RHB Research maintains Buy on Inari

KUALA LUMPUR: RHB Research has maintained its Buy call on Inari Amerton with a target price of RM3.82 pegged on a 17.5 times CY15F price per earnings, a 41.5% upside.

In a note on Thursday, the research house said Inari has finalised rights issue pricing at RM1.50 per rights share. 

"The free warrants attached to the rights share are priced at RM2.00 exercise price. We believe the proceeds raised from the rights issue could help to expand its core businesses to propel earnings growth in the medium term," it said.

It added that the exercise would cater for future growth opportunities within its radio frequency integrated circuits segment, as we have highlighted previously that existing capacity is almost fully occupied at an average utilisation rate of over 85%.

"This would entice investors to subscribe for the rights as the warrants will be issued deep in the money. Based on our calculations, Inari’s share price ex-rights and ex-warrants (given that it is deep in the money) would be adjusted to RM2.51 (from its last closing of RM2.70)," it said.

The research house urged investors to subscribe for the cash call as it believed the exercise could help to fund its expansion plans and hence propel earnings growthover the medium term.

"Upon completion of the rights issue and assuming full conversion of the new warrants, Inari’s fully-enlarged share base would increase to 797.7 million,while we would tweak our target price accordingly to RM3.10," it said.

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