The company's recent situation

Ferretti Group released the 1H24 performance update: net revenue (excluding second-hand business) increased 7.7% year over year to €0.611 billion, and adjusted EBITDA increased 15.9% year over year to 96.7 million euros, corresponding to 15.8% profit margin (vs. 14.7% of 1H23 and 15.2% for the full year of 2023).

New orders for 1H24 reached 0.514 billion euros (down 10.4% year on year compared to €0.574 billion in 1H23), mainly driven by European business, especially the integrated yacht business, due to a high year-on-year base and weakening demand (customers usually buy integrated yachts for immediate use, and colder weather will adversely affect customer demand). New orders from the Middle East and Africa region grew 60.9% year-on-year in 1H24, thanks to improved local infrastructure and the Group's strong local advantage. The year-on-year growth rate of new orders in the 1H24 American region (up 28.1% year over year) was positive, thanks to a strong rebound in demand in 2Q24 (up 145.9% year over year).

According to the company's disclosure, as of June 30, 2024, the Group had active orders of 1.496 billion euros, up 6.0% year on year, and net on-hand orders (total orders minus confirmed revenue) of 0.786 billion euros. Of these, 35% will enter 2024 revenue, and the remaining 65% will cover revenue after 2024.

On August 29, 2024, Jiang Kui was appointed as the new chairman of the board of directors of Ferretti Group after Tan Xuguang stepped down due to age. At the same time, the new composition of the group's internal board committee was also approved by the board of directors.

On September 3, 2024, Ferretti Group announced that Stefano de Vivo has decided to step down as Group Chief Commercial Officer and Managing Director for personal reasons (focusing entirely on his family business since November 1, 2024) after joining the Group for more than 10 years.

reviews

We believe that changes in the Group's management are normal and should not have a significant impact on Ferretti's business. We would like to draw investors' attention to Ferretti's performance in September, when there will be many boat shows and a potential decision by the Federal Reserve to cut interest rates.

Profit forecasting and valuation

We have kept our 2024 and 2025 revenue and EBITDA forecasts largely unchanged. We maintain our outperforming industry rating and target price of HK$36 (corresponding to 6.6 times 2024 EV/EBITDA). The current share price corresponds to 3.9 times 2024 EV/EBITDA. Our target price has 67.8% upside compared to the current stock price.

risks

Capacity bottlenecks; increased competition.