Sanlorenzo Investment thesis – $SL.MI

Introduction to Sanlorenzo

Sanlorenzo is the luxury boat manufacturer we have probably discussed the most in recent years, second only to The Italian Sea Group. It was founded in 1958 and has historically specialized in the 30–40-meter segment, where they have been global leaders for the past decade. However, the company as it exists today cannot be understood without Massimo Perotti (its current CEO and 60% shareholder), who acquired Sanlorenzo in 2005 and has elevated it to a new level.

Since Mr. Perotti’s acquisition, the company’s top-line growth has been remarkable, achieving a 17.8% CAGR between 2004 and 2024. In 2007, they inaugurated the new Viareggio shipyard for the production of superyachts. Over the following years, they expanded their traditional yacht business by introducing new lines (SD, SX, SP), launching Bluegame (sport yachts), and increasing their international distribution.

In recent years, after the enormous growth following their IPO in 2019, they have undertaken several investments to expand their capacity of their shipyards and have shifted more towards the superyacht segment, which now represents 31% of their revenue and 46% of their backlog. Similarly, they have been very active in M&A, acquiring Swan Nautor, a well-known sailing yacht brand (which they aim to scale globally by leveraging their distribution network), and a distributor in the APAC region.

We now find it a very interesting time to revisit the company, as the superyacht industry, as we analyzed in detail in our recent publication on the sector, is currently experiencing a slowdown in demand due to post-COVID normalization and the cyclicality of smaller yacht segments. This has caused the stock prices of the two main publicly listed superyacht players, Sanlorenzo and The Italian Sea Group, like the rest of the sector, to plummet (due to fears of significantly lower order intake in the future), and they are currently trading at just 6x EV/EBITDA.

We believe that, in the long term, the industry will benefit from highly favorable trends, such as market growth driven by the increasing number of ultra-wealthy individuals, the rising penetration of luxury yachts, the substantial increase in hours spent onboard, and the greater pricing power of the world’s top brands, such as Sanlorenzo…

Today, we are conducting a complete review of the company (probably, one of the deepest analysis we have never done), as if it were the initial equity research, covering it in full. Starting with its history, business model, segments, facilities, geographic areas, and growth (including an analysis of its recent acquisitions of Swan and Simpson Marine), corporate structure, detailed financial model, and finally, our point of view and how it fits into the portfolio. It is one of the most detailed analyses we have done for a company that undoubtedly deserves it. The financial model is downloadable in the financial models section