Superyacht firm makes a big splash on debut
number of billionaires is growing, with superyachts increasing in sync. In 2015, there were 1,800 billionaires and 1,835 super-yachts. By 2020, there are expected to be 2,500 billionaires and 2,285 superyachts. At the same time, the vessels are getting bigger. Ten years ago, the average boat that GYG painted was 54 metres long. Today it is 80 metres and some boats are up to 150 metres long.
These massive craft have to be serviced every five years to comply with regulations, and are often docked for maintenance annually, too. The work is highly specialised and GYG is a leading player with a 30 per cent share of the market. The group has a smaller presence in new-build painting, with just a 5 per cent share.
Historically, superyachts have largely been built in Northern Europe and GYG is based in Majorca. But it recently bought French firm ACA Marine, which has a strong new-build business.
Interim results, released last week, were encouraging. Revenues were up more than 19 per cent to €33.9million (£30million) and the company has a record order book, of €41.8million of contracted work for this year and next. The company reports in euros but dividends will be paid in sterling.
The group made a small half-year loss, largely relating to the cost of floating on AIM and also because most of its business is done in the second half of the year. Analysts expect underlying pre-tax profits of €7 million for this year, rising to €8.6million in 2018. Revenues of €66million are forecast for 2017, increasing to €74million next year. And a 3.2p payout is pencilled in for this year, rising to 6p in 2018 and growing steadily thereafter.
Chief executive Remy Millott is ambitious. He started working on yachts 35 years ago, and having joined GYG subsidiary Pinmar in 1996, he helped to create today’s group through mergers, acquisitions and management buyouts. Now he is keen to take GYG’s share of the superyacht priming and painting market to 50 per cent.
Most superyacht owners are less worried about the cost of maintenance than the standard and timeliness of the work. Yachts tend to be chartered for much of the year and GYG is known for delivering excellent finishes to schedule, so clients return time and again.
The firm has a supplies arm too, providing goods ranging from paints to safety equipment, jet-skis and marine uniforms.
Midas verdict: The superyacht market is expanding and GYG is a well-regarded player. At 137½p, GYG offers good long-term potential and a decent income. Buy.