,Analysts noted that Inari’s results had exceeded expectations for the third consecutive quarter due to higher margin from RF contribution amid the 5G technology refresh cycle.
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KUALA LUMPUR: Inari Amertron Bhd is expected to see higher profitability from financial year ending June 30 (FY22) onwards mainly supported by its strong radio frequency (RF) business on the back of new value-added processes and higher 5G smartphone penetration.
Analysts noted that Inari’s results had exceeded expectations for the third consecutive quarter due to higher margin from RF contribution amid the 5G technology refresh cycle.
Its P34 plant is seeing positive progression which could supercharge its earnings starting from FY22, opined UOB Kay Hian (UOBKH) Research in a report yesterday.
Inari had reported its strongest ever in the fourth quarter ended June 30, 2021 with a net profit at RM88.8mil, which is up 8% quarter-on-quarter or 145% year-on-year (y-o-y). This brought its FY21 core net profit to RM328.6mil.
Its FY21 sales rose by 35% y-o-y mainly driven by its RF business on higher utilisation of its system in package (SiP) assembly lines for RF, despite weakness from its optoelectronics segment.
Moving into the first quarter ending Sept 30 (Q1’22), UOBKH Research “expects seasonally stronger loadings for its RF business.”
This is likely to come on the back of three months of fixed orders plus another three months of floating orders as the group is working with its integrated device manufacturer (IDM) customer for the next flagship smartphone, which would see an additional 10% to 15% content boost.
Meanwhile, CGS-CIMB Research has raised its RF division sales growth forecasts to 25% from 16% for FY22 forecast. It has also raised in sales growth forecast for FY23 to 12% from 10% driven by higher RF content value growth on the back of rising 5G smartphone penetration.
Industry research group, Canalys, estimates worldwide 5G smartphone penetration to grow to 43% and 52% in FY21 and FY22 respectively.
“Moreover, we see new processes, such as electromagnetic interference shield coating for RF chips going into 5G smartphones, driving RF division sales in FY22F,” added CGS-CIMB Research.
Notably, as at end-July 2021, Inari raised about RM1.03bil through a private placement following the issuance of 333 million new shares at RM3.10 per share.
The group plans to utilise the proceeds for potential capital expenditure, acquisition and investment.
As for Maybank IB Research, it has increased Inari’s net profit by 4% to 6% for FY22 and FY23 estimates after adjusting its FY21 financials.
In the near term, the research house said its earnings growth forecasts are still largely driven by the strong RF segment, and stable contributions from the optoelectronic segment.