Company Update � Inari Amertron (BUY,
maintain)
- On track for production capacity expansion
We expect Inari to post its fourth consecutive year
of record earnings in FY14E largely due to the higher demand for the Radio
Frequency (RF) product from its key customer, Avago, as well as margin
enhancement from Amertron. Meanwhile, management has identified and plans to
acquire a new plant in Penang. This will house the additional production
volume in the RF segment. Management also shared with us its plans to expand
its existing Clark facility to accommodate the higher demand for its
opto-coupler products. We are keeping our earnings forecasts unchanged
pending further management guidance on its expansion plan. Further margin
enhancement from Amertron and higher-than-expected production volume would
likely provide upside to the FY15E EPS. We reaffirm our BUY rating with an
unchanged TP of RM4.26, based on an unchanged PE target of 18x on the fully
diluted CY15
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