Sarin: Kim Eng maintains Buy and increases TP to $1.16 from $0.91. Note that house has been overly conservative and Sarin is deserving of a higher valuation. Hike PER multiple from 14x to 16x on revised FY11F earnings. Add that Arjav Diamonds is conducting India's first online auction with Galaxy system and BHP had previously adopted same system and was able to achieve higher premiums for its diamonds. The longer term implication is that De Beers may follow suit....
Success of the Galaxy system has led to flowover effects resulting in increasing demand for other Sarin products. Anticipate more manufacturers to switch to Sarin products when their product renewal cycle is due.
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