Inari Amertron Berhad (Inari) has outlined its growth strategy following its fourth-quarter financial results for FY24. Analysts at MIDF have maintained a NEUTRAL recommendation on the company, with a target price set at RM3.25, reflecting cautious optimism as Inari navigates the evolving semiconductor landscape.

The company reported a 22.1% year-on-year increase in normalised earnings for 4QFY24, amounting to RM59.5 million, largely due to higher loading volumes in its radio frequency (RF) and optoelectronics segments. Despite this positive performance, the cumulative normalised earnings for FY24 showed a slight contraction of 1.9% year-on-year, totalling RM302.1 million. This decline in profit margins was primarily due to higher electricity costs and the introduction of lower-margin products. Management anticipates that profit margins will stabilise between 20% to 25% in the near term, with the lower range expected to prevail until volume loading improves.

The RF business remains a key driver for Inari, contributing 61% to total revenue, which increased by 12.9% year-on-year to RM902 million. The optoelectronics segment also saw revenue growth of 9.2% year-on-year, reaching RM488 million. Analysts expect this revenue distribution to continue as Inari ramps up production for the anticipated launch of a new AI-enabled flagship phone, which is projected to drive higher average selling prices due to increased chip density.

In addition to its core RF business, Inari is making strides in its non-RF segments, including memory modules, higher power LEDs, Edge AI packaging, optoelectronics, power management, and sensors/optocouplers. The company invested RM181 million in capital expenditures for FY24, with a planned reduction to RM150 million for FY25. Research and development expenses were RM17 million, with a planned increase to RM20 million in FY25 to support advancements in packaging technology and autonomous manufacturing.

In response to intermittent electricity supply issues impacting operations, Inari is integrating solar power into its facilities as part of its environmental, social, and governance (ESG) efforts. Additionally, the company is establishing a RM10 million power plant to support its wafer processing business.