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What Does Sarine Technologies Ltd Do and How Does it Make Money?

It is important to know what a particular company does and how it makes its money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Sarine Technologies Ltd (SGX: U77) is involved in and how it generates its revenue.

As a quick background, Sarine Technologies “develops, manufactures, markets and sells precision technology products for the processing and trade of diamonds and gemstones”. It is involved in the entire diamond value chain as seen below:

Source: Sarine Technologies Ltd’s Earnings Presentation

The table below summarises how the firm classifies its revenue and how much each segment brought in for the financial year ended 31 December 2016 (FY2016):Source: Sarine Technologies Ltd Annual Report 2016

Revenue from the sale of products, like the Galaxy family of products, Sarine Light, Sarine Loupe and Sarine Profile, came in at US$60.6 million, contributing to the bulk of total revenue.

The firm also provides maintenance and services and this raked in US$11.9 million for FY2016.

It is noteworthy that recurring revenue for FY2016 represented around 40% of total revenue.

India was the primary market for its products in FY2016, which contributed to 78.7% of overall revenue. A distant second was Israel, bringing in 5.5% of total revenue.

One of its key products, the Galaxy family, has no competition in the automated inclusion mapping systems market. As of 31 December 2016, Sarine Technologies had a total installed base of 299 systems worldwide. These systems have helped to contribute to Sarine Technologies’ recurring revenue.

Source: Sarine Technologies Ltd Annual Report 2016

Behind every ticker symbol lies a living, breathing business. Buying a stock without fundamental knowledge of what the company does and how it makes money can be dangerous.

Now that we know about Sarine Technologies’ revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash generating abilities, and more.

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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 Sudhan P doesn’t own shares in any companies mentioned.