Inari Amertron Berhad - New smartphone launches to drive sequential growth
Tue, 02-Sep-2025 07:53 am
by Research Team • Apex Research

Counter

INARI (0166)

Target Price (RM)

2.23

Recommendation

Buy

  • RF production is ongoing for the upcoming launch of flagship smartphones on 9 Sep. RF revenue in FY26 will remain largely stable with potential upside arising from better forecasted volume by its key customer for the upcoming product cycle.

  • Longer-term upside could stem from its involvement in more RF components due to potential market share gain from its competitors, though there is still lack of clear visibility at this juncture.

  • The joint acquisition of Lumileds with San’an is slated for completion by 3QCY26, subject to regulatory approvals.

  • Make no changes to our forecasts and maintain BUY rating on Inari with an unchanged target price of RM2.23, based on a 30x P/E multiple applied to FY26F EPS of 7.4 sen.

 

We came away from Inari’s 4QFY25 results briefing with the following takeaways:

 

Results recap. Inari recorded 4QFY25 core net profit of RM53.8m (-11% QoQ, -14% YoY), bringing FY25 core earnings to RM253.4m (-17% YoY). The weaker performance was largely attributed to lower volume of product loading across the board and unfavourable forex movement. 

 

RF segment on a positive trajectory. We gathered from management that RF production is ongoing for the upcoming launch of flagship smartphones on 9 Sep. RF revenue in FY26 will remain largely stable with potential upside arising from better forecasted volume by its key customer for the upcoming product cycle. Inari’s RF overall loading factor currently stands at 80-85% and is expected to achieve c.65% on a full year basis in FY26. Meanwhile, Inari is working on new product initiatives with its key customer for the next product cycle to be launched in 2HCY26. We expect the next handset model lineup to garner better interests due to renewed form factor and product features, thereby driving better RF volume in FY27, in our view. Longer-term upside could stem from its involvement in more RF components due to potential market share gain from its competitors, though there is still lack of clear visibility at this juncture.

 

Non-RF operational updates. Inari expects its memory business to turnaround as it gradually ramps up its production to 40k/day (from 24k currently) alongside better yields. Management also revealed that several new products are undergoing qualification, which could lift production loading if successful. On Optoelectronics, Inari is seeing rising orders for 800G fibre transceivers at its Philippines subsidiary, driven by growing AI-related demand. 

 

Pending Lumileds acquisition approval. The joint acquisition of Lumileds with San’an is slated for completion by 3QCY26, subject to regulatory approvals. Inari remains upbeat on turning around Lumileds as management hinted its financial performance is currently on an improving trajectory and is hopeful of achieving breakeven post-acquisition. Inari aims to support Lumileds as an insourced semiconductor assembly and test (ISAT) partner, which we estimate could contribute c.RM250m p.a. in revenue.

 

Forecast. Unchanged. Our forecast has yet to factor in the proposed Lumileds acquisition.

 

Valuation. We maintain our BUY rating on Inari with an unchanged target price of RM2.23, based on 5-year historical average PE multiple of 30x on revised FY26F core EPS of 7.4 sen, with a 0% ESG premium/discount, reflecting its three-star ESG rating. 

 

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

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.213466 4.244897
EUR 4.946298 4.953651
CNY 0.592866 0.593738
HKD 0.540491 0.544550
SGD 3.282193 3.306905