PETALING JAYA: Inari Amertron Bhd
is expected to enter a recovery phase in the financial year ending June 2027 (FY27), with stronger radio-frequency (RF) volumes and rising contributions from silicon photonics and advanced semiconductor packaging providing the main earnings drivers, analysts say.
CIMB Research said the recovery in RF volumes should be supported by new design wins, while Inari Semiconductor Lab (ISL) is emerging as a structural growth driver amid rising demand for silicon photonics used in artificial intelligence (AI) data centre interconnects.
“We raise our FY27 to FY28 earnings per share (EPS) forecasts by 5% to 6% to reflect higher contributions from the ISL and RF segments,” the research house said in a report last Friday.
CIMB Research expects Inari’s core net profit to grow 32% over FY27 to FY28, driven by a recovery in RF volumes and stronger contributions from its datacom segment.
It raised the target price (TP) to RM2.85 from RM2.50 and kept a “buy” call.
Apex Research remained more cautious, retaining a “hold” recommendation and RM2.11 TP following Inari’s FY26 results.
The research house said the FY26 core net profit of RM187.5mil, down 26% year-on-year (y-o-y), was broadly in line with expectations, accounting for 102.6% of its forecast and 96% of consensus.
“We remain cautiously constructive into FY27, underpinned by an expanding photonics and advanced packaging pipeline riding the generative AI cycle, alongside recovery from the Philippines fire disruption and a normalisation in RF loading volumes,” the research house said.
CIMB Research pointed out that signs of an RF recovery were already visible in the fourth quarter ended June 30 when revenue rose 8.7% quarter-on-quarter, supported by higher loading volumes in both RF and optoelectronics.
The research outfit attributed the improvement in RF to new design wins, noting that Inari had secured at least four RF socket wins for a new flagship smartphone due for launch in September 2026, compared with one socket for the current generation.
CIMB Research expects blended RF utilisation to improve to 75% in FY27 from 55% in FY26, while longer testing times for value-added processes such as wafer probing and testing could also support margins.
Beyond FY27, Inari is targeting as many as nine RF sockets for new smartphone launches in FY28, while also planning to introduce double-sided moulding for next-generation RF modules.
The recovery comes after a difficult FY26, during which Inari’s revenue fell 12.2% y-o-y to RM1.19bil while core net profit declined 26% to about RM190mil, according to CIMB Research.
The weaker performance was primarily due to lower RF contributions, with the research house noting a 22% decline in RF revenue, partly because a key customer shifted its product mix from mid- and low-band filters towards higher-band RF filters, resulting in lower shipment volumes.
Unfavourable foreign exchange (forex) movements also contributed, with RM24.6mil in forex losses.
At the same time, the company’s longer-term growth prospects are increasingly tied to AI-related applications.
CIMB Research said ISL is entering a multi-year ramp-up, targeting approximately RM200mil in silicon photonics assembly and test revenue in FY27, compared with RM110mil in FY26.
ISL’s revenue could potentially expand by two to four times over FY27 to FY28, supported by demand, capacity expansion in Penang and scalable wafer supply.
The company has allocated RM100mil for ISL expansion to support an existing customer’s production ramp and potentially onboard a second chip-fabrication customer.
Apex Research highlighted the company’s photonics and advanced packaging pipeline as key to its medium-term outlook, while noting that the termination of the proposed Lumileds joint acquisition in April 2026 following objections from the Committee on Foreign Investment in the United States allows management to refocus on its core operations.
The May 2026 fire at Inari’s CK1 plant in the Philippines also weighed on FY26 earnings, with CIMB Research observing that the incident resulted in a RM41.9mil fire- related provision, although unaffected areas at CK1 had resumed operations while CK2 continued to operate normally.
Inari declared a fourth interim dividend of 1.37 sen per share, bringing FY26 total dividends to 4.7 sen, down from 5.5 sen in FY25.
While CIMB Research sees upside from new programmes, additional customers and government incentives under the National Semiconductor Strategy, it flagged smartphone demand, a lack of further RF content wins and a stronger ringgit as risks.
Apex Research similarly identified prolonged weakness in RF loading, forex volatility and delays in restoring full production following the Philippines fire as key risks.
Apex Research said it has retained a “hold” call with a TP of RM2.11 on the counter, “pending further clarity from a quarterly results briefing, given that FY26 was a transitional year and FY27 is expected to mark the turnaround”.
Another analyst with a foreign research firm told StarBiz that she is “prudently optimistic” on Inari, with FY27 likely marking the beginning of a meaningful earnings recovery as RF utilisation improves, new smartphone RF socket wins come through and the silicon photonics business ramps on AI data centre demand.
“We would value Inari at around RM2.60 per share based on roughly 39 times FY27 core forecast EPS, giving moderate upside from the RM2.50 reference price and supporting a ‘buy’/’hold’ borderline, leaning to a ‘buy’ stance for investors willing to take a longer-term view,” said the analyst.
She said the key catalyst for a higher valuation would be evidence that photonics/datacom orders are ramping faster than expected and that RF utilisation is indeed recovering towards 75%.
