KUALA LUMPUR: Kenanga Investment Bank Research has raised its earnings forecasts for Inari Amertron Bhd

on the back of the addition of more system in package (SiP) lines and demand in its radio frequency segment. "We increase our FY20E and FY21E NP both by 8% each to RM259.7m and RM324.9m,representing growth of 67% and 25%, respectively," it said. Kenanga kept its "outperform" call on the counter and raised its target price to RM3.14 from RM2.50 previously based on a higher 2021 price-earnings of 35x from 30x previously. Following a meeting with Inari, the research house said the group has added 10 SiP assembly lines in its P34 plant and is expected to install another four SiP lines by end-2020, which would bring total SiP lines to 22. It added that this is a 2.75x increase from the eight lines in FY20, which are based in the P13 plant. Inari's current utilisation rate of 80% is expected to to be ramped up to 95% "We attribute the strong RF loading volume to the latest 5G US smartphones that were launched last week," it said. Kenanga believes an overdue replacement cycle will drive demand for the latest US 5G smartphones, making it a go-to choice for a future-proof upgrade among consumers. "Note that the top three active US smartphones in circulation still consist of 4-5 years old models which are due for replacement. "The fact that the latest models support 5G and were launched at the same price point as its predecessor will likely entice consumers to upgrade," it said.