• Overview. Inari’s 4QFY21 core profit surged 121% yoy and 15% qoq to RM85m, breaking its record high performance achieved in 3QFY21. This was in tandem with strong sales volume for radio frequency (RF) products coupled with higher loading volume in both Optoelectronics and Generic business segment.

• Key highlights. Inari recorded the best-ever EBITDA margin level in its quarterly history where the margin expanded 6.4ppt yoy and 1.9ppt qoq to 31.7% on higher volume loadings from RF products and improved net opex to sales ratio in 4QFY21 at 68.3% (4QFY20: 74.6%; 3QFY21: 70.1%).

• Against estimates: inline. Inari’s FY21 core profit grew 114% to RM324m, primarily on strong contribution from RF business segment. Overall, FY21 core profit was inline with our and consensus’ estimate at 103% and 104% respectively.

• Dividend. A fourth interim DPS of 2.50 sen was declared (4QFY20: 1.10 sen), implying a dividend payout of 95% which brings its total DPS to 11 sen for FY21.

• Outlook. We anticipate Inari’s RF segment to remain strong in FY22 following soaring demand for 5G smartphones amid rapid adoption of 5G technology worldwide.

• Our call. Maintain BUY with TP of RM4.10, pegged at 40x PER on FY22 EPS of 10.3 sen.

Source: BIMB Securities Research - 8 Aug 2021