3.95 4.65 2.20 (10.6) 8.9 18.5 2.8 8.3 (53.3) 3.0 15.2

Dec - 18F 49,588 11,384 7,240 4,682 4,682 3.75 3.75 2.06 (5.0) (19.4) 17.0 2.2 10.3 (48.9) 3.2 13.2

Dec - 19F 53,754 13,700 7,741 6,407 6,407 5.14 5.14 3.08 36.8 36.8 12.4 2.1 7.7 (49.6) 4.8 16.8

Dec - 20F 57,064 14,821 8,160 7,228 7,228 5.79 5.79 3.48 12.8 12.8 11.0 1.9 6.7 (51.1) 5.5 17.6

Source: Company data, KGI Research

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

1

Thailand

Delta Electronic (Thailand)

Figure 1: DELTA's 2Q18 earning preview

Btmn Revenue Gross Margin SG&A Operating Profit Operating EBITDA Non-Operating Inc./(Exp.) Net Profit Normalized Profit EPS(Bt) Normalized EPS(Bt) Percent Gross margin EBIT margin SG&A/sales

2Q18F 13,318 2,975 1,750 1,361 1,671 (51) 1,256 1,307 1.01 1.05 2Q18F 22.3 10.2 13.1

2Q17 12,296 3,123 1,681 1,505 1,751 (571) 843 1,414 0.68 1.13 2Q17 25.4 12.2 13.7

YoY (%) 8.3 (4.7) 4.1 (9.5) (4.6) (91) 49.0 (7.6) 49.0 (7.6) YoY (ppts) (3.1) (2.0) (0.5)

1Q18 12,528 2,731 1,711 1,149 1,443 (48) 1,058 1,106 0.85 0.89 1Q18 21.8 9.2 13.7

QoQ (%) 6.3 8.9 2.3 18.5 15.8 6 18.7 18.2 18.7 18.2 QoQ (ppts) 0.5 1.1 (0.5)

1H18 25,847 5,706 3,462 2,510 3,114 (99) 2,314 2,413 1.86 1.93 1H18 22.1 9.7 13.4

1H17 24,423 6,341 3,522 2,979 3,458 (546) 2,191 2,737 1.76 2.19 1H17 26.0 12.2 14.4

YoY (%) 5.8 (10.0) (1.7) (15.7) (10.0) (82) 5.6 (11.9) 5.6 (11.9) YoY (ppts) (3.9) (2.5) (1.0)

Source: Company data, KGI Research

July 19, 2018

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

2

Thailand

Delta Electronic (Thailand)

Figure 2: Company profile

Figure 3: Core profit rebased in 2018

Delta Electronics (Thailand) PCL. (DELTA), was founded in

Normalized earnings, Btbn

1990 and is one of the world's leading producers of power supplies and electronic components comprising cooling fans, EMI filters and solenoids. DELTA’s key power management

9.0

8.0 7.0

6.0

products consist of switching power supply, DC-DC converters

5.0

and

4.0

solar

inverters.

The

products

are

widely

used

in

applications for automotive, medical, telecommunications, IT, automation and more

3.0

2.0 1.0

0.0 2016

2017

2018F

Source: Company data

Source: Company data, KGI Research

Figure 4: Revenue breakdown by application

Figure 5: Quite stable profitability

percent

percent

2019F

2020F

30.0 Automotive power and Fans Trading business

25.0

15.2

19.5

20.0 15.0 10.0

Industrial automation 6.9

5.0

24.2

1Q18

4Q17

3Q17

2Q17

1Q17

4Q16

3Q16

2Q16

1Q16

4Q15

3Q15

2Q15

1Q15

4Q14

3Q14

10.4

2Q14

0.0 1Q14

Non-auto fans (data center and telecom)

Data Center

6.9

6.9

Hand tools and charger

Grossprofit margin

Telecom

Source: Company data, KGI Research

Source: Company data, KGI Research

Figure 6: Consistency dividend payment

Figure 7: Cash per share

DPS (Bt/share): Dividend yield (percent)

Bt/share 5.4

16.4

4.8

15.2

17.0

15.2

14.8

15.5

15.8

15.2

13.3

3.7 3.0

2016

3.0

3.2

2.2

2.1

2017

13.2

14.1

13.9

14.3

3Q17

4Q17

1Q18

3.5

3.1

2018F DPS

2019F

2020F 1Q15

Dividend yield

2Q15

3Q15

4Q15

1Q16

2Q16

Source: Company data, KGI Research

Source: Company data, KGI Research

Figure 8: Company’s PER

Figure 9: Company’s PBV

PER, times

PBV, times

30.0

3Q16

4Q16

1Q17

2Q17

5.0

25.0

4.0

+2.0 sd = 22.0x

+2.0 sd = 3.9x +1.0 sd = 3.4x

+1.0 sd = 18.9x

20.0

3.0

15.0

Average = 15.7x -1.0 sd = 12.6x

10.0

-2.0 sd = 1.8x

-2.0 sd = 9.4x

2014

Source: KGI Research

July 19, 2018

2015

2016

Average = 2.9x -1.0 sd = 2.3x

2.0 1.0

5.0 0.0 2013

Net profit margin

2017

2018F

2019F

0.0 2013

2014

2015

2016

2017

2018F

2019F

Source: KGI Research

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

3

Thailand

Delta Electronic (Thailand)

Quarterly Income Statement Income Stetement (Bt mn) Revenue Cost of Goods Sold Gross Profit Operating Expense Other incomes Operating Profit Depreciation of fixed asset Operating EBITDA Non-Operating Income Interest Income Other Non-op Income Non-Operating Expense Interest Expense Other Non-op Expense Equity Income/(Loss) Pre-tax profit Current Taxation Minorities Extraordinary items Net Profit Normalized Profit EPS(Bt) Normalized EPS(Bt) Margins Gross profit margin Operating EBIT margin Operating EBITDA margin Net profit margin Growth Revenue growth Operating EBIT growth Operating EBITDA growth Net profit growth Normalized profit growth

Mar-14A

Jun-14A

Sep-14A

Dec-14A

Mar-15A

Jun-15A

Sep-15A

Dec-15A

Mar-16A

Jun-16A

Sep-16A

Dec-16A

Mar-17A

Jun-17A

Sep-17A

10,768 (7,855) 2,913 (1,636) 107 1,384 (192) 1,576 75 0 75 (20) (20) 0 0 1,439 (45) 0 0 1,394 1,319 1.12 1.06

10,957 (8,028) 2,929 (1,571) 89 1,447 (199) 1,646 58 0 58 (23) (23) 0 0 1,482 3 0 0 1,486 1,427 1.19 1.14

11,456 (8,192) 3,263 (1,621) 108 1,750 (200) 1,950 215 0 215 (14) (16) 0 2 1,951 (9) 0 0 1,942 1,727 1.56 1.38

10,891 (8,209) 2,682 (1,553) (38) 1,091 (198) 1,289 78 0 78 (13) (13) 0 0 1,156 (35) 0 0 1,121 1,043 0.90 0.84

10,987 (7,949) 3,038 (1,515) 85 1,608 (191) 1,799 49 0 49 (8) (8) 0 0 1,649 (90) 0 0 1,559 1,509 1.25 1.21

11,466 (8,342) 3,124 (1,518) 89 1,695 (193) 1,887 80 0 80 (9) (9) 0 0 1,765 (62) 0 0 1,703 1,624 1.37 1.30

12,103 (8,945) 3,158 (1,656) 77 1,579 (197) 1,775 189 0 189 (12) (12) 0 0 1,755 (14) 0 0 1,741 1,553 1.40 1.24

12,382 (8,891) 3,491 (1,910) 154 1,735 (199) 1,933 94 0 94 (10) (10) 0 0 1,819 (109) 0 0 1,710 1,616 1.37 1.30

11,203 (8,247) 2,956 (1,842) 163 1,277 (201) 1,478 39 0 39 (9) (9) 0 0 1,307 (58) 0 0 1,250 1,211 1.00 0.97

11,273 (8,203) 3,070 (1,848) 121 1,342 (211) 1,553 31 0 31 (12) (12) 0 0 1,361 (32) 0 0 1,329 1,298 1.07 1.04

11,612 (8,533) 3,078 (1,725) 79 1,432 (220) 1,651 31 0 31 (14) (14) 0 0 1,449 (44) 0 0 1,405 1,373 1.13 1.10

12,800 (9,489) 3,312 (1,903) 89 1,497 (230) 1,727 82 0 82 (10) (10) 0 0 1,569 (35) 0 0 1,533 1,452 1.23 1.16

12,127 (8,909) 3,218 (1,841) 97 1,474 (233) 1,707 25 0 25 (10) (10) 0 0 1,489 (141) 0 0 1,348 1,323 1.08 1.06

12,296 (9,173) 3,123 (1,681) 63 1,505 (246) 1,751 480 0 480 (1,058) (1) (1,051) (6) 927 (84) 0 0 843 1,414 0.68 1.13

12,148 (9,048) 3,100 (1,710) 88 1,478 (264) 1,741 8 0 8 (10) (4) (4) (2) 1,476 (48) 0 (19) 1,409 1,424 1.13 1.14

Dec-17A Mar-18A 12,698 (9,592) 3,106 (1,743) 221 1,584 (298) 1,882 (23) 0 (23) 1,011 (5) 949 67 2,572 (3) (2) (1,240) 1,331 1,645 1.07 1.32

12,528 (9,797) 2,731 (1,711) 129 1,149 (295) 1,443 (48) 0 (48) 16 (5) 0 21 1,117 (62) (4) 0 1,058 1,106 0.85 0.89

27.1 12.9 14.6 12.9

26.7 13.2 15.0 13.6

28.5 15.3 17.0 17.0

24.6 10.0 11.8 10.3

27.7 14.6 16.4 14.2

27.2 14.8 16.5 14.9

26.1 13.0 14.7 14.4

28.2 14.0 15.6 13.8

26.4 11.4 13.2 11.2

27.2 11.9 13.8 11.8

26.5 12.3 14.2 12.1

25.9 11.7 13.5 12.0

26.5 12.2 14.1 11.1

25.4 12.2 14.2 6.9

25.5 12.2 14.3 11.6

24.5 12.5 14.8 10.5

21.8 9.2 11.5 8.4

0.6 33.9 25.2 27.2 29.4

1.8 4.5 4.4 6.6 8.2

4.6 20.9 18.5 30.7 21.0

(4.9) (37.7) (33.9) (42.3) (39.6)

0.9 47.4 39.6 39.1 44.7

4.4 5.4 4.9 9.3 7.6

5.6 (6.8) (5.9) 2.2 (4.4)

2.3 9.9 8.9 (1.8) 4.1

(9.5) (26.4) (23.5) (26.9) (25.1)

0.6 5.1 5.0 6.3 7.2

3.0 6.7 6.3 5.7 5.8

10.2 4.6 4.6 9.1 5.7

(5.3) (1.6) (1.1) (12.0) (8.8)

1.4 2.1 2.6 (37.5) 6.8

(1.2) (1.8) (0.6) 67.2 0.7

4.5 7.2 8.1 (5.6) 15.5

(1.3) (27.5) (23.3) (20.5) (32.8)

Source: KGI Research

July 19, 2018

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

4

Thailand

Delta Electronic (Thailand)

Balance Sheet As of 31 Dec (Bt mn) Total Assets Current Assets Cash & ST Investment Inventories Account Receivable Others Non-current Assets LT Investment Net fixed Assets Others Total Liabilities Current Liabilities Account Payable ST Borrowing Others Long-term Liabilities Long-term Debts Others Shareholders' Equity Common Stock Capital Surplus Retained Earnings Preferred Stock

Profit & Loss 2016 46,319 38,928 20,117 7,297 10,697 818 7,391 211 5,966 1,214 14,428 12,402 11,349 321 732 2,026 0 2,026 31,891 1,247 1,492 30,705 0

2017 46,154 36,554 17,535 7,684 10,468 866 9,600 1,004 7,302 1,294 13,680 11,836 10,480 229 1,127 1,844 0 1,844 32,474 1,247 1,492 31,998 0

2018F 45,803 36,249 17,558 7,327 10,869 496 9,553 210 7,634 1,710 10,233 8,150 7,327 179 645 2,083 0 2,083 35,570 1,247 1,492 34,105 0

2019F 48,899 39,025 19,024 7,682 11,782 538 9,874 210 7,912 1,752 10,767 8,509 7,682 129 699 2,258 0 2,258 38,133 1,247 1,492 36,668 0

2020F 52,342 42,204 21,024 8,101 12,507 571 10,139 210 8,146 1,782 11,319 8,922 8,101 79 742 2,397 0 2,397 41,024 1,247 1,492 39,559 0

Year to Dec 31 (Btmn) Revenue Cost of Goods Sold Gross Profit Operating Expenses Other Incomes Operating Profit Depreciation of fixed assets Operating EBITDA Non-Operating Income Interest Income Other Non-op Income Non-Operating Expense Interest Expense Other Non-op Expense Equity Income/(Loss) Pretax Profit Current Taxation Minorities Extraordinaries items Net Profit Normalized Profit EPS(Bt) Normalized EPS(Bt)

Source: KGI Research

Source: KGI Research

Key Ratios

Cash Flow

Year to 31 Dec Growth (%YoY) Sales OP EBITDA NP Normalized Profit EPS Normalized EPS Profitability (%) Gross Margin Operating Margin EBITDA Margin Net Margin ROAA ROAE Stability Gross Debt/Equity (%) Net Debt/Equity (%) Interest Coverage (x) Interest & ST Debt Coverage (x) Cash Flow Interest Coverage (x) Cash Flow/Interest & ST Debt (x) Current Ratio (x) Quick Ratio (x) Net Debt (Bt mn) Per Share Data (Bt) EPS Normalized EPS CFPS BVPS SPS EBITDA/Share DPS Activity Asset Turnover (x) Days Receivables Days Inventory Days Payable Cash Cycle Source: KGI Research

July 19, 2018

2016

2017

2018F

2019F

2020F

(0.1) (16.1) (15.6) (17.8) (15.4) (17.8) (15.4)

5.1 8.9 14.1 (10.6) 8.9 (10.6) 8.9

0.6 (20.5) (19.9) (5.0) (19.4) (5.0) (19.4)

8.4 36.7 30.3 36.8 36.8 36.8 36.8

6.2 12.7 11.2 12.8 12.8 12.8 12.8

26.5 11.8 14.1 11.8 11.9 17.3

25.5 12.3 15.3 10.0 10.7 15.2

23.0 9.7 12.2 9.4 10.2 13.2

25.5 12.2 14.6 11.9 13.1 16.8

26.0 13.0 15.3 12.7 13.8 17.6

0.5 0.4 0.3 0.3 0.3 (0.6) (0.5) (0.5) (0.5) (0.5) 126.9 330.2 159.0 287.6 480.2 15.6 26.1 23.2 43.7 79.3 122.4 245.5 84.0 297.6 507.2 15.1 19.4 12.3 45.2 83.7 3.1 3.1 4.4 4.6 4.7 2.6 2.4 3.5 3.7 3.8 (19,795.6) (17,306.7) (17,379.1) (18,895.5) (20,945.7)

Year to 31 Dec (Bt mn) Operating Cash Flow Net Profit Depreciation & Amortization Change in Working Capital Others Investment Cash Flow Net CAPEX Change in LT Investment Change in Other Assets Free Cash Flow Financing Cash Flow Change in Share Capital Net Change in Debt Change in Other LT Liab. Net Cash Flow

2016 46,887 (34,471) 12,416 (7,319) 452 5,548 (861) 6,593 183 0 183 (45) (45) 0 0 5,686 (170) 0

2017 49,269 (36,723) 12,547 (6,976) 470 6,041 (1,041) 7,525 489 0 489 86 (20) 105 59 6,464 (276) (2)

2018F 49,588 38,204 11,384 7,240 660 4,804 1,168 6,026 0 0 0 (31) (31) 0 54 4,827 (145) 0

2019F 53,754 40,054 13,700 7,741 607 6,567 1,221 7,850 0 0 0 (23) (23) 0 62 6,605 (198) 0

2020F 57,064 42,243 14,821 8,160 742 7,403 1,266 8,733 0 0 0 (16) (16) 0 64 7,451 (224) 0

5,516 5,333 4.42 4.28

4,931 5,806 3.95 4.65

4,682 4,682 3.75 3.75

6,407 6,407 5.14 5.14

7,228 7,228 5.79 5.79

2016 5,529 5,516 861 (849)

2017 4,820 4,931 1,041 (1,152)

2018F 2,566 4,682 1,168 (3,285)

2019F 6,861 6,407 1,221 (768)

2020F 7,887 7,228 1,266 (607)

(2,280) (1,885) 19 (413) 3,249 (4,052) 0 0 (4,183) (803)

(2,745) (2,378) 1 (369) 2,075 (4,441) 0 0 (4,348) (2,365)

(907) (1,500) 0 593 1,659 (1,636) 0 0 (1,586) 22

(1,500) (1,500) 0 0 5,361 (3,894) 0 0 (3,844) 1,466

(1,500) (1,500) 0 0 6,387 (4,387) 0 0 (4,337) 2,000

Source: KGI Research

Rates of Return on Invested Capital Year 2016 2017 2018F 2019F 2020F Year

4.4 4.3 4.4 25.6 37.6 5.3 3.0

4.0 4.7 3.9 26.0 39.5 6.0 2.2

3.8 3.8 2.1 28.5 39.8 4.8 2.1

5.1 5.1 5.5 30.6 43.1 6.3 3.1

5.8 5.8 6.3 32.9 45.7 7.0 3.5

2016 2017 2018F 2019F 2020F

1.0 83.3 77.3 120.2 40.4

1.1 77.6 76.4 104.2 49.8

1.1 80.0 70.0 70.0 80.0

1.1 80.0 70.0 70.0 80.0

1.1 80.0 70.0 70.0 80.0

2016 2017 2018F 2019F 2020F

Year

COGS Operating Exp. Operating Depreciation + + = Revenue Revenue Margin Revenue 73.5% 1.8% 16.6% 8.1% 74.5% 2.1% 14.2% 9.2% 77.0% 2.4% 15.9% 4.7% 74.5% 2.3% 15.5% 7.7% 74.0% 2.2% 15.6% 8.2% Working Capital Other Assets Capital Net PPE 1/ + + = Revenue Revenue Turnover Revenue (0.0) 0.1 0.9 1.0 (0.0) 0.1 0.8 1.1 (0.1) 0.2 0.8 1.2 (0.0) 0.1 0.8 1.1 (0.0) 0.1 0.8 1.1 Operating Cash After-tax Return Capital x x = Margin Tax Rate on Inv. Capital Turnover 8.1% 3.0% 0.2% 1.0 9.2% 4.3% 0.4% 1.1 4.7% 3.0% 0.2% 1.2 7.7% 3.0% 0.3% 1.1 8.2% 3.0% 0.3% 1.1

1-

Source: KGI Research

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

5

Thailand

Delta Electronic (Thailand)

Delta Electronic (Thailand)– Recommendation & target price history Date 4-Jun-18 20-Mar-18 28-Feb-18 27-Nov-17 26-Jul-17

100

90 80

70

Rating Outperform Neutral Neutral Neutral Neutral

Target 74.00 68.00 72.00 86.00 80.00

Price 65.00 66.00 68.00 85.50 89.50

60

50 Jul-17

Aug-17

Sep-17

Oct-17

Nov-17 Share price

Dec-17

Jan-18

Feb-18

Target price lowered

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Target price raised

Source: KGI Research

July 19, 2018

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

6

Thailand

Delta Electronic (Thailand)

Corporate Governance Report of Thai Listed Companies Companies with Excellent CG Scoring Stock

Company name

Stock

Company name

Stock

Company name

EGCO KBANK KKP

ELECTRICITY GENERATING

KTB RATCH SCB

KRUNG THAI BANK

TISCO

TISCO FINANCIAL GROUP

Stock

Company name

Stock

Company name

Stock

Company name

ADVANC AOT AP BBL BH BIGC CK CPALL CPN DRT

ADVANCED INFO SERVICE

ERW GFPT IFEC LPN MINT PS QH ROBINS RS SAMART

THE ERAWAN GROUP

SCC SPALI STEC SVI TASCO TCAP TMB TRUE

THE SIAM CEMENT

Stock

Company name

Stock

Company name

Stock

Company name

CENTEL DCC GL GLOW

CENTRAL PLAZA HOTEL

HMPRO ILINK KTC MAJOR

HOME PRODUCT CENTER

MAKRO MODERN TRT TVO

SIAM MAKRO

THAI VEGETABLE OIL

KASIKORNBANK KIATNAKIN BANK

RATCHABURI ELECTRICITY GENERATING HOLDING THE SIAM COMMERCIAL BANK

Companies with Very Good CG Scoring

AIRPORTS OF THAILAND ASIAN PROPERTY DEVELOPMENT BANGKOK BANK BUMRUNGRAD HOSPITAL BIG C SUPERCENTER CH. KARNCHANG CP ALL CENTRAL PATTANA DIAMOND ROOFING TILES

GFPT INTER FAR EAST ENGINEERING L.P.N. DEVELOPMENT MINOR INTERNATIONAL PRUKSA REAL ESTATE QUALITY HOUSES ROBINSON DEPARTMENT STORE

SUPALAI SINO-THAI ENGINEERING AND CONSTRUCTION SVI TIPCO ASPHALT THANACHART CAPITAL TMB BANK TRUE CORPORATION

RS SAMART CORPORATION

Companies with Good CG Scoring

DYNASTY CERAMIC GROUP LEASE GLOW ENERGY

INTERLINK COMMUNICATION KRUNGTHAI CARD MAJOR CINEPLEX GROUP

MODERNFORM GROUP TIRATHAI

Companies classified Not in the three highest score groups Stock

Company name

Stock

Company name

Stock

Company name

AAV ANAN BA BCH BDMS BEM BJCHI CBG

ASIA AVIATION

CHG CKP DTAC GLOBAL GPSC GUNKUL LPH MTLS

CHULARAT HOSPITAL

NOK PACE SAWAD TMT TPCH WHA WORK

NOK AIRLINES

ANANDA DEVELOPMENT BANGKOK AIRWAYS BANGKOK CHAIN HOSPITAL BANGKOK DUSIT MEDICAL SERVICES BANGKOK EXPRESSWAY AND METRO BJC HEAVY INDUSTRIES CARABAO GROUP

CK POWER TOTAL ACCESS COMMUNICATION SIAM GLOBAL HOUSE GLOBAL POWER SYNERGY GUNKUL ENGINEERING LADPRAO GENERAL HOSPITAL

PACE DEVELOPMENT CORPORATION SRISAWAD POWER 1979 THAI METAL TRADE TPC POWER HOLDING WHA CORPORATION WORKPOINT ENTERTAINMENT

MUANGTHAI LEASING

Source: www.thai-iod.com Disclaimer: The disclosure of the survey result of the Thai Institute of Directors Association ("IOD") regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an assessment of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date or when there is any change to the relevant information. Nevertheless, KGI Securities (Thailand) Public Company Limited (KGI) does not confirm, verify, or certify the accuracy and completeness of such survey result.

July 19, 2018

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

7

Thailand

Delta Electronic (Thailand)

Anti-corruption Progress Indicator Level 5: Extended Stock CPN

Company name CENTRAL PATTANA

Stock SCC

Company name

Stock IFEC KBANK KKP KTB MINT SCB

Company name

Stock DTAC GFPT GL GLOW GPSC HMPRO KTC LPN MAKRO MODERN NOK

Company name

Stock GUNKUL ILINK MTLS

Company name

Stock RS

Company name

Stock CPALL LPH

Company name

Stock

Company name

Stock SVI TCAP TISCO TMB

Company name

Stock PACE PS RATCH ROBINS SAMART SPALI STEC TASCO TMT TPCH WHA

Company name

Stock QH TRT TVO

Company name

THE SIAM CEMENT

Level 4: Certified Stock ADVANC BBL DCC DRT EGCO ERW

Company name ADVANCED INFO SERVICE BANGKOK BANK DYNASTY CERAMIC DIAMOND ROOFING TILES ELECTRICITY GENERATING THE ERAWAN GROUP

INTER FAR EAST ENGINEERING KASIKORNBANK KIATNAKIN BANK KRUNG THAI BANK

SVI THANACHART CAPITAL TISCO FINANCIAL GROUP TMB BANK

MINOR INTERNATIONAL THE SIAM COMMERCIAL BANK

Level 3: Established Stock AAV ANAN AP BA BDMS BIGC BJCHI CENTEL CHG CK CKP

Company name ASIA AVIATION ANANDA DEVELOPMENT ASIAN PROPERTY DEVELOPMENT BANGKOK AIRWAYS BANGKOK DUSIT MEDICAL SERVICES BIG C SUPERCENTER BJC HEAVY INDUSTRIES CENTRAL PLAZA HOTEL CHULARAT HOSPITAL CH. KARNCHANG CK POWER

TOTAL ACCESS COMMUNICATION GFPT GROUP LEASE GLOW ENERGY GLOBAL POWER SYNERGY HOME PRODUCT CENTER KRUNGTHAI CARD L.P.N. DEVELOPMENT SIAM MAKRO MODERNFORM GROUP NOK AIRLINES

PACE DEVELOPMENT CORPORATION PRUKSA REAL ESTATE RATCHABURI ELECTRICITY GENERATING HOLDING ROBINSON DEPARTMENT STORE SAMART CORPORATION SUPALAI SINO-THAI ENGINEERING AND CONSTRUCTION TIPCO ASPHALT THAI METAL TRADE TPC POWER HOLDING NOK AIRLINES

Level 2: Declared Stock AOT BH GLOBAL TRUE

Company name AIRPORTS OF THAILAND BUMRUNGRAD HOSPITAL SIAM GLOBAL HOUSE

GUNKUL ENGINEERING INTERLINK COMMUNICATION MUANGTHAI LEASING

QUALITY HOUSES TIRATHAI THAI VEGETABLE OIL

Level 1: Committed Stock CBG MAJOR

Company name CARABAO GROUP

RS

Stock Company name SAWAD SRISAWAD POWER 1979

MAJOR CINEPLEX GROUP

No progress Stock BCH BEM

Company name BANGKOK CHAIN HOSPITAL BANGKOK EXPRESSWAY AND METRO

CP ALL

Stock WORK

Company name WORKPOINT ENTERTAINMENT

LADPRAO GENERAL HOSPITAL

Source: www.cgthailand.org Disclaimer: The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by the relevant institution as disclosed by the Office of the Securities and Exchange Commission, is made in order to comply with the policy and sustainable development plan for the listed companies. The relevant institution made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company . The assessment result is therefore made from the perspective of a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, KGI Securities (Thailand) Public Company Limited (KGI) does not confirm, verify, or certify the accuracy and completeness of the assessment result.

July 19, 2018

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

8

Thailand

KGI Locations

China

Contact

Shanghai Room 1507, Park Place, 1601 Nanjing West Road, Jingan District, Shanghai, PRC 200040 Room 24D1, 24/F, A Unit, Zhen Ye Building, 2014 Bao’annan Road,

Shenzhen

Shenzhen, PRC 518008

Taiwan

Taipei

700 Mingshui Road, Taipei, Taiwan Telephone 886.2.2181.8888 ‧

Hong Kong

41/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong Telephone 852.2878.6888

Thailand

Facsimile 886.2.8501.1691

Bangkok

Facsimile 852.2878.6800

8th - 11th floors, Asia Centre Building 173 South Sathorn Road, Bangkok 10120, Thailand Telephone 66.2658.8888

Singapore

Facsimile 66.2658.8014

4 Shenton Way #13-01 SGX Centre 2 Singapore 068807 Telephone 65.6202.1188 Facsimile 65.6534.4826

KGI's Ratings

Rating

Definition

Outperform (OP)

The stock's excess return over the next twelve months is ranked in the top 40% of KGI's coverage universe in the related market (e.g. Taiwan)..

Neutral (N)

The stock's excess return over the next twelve months is ranked in the range between the top 40% and the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan)

Under perform (U)

The stock's excess return over the next twelve months is ranked in the bottom 40% of KGI's coverage universe in the related market (e.g. Taiwan).

Not Rated (NR)

The stock is not rated by KGI.

Restricted (R)

KGI policy and/or applicable law regulations preclude certain types of communications, including an investment recommendation, during the course of KGI's engagement in an investment banking transaction and in certain other circumstances.

Excess return = 12M target price/current priceNote

Disclaimer

July 19, 2018

When an analyst publishes a new report on a covered stock, we rank the stock's excess return with those of other stocks in KGI's coverage universe in the related market. We will assign a rating based on its ranking. If an analyst does not publish a new report on a covered stock, its rating will not be changed automatically.

KGI Securities (Thailand) Plc. ( “The Company” ) disclaims all warranties with regards to all information contained herein. In no event shall the Company be liable for any direct, indirect or any damages whatsoever resulting from loss of income or profits, arising by utilization and reliance on the information herein. All information hereunder does not constitute a solicitation to buy or sell any securities but constitutes our sole judgment as of this date and are subject to change without notice.

*The Company may be issuer of Derivative Warrants on these securities. http://research.kgi.com; Bloomberg: KGIT

Please see back page for disclaimer

9