Grand Banks Yachts

Grand Banks Yachts: The luxury boat maker announced stellar 4QFY14 results, boosted by higher sales and underpinned by stringent cost-cutting efforts, spearheading the group to record its best year since FY09. Revenue improved 12% y/y to $13.2m, propelled by luxury boat sales in North America and growth in Asia. Gross margin was lifted 11.2 ppts to 17.7%, mainly attributed to higher productivity and utilisation rates. Subsequently, earnings turned around to $0.8m from a loss of $2.3m in 4QFY13. Notably, operating costs declined 44%, from improving cost-of-sales efficiencies, realigning sales, marketing and admin expenses through headcount reduction, lower travel and entertainment expenses and restructuring of its offices in the US and Australia. This brought full year earnings to $1m (FY13: -5.2m) and revenue to $40.3m (+15%). Following the watershed results, Grand Banks to submit an application to exit from the SGX Watch-List, after fulfilling the criteria for a profitable year. Order book stood at $19.8m. Market Insight reiterates its value call on Grand Banks. In a scenario whereby the company is able to obtain approval to exit the Watch-List, share price may lead to a potential re-rating. At $0.265, Grand Banks is attractively valued at 0.9x P/B, supported by net cash of $0.154/share.