KUALA LUMPUR (May 17): Kenanga Research has maintained its “outperform” rating on Inari Amertron Bhd at RM2.56 with a lower target price (TP) of RM3.30 (from RM4.60) and said Inari reported 3QFY22 core net profit (CNP) of RM89 million (-17.6% q-o-q; +20% y-o-y), bringing 9MFY22 CNP to RM302.6 million (+26.7% y-o-y) which came in within expectations, representing 76% each of both house/street’s forecast.
In a note on Tuesday (May 17), the research house said 3QFY22 revenue inched 5% higher y-o-y as the leading US smartphone brand managed to eke out a 2.2% y-o-y shipment growth while global shipment as a whole declined for the second consecutive quarter.
Kenanga said the growth in the smartphone market will likely remain tepid which is evident by the back-to-back decline in global smartphone shipment in 4QCY21 (-1.8% y-o-y) and 1QCY22 (-8.9% y-o-y).
It said this is also the first time in the past seven quarters that management has toned down its comments in the prospect statement, indicating a “cautiously” positive stance as it braces for a “heavily clouded” outlook.
“We also noticed that the MoU with China Fortune-Tech Capital (CFTC) to expand into the Chinese market had expired on April 17, 2022 and both parties have agreed to extend it for another two months.
“While we are confident of the management’s execution in diversifying into other industries over a longer term, we believe its large exposure to the smartphone segment in the immediate term may not bode well with investor’s appetite.
“Maintain 'outperform' with a lower TP of RM3.30,” it said.