Inari Amertron Berhad

(0166)

Name of Student: Toh Cindy

Matric Number : MBS141093

Company Background
Established in June 2006 with the
name of Inari Technology Sdn Bhd
Focused on back-end
semiconductor packaging
Included comprises back-end
wafer processing, package
assembly and RF final testing for
electronic and semiconductor
industry
accredited with ISO 9001:2000
products of the Inari were mainly
provided to the market electronic
product such as mobile
smartphone

Company Background
2006

2007

2008

Established in June 2006 with the name of Inari Technology Sdn Bhd
Focused on back-end semiconductor packaging
accredited with ISO 9001:2000

Successfully obtained in Pioneer Status for wireless technology from MITI

(Ministry of International Trade and Industry)
second factory was set up to improve the fine-pitch SMT assembly services

Focus set up R&D and enhance technology for the company

New third factory was launched to conduct fine-pitch SMT assembly and
processing services

Company Background
2010

2011

2012

2013

Inari was awarded another ISO 1485 certification for medical sensor products
warded Excellent Manufacturing and Outsourcing support on Semiconductor
Division Products 2009 Award
listed on the Bursa Malaysia in ACE market

Inari was obtained another Pioneer State for integrated front end modules devices from
MITI
Inari was developing of fibre optics by in cooperated with Inari South Keytech
Completed the acquisition of Amentron Inc (Global) Limited rename to Inari Amertron
Berhad
Transferred to the Main Market in Bursa Malaysia

Company Background
Today, Inari Amertron Group was become
multinational corporation (MNC) with 9 facilities
across 3 countries in Malaysia, China and the
Philippines, and 5000 employees were working
with Inari.

Industry and Competitive

Position

Industry and Competitive Position

Threat of substitutes
o medium
o product provide by the company are also
provide by the other competitor
o Well in its research and development
o Successfully obtained in Pioneer Status several
times such as wireless technology from 200720155
o Start to manufacture its own fibre optical cables
to enhance the market share
o Pricing advantage due to economic of scale

Power of Buyer
o low
o Inari was back-end semiconductor packaging
and mostly supplier semi-conductor to
manufacture company
o high demand of the electronic product and
those product such as mobile smartphone
become necessary product in the market
o most of the electrical product need semiconductor to assemble to become final product

Industry and Competitive Position

Supplier power
o less
o The business of the Inari was focusing on backend semiconductor packaging, the product that
provides by Inari are normally partially finished
goods
o Other manufactures especially electrical
product manufactures are required Inari
component to assembly in to their product in
order to become finished goods.

Threat of new entry

o
o
o
o
o

Low
Strong barrier to entry
Patent of technology hold by existing player
High fixed costs need to be covered
High start up cost and difficult to achieved
economic of scale

Industry and Competitive Position

Rivalry
o High
o larger number of firm that similar
to the Inari either local or
international
o the high fixed cost of the
company forces them to product
larger production to attain the
lowest unit cost due to economics
of scale effect
o high exit barrier for semiconductor industry as company
was difficult to abandoning the
plant and equipment that already
purchase
o Sometimes there was less profit
for the company the business still
have to maintain running

Financial Ratio Liquidity ratio

The ability of company to cover its short term obligation is good

(Current ratio >1)
Liquidity of Inari was able to cover its short term obligation after
exclude inventory.
Cash conversion cycle showed company liquidity was well as the
result only about 86 days to tied up in its production, sales
processes of its operations, and get payment from its debtor as
well
The Inari cash ratio figure was moderate and reasonable as it
showed that company was utilizing its cash fully rather keep it in
the bank

Financial Ratio Liquidity ratio

Inaris DIO showed that company need about 71 days to turnover it

inventory.
For DSO, company needs about 48 days to collect its debt from its
debtor.
About 32 days allow Inari to lengthen its obligation to creditor.
From the result, Inari ability convert its inventories to sales was
longer, and collect the payment from debtor was longer as well.
Thus, Inari no well manage in its cash cycle
In theory, company should shorten its DIO and DSO but
lengthen the DPO to maintain its cash.

Financial Ratio Activity Ratio

Inari was having ability to covert is inventory to cost of goods sold

(Inventory Turnover = 4.609
Company was used one dollar of fixed asset to generate RM 5.46
return to its company. Inari was fully utilized to it fixed asset by
producing company product.
Inaris total asset turnover ratio was about 1.569 which showed
that company was used RM 1.00 of its total asset to generate RM
1.57 returned to its company.
That company was well utilized its non-current asset to produce its
product but did not utilized well in current asset to generated
sales.

Financial Ratio Profitability ratio

Inari was difficult to reduce its price of product as only 20 % of sales

were left after deduct COGS
Most of the company sales revenue was paid to the cost of goods
sold, about 80 % of the sales revenue was paid to it. Yet, there was
less operating and other expenses for the company.
Inari was using one dollar of its asset to generate RM 0.20 of earning,
about 20% of earning was generating by company asset. (ROA)
About 39 % returns was earned and could be provided to the investor
In term of efficient management to generate the return, Inari was
showed well manage for its management and able to generate return
based on its asset and equity.

Financial Ratio Debt ratio

Inari was less depend on financing leverage. Most of the

asset was funding from its equity (debt to asset = 0.4799)
company were less and financing from long- term debt
Inari debt to equity ratio portion was 0.923: 1. This indicate
company had the ability to pay off its debt and strong in it
equity position.
Inari able to cover its interest expenses

Financial Ratio Market Ratio

Inaris investor was getting RM 0.21 return from

its RM 1.00 investment
The P/E ratio of Inari was 14.45 which was about
14 times of stock trading per each dollar of EPS.
The company 2014 dividend showed about 0.068
per share.

Understanding cash flow statement

How much cash did the firm generated from its
operations?
o company generated about RM 40,550,000.00 cash from its operating
activities in 2014

Understanding cash flow statement

How much did the firm invest in plant and
equipment?
o Inari was investing about RM 41,146,000.00 to its property, plant and
equipment in 2014.

Understanding cash flow statement

Did the firm raise additional funds, and if so, how
much and from what source ?
o Inari was proceeding issues its RPS (Redeemable preference share) and
common share to raise its funds. Other than that, Inari reduced its
financing and borrowing from most of the finance sources provider.

Understanding cash flow statement

is the firm able to generate positive cash flow?
o Inari Amentron berhad able to show positive cash flow which was RM
75,070,000.00. Compare to 2013, the cash flow of the Inari was
showed increased trend from RM 42,933,000.00 (2013) to RM
75,070,000.00 (2014) about 75 % increased

Projection of future performance Key

assumptions
Growth and Dividend Assumptions
o Expectation sales at 20 % increase from 2014 (RM 793,655,000.00),
maintained same dividend with previous year

Reason
o Smart mobile device such as smart phone, table, and cloud
computing and data system was expected booming in information
technology industry.
o Inari was having acquisition activities with other company factory,
and expected purchase a new factory in the end of 2014 and also
early of 2015.
o The purchase and acquisition showed that company was trying to
reach market demand and thus increase sales revenue.
o Inari new coming product in 2014: fibre- optic components
o Inari was partnership with Avago Technologies Ltd
o company was drawdown its debt start from 2014

Summary of assumption

Summary of assumption

Inari Amentron Berhad 3 year

Projection Results

Inari Amentron Berhad 3 year

Projection Results- Income Statement

Inari Amentron Berhad 3 year Projection

Results- Balance Sheet

Recommendation & Conclusion

Inari production line and manufacture do
not meet to the market demand,
company may lose its competitive in the
market.
The company sales were growing further
Inari need to seek for outsourcing the
production to other company in order to
meet market demand
There was several manufactures plant in
process Inari should use its fund speed
up the new plant operation and shorten
the date of opening in order to improve
number of production line.

Recommendation & Conclusion

Inari need to frequent update its
existing products and technology
to its client and keep on
launching the new product and
technology which match with the
market needs.
o Inari result was goods however
technology sector was normally
considered as cyclical business. The
performance of the technology easy
to fluctuate and could be down to the
deep