Wednesday 19 March 2014

Inari Breaks Its Ceiling Again!

Today I read a report that Affin Research has raised Inari's target price to RM3.33! This means there is still potential 50% upside from RM2.20 currently.

Just less than a month ago, Affin has just revised its target price for Inari upwards to RM2.55.

Anyway, the target price of RM2.55 is for year 2014, while RM3.33 is for year 2015, base on PE ratio of 15x.

       Inari: 70sen in June13

In the middle of last year, Inari's share price appreciated more than 100% in 6 months time. Some investors may think that the rise was over just because the pace was too fast. However, it went up another 200% from there in 8 months.

So, rather than looking at the chart alone, investors should roughly know the value of the stock before buy and sell.

It is reported that the newly acquired Amertron will post stronger revenue and profit margin in FY2014 which ends in June 2014.

Besides, Amertron's China operation was qualified by a leading smartphone player for infrared product in Feb14. If it successfully get the contract, then it will certainly be a big boost to Inari.

Inari plans a capex allocation of as much as RM80mil for its FY15 mainly to cater for higher production in RF & fiber optics segment. Its capex for FY12, FY13 & FY14 are RM20mil, RM40mil & RM40mil respectively.

I think the doubling in capex shows the medium term growth potential that Inari has. The management is unlikely to build new factory and buy new machines if they are not really confident that they will need them.

The capex will include a new plant in Penang, as well as expansion of existing facilities in Penang and the Phillipines.

As a result, Inari's share price shoots over its ceiling today.

I think I'd better think of topping up Inari shares seriously, rather than just hold and watch...

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