A company more luxurious than Ferrari & Hermes
It's not Ferrari, Richemont or Hermès! Just 0.0000075% of the world owns such a thing!
Luxury is a relative concept. A $50.000 Hermès Birkin bag is expensive, but in the world of ultra-high-net-worth individuals (UHNWI), it barely scratches the surface of true exclusivity. If you really want to understand extreme wealth, you need to look at some of the rarest and most exclusive assets’ money can buy; (custom) yachts.
To put things in perspective, while millions of people can afford designer handbags or even supercars, only 0.0000075% of the world owns a yacht. And not just any yacht, but a vessel that can cost anywhere from $1 million to $600 million or more.
For example. This is the Azzam yacht, which cost around $600 million and was built for the Emir of Abu Dhabi (not built by the company we’re going to analyze today). This is a whole new level of luxury!
The Italian Sea Group ($TISG), the company we analyzed last week, builds yachts ranging anywhere from 30 meters up to 140 meters in length. Here a few examples of yachts they've built over the last few years.
Owning a yacht isn’t just about transportation; it’s about having your own floating villa, an art piece, with the ultimate privacy, customization, and a statement of wealth that even a private jet can’t match.
This is where The Italian Sea Group stands out. If Hermès and LVMH dominate luxury fashion, and Ferrari defines elite automotive engineering, then The Italian Sea Group is the pinnacle of maritime luxury. (At least, as far as publicly listed yacht builders are concerned).
Even though names like LVMH and Ferrari are well-known, TISG is still unknown to most people. Let’s change that.
The Italian Sea Group
TISG is the largest Italian producer of yachts over 50 meters and one of the top three yacht-builders in the world. Unlike mass-market yacht builders, it specializes in full-custom and semi-custom mega-yachts, ensuring that each vessel is one-of-a-kind.
Unlike traditional shipbuilders, The Italian See Group is positioned in the ultra-high-end segment, catering exclusively to Ultra High Net Worth Individuals (UHNWI), those with at least $50 million in assets. TISG is one of the most recognized companies in the luxury yachting sector, specializing in the design and construction of sailing and motor yachts ranging from 17 meters to 140 meters in length. TISG is the only publicly listed giga-yacht builder.
With a production model centered on ultra-customization, every yacht built by TISG is unique and tailored to each client’s needs. Unlike luxury car manufacturers that mass-produce vehicles, each TISG yacht is a work of art tailored to the owner’s exact specifications, often taking years to complete.
The TISG customers
The yacht market is a niche sector, catering to the wealthiest 1% of the population. It can be further divided into the wealthy, the super-wealthy, and the ultra-wealthy. Yacht builders often target Ultra High Net Worth Individuals (UHNWIs), but there is a clear distinction between millionaires, billionaires, and the ultra-elite like oligarchs, Saudi’s and Bernard Arnault, Elon Musk or Jeff Bezos.
The clientele of TISG isn’t just wealthy; they are the wealthiest of the wealthy. For this group, the difference between spending $50 million and $75 million on a yacht is negligible. Unlike companies like LVMH and Ferrari that cater to the affluent but still price-sensitive audience, TISG’s customers operate in a world where economic downturns and market fluctuations barely register.
Consider this: most luxury goods like handbags, watches, and even high-end sports cars are cyclical, meaning they can experience demand slowdowns during recessions. However, TISG serves a clientele that remains (mostly) immune to typical economic shifts.
For these ultra-wealthy individuals, a yacht isn’t just a purchase, it’s an asset, a sanctuary, something they’ve dreamed of for decades. Owning your own yacht is a global status symbol. The pinnacle of wealth.
How TISG compares to competitors
While Ferretti Group and Sanlorenzo are also well-respected Italian yacht manufacturers, they serve a slightly different clientele.
Both Ferretti and Sanlorenzo serve high-net-worth individuals, but their core business relies more on yachts below 70m, which are more exposed to economic cycles. TISG, on the other hand, plays in the ultra-luxury segment where buyers are far less price-sensitive. Additionally, TISG can build mega yachts over 100m+. Both Sanlorenzo and Ferretti (at this moment) cannot.
The company has an insulated business model because its customers continue to spend even in downturns.
🔓 Want to unlock the full analysis of The Italian Sea Group?
🛑 Don’t join TDI-Premium (yet). Our 95+ members already have access to the full in-depth analysis, but you’ll want to wait until our one-year anniversary promotion next week. It wouldn’t feel right to let you pay more than necessary for a membership.
In our in-depth analyses, we cover the following topics:
The business model
The sector & industry
The competitive advantage
Management (incentives, skin in the game)
Financials (health, KPI’s, capital allocation, etc.)
Valuation
We look forward to welcoming you next week! By then, The Italian Sea Group + over 50 other in-depth reports will be waiting for you on the TDI Platform. You’ll also get 24/7 access to our (4) analyst portfolio’s plus all our buys & sells.
Have a wonderful day and happy investing.
The Dutch Investors.