Delta Electronics Inc

2308: XTAI (TWN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	TWD 376.00	Rdzjr	Tkcktmlf

We Like Delta Electronics’ Energy Storage Vision; Shares Attractive Despite Short-Term Cost Hiccups

Phelix Lee

Feb 28, 2022

We lift our fair value estimate on Delta Electronics to TWD 285, corresponding to 27 times 2022 P/E, backed by a robust gross margin recovery in 2023 and more aggressive expansion that we reckon is justified by better visibility in electric vehicle, or EV, automation, and energy storage system, or ESS, businesses. Shares are undervalued as Delta’s rising costs should ease in mid-2022. Upside surprise for the stock lies in faster commercialization of international automakers, and better-than-expected progress in its reorganized ESS business.

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