9 Things You Need to Know About Inari Amertron Bhd Before You Invest

In 2006, Inari Technology Sdn Bhd has begun operations of its first factory in Penang which offers SMT assembly, PCBA and Box-Build Services. They are used to produce satellite TV cards for small OEM customers in Europe. As at December 2006, Inari Technology Sdn Bhd was appointed as the main EMS manufacturer of Avago, a NASDAQ-listed company which supplies a wide range of analog, mixed-signal and optoelectronic components.

Subsequently, on 19 July 2011, Inari Bhd was listed and Inari Technology Sdn Bhd is Inari Bhd’s wholly-owned subsidiary. In 2013, Inari Bhd has acquired Amertron Inc (Global) Ltd which led to a change in its listing name to Inari Amertron Bhd. Fast forward to 2017, Inari Amertron Bhd operates a total of 12 plants located in Malaysia, China and the Philippines. As I write, it is now worth RM 6.26 billion in market capitalization.

Here, I’ll list down 9 key things that you need to know about Inari Amertron Bhd before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: INARI / KLSE: 0166
Market Capitalization: RM 6.26 Billion (15 March 2018)

Share Price: RM 3.06 (15 March 2018)

Industry: Technology

Syariah Compliant: Yes

#2: The Business

Inari Amertron Bhd derives income from 3 key subsidiaries. They include:

  1. Inari Technology Sdn Bhd
    Inari Technology is a leading outsourced semiconductor assembly & test (OSAT) provider to multinational and local electronics product manufacturers in the ASEAN region.  
  2. Ceedtec Sdn Bhd
    In 2012, Inari Bhd has acquired 51% interests in Ceedtec Sdn Bhd for RM 3.60 million. Ceedtec Sdn Bhd is an original design manufacturer of the power supply and testing equipment.   
  3. Amertron Inc. (Global) Ltd
    In 2013, Inari Bhd has acquired 100% stake in Amertron Inc. (Global) Ltd for US$ 32 million or equivalent to RM 101.65 million. Amertron Inc. (Global) Ltd is involved in providing EMS contract services from three manufacturing facilities located in China and the Philippines to semiconductor and optoelectronic industry in Southeast Asia.

#3: Financials

The acquisition of Amertron Inc. (Global) Ltd has substantially impacted the group’s financial performance. Inari Amertron Bhd has reported a substantial hike in sales and profits in 2014 from 2013 as a result of this acquisition. Over the last 4 years, Inari Amertron Bhd has achieved continuous growth in sales and profits.

  1. Revenue has grown from RM 793.7 million in 2014 to RM 1.18 billion in 2017.  
  2. Shareholders’ earnings have increased from RM 99.2 million in 2014 to RM 227.8 million in 2017.  
  3. Inari Amertron Bhd has a 5-Year ROE Average of 28.22% a year. This means it made, on average, RM 28.22 in annual earnings from every RM 100 in shareholders’ equity from 2013 to 2017.


Source: Annual Reports of Inari Amertron Bhd

#4: Balance Sheet Strength

As at 31 December 2017, Inari Amertron Bhd has reported having RM 25.36 million in long-term borrowings. Its debt-to-equity ratio is 2.57%. Hence, it is likened to one who has RM 2.57 in long-term borrowings for every RM 100 he owns.

Also, Inari Amertron Bhd has reported having RM 917.51 million in current assets and RM 304.50 million in current liabilities. Therefore, its current ratio works out to be 3.01 which is similar to a person having savings equivalent to 3 years’ worth of living expenses.

#5: Future Prospects

Here are the key highlights of Inari Amertron Bhd:

RF Business Unit

Inari Amertron Bhd has started the fitting out of Plant 13B phase 1 that adds 60,000 sq. ft. of floor spaces to its original 166,000 sq. ft. facility. These spaces are ready and are fully commissioned. The management is focused on adding another Plant 13B phase 2 with an additional 120,000 sq. ft. by the middle of 2018.

Bonus Issue

On 6 March 2018, Inari Amertron Bhd has proposed to undertake a bonus issue on the basis of 1 Bonus Share for every 2 existing ordinary shares.

#6: Risks

Inari Amertron Bhd has derived 86% of its revenue from 2 major customers:

  1. Customer A: RM 839.0 million.
  2. Customer B: RM 173.5 million.

Thus, Inari Amertron Bhd is overly dependent on them for its future revenue and profits. If Inari Amertron Bhd loses these customers or experienced slow orders from them, Inari Amertron Bhd’s financial results would be negatively affected.

#7: Valuation

As I write, Inari Amertron Bhd is trading at RM 3.08 a share.

Over the last 12 months, Inari Amertron Bhd has made RM 253.79 million in shareholders’ earnings (Q3 2017 to Q2 2018). It has issued a total of 2,033.633 million ordinary shares. Hence, the company has made RM 0.125 in earnings per share. At a current stock price of RM 3.08, its current P/E Ratio works out to be 24.64.

As at 31 December 2017, Inari Amertron Bhd has reported having RM 0.481 in net asset value a unit. Thus, its current P/NAV works out to be 6.40.

Inari Amertron Bhd has been paying out dividends on a quarterly basis. I’ve compiled the amount of dividends per share paid out to its shareholders and its payment date:

Source: Quarterly Reports of Inari Amertron Bhd

Thus, over the last 12 months, Inari Amertron Bhd has paid out a total of RM 0.086 in dividends per share. If it is able to maintain its dividend per share at RM 0.086, its gross dividend yields are expected to be 2.79%.

#8: Investors Relation

For further enquiries or to request for additional investment information on Inari Amertron Bhd’s Investors Relation matters, you may contact:
Telephone:
(604) 645 6618

Website:

http://www.inari-amertron.com/

#9: Major Shareholders

As at 26 September 2017, the substantial shareholders of Inari Amertron Bhd are:

– Dato’ Sri Thong Kok Khee: 20.41%

– Kumpulan Wang Persaraan (Diperbadankan): 7.79%

– Employee Provident Fund Board: 5.12%

If you are just getting started in learning about investing in the Asian Stock Market, we have created a full 15-Video Course for you to help you get up to speed on how to look for great investments in Asia. Click here to find out more.

Ian Tai

Ian Tai is the founder of Bursaking.com.my, a platform that empowers retail investors to build wealth through ownership of fundamentally solid stocks. It is an essential tool that sifts out stocks that grow profits consistently from a database of over 900+ stocks listed mainly in Malaysia. As a Malaysian with close family ties in Singapore, Ian publishes a series of newsletters on how anyone can invest profitability in both countries.

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