KUALA LUMPUR (Nov 18): After posting weaker-than-expected earnings for the first quarter ended Sept 30, 2022 (1QFY2023), Hong Leong Investment Bank (HLIB) Research has downgraded Inari Amertron Bhd to “hold” from “buy”, with a lower target price of RM2.48 from RM3.24 previously.

This was on the back of its core net profit forecasts being revised downward by 11% for FY2023, 20% lower for FY2024, and down by 29% for FY2025.

“Although we strongly believe that the iPhone 5G supercycle will continue, while the optoelectronics division is expected to improve with further customer diversification and more partnerships, the risks and rewards are balanced at the current juncture,” the research house said in a note on Friday (Nov 18).

Net profit was flat at RM106.25 million for 1QFY2023, against RM106.93 million a year earlier, amid comparatively lower loading volume offset by favourable movement in foreign exchange.

Quarterly revenue even dropped 12.55% to RM377 million from RM431.12 million previously.

In view of global economic uncertainties arising from inflation, conflicts and supply chain disruption due to Covid-19 lockdowns, Inari is cautious about growth in its recurring radio frequency and optoelectronics businesses for the rest of FY2023.

It is working on new opportunities coming onshore into Malaysia’s outsourced semiconductor assembly and test ecosystem, while bringing up its new Chinese joint-venture site in Yiwu to begin production in the second half of FY2024.

Inari shares finished down three sen or 1.15% at RM2.58 each on Thursday, bringing the group a market capitalisation of RM9.63 billion.