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HLIB Research maintains Buy on Inari, ups target price to RM3.41

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HLIB Research maintains Buy on Inari, ups target price to RM3.41 Empty HLIB Research maintains Buy on Inari, ups target price to RM3.41

Post by Cals Tue 08 Jul 2014, 08:40

HLIB Research maintains Buy on Inari, ups target price to RM3.41
Business & Markets 2014
Written by theedgemalaysia.com   
Monday, 07 July 2014 08:50

KUALA LUMPUR (July 7): Hong Leong IB Research has maintained its Buy rating on Inari Amertron Bhd with a higher target price of RM3.41 (from RM3.09) after the company proposed a renounceable right issue of up to 88.8 million new shares together with up to 88.8 million free detachable warrants.
Under the proposal, every 8 ordinary Inari shares are entitled with 1 right share at an indicative price of RM1.50 sweetened with 1 warrant for every 1 rights share subscribed.
The 5-year American-style warrant’s indicative exercise price is RM2.00 on the basis of 1 for 1 new Inari share.
The right issue proceeds will be allocated for CAPEX to expand production capacity, repayment of bank borrowings and working capital.
In a note Monday, the research house said the exact details/breakdown of the utilization of Warrant proceeds have not been determined.
“We are not surprise that Inari is embarking on an aggressive expansion plan as this was highlighted in previous report.
“Imputed a more aggressive capacity expansion plan for RF segment in FY15. As a result, FY15-16 core net profits were raised by 8.7% and 7.6%, respectively while FY14 was unchanged.
“Reiterate Buy after raising target price by 10.4% from RM3.09 to RM3.41 chiefly to reflect the upward earnings revision. Fair value is pegged to unchanged 15.1x CY15 P/E,” it said.
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