Ferretti: La Dolce Vita
With recession signs on the horizon, ambitions for the IPO might have to be lowered
Compelling images are needed to get investors aboard an initial public offering. The products of Italian luxury motor yacht maker Ferretti could feature in the glitziest Hollywood movie. Fans reportedly include George Clooney.
Piero Ferrari, son of carmaker Enzo Ferrari, holds a 13 per cent stake. A price range for the shares revealed on Monday could value it at up to €1bn. Ferretti’s boats may be priced for those with A-list budgets. The shares could have potential for ordinary investors too.
Ferretti’s beautifully crafted, wooden-hulled Riva Aquarama vessels are known as the Ferrari of boats. Thankfully, the mooted valuation multiple is not as high as that of the car company. At the middle of the price range, Ferretti would be worth about 13 times this year’s ebitda earnings, a third below where Ferrari shares trade. But a Ferrari-like business is the final objective. Fresh capital from the IPO will be used to expand the group’s model range. Harder to achieve will be building a Ferrari-esque brand to sell high margin items. Swanky sailor’s sunglasses, perhaps?
Ferretti’s main shareholder is China’s state owned industrial group Weichai. It wants to reduce its 86 per cent shareholding but keep a controlling stake. Ferretti will come to market with a debt-free balance sheet.
While sales rose a tenth to €609m last year, ebitda rose only 2 per cent, which pushed the relevant margin down to 8.6 per cent — a far cry from Ferrari’s near 30 per cent margin. That suggests some work is needed in Ferretti’s engine room. But it still outclasses UK yacht builders Sunseeker and Princess, with ebitda margins of 4.5 per cent and 5.8 per cent.
Ferretti promises growth from countercyclical sectors, such as maintenance. The bulk of sales still come from rich countries. With recession signs on the horizon, ambitions for the IPO might have to be lowered. If so, a new chapter in Ferretti’s story would offer investors a chance to sail away into the sunset too.