Inari: The Journey Continues

Inari FY14Q3 Financial Result

INARI (RM mil)	FY14Q3	FY14Q2	FY14Q1	FY13Q4	FY13Q3
Revenue	191.8	186.6	191.3	67.6	56.8
PBT	27.2	26.6	22.1	13.5	8.3
PBT%	14.2	14.3	11.6	20.0	14.6
PAT	25.0	24.4	21.0	13.1	12.4
Total Equity	231.1	202.2	176.8	153.4	110.0
Total Assets	461.4	438.8	406.2	366.4	181.3
Trade Receivables	131.8	123.5	121.1	93.0	38.6
Inventories	137.7	126.2	107.4	105.5	24.7
Cash	53.2	60.0	48.9	44.6	31.0
Total Liabilities	231.1	236.9	230.0	213.8	71.3
Trade Payables	118.4	131.2	138.7	120.2	48.0
ST Borrowings	33.0	26.2	19.6	20.4	5.5
LT Borrowings	15.8	16.4	17.8	10.3	13.3
Net Cash Flow	8.8	15.3	4.3	3.8	-9.9
Operation	12.4	11.5	7.2	86.3	20.1
Investment	-30.4	-14.5	-9.6	-112.2	-31.1
Financing	26.9	18.4	6.8	29.7	1.1
EPS	5.19	5.31	4.7	3.69	3.68
Net D/E Ratio	Net cash	Net cash	Net cash	Net cash	Net cash

Inari produces its best ever financial result in its latest FY14Q3. Revenue increases marginally by 2.8% QoQ while PATMI improves by 2.5% QoQ.

The PBT in FY14Q3 includes an ESOS charge of RM2.1mil. Excluding this item, Inari's current quarter PBT will be RM29.3mil, which is 10.1% higher QoQ.

Amertron contributes RM106.8mil of revenue in this quarter, which means Inari has RM85mil revenue that represents 49.6% organic growth in one year.

PBT margin stays healthy at 14.2%, while cash flow is still good despite paying consistent dividends.

       Inari South Key

The practice of quarterly dividend is continued. Inari declared a third interim dividend of 1.2sen plus special dividend of 0.8sen for its FY14, all single tier.

This is the highest "quarterly" dividend for Inari, which is in line with its higher & higher profit. The date of entitlement is still yet to be announced.

The table below shows Inari's dividend for the last 3 years. Figures in bracket represent special dividend.

Div (sen)	FY14	FY13	FY12
1st	1.1 (0.4)	0.8	0.6
2nd	1.1 (0.4)	0.9	0.6
3rd	1.2 (0.8)	0.9	0.8
4th		1.0 (0.9)	0.8

Total dividends after 3 quarters are already 5sen, which is more than 4.5sen for the whole FY13. Total dividend for FY14 should be about 7sen, base on payout policy of up to 40% and estimated full year net profit of RM90mil. However, the yield of 7sen dividend is just 2.5% at current share price of RM2.84.

At 9 months PATMI of RM70mil, I think Inari should be able to reach RM95mil for its FY14. Base on current paid-up shares of 499.6mil, estimated EPS will be 19sen, thus target price should be RM2.85.

At this moment Inari seems to be fully valued, but I think it is still a growing company. Apart from anticipated robust growth in mobile devices, its subsidiary Ceedtec is pointed out by analysts to start  to contribute meaningfully to its bottom line in FY15.

So, just like Gtronic, I will hold Inari for the time being.

Anyway, there is still no news regarding main board transfer, as well as the anticipated bonus issue.