Inari Amertron

Re: Inari Amertron

Postby winston » Thu Aug 24, 2017 1:52 pm

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Product drivers intact; to sustain outgrowth

Inari’s outlook was positive at its briefing: FY18 sales guidance remains solid at +15% to +20% YoY, driven mainly by:
(1) continued growth in RF filter back-end;
(2) ramp up on iris scan packaging for Osram potentially adding a second major customer;
(3) steady growth in fiber-optics with acceleration as 5G approaches.

GMs higher: We lift our GM assumption from 21-22% to 23-24%, mainly driven by operational cost savings as the company continues to make use of lower-cost local suppliers for some of its business segments.

Payout rising: Management guided that it can afford to sustain payouts at 60-70% in FY18-19, provided that there is no M&A or unexpected investments. As such, we lift our payout ratio from
55% to 65%, implying 3.5-4.7% yield for FY18E-20E.

Good execution could lift the share price further. We raise our FY18/19E EPS from RM0.12/RM0.15 to RM0.14/RM0.17 and TP to RM3.00 (from RM2.70) on same 19x CY18 P/E, based on good margins at 23.6%/24.4% GMs and 18.1%/18.9% OpMs.

Source: CS
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Re: Inari Amertron

Postby winston » Fri Sep 15, 2017 12:26 pm

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Maintain OUTPERFORM

Growth drivers intact; post-launch correction a good buying opportunity.

Following the launch of the iPhone X and iPhone 8/8Plus (click here for our review), Inari’s share price has been under pressure
(1) trading at a three-week low of RM2.45 (recovering to RM2.49 today); and
(2) ADTO doubling to US$8 mn vs the six-month average of US$4 mn.

Nonetheless, after hosting the company at our Asian Technology Conference (ATC) in Taipei last week (for full details, please refer to page 10 of this report—link to report), we see the takeaway as positive and have gained confidence on Inari's long-term growth.

As such, we believe that the near-term correction, which is in line with the launch sell-off during the iPhone 6 cycle, could be a good buying opportunity for longer term investors.

We maintain our OUTPERFORM rating with an unchanged target price of RM3.00, based on 19x CY18 P/E. We believe that Inari offers investors an option on the rebound in the iPhone cycle, and incremental sales from Broadcom’s back-end test and Osram’s iris scan packaging.

Source: CS
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Re: Inari Amertron

Postby winston » Tue Jan 02, 2018 12:47 pm

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Inari Amertron Bhd - Riding on continuous firm demand

by Billy Toh

Inari Amertron Bhd, one of The Edge Financial Daily’s stock picks for 2017, is also one of the top performers for the year on Bursa Malaysia.

It remains as one of our stock picks amid expectations that demand for radio frequency (RF) filters to stay strong despite saturating growth in the global smartphone market.

Affin Hwang analyst Kevin Low told The Edge Financial Daily that demand is driven by the increase in bandwidths and complexity in expanding the long-term evolution coverage, and that demand for RF will likely remain robust. Also, Inari’s customer, Broadcom, is a major player in this space.

“The number of Inari’s RF testers grew to 960 units and was projected to reach 1,000 units by end-2017. This had far exceeded our assumptions for FY18 (ending June 30, 2018) to FY20, as we had only expected the 1,000-unit mark to be hit by FY20,” Low said, adding that the Iris IR chip could be Inari’s new earnings driver.

Inari achieved a net profit growth of 42.4% in the first financial quarter ended Sept 30, 2017 (1QFY17) to RM68.4 million, from RM48 million in the previous corresponding quarter, mainly due to increased demand for its existing and new products which came on stream during the past two quarters.

The positive outlook is also supported by the upward forecast revision on global semiconductor sales by World Semiconductor Trade Statistics, which raised its forecast to an annual growth of 20.6% in 2017 and 7% in 2018.

Similarly, other market researchers such as Gartner Inc and IC Insights have revised their forecasts upwards on the semiconductor industry due to exceptional growth in the memory device market.

Inari’s share price, which closed at RM3.40 last Friday, has exceeded the average 12-month target price of RM3.09 by analysts based on data compiled by Bloomberg.

Despite the optimism on demand, the slowdown in global demand for smart devices, loss of customer base, and the introduction of new technologies may render Inari’s products obsolete and could dampen its earnings prospects.

Investors should also pay heed to a recent report on the forecasts cut on Apple’s iPhone X shipment by analysts citing tepid demand.

In the last five years, Inari’s investors would have seen an annualise gain of 101.3%. At the current level, the stock is trading at a trailing price-earnings ratio (P/E) of 27 times compared with Apple Inc’s 18 times.

Despite the downside risks, Inari has a proven track record with a good management and is a leading RF test house in Asia, which fit into our selections.

Source: The Edge
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Re: Inari Amertron

Postby winston » Wed Jan 03, 2018 10:50 am

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Solid growth ahead

Upgrade to Hold with higher RM3.00 TP. We expect Inari to record significant RF content
growth in 2018 as more premium smartphones start to adopt Gigabit LTE technology for
faster speed.

This is reflected in the on-going capacity expansion at Inari’s P13B plant, which we have updated in our model and led to 12-25% revision to our FY18-20 forecasts.

Beyond 2018, the commercialisation of 5G starting 2019 should underpin medium-term
growth for the RF division, notwithstanding contribution from other divisions such as IIS and
IR LED as well.

Upgrade to HOLD with revised RM3.00 TP (based on18x FY19 PE). We believe the stock is
fairly valued at 20.6x FY19 EPS and offers decent dividend yield of 3-4%.

Source: DBS

https://researchwise.dbsvresearch.com/R ... =ddajjkiia
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Re: Inari Amertron

Postby winston » Fri Aug 03, 2018 9:37 pm

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Inari Amertron

Inari is close to clinching three new projects from OSRAM Opto Semiconductors, which includes facial recognition systems (for biometric authentication), health sensors for smart devices and mini LED for billboard applications.

These projects will boost Inari’s under-utilised capacity for iris scanner.

Broadcom, one of Inari’s top customers, is looking at sanctioning plans to transfer more in-house jobs to Inari’s subsidiary (Inari Semiconductor Lab (ISL)). The transfer is a signal that Inari will continue benefitting from Broadcom’s high-margin and high-value engineering focus.

BUY, TP RM2.68; Current Share Price $2.44

Source: Shares Investment
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Re: Inari Amertron

Postby winston » Fri Oct 12, 2018 8:44 am

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Inari Amertron (INRI MK)

Nurturing A Second Strategic Relationship

Inari’s long-term outlook is promising, especially since we are seeing Inari at the beginning stage of nurturing a strategic relationship with OSRAM.

This could enable it to put the latter’s flagship products in its pocket.

The recent new projects (facial recognition, health sensor, and mini LED products) are just a start, we believe.

On the other hand, growth with Broadcom on RF and fibre optics-related products will continue. Maintain BUY. Target price: RM2.68.

Source: UOBKH

https://research.uobkayhian.com/content ... 71e262abde
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Re: Inari Amertron

Postby winston » Fri Jan 18, 2019 9:57 am

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Jan 4, 2019

Opportunity to Accumulate

Yesterday, Inari’s share price took further beating (-13.6%).

This came on the heels of a major smartphone brand lowering revenue guidance for its upcoming quarterly results by 6-10% due to weak smartphone sales.

While Inari is a part of the major smartphone brand’s supply chain, we do not expect the financial impact on the group to be significant with estimates of only a low to mid-single digit downtick to earnings and hence, opine that the sell down is overdone.

Above all, we remain sanguine on Inari’s near to longer term prospects on the back of its new projects and expansion plans.

We are maintaining our forecasts and reiterate our Buy recommendation on Inari with an unchanged TP of RM2.10/share based on a PE of 23.0x CY19 EPS.

Source: TA Securities
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Re: Inari Amertron

Postby winston » Fri Jan 18, 2019 10:56 am

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Jan 4, 2019

Turning cautious on RF prospects for FY19F

We turn cautious on the group’s RF division growth prospects following the earnings revision guidance by one of its key end customers.

We cut our RF division sales growth forecast in FY19F from +3% to -10% in light of a tepid smartphone demand outlook. FY19-21F EPS is cut 3-10%.

Maintain Add with a lower RM1.65 TP, based on a lower 16x CY20F P/E.

Source: CIMB

https://brokingrfs.cimb.com/kJB96rE_wA3 ... 0ZYRw2.pdf
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Re: Inari Amertron

Postby winston » Thu Dec 19, 2019 3:23 pm

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Nov 28, 2019

Still Poised for Growth

Inari held a briefing post its 1QFY20 results.

Key takeaways include:
1) Revenue fell 2.8% YoY mainly due to weakness from the optoelectronics segment on the back of the trade war, albeit it was large cushioned by the core radio frequency (RF) segment’s strength which benefitted from growing RF content per device
2) Thus far in 2QFY20, the RF segment’s utilisation rate remained strong at >70%, driven by a major endcustomer’s new smartphone line-up and
3) ~10% of P34, the group’s new plant in Batu Kawan, Penang has been fitted.

In all, we have cut our FY20/FY21/FY22 earnings estimates by 13.8%/5.1%/5.1% in view of the headwinds from the trade war on the optoelectronics segment and correspondingly, arrive at a lower TP of RM1.98 (previously RM2.17) based on 24.0x CY20 EPS.

Downgrade to Hold.

Source: TA Securities
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Re: Inari Amertron

Postby winston » Thu Dec 19, 2019 3:40 pm

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Investors would need to be ‘patient’ with Inari

by Supriya Surendran

KUALA LUMPUR: Investors eyeing Inari Amertron Bhd would have to be patient if they want to see the same kind of returns that the stock has delivered in the past.

The evolvement and technological advancements of the smartphone over the past few years had helped to boost the earnings of the group, which provides outsourced semiconductor assembly and test services for radio frequency (RF), fibre optic transceivers, optoelectronics and sensors.

This in turn had led to higher returns for its shareholders — with the share price up by almost five times, from 49 sen on Dec 16, 2014 to RM2.43 on Aug 9, 2018.

However, as latest reports from Gartner Inc would tell you, the demand for smartphones has been waning, with global smartphone sales expected to contract by 2.5% this year.

Inari, too, has seen a slowdown in its earnings. For its first financial quarter ended Sept 30, 2019, Inari reported a 20.6% year-on-year decline in net profit to RM47.7 million, which the group said was because of a change in product mix, higher depreciation costs, lower foreign exchange and an increase in taxation compared to the corresponding period.

At its current share price of RM1.86, Inari is trading at 32 times its earnings.

An analyst with a local investment bank told The Edge Financial Daily that investors eyeing Inari would need to stomach its current hefty valuations — at over 30 times price-earnings ratio (PER) — at least till the commercialisation of the fifth-generation (5G) technology in mobile devices takes place.

“In the past, consensus has been overly bullish on the stock and right now, we think the market is pricing in a recovery for Inari that has not even begun.

“However it should be noted that though the long-term outlook for Inari remains promising, patience is needed from investors because it will take time for the commercialisation of 5G technology, which is expected to happen somewhere in the second half of 2020 or even 2021 — to have a serious impact on Inari’s earnings,” an analyst with a local investment bank told The Edge Financial Daily.

JPMorgan in a Nov 28 note said it is also of the view that the market is packaging lofty expectations for Inari.

“We anticipate RF revenues to grow and find softness in its optoelectronics [segment] to be well understood. However, the stock seems to be pricing in aggressive growth expectations driven by the launch of 5G, and this has underpinned Inari’s year-to-date rally [whereby its share price has appreciated by 25%],” the firm said.

JPMorgan has an “underweight” call on Inari, with a TP of RM1.40, which is 25% lower than Inari’s closing share price of RM1.86 last Friday. At RM1.86, the company’s market capitalisation stood at RM5.9 billion.

AmInvestment Bank Research in its Nov 27 note on Inari reiterated that 5G deployment remains a crucial barometer of Inari’s RF segment growth.

“We like Inari for its longer term prospects, arising from its involvement in the production of RF, which will benefit from the transition to 5G and rising content per device, laser devices which will be boosted by increasing biometric and augmented reality applications in smartphones and LED which rides on the increasing demand for high-resolution billboards in shopping malls,” the research house said.

AmInvestment Bank Research has a “hold” call on Inari, with a fair value of RM1.76.

Hong Leong Investment Bank Research (HLIB Research) said Inari has guided that its short-term outlook is clouded by geopolitical events including the ongoing US-China trade war.

HLIB Research has a “sell” call on Inari, with a target price (TP) of RM1.39, as the firm believes that its share price has run ahead of its fundamentals.

“This is the fifth consecutive quarterly earnings disappointments [from Inari] and RF demand may falter into early 2020. Besides that, the threat of its RF product being substituted is a major risk. Thus, we opine that its huge valuation premium against its peers is not justifiable,” the research house said.

However, there are some who are more sanguine about Inari’s prospects.

Affin Hwang Capital for one has a “buy” call on Inari with a TP of RM2.14, indicating an upside of 15% to its close last Friday.

“We maintain our ‘buy’ rating with a higher target price of RM2.14 based on a higher target PER multiple of 24 times ... as we take into account the improved investor sentiment and appetite for the sector.

“The higher PER multiple is justified by the likely stronger earnings growth profile ahead, fuelled by the 5G technology transition,” the firm said in a note.

From the perspective of a fund manager, Areca Capital chief executive officer Danny Wong Teck Meng said high valuations for semiconductor players are justifiable as they need to be at the forefront in terms of innovation.

“It is different compared to say, those who provide test equipment and precision cleaning who are not so impacted by things like the trade war, as testers for the semi-conductor industry are always needed whether in times of high or low volumes.

“But for semiconductor players, innovation is the name of the game as they need to invest in research and development to meet the requirements of suppliers and [to stay ahead of competition], hence their higher PER is justifiable,” said Wong.

Other tech stocks such as Unisem (M) Bhd and Globetronics Technology Bhd are a trading at 39 times and 27 times their earnings, respectively, according to Bloomberg.

Source: The Edge

https://www.theedgemarkets.com/article/ ... ient-inari
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