Inari’s long-term prospects viewed favourably

KUCHING: Inari Amertron Bhd’s (Inari) long-term prospects have been viewed favourably due to its involvement of radio frequency (RF) products and other tech products that are expected to see an increase in demand.

In a report, the research team at AmInvestment Bank Bhd (AmInvestment Bank) continued to like 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 (AR) applications in smartphones, and LED, which rides on the increasing demand for highresolution billboards in shopping malls.

However, it remained cautious on Inari in the short-term amid potential delays in the widespread deployment of 5G due to the US-China trade war.

“Meanwhile, Inari’s 1Q core net profit declined 14 per cent yearon-year (y-o-y) due unfavourable change in product mix and as revenue fell three per cent amid lower sales of optoelectronics and fiber products due to lower Kunshan and Amertron contribution as a result of a slowdown in the automotive and industrial markets, as well as sales decline of irisscanning devices.

However, it pointed out that 1QFY20 core profit and revenue rose by 45 and 17 per cent respectively q-o-q due to higher volume loading particularly that of its RF products, as well as due to favourable product mix.

As for Inari capital expenditure (capex), AmInvesment said Inari’s capex for FY20 is expected to be more focused on improving equipment capabilities to improve lead time.

“Inari has been producing health sensor products to support its Korean customer, although still at a small volume.

“Meanwhile, production of its 2D & 3D facial recognition module is ramping up for an upcoming flagship Korean smartphone. Mini-LED contribution will build up from December 2019 but is also anticipated to not be meaningful in the near-term due to its low volume,” it added.

Overall, AmInvestment retained its ‘hold’ recommendation on Inari.