Inari in search growth prospects amid challenges to RF segment
PETALING JAYA: Inari Amertron Bhd is looking for growth beyond its flagship radio frequency (RF) division as the outlook for this is subdued.
Analysts have come out cautious post a briefing on the company's third quarter ended March 31, 2025 (3Q25) performance, which came in below expectations.
Inari's normalised net profit for 3Q25 fell 11.5% year-on-year to RM57.9mil, while revenue was down 11.3% to RM308.3mil. This was due volume loading weakness across all business segments.
Inari Amertron is the biggest semiconductor player locally. It is one of US-based Broadcom Inc's top third-party packaging and testing services providers in the thriving wireless segment.
CIMB Securities Research said during the briefing, Inari indicated a subdued growth outlook for RF content gains tied to next-generation smartphone launches in the second half of 2025.
"Any potential upside in RF value is expected to be driven more by market share gains from competitors and the introduction of new processes, rather than new socket wins.
"We also gather that RF utilisation slipped to around 65% in 3Q25, down from 75% in 2Q25.
Nonetheless, the group expects similar volume loadings in 4Q25," the research firm said in a report.
According to CIMB Research, Inari is targeting financial year 2025 (FY25) revenue of RM1.35bil (based on mid-point guidance), implying flat quarter-on-quarter sales in the final quarter.
Additionally, Inari does not foresee any front-loading activities boosting near-term utilisation, as its key RF customer is maintaining a steady volume loading forecast for the upcoming quarters.
Despite challenges in the RF segment, Inari remains optimistic with growth prospects to be driven by memory module, power management, and automotive MCU testing programmes.
"We expect these initiatives to contribute between RM80mil and RM100mil in revenue, making up about 6% of total FY26 sales. Inari's first memory product has already entered high-volume manufacturing, achieving a high yield rate and improved throughput, which bodes well for future contributions.
"For example, the group expects to raise its memory module production volume by 33% in 4Q25F Additionally, the company is actively working to secure qualifications for new products in the coming quarters, further strengthening its diversification efforts," added the research firm.
It is also working to optimise production at its 55%-owned China-based subsidiary, Yiwu Semiconductor International Corp by expanding its product portfolio to include advanced packaging solutions tailored for the domestic market.
CIMB Research has kept its Buy call and RM2.20 target price on the stock.
On the other hand, Maybank Investment Bank (Maybank IB) Research is maintaining its Hold stance, citing muted near-to-medium term prospects. It said a "significant positive shift in demand is needed for us to re-rate the stock".
The research firm said plans to move up the value chain in its sensor business which should bode well for future prospects.
"Its existing key customer in the segment has plans to aggressively grow into new generic sensor segments and redesignate some China-for-China products to Imari. However, its Yiwu factory has yet to yield positive new product initiative results with management alluding that its facility there may undergo restructuring to enhance yield," said Maybank IB Research, which has a RM2 target price on the stock.
Shares of Inari was trading at RM1.87 at the time of writing, down 13.43% in the past five days.
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