- Sarine Technologies (SGX:U77)'s 9M22 revenue and net profit came in at US$45.7m and US$8.7m, respectively (-5% y-o-y, -40% y-o-y), broadly in line with expectations. 9M22 revenue comprises 80% of our FY22F forecasts and the 5% y-o-y decline was expected due to a high base in 9M21, driven by a surge in diamond demand as retail activities reopened.
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- On a quarterly basis, Sarine Technologies's 3Q22 revenue of US$14.5m and net profit of US$2.2m comes in 20% and 12% higher y-o-y, respectively. We note that the gross profit for 3Q22 was much lower, at 68%, compared to 76% in 3Q21. This is largely due to changes in the product, mix as the lower margin Meteorite Plus was rolled out in 3Q22.
Capital equipment sales robust with a 53% y-o-y increase; driven by recently launched Meteorite Plus.
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- All of the equipment was sold with recurrent revenue to be generated with the exception of 1 Meteor system that was sold under the one-off paradigm. In particular, the surge in capital equipment sales is due to the new Meteorite Plus that was launched recently in September.
- The Meteorite Plus is highly efficient, allowing a single operator to control up to five systems. In addition, it also yields an improvement in throughput, which is close to 50%. This allows the Meteorite Plus to significantly reduce the cost of ownership per stone scanned, which could also potentially help with unit economics, providing a line of defence against illicit IP infringements.
- We believe that there is still room for Meteorite Plus deliveries to increase, given that it is still early in the launch cycle, which should further lend support to recurring revenue as well as capital equipment sales. In fact, our checks indicate that supply chain constraints rather than a lack of demand is the limiting factor for the Meteorite Plus system.
Special interim dividend of US 0.5 cents; new dividend policy to distribute 80% of net profit.
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