Inari Amertron plunges 14% on news of US customer selling unit

The fall in the semiconductor firm’s shares was the biggest move since its listing on July 19, 2011

by SHAHEERA AZNAM SHAH/ pic credit:

INARI Amertron Bhd saw some RM860 million wiped out from its market capitalisation yesterday, as investors dumped the stock on news that one of the semiconductor firm’s major customers, Broadcom Inc, is selling one of its wireless-chip units.

The counter plunged 14.4% or 27 sen to a three-month low of RM1.61 yesterday, giving the company a market capitalisation of RM237.19 million. 141 million shares were traded.

Bursa Malaysia suspended short selling of the stock under proprietary day trading (PDT) and intraday short selling (IDSS) during the afternoon trading session, as the last done price of the counter “dropped more than 15%” from the reference price.

Short selling under PDT and IDSS will only be activated today at 8.30am, the bourse said in a filing yesterday.

“The movement in Inari’s shares tracked the news on the selling of Broadcom’s unit,” Rakuten Trade Sdn Bhd VP (research) Vincent Lau told The Malaysian Reserve.

“There are uncertainties on how the selling of Broadcom’s disposal will affect Inari’s financials, but it definitely will not appear on its balance sheet in the immediate term”.

Analysts surveyed by Bloomberg are mixed in their outlook on Inari, with eight of the 19 analysts covering the counter having a ‘Sell’ call on the stock. Six are recommending ‘Hold’ on the counter, and five have a ‘Buy’ call.

The fall in Inari’s shares was the biggest move since the company’s listing on July 19, 2011. Its trading volume yesterday was more than 18 times the 20-day average.

Despite advancing 2.5% in the past 52 weeks, the stock has lost 16% in the past five days and 17% in the past 30 days.

Analysts have a consensus one-year price target of RM1.82 on the company, for a potential return of 13%.

The Wall Street Journal (WSJ) reported that Broadcom, one of Apple Inc’s component suppliers, is considering selling one of its wireless-chip units to accelerate the company’s move in shifting away from its roots as a semiconductor maker.

Broadcom is said to be currently working with Credit Suisse Group AG to find a prospective buyer for its radio-frequency (RF) unit.

The RF subsidiary is a segment of the wireless-chip business that produces filters used in cellular phones to enhance signals.

For the financial year ended Nov 3, 2019, the RF unit contributed US$2.2 billion (RM9.11 billion) to group revenue.

WSJ reported that the RF unit could be worth US$10 billion, although the deal is still at an early stage.

Broadcom, mainly known as a maker of semiconductors for cellular phones and networking equipment, has been stepping into the lucrative software business via its acquisitions of CA Technologies Inc in 2018 and Symantec Corp this year.