Caramen

Two tales from Thailand

Section: BUSINESS

When currencies collapse

Dateline: BANGKOK

WHEN a currency loses nearly 40% of its value in the space of a few months, as Thailand's did after it let die baht float in July, there are bound to be a few winners along with all the losers. One such is Delta Electronics, which had sales of 10.2 billion baht ($400m) last year from making rather dull electronics parts using lumps of steel and wire. With every step of the baht's descent, Delta's share price has risen: since July it has climbed over 150%.

Delta is, of course, an exporter, but not all exporters are alike, and few have found bad limes quite as good as Delta. For that it can thank its particular niche in electronics: mostly obscure analogue bits and pieces, such as filters to cut electrical noise in computers and fax machines; transformers and other parts of power supplies; and computer monitors. By Silicon Valley's standards, it is low-tech stuff, reaping low margins compared with semiconductors and software. But when the local economy rambles, low-tech companies may do best. Labour costs--which, at 8%, make up a bigger chunk of Delta's total costs than they do at higher-tech firms--drop along with the baht. Instead of having to import lots of sophisticated chips from America, Japan or Korea, Delta's raw materials are mostly wires, plastic, steel and glass, most of which it buys locally in baht.

Delta fostered local suppliers to help it move to just-in-time manufacturing, says James Ng Kong Meng, its president. But Thailand's economic crisis has turned this strategy into an accidental option on the baht's depreciation. Delta's third-quarter revenues grew by 88% over the same period last year, half of which was due simply to the devaluation. Most of its debt is in baht, sparing it the skyrocketing interest charges that many other Thai firms are suffering. Securities One, a Thai stockbroker, reckons that Delta's profits (in baht) will grow by 39% this year and...