CGSI International Research said said it expects the group’s margin to gradually rise by 2026 to 2027.
KUALA LUMPUR: The profit margins for semiconductor company Inari Amertron Bhd
are set to be diluted in the coming few years following new capital expenditure plans to develop advanced packaging solutions, analysts say.
The company is planning on making advanced packaging solutions as it wants to make bigger inroads into the logic and memory segment of the technology sector.
CGS International (CGSI International) Research said it had cut its earnings outlook for the company due to this, noting potentially lower earnings before interest, taxes, depreciation and amortisation margins moving forward.
“We cut our 2025 and 2026 earnings per share forecasts by 19% and 20%, respectively on lower revenue from radio frequency products due to slower-than-expected handset sales growth and lower margins as the group’s new ventures in developing its advanced packaging solutions may result in margin dilution,” CGSI International Research said.
However, the research house said it expects the group’s margin to gradually rise by 2026 to 2027 as a higher percentage of its new businesses may achieve high-volume manufacturing.
It said Inari’s strong net cash position of more than RM2bil will also enable it to support future investments.
“We expect annual capital expenditures to grow to about RM250mil over the 2025 to 2026, compared with the RM180mil in 2024 to fund the new production lines, though this could be partially supported by the government’s new National Semiconductor Strategy initiative,” the research house said.
“These plans form part of the building blocks to develop the full capability needed to assemble or package chips on wafers and interposers, which are largely adopted for artificial intelligence and high-performance computing chips,” the research house said.
CGSI International Research maintained its “hold” call on the stock with a lower target price of RM2.60 based on a lower Gordon growth model derived price.
Inari closed yesterday at RM2.47.
