KUALA LUMPUR: Inari Amertron Bhd is expected to show sustainable performance going into the second quarter (Q2) of 2024, with potential quarter-on-quarter (QoQ) margin improvement on the back of healthy loadings and efficiency management.
RHB Research said Inari's various new projects are progressing according to plan, with new packaging technology and budgeted capex on new plant expansions earmarked for future growth.
The firm also said the company's new Fab 1 factory in China under the Yiwu Semiconductor International Corporation (YSIC) JV is progressing as planned, with one product under the SiP platform currently undergoing the qualification stage.
"Low volume production is expected to start in the third quarter (Q3) of 2024.
"Capacity expansions at Clark, Philippines, and at P34, Penang, are ongoing, with a capex of RM236 million for the financial year 2024 (FY24) to FY25 earmarked for future growth," it said in the note.
Meanwhile, RHB Research said that Inari is guiding for stable loading into Q224 with utilisation of above 90 per cent for radio frequency (RF) to make up for some volume loss in Q124.
It said additional content growth for the new model of flagship smartphones would help sustain revenue for its RF segment.
In addition, RHB Research said Inari's optoelectronic segment is seeing a pick-up in volume loading as well as stabilising yield and production for some of the new packages or products in sensors and optocouplers.
On the generic side, it was noted that demand is expected to be flattish to stable.
"We like the stock for its relatively stickier earnings profile, solid execution, and various yielding diversification strategies. Maintain Buy with a target price of RM3.62," it added.