When Luxury Sells for Less: European Yachts, too cheap to ignore.

Mr Market Shows Another Bout of Irrationality

Introduction:

Today we are looking at a niche within an undercovered market, exploring some deep-value opportunities that feature my favorite elements: cyclicality and minimal guidance, which together lead to uncertainty and attractive valuations.

I am referring to European yacht manufacturers. You might recognize some of the larger names such as San Lorenzo, Ferretti, and the Italian Sea Group, which focus on building boats and yachts for ultra-high-net-worth (UHNW) individuals. This segment typically exhibits lower cyclicality because the very rich tend to remain wealthy regardless of economic downturns. Nonetheless, these companies have struggled over the last year due to lower-than-expected order intake, and they now trade at very cheap valuations, suggesting they could be excellent long-term investments. Although we will likely cover them in the future, our current focus is on the more cyclical segment of European boat manufacturers, which includes Beneteau, Catana Group, and Fountaine Pajot. These firms usually make boats costing around one million euros each, and many of their clients are charter companies, so they are more sensitive to economic fluctuations. High-net-worth (HNW) individuals—who are more impacted by downturns than UHNW individuals—also comprise a significant portion of their customer base. Despite this vulnerability, our favorite picks, Catana Group and Fountaine Pajot, are extremely cheap and should benefit from the expanding catamaran market, projected to grow at an average CAGR of 6% over the next decade. These companies are currently experiencing a slowdown in sales, following a post-pandemic surge that primarily boosted yacht and especially catamaran orders, driving price increases of 30–40%. While 2023 was a soft year for new sales—and 2024 is expected to be similarly lackluster—most manufacturers managed to stay afloat thanks to substantial backlogs built up during the post-pandemic boom. However, the sustained drop in sales is now taking its toll, keeping prices depressed as 2025 is forecasted to be particularly challenging. Even so, the long-term thesis remains intact, and this downturn may well provide an appealing entry point. The key question is whether or not we have already hit the bottom of the cycle.

Have we reached the bottom of the cycle?

Have we reached the bottom of the cycle? Since we do not have formal guidance from any company, I have searched for insights directly from yacht brokers. In particular, I found a U.S.-based yacht operator called Catamaran Central that publishes quarterly updates on the catamaran market. The challenge is that their reported data typically reflects sales from six to nine months prior—reflecting the time it takes to build each boat—which means these numbers could give us a window into what the remainder of 2025 might look like. While Catamaran Central mainly reports on the U.S. market (which has a lower impact on Catana and Fountaine Pajot), it still offers valuable insights into overall market movements. The U.S. market tends to be more sensitive and volatile than Europe because American buyers rely more on financing and are therefore more affected by interest rates. Even so, there is a notable correlation between the data from Catamaran Central and the results reported by Catana and Beneteau.

Throughout the quarters of 2024, Catamaran Central reported boat sales down more than 20% year over year, aligning closely with Catana’s numbers for Q1 (which covers September to October), its recently reported Q2, and Beneteau’s performance in mid-2023. Because Catana has a longer delivery timeframe, if this correlation continues, we can likely expect the next few quarters to show similar revenue trends. On a more positive note, Catamaran Central recently reported that Q1 of 2025 saw slight year-over-year growth, thanks mostly to lower prices after the post-pandemic surge. This aligns with Catana’s statements in their press releases: the market reacted poorly to price hikes, but with more moderate pricing, hesitant buyers have begun returning.

It is important to remember that many catamaran buyers follow the market very closely—much like people shopping for a home. They compare prices, research models, and often wait for a dip in prices before making a purchase. The same applies to charter companies, which see these boats as investments. At lower prices, charters can achieve a better return on investment, prompting them to upgrade or expand their fleets. Consequently, while we may still see declining revenues across the sector over the next few quarters, guidance could turn more positive if order intake starts to recover by this summer. It is also true that margins will likely be a bit lower in the near term; however, considering that supply chain issues previously inflated costs and squeezed margins, these factors may end up balancing each other out.

Of course, macroeconomic uncertainty could still keep many potential buyers on the sidelines despite lower prices. It seems certain that 2025 will be a challenging year for the yacht sector, but I suspect the worst may already be behind us, as 2023–2024 appear to have been the weakest period in terms of sales. We are seeing the effects of that slump now, largely because manufacturers had robust backlogs from the post-pandemic boom that only recently began to taper off. With current valuations looking extremely attractive—even factoring in a potential 50% drop in profits—we remain in what I believe is “bargain” territory. For this reason, I think this is a good time to take a closer look at the market, given the widespread pessimism. If interest rates are lowered and prices stay more moderate, we could see growth return as soon as 2026. Even if that timeline is delayed, companies with healthy balance sheets (including net cash positions) and extremely low valuations should offer decent downside protection.

While I do not typically try to time the market, and I usually invest when assets become cheap enough to promise a solid long-term return, in this instance I plan to wait a bit longer. The market generally dislikes uncertainty, and I expect more of it in the coming quarters. I will continue to monitor developments, and paid subscribers will be notified when I decide to establish a position in any of these companies.

Now we will give an overview of Catana Group, the full thesis is available for paid subscribers, by the end of next week we will publish a thesis on Fountain Pajot which is trading under one times EV/EBITDA. I like Catana because they have leading gross and EBITDA margins, they have a great management team that has been able to grow the company really fast over the last decade and they have managed to keep inventories low anticipating the slowdown in demand in the market.

Catana Group:

Catana Group is an exceptional company. Revenue has risen from €34 million in 2016 to €229 million in 2024—an average annual growth rate of more than 20 % over the decade. This expansion has been driven mainly by the runaway success of its BALI brand. Management now intends to move BALI up‑market with longer, more expensive catamarans (beginning with the new BALI 5.8 this year) while simultaneously refocusing on the higher‑priced Catana range.

Catana Group is the only pure‑play catamaran manufacturer, a positioning that gives it clear competitive advantages through a strong brand and dominant presence in its niche. The portfolio currently comprises three product lines:

Recent quarters:

Catana reported weak revenue in the last few periods, with sales falling more than 20% in the first two quarters of the year—reflecting last year’s muted order intake. The order book should begin to recover as YOT production starts this month and new models such as the BALI 5.8 reach the market. Although a few tough quarters may still lie ahead, the share price already reflects an extreme level of pessimism, suggesting the market is overreacting.

Catana Catamarans:
Known for luxury, performance, safety, and comfort, the Catana line offers a semi‑custom approach: buyers can tailor layout, décor, and equipment to their preferences. After BALI’s explosive growth, management has pledged to push this higher‑end Catana brand again, which could unlock additional upside.

Bali Catamarans:
BALI generates more than 90 % of group revenue and has been the principal growth engine. The brand created a fresh niche: catamarans designed for enjoying the sea rather than for expert sailing, perfectly suited to charter companies and casual owners. To avoid over‑reliance on the largest charter operators, Catana targets smaller fleets of 10‑15 boats (about 80 % of the global charter market). Continuous product tweaks—aimed at lower maintenance costs and better operating economics—reinforce that positioning. For a feel of the concept, see the BALI 4.8 video:

The newly launched BALI 5.8, significantly larger and more expensive than earlier models, has already logged strong orders, underscoring the brand’s ability to penetrate the premium yacht segment, which tends to be less volatile.

YOT Motorboats:
The new YOT motorboat brand is scheduled to start generating meaningful revenue in the 2024/25 fiscal year, backed by a purpose‑built factory in Aveiro, Portugal. The move diversifies Catana into a market whose total addressable size is nine times larger than catamarans—and one that is admittedly more competitive. Early signals are positive: the second model, Y 41, launched early this year and was named “European Motorboat of the Year.” Management is visibly confident about the line’s prospects, expecting significant billings once production scales.

Thesis:

Catana Group is currently executing a 10 % share‑buyback program and has raised its dividend, offering an attractive yield of roughly 4.6 %. Although 2025 will likely be a challenging year, I believe the worst of the cycle is behind us. Macroeconomic shocks could still prolong the downturn, yet even under that scenario the company should post incremental growth: the new YOT motor‑boat segment is ramping up, and larger catamaran models are already expanding the order book. On the latest figures—about €30 million in net income and €40 million in EBITDA—the shares trade at less than 3.5 × earnings and under 2.5 × EBITDA, valuations that look absurdly cheap for a firm generating > 20 % ROIC, operating in a growing market, and enjoying higher profitability than its peers. For these reasons, Catana Group remains my top pick for playing a rebound in the yacht market.

I have updated my thesis on Catana Group with the latest numbers and with a new valuation.

Disclaimer:

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The information provided in this article is for informational purposes only and should not be considered financial advice. The content does not constitute a recommendation to buy, sell, or hold any security or investment. Always do your own research and consult with a professional financial advisor before making any investment decisions. Investing in stocks involves risk, including the potential loss of principal. Past performance is not indicative of future results.