SARINE Technologies : U77 0% is proposing to launch an off-market, equal access share buyback offer at S$0.34 per share.

On Monday (Nov 20), the developer and producer of diamond technologies said it believes the deal will enhance shareholder value by reducing its total number of shares in circulation, thereby raising the company’s earnings per share.

It added that the deal will also allow shareholders to realise their investments at a premium over the recent market prices of Sarine’s shares, without incurring transaction costs.

Daniel Glinert, executive chairman of Sarine’s board, said: “The directors believe that the company’s shares are significantly undervalued due to prevailing market uncertainties and are fully committed to creating long-term shareholder value. This offer is the first step in the company’s strategy to realise this substantial value.”

The group further intends to buy back up to four million shares, or 1.15 per cent of its issued share capital, excluding dormant shares, under the equal access offer exercise.

Based on the offer price this translates to about S$1.4 million, which Sarine said will be financed with company profits. Its directors believe this will not adversely affect the company’s working capital requirements or gearing levels, nor result in the company being delisted from the Singapore Exchange.

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To increase the number of shares a shareholder may tender, directors of Sarine who currently hold shares in the company, along with its chief executive, will not be participating in the equal access order.

The equal access offer will be made through an offer letter which the group intends to dispatch to its shareholders in due course.

Separately, Sarine announced that it recorded a net loss of just under US$1 million for the third quarter ended September, due to lower revenue and a reduced gross profit margin. This contrasts with the group’s Q3 net profit of US$2.2 million announced in the same period the previous year, when the group also announced a special interim dividend of US$0.005.

Revenue for Q3 FY2023 fell 28.3 per cent on the year to US$10.4 million from US$14.5 million, amid lower demand for polished diamonds and a drop in their prices.

The group said this was due to a combination of macro-economic uncertainties in the United States – which continued to affect consumer confidence and retail sales – along with economic woes in China, Sarine’s second-most important market for polished diamonds.

It added that the holiday outlook remains uncertain as budget-conscious shoppers in the US may show a further shift to lab-grown diamonds, further denting sales of the group’s one to two-carat natural diamonds.

“The extent of this trend, and the overall end-of-year holiday season in the West and the Chinese New Year buying early in 2024, will determine how fast the natural diamond industry recovers,” said Sarine.

Shares of Sarine were trading flat at S$0.285 as at 9.15 am on Monday, after the group announced both its proposed equal access share buyback and its Q3 results update.