Inari: Another Record-Breaking Quarter

Inari FY15Q2 Financial Result

INARI	FY15Q2	FY15Q1	FY14Q4	FY14Q3	FY14Q2
Revenue	227.9	221.9	223.9	191.8	186.6
Gross Profit	49.4	43.4	52.0	40.9	37.4
Gross%	21.7	19.6	23.2	21.3	20.0
PBT	40.0	33.9	31.4	27.2	26.6
PBT%	17.6	15.3	14.0	14.2	14.3
PAT	40.3	33.8	30.8	25.0	24.4
Total Equity	352.9	313.4	260.2	231.1	202.2
Total Assets	583.5	544.3	487.5	461.4	438.8
Trade Receivables	128.1	143.4	137.3	131.8	123.5
Inventories	134.0	135.8	137.8	137.7	126.2
Cash	141.9	89.5	65.3	53.2	60.0
Total Liabilities	230.6	230.9	226.9	231.1	236.9
Trade Payables	107.3	107.9	120.0	118.4	131.2
ST Borrowings	44.8	46.8	36.4	33.0	26.2
LT Borrowings	14.9	15.1	18.6	15.8	16.4
Net Cash Flow	65.0	14.0	20.9	8.8	15.3
Operation	88.3	23.7	41.2	12.4	11.5
Investment	-44.9	-34.4	-43.4	-30.4	-14.5
Financing	21.5	24.7	23.0	26.9	18.4
EPS	6.59	6.00	6.23	5.19	5.31
NAS	0.58	0.56	0.53	0.48	0.42
Net D/E Ratio	Net cash	Net cash	Net cash	Net cash	Net cash

As widely expected, Inari posted a record high revenue, PBT & PATAMI for its latest quarter of FY15Q2.

The better results are due to higher trading volumes, favourable foreign exchange & gold price.

How much has Inari gained from foreign exchange? 

We might get a clue from its cash flow statement.

It seems like Inari registers unrealized foreign exchange gain of RM9.2mil in the first 6 months of its FY15.

Another thing noteworthy is that its cash suddenly jumps about 60% (+RM52.4mil) in 3 months time from RM89.5mil to RM141.9mil.

This is mainly contributed by strong operating cash flow while warrant conversion added RM11.3mil of cash in this quarter.

Once its rights issue is completed in the end of Feb15, it will add another RM115mil to its cash pile.

Inari declared a second interim of 1.8sen plus a special dividend 0.5sen. The total of 2.3sen is 0.1sen higher than its 1st interim payout.

The dividends will be ex-ed very soon in 10 days time on 16 Feb 2015 but will only be paid one month later. So it's a belated CNY ang pow :)

Div (sen)	FY15	FY14	FY13	FY12
1st	1.8 (0.4)	1.1 (0.4)	0.8	0.6
2nd	1.8 (0.5)	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

Inari has just increased the capacity of its RF division which is expected to contribute from the 2nd quarter of CY2015 (FY15Q4). So I would expect better earning from Inari for its 2HFY15.

The extent of capacity increase reported by HLIB & Maybank is different:

Maybank: 522 + 80 to 90 units test machines
HLIB: 422 + 100 units test machines

I think it is roughly a 20% increase in capacity in phase one of expansion.

With better outlook, I think I should increase Inari's target net profit from RM140mil to RM155mil for FY15. I will only set my adjusted target price after the completion of rights issue.

Inari does not mention about the performance of its various business segment ie. RF, fiber optics, opto-electronics in its quarterly report. So we have to depend on analysts for the info.

Recently various China-brands smartphones such as lenovo, oppo, vivo etc are penetrating into Malaysia and other countries aggressively. I think shareholders of Inari & Gtronic must be very keen to know whether their products are used in these smartphones.