STOCK FOCUS OF THE DAY
Inari Amertron: Strong growth lies ahead BUY
We reiterate BUY on Inari Amertron (Inari) and raise our bonus-adjusted fair value from RM1.87/share to RM2.50/share. We are pegging our fair value to a higher CY19F FD PE of 20x, as its recent capacity expansions put it in a better position to win new jobs and pose greater upside risks to our earnings projection. In addition, we have revised upwards our FY18F-FY19F profit forecasts by 10% and FY20F’s by 33% to reflect higher expected orders of LED and laser components from a German customer.
We came away with a visit to Inari’s P21 plant learning that its recently available space is ripe for production ramp-up in 1HFY19 (3–6 months’ time). In particular, the new space will be utilised for the production of new laser and LED components. Applications of the laser devices are mostly in smartphones, while the LED components will likely be used for billboards and other public display panels.
The revenue potential of these new products is substantial. To give some context, the two segments, taken in isolation, could be more sizeable than the group’s radio frequency (RF) business if matured (but would likely take 2–3 years).
Others:
Malaysian Pacific Industries: Earnings to pick up in 4QFY18F BUY
Tan Chong Motor: Ends streak of losses HOLD
QUICK TAKE
Plantation Sector: News flow for week 14 – 18 May NEUTRAL
RETAIL RESEARCH
Stocks On Radar: Pentamaster, N2N Connect, Dagang NeXchange, IQ Group
ECONOMIC HIGHLIGHT
Japan: Expect BoJ to remain muted on normalization
NEWS HIGHLIGHTS
NTPM: To spend RM50mil on ex¬pan¬sion
Kerjaya Prospek Group: Chairman to inject property arm in GSB?
KKB Engineering: O&G unit eyes three more fabrication contracts
Vizione Holdings: Eyes new govt’s affordable housing projects
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