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Sarine Technologies Ltd Continues Shining Through With Steady Growth

Sarine Technologies Ltd (SGX: U77), which was previously known as Sarin Technologies, is the leader in precision technology products for the planning, processing, evaluation and measurement of diamonds and gems.

The company had undergone a change in its business model over the past few years, with a stronger emphasis on recurrent revenue now as compared to booking one-off sales by selling capital equipment in the past. It’s currently promoting systems and services, introduced from only 2012 onwards, that might revolutionize the wholesale and retail trading of polished diamonds.

Performance for the year

Sarine Technologoies had released its full-year results for 2013 on Thursday. In the year, the company had achieved revenue growth of 19.8% to US$76.37 million.

The main contributor to the growing top-line came from strong sales of products from the GalaxyTM family. During the year, the total installed base of GalaxyTM  systems reached over 140, up from 95 at the end of 2012, and recurring revenue now accounts for more than 30% of the company’s total revenue.

Sarine LightTM, the company’s prized technology for grading polished diamonds, started selling for the first time in 2013. This marks another possible avenue for growth for the company as Sarine LightTM, along with Sarine LoupeTM, caters to the market segment within the diamond industry that deals with the wholesale and retail trade of polished diamonds; it’s a market segment where Sarine Technologies has never had any involvement previously.

In any case, 2013 was also a year of growth for Sarine Technologies on many fronts. The company’s gross profit margin had expanded from 68.1% to 71.5% due to the recognition of more recurring income. In addition, the company also  saw strong growth in India, Europe and Israel, though it faced declining revenue in Africa and North America.

All told, Sarine Technologies ended 2013 with a net profit of US$23.9 million, which is 15.1% higher compared to 2012.

The company’s balance sheet remains strong, with more than US$33 million of cash in the bank with no debt.

In line with its profit growth, the company also increased its dividend. Sarine Technologies had declared a final dividend of US$0.02 per share, bringing total dividends for 2013 to US$0.06 per share, representing a 33% increase in dividend compared to 2012.

Future prospects

The company is confident in its superior technology and believes that any meaningful competition is still far from being able to catch up with them. With new products such as Sarine LightTM and Sarine LoupeTM, the company is entering a new market segment within the diamond industry that has the potential to be a new avenue of growth for the company.

Foolish Bottom Line

Sarine Technologies has been one of the strongest performing shares since the global financial crisis; it has gained more than 2,300% since the Straits Times Index (SGX: ^STI) bottomed-out in March 2009. At its closing price of S$ 2.26 yesterday, it is valued at 25.7 times trailing earnings and carries a dividend yield of 3.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.