KUALA LUMPUR: Affin Hwang Capital research is positive on the announced joint venture between INARI AMERTRON BHD and PCL Technologies in Malaysia as the move would help to fill the floorspace of the former's P34 plant.
In addition, the partnership could possible lead to a gradual transfer of optical transceiver products from PCL's current factory, said the research house.
The initial joint venture will have an inital capitalisation of up to RM21mil (US$5mil) which will be subscribed for in cash by Inari and PCL in the ratio of 30:70.
The JV is expected to take up 100,000 sq ft of floorspace at the plant, which offers 600,000 sq ft of floor space.
This would not be the first time that Inari will collobarate with PCL as it had previously owned a 9.7% stake in the company when it acquired a stake in 2016.
Affin Hwang maintained its buy call on Inari with a target price of RM1.79.
Moving forward, the research house believes this JV could be the first of many collaborations for Inari.
"We suspect that the impact of the trade tensions could be a motive behind this partnership and, hence believe that there could be greater outsourcing opportunities, especially for well established and well managed OSATs such as Inari," it said.