2022 adjusted EBITDA exceeds our expectations
Ferretti S.p.A. Announcement of 2022 results: revenue rose 15% year-on-year to 1.03 billion euros, in line with our expectations of 10. 5%. 4.6 billion euros are basically the same. Adjusted EBITDA grew 36 per cent year-on-year to 140 million euros, corresponding to 14.1 per cent adjusted EBITDA margins (vs. 2021 adjusted EBITDA margins 12.0 per cent), 10 per cent higher than our forecast of 127 million euros. Net profit rose 61% year-on-year to 60.27 million euros (vs. 37.55 million euros in 2021).
2022 revenue growth was mainly driven by the Americas (up 29 per cent year-on-year) and Asia-Pacific (up 95 per cent year-on-year), while revenue in the EMEA region was flat. New orders for Ferretti reached 1.162 billion euros in 2022, while existing orders reached 12. 5 percent as of December 31, 2022. 9.6 billion euros.
The strong adjusted EBITDA profit margin benefited from economies of scale, price increases and the company's strategy to shift to larger integrated yachts and customized yachts with higher margins. In 2022, custom yachts accounted for 39 per cent of total revenue (vs. 2021 accounted for 28 per cent). Benefiting from deferred income tax assets, the group enjoyed a lower tax rate of 13% in 2022 (vs. The net profit margin was raised to 6.1 per cent (vs. 4.4 per cent in 2021). Ferretti plans to pay a final dividend of 5.88 euro cents per share in 2022 (corresponding to a dividend payment ratio of 31%).
Note: all the above profit margin calculations are based on net income excluding second-hand business.
Trend of development
We believe that the company's strategic shift to more exclusive customization will help to accumulate a large number of high-quality customer orders (as evidenced by the size of on-hand orders), which will help to improve the predictability of future revenue growth while supporting price increases and profit margin growth. We believe that Ferretti can continuously increase the average retail price in the following ways:
1) reduce the discount; 2) increase the proportion of high-end yacht revenue; 3) raise the price of the same type of products.
We draw investors' attention to Ferretti's first Capital Markets Day, which will be held on March 21, 2023, on which we expect management to further explain 2022 results and reveal future strategic plans.
Profit forecast and valuation
We expect revenue growth in the EMEA and AMAS regions to gradually normalize, so we downgrade our 2023 revenue forecast by 7.9% to 1.133 billion euros, but raise EBITDA and net profit forecasts by 9.9% and 25.8% to 167 million euros and 84.7 million euros, respectively, based on increased operating leverage and a skewed revenue structure towards customized yachts. We introduce 2024 revenue forecast of 1.247 billion euros, EBITDA forecast of 196 million euros and net profit forecast of 107 million euros. Based on improved profit margins, we maintained our outperforming industry rating and raised our target price by 10% to HK $33, corresponding to 5.6x 2023e EV/EBITDA. The current share price corresponds to 3.6x 2023e EV/EBITDA. Our target price has 43.2% upside over the current share price.
Risk
Production bottlenecks and supply constraints; increased competition.