PETALING JAYA: It will be a testing year for Inari Amertron Bhd
as near-term headwinds cloud earnings visibility, even as the company positions itself for a structurally stronger growth phase, says Kenanga Research.
Management has acknowledged that the year ahead would be defined by a confluence of challenges, including the ongoing transition in radio frequency (RF) assembly, foreign exchange volatility and tightening substrate and material supply linked to the broader artificial intelligence (AI)-driven semiconductor upcycle.
However, in the longer term, Kenanga Research said the management continued to position and project opto-electronics as the next growth engine into financial year 2027 (FY270 to FY28), underpinned by AI-led transceiver demand.
“Reflecting the second quarter (2Q26) result performance, we cut our FY26-FY27 net profit forecasts by 16% and 1% and lower our target price to RM2.05 (from RM2.20) on an unchanged 2026 price earnings ratio of 29.3 times, while maintaining ‘outperform’,” it said.
The research house pointed out that the near-term weakness lay in Inari’s core RF segment, which still accounts for 61% of group revenue.
The softer first half performance – with revenue declining 21% year-on-year – was largely attributed to the loss of certain mid- and low-band assembly scope.
Unlike wafer processing and testing, which remain largely stable, assembly carries higher material content and margin sensitivity, amplifying the impact of this shift.
“Looking ahead, management is cautiously more constructive into the next premium smartphone cycle (around September), citing a likely content normalisation on the next design, with mid and high-band content potentially returning – supporting a rebound in assembly contribution from current trough levels,” it added.
“Beyond FY26, however, the narrative shifts to opto-electronics, which is increasingly being positioned as the group’s next growth engine, underpinned by rising demand for AI-driven datacentre transceivers.
“ChipFab volumes are expected to double from FY27, lifting opto-electronics’ revenue contribution from roughly 30% currently to as high as 38% by FY27–FY28,” it added.
This transition will gradually rebalance Inari’s revenue mix, with RF’s share projected to ease to about 55% over the same period, according to the research house.
The proposed Lumileds acquisition remained on track for completion by end-3Q26, pending regulatory approvals from the United States and Europe.
