Inari: "Unexciting" Record-Breaking Feat

Inari FY15Q4 Financial Result

INARI	FY15Q4	FY15Q3	FY15Q2	FY15Q1	FY14Q4
Revenue	225.0	228.3	227.9	221.9	223.9
Gross Profit	56.5	47.7	49.4	43.4	52.0
Gross%	25.1	20.9	21.7	19.6	23.2
PBT	39.8	38.0	40.0	33.9	31.4
PBT%	17.7	16.6	17.6	15.3	14.0
PAT	40.4	38.1	40.3	33.8	30.8
Total Equity	537.2	511.5	352.9	313.4	260.2
Total Assets	835.2	720.1	583.5	544.3	487.5
Trade Receivables	187.4	136.8	128.1	143.4	137.3
Inventories	145.2	139.9	134.0	135.8	137.8
Cash	296.7	260.4	141.9	89.5	65.3
Total Liabilities	299.9	210.2	230.6	230.9	226.9
Trade Payables	171.3	92.2	107.3	107.9	120.0
ST Borrowings	45.3	42.1	44.8	46.8	36.4
LT Borrowings	22.0	21.9	14.9	15.1	18.6
Net Cash Flow	218.0	181.9	65.0	14.0	20.9
Operation	176.2	110.6	88.3	23.7	41.2
Investment	-89.0	-52.7	-44.9	-34.4	-43.4
Financing	130.8	124.1	21.5	24.7	23.0
EPS	5.57	5.69	6.59	6.00	6.23
NAS	0.74	0.71	0.58	0.56	0.53
Net D/E Ratio	Net cash	Net cash	Net cash	Net cash	Net cash

In this final quarter of FY15, Inari broke its record again with highest ever quarterly revenue and PATAMI.

Compared YoY, revenue and PATAMI increase 13.9% and 40.2% respectively.

Compared QoQ, revenue and PATAMI increase 11.7% and 6.0% respectively.

For the whole FY15, revenue and PATAMI increase 17.6% and 53.7% to RM933.1mil & RM152.5mil respectively compared to FY14..

If disaster does not strike, its revenue in FY16 will surely breach a billion mark.

However, due to huge amount of warrant conversion, current quarter's EPS drops slightly to 5.57sen compared to 5.69 in preceding quarter of FY15Q3.

While everyone is expecting Inari to gain from weakening RM, there is actually a RM2.4mil net forex loss in this quarter.

Anyway, weak RM against USD will be beneficial to Inari.

Balance sheet and cash flow remain healthy as usual, with plenty of cash reserved for further capacity expansion.

Inari RM mil	FY15	FY14	FY13	FY12	FY11
Revenue	933.1	793.7	241.1	180.8	119.6
Revenue growth %	17.6	229.2	33.3	51.2
Gross Profit	197.1	158.4	66.4	36.0	25.8
Gross %	21.1	20.0	27.5	19.9	21.6
PBT	151.7	107.2	43.3	20.3	20.5
PBT%	16.3	13.5	17.9	11.2	17.1
PAT	152.5	101.3	42.0	19.3	18.8
PAT growth %	50.5	141.2	117.6	2.7
EPS	23.82	21.42	12.32	6.06	11.21
ROE	28.4	38.8	26.2	23.3	41.4

Inari's new facilities P13 in Bayan Lepas has started early phase of production in FY15Q4 and contributed modestly to its revenue and gross profit.

It is expected to contribute more significantly in FY16 when new capacities are ramped up in stages.

Final or 4th interim dividend of 2.3sen was declared, making it 8.9sen total in FY15, 30% higher than FY14's dividend of 6.8sen.

This represent a payout ratio of almost 40%.

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	2.1	1.2 (0.8)	0.9	0.8
4th	2.3	1.8	1.0 (0.9)	0.8

With latest ordinary shares of 729.6mil, Inari's EPS for FY15 stands at 21sen.

At share price of RM3.03, its actual PE is 14.4x, with dividend yield of 2.9%.

I think Inari still has room to grow. Its FY15 capex of RM62.4mil is its highest ever which is 50% more than previous 2 years.

However, this does not mean that its share price will continue to grow especially in current bearish market.

Many investors may face a dilemma of whether to sell now and buy back at cheaper price later, as KLCI is widely expected to fall further.

For me, I am unlikely to sell all or even a major portion of my shares in Inari but if I don't have enough cash, I might sell some to lock in some profit.