Inari Amertron Berhad - A decent closing
Fri, 29-Aug-2025 07:45 am
by Research Team • Apex Research

Counter

INARI (0166)

Target Price (RM)

2.23

Recommendation

Buy

  • Inari recorded 4QFY25 core net profit of RM53.8m (-11% QoQ, -14% YoY), bringing FY25 core earnings to RM253.4m (-17% YoY). The results were broadly inline with our (104%) and street (98%) forecasts.

  • FY25 core bottom line shrunk 17% due to lower volume of product loading across the board, unfavourable forex movement (FY25: RM4.43/USD vs FY24: RM4.70/USD) and start-up losses of RM16m at its China subsidiary, YSIC in FY25.

  • Upon incorporating FY25 results, our FY26/27F forecasts are marginally adjusted by -0.01%/-1.0%, respectively. Also, we introduce FY28F earnings at RM366.5m.

  • We maintain our BUY rating on Inari with unchanged target price of RM2.23, based on a 30x P/E multiple applied to FY26F EPS of 7.4 sen.

 

Closing inline. Inari recorded 4QFY25 core net profit of RM53.8m (-11% QoQ, -14% YoY), bringing FY25 core earnings to RM253.4m (-17% YoY). The results were broadly inline with our (104%) and street (98%) forecasts. 4QFY25 results were arrived after adjusting for unrealised forex loss (+RM12.3m) and reversal for slow moving inventories (-RM7.7m). 

 

QoQ. Despite flattish revenue (-0.5%), core net profit declined 11.3% no thanks to forex headwinds arising from appreciation of RM against USD (4QFY25: RM4.31/USD vs 3QFY25: RM4.45/USD), coupled with unfavourable product mix during the quarter as the group saw higher mix of Optoelectronics but weaker volume from RF segment, which typically commands higher margins. 

 

YoY/YTD. Core earnings shrunk (-14% QoQ, -17% YTD) due to lower volume of product loading across the board, unfavourable forex movement (FY25: RM4.43/USD vs FY24: RM4.70/USD) and start-up losses of RM16m at its China subsidiary, YSIC in FY25. 

 

Dividend. Declared dividend of 1.2 sen per share (ex-date: 17 Sep), bringing total dividend declared to 5.5 sen per share (vs FY24: 7.7 sen).

 

Outlook. RF segment is set to rebound sequentially in 1HFY26 in anticipation of new flagship smartphone launches in Sep. Nonetheless, we expect its RF segment to stay flattish in FY26 on a full year basis due to limited wow factor for the upcoming models, while potentially higher retail prices may weigh on sales volume. We understand Inari is currently working on a new product initiative (NPI) for its RF customer for the flagship handset lineup to be introduced in 2HCY26. Its memory module production for its new customer is ramping up progressively and will contribute meaningfully going into FY26F. On Optoelectronics, Datacom should see gradual improvement as its new capacity for the 800G fiber transceiver modules gradually comes online (catered for the transition from 400G), though its Automotive segment may remain tepid in FY26.

 

Forecast. Upon incorporating FY25 results, our FY26/27F forecasts are marginally adjusted by          -0.01%/-1.0%, respectively. Also, we introduce FY28F earnings at RM366.5m.

 

Valuation. We maintain our BUY rating on Inari with unchanged target price of RM2.23, based on a 30x P/E multiple applied to FY26F EPS of 7.4 sen, with a 0% ESG premium/discount, reflecting its three-star ESG rating. 

 

Risks. Delays in its turnaround plan for Lumileds, and US semiconductor tariff uncertainties.

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