Kim Eng on 5 March 2012
First-hand insights. Sarin’s chairman, chief executive officer and chief financial officer were in town last week to provide clients with a first-hand insight into their company. The trio’s sharing at the lunch-time briefing brimmed with the latest on product development and how the company is preparing to penetrate the polished diamond market with two new products, the D-Light and the D-Loupe, as part of its next phase of growth. Reiterate Buy and target price of S$1.71.
A billion-dollar company in the making. We envision what Sarin’s net profit figure will look like when it achieves what it sets out to do. Based on our blue-sky scenario, Sarin can potentially generate net profit of US$114m pa in the future and become a US$1.4b market cap company.
GalaxyTM value propositions proven once again. Management convincingly demonstrated the value proposition of the Galaxy machine both from an economic perspective and the time-effectiveness of using it. In our view, it is only a matter of time before the Galaxy becomes a widely adopted technology and the standard in the diamond industry value chain. Management also expressed confidence in achieving its target deployment of 100 Galaxy machines by year-end.
Two new key products. Sarin plans to formally launch the D-Light and the D-Loupe in 2H12. These two new products are slated to become the next key growth drivers for the company. We estimate the annual revenue potential for each product at about US$40m with annual net profit potential of about US$29m each in the future.
Liquidity may be freed up. Sarin R&D, owned by the original founders of the group, is the biggest shareholder of the company. We understand that most of founders are past retirement age and no longer actively involved in the management of the company. Should this group decide to cash out, it would free up some liquidity for the company.
Reiterate Buy and TP of S$1.71. We are more convinced than before and maintain our forecasts and target price of S$1.71, which is pegged at 16x FY12F PER.
Showing posts with label Sarin. Show all posts
Showing posts with label Sarin. Show all posts
March 5, 2012
February 15, 2012
Sarin Technologies
Kim Eng on 15 Feb 2012
A good set of 4Q11 results. Sarin’s 4Q11 net profit beat our expectations, coming in at US$4.8m (+271% YoY, +13% QoQ). FY11 revenue came up to US$57.8m (+27% YoY) with corresponding net profit of $17.4m (+56% YoY), slightly higher than our full-year net profit forecast of US$16.2m. A final dividend of 1 US cent per share was declared, bringing full-year dividend to 3.25 US cents per share. Reiterate Buy with the target price raised to $1.71.
Our worries were unfounded. We had expected 4Q11 to be weak due to seasonality and uncertainties associated with the global economy. Our concerns were unfounded as business sentiment in the sector was robust, with optimism in the market towards the end of the quarter. While demand from China and India is expected to continue to drive growth this year, Sarin does caution against a slower rate of growth if current macroeconomic conditions persist.
GalaxyTM sales momentum gaining traction. Sarin delivered 34 GalaxyTM machines in FY11, bringing the total number of installed GalaxyTM machines to 55 at year-end. This exceeded its expectation of doubling its installed base from a year ago. It further guided for the number of installed machines to reach 100 by end-FY12. We revise our FY12 forecast from 79 machines to 95 machines, as we see sales momentum gaining strong traction. Recurring revenue from GalaxyTM will swell as more machines are installed.
New revenue drivers. Sarin will have new revenue drivers in FY12, namely, the D-LightTM, D-LoupeTM and its Diamond Assay Service (DAS). These products are expected to have an impact on the topline from 2H12, with the former two possibly becoming significant contributors in the future. We are incorporating conservative assumptions for these new revenue drivers into our forecasts.
Reiterate Buy, target price raised to $1.71. We reiterate our Buy recommendation as we raise our FY12F net profit forecast by 23%, thereby revising our target price upwards to $1.71, pegged at 16x PER.
A good set of 4Q11 results. Sarin’s 4Q11 net profit beat our expectations, coming in at US$4.8m (+271% YoY, +13% QoQ). FY11 revenue came up to US$57.8m (+27% YoY) with corresponding net profit of $17.4m (+56% YoY), slightly higher than our full-year net profit forecast of US$16.2m. A final dividend of 1 US cent per share was declared, bringing full-year dividend to 3.25 US cents per share. Reiterate Buy with the target price raised to $1.71.
Our worries were unfounded. We had expected 4Q11 to be weak due to seasonality and uncertainties associated with the global economy. Our concerns were unfounded as business sentiment in the sector was robust, with optimism in the market towards the end of the quarter. While demand from China and India is expected to continue to drive growth this year, Sarin does caution against a slower rate of growth if current macroeconomic conditions persist.
GalaxyTM sales momentum gaining traction. Sarin delivered 34 GalaxyTM machines in FY11, bringing the total number of installed GalaxyTM machines to 55 at year-end. This exceeded its expectation of doubling its installed base from a year ago. It further guided for the number of installed machines to reach 100 by end-FY12. We revise our FY12 forecast from 79 machines to 95 machines, as we see sales momentum gaining strong traction. Recurring revenue from GalaxyTM will swell as more machines are installed.
New revenue drivers. Sarin will have new revenue drivers in FY12, namely, the D-LightTM, D-LoupeTM and its Diamond Assay Service (DAS). These products are expected to have an impact on the topline from 2H12, with the former two possibly becoming significant contributors in the future. We are incorporating conservative assumptions for these new revenue drivers into our forecasts.
Reiterate Buy, target price raised to $1.71. We reiterate our Buy recommendation as we raise our FY12F net profit forecast by 23%, thereby revising our target price upwards to $1.71, pegged at 16x PER.
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