Sarin Technologies Presentation November 2012 Disclaimer Please - - PowerPoint PPT Presentation

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Sarin Technologies Presentation November 2012 Disclaimer Please - - PowerPoint PPT Presentation

Sarin Technologies Presentation November 2012 Disclaimer Please note that the information is provided for you by way of information only. All the information, report and analysis were and should be taken as having been prepared for the purpose


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Sarin Technologies Presentation

November 2012

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Disclaimer

Please note that the information is provided for you by way of information only. All the information, report and analysis were and should be taken as having been prepared for the purpose of general circulation and that none were made with regard to any specific investment objectives, financial situation and particular needs of any particular person who may receive the information, report or analysis (including yourself). Any recommendation or advice that maybe expressed in or inferred from such information, reports or analysis therefore does not take into account and may not be suitable for your investment objectives, financial situation and particular needs. You understand that you buy and/or sell and/or take any position in/or on the market, in any of the stocks, shares, products or instruments etc. based on your own decision(s). This is regardless of whether the information is analysed or not, regardless of the details or information related to price levels, support/resistance levels and any information based on technical or fundamental analysis. You understand and accept that nothing told or provided to you whether directly or indirectly is to be a basis for your decision(s) in relation to the market or your trades or transaction(s). Please see a registered trading representative or financial adviser for formal advise.

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Contents

Company Profile 1 Key Drivers 2 Valuation Model 3 Risk Analysis 4 Recommendation 5

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Sarin Tech Company Profile

 Precision technology products for processing of

diamonds and gemstones  Covers the value chain from planning, cutting, analyzing to grading diamonds

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Diamond Value Chain

Rough Diamond Exploration & Mining Rough Diamond Sales Polished Diamond Output Diamond Retail Sales

31% of Retail Value 48% of Retail Value

21% of Retail Value

US$ 70.8 billion

(US$ 15 billion)

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Polished Diamond Flow

Inclusion Mapping Planning Sawing & Shaping Polishing Cut Finishing Laser Inscription Visual Aids for Trade

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Revenue Breakdown

Source: Company Data, FY 2011

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Revenue Structure Trend

  • Revenue for services (Recurring) has been increasing

10 20 30 40 50 60 70 80 Revenue (US Millions) Service (Recurring) Product 0% 5% 10% 15% 20% 2007 2008 2009 2010 2011 2012F

% of Service to Revenue

% of Service to Revenue

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Key Drivers – Product Sales

Continued improvements in existing range of products; GalaxyTM and SolarisTM

  • Galaxy, Solaris – Accurately maps rough diamond inclusions

New service centres in diamond manufacturing centres and deliveries of GalaxyTM and SolarisTM systems Expansion to target mining and retail segment

  • Eg BHP Billiton, Tiffany & Co.
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Current Customer Base

Sarin Tech

Australia India Israel Belgium Japan Korea South Africa South America Taiwan Thailand USA

Source: Company Website

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Key Drivers – Recurring Sales

 Development of inclusion mapping system for polished diamonds  D-LightTM and D-LoupeTM

  • Stated to be future key growth drivers by management
  • D-Light: measures Light parameters (Brillance, Fire, Scintillation)
  • D-Loupe: imaging technology for diamond assessment

 Gemmological lab plans to utilise Sarin’s systems in their grading processes to issue GIA certificates (~5mil issued annually) (Extracted from Kim Eng Analyst Report)

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Luxury Goods Industry Trend

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A closer look…

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Penetration Rates: Diamond Engagement Rings

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Base Case

Assumptions

  • Revenues will grow in line with the rise of middle

income groups in India and China

  • Bain Diamond Industry Report of 6% Growth
  • Company retains its market share in the industry
  • Company mode of operations does not change

dramatically

  • Working Capital Ratios maintain relatively stable
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Scenario Analysis

Scenario 1

  • Illiquidity premium of 2% added to discount rate

Scenario 2

  • Revenue Growth Reduced to Zero for 3 years

Scenario 3

  • Combination of Scenario 1 and 2
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Intrinsic Value

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Risk

Currency risk - the weak Rupee has affected clients appetite for capital investment Credit risk of its customers Low Liquidity - average daily volume for past year is at 287K but at lowest point it is only 2K End demand for diamonds in developing markets like China is key to propel growth

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Insider Trades

  • Sarin has been

initiating share buybacks

  • Institutional investors

has been increasing their positions

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Conclusion

Sarin Technologies is..

  • Hidden gem
  • Pays you (dividends) to wait ~2.5%
  • Fundamentally sound technology company with a

global competitive edge

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