FIGURE 1: INARI AMERTRON
BERHAD LAST 1 YEAR SHARE PRICE TREND
**analysis
based on 2020 annual report.
1. GENERAL
INTRO: Inari Amertron Bhd principally engaged in the outsourced
semiconductor assembly and test services and electronics manufacturing services
industries.
2.
NOTABLE
POINTS:
a. Inari is one of the largest technology
corporations in Malaysia since its incorporation in 2006. Over a span of 14
years, it has expanded its operations from 1 plant in Malaysia to a total of 9
plants located across Malaysia, Philippines and China with a total built-up
production floor space of approximately 1,800,000 square feet and a total
workforce of more than 5,500.
b. In FY2020, due to the COVID-19 lockdown, the rising
demand for online services meant that semiconductor products remained in
demand. Despite Movement Control Orders in Malaysia and global supply chain disruption
to varying degrees since February 2020, the Group managed to post revenues of
RM1.06 billion, a net profit of RM156.4 million, and EBITDA of RM273.5 million
in FY2020.
c. During FY2020, Inari invested a total of RM89.4
million in capital expenditure, primarily to increase its capacity in packaging
and testing through adding and improving production facilities and equipment.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 1057.9 million as
reported in 2020 annual report, this is a high revenue company. Between year
2012-2020, the counter’s revenue has been on an overall rising trend. On the
other hand, both of the Profit Before Tax (PBT) and Profit After Tax (PAT) are also
on a gradual rising trend.
b. SHARE PRICE: in the last 1 year share price has
experienced a significant rising trend from around RM1.30 to RM3.50.
c. EARNING PER SHARE (EPS): earning per share in
last 5 years was fluctuating, whereby it ranged from 4.9 to 8.1 sen.
d.
PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is 50, which shows that the share price is very expensive to invest in.
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 89.4
million, which is around 6% of total assets. This shows that the management is making
a major investment in the future growth and expansion of the business. (The
investment in capital expenditure was made for the continued expansion of production
facilities, increases in production capacity as well as on-going automation and
cost optimisation measures.)
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2020 financial year, INARI declared
a dividend payout of 4.4 sen to its shareholders, which amounts to a dividend
yield of 1.26%.
b.
DIVIDEND PAYOUT RATIO: The dividend-to-earnings
payout ratio is about 90%.
c. CONSISTENCY: This counter’s dividend payout has
been very consistent (dividend paid to shareholders in 5 years out of 5 years)
in the last five years, whereby dividends paid to shareholders ranged from 2.8
to 8.4 sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2020 financial year, INARI
reported a good return of shareholders’ equity, at 12.94%.
b. COST-TO-INCOME RATIO: In FY2020, the report
cost-to-income ratio is 513%. This shows that the cost of doing business is relatively
high, which is normal in the semicondutor industry.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 21%, whereby its debt level is less than its equity, resulting in a
healthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM 519.5
million, equivalent to RM 0.16 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: This counter
is very well supported by institutional investors, there are 27 institutional
investors at top 30 major shareholders list, including EPF (10.31%), KUMPULAN
WANG PERSARAAN (13.2%), LEMBAGA TABUNG HAJI (1.95%), PERMODALAN NASIONAL BERHAD
(0.76%) a few investment funds, as well as insurance funds and retirement funds.
Its major shareholders are Dato’ Sri Thong Kok Khee (17.07%), Insas Berhad
(16.96%) and Insas Technology Berhad (13.78%).
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