Posted by: donmihaihai | August 5, 2021

Sarine, diamond and LGD

Sarine just announced best first half result since 2014. Still can’t believe how lucky I am. Sold close to the peak and bought close to the bottom and now the business is roaring back strongly within a year. It has to be luck since I don’t project/guess what would happen next on year to year swing in business. But I do try project/ assess the company competitive advantage and the landscape it is in.

Diamonds and Sarine are interesting.

With LGD, rather than replacing mined diamonds, I believe it is moving toward 2 tier segments. 1st segment will be where ladies will perceive mined diamonds as real diamonds and 2nd segment where LGD will be perceived as not fake but lesser diamond. And over time, while mined diamonds market size might become smaller and smaller, value of each diamond will increase, and mined diamond will shed off the image of blood diamond.  As for LGD, it will become more and more mass market, ie lower and lower price. I mean how can diamond be rare and forever when it is manufactured in a factory? After some time, differentiation between mined and LGD will be wider and wider despite both are essentially the same thing.

Since Sarine will be servicing both mined and LGD, then the future is very bright because LGD expand Sarine market. For a manufacturer, the equipment they needs will be different from mined diamond, toward the likes of efficient, productivity and cheap which I think Sarine is moving toward the right direction with “diamonds produced by technology – graded by technology”.

Having very strong position on the manufacturing side of mined diamonds, I don’t have much to add except on diamond Journey. This Journey can be so powerful that it can basically chains a diamond from the moment it is mined to on the slim finger of a lady to…… Sarine. I believe Sarine will be losing money on providing Journey but it will gain much more when Journey became the Chain that strengthen Sarine hold on manufacturing side of mined diamond and also make it easier for Sarine to get into the mining side and especially the prized segment – retail.

As long as diamond continue to perceive as rare and forever, Sarine will continue to gain competitive advantage.

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