Grand Banks Yachts

Grand Banks Yachts: Restructured and recapitalized in time to ride the US luxury boat market recovery. Grand Banks posted its lowest loss in four years of $0.6m, as 1QFYJun14 revenue rose 46% to $9.5m, driven by a recovery in the US luxury boat market and the successful introduction of several new Grand Banks’ models. Gross profit climbed 55% to $1.8m. Operating cash flow reversed back to $0.6m, from the negative cash flow of $1.7m a year ago. Net order book stood at $14.2m, 7% higher q/q, due to more orders form the US market which has exhibited good market traction in recent quarters. Grand Banks is positioning itself to tap into the continued US market recovery. For instance, it will be showcasing 6 of its models in the largest boat show in the world in Fort Lauderdale over 31 Oct – 4 Nov – the biggest Grand Banks’ display in the last 10 years. Management reiterates that while its FY13 losses have narrowed compared to FY12, more needs to be done to improve the financial performance in FY14. The group has embarked on a review of its operational structure and processes and will be executing the necessary actions with a view to achieving profitability in FY14, in line with its priority to be removed from the SGX Watch-List. The group has made an application to the SGX for an extension of time beyond 5 Dec ’13 for removal from the Watch-List and is awaiting response from SGX. In Oct, the group completed a 1-for-2 rights issue raising net proceeds of ~$12.3m, which may be deployed toward investment initiatives including new products, yacht inventory, and potential business acquisitions and for general working capital. The group remains on the look out for investment opportunities to widen its market reach and broaden avenue streams. Adjusted for the rights issue, Grand Banks trades at 0.8x P/B. The company boasts a strong balance sheet backed by $25.9m cash ($0.15 per share) and no debt.