Sarine Technologies

[punklitez]

I have written an initiation report on Sarine Technologies.

Find out why I am confident of a near term recovery!

http://heartlandboy.com/initiation-repor...hnologies/

Regards,

Heartland Boy

[cyclone]

Sarine Technologies Ltd (U77:SI), a worldwide leader in the development, manufacture and sale of precision technology products for the planning, processing, evaluation and measurement of diamonds and gems, is pleased to report that it has delivered a record 20 Galaxy™ family inclusion mapping systems in Q2 2016.

More details in : http://infopub.sgx.com/FileOpen/Press_Re...eID=411591

[punklitez]

Sarine Technologies Ltd (U77:SI), a worldwide leader in the development, manufacture and sale of precision technology products for the planning, processing, evaluation and measurement of diamonds and gems, is pleased to report that it has delivered a record 20 Galaxy™ family inclusion mapping systems in Q2 2016.

More details in : http://infopub.sgx.com/FileOpen/Press_Re...eID=411591

Hey, thanks for the update. This is great news. Looking forward to even better financial results this quarter!

(Vested)

Regards,

Heartland Boy (heartlandboy.com)

[cyclone]

Sarine Delivers Record 24 Galaxy Family Systems in Q4 2016

Sarine Technologies Ltd, a worldwide leader in the development, manufacture and sale of precision technology products for the planning, processing, evaluation and measurement of diamonds and gems, is pleased to report that it has delivered a record 24 GalaxyTM family inclusion mapping systems in Q4 2016 bringing total 2016 deliveries to 84 systems (previous record year saw 48 deliveries) and total installed base as of the end of 2016 to 299 systems.

More details in http://infopub.sgx.com/FileOpen/Press_Re...eID=435209

[bardsmanship]

Sarine has really been down in the dumps lately, what with the repeat of the overstocking situation in 2015 and having to defend against infringements of their IP. I did an analysis last month and decided that $0.90 would be a fair level to initiate a small position during this cyclical downturn, and wait patiently until the industry returns to normal or for one of a few catalysts to take hold.

Would love to hear what others think, more detailed write-up at https://fundamentalsmatter.wordpress.com...onal-woes/

[corydorus]

Sarine is back to 2006 price. That's more than a decade ago. Neither is it a dividend stocks.
Be it fundamental or dividend wise, it is nether. Waste of time and opportunity if you have parked money there since then.

[CY09]

Sarine has been giving out dividends constantly at about s$0.045 annually. The reason why Sarine was hardly seen as a dividend stock was because of its previous prices above $1.50. With only a 2+% yield, it hardly qualify. However with its price languishing at 90 cents region, Sarine's yield is close to 5%.

The next question is Sarine's dividends sustainable? The answer is yes. To pay out about USD 3.5 cents (SGD 4.5 cents), Sarine needs to generate a cash flow of US10 million annually. Based on the past 6 months of results (weak diamond outlook), Sarine has generated that amount in Ops cashflow in 6 months with a CAPEX outflow of 2 mil. Furthermore, the company is debt free.

<recently vested at 0.94>

[karlmarx]

Over the past 10 years, Sarine has generated an average FCF of US$10m, and paid out average dividends of the same amount. Assuming that Sarine's operations were not affected by the illicit competitors, there is no doubt that Sarine will be able to pay dividends of US$10m a year. Another interesting point is that its trade receivable days has gradually increased from about 10 days or less in 2005 to about 90 days in 2016; perhaps a sign of increasing competition.

But will Sarine be able to stop the (illicit) competitors who are undercutting them? I don't know. But certainly, this is a big risk to sustained dividends.

Even after the share price decline over the past 3 years, Sarine is still valued at about 24 times its 10 year average FCF.

http://infopub.sgx.com/FileOpen/Appendix...eID=478330

[Jacmar]

It was one of my core holdings 2 yrs ago n hv disposed most of it(lock-in a 2 bagger gain) and left some remnant "free" shares. I am eyeing to re-enter and make it significant again once it is given for dead.

sarine is neither a fundamental cheap stock nor a div stock. It should be seen as a growth stock. Since IPO the co has gone through 1 painful transformation from a machine seller(inclusion mapping) to building a recurring income stream(42%). now the next transformation is to go down stream to the polished/retailer segment. I believed the transformation will take place and execution is coming along fine. It needs time to gain acceptance as this is something very new to the retail industry.

The illicit competition to me is just a distraction. As stated by co, their recurring rev was not impacted. The biggest bugbear for me with sarine is that it gets jerk around by the oligopolistic miners ie debeers n the russian mines. Sarine has no control over the diamond value chain and earnings can be lumpy. Hopefully by going down stream and building more recurring income from the polished diamonds, earning can be a bit more stabilised.

watch this space and DYDD

[holymage]

The illicit competition may be temporary, but I think a larger factor that hasn't garner sufficient attention is the possibility of structural change in consumer habit. Research on the industry is definitely lacking. I read somewhere that China is the 2nd largest market for diamond (US being the first), and many articles reporting that Chinese millennials has changed from "material wants" to "experiences" like travelling etc. Even within the "material wants" categories, there are emerging competitors vying for the consumer's wallet, like... the technology gadgets. Would you rather spend on the latest smartphone/tablets, or a piece of diamond?

Sarine's latest Q3 2017 quarterly report stated that there is higher than normal surplus inventories of polished diamonds. This problem started in 2015 and persist till 2017, despite several premium consumer products companies reporting record revenue and profits (Kweichow Moutai, Pola Orbis, Apple etc). Could it be that the declining demand for diamonds is insufficient to deplete the existing inventory of diamonds? If that is the case, is it justified to classify Sarine as a growth stock, given its market leader position in a declining industry? More research is definitely needed.

If this structural change is real and demand for diamond is expected to dwindle in the years to come; while diamond is no buggy whip, Sarine definitely do not deserve a P/E meant for a growth stock.

Good luck to those vested.