GRAND BANKS YACHTS: Temporary Pain for Long-Term Gain, says analyst "special report"

Expanding Production Capacity
GBY's growth strategy involves the expansion of its manufacturing yard in Pasir Gudang, Malaysia.

Previously, the company faced operational constraints.

Analyst Nicholas notes, "The expansion of GBY’s Pasir Gudang yard was necessary as GBY’s existing production capacity had effectively reached its limits amidst a strong orderbook environment".

CEO of Grand Banks Yachts, Mark Richards, at the Pasir Gudang yard. He is also the nine-time champion skipper of Palm Beach XI yacht, now owned by the company and used as a R&D and marketing tool. 

The newly expanded yard adds 25% more usable floor space and is expected to improve overall production capacity 10-15%.

This increase reduces delivery times for its buyers and allows multiple boats to be built simultaneously, including higher-margin stock boats used for display at global boat shows.

Global Footprint and Marketing Investments
Beyond physical manufacturing, GBY has directed capital toward its sales and marketing infrastructure.

In the US, which accounts for roughly 80% of its sales, the company acquired Casey’s Marina in Newport, Rhode Island.

This facility serves as a customer-facing hub and generates recurring revenue through services and storage. In Europe, GBY opened an office in San Remo, Italy, to re-establish its direct-to-consumer sales model in the Mediterranean.

The company has also increased its marketing presence, tripling its participation in international boat shows since 2022.

Furthermore, GBY purchased the successful racing yacht Wild Oats XI, now renamed Palm Beach XI.

This vessel is used as a R&D platform to test hull designs, while also serving as a marketing asset to build global brand awareness.

Observations:

• Revenue has shown strong growth: +17% in FY24 and +21% in FY25.
• Profit peaked in FY24 but declined in FY25, with a very weak 1H26.
• Order book is relatively stable but dipped in FY24 before recovering.

GBY currently trades at a lower valuation than its industry peers.

The company trades at a forward P/E ratio of 6.3x to 6.8x, whereas the industry average is around 18.5x, according to Nicholas.

Strong underlying business

"The value of GBY is driven by its brand equity, which is difficult to fully capture through conventional valuation metrics. As a result, earnings can appear volatile due to delivery timing, product mix and the sizeable CapEx cycle that has now largely been deployed, even though the underlying business remains strong." -- Nicholas Yon, analyst

GBY utilizes a direct-to-consumer, built-to-order business model where customers make progressive payments during the construction process.

It is a nice business model when your customers essentially finance your production.

This is supported by an orderbook that stands at S$144.7 million.

The company is also shifting its focus toward building larger yacht models, which typically yield higher margins.

The current valuation disconnect is partly due to the company's accounting methods.

GBY recognizes revenue using the percentage-of-completion method, meaning reported earnings can fluctuate depending on when specific boats are delivered.

Additionally, the upfront costs for the yard expansion and increased marketing have temporarily reduced recent profit margins.

However, Nicholas views this as a short-term accounting effect: "As these investments mature, we think the gap between cost-inflated trailing earnings and normalized earning power should close in the next few years".

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