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10 Things to Know About Sarine Technologies Ltd’s Latest Earnings

Sarine Technologies Ltd (SGX: U77) is a manufacturer of precision technology products for the processing and trade of diamonds and gemstones.

Yesterday, the firm announced its financial results for the third quarter and nine months ended 30 September 2017. Here are 10 things investors should know from the earnings announcement:

1. Revenue for the third quarter slumped 34.6% year-on-year to US$11.3 million, in line with the guidance it gave last month. Higher than normal polished diamonds inventories in the mid-stream caused manufacturers to slow production during the quarter. Furthermore, sales of Sarine’s inclusion mapping systems were affected by ongoing illegal competition.

2. However, Sarine did not experience any major drop in the number of stones processed by its installed base. Recurring revenues remained stable and accounted for more than 46% of its revenue.

3. Sarine went into a net loss of US$0.5 million for the quarter as compared to a net profit of US$4 million clocked in last year. The loss was due to the decrease in the sales volume.

4. As of 30 September 2017, the firm had US$13.4 million in cash and cash equivalents with no debt. This is a fall from US$19.5 million in cash hoard and zero debt that it had at the end of last year.

5. Sarine generated net cash from operating activities of negative US$1.1 million for the quarter, down from a positive US$5.3 million raked in last year. It also had a free cash flow of US$3.8 million a year ago.

6. For the nine-month period, revenue fell 14.7% to US$45.7 million.

7. Net profit plunged 60.3% to US$5.2 million.

8. Net profit margin tumbled 12.9 percentage points for the nine months, from 24.2% last year to 11.3% in the latest period.

9. Despite slower diamond manufacturing activities during the latest quarter, the firm said that “end-consumer demand in most of the significant retail diamond markets remains robust”. It expects the “polished inventory levels to be reduced by wholesale buying commencing after the holiday season, which typically provides for the return to normal industry activity” in the first quarter of next year.

10. It also added that it is “fully committed to defend and enforce its intellectual property rights”. On top of taking legal action against the lawbreakers, it is also “working on additional technological and commercial initiatives on several fronts to curtail and/or contain the illicit activities”.

Shares of Sarine Technologies Ltd closed at S$0.955 yesterday.

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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.