Kuala Lumpur: RHB Investment Bank Bhd (RHB IB) has identified Inari Amertron Bhd’s shares as ‘oversold’, suggesting that the uncertainties stemming from the US-China trade war are likely to be temporary.

According to BERNAMA News Agency, RHB IB’s research note indicates that Inari Amertron is expected to see medium to long-term benefits due to controlled bookings, a short-term surge in orders, and an increase in manufacturing relocation outside of China. This relocation, aimed at its US-based customers, may not occur immediately, presenting a current undervaluation as a buying opportunity for the notable outsourced semiconductor assembly and test (OSAT) player.

RHB IB highlighted that while Inari Amertron’s exposure to the US is minimal, at only 2.9 per cent based on its FY2024 annual report, the potential impact could be more significant, affecting 20-25 per cent of revenue due to demand disruptions like higher goods prices and worsened sentiment if the trade war continues. It also noted that most of Inari Amertron’s integrated circuits are not directly exported to the US, potentially shielding them from direct tariffs.

Despite caution and a reduction in net profit forecasts for FY2025-2026 by eight per cent and 13 per cent respectively, due to slower revenue growth, RHB IB anticipates a significant rise in the target price (TP) for the stock. Investors are encouraged to overlook short-term challenges and focus on cyclical recovery in the sector, with the TP revised to RM2.45 from RM2.75.

Concurrently, Hong Leong Investment Bank Bhd forecasts that Inari Amertron’s share price may remain sluggish in the short term, as it is early in the earnings downgrade cycle. They expect the market to eventually focus on the company’s underlying fundamentals, supported by its substantial net cash buffer of RM2.2 billion, once tariff clarity emerges and earnings downgrades stabilize. Despite risks, such as higher-than-expected tariff rates impacting smartphone sales, Hong Leong has upgraded Inari Amertron to a ‘buy’ call with a revised TP of RM2.10.

At 2.37 pm, Inari Amertron’s share price experienced a decline of 3.0 sen, settling at RM1.79 with 8.20 million shares changing hands.