KUALA LUMPUR: MIDF Research has revised downwards Inari Amertron Bhd's earnings estimates for financial year 2023 (FY23) by three per cent as its earnings for the fourth quarter (Q4) came below expectations.
The research firm noted Inari's Q4 normalised earnings fell by 20.7 per cent year-on-year (YoY) to RM69.2 million while revenue declined by seven per cent YoY to RM336.2 million.
However, Inari's full-year earnings for FY22 was stronger than that of FY21.
"The group recorded RM367.9 million (+8.9 per cent YoY) in normalised earnings for FY22.
"Earnings increased primarily due to greater cumulative revenue of RM1.5 billion (+8.3 per cent YoY) as all business segments recorded positive growth, with the radio frequency (RF) business segment continuing to be the leading contributor to revenue growth.
"Nevertheless, the group's FY22 financial performance fell short of both our and the consensus's forecast, accounting for 88 per cent and 94 per cent of full-year FY22 earnings estimates respectively.
"The negative deviation could be attributed to reduced loading volume in the optoelectronics and generic business categories owing to raw material supply restrictions," it said in a report.
MIDF Research added that Inari's performance remained relatively robust and insulated despite continuous global supply chain challenges owing to cautious inventory management.
The firm believes that the group's volume loadings will continue to grow, particularly in the RF market, which is critical for 5G technology adoption.
"We also expect operational profit margins to improve as a result of various cost-cutting and capital expenditure actions," it said.
MIDF Research kept its "Buy" recommendation for the stock with a revised target price of RM3.53 from RM3.65 previously.