Sarine Technologies Ltd (SGX:U77) was incorporated in 1988 in Israel formerly known as Borimer Ltd. Through various stages of development and progression, the Group renamed itself as Sarin Technologies Ltd in 1994 and was subsequently listed in 2005 on the Singapore Exchange. Today, the Group has grown to S$954 million in equity value with a current P/E of 25.5 and current P/B of 9.4x!
What Does Sarine Technologies Ltd (STL) Do?
The Group develops, manufactures and sells precision technology products that utilizes 3D geometric measurements and software codes to process diamonds and gemstones. STL’s system provides these solutions at every stage of the diamond design, from determining the optimal yield from a rough stone, to laser engraving on rough stones; measuring, analyzing and inscription of polished diamonds.
The Group derives most of its revenue from India, followed by Asia ex-India and Israel. Although major wholesale diamond trading and manufacturing centres were historically in Israel and Belgium, this has fundamentally shifted to India which accounts for more than 80% of stones manufactured globally; China is the second most important manufacturing centre with several factories set up by international companies. Since FY2009, the Group has grown its revenue from US$21.4 million to US$76.4 million, a whopping 37.5% CAGR! Given the growing industry, net profit margin has greatly improved from 7.1% to 34.7% over the same period. Some of these customers include Tiffany & Co Ltd, Karp Index Ltd, Venus Jewels and Overseas Diamonds.
STL’s total assets stood at US$91 million as at 30 Sep 2014, with 77% of total assets consisting of current assets. Cash + short-term investments = US$40.6 million. Its liquid assets are able to sufficiently cover total liabilities of US$14.8 million. With its cash generative business, the Group has been able to consistently pay out dividends to shareholders (save for FY2009).
R&D and sales & marketing expenses continue to be the main operating expenses of the Group with a combined of around 80% of total operating expenses. Management has indicated that they will continue to focus on their R&D initiatives on The Galaxy family of products, Rough Planning products such as the Advisor, Facet Polishing products such as the DiaMension Axiom, Sarine Light and Sarine Loupe.
Value in Action
Sarine Technologies Ltd is probably one of the more unique companies listed on the Singapore Exchange and hope that this article would be able to provide a quick overview of the company.
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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above.