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Sarine Technologies

Cost reductions driving profitability

Update | General Industrials | 16 Aug 2018

Sarine’s prudent cost management in Q218 translated into a 12.4% y-o-y increase in EBIT to US$4.7m, despite the lack of top-line growth. The company continues to focus on increasing the recurring revenue streams from retail-oriented services led by Sarine Profile and the 4Cs grading reports, with its second technology lab that recently opened in Mumbai. Despite the progress in already initiated projects with downstream customers being slower than expected, management remains confident that these services will become an important contributor to group sales.

Sarine Technologies

Growing importance of recurring revenue

Update | General Industrials | 18 May 2018

Following a considerable oversupply of polished diamonds in H217, conditions in the midstream market have returned to normal post the holiday selling season, as expected. Sarine was able to post a slight increase in sales in Q118 vs the previous year on the back of higher recurring income from its inclusion mapping systems. Equipment sales were largely focused on systems for smaller stones, including the recently launched Meteorite system. Going forward, management expects increased adoption of its comprehensive offering including Sarine Profile, the light performance grading tools, Sarine Diamond Journey and the AI-based 4C grading reports to further drive recurring revenue.

Sarine Technologies

Capital equipment sales gradually recovering

Update | General Industrials | 05 Mar 2018

Sarine's FY17 results were under pressure from excessive polished diamond inventories in H217 and continued illicit competition in India. However, Q417 saw a sequential increase in capital equipment sales, with 11 Galaxy family systems delivered during the quarter and a total installed base of 345 systems as at end-2017 vs 299 in 2016. Midstream inventory levels seem to have normalised and scanning activity is picking up. Management confirmed its positive consumer demand outlook for FY18.

Sarine Technologies

Preparing for the peak season

Update | General Industrials | 22 Nov 2017

Sarine’s ytd (Jan to Sep) profitability was relatively subdued, with lower equipment sales due to excess midstream inventories in Q2 and Q3, as well as the illicit actions of competitors. Simultaneously, Sarine incurred considerable R&D costs related to the development of Clarity and Colour grading technology and Sarine Profile. This was further exacerbated by the strengthening of the Israeli shekel. However, downstream demand remains strong (according to the company), while new products and lower R&D expenses should support earnings going forward. Sarine trades on a P/E of 16.3x FY17e, a 35% discount to the peer group.

Sarine Technologies

Leader in diamond manufacturing equipment

Initiation | General Industrials | 30 May 2017

Sarine is an established leader in equipment and services for the diamond manufacturing industry (the so-called “midstream”) with its own proprietary technology. Through new products and services, the company has entered the higher value-add downstream retail segment of the industry, which is more than twice the size of its traditional midstream market and commands higher valuations. This potentially underpins attractive growth and share price prospects over the medium term. Investors looking for direct exposure to the diamond industry may find the stock of interest in its initial stages of entering new markets.

Thin Film Electronics

Bringing it all together in 2018

ADR Update | Technology | 24 Nov 2016

Thin Film Electronics (Thinfilm; THIN) continues to report significant advances on an almost weekly basis. In October it took the keys to its new San Jose facility and recent milestones include new pilot orders in gemstones (Sarine Technology) and food (olive oil) and a partnership to produce combined hologram/NFC document authentication tags. We have cut our near-term earnings forecasts as THIN no longer intends to further de-bottleneck its existing plant (with short-term revenue implications), but our DCF valuation has risen 15% to $10.40/ADR, reflecting the expected boost to long-term cash flows from the greatly increased capacity/reduced cost expectations from the planned new roll-to-roll (R2R) production line.

Thin Film Electronics

Bringing it all together in 2018

Update | Technology | 21 Nov 2016

Thin Film Electronics (Thinfilm; THIN) continues to report significant advances on an almost weekly basis. In October it took the keys to its new San Jose facility and recent milestones include new pilot orders in gemstones (Sarine Technology) and food (olive oil) and a partnership to produce combined hologram/NFC document authentication tags. We have cut our near-term earnings forecasts as THIN no longer intends to further de-bottleneck its existing plant (with short-term revenue implications), but our DCF valuation has risen 15% to NOK8.58/share, reflecting the expected boost to long-term cash flows from the greatly increased capacity/reduced cost expectations from the planned new roll-to-roll (R2R) production line.