Weaker RF loadings expected to hit Inari’s earnings

PETALING JAYA: Given the weaker-than-expected results, earnings forecasts for outsourced semiconductor assembly and test (Osat) player Inari Amertron Bhd for financial year 2025 (FY25), FY26 and FY27 have been cut by 9.9%, 3.4% and 3.3%, respectively, after accounting for lower loadings from the radio-frequency (RF) segment.

In a note, TA Research said after revising the earnings forecasts, it lowered its target price from RM2.48 to RM2.32, based on an unchanged 28 times 2026 earnings and a 3% environmental, social and governance premium.

“We upgrade the stock from ‘sell’ to ‘hold’ following the recent weakness in share price,” it noted. At last look, the share was at RM2.03, down 16 sen.

TA Research said the RF segment is experiencing short-term softness, but the long-term outlook remains positive, supported by the upcoming smartphone replacement cycle driven by accelerating artificial intelligence (AI) adoption.

Meanwhile, new product developments across the optoelectronics, power management, memory, automotive, and edge-AI segments is progressing well, it added.

The acquisition of Lumileds Holding BV remains on track and is expected to be completed by the end of the third quarter of FY26 (3Q26), the research house said.

Inari saw its net profit increase by 113.5% for 1Q26 ended Sept 30, 2025, helped mainly by favourable foreign-exchange movements, although revenue for the period fell 16%.

CIMB Research said that following its earnings revisions, it was downgrading the stock to “hold” from “buy” while raising its target price to RM2.50 from RM2.20, as it rolled forward valuations to end-2026.

“Our target price is based on 27 times price-to-earnings (PE), which remains one standard deviation below the Malaysian Osat sector’s five-year mean,” it said.

The research house noted that the stock has performed well, rising 66% from its year-to-date low on April 9, but it remains 20% below its level at the start of the year.

“Inari offers FY26-FY27 dividend yields of 2.5%-2.9%, supported by a solid balance sheet with RM2.2bil in cash (RM0.57 per share) and zero borrowings as at end-September 2025.”

It said potential catalysts include higher contribution from new programmes, stronger-than-expected smartphone demand recovery, new customer acquisitions, earnings-accretive acquisitions, favourable government incentives and higher dividend payouts.