The sparkling gem

Ride the earnings upcycle; Initiate BUY
Sarine mainly engages in the development and manufacturing of advanced
systems for diamond technologies. We are initiating coverage with a BUY
and DCF-based TP (WACC: 8.6%, LTG: 2%) of SGD0.70. Our intrinsic value
implies 17.9x FY21E P/E and 14.4x FY22E P/E, compared to >20x during
the previous upcycle. We expect Sarine to post cyclical earnings uplift in
tandem with the recovery of the global diamond industry. The successful
dual listing on Tel-Aviv Stock Exchange by 2Q21 and better-than-expected
adoption rate for its e-Grading could further catalyse the stock.