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BUSINESS • 24/04/2025 04:23 PM

Inari Amertron 'Oversold' -- RHB IB

KUALA LUMPUR, April 24 (Bernama) -- RHB Investment Bank Bhd (RHB IB) believes that Inari Amertron Bhd’s shares are oversold despite the uncertainties caused by the US-China trade war being only temporary.

In a research note today, RHB IB said that with controlled bookings, a sharp short-term increase in orders, and a larger manufacturing relocation outside China, Inari Amertron is expected to benefit over the medium to longer term, as the manufacturing relocation for its US-based customers may not happen in the near term.

The investment bank said the current undervaluation presents a buying opportunity for shares of this well-known outsourced semiconductor assembly and test (OSAT) player.

“Although Inari Amertron’s exposure to the US is only 2.9 per cent based on the financial year of 2024 (FY2024) annual report, the impact (if any) could be higher (20-25 per cent of revenue) due to demand disruptions (higher goods prices, worsened sentiment) if the trade war persists.

“Most of its integrated circuits are not exported directly to the US, so these products may not be subject to direct tariffs,” it added.

However, RHB IB remained cautious and has lowered Inari Amerton’s net profit forecasts for FY2025-2026 by eight per cent and 13 per cent, respectively, due to slower gross revenue growth.

“Despite the earnings cuts, we expect the target price (TP) to rise significantly. Therefore, the stock is upgraded to ‘buy’ as investors should look past the short-term constraints and shift focus to this sector for a cyclical recovery.

“Our TP has been revised down to RM2.45 from RM2.75 following the forecast adjustments,” it added.

Meanwhile, Hong Leong Investment Bank Bhd expects Inari Amertron’s share price to remain sluggish in the near term as the investment bank is still very early into the earnings downgrade cycle.

“Only once clarity on tariff emerges, and earnings downgrades bottom, do we expect the market to shift focus toward underlying fundamentals and turn more constructive on Inari, supported by its sizeable net cash buffer (RM2.2 billion).

“Key downside risks are higher-than-expected tariff rates leading to a sharper decline in smartphone unit sales. We upgraded Inari Amertron to a ‘buy’ call with a revised TP of RM2.10,” it said.

At 2.37 pm, Inari Amertron’s share price fell 3.0 sen to RM1.79 with 8.20 million shares traded.

-- BERNAMA

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