Moram Analysis The Italian Sea Group
Results of companies

The Italian Sea Group – 3Q22 results $TISG.MI

Introduction to The Italian Sea Group

The Italian Sea Group is the leader in the luxury yacht-building industry. It made its IPO in the summer of 2021. It trades as $TISG in the Milano Stock Market. $TISG has a market cap of around €260MM. Its revenues and EBITDA have trebled in the last 2 years. The Italian Sea Group has five brands (Admiral, Tecnomar, Perini Navi, Pichiotti and NCA refit). And it is focused on superyachts entirely made to measure, with Length Overall (LOA) ranging from 20m to 100m. It is the first builder in Italy and the fourth in the world for yachts over 50 meters.

What are the brands of The Italian Sea Group?
Source: TISG

TISG 3Q22 Results

TISG reported results on Thursday and beat analyst expectations. Its revenue for 3Q22 was €76.5MM (+64% YoY) and its EBITDA was €16.2MM. EBITDA margins have grown to 15.7% which is beyond the top range of the 2022 guidance (15%).

By business lines, shipbuilding revenues accounted for >95% of the group revenue in the 3Q22. Growing to €73.2MM in these 3 months, which is more than the entire 1H21. Refit revenues in the first 9M22 which almost triple the figure from last year, as a result of increased capacity at the Carrara shipyard and availability of spaces in the newly acquired Perini shipyards of Viareggio and La Spezia. However, we need to highlight that there is almost no refit in 3Q as it is peak season and no maintenance is usually done during these months.

On the investment side, they invested €4MM this quarter. It makes €11MM the investment made this year so far. This amount has been used for La Spezia & Viareggio facilities including the capacity increment and photovoltaic panels to diminish electric consumption. Net debt continues at €46MM following the acquisition of Perini Navi earlier this year.

$TISG Backlog

The backlog increased €61MM to €922MM at the end of Jun 22 with the progress related to the sale of two Admiral panorama during 3Q22. Moreover, it signed two NDAs for two new megayachts (>65mt full custom) in the US (not yet included in the current Order Book and net Backlog). They also commented that are two Picchiotti yachts close to being signed. Furthermore, they expect around €300MM new orders in 2023

As of today, the Group has 35 yachts under construction, of which 19 mega and Giga-yachts and 16 Tecnomar for Lamborghini. Giovanni Constamti (CEO) commented that there are no signs of slowdowns in demand, particularly in the very high-end range of products. TISG plans to maximise production capacity through serial production projects (Gentleman Picchiotti and Admiral Panorama). They also confirmed that Tecnomar’s production for Lamborghini will be moved entirely to La Spezia starting in December

We also see that the macroeconomic crisis is not impacting the TISG business as the ultra-wealthy segment of the population is very resilient. In fact, the current demand is 3x the installed capacity worldwide.

TISG Backlog - The Italian Sea Group backlog
Source: TISG

Our thoughts about The Italian Sea Group

The results of TISG in 3Q22 have been impressive. We believe that they will surpass the high-end of the 2022 guidance in FY22. The margins are increasing and they are ramping-up activities in the newly acquired shipyards of Viareggio and La Spezia.

We believe that the perspectives are pretty good for TISG as the demand remains strong. Moreover, it is dealing with the increment in cost and managing to improve its margins. The industry continues to grow and TISG is well-placed to exploit the full potential of a steadily-growing industry. Furthermore, the increment in capacity and turnover are boosting operating leverage on costs, so we expect a further increase in margins in 4Q22 and beyond.

TISG also announced a Capital market Day in the second part of January which we believe will provide more details about the new projects signed and yacht designs.

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