PETALING JAYA: Inari Amertron Bhd remains on solid financial standing with a robust net cash position of RM1.9bil.

       The group’s cash pile was boosted by its recent private placement in July, which raised RM1bil, said TA Securities in its latest report.

       For the first quarter of financial year 2022 (Q1 of FY22), Inari reported a record-high quarterly revenue and core net profit of RM431.1mil and RM105.6mil, respectively.

       The research house said “earnings came within ours and consensus full-year estimates at 27.8% and 27.4%, respectively.”

       The group also declared a first interim dividend of 2.8 sen compared with two sen in Q1of FY21.

       On Inari’s outlook, TA Securities remained positive on the group’s growth prospects with its core radio frequency (RF) segment poised to continue benefitting from content gains alongside the nascent 5G smartphone upgrade cycle.

       “We also view upside for Inari in the near-to-medium term from ongoing customer diversification efforts and potential merger and acquisition or large-scale expansion, supported by its robust net cash position of RM1.9bil as at end-Q1 of FY22,” it noted.

       This includes the recent memorandum of understanding (MoU) Inari entered into with China Fortune-Tech Capital Co Ltd (CFTC) to form a joint-venture company for the purpose of carrying out outsourced semiconductor assembly and test manufacturing and related businesses in China.

       TA Securities has also maintained a “buy” recommendation on Inari and raised its target price (TP) to RM4.55 from RM4.25 previously.

       “We take the opportunity to ascribe a higher price earnings multiple of 42.0 times against calendar year 2022 earnings per share.

       “The richer multiple we ascribe is premised on the group’s promising traction with its merger and acquisition (M&A) ambitions, as evident by its recent MoU with CFTC.”

       TA Securities also continues to like Inari for its growth prospects catalysed by the 5G theme, above industry average margins, and robust balance sheet.

       Maybank Investment Bank Research (Maybank IB) said Inari’s balance sheet has strengthened considerably post-completion of the recent private placement exercise.

       It has also pared down all debts, and excluding about RM300mil outlay for the CFTC venture should it materialise, the group can still sit comfortably on a net cash balance of RM1.5bil or 43 sen per share.

       Maybank IB, which is reiterating a “buy” call on Inari, said “with a sizeable war chest for potential M&As and a strong long-term growth outlook for its RF segment, we opine that it is primed and well-positioned to capitalise on the industry upcycle.”

       While the group’s core net profit in Q1 of FY22 was strong, the brokerage said it came in within expectations at 29% of Maybank IB and the street’s FY22 core earnings estimates.

       “At this juncture, we maintain our buy call and earnings forecast,” said the research house.

       It has also raised Inari’s TP by 5% to RM4.72.