Oct 14, 2013

Short-term Buy On Inari

INARI – MYR1.22    Stock Code: 0166  (Bloomberg Code: INRI MK Equity)

inari analysis above: Inari Weekly Chart (click to enlarge)

INARI made a major  weekly Wave 2 low of MYR0.37 (Mar 2013) with grossly oversold and bullish signals. All its positive signals above suggest a strong daily Wave 3 and 5 uptrend. It is likely to break into higher territory, as it breached its key resistance areas in a clear  upward Wave 3 and 5  move. Short-term  BUY  on dips for INARI, with very firm supports and clear upward target areas of MYR1.28, MYR1.45 and MYR1.80. Stop-loss is at MYR0.98.

INARI announced  its  4QFY13 results in August. The group’s profitability rose significantly as revenue surged 61.9%  YoY  to  MYR67.7m  from  MYR41.8m  FY12]  while  profit  before  tax  (PBT)  rose  252.6%  YoY  to MYR13.4m from MYR3.8m  over the same period. The strong rise in profitability was attributed to increased orders from the group’s major customer,  resulting in  greater  utilisation of its  production capacity. Other factors contributing to the  significantly better  bottom line  were  higher trading volume, favourable gold prices and  a strengthening US Dollar.

Going  forward,  INARI  expects  rising  dem and  to  contribute  positively  to  its  outlook,  as  demand  for  smart phones  and tablet computers is  expected to register double-digit growth in the near  term. Furthermore, INARI expects  that  their  recently  completed  acquisition  the Amerton  Group  to  contribute  positively  to  its  financial performance from FY14 onwards.

A check of  Bloomberg consensus reveals that only one research house has coverage of the stock, with a BUY call. The stock is currently trading at a historical  PER of 10.5x  and P/BV  of 3.5x. INARI  has a good indicative 12-month dividend yield of 3.6%.

inari datajpg

Inari  Amertron  Berhad  (INARI)’s  products  and  services  include  back-end  wafer  processing,  package assembly, and RF final testing for the electronic and semiconductor industries. It  also provides services for the wireless communications industry.

by Mayban IB