Italian Sea Group's thesis is very detailed, but if you have any questions about it or any of the others on the website (the team publishes one every Sunday - they are all available on the website) feel free to ask us! Thanks!
first of all thanks for your detailed analysis on your website. This has inspired me very much to look at this company myself. In fact, I have a few questions that have come up and would love to hear your perspective on them.
1. the company has not been on the stock exchange for so long and has accordingly published few figures. Is it possible that the very strong increase in sales so far depended on the economic environment and with the current phase the sales will stagnate?
Or are these high net worth individuals "immune" to this?
2. are the orders in the backlog sales to be realized in the future and are they secured, or how should this be understood?
2.1 What is the difference between Gross and Net Backlog?
3. although the growth of the company is immense, it seems to me that the free cash flow is very low. On this basis, I don't know if the dividends are sustainable. In addition, the so company seems to me to be very expensive on a free cash flow basis. So what is your opinion on this?
4.What is your opinion about the market position of the company and can you understand the reputation of the company among the customers?
1) They have been public for only 2 years since their IPO, but they have more than met their guidance for both years and have been ahead of their industry by investing in expanding their facilities during 2020-2022 to have more capacity during the "supercycle" in the industry (they are fully booked for 3 more years). Additionally, with the money from the IPO, they bought Perini Navi, which was bankrupt (it is the most iconic sailboat manufacturer in the world).
2) Yes, the orders are secured, and as a policy, they only purchase materials once the boat sale is signed.
3) The FCF has been small because they have been expanding their shipyards over the past 3 years (projects TISG 4.0 and 4.1, now all the investments have been made, and the FCF for the coming years will be much higher).
At https://moram.eu , we have analyzed several companies in this sector, such as $ONEW, $SL.MI... and although there are interesting opportunities, $TISG.MI represents the most potential, even considering the current revaluation. The ultra-wealthy segment (people who can afford €50-100MM yachts) won't suffer as much in a crisis (expansionary policies of central banks have created a lot of money) as the upper-middle class.
4) TISG was a step below Nordic shipyards, but they have been closing the gap for 2 years and are now closing the price gap (increasing margins) with them. TISG is in the top 7 worldwide for mega-yachts.
Regarding the current debt level (which is what concerns me the most) it’s mainly attributable to the Perini Navi acquisition and is likely to get down in the coming years?
First time reading. Very informative. Thanks Jon!
Thanks, glad you enjoyed it.
Great round up Jon!
Thanks Conor, glad you enjoyed it.
Thanks for sharing my write-up, Jon.
It was a good write up, keep them coming :)
Thank you for featuring my piece on Melcor. Much appreciated!
Enjoying your write-ups Nelson. Keep 'em coming.
Thank you very much for the mention!
Italian Sea Group's thesis is very detailed, but if you have any questions about it or any of the others on the website (the team publishes one every Sunday - they are all available on the website) feel free to ask us! Thanks!
Hey,
first of all thanks for your detailed analysis on your website. This has inspired me very much to look at this company myself. In fact, I have a few questions that have come up and would love to hear your perspective on them.
1. the company has not been on the stock exchange for so long and has accordingly published few figures. Is it possible that the very strong increase in sales so far depended on the economic environment and with the current phase the sales will stagnate?
Or are these high net worth individuals "immune" to this?
2. are the orders in the backlog sales to be realized in the future and are they secured, or how should this be understood?
2.1 What is the difference between Gross and Net Backlog?
3. although the growth of the company is immense, it seems to me that the free cash flow is very low. On this basis, I don't know if the dividends are sustainable. In addition, the so company seems to me to be very expensive on a free cash flow basis. So what is your opinion on this?
4.What is your opinion about the market position of the company and can you understand the reputation of the company among the customers?
Kindly,
Lukas
Thank you for your words, sure:
1) They have been public for only 2 years since their IPO, but they have more than met their guidance for both years and have been ahead of their industry by investing in expanding their facilities during 2020-2022 to have more capacity during the "supercycle" in the industry (they are fully booked for 3 more years). Additionally, with the money from the IPO, they bought Perini Navi, which was bankrupt (it is the most iconic sailboat manufacturer in the world).
2) Yes, the orders are secured, and as a policy, they only purchase materials once the boat sale is signed.
3) The FCF has been small because they have been expanding their shipyards over the past 3 years (projects TISG 4.0 and 4.1, now all the investments have been made, and the FCF for the coming years will be much higher).
At https://moram.eu , we have analyzed several companies in this sector, such as $ONEW, $SL.MI... and although there are interesting opportunities, $TISG.MI represents the most potential, even considering the current revaluation. The ultra-wealthy segment (people who can afford €50-100MM yachts) won't suffer as much in a crisis (expansionary policies of central banks have created a lot of money) as the upper-middle class.
4) TISG was a step below Nordic shipyards, but they have been closing the gap for 2 years and are now closing the price gap (increasing margins) with them. TISG is in the top 7 worldwide for mega-yachts.
Best
Carlos
Thanks for your response. I appreciate it a lot!
Regarding the current debt level (which is what concerns me the most) it’s mainly attributable to the Perini Navi acquisition and is likely to get down in the coming years?
Thanks!
Thanks Carlos.
Thanks ! Will read those after I finish Part2
Looking forward to reading Part2.