The company's recent situation
Ferretti S.p.A. announced 9M23 results: net revenue (excluding second-hand business) increased 10.4% year over year to 834 million euros, new orders increased 875 million euros, and on-hand orders increased 6.6% year over year to 1,472 million euros (+13.6% vs. 2022), covering more than 60% of the company's expected revenue in 2024. The increase in on-hand orders for 9M23 was mainly driven by an increase in in-hand orders for custom yachts (up 17.7% year over year).
By region, in 9M23, the Asia Pacific region (up 67.1% year over year) led revenue growth, followed by Europe, Middle East, and Africa (up 22.0% year over year), while the American region (down 20.9% year over year) was a partial drag on growth. By category, superyacht revenue continued to record strong growth (up 33.4% year over year), thanks to the release of semi-customized flagship models.
This was followed by integrated yachts (up 10.5% year over year), other businesses (up 10.5% year over year), and custom yachts (+3.3%).
9M23, the Group's adjusted EBITDA increased 17.7% year over year to 125 million euros, corresponding to a 15.0% profit margin (vs. 14.0% of 9M22), net profit increased 30.6% year over year to 61.9 million euros, corresponding to a profit margin of 7.4% (vs. 6.3% of 9M22), benefiting from strong brand power, pricing power, strategic positioning and scale effects.
reviews
Although the growth rate of the global luxury goods industry may be normalized due to continued inflation, a high year-on-year base, and weak demand, we believe that Ferretti can benefit from the resilience of the high-end customer base, continued market share integration, and increased operating leverage, thus relatively outperforming the industry and achieving double-digit year-on-year revenue growth and increased profit margins.
Profit forecasting and valuation
We kept our profit forecasts for 2023 and 2024 unchanged, and maintained our outperforming industry ratings and target price of HK$33 (corresponding to 6.4 times the 2023 EV/EBITDA), with 35.2% room to rise from the current stock price. The current stock price corresponds to 4.2 times the 2023 EV/EBITDA.
risks
Capacity is limited; competition intensifies.