Inari Amertron Berhad - Hopes of seasonal strength dashed
Fri, 28-Nov-2025 07:37 am
by Brian Chin Haoyan • Apex Research

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INARI (0166)

Target Price (RM)

N.A.

Recommendation

Not Rated

  • Inari recorded 1QFY26 core net profit of RM54.9m (+2% QoQ, -27% YoY), missing both our (20%) and consensus (19%) estimates due to lower-than-expected RF shipment.

  • Core net profit dipped 27%, weighed down by softer loading volume across all business segments. Despite encouraging sales for new smartphone models launched in 3QCY25 at its end-customer, RF segment surprisingly saw weaker shipment. 

  • Pending updates from analyst briefing, we keep our forecasts unchanged for now, and put our BUY rating and target price of RM2.23 under review. 

 

Earnings miss. Inari recorded 1QFY26 core net profit of RM54.9m (+2% QoQ, -27% YoY), missing both our (20%) and consensus (19%) estimates. The results shortfall was due to lower-than-expected RF shipment despite new smartphone model launches. 1QFY26 results were arrived after adjusting for net EIs of RM3.4m, comprising reversal for slow moving inventories (-RM0.2m) and forex loss (+RM3.6m).

 

QoQ. Core earnings rose marginally (+2%) on the back of higher loading volume in RF segment thanks to seasonally stronger RF shipment volume amidst new handset model launches during the quarter. 

 

YoY. Core net profit dipped 27%, weighed down by softer loading volume across all business segments. Despite encouraging sales for new smartphone models launched in 3QCY25 at its end-customer, RF segment surprisingly saw weaker shipment. We suspect this was attributed to (i) loss of RF component share by Inari or Customer B and (ii) cautious volume forecast ahead of the new smartphone launches by its end customer, in our view.

 

Revenue breakdown. RF segment made up 61% of its 1QFY26’s top line (vs 1QFY25: 65%), while Optoelectronics and Generic account for 33% (1QFY25: 28%) and 6% (1QFY25: 7%), respectively.

 

Dividend. Declared first interim dividend of 1.33 sen per share (ex-date: 17 Dec), higher than the 1.0 sen declared in 1QFY25.

 

Outlook. Despite earlier anticipation of a strong seasonal rebound driven by the annual refresh cycle of handset models at its end-customer, the uplift did not materialise in 1QFY26. We do not rule out a potential recovery in 2QFY26 as its end-customer catches up its smartphone production due to better-than-expected sales. Nonetheless, we now turn cautious on Customer B and Inari’s ability to retain its component share in the RF space, especially given the former’s shifting focus on more attractive growth areas. The silver lining is that the new smartphone model launches in FY27F may introduce a new form factor, potentially boosting interest in the refreshed product lineup and supporting RF shipment volumes during the year, provided Customer B and Inari are able to retain or gain component share in the next launch cycle.

 

Forecast. We maintain our forecasts for now, pending further clarity from management at today’s analyst briefing.

 

Valuation. Pending updates from analyst briefing, we put our previous BUY rating and target price of RM2.23 under review. Our target price was derived from a 5-year mean P/E multiple of 30x, applied to FY26F EPS of 7.4 sen.

 

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

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