Sarine Technologies

Sarine Technologies: (S$1.995) Overwhelming response at JCK 2015 trade show
Sarine Technologies disclosed that the group enjoyed an overwhelmingly positive response during the JCK 2015 Las Vegas trade show (29 May to 1 Jun), a strong indication of the sentiment in the polished diamond market.

Management disclosed that significant deals have been bagged for its products and technologies, with likely more on the way. The group sees indications of a gradual return to normalcy in the diamond industry and hopes for the trend to stay.

Sarine shed off 38% of its market cap since 4Q14, dragged by a slew of factors which include:
- High rough diamond prices in China, which resulted in a margin squeeze for manufacturers
- Ongoing anti-corruption measures in China
- Lacklustre economy in Japan
- Weakened demand in Dubai and the Middle East, hit by lower oil price
- Tough credit conditions for second and third-tier Indian diamond manufacturers in securing working capital

Upcoming milestones to watch are the De Beers sight (8 Jun) and Hong Kong jewellery show (25-28 Jun), which should provide a sense of rough diamond pricing and polished diamond demand, respectively.

Going forward, Maybank-KE expects 2Q15 results to be much better than the breakeven achieved in 1Q15, underpinned by the significant deals closed during the JCK 2015 trade show.

Nevertheless, the house believes that a more meaningful recovery may only be seen from 2H15 as liquidity issues in India is still present.