Focus Stock: Delta Electronics AI Power and BBU Dual Engines Powerful in the Second Half of the Year, Earnings Call Reports Good News and Stock Price Locked at Limit Up

Delta Electronics (2301-TW), a power supply manufacturer, announced impressive financial results at its earnings call. AI-related revenue now accounts for over 30% of total revenue, and the company expects continued growth in the second half of the year. On March 3, following the momentum from the previous Friday, the stock price surged to the upper limit of 229.5 yuan at the opening, driven by strong buying orders.

Delta Electronics' second-quarter financial data showed remarkable performance. The quarterly net profit after tax reached 7.116 billion yuan, with earnings per share after tax at 3.14 yuan, a 126% year-on-year increase, setting a new quarterly historical high. The gross margin was 27.2%, an increase of 5.1 percentage points year-on-year. The cumulative net profit after tax for the first half of the year was 10.891 billion yuan, with earnings per share after tax at 4.80 yuan, a 66% year-on-year increase, also setting a new historical high for the same period.

With the continuous rise in demand for AI servers and data center power management, Delta Electronics' AI-related product revenue accounted for over 25% in the second quarter, with an annual target of exceeding 30%. Among these, backup battery systems account for nearly 20% of the cloud department's revenue, with an expected annual growth rate of over 70%, in line with the cloud business.

In response to strong customer demand, Delta Electronics increased its capital expenditure from the originally planned 13 billion yuan to 18 billion yuan. The investment will primarily go towards expanding production capacity in Kaohsiung, Vietnam, and Texas, USA, as well as expanding high-end R&D and testing equipment. The second phase of the Kaohsiung plant is scheduled to start production in the third quarter, the new Vietnam plant in the fourth quarter, and the Texas plant is expected to start mass production of high-voltage DC power supply and backup battery systems in the first half of 2027.

In addition to the significant expansion of its power supply business, Delta Electronics announced a strategic investment of 34.3 million US dollars (approximately 1.108 billion yuan) in DenseLight, a Singapore-based indium phosphide optical communication component manufacturer. This investment will give Delta Electronics approximately 21.22% equity and a seat on the board. The two companies will combine their advantages in laser chip technology and advanced optical packaging to jointly target the high-power laser light source and common optical packaging markets, with significant revenue contributions expected as early as the second half of 2027.