Review

• Excluding foreign exchange loss of RM17.7mn, INARI’s 1QFY25 core profit of RM77.4mn came in at 18.6% and 19.5% of ours and consensus’ full-year estimate, respectively. We deem the results to be within expectations as we expect the group to see sequential improvements in the upcoming quarters, underpinned by demand recovery.

• The group declared a 1st interim dividend of 1.0sen/share (1QFY24: 2.2sen/share).

• YoY, 1QFY25's core profit dropped 9.6% to RM77.4mn, despite revenue being 1.1% higher at RM388.0mn. The weaker bottom line was primarily due to higher administrative expenses. Although profitability declined, with the core net profit margin narrowing from 2.4pp YoY to 19.9%, it remained well above the industry average. Meanwhile, the revenue growth was mainly driven by higher loading volume in radio frequency segment.

• QoQ, 1QFY25’s core profit jumped 32.0% to RM77.4mn, while revenue was 16.5% higher at RM388.0mn. The stronger earnings performance was mainly due to higher revenue, driven by increased loading volume in the radio frequency segment.

• It maintained a robust balance sheet with a net cash position of RM2,100.7mn as at end-1QFY25.

Impact

• Maintain FY25 to FY27 earnings forecasts.

Outlook

• The group will continue to focus on strengthening its advanced semiconductor packaging capabilities, recognising its critical role in the future. This effort will also support the expansion of its customer base.

Valuation & Recommendation

• No change to our target price of RM4.10, based on unchanged 33x CY25 earnings and a 3% ESG premium. Reiterate a Buy call on the stock.

Source: TA Research - 28 Nov 2024