KUALA LUMPUR (Aug 30): Several research houses remain cautiously optimistic of Inari Amertron Bhd's prospects amid a potential recovery in the semiconductor sector in the second half of 2023 (2H2023) along with newer smartphone products and the company's prospects in China, even though the company posted weaker earnings in FY2023.
Inari’s net profit fell 23% to RM66.31 million in the fourth quarter ended June 30, 2023 (4QFY2023) from RM86.22 million a year ago as an industry slowdown continued to hamper revenue alongside higher energy costs. Revenue for the quarter also fell 11% to RM298.75 million from RM336.18 million a year earlier.
For the full-year 2023 (FY2023), Inari's net profit declined 17% to RM323.54 million from RM390.92 million in FY2022, with revenue dropping 12.5% to RM1.35 billion from RM1.55 billion.
Research houses have generally maintained their recommendations with TA Securities and Maybank IB Research upgrading their target prices (TPs) to RM3.15 and RM3 respectively.
MIDF Research was less optimistic, downgrading the stock to “neutral” from “buy” with a slight revision to its TP to RM3.04 from RM3.06 previously. The research house noted that Inari’s financial performance came in within its expectation, making up 95% of its full year FY2023 earnings estimate.
But it made changes to its FY2024 and FY2025 earnings estimates to RM391.5 million and RM442.6 million respectively after taking into consideration FY2023 results.
Despite the counter's better share price performance todate — up 15.6% — MIDF said limited improvement could be seen in the subsequent quarters due to the unfavourable landscape at the moment.
“This could translate into a lacklustre 1HFY2024 before a strong rebound in the second half of the financial period. In addition, we do not discount the possibility that the ongoing China slowdown could potentially affect its China venture with China Fortune-Tech Capital Co Ltd (CFTC).”
At the time of writing, Inari shares were up by 11 sen or 3.63% to RM3.14, valuing the company at RM11.73 billion.