Inari Amertron results below expectations, downgraded to 'Market Perform'

Malaysian Reserve

21-05-2025

INARI Amertron Bhd has been downgraded to 'Market Perform' from 'Out Perform' at Kenanga Research after releasing its latest quarterly results which saw a drop in both its revenue and net profit.
In a note released today, Kenanga Research said Inari's first nine months results came in below expectations, primarily due to weaker demand in its radio frequency (RF) and opto-electronics segments.
It said the Group anticipated continued growth in the data communications segment, but demand for bread-and-butter smartphones and other semiconductor products is expected to stay muted.
'Post US 'liberation day', it is becoming evident to us that margin pressures are likely to persist amid ongoing forex volatility and US-China tariff war uncertainties. Incorporating a more cautious outlook, we trim FY25F/FY26F earnings forecasts by 8%/16%,' it said.
The research house has lowered the counter's 52-week target price (TP) to RM2.00 from RM2.39.
Inari has 12 'Buy', seven 'Hold' and three 'Sell' calls among the analysts tracked by Bloomberg, with a consensus TP of RM2.26.
In its exchange filing yesterday, Inari said its net profit for the first nine months ended March 31, 2025 was down 30.9% to RM169.6 million on a revenue of RM1.045 billion, down 11.3%.
It said the revenue decrease was mainly due to comparatively lower volume loading of products in all business segments and product mix.
The lower profit was attributed to lower volume loading, unfavorable movement in foreign exchange rates, and start up loss of RM15.70 million at China subsidiary during the period. Excluding China subsidiary losses, the decrease will be 27.0%.
For the third quarter (3Q25), its net profit plunged 24.8% to RM55.5 million on a revenue of RM308.3 million which was 11.3% lower compared to the same period.
In the company's outlook, Kenanga Research said Inari anticipates selective growth within the semiconductor industry, driven by the accelerating adoption of generative AI across various sectors.
The group also expects robust performance from the data communications segment – which contributed approximately 14% of 9MFY25 revenue – while demand for smartphones (68% of sales) and other semiconductor products is likely to remain subdued.
'Margin pressures are expected to persist, stemming from forex volatility and ongoing US-China tariff negotiations, which continue to disrupt supply chains and inflate cost structures,' according to the report.
At 9.40am today, Inari shares were down 5% or 10 sen to RM1.92 (52-week high/low: RM4.02/RM1.42). — TMR