Post on 20-Sep-2020
Sarin Technologies Ltd.
Corporate Presentation
November 2012
Disclaimer
This presentation may contain statements regarding the business of Sarin Technologies Ltd and its subsidiaries (the “Group”) that are of a forward looking nature and are therefore based on management’s assumptions about future developments. Such forward looking statements are typically identified by words such as ‘believe’, ‘estimate’, ‘intend’, ‘may’, ‘expect’, and ‘project’ and similar expressions as they relate to the Group. Forward looking statements involve certain risks and uncertainties as they relate to future events. Actual results may vary materially from those targeted, expected or projected due to various factors.
Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, interest rate charges and regulatory developments. Such factors that may affect the Group’s future financial results are detailed in our listing prospectus / circulars, listed in this presentation, or in the management discussion and analysis section of the company’s result report and filing with the SGX. The reader is cautioned to not unduly rely on these forward-looking statements. We do not undertake any duty to publish any update or revision of any forward looking statements.
The information contained in this presentation has not been independently verified. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Neither Sarin Technologies or any of its affiliates, advisers or representatives shall have any liability whatsoever for any loss arising, whether directly or indirectly, from any use or distribution of this presentation or its contents.
This presentation is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares in Sarin Technologies.
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Agenda
3
Executive Summary
Results Update
New Products Update
Trends & Prospects
Appendices
Business Overview
Products
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Executive Summary
Sarin is the global leader in the development and provider of solutions for the evaluation, planning, manufacturing and finishing of diamonds and is now launching systems and services which could revolutionize the wholesale and retail trade
Revenues and net profit rose 13% and 35% to US$49.6m and US$16.9m respectively in 9M 2012. 9M 2012 net profit is 97% of FY2011 full year net profit.
Q3 2012 revenues and net profit declined to US$11.7m and US$2.5m respectively as diamond manufacturing activities in India slowed down due to high rough diamond prices and liquidity issues faced by manufacturers
Total recurrent revenue grew more than 20% yoy and constituted over a third of Q3 2012 group revenues
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Results Update
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5-Year Results Summary
(US$’000) FY2007 FY2008 FY2009 FY2010 FY2011
Revenues 37,123 33,149 21,382 45,663 57,803
Gross Profit 24,402 21,130 12,479 29,350 38,281
Net Profit 8,010 1,594 1,528 11,111 17,366
Gross Profit Margin 65.7% 63.7% 58.4% 64.3% 66.2%
Net Profit Margin 21.6% 4.8% 7.1% 24.3% 30.0%
Cash and investments (no debt) 25,270 12,010 20,863 28,270 33,946
EPS (US cents, fully diluted)* 2.49 0.50 0.46 3.30 5.12
Annual Dividend (US cents)* 1.32 0.64 0.64 1.60 2.60
6 * Adjusted for bonus issue in May 2012
9M 2012 Results Summary
-5
0
5
10
15
20
25
30
35
40
45
50
Revenue Gross Profit Operating Profit
Pre-tax Profit Tax Net Profit
49.6
33.9
20.2 20.2
(3.2)
16.9
43.7
28.3
15.6 15.7
(3.1)
12.6
9M 2012 9M 2011 (U
S$
m)
%
change +13% +20% +29% +29% (4%) +35% 7
Q3 2012 Results Summary
-5
0
5
10
15
20
Revenue Gross Profit Operating Profit
Pre-tax Profit Tax Net Profit
11.7
7.4
3.1 3.0 (0.5) 2.5
15.9
10.1
5.8 5.7
(1.4)
4.3
Q3 2012 Q3 2011 (U
S$
m)
%
change (26%) (26%) (47%) (47%) (64%) (41%)
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9M and Q3 2012 Results Highlights
Driven by overall positive business sentiments in H1 2012 and GalaxyTM–
related pentration and usage, revenues rose 13% to US$49.6m and net
profit increased 35% to US$16.8m in 9M 2012
Q3 2012 revenue and net profit declined 26% and 41% to US$11.7m and
US$2.5m respectively due to following factors:
Increased rough diamond prices and short term price erosion of polished diamonds resulted in lower profitability for diamond manufacturers
Limited liquidity and working capital credit lines available to India manufacturers affected capital equipment investment
Various market uncertainties related to global macroeconomic conditions
Total recurring revenue grew 20% to over a third of group revenues in Q3 2012
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10
Revenue Breakdown by Geographical Segments
Region 9M 2012
(US$’ 000)
9M 2011
(US$’ 000)
y-o-y
Change
9M 2012
%
9M 2011
%
India 38,158 33,974 + 12% 77 78
Africa 4,007 3,657 + 10% 8 8
Europe 1,226 1,348 (9%) 2 3
N. America 914 796 + 15% 2 2
Others 5,252 3,962 + 33% 11 9
Total 49,557 43,737 + 13% 100 100
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Strong Balance Sheet
(US$ millions) 30 Sep 2012 31 Dec 2011
Non-current Assets 15.2 12.9
- Property, plant & equipment 5.5 2.9
- Intangible assets 9.1 9.5
Current Assets 55.1 48.2
- Inventories 7.8 6.3
- Trade receivables 7.9 6.7
- Cash & bank deposits 38.0 33.9
Current Liabilities 10.7 12.1
- Trade payables 2.1 2.7
Non-current Liabilities 0.6 0.8
- Long term liabilities 0.5 0.7
Shareholders’ Equity 59.0 48.2
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New Products Update
GalaxyTM Family Rollout
Demand for GalaxyTM family of products remains strong in all major industry centres
From just over 20 at year end 2010, the Group more than doubled the installed base in 2011 to well over 50 systems
As of 30 September 2012, the Group has just under 90 systems deployed worldwide
GalaxyTM HD (High Definition) and XL (Extra Large) systems were shipped to the Israeli, Indian and Belgium service centres in late 2011 and early 2012 to broaden the service offerings to customers
An enhanced GalaxyTM system with microscope quality to detect even very small inclusions will be available in Sarin’s service centres in mid 2013
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14
Optimal Planning with GalaxyTM Inclusion Mapping
Note unique
StrategistTM &
QuazerTM II
pie-cut sawing
Adoption by Major Customers
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BHP Billiton adopted GalaxyTM scanning technology to
map rough diamonds for sale in spot market auctions in
March 2010, followed by Blue Star (Arjav) of India in June
2011
Tiffany’s manufacturing arm, Laurelton, has adopted
GalaxyTM scanning technology to optimise their diamond
planning process
The ongoing adoption by major diamond miners, manufacturers and rough dealers is proof of GalaxyTM’s value proposition in facilitating the sale and manufacturing of rough diamonds
15
SolarisTM 100 – Small Stone Inclusion System
In October 2010, Sarin launched SolarisTM, the GalaxyTM equivalent for small stones (rough diamonds of under 2.5 carats)
This product helps diamond manufacturers achieve attractive returns on small-sized rough diamonds that typically yield lower margins
Provides exceptional scanning accuracy even to VVS levels
Group benefited from significant deliveries of SolarisTM systems in H1 2012
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DiaMensionTM HD / InstructorTM / DiaMarkTM HD
DiaMensionTM HD
High-end product for proportion measurement and symmetry
grading of polished diamonds qualified by GIA and AGS
Symmetry grading new business opportunity as previously only
done manually
The InstructorTM software product For the ongoing quality control of the actual polishing process
as the polished diamond is faceted
Unique capability of providing instructions on necessary
corrective actions and/or possible asymmetric enhancements
Almost untapped market potential as the product targets a need
which, until its launch, had not been automated
Sales of both products are expected to continue to drive the growth
of Group’s polished diamond grading product line
Sarin-LightTM
With increasing demand for prettier diamonds, Light Performance parameters (brilliance, fire, scintillation/sparkle and symmetry) are becoming accepted as understandable consumer-oriented criteria
In December 2010, Sarin acquired the Light Performance Technology (LPT), a system that enables the automatic, independent and accurate measurement of a polished diamond’s appearance
The Group expects interest in LPT from the virtually all players in the diamond industry, including manufacturers, wholesalers, gem labs and retail chains
Sarin-LightTM was launched in trade shows in the US and Hong Kong to very positive response; Sarin is working to conclude commercial agreements with major industry players; initial ones hopefully by year’s end.
Similar to business model for GalaxyTM/SolarisTM, the business model adopted for Sarin-LightTM will add to recurring revenue.
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18
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Low Clarity Low Colour Low Cut
Perfect stone -
high Clarity,
Colour and
Cut grades
Sarin-LightTM Imagery
Sarin-LoupeTM
An imaging system that captures a polished diamond, including its
internal features, in simulated three dimensions
Enables buyers to view it, as if with a traditional loupe, from a multitude
of angles and at varying magnifications, without having the polished
diamond physically in hand
Expected to significantly simplify the buying process of polished
diamonds by reducing costs and time involved for both buyers and
sellers
Target for commercial launch in 2013
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Sarin-LoupeTM Imagery of Included Stone
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Prospects
Prospects
While economic challenges prevail in Europe, some signs of improving economic conditions are emerging in markets such as China and the US.
The recent decline in rough diamond prices and renewed buying of polished diamonds by wholesalers and traders ahead of the year end holiday season have resulted in higher diamond manufacturing activities
in India.
GalaxyTM and SolarisTM inclusion mapping enhances demand for Sarin’s other products and contributes to the consolidation of the Group’s leading market share for manufacturing products
New service centres in additional diamond manufacturing centres and additional deliveries of GalaxyTM family systems will boost Sarin’s recurring revenue base
New products such as Sarin-LightTM, Sarin-LoupeTM and similar services (e.g., DAS) address the wholesale and retail trade of polished diamonds – a significant new market segment that is expected to add to the Group’s recurring revenue base
23
Deliveries of GalaxyTM family systems for rough diamond inclusion scanning and mapping to customers
Development of inclusion mapping system for polished diamonds (in research phase)
Launch of the Sarin-LightTM (LPT) and Sarin-LoupeTM
Expand Sarin’s potential markets to the mining and retail segments of the diamond industry
Broaden the Group’s revenue base into polished diamonds trade
Increase the recurrent portion of the revenue stream
Growth Drivers for Recurring Revenue
Important Catalysts to Future Growth
Benefits to Sarin
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Business Overview
Business Overview
26
Established in Israel in 1988, Sarin is a global leader with
proprietary technology specifically designed for and
applied to the diamond industry
Development, manufacture and sales of precision technology
products and services that revolutionise diamond manufacturing,
and the wholesale and retail trade
Major centres of diamond manufacturing and wholesale and retail
trading worldwide: India, China and southern African countries (S.
Africa, Botswana, Namibia), Belgium, Israel, Russia, USA and
Hong Kong
Business
Focus
Market
Focus
The need for technology is driven by pressures on manufacturing
margins, increasing consumer sophistication and demand for
better and prettier diamonds and retail chain positioning and
branding efforts
Adoption of
Technology
Diamond Industry Value Chain
Miners
De Beers concentrates ~ 45% of rough diamonds
worldwide; Botswana; Russia; Zimbabwe; Australia;
Canada; others
Manufacturers
India accounts for > 80% of all stones;
Southern Africa (S. Africa, Botswana and Namibia)
emerging as important centre
Gemmological
Laboratories Strategic customers setting industry standards
Wholesalers Belgium, Israel, USA, Hong Kong
Retailers
• USA > 40% of global retail diamond market
• Hong Kong is second largest market (~25%)
• Chains gaining in importance over shops
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Diamond Industry Value Chain
$15.2 billion
Rough
Diamond
Mining
Output
$18.3 billion
Rough
Diamond
Sales
$22.6 billion
Polished
Diamond
Output
$70.8 billion
Retail Sales
of Diamond
Jewellery
Our products increase profits at
all stages of the diamond trade from purchase
of rough stones to sale of polished diamonds
Value of Market in US$ in 2011
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Sarin’s Value Proposition
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Sarin’s Expertise
Challenges
• Need to increase industry players’ profits
• Address issues of quality and beauty
Proprietary precision mechanics, optics, electronics, laser and colour
technology with sophisticated software in computerised systems
Sarin’s Solutions
• Maximise profit from rough diamonds
• Grade quality and beauty polished diamonds according to 4Cs and
light performance
• Solutions to affirm and enhance branding
Products
Rough to Polished Diamond Flow
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Visual
Aids
for Trade
Laser
Inscription
Cut
Finishing Polishing
Sawing
&
Shaping
Planning Inclusion
Mapping
Sa
rin
Pro
du
cts
an
d S
erv
ice
s
DiaScan S+
DiaVision
DiaScribe
Sarin-Light Galaxy /
Solaris
Advisor
DiaExpert Eye/
DiaExpert Nano
DiaMark-Z
Instructor
DiaMension
HD
Strategist
&
Quazer II Green
Laser System
Sarin-Loupe
Products Introduced Over the Years
DiaMensionTM
DiaExpertTM
& Eye / Nano
DiaMarkTM & Z
DiaScanTM S+
DiaScribeTM
QuazerTM
ColibriTM
GalaxyTM 1000
/ 2000
DiaMensionTM
HD
DiaMobileTM
XL
InstructorTM
SolarisTM 100
DiaExpert TM
Nano 6.5
QuazerTM II
StrategistTM
GalaxyTM HD
DiaMark TM HD
GalaxyTM XL
DAS
Sarin LightTM
2012 2011 2009 2008 &
prior
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2010
33
Diamond with Inclusion Diamonds without Inclusion
Inclusion
Planned diamonds
Diamonds without inclusions can be worth up to 10x more
No cost effective automated inclusion mapping system existed in the market until the introduction of GalaxyTM 1000
GalaxyTM/SolarisTM offer automated, comprehensive and accurate mapping of inclusions within rough and polished diamonds in a far shorter time compared to currently available techniques
Inclusion Mapping
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Disadvantages Suppliers Technology
Needs windows opened in stone
Done by expert personnel
Limited success on complicated inclusions
Limited to larger inclusion sizes
Very long (hours/days per stone) process
Sarin and
others
Manual
Inclusion
Charting
Expert personnel required - not all
inclusions easily detected, often many
“false positives”
Relatively long process (hour +)
High cost
Others X-Ray
Inclusion Technologies Before GalaxyTM 1000
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No need to preprocess the rough diamond (no “windows”)
Supports most types of stones (even thin mineral-coating)
Automatic; little user-expertise required
Identifies all types and most sizes of inclusions
Relatively fast operation (minutes)
Cost-effective
GalaxyTM / SolarisTM
Automated Inclusion Mapping Technology
How opaque becomes transparent
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GalaxyTM / SolarisTM in Planning
DiaExpertTM Set-up Station DiaMarkTM Z
3-D External
Convex /
Concave
Mapping
Linking inclusion
mapping data and
rough planning to
optimise polished
diamonds’ value
Marking
Internal
Inclusion
Scanning /
Mapping
GalaxyTM
SolarisTM
Competitors
Diamond Planning &
Grading Products
Laser Sawing &
Cutting Products
OctoNus (Russia) High-end rough and polish equipment; teamed
with Lexus in India
Lexus (India) Low-end (primarily for quality control) & price-
driven products
Sahajanand Technologies (India) Former Sarin distributor in India – marketing own
equipment
Sahajanand Laser Technology (India) Low-end equipment
OGI Systems (Israel) Price player with international presence
Bettonville (Belgium)
Veteran high-end laser manufacturer
Laxmi (India)
Low-cost/low-end green laser without
cutting/shaping capabilities
S.O.S. (India)
Mainstream infra-red (IR) laser supplier
Sahajanand Technologies (India) Low-end/low-cost IR laser; wide presence
Sahajanand Laser Technology (India)
Low-end/low-cost IR laser; wide presence
OGI Systems (Israel)
Some market presence with a laser
Combined market share of competitors for diamond planning
& grading products is still smaller than Sarin’s (~75%) 37
Thank You
Q & A