Thailand's Electronics Sector Gains from AI Demand: HANA, DELTA, and CPALL Shine

The Thai electronics industry is experiencing a notable recovery, largely fueled by the increasing global demand for artificial intelligence (AI) technologies. This trend is reflected in the strong performance of key players such as HANA Microelectronics (HANA), Delta Electronics (DELTA), and CP All (CPALL). Analysts from Krungsri Securities have highlighted these companies as prime beneficiaries of the ongoing AI boom.

HANA's Impressive Turnaround

HANA has reported a remarkable recovery in its financial performance, with a net profit increase of 4,614% year-on-year in the third quarter of 2023, significantly surpassing market expectations. This growth is attributed to a resurgence in demand for its products, particularly in the AI supply chain. HANA's stock has dropped over 25% from its peak, making it an attractive investment opportunity, according to analysts. The company is expected to see profit growth of 24% in 2023 and 44% in 2024, driven by the expansion of the global electronics and AI industries.

“Analysts from Krungsri Securities noted that HANA's recovery reflects strong demand for AI products, positioning it well for future growth.”Analysts, Krungsri Securities

DELTA's Strong Market Position

Similarly, DELTA is poised for a strong performance in the fourth quarter of 2023, bolstered by record sales figures from its parent company in Taiwan. The easing of raw material supply constraints is expected to enhance production efficiency. DELTA's profits are projected to grow by 32% in 2023 and 51% in 2024, reflecting the company's strategic focus on AI and digital infrastructure investments. Analysts recommend a buy rating for DELTA, with a target price of THB 280.

CPALL's Retail Resilience

In the retail sector, CPALL continues to thrive, reporting third-quarter earnings that exceeded market expectations by 5%. The strength of its 7-Eleven convenience stores, coupled with an ongoing focus on AI to enhance customer service, positions CPALL for continued growth. The company has implemented AI-driven solutions to improve its call center operations, significantly reducing customer hold times and increasing efficiency. Analysts project an 11% profit growth for CPALL in 2023 and 9% in 2024, with a target price of THB 68.

“Delta Electronics highlighted its role in addressing the challenges posed by increased energy consumption in data centers through advanced power and cooling technologies.”Delta Electronics

Investment Strategies and Market Outlook

Investors are advised to consider not only HANA, DELTA, and CPALL but also other sectors that may benefit from the expanding investment landscape, including electronics, energy, and construction. The forecast for Brent crude oil prices, which are expected to stabilize between USD 90-95 per barrel, is seen as a positive factor for the Thai stock market, alleviating inflationary pressures and influencing interest rates.

“Areoll Wu, Deputy General Manager of CP All, explained that the company's innovative use of AI in customer service is enhancing operational efficiency and customer satisfaction.”Areoll Wu, Deputy General Manager, CP All

As the global AI market continues to grow, driven by increasing energy demands and the need for efficient data management, Thai companies are well-positioned to capitalize on these trends. The International Energy Agency has noted that data centers consumed approximately 460 terawatt-hours of electricity in 2022, a figure projected to exceed 1,000 terawatt-hours by 2026, underscoring the need for innovative energy solutions.

Thai electronics companies like Delta Electronics are actively addressing the challenges posed by increased energy consumption in data centers by providing advanced power management and cooling solutions. CP All is leveraging AI technologies to enhance customer service efficiency in its extensive 7-Eleven convenience store network, including AI-powered call centers that significantly reduce customer hold times.