DEVELOPMENT & VIEW

• A timely acquisition? We maintain our NEUTRAL recommendations on Inari with an unchanged target price of RM2.13 post management’s briefing on the joint acquisition of Lumiled. Management reiterates that Lumiled’s turnaround plan will originate from Sanan given its majority stake as well as its track record in the optoelectronic business. While there is no explicit guidance on the potential financial impact of the acquisition to Inari, we deduce that the acquisition will lead to a more balanced portfolio between its RF and non-RF businesses. However, specified on the expectation that the profit margin for RF is healthier, we expect some contraction in the group profit margin. On separate note, the acquisition could be a timely one, based on the latest global forecast for the optoelectronics business, the segment should grow by approximately +3% in 2026 following a contraction of -1.1%yoy anticipated for 2025. Meanwhile, on a medium to long term horizon, the group is anticipating technology transfer from Sanan to bring Inari up the semiconductor value chain. All factors considered, we are keeping our earnings estimates unchanged at this juncture, pending the finalisation of the deal at 1QCY26.
• Riding on Sanan. It appears that Sanan will make the decision the around plan for Lumiled while Inari’s role will be constrained to the assembly and testing portion of the business. Some of Sanan’s notable development this year includes business win on Samsung’s microLED smartwatch chips as well as completion of USD3.2b Silicon Carbide wafer factory with its Swiss peer STMicroelectronic in Chongqing.
• A more balanced portfolio. While there is no explicit guidance on the financial implication on the joint acquisition of Lumiled, we deduced that the acquisition would lead to a more balanced portfolio for Inari. For context, the RF business segment made up 66% of the group’s revenue for 9MFY25. This is followed by Optoelectronic business segment at 28% while the generic segment will make up the balance 6%. We anticipate that should Inari take up half of the assembly and testing portion of the business of Lumiled, the revenue contribution for the optoelectronics segment should ballooned to about 44% of total revenue while the RF business segment would go down to slightly over 51%.
• Minimal improvement in worldwide optoelectronic business in 2026. The World Semiconductor Trade Statistics has recently revised its forecast for 2025 and 2026. Based on the new forecast, the optoelectronic business is expected to contract by -1.1%yoy in 2025 before growing by +2.8%yoy in 2026. Thus, we think that the acquisition could be timely as the M&A is expected to be completed by 1QCY26.

INVESTMENT STATISTICS

Source: Company, MBSBR

SHARE PRICE CHART

The share price chart shows the stock performance from August 2024 to July 2025. The last price noted is 1.99. The high for the period was 3.60 and the low was 1.45. Volume data is also represented on the chart.