Did Inari Make A Bright Move?
MBSB Investment Bank Bhd (MBSB Research) has maintained its NEUTRAL call on Inari Amertron Bhd with an unchanged target price of RM2.13, while Hong Leong Investment Bank Bhd (HLIB Research) reaffirmed its HOLD recommendation with a target price of RM2.10. Both analysts cited the group’s latest move to strengthen its optoelectronic business through a joint acquisition of Lumileds International.
According to MBSB Research, the acquisition could enhance Inari’s manufacturing footprint and customer base across multiple regions, but uncertainty lingers over the turnaround timeline for Lumileds, which remains loss-making. The research house noted that “the development is positive as it allows Inari to serve a wider global customer base”, but highlighted that the potential earnings contribution is unclear. It added that the transaction resembles Inari’s earlier expansion into optoelectronics via the acquisition of Amertron in 2013.
Inari, alongside its partner Sanan Optoelectronics, has agreed to acquire Lumileds for a total enterprise value of US$239 million (RM1.03 billion), to be fully settled in cash. Post-acquisition, both parties will inject an additional US$41 million (RM176.3 million) for working capital, bringing the total outlay to US$280 million (RM1.2 billion). Of this, Inari’s commitment amounts to RM307 million, funded primarily from the company’s previous private placement proceeds. The deal is expected to be completed by the first quarter of 2026.
HLIB said the move offers potential for product and customer diversification, reinforcing Inari’s OSAT business strategy. However, it cautioned that investor concerns could persist due to exposure to the highly competitive LED market, compounded by Lumileds’ losses of US$67 million in FY24 and US$17 million in 1QFY25. HLIB added that the partnership with Sanan, China’s largest LED chipmaker, should mitigate some risks, noting that the collaboration could strengthen both companies’ position against established players such as Nichia and Osram.
Both analysts kept their forecasts unchanged, with MBSB Research emphasising the lack of detailed turnaround plans for Lumileds, while HLIB pointed out that near-term catalysts remain limited due to flat RF growth and the upcoming expiry of a major supply agreement in mid-2026. However, they remain constructive on Inari’s longer-term outlook, citing recovery prospects in optoelectronics and potential RF gains in the next product cycle.
