Hong Leong Investment Bank has reiterated a “BUY” recommendation for Inari Amertron Bhd with an unchanged trading price of RM4.28, pegged to 40x of CY22 EPS. We strongly believe that iPhone 5G supercycle will continue while the optoelectronics division is expected to improve with more customer diversifications and partnerships.
Inari entered into a non-binding MoU with China Fortune-Tech Capital (CFTC) with the intention to set up a JV in China to carry out OSAT manufacturing and related businesses primarily for the China market. The JV shall focus exclusively on the China market and can only provide OSAT services within China
The investment bank said that the MoU will bring together the strengths of both parties and leverage each other’s expertise through knowledge transfer from Inari to the JV while Inari will draw from CFTC’s local leadership and guidance in the operation of the JV and its plants.
It said that the MoU represents an opportunity and commitment to foster a business relationship with CFTC with a view to collaborate and expand the OSAT business of Inari and ATK under the JV in China and thus enable Inari to expand its operations in China and to increase its revenue and earnings stream.
HLIB’s view this development positively as the JV will reinvigorate ATK; the China semiconductor market will be vibrantly supported by over USD150 million investment from the government from 2014 through 2030, and CFTC is a strong partner which in turn will lower the risk of doing business in China
