PUBLIC INVESTMENT BANK
PublicInvest Research Company Update
KDN PP17686/03/2013(032117)
Inari Amertron Berhad: Clarifications on Lumileds Deal
Tuesday, August 05, 2025
DESCRIPTION
Leading outsourced semiconductor assembly and test (OSAT) provider to Broadcom’s RF business, which in turn supplies Apple/Samsung for their leading smartphones.
12-Month Target PriceRM2.22
Current PriceRM1.99
Expected Return+11.5%
Previous Target PriceRM2.30
MarketMain
SectorTechnology
Bursa Code0166
Bloomberg TickerINRI MK
Shariah-CompliantYes
SHARE PRICE CHART
Chart data from Mar-25 to Aug-25, range from 1.40 to 2.30.
52 Week Range (RM)1.42 – 3.66
3-Month Average Vol (‘000)14,451.6
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | 6.0 | 11.7 | -14.4 |
| Relative Returns | -2.4 | 1.5 | -16.3 |
KEY STOCK DATA
| Market Capitalisation (RMm) | 7,578.0 |
| No. of Shares (m) | 3,788.9 |
MAJOR SHAREHOLDERS
| % | |
|---|---|
| Insas Bhd | 13.4 |
| EPF | 12.4 |
| KWAP | 10.2 |
Chong Hoe Leong
T 603 2268 3015
F 603 2268 3014
E chonghoeleong@publicinvestbank.com.my
Clarifications on Lumileds Deal
During a recent briefing, management provided further insights into the joint proposed acquisition of Lumileds International. The acquisition is intended to enhance Inari’s market positioning by:- i) gaining access to Lumileds International’s diversified customer base, ii) leveraging on Sanan’s expertise in wafer back-end process to move up the value chain, and iii) targeting up to 75% share of Lumileds International’s LED assembly and testing jobs. Key risks include i) additional capital injection requirements, ii) prolonged gestation period, and iii) a drag on the group’s margin, as LED generally fetches lower margin compared to the radio frequency products. We maintain Neutral call with a revised TP of RM2.22 based on a lower 28x FY26 EPS.
- Financial snapshots of Lumileds International. Two major subsidiaries—Lumileds Malaysia and Lumileds Singapore—posted FY23 PAT of USD49.1m (RM211.3m) and USD36.0m (RM154.8m) respectively. Combined, their FY23 net assets stood at USD579.5m (RM2.5bn). However, the net asset value of the Lumileds International group level had declined to USD193m (RM810.6m) as of 1QFY25, likely due to impairments and operating losses. As the acquisition cost is based on a “zero cash and zero debt” basis, post-acquisition, both receivables and payables will be fully reset.
- Post-acquisition structure. Following completion, the Hong Kong SPV (the acquisition vehicle) will be 74.5%-owned by Sanan and 25.5% by Inari. The SPV will be an associate company of Inari. Its board will consist of 2 representatives from Sanan and 1 from Inari. Major decisions will require 75% approval, while other decisions need a simple majority of 51%. Both parties have agreed to inject USD41m (RM172.2m) for the purpose of working capital and it is expected to support the operations for the next couple of years. Management intends to retain all 2,500 staff at Lumileds’ Penang plant.
- Rationale of the acquisition. Inari aims to secure 25-50% of Lumileds’ LED assembly and testing jobs within the first year, capitalising on its strength in back-end services. Although LED technologies are less advanced, they require stringent testing, which fits Inari’s capabilities. Additionally, Inari plans to leverage on Sanan’s back-end wafer processing strengths to expand its advanced packaging capabilities. The increasing global tariff barriers could open up more opportunities for both partners as Sanan could ride on Inari’s OSAT plant in China to cater for the domestic LED market while the plants in Malaysia and the Philippines will serve the EU and US markets. As LED margin is relatively low compared to its traditional radio frequency products, Inari’s group margin could be dragged lower to mid-teen going forward. Lastly, there are also future plans to list Lumileds International on the Hong Kong Stock Exchange.
KEY FORECAST TABLE
| FYE June (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 1,354.0 | 1,478.7 | 1,384.8 | 1,472.3 | 1,532.8 | 1.2% |
| Gross Profit | 355.0 | 323.7 | 304.7 | 346.0 | 360.2 | 3.6% |
| Pre-tax Profit | 355.8 | 310.1 | 278.8 | 314.3 | 324.0 | 1.5% |
| Core Profit | 323.5 | 310.2 | 259.3 | 292.3 | 301.4 | -1.0% |
| EPS (Sen) | 8.5 | 8.2 | 6.8 | 7.7 | 8.0 | |
| P/E (x) | 23.3 | 24.3 | 29.1 | 25.8 | 25.0 | |
| DPS (Sen) | 8.2 | 7.7 | 6.6 | 7.4 | 7.7 | |
| Dividend Yield | 4.1 | 3.9 | 3.3 | 3.7 | 3.8 |
Source: Company, PublicInvest Research estimates
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE June (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 1,354.0 | 1,478.7 | 1,384.8 | 1,472.3 | 1,532.8 |
| Cost of sales | -999.0 | -1,155.0 | -1,080.2 | -1,126.3 | -1,172.6 |
| Gross Profit | 355.0 | 323.7 | 304.7 | 346.0 | 360.2 |
| Other Gains / (Losses) | 77.1 | 81.1 | 79.1 | 79.5 | 79.2 |
| Administrative expenses | -75.8 | -92.6 | -103.9 | -110.4 | -115.0 |
| Finance Costs | -1.8 | -1.9 | -1.2 | -0.8 | -0.4 |
| Share of profit/(loss) of associates | -0.1 | 1.3 | -0.2 | 0.0 | 0.0 |
| Pre-tax Profit | 355.8 | 310.1 | 278.8 | 314.3 | 324.0 |
| Income Tax | -30.8 | -9.9 | -19.5 | -22.0 | -22.7 |
| Effective Tax Rate (%) | 8.6 | 3.2 | 7.0 | 7.0 | 7.0 |
| Minorities | -1.5 | -0.1 | 0.0 | 0.0 | 0.0 |
| Core Profit | 323.5 | 310.2 | 259.3 | 292.3 | 301.4 |
Growth
| Revenue | Gross Profit | Core Profit | |
|---|---|---|---|
| 2023A | -13% | -24% | -17% |
| 2024A | 9% | -9% | -7% |
| 2025F | -6% | -6% | -14% |
| 2026F | 6% | 14% | 13% |
| 2027F | 4% | 4% | 3% |
BALANCE SHEET DATA
| FYE June (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 509.0 | 779.4 | 800.5 | 811.1 | 811.1 |
| Cash and Cash Equivalents | 1,831.0 | 2,260.7 | 2,271.8 | 2,262.0 | 2,266.4 |
| Receivables, deposits and prepayment | 411.0 | 253.5 | 241.5 | 252.7 | 260.5 |
| Other Assets | 215.7 | 260.4 | 248.7 | 255.9 | 263.2 |
| Total Assets | 2,966.8 | 3,554.1 | 3,562.5 | 3,581.7 | 3,601.1 |
| Payables | 276.1 | 274.7 | 269.6 | 273.8 | 277.8 |
| Borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Deferred tax | 11.5 | 13.4 | 13.4 | 13.4 | 13.4 |
| Other Liabilities | 73.3 | 91.9 | 91.9 | 91.9 | 91.9 |
| Total Liabilities | 360.9 | 379.9 | 374.9 | 379.1 | 383.1 |
| Shareholders’ Equity | 2,605.8 | 3,174.2 | 3,187.6 | 3,202.6 | 3,218.0 |
| Total Equity and Liabilities | 2,966.8 | 3,554.1 | 3,562.5 | 3,581.7 | 3,601.1 |
PER SHARE DATA & RATIOS
| FYE June | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share | 0.8 | 0.8 | 0.8 | 0.9 | 0.9 |
| NTA Per Share | 0.8 | 0.8 | 0.8 | 0.8 | 0.9 |
| EPS (Sen) | 8.5 | 8.2 | 6.8 | 7.7 | 8.0 |
| DPS (Sen) | 8.2 | 7.7 | 6.6 | 7.4 | 7.7 |
| Payout Ratio (%) | 95.9 | 94.5 | 96.2 | 96.2 | 96.2 |
| ROA (%) | 10.9 | 8.7 | 7.3 | 8.2 | 8.4 |
| ROE (%) | 12.4 | 9.8 | 8.1 | 9.1 | 9.4 |
Source: Company, PublicInvest Research estimates
RATING CLASSIFICATION
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