Inari: Ends FY14 With A WOW

Inari FY14Q4 Financial Results

INARI	FY14Q4	FY14Q3	FY14Q2	FY14Q1	FY13Q4
Revenue	223.9	191.8	186.6	191.3	67.6
PBT	31.4	27.2	26.6	22.1	13.5
PBT%	14.0	14.2	14.3	11.6	20.0
PAT	30.8	25.0	24.4	21.0	13.1
Total Equity	260.2	231.1	202.2	176.8	153.4
Total Assets	487.5	461.4	438.8	406.2	366.4
Trade Receivables	137.3	131.8	123.5	121.1	93.0
Inventories	37.8	137.7	126.2	107.4	105.5
Cash	65.3	53.2	60.0	48.9	44.6
Total Liabilities	226.9	231.1	236.9	230.0	213.8
Trade Payables	120.0	118.4	131.2	138.7	120.2
ST Borrowings	36.4	33.0	26.2	19.6	20.4
LT Borrowings	18.6	15.8	16.4	17.8	10.3
Net Cash Flow	20.9	8.8	15.3	4.3	3.8
Operation	41.2	12.4	11.5	7.2	86.3
Investment	-43.4	-30.4	-14.5	-9.6	-112.2
Financing	23.0	26.9	18.4	6.8	29.7
EPS	6.23	5.19	5.31	4.70	3.69
NTA	0.46				0.35
Net D/E Ratio	Net cash	Net cash	Net cash	Net cash	Net cash

As expected, Inari has just released its best ever quarterly result in which revenue & PAT improve 16.7% & 23.2% respectively QoQ.

It is mentioned that if not because of ESOS charge, PBT of FY14Q4 & FY14Q3 will be RM2.0mil & RM2.1mil more.

Overall it is a great ending to its FY14. Looking ahead of FY15, the management "looks forward to improving on its current level of performance in the EMS industry".

Because of the consolidation of Amertron, FY14's revenue surges 229% to RM793.7 compared to FY13. At the same time, PATAMI also grows impressively at 141% to RM101.3mil, slightly above my prediction of RM95mil.

It still keeps its net cash position despite aggressive CAPEX, thanks to good cash flow from operation. FY14's ROE stands at a remarkable 38.9%.

INARI (RM mil)	FY14	FY13	FY12	FY11
Revenue	793.7	241.1	180.8	119.6
Revenue growth %	229.2	33.3	51.2
PBT	107.2	43.3	20.3	20.5
PBT%	13.5	17.9	11.2	17.1
PAT	101.3	42.0	19.3	18.8
PAT growth %	141.2	117.6	2.7
EPS	21.42	12.32	6.06	11.21
ROE	38.9	27.4	23.3	41.4

Inari has declared a fourth & final interim single tier dividend of 1.8sen for FY14. There is no special dividend this time so this quarterly dividend is actually lower QoQ (2.0sen) & YoY (1.9sen).

Overall 6.8sen for FY14 represents about 40% payout, with a yield of 2.1% at share price of RM3.23.

It has recently purchased a 5.05-acre leasehold land in Batu Kawan and a 2-storey 166k sq ft factory on a 5.5-acre leasehold land in Bayan Lepas for business expansion. So it should not give out too much as dividend.

(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	1.8	1.0 (0.9)	0.8

At RM101.3mil, Inari's EPS for FY14 is 17.8sen with a PE ratio of 18.1x.

As it is still in an expansion mode, I think it can achieve better performance in FY15, perhaps RM120mil net profit. 

Base on current total shares of 570mil, projected FY15 EPS will be 21.1sen, with target price of RM3.16 base on PE ratio of 15x.

Even though current share price is above my target price, I will not sell Inari at this moment as it has great potential for growth. I feel that the excitement does not stop here.