Latest / The Dutch Investors / #24 | A company more exclusive than Hermès and Ferrari | The world’s most exclusive business

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#24 | A company more exclusive than Hermès and Ferrari | The world’s most exclusive business · The Dutch Investors

• 0:00
  SPEAKER_00: Welcome back to another episode by the Dutch Investors.
• 0:03
  SPEAKER_00: Today we're stepping into the world of extreme luxury.
• 0:07
  SPEAKER_00: And no, I'm not talking about a 50,000 Hermes Birkin bag or even a million dollar Ferrari.
• 0:15
  SPEAKER_00: Those are mere souvenirs compared to what we're discussing today.
• 0:20
  SPEAKER_00: This company sells to the wealthiest of wealthy.
• 0:24
  SPEAKER_00: Curious?
• 0:25
  SPEAKER_00: Let's find out.
• 0:27
  SPEAKER_00: Alright, I am talking about the ultimate luxury statement, something so rare that only a tiny fraction of the world can afford it.
• 0:37
  SPEAKER_00: To put things into perspective, while millions of people can afford designer handbags or even supercars, only 0.0000075% of the world owns a luxury yacht.
• 0:55
  SPEAKER_00: And not just any yacht, but a vessel that can cost anywhere from a million dollars to seven hundred million dollars or even more.
• 1:05
  SPEAKER_00: For example, take the Azam, a$600 million yacht built for the Emir of Abu Dhabi.
• 1:13
  SPEAKER_00: If you have that kind of money, it doesn't really matter what you ask a yacht builder, they'll do it.
• 1:20
  SPEAKER_00: Today we're not here to talk about that yacht or any other yacht specifically.
• 1:26
  SPEAKER_00: Instead, I want to talk about the Italian C Group, one of the finest yacht builders in the world, building yachts ranging from 30 meters all the way up to 140 meters.
• 1:40
  SPEAKER_00: This company is quite unique and perhaps the only interesting publicly listed yacht builder in the world.
• 1:47
  SPEAKER_00: And trust me, by the end of this episode you'll understand why I prefer the Italian C Group over competitors like San Lorenzo or Ferretti.
• 1:57
  SPEAKER_00: If Hermes and L VMH dominate fashion and Ferrari defines elite automotive engineering, then the Italian C Group is the pinnacle of maritime luxury.
• 2:08
  SPEAKER_00: But despite being one of the top 3 yacht builders in the world, it remains relatively unknown to the general public.
• 2:17
  SPEAKER_00: The Italian Sea Group is the largest Italian producer of yachts, over 50 meters and specializes in full custom and semi-custom mega yachts.
• 2:27
  SPEAKER_00: And unlike traditional shipbuilders, this company is positioned in the ultra-high-end segment, catering exclusively to the ultra high net worth individuals, those with at least$50 million in assets.
• 2:43
  SPEAKER_00: Each yacht is a one-of-a-kind masterpiece, tailored to the exact desires of its owners, and ranges anywhere from 1 to 3 years to complete.
• 2:54
  SPEAKER_00: And unlike luxury cars that are mass-produced compared to yachts, these yachts can take years to build, ensuring that every single inch reflects the vision of its ultra-wealthy clientele.
• 3:09
  SPEAKER_00: Think about it, the Tel MC Group might build 10 to maybe 25 yachts in a year.
• 3:16
  SPEAKER_00: Smaller ones, like the Lamborghini Technomar, get one delivery each month.
• 3:22
  SPEAKER_00: Roughly, while some full custom yachts only get two to five built in a year.
• 3:28
  SPEAKER_00: It just shows you how extremely exclusive and pricey these items are.
• 3:34
  SPEAKER_00: These extremely wealthy customers want the ultimate freedom, privacy, status, exclusivity, and a floating palace that just makes a private jet look like an Oberride.
• 3:49
  SPEAKER_00: So who are their customers?
• 3:51
  SPEAKER_00: This is where it gets interesting.
• 3:54
  SPEAKER_00: The Italian C Group customers aren't just rich, we're talking about the wealthiest of the wealthy.
• 4:01
  SPEAKER_00: And while many companies like LVMH, Kering, perhaps even Hermes and Ferrari cater to the high net worth individuals, their buyers still have price sensitivities.
• 4:15
  SPEAKER_00: But the Italian C Group's clientele live in a world where economic slowdowns and market fluctuations barely matter.
• 4:24
  SPEAKER_00: For these individuals, a yacht isn't just a luxury purchase.
• 4:28
  SPEAKER_00: It's the end goal, it's a statement, an asset, it's a sanctuary almost.
• 4:34
  SPEAKER_00: It's something they have dreamed about for decades.
• 4:38
  SPEAKER_00: I mean, is there anything more exclusive than having your own yacht?
• 4:43
  SPEAKER_00: I'm not sure there is.
• 4:45
  SPEAKER_00: This level of abundance means that unlike traditional luxury goods, the yachting industry is less cyclical.
• 4:53
  SPEAKER_00: While handbag sales, jewelry, clothing or cars might slow in a recession, the ultra-wealthy individuals will still finance their dream yachts.
• 5:06
  SPEAKER_00: Because when your net worth is north of a billion dollars, what's an extra 15 million dollars on a yacht that was already costing you over 50 million?
• 5:16
  SPEAKER_00: Now in the beginning I said that I prefer the Italian C Group over Ferretti and San Lorenzo, and let me try to explain why.
• 5:24
  SPEAKER_00: The Italian C Group operates in a niche within the luxury yachting segment.
• 5:29
  SPEAKER_00: While Ferretti and San Lorenzo are respected Italian yacht manufacturers and they build beautiful yachts, they also cater to the high net worth individuals, focusing mostly on yachts below 70 meters in length.
• 5:44
  SPEAKER_00: These yachts and customers are more susceptible to economic cycles.
• 5:49
  SPEAKER_00: The Italian Seagroup, on the other hand, plays in the ultra-luxury segment, where buyers are far less price sensitive.
• 5:57
  SPEAKER_00: Additionally, the Italian Sea Group can build mega yachts over 100 meters in length, something competitors currently cannot do.
• 6:06
  SPEAKER_00: Imagine you're worth$100 million, a very considerable fortune.
• 6:11
  SPEAKER_00: Buying a$10 million yacht will consume 10% of your net worth.
• 6:16
  SPEAKER_00: Now, if an economic downturn slashes your wealth to, say, 50 million, the same yacht suddenly represents 20% of your assets.
• 6:25
  SPEAKER_00: It's a serious shift, making such a purchase far more unpleasant.
• 6:31
  SPEAKER_00: The Italian C Group often structures yacht deals where 80% of the costs are fixed up front, but any additional expenses, say due to rising material costs or increasing labor costs, are passed on to the buyer.
• 6:47
  SPEAKER_00: For someone whose wealth has halved, these unexpected costs can be a real concern.
• 6:53
  SPEAKER_00: However, the Italian C Group also caters to clients in a different wealth league.
• 6:58
  SPEAKER_00: As the only publicly listed company capable of building yachts over 100 meters in length, they attract ultra-wealthy individuals as well.
• 7:08
  SPEAKER_00: For someone who is worth, say,$10 billion, losing 100 million in a market slump sucks, but he or she will barely feel any of it.
• 7:18
  SPEAKER_00: And an extra$20 million on a yacht is hardly noticeable, too.
• 7:23
  SPEAKER_00: And this distinction is essential to understand if you're looking for the best possible publicly listed yacht building company.
• 7:32
  SPEAKER_00: While economic downturns can deter the merely affluent from luxury purchases, the ultra-rich continue to invest in bespoke assets like Mega Yachts, ensuring companies like the Italian C Group remain resilient even in tough times.
• 7:50
  SPEAKER_00: In the luxury market, the higher the exclusivity, the more insulated the clientele is from economic downturns.
• 7:58
  SPEAKER_00: Brands like Hermes, with their ultra-affluent customer base, often remains more resilient when others falter.
• 8:07
  SPEAKER_00: Similarly, in the automotive world, Ferrari's elite positioning has allowed it to post strong results despite broader market challenges.
• 8:17
  SPEAKER_00: In other words, the Italian C group operates in a niche, within a niche almost, where demand remains strong regardless of market conditions.
• 8:28
  SPEAKER_00: And while no brand or company is entirely immune to global economic declines, those catering to the highest level of luxury and wealth often feel the impact last.
• 8:41
  SPEAKER_00: As investors, we love businesses that are insulated from economic downturns.
• 8:47
  SPEAKER_00: And that's exactly what makes the Italian C Group so fascinating.
• 8:51
  SPEAKER_00: The customers continue to spend even when everyone else is struggling.
• 8:56
  SPEAKER_00: But as with any investment, there are always risks to consider.
• 9:01
  SPEAKER_00: That's why in our full fundamental analysis of the Italian C Group, we cover everything there is to know: the history, the business model, the sector and industry, competitors, the competitive advantage, management, incentives, skin in the game, health, KPIs, capital allocation, financials, valuation, and we give you our thoughts on the company, whether we're buying, selling, or doing nothing.
• 9:28
  SPEAKER_00: Every single fundamental analysis is available as a podcast or written report.
• 9:33
  SPEAKER_00: Do you want access to the full deep dive into the Italian C Group or luxury companies like Caring or Richmond?
• 9:40
  SPEAKER_00: Head on over to the Dutchinvestors.com, and for less than 55 cents per day, you get a new company deep dive every single Friday.
• 9:49
  SPEAKER_00: Our 100 plus members already have access to over 40 different company reports.
• 9:55
  SPEAKER_00: And you'll also get access to our analyst portfolios, our buys and sells, and everything you need to make better investment decisions.
• 10:05
  SPEAKER_00: Until then, have a wonderful day, stay curious, keep learning, and happy investing!