Sarin

Sarin: 2Q13 results above Maybank KE's expectations, making up 53% of FY13 estimates. Sarin also declared higher-than-expected dividends with US1.5¢ interim and US2.5¢ special. House see the possibility of a similar level of dividends in 2H13, implying FY13F yield of 6.5%. As expected, sales of Galaxy were exceptionally high in 2Q13 due to pent-up purchases that were put off in 1Q13 by several India customers. A total of 17 units were installed in 2Q13 (9 units in 1Q13), bringing accumulated GalaxyTM installed units to 122 units. Maybank KE forecast total installed base to reach 144 by end-FY13F. Recurring revenue now forms just under 30% of total 1H13 revenue, providing an increasingly steady support to earnings. Sarin is generally upbeat on long-term prospects, but cautions that 3Q13 performance could be weaker q/q due to macroeconomic challenges in China (decelerating growth) and India (devaluation of rupee), as well as the narrowing of spread between rough and polished diamond prices. These factors could temporarily dampen equipment spending due to credit tightness and suppressed end-consumer demand. Maybank has a BUY rating with TP of $1.86.