Date of Report
October 7, 2024
Broker Name
Lim & Tan Securities Pte Ltd
Overview of FY2024 Performance
Grand Banks Yacht (GBY) delivered a remarkable performance for FY2024. The company achieved record-breaking revenue of S$133.7 million, up from S$36.8 million in FY2023, primarily driven by increased boat-building activities at its manufacturing yard in Pasir Gudang, Malaysia. Gross profit improved to S$50.7 million, while net profit more than doubled to a record-high of S$21.4 million.
Order Book and Future Outlook
As of June 30, 2024, the company reported a healthy net order book of S$120.0 million, providing a cushion against short-term macroeconomic headwinds. This is a slight decline from the S$159.4 million reported as of June 30, 2023. Grand Banks remains optimistic about the long-term growth potential of the luxury yacht market despite the challenges posed by rising interest rates, higher operating costs, and potential supply chain disruptions caused by geopolitical developments such as the Russia-Ukraine war and conflicts in the Middle East.
Dividend Announcement
To reward shareholders, the Board of Directors has proposed a final dividend of 1.0 Singapore cent per ordinary share. This, combined with the interim dividend of 0.5 Singapore cent per share, would result in a total payout of 1.5 Singapore cents per share for FY2024, marking the highest dividend payout in over 15 years.
New Model Launch and Expansion Plans
In response to market demand for larger, more energy-efficient yachts, GBY’s Palm Beach Motor Yachts brand is introducing its newest flagship model, the Palm Beach 107, the first yacht in their portfolio exceeding 100 feet. Additionally, the Palm Beach GT50 RS Outboard model, an evolution of the classic GT50, is designed to combine higher speed with improved fuel efficiency.
GBY is also expanding its Malaysian facility, with a new single-storey facility expected to be completed by December 2024. This will expand the yard’s floor space by more than 25%, allowing for shorter production times and facilitating the manufacture of larger yacht models.
Valuation and Market Position
At S$0.55, Grand Banks Yacht is capitalized at S$101.5 million and trades at 4.7x P/E, 2.9x ex-cash P/E, and 1.2x P/B. The company’s valuation paints a picture of a distressed company, which contrasts sharply with its strong market performance and brand recognition. GBY’s share price has almost doubled since the previous initiation of coverage, reflecting the company’s doubling in earnings. With orders moving toward larger boats commanding higher average selling prices, GBY’s profit margins are expected to improve, positioning the company for further growth.
Conclusion
Grand Banks Yacht stands as a distinguished brand celebrated for its iconic aesthetics and strong market presence. The company’s financial performance, strategic expansion, and continued product innovation signal a promising outlook, as reflected in its impressive FY2024 results and upward trajectory.
