Sarine

Sarine: Maybank-KE says its third pillar of growth appears to be shaping up nicely. Gemological Science International, a leading gem lab in the US will incorporate Sarine Profile into its diamond grading reports.
Meanwhile, Sarine had also enjoyed “overwhelming” interest in its Sarine Profile at the end-May CK trade show, closing significant deals.

While the terms of the GSI agreement was not disclosed, Maybank-KE’s back of envelope calculations estimate a potential contribution of US$4-14m p.a.

More importantly, with GSI adopting this certification standard, other gem labs or retailers may follow suit. Maybank-KE believes that GIA, an existing customer, and the world’s largest gem lab, may be evaluating such an option.

Should GIA adopt Sarine Profile, Sarine could theoretically boost annual net profits by US$26-44m. This is not yet in Maybank-KE’s forecasts.

The house also thinks market has been caught up in earnings weakness, and losing focus of its key investment merits, being its highly scalable growth from the adoption of its technologies.

Meanwhile, the house eyes a 2H15 earnings recovery for the rough-manufacturing sector and further adoption of Sarine’s polished-diamond products.

Maybank-KE has a Buy call on Sarine with TP of $3.07