Inari Amertron optimistic about growth prospects

by **Cals** Wed 16 Oct 2013, 13:46

Business & Markets 2013

Written by Charles Yong of theedgemalaysia.com

Wednesday, 16 October 2013 09:50

KUALA LUMPUR: Inari Amertron Bhd, a provider of semiconductor packaging services, is confident about growing into a larger player in the US$150 billion (RM477 billion) to US$400 billion global electronics manufacturing services (EMS) industry.

“We have successfully expanded the group’s footprint as a major EMS player in the region, with our services forming a crucial part of the global semiconductor industry value chain,” said vice-chairman Tan Seng Chuan.

Inari’s two main business segments, radio frequency (RF) mobile products and optical fibre, are fast growing markets.

In a report published in July, TechNavio, a technology research and advisory company, forecast the global RF components market to grow at a compound annual growth rate of 12.5% from 2012 to 2016.

Avago Technologies, the global leader in the RF space, contributed 100% of the group’s RF product segment in its 2013 financial year (FY13). About 90% of Inari’s entire revenue is derived from the sales of RF products.

These products are used in wireless telecommunications devices, such as smartphones, cellular phones, 3G devices and wireless computing peripherals.

The group is also optimistic about the prospects of its new optical fibre business, which hinges on the proliferation of heavier data uploads and downloads that will lead to even higher demand for faster connections.

Inari ventured into fibre optics this June with its acquisition of Amertron, an optoelectronics manufacturer based in the Philippines, as part of its growth and diversification strategy.

Tan said the company will continue its strategy of organic expansion and acquisitions.

“The outlook for this financial year is quite good,” he added. “Barring unforeseen circumstances, we will do as well as the last financial year if not better.”

Inari’s net profit for FY13 increased 111% to RM41.24 million. After including Amertron’s figures, the current financial year’s revenue will be as much as three times last year’s, Tan said.

It was reported that Inari Amertron is targeting RM1 billion in revenue within the next three years, almost a five-fold growth over FY13’s revenue of RM241.1 million.

It recently acquired a new optical fibre plant in Iskandar Malaysia and increased floor capacity at its Penang RF plant by 20%, Affin Securities analyst Kevin Low told The Edge Financial Daily.

Inari Amertron is operating at 80% to 85% capacity for most of its major products.

Low said possible risks to the company include a cyclical downturn or an economic slump that may depress global sales of consumer electronics.

On Sept 30, Affin Research maintained its “buy” call on Inari Amertron for a target price of RM1.70.

The company’s share price surged 8.5% from 94 sen at the start of that day to RM1.02 at its close. The stock closed at RM1.23 on Monday.

This article first appeared in The Edge Financial Daily, on October 16, 2013.