Shares of Delta Electronics plunged by nearly 20% on Tuesday, dragging down the bourse after the Stock Exchange of Thailand (SET) imposed market surveillance measures on the equity, citing unusual rises in price.
Analysts at Krungsri Capital Securities (KCS) and Maybank Securities said the main reason for the SET index decline of more than 1% on Monday was the drop of Delta's share price, as the electronic parts and component maker comprises 25 points of the Thai bourse.
Late on Monday, the SET announced market surveillance cash balance measures for Delta, meaning investors have to pay the full amount in cash prior to trading the stock. The security is excluded from credit limits, meaning brokers cannot use the security as collateral in the calculation of a customer's credit line in all types of accounts.
The measures are effective from June 20 to July 10.
The bourse said the measures were triggered by unusual price movements and trading volumes, compared with previous trading sessions.
"The main factors used as criteria for the restrictions are the turnover ratio, trading value and price not corresponding with fundamental factors such as P/E [price-to-earnings] ratio," said the SET.
Delta shares rose 5.35% to finish at 117.50 baht on Monday, following a surge of 9.31% on June 15, 2.26% on June 13 and 1.79% on June 12.
Suwat Wattanapornprom, an analyst with KCS, said electronics companies have benefited recently from high demand prospects and the likelihood the US Federal Reserve is approaching the end of an interest rate hike cycle.
"Fundamentally, Delta has better growth prospects than its peers, thanks to its data centre and electric vehicle businesses," he told the Bangkok Post.
"However, the share's valuation is too expensive and I cannot think of a reason to buy the stock at the current price."
As the cash balance measure has been imposed by the SET on Delta three times this year, Mr Suwat said the company could potentially be excluded from the SET50 index beginning in 2024 if this measure is imposed one more time this year.
In its filing to clarify information required by the SET, Delta said the company "has no significant changes or developments that have not been disclosed".
"If the company has any information or developments that may affect the fundamentals of the stock price, we will inform the public accordingly," said the Delta filing.
Shares of Delta closed on Tuesday at 96 baht, down 18.3%, in trade worth 4.38 billion baht, while the SET decreased by 1.24% to finish at 1,537.59 points in trade worth 46.0 billion baht.
