This is not a analysis type of company prospecting. Just my loose thoughts and me writing it down to test my own understanding.
Whe I am doing some loose readings and prospecting, a few companies not currently in my radar caught my attention.
First and foremost is Sarine Tech. It is at almost 10 years low. It is not loss Making, has zero debt, gave good dividends, so what is the problem?
There are 2 known big risks. First, no matter how good its techology is in the whole value chain of natural diamonds priduction, from planning to retail, it is affected by the cyclicality of vanity consumer product market.
When the suppliers of rough diamonds slow production due to weak polished diamond prices, diamond Capex will be affected, so Sarine Tech Planning, Mapping, cutting etc software and hardware sale will be affected.
This is just 1 side of the problem. Synthetic diamonds reduce the need for mapping and as much as I tried to Google, I dun think Sarine do cutting for Synthetic Diamonds.
Why am I still interested?
2 reasons. Debeer stated its intention to also produce synthetic diamonds, and not only so, its doing it at a fraction of price of natural diamond. As stated in the newspaper article, the tactic is not so much to undercut the competition, but to really differentiate the natural and synthetic diamond. I am not sure how successful it will be. But I do think it makes a lot of sense to create the 2 tier system.
Personally, the cheapo effect on synthetic diamond, will contrast the premium of natural diamond. Think of farm salmon and wild salmon. Also, as a solitaire, unless u are proposing not with a diamond, which one will u buy? It's not logical and rational at all, but diamond as a vanity product is never logical at the first place.
Assume the price of diamond is 3K, u can get the same grade diamond for 2K, there is this glee feeling of getting a good deal. But when u get it for 800 dollars, it lost its shine. The girl will ask why, and u hope no one will explain to the girl about lab produce diamonds. Nevermind the composite of carbon is the same.
Sarine Tech's Journey, Profile and light series of technology/ software further work on the premium and vanity quotient of diamonds by allowing customisation and adding to the story effect - "A diamond is forever" told in another way, if I can interpret it in my way.
Sarine Tech also face copycat problem in India, it's single biggest market. So there are reasons enough for it's free fall.
But assume a dividend of 3 US cents, EpS for 6 months already 2 US cents, it's a counter giving 4 cents SGD and above 5 Percent dividend when all the odds are against it.
The joy of company prospecting is not so much finding the baggers now. I wish I could, but I enjoy reading and understanding the business and industry through my layman lens. It's quite fun. Acknowledgments to Valuebuddies again, I had fun reading how the early investors took a 3 baggers and unload it before it crash back to earth.
Such fun, reading the bullishness in 2011 and the downturn that lead to a once market darling to become a plague.
Really a eye opener as I read through how growth explode in the early years and the turn came suddenly and how even with 50% fall from the peak, many who predict an rebound would be 30 % in the red now.
If u read the AR and recent announcement, it's "Vanity Enhancing" software seem to be going places, with Singapore Sookee taping its service. Sarine Tech also setting up centers at Guangzhou, Japan.
Of course, if trade war blows, and economy go on tailspin, diamond as a discretionary vanity product will be hit further.
But it does seem worthwhile to be locked into my alert list after primary reading.
Hope, I have time to read and hence share about the second counter that caught my attention, Netlink NBN Trust