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INARI

Author: YiStock   |   Latest post: Thu, 6 Dec 2018, 11:36 AM

 

INARI - My Thoughts (5) - YiStock

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image:https://www.youtube.com/watch?v=vXBxUKZJfIs

Iphone "XI" ? (iphone 11)

Expecting an "iphone super cycle" in china? :-))

 

I have written about inari yesterday. https://klse.i3investor.com/blogs/Inari/183804.jsp

Today this kopi-o research i added in latest data. 

Key Observation:

(1) Noticing the average quarter revenue for singapore segment from FY 14 to FY 18: 

RM 157.9 mil --> Rm 199.9 mil -->  Rm 209.9 mil --> Rm 218 mil --> RM 253.4 mil --> RM 256 mil (1 quarter). 

FY 2017 showed high base of growth due to iphone X and causeing excess inventory. 

(2) Based on latest singapore segment revenue, i believe the supply chain excess inventory has returned to normal. This echo with the Apple's inventory and confirmed my previous thought is correct.

(3) Demand for RF has again returned to normal growth. I'm putting revenue to averagely grow in the 5% pace. The explosive growth should only be in 2019 when 5 G kicks in. Worth to note that with higher RF content, the revenue will not jump as significant as the profit, this is a volume game.

(4) Samsung Q3 shipment is the real culprit for inari Q1 FY 2019. It has falled by 13.4% and has resulted in lower volume loading for Iris scanner volume in Inari. Moving forward, Osram will lift this segment. 

(5) Also interesting is the supply chain effect. If you notice FY 16 Q1 & Q2 high base revenue (probably causing excess inventory too in the supply chain) has resulted significant drop in FY 16 Q3 & Q4. The effect has prolonged into FY 17 Q1 & Q2. But leading to higher volume in FY Q3 & Q4 which traditionally should be low season.

All in all, i think inari is doing fine, just supply chain effect. 

 

My Thoughts on Inari RF Business: Bullish!!!

THE Apple Ecosystem

You may have/ or have not heard about the term: Apple "Iphone Ecosystem". The ecosystem is basically a huge user base that apple has created over the past 10 years. To understand it, just imagine Apple is Airasia (of course, should be Tony wanted to be like Tim Cook), you have millions and millions of loyal customers to continue use your product, use your UPGRADED product, to experience all the excitement etc. 

Let see Iphone models launched over the past 10 years:

If you noticed that iphone 5S launched in 2013 is still supported by Apple. More than 5 years. That raises 1 important question: Can competitors offer such durable phones? 

While some media has demonised its longer-phone upgrade-cycle and used it to attack apple, I view it quite positively whereby the huge user carrying old iphone served as "RESERVE BANK" for future iphone models, while Apple continue to build / acquired new user. The phone upgrading cycle is self sustaining. Refer this link:  https://www.statista.com/statistics/606147/iphone-model-device-market-share-worldwide/

 

 

 

As of Oct 2018,

(1) iphone 6S plus and older model around 27.66% (Dec 2017: 54.3%)

(2) Iphone 7/ 7 plus around 33% ( Dec 2017: 32.7%)

(3) Iphone 8/ 8 plus around 22% ( Dec 2017: 7.4%)

(4) iphone X around 14% (Dec 2017: 5.3%)

(5) Iphone Xs/ Xs max around 3.4% 

From above statistic, about 50% of the Iphone 6S plus or older model user has upgraded thier phone.

To be more specific, iphone 6/ 6 Plus/ 6S / 6S Plus users was 41.6% in Dec 2017 and the active user has upgraded thier phones and make the number of 6/ 6 Plus/ 6S / 6S Plus users reduced to 19.1%.

While we see a big jump in iphone 8/ 8plus / iphone X.

To answer the the long pending doubt of iphone getting expensive ? above data show price tag is not really a problem within iphone ecosystem.

 

https://www.businessinsider.my/warren-buffett-apple-iphone-enormously-underpriced-2018-8/?r=US&IR=T

You probably hear people call themself "苹果粉丝“/ "I 疯" . They just love iphone.

So far we did not see "Iphone Super Cycle" as we see in 2014/2015 when big screen iphone 6S/ 6S plus launched. But a gradual progressive one. A good one.

We certainly going to see one when 5G launched. IoT is future. Nobody will be left behind. Part of the reason of super cycle in 2014/2015 could also be due to the use of 4G. 

 

How many Apple product is active in use now?

1.3 BILLION Devices including mac, ipad, iwatch etc

[iphone - 1 Billion https://www.cultofmac.com/465968/iphones-user-base-to-surpass-1-million-units-by-2019/) ]

 

https://www.apple.com/newsroom/2018/02/apple-reports-first-quarter-results/

Don't forget, ALL DEVICES need more RF filters when signal moving in higher frequency. 

Moving towards, more 4G, 4GLTE devices will be sold and eventually 5G will kicks in, the requirement for RF content will be in great to greater level.

Inari increases it RF testers capacity for another 25% for good reason.

https://www.mwrf.com/systems/top-5-rf-technologies-5g-iot

Conclusion:

(1) Iphone expensive? Price is never a problem to iphone itself, you are the problem indeed!

(2) tradewar fear? yes, this is one significant risk. But beyond my control. I have wrote my logic here. https://klse.i3investor.com/blogs/YiStock/164917.jsp

 

Cheers!

YiStock

 

 

 

 

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Labels: INARI

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Chart Stock Name Last Change Volume 
INARI 1.60 -0.01 (0.62%) 878,500 

  2 people like this.
 
unclejoe YiSTock, good job! Samsung and all China Tier 1 Handphone makers are gearing up for their 5G flagship handphone release by either Q1 or Q2 2019.
27/11/2018 4:36 PM
pputeh Thanks YiStock for a detailed write up
27/11/2018 8:27 PM
iamwen Went to AGM today. From what the director said. The RF tester increase around 100++ units from 2017 to 2018 from 700+ unit to near 900 unit this year.
Each tester cost from 1-1.6 million usd. Broadcom is increasing the tester to prepare for future expansion. I think this align with your thought. And hope mi and penta will benefit from such trend which is align of what you write about penta. And also Inari is switching IR scanner to VCSEL to support osram for the company that acquired by osram recently.
27/11/2018 11:08 PM
iamwen And Inari is well diversified to health sensor such as biometric sensor, heart beat sensor at smart watch which is one type of opto electronic as well. Not to forget about mini led. However, this two sector won’t contribute significantly.
27/11/2018 11:14 PM
unclejoe iamwen, thanks a lot! How about the current capacity utilisation rate for both assembly and test?
28/11/2018 6:30 AM
YiStock iamwen, thanks for the great input
28/11/2018 8:16 AM
7210 YiStock, do you think it is still worth to invest in INARI?

INARI had issued bonus shares in 2016, 2017, and april 2018, this had diluted the EPS, ad resulted in high PE.
28/11/2018 3:44 PM
YiStock Inari should have 1 more round of bonus issue 1:2 by end of the year due to the removal of Par value regime change. You can search back 2016 report for the detail.

The share price is adjusted post bonus issue. PE should stay the same.
28/11/2018 4:23 PM
7210 Yistock, many countries now block huawei 5G including NZ. what is your thought?

https://klse.i3investor.com/blogs/kianweiaritcles/184256.jsp
28/11/2018 4:59 PM
YiStock i think they are talking about communication system, not huawei smartphone.
28/11/2018 5:05 PM
unclejoe Inari Q report Briefing, by CIMB and Omighty Capital:

the key highlights

Positive earnings growth for FY 2019
Osram products to contribute 30% in FY 2018 increased to 50% in FY 2020
Flat utilisation for 1Q 2019 and same expectation for 2Q 2019
New products include mini LED, facial recognition chip and health sensor
New products to contribute in 2H 2019
28/11/2018 5:16 PM
YiStock Found the reasoning finally. Also witnessed again how the short seller operate and newsmedia manupulate human's fear and greed

The Evil:
https://www.wsj.com/articles/not-so-big-in-japan-apple-cuts-price-of-i...

The Clue:
https://asia.nikkei.com/Business/Companies/Apple-to-alter-iPhone-sales...
https://www.cultofmac.com/561675/apple-japan-antitrust-rules-iphone/
https://www.japantimes.co.jp/news/2018/07/11/business/corporate-busine...

My thought:
It is a long practice for apple subsidizing japan carrier to capture the biggest market share there.
29/11/2018 08:33
29/11/2018 8:35 AM
YiStock And let listen to what the insider tell:
https://www.macrumors.com/2018/11/28/iphone-xr-best-selling-iphone/
29/11/2018 8:39 AM
YiStock "蘋果產品行銷部副總裁Greg Joswiak在最新專訪中堅稱,iXR上市後就是最暢銷機種。
路透社、CNET報導,蘋果產品行銷部副總裁Greg Joswiak 28日在接受訪問時表示,iPhone XR目前是蘋果「最主流的商品、也是最受歡迎的iPhone」(most mainstream product and our most popular iPhone)。他說,自從iXR上市之後,就一直是最暢銷的iPhone機種。
這跟市場先前傳出的消息不太相符。

https://www.moneydj.com/KMDJ/News/NewsViewer.aspx?a=2834584b-914c-4c14-8586-d92949585f25&c=MB010000
29/11/2018 10:51 AM
unclejoe A lot of fake news in WSJ on Apple Iphone lately. I had terminated the subscription. It is waste of money, I rather spend that on BBC or The Economist.
29/11/2018 10:52 AM
iamwen @unclejoe based on my memory, utilization rate at malaysia factory is around 70% and philippines is 60%, China factory is around 70% if i didn't remember wrongly
29/11/2018 12:04 PM
unclejoe iamwen, Thanks a lot! 70% utilisation rate is good for the enlarge capacity. This is inline with UOB's OCT report (see below:The loading volume for Inari’s RF segment is good in October, with utilisation rate of the testing capacity at 65-70% and the assembly capacity at >90%). Current quarter loading is higher than Q1'19.
29/11/2018 12:26 PM
iamwen http://www.inariberhad.com/img/ir/8th%20AGM%20minutes%20(Key%20Matters%20Discussed).pdf
27/12/2018 3:49 PM
iamwen Inari now upload the matter discussed in AGM to their website, and i think it is very good for investor which not able to attend the AGM
27/12/2018 3:49 PM


 

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