A growth stock with projected 3-year earnings CAGR of 61%.
Provides exposure to the fast-growing smart devices and fibre-optics markets via its partnership with Avago.
Initiate with BUY; MYR4.20 cum-rights TP (17x CY15 PER) offers 30% upside and backed by 2+% net yield in FY15.
Against this backdrop, Inari Amertron’s (Inari) growth trajectory is promising, riding on the growth of its strategic partner, Avago, a key OEM to global electronics players (i.e. Apple, Samsung, LG). As one of Avago’s key electronics manufacturing services (EMS) companies, Inari is well-equipped to ride the wave of growth with core competencies in the packaging, manufacturing and testing of RF chips and fibre-optics transceivers. Its operations are well supported by the Government with matching R&D grants and pioneer status.
Risk/reward ratio is compelling, valuations are undemanding at 12.9x CY15 PER with a PEG of just 0.5x. We see potential upside to earnings on the back of (i) a potential uptick in demand for smart devices and (ii) new manufacturing contract awards. We initiate coverage with a BUY and MYR4.20 cum-rights TP (17x CY15 PER).
Source: Maybank Research - 9 Jul 2014
Provides exposure to the fast-growing smart devices and fibre-optics markets via its partnership with Avago.
Initiate with BUY; MYR4.20 cum-rights TP (17x CY15 PER) offers 30% upside and backed by 2+% net yield in FY15.
Promising new catalysts and growth prospects
Demand for smart devices, adoption of faster cellular network (i.e. from 3G to LTE) and cloud computing activities are on the rise. International Data Corporation (IDC) expects smartphone shipments to grow to 1.8b units in 2018 (2013: 1b units), representing a 5-year CAGR of 12.3%. Global adoption of LTE/LTEA cellular networks remains low. Shifts to faster cellular networks increase the complication and content of radio frequency (RF) chips in smart devices. Meanwhile, Cisco’s forecasts of a >10x jump in global mobile data traffic to 15.9 exabyte (EB)/month by 2018 will prompt higher usage of fibre-optic components to facilitate faster data transmission.Against this backdrop, Inari Amertron’s (Inari) growth trajectory is promising, riding on the growth of its strategic partner, Avago, a key OEM to global electronics players (i.e. Apple, Samsung, LG). As one of Avago’s key electronics manufacturing services (EMS) companies, Inari is well-equipped to ride the wave of growth with core competencies in the packaging, manufacturing and testing of RF chips and fibre-optics transceivers. Its operations are well supported by the Government with matching R&D grants and pioneer status.
Risk/reward ratio is compelling, valuations are undemanding at 12.9x CY15 PER with a PEG of just 0.5x. We see potential upside to earnings on the back of (i) a potential uptick in demand for smart devices and (ii) new manufacturing contract awards. We initiate coverage with a BUY and MYR4.20 cum-rights TP (17x CY15 PER).
Source: Maybank Research - 9 Jul 2014
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