Sarin Technologies

Sarin Technologies: CIMB initiates Coverage with O/p Call and $1.96 TP. Note that Sarin has cemented its position as the leading diamond manufacturing equipment provider. Its Galaxy™ family systems are one-of-a-kind and it has the lion’s share of the planning-equipment market and has new products to penetrate the retail end of the value chain. Management estimates that the group commands around 75% of the diamond planning equipment market. This has supported uptake of its Galaxy™ systems from synergies and ease of interfacing between the two. With a lack of meaningful competition, demand for its products is strong with a total installed base of 122 Galaxy™ systems as at end-2Q13, up more than 400% since end-FY10. Galaxy™ systems are Sarin‟s highest-margin products (70+% GPM vs. a 60+% blend for its other products). Further, Galaxy™ systems provide the group with recurring revenue as customers are charged per use. This is a new business model for Sarin and recurring revenue had grown from 10% in FY10 to almost 30% by 2Q13. The launch of Sarine Light™ has allowed the group to penetrate the retail end of the value chain. Another new revolutionary product that is expected to receive strong support is Sarine Loupe™, to be launched in 4Q13. If executed well, these new products should propel the group to its next phase of growth.