For the first quarter of its 2020 financial year, Inari recorded a core profit of RM46mil, which was 11% lower year-on-year. It accounted for 19% of Affin Hwang's and consensus full-year estimates.
However, the research house said the earnings were within expectations as they should improve in 2HFY20 with increased sales of 5G-related filters.
Ebitda margin was relatively stable at 23.9%. Lower contribution from the higher-margin sensor business might have negated margins, which was likely made up by the 1.7% y-o-y depreciation of the ringgit versus the US dollar.
"We maintain our BUY rating with a higher target price of RM2.14 based on a higher target PE multiple of 24x or +1SD above its 5-year mean (previously 20x) on CY20E EPS as we take into account the improved investor sentiment and appetite for the sector," Affin Hwang said.