Inari’s revenue to remain intact despite iPhone 8’s slow response
KUCHING: Expectations vis-àvis Inari Amertron Bhd’s (Inari) radio frequency ( RF) testing revenue remain intact, analysts say, despite reports of lukewarm responses to Apple’s iPhone 8 and iPhone 8 Plus.
AmInvestment Bank Bhd (AmInvestment Bank) highlighted that over the weekend, there were numerous reports, including from Reuters and The Guardian, saying that Apple’s launch of iPhone 8 and 8 Plus around the world received lukewarm response relative to previous launches.
“According to The Guardian, hundreds of people would usually gather outside Apple’s store in Sydney to welcome new iPhone launches.
“However, there were fewer than 30 people in queue before the store opened on Friday,” the research firm said.
Concurring with Fox Business and Reuters, AmInvestment Bank believed this indicates that consumers are holding back purchase for iPhone X, which is scheduled for release this November.
The research firm noted that this was also verified by an article from Quartz, which said that most reviewers recommended waiting for iPhone X.
“In other words, we believe expectations vis-à-vis Inari’s RF testing revenue remain intact despite the reports,” it said.
“On another note, several online reviews pointed out that feature/ functionality upgrades of the three new models, compared to iPhone 7 and 7 Plus (the Sevens), are minimal.
“While this is true to a certain extent, the new iPhone models offer significant upgrades for models before the Sevens.”
AmInvestment Bank pointed out that data from David Smith, an influential independent iOS developer, shows that models prior to the Sevens accounted for more than 80 per cent of iPhone device share as of September 22, 2017.
The research firm went on to say that this implies that the triviality of the functionality upgrades has little impact on the demand for the new models, as replacements could still come from the bigger pool (more than 80 per cent) of oldergeneration iPhone users.
In addition, AmInvestment Bank noted that the 6 and 6S models currently occupy the highest percentage of iPhone device share.
“This means that the launch of the anniversary phone (iPhone X) is timely, coinciding with iPhone’s average device age (or replacement cycle) of two to three years,” it said.
All-in, AmInvestment Bank believed the additional model (iPhone X) introduced on top of the two conventional lines, coupled with new features such as wireless charging and TrueDepth camera ( 3D depth sensing capability) would underpin Inari’s earnings growth of 35 per cent in financial year 2018 forecast (FY18F).
However, despite bright prospects, the research firm kept its ‘ hold’ recommendation on Inari as the stock trades near its fair valuation.
The research firm noted that Inari is currently trading at a current year 2018 forecast ( CY18F) price earnings ( PE) of 17-fold versus industry average of 14-fold.