Sarine Tech: Since 4Q14 results on 22 Feb, management’s confidence has been bolstered by industry developments, driven mainly by strong US and China sales.
The market for Galaxy products remains under penetrated. Sarine has expanded its range of inclusion-mapping systems to cater to different market tiers. This game-changing technology has helped to jack up rough diamond yields from 40% to over 50%.
Polished diamond remains an untapped market for Sarine Light/Loupe/Profile. Expect 3-5% revenue contributions in FY15E. More importantly, these are highly scalable products and could emerge as a third core business for Sarine.
1Q15 is likely to be weak, though recent improved liquidity for Indian manufacturers may lift 2Q15 sales from pent-up demand.
House conservatively factored in a 2H15 recovery. Maybank-KE maintains BUY and TP of $3.13.