Sarin

Sarin: 3Q12 results, weaker than Maybank KE expectations of a softer quarter. Revenue at US$11.7m (-26% YoY, - 35% QoQ) and corresponding net profit of US$2.5m (-41% YoY, -62% QoQ), mainly due to Indian manufacturers holding back on capital spending due to liquidity issues. Only 5 Galaxy machines were sold this quarter (compared to an average of >10 each quarter), bringing total installed base of Galaxy machines to 88. The company warned that it may miss its target for 100 machines by year end. Nevertheless, the house notes positives in that, there are more signs of easing, with some rebound in manufacturing activities in India. Sarin also seeks to establish initial agreements with major industry opinion leaders for its Sarin-Light product by year-end. The house expects initial negative reactions to this set of results which may result in some sell-down. However, it is still positive on the long-term growth prospects of the company given its game-changing technology. Expects to see rebound in sales with more easing of the current situation. Says to look for growth beyond FY13F. Adds, it is likely maintain its Buy call on Sarin, but possibly with some downward adjustments to figures. More details after the conference call with mgt this afternoon. The house's last call was a Buy with TP $1.68, based on 13x PER on FY13F P/E. The stock is +1.5% at $0.995, on thin volume.