SARINE TECHNOLOGIES LTD (SGX:U77)
Sarine Technologies - Shining Bright; Best 1H21 Since 2014
- Sarine Technologies (SGX:U77)'s 1H21 PAT exceeded our and street’s full year estimates, surging by 972.4% y-o-y to US$12.6m. This was driven by the recovery of manufacturing activities amid robust demand for diamond jewellery after the reopening of retail activities in key global markets.
- In line with the strong earnings, Sarine Technologies has declared an interim dividend of US$0.015, comprising a US$0.01 and US$0.005 special dividend.
- We roll forward our valuation to FY22E, and raised our DCF-based target price for Sarine Technologies to S$0.94 (LTG:3%, COE: 8.6%). Maintain BUY.
Buoyant industry conditions drive topline growth
- Sarine Technologies's revenue jumped 60.5% y-o-y to US$36m due to higher capital equipment sales (12/36 Galaxy® family systems were delivered in 1Q/2Q21) and > 80% increase in recurring revenues from Galaxy® inclusion scanning. Its new business comprising rough & polished diamond wholesale and retail related revenues was just < 6% of turnover but we expect this segment to continue growing with broader commercial adoption.
- Total recurrent revenues now account for ~40% of Sarine Technologies’s topline, as compared to 35% a year ago.
Raises earnings forecasts on better operating leverage
- Sarine Technologies's gross profit margin expanded 12.2ppt earnings per share forecasts for Sarine Technologies by 57%/36%/22%.
e-Grading on track to roll out by end-2021
- See
- According to Sarine Technologies's management, the in-lab implementation of its AI-based grading paradigm is the end of 2021.
Eric Ong
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-08-05
SGX Stock
Analyst Report
0.94
UP
0.700
