DELTA stock follie, a discussion with Thai broker Analyst.

Here is a discussion I just had with a Thai broker analyst, post reading their newly released "buy" recommendation with a price target of 440 Baht:

As  long experienced investors here we are aghast how you can recommend Delta as a buy today, at this stratospheric high valuation?. We also believe you show p/e shown is off, as Streaming shows it at 112.    Paul A. Renaud 

Analyst answer:  “Thank you for your candid feedback. We fully understand your concern that DELTA’s valuation is already elevated.   Our view is based on the medium- to long-term potential we see from AI data-center power, HVDC and cooling opportunities, together with DELTA’s scarcity premium as one of the few listed regional plays with meaningful exposure to the AI/DC supply chain.”

Then I wrote back as follows:

Thank you K.....Understand your reasons, but it does not answer what seems to be your off p/e rating shown in your report?? Last year DELTA earned 1.99 Baht per share, but  you show its 2025 p/e, at 60.7.  The SET website shows DELTA p/e at 112 -as does the "Streaming" SET.  DELTA is also one of the most volatile stocks on the SET, and while traders/punters and brokers cherish this, in strict investment-finance -a high beta very high volatile stock should trade at a discount valuation,.....not premium.  Not least, if there US mkt. corrections likely lead by bubbly dominant AI related stocks, as many true professionals believe could happen anytime: 

DELTA could tumble fastest/most!  As on top it does not have the anchor of any decent dividend.  Surely there are other companies which will greatly benefit from the Thai AI boom, like diaphragm-wall construction, where for example PYLON (3.80) leads,  its p/e is barely 9 and dividend +10% (the SET is simply wrong by showing 6.1%!)  but of course not suitable for liquidity obsessed traders/punters -and institutions.   Yet, surely an investor jewel, for the real individual people/investors, yes.  :)  

Best Regards,

Paul A. Renaud.

Minutes later, the Analyst wrote back as follows:
"I fully understand your point that, from a strict investment-finance perspective, a high-beta and highly volatile stock should normally deserve a valuation discount, not a premium. We also agree that DELTA carries meaningful downside risk if there is a correction in AI-related stocks globally.  On the P/E number, our 2025 P/E of 60.7x is based on DELTA’s average share price in 2025 of Bt120.75 divided by 2025 EPS of Bt1.99. 

On valuation, our argument is not only about the AI premium. It also reflects DELTA’s scarcity premium in the Thai market. For some domestic funds with mandates largely restricted to Thai equities, there are very few liquid Thai-listed companies with direct exposure to the AI/data-center supply chain and strong earnings growth visibility. As DELTA is also the largest stock in the Thai market, benchmark-related positioning can further support demand from funds that need to manage tracking risk against the index."

I ended it with this:  Thanks K...., understood.  A bit crazy but ok true enough.  Hence, it shows how individual investors, here especially,  have a huge advantage  as they are not bound by such artificial constraints and can invest (no, not day trade) in high quality secondary companies priced at, well... "low valuations which go begging".   FETCO should take note!   Paul A. Renaud.