Sanlorenzo IPO

[MapisM]

The aborted Ferretti IPO which we debated in this thread didn't scare too much Sanlorenzo shareholders, who are going ahead with their plans.
In fact, last week they issued the IPO press release.
And I just read that it's scheduled to start in a couple of days (Dec. 5th), with the aim of being listed by Dec 10th.
So, time for placing your bets, folks. Wadduthink?

 

[jfm]

I commented on this in the other thread at the time.

Wow - that looks ambitious. They are valuing themselves more highly than Ferretti was valued by the market, on both a pre and post new money basis. And that higher valuation is both in multiple terms (about 9.5x 2019F ebitda compared with about 9x for Ferretti) and in absolute value. A noticeable feature in Ferretti was the secondary offering of shares when neither seller needed the money - that raised some eyebrows obvs. It is at least as striking with SanLorenzo in that the selling family is selling 22% of the company and taking €130m cash off the table (at the mid point of the price range and with full greenshoe). That's not out of kilter with people diversifying their wealth but in a yacht builder it prompts the question what do they know that others don't.

The timing is super brave so soon after Ferretti.

If we are placing bets then I'll bet the pricing will be at bottom end of range and they will really struggle to build the book - if the bet is binary then I'll bet a pint that they won't be done by Dec 10th.

As a side note, things like footnote 1 on the press release don't help - CAGR calculated by comparing a 2004 IT gaap number (no offence mapism ) with a 2018 IFRS number - perleeeese!

Will be super interesting to see how this goes, especially to Ferretti

 

[Deleted User YDKXO]

I bow to jfm's greater knowledge but as a layman looking at the Financials, 2019 looks a trifle massaged. I think I'd want to be convinced that the significant upward trend in Revenue and EBITDA through 2018/19 was more than just a blip, to justify that multiple

 

[Coustea1]

By boats, not boat builders.

 

[jfm]

Exactomondo. Was a heck of a blip. Another thing to go on the “spook investors” list.
Along with many others that I didn’t mention above. Like, if you buy a small boat from them you’re more than 1% of their turnover. Buy something well up their model range and you’re 5%. Gweep.
Margins are decent and plenty of cost is variable but not all. So what if 5 loyal customers were persuaded to buy a boat this year not next, as they would otherwise have done. Just work out what that does to the numbers. I’m not saying anything is wrong; only that there is plenty to spook investors even if ferretti were not so recent.

 

[Deleted User YDKXO]

By boats, not boat builders.

Youre right. Boat building has always struck me as a terrible industry. Entirely discretionary purchase in a relatively small and mature market hugely dependent on the economic cycle. Many different players with few economies of scale and requiring massive working capital. And with technology soon to be subject to environmental restrictions

So yes, buy the product but not the company

 

[MapisM]

CAGR calculated by comparing a 2004 IT gaap number (no offence mapism ) with a 2018 IFRS number - perleeeese!

Haha, no worries J, I wish this were the weirdest thing I found in that press release.
In fact, I suppose they had to specify that simply because back in 2004 SL didn't publish an IFRS B/S, which was mandatory only for listed companies.
But actually, with regard to net revenues (which is all it takes to calculate the CAGR), I wouldn't expect any relevant principles-driven differences.
As opposed to the bottom line, which can definitely be more affected.
Btw, I'd rather look at a B/S drawn up according to the IT accounting standards (which, to put it simply, are more stakeholders- rather than shareholders-oriented), if I were one of their suppliers and I should decide a credit limit. But that's me of course, and I don't think anyone can be interested in this digression.

Back to the point, yes, it'll be interesting to see how it goes.
I also agree that Perotti's expectations in this IPO could raise some eyebrows.
But frankly, I'd be more worried if it were his legendary predecessor Jannetti (RIP) to do the same.
In fact, I don't think he would have.

 

[MapisM]

if you buy a small boat from them you’re more than 1% of their turnover. Buy something well up their model range and you’re 5%.

Mmm... the math is a bit more complicated than that, 'innit?
Assuming 100 boats/year, if you buy a small one it can't by definition be worth 1% of the turnover.
And also for the larger ones, it takes a weighted average (that we don't have) to make that sort of calculation.
Not arguing on the principle, mind - just on the math.

 

[MapisM]

By boats, not boat builders.

If it's meant to be a sensible suggestion, probably "buy neither" is a much better one...

 

[jfm]

Mmm... the math is a bit more complicated than that, 'innit?
Assuming 100 boats/year, if you buy a small one it can't by definition be worth 1% of the turnover.
And also for the larger ones, it takes a weighted average (that we don't have) to make that sort of calculation.
Not arguing on the principle, mind - just on the math.

I wouldn't assume 100 boats/year btw. Turnover is ballpark e400m. I can't remember exactly. A nice small SanLorenzo in the 80 foot zone is ballpark 5m. That's 1%+ A 110 ish foot SanLorenzo is e9m = 2%+ ballpark

No matter on the exact numbers - my point is that there is a worrying lack of customer diversity. And they're not 35 yrs old either!

 

[burgundyben]

If it's meant to be a sensible suggestion, probably "buy neither" is a much better one...

That raised a chuckle.

 

[MapisM]

I wouldn't assume 100 boats/year btw

Aha, I see. I thought you did, just because I read elsewhere that they are (and they are planning to stay) within that ballpark production number.

Anyhow, yep, as I said the point is valid regardless.
Otoh, that's true for any builder of semi/fully customized boats.
Coming to think of it, for most of them it's even truer...!

 

[wakeup]

Anyone got access to their placing document?

 

[roa312]

Anyone got access to their placing document?

An Italian version of the prospectus (I assume that is what you're referring to?) is available on various platforms but I haven't been able to find an English version. I know some of the people that are assisting Sanlorenzo and have asked them if it is available and if I can post it.

 

[benjenbav]

The only sensible reason to invest is a realistic expectation of getting more back than you’ve put in.

On the other hand, an industry that’s building white elephant product with existing owners seemingly cashing out.

Does it come with a medal for bravery?

 

[wakeup]

Yes English thanks, my IT only extends to ordering bobardinos in Val Gardena

As they are putting this to US investors as well , there must be a EN version knocking about.

 

[PowerYachtBlog]

They build about 30/40 boats a year, taking Blue Game out of the equation. That might add another 10 - 20 the most AFAIK.

This month they sold two 500 XP models 50 meters hull eachm and I think they also have an order for one of the new 70 meters plus.

Sanlorenzo was founded 1958 by Janetti, so they are older then 35 years. Perotti bought the company in 2005.

 

[MapisM]

Sanlorenzo was founded 1958 by Janetti

I'm 99% sure that this isn't correct, W.
Giovanni Jannetti definitely was to SL as RB (RIP to both) was to S/skr, but as opposed to the latter, actually GJ was NOT the SL founder.
IIRC, he bought the yard in the early 70s, from a couple of Tuscan folks whose name now escapes me.
That's probably googlable I guess, if anyone is interested.

That aside, ref. the number of hulls, I read in an interview Perotti declaring that they are already "not far from 100 units", and strategically they don't want to go above that treshold.
No idea of the real number, but if your 30/40 is correct, his definition is a helluva stretch, I reckon!

 

[Deleted User YDKXO]

That aside, ref. the number of hulls, I read in an interview Perotti declaring that they are already "not far from 100 units", and strategically they don't want to go above that treshold.
No idea of the real number, but if your 30/40 is correct, his definition is a helluva stretch, I reckon!

Having visited their main Ameglia factory on several occasions in 2014 as you know, I was impressed by the build quality of their boats but not by the production process which seemed very old school artisan type boat building. Nothing wrong with that of course but its not conducive to massively ramping up production numbers unless they have plans to outsource some of their manufacturing

 

[PowerYachtBlog]

I'm 99% sure that this isn't correct, W.
Giovanni Jannetti definitely was to SL as RB (RIP to both) was to S/skr, but as opposed to the latter, actually GJ was NOT the SL founder.
IIRC, he bought the yard in the early 70s, from a couple of Tuscan folks whose name now escapes me.
That's probably googlable I guess, if anyone is interested.

That aside, ref. the number of hulls, I read in an interview Perotti declaring that they are already "not far from 100 units", and strategically they don't want to go above that threshold.
No idea of the real number, but if your 30/40 is correct, his definition is a helluva stretch, I reckon!

Perrotti said a few years back that about 30 boats a year is where he sees Sanlorenzo at. 100 units a year is a hell a lot of boats especially when your smallest boat is the SX76 costing about 4 million euros.

Are you it was not in a context like Sanlorenzo is very close to building its 100th hull above 100 feet? Just as an example.