KUALA LUMPUR (Feb 21): Shares of Inari Amertron Bhd (KL:INARI) fell on Friday, while analysts slashed their earnings forecasts, in response to the company’s underperforming results.
Despite a 3.6% year-on-year increase in net profit for the three months ended Dec 31, 2024 (2QFY2025), earnings fell significantly short of expectations, coming in 42% below the consensus estimate.
Meanwhile, revenue contracted by 15.7% to RM348.97 million from RM414.08 million in 2QFY2024, attributed to lower volume loading.
“Near-term volume headwinds are expected to persist”, said Apex Securities, adding that “in the optoelectronic segment, volume loading is likely to remain low until the new 800G capacity becomes operational in the Philippines sometime in June 2025”.
Apex slashed its FY2025 core net profit forecast for Inari by 25% to RM290.9 million, factoring in weaker optoelectronic volume loading. The house's FY2026/FY2027 forecasts remain unchanged.
Shares of Inari have lost more than 16% so far this year, before settling at RM2.57 at the time of writing on Friday, valuing the company at a market capitalisation of RM9.70 billion.
Among the research houses covering the stock, there are now two 'buy', three 'hold' and no 'sell' calls. The Bloomberg consensus pegs an average 12-month target price of RM3.04, implying a potential upside of 18% from Inari's current price.
“While Inari broadly concurs with industry forecasts and growth from rising demand for artificial intelligence and data centres, the escalating geopolitical uncertainties, particularly the recent repeated threat of US tariffs, are concerning,” said Hong Leong Investment Bank, adding that the outlook for FY2026 is highly uncertain.
To reflect the challenging outlook, HLIB cut its earnings forecasts for Inari by 12.4% for FY2025, 12.1% for FY2026, and 11.9% for FY2027.
The house reiterated its 'hold' call after cutting estimates, noting that Inari’s risk-reward profile remains balanced at this juncture.
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