Delta Electronics’ Shares No Longer Rich After Q3 Miss and Near-Term Headwinds

Delta Electronics' competitiveness and reputation are built on its expertise in power management. It enables the firm to offer energy-efficient solutions that conform to standards of different industries and regions. The stringent requirements of telecom and data center applications are perfect showcases of Delta’s moat. Together they contribute about 30% of revenue. We think growth of the data center business will be driven by accelerating data generation and upselling of cooling, power management, and monitoring systems to existing enterprise customers. For telecom products, 5G rollouts should last years, as 3 times more base stations are needed compared with 4G. We believe Delta’s reputation should reassure data center customers of optimized energy usage; and telecom clients of reliability in adverse conditions.