20150702-Maybank_KERPL-Shaping_its_third_pillar_11页_786kb

报告摘要

Sarine Technologies Summary

Core Content

Sarine Technologies (SARINE SP) is a Singapore-based company in the Industrials sector with a current share price of SGD2.31 and a target price of SGD3.07, representing a 33% increase. The company has a market capitalization of USD599M and an average daily trading volume of USD1M. Maybank has maintained a "BUY" rating with a DCF target price of SGD3.07, based on a WACC of 9.6% and a terminal growth rate of 2%.

Main Points

Third Pillar of Growth: Sarine's Sarine Profile™ is gaining traction, particularly with Gemological Science International (GSI), which has decided to incorporate it into its diamond grading reports. This could lead to net profits of USD4-14m annually from GSI alone, with the potential for further growth from other pipeline deals.
Potential for GIA Adoption: The company believes that GIA, the world's largest gem lab, may adopt Sarine Profile™ for its certification process, which could contribute USD26-44m to Sarine's net profits annually. However, this is not currently included in forecasts.
Earnings Recovery: Sarine's short-term earnings weakness is attributed to a weak rough-diamond manufacturing market, but the firm expects a recovery in 2H15 as manufacturers' liquidity improves and demand increases.
Technology Advantages: Sarine Profile™ is based on the company's proven technologies such as Sarine Light™ and Sarine Loupe™, which provide detailed diamond imaging and grading capabilities. These technologies are highly customizable and have not yet reached their full potential in the market.
Market Position: Sarine's technologies are already used by GIA and are being evaluated for further applications by GIA. The company's market share is growing, and it is well-positioned for future expansion.

Key Information

Financial Highlights

Metric	FY13A	FY14A	FY15E	FY16E	FY17E
Revenue (USD m)	76.4	87.8	81.9	110.0	123.6
EBITDA (USD m)	33.9	37.9	34.8	57.1	66.6
Core Net Profit (USD m)	23.9	27.2	25.4	44.3	53.0
Core FD P/E (x)	25.1	22.8	24.5	14.0	11.7
P/BV (x)	8.8	7.5	6.7	5.1	3.9
Net Dividend Yield (%)	3.2	2.6	2.6	2.6	2.6
ROAE (%)	38.7	37.1	30.1	43.1	39.5
ROAA (%)	32.0	31.4	26.2	37.9	35.1
EV/EBITDA (x)	14.0	16.0	15.5	9.0	7.2

Sarine Profile™ Revenue Potential from GSI

Scenario	No. of Certificates (m)	Price per Certificate (USD)	Revenue (USD m)	Gross Profit (USD m)	Net Profit (USD m)	% of FY14A Net Profit
Base Case	0.5	18	9	8.6	8.6	31%
Bear Case	0.3	15	4.5	4.1	4.1	15%
Bull Case	0.8	18	14.4	14.1	14.1	52%

Sarine Profile™ Revenue Potential from GIA

Scenario	No. of Certificates (m)	Price per Certificate (USD)	Revenue (USD m)	Gross Profit (USD m)	Net Profit (USD m)	% of FY14A Net Profit
Base Case	1.5	18	27	25.7	25.7	94%
Bear Case	1.0	15	15	13.5	13.5	50%
Bull Case	2.5	18	45	44.1	44.1	162%

Key Risks

Adoption Risk: The success of Sarine Profile™ depends on its widespread adoption by gem labs and diamond retailers. Failure to gain traction could impact future earnings.
Competition: There are currently no competing products that can perform the same functions as Sarine's technologies, but this could change in the future.
Time to Adoption: GIA is expected to take at least two years to adopt Sarine Profile™, as it is conducting tests and evaluations.

Conclusion

Sarine Technologies is positioned for long-term growth through the adoption of its innovative Sarine Profile™ technology. The collaboration with GSI and the potential for GIA to adopt the same technology are significant catalysts for future earnings. Despite short-term earnings weakness, the company's core technologies continue to show strong performance, and its growth potential remains substantial. Maybank maintains a "BUY" rating and a DCF target price of SGD3.07, emphasizing the company's scalability and future prospects.

展开完整摘要