Inari eyes RM1b revenue within 3 years

Inari eyes RM1b revenue within 3 years
Business & Markets 2013
Written by Surindran Murugiah of theedgemalaysia.com
Monday, 19 August 2013 09:57

KUALA LUMPUR: Inari Amertron Bhd, which is targeting RM1 billion in revenue within the next three years, is hoping to increase its exposure to new customers in its wireless packaging and radio frequency (RF) testing segment.

Vice-chairman Dr Tan Seng Chuan said Inari has geared up for the next stage through the recent successful acquisition of Amertron Inc (Global) Ltd.

With the newly acquired Amertron group on board, the company has increased its size and presence in the global semiconductor industry and gained immediate entry into the industry's optoelectronics segment, he said in an email interview.

Tan also said the electronics manufacturing services (EMS) sector has a wide scope, from contract manufacturing of semiconductor components like integrated circuits to the assembly of household appliances and electronic gadgets.

"Inari Amertron's core focus since inception has been in the supply of back-end wafer processing, integrated circuit package assembly, and RF testing services in the wireless microwave telecommunications segment of the global semiconductor industry," he said.

Tan said the global smart mobile devices market was expected to grow exponentially for the years to come, with the International Data Corp (IDC) recently forecasting global smartphones and tablets to see year-on-year growth of 32.7% and 58.7% respectively this year.

"In view of the industry trend, we remain highly confident of reaping significant growth prospects in our wireless segment.

"Over the longer term, the EMS sector is expected to be driven by higher value-added activities, and dominated by the larger EMS companies with global networks and diverse skill sets."

Tan said the company's international operations are now strategically located in Asia, with manufacturing facilities in Malaysia, China as well as the Philippines.

"At the same time, the enlarged group's workforce has increased from 1,800 to 4,300 globally, positioning us well to increase the group's capacity to better serve our existing customers as well as setting the platform to cater to a larger clientele," he said.

In Malaysia, Inari's operations are in Penang and Johor. It also has operations in Kunsha, China, and Clark Field and Paranaque in the Philippines.

Tan said the Penang plant primarily serves the package assembly and RF testing for the wireless telecommunications segment, with the recent addition of a plant in Iskandar Malaysia, Johor, to manufacture fibre optics components.

"On the other hand, our plants in the Philippines and China are focused on the optoelectronics segment which includes fibre optics components, optical sensors and opto-couplers, LED displays, and packaging of integrated circuits," he said.

The enlarged Inari Amertron group has 47,000 sq m of production floor space, with an approximately 80% utilisation rate, Tan said. Its "expansion" in the immediate term will be in the form of integration and enhancement of the entire value chain to streamline technologies and optimise resource sharing activities.

Tan said the company was in talks with new and existing customers for the introduction of new products.

"However, due to confidentiality we are not at liberty to disclose their names."

On its finances, Tan said the company's performance had tracked the expansion of its operations over the years.

He said the group's revenue (excluding Amertron's) has increased from RM100.2 million for its 2008 financial year ended June 30 (FY08) to RM180.8 million for FY12, recording 16% growth on a compound annual growth rate basis (CAGR).

More significantly, its net profit has expanded at a quicker pace of expansion of 25% CAGR, from RM7.9 million for FY08 to RM19.3 million for FY12, he said.

"In fact, for the nine months ended March 31, 2013, we have already exceeded our bottom line performance in FY12, posting net profit of RM28.9 million on revenue of RM173.5 million.

"With the recent acquisition of Amertron, which has an annual revenue of approximately USS100 million (RM328 million), our current combined revenue is around RM600 million."

On challenges faced by the company, Tan said being an export-oriented entity, where more than 90% of its pricing is quoted in US dollars, Inari had to constantly monitor and mitigate the effects of the fluctuating ringgit against the dollar.

He added that attracting and retaining skilled labour was an ongoing challenge.

"All things considered, Inari has undergone and met the challenges of the tough economic cycles since inception in 2006, including the major 2008/2009 financial crisis.

"We believe that our experience from being able to grow through these difficult periods will enable Inari Amertron to continue to make a significant impact in the global EMS sector, going forward," he said.



This article first appeared in The Edge Financial Daily, on August 19, 2013.