Grand Banks Yachts gets the wind in its sails amid pandemic

SINGAPORE - Sportsmen have a somewhat different world view from the average businessman: They tend to be perfectionists and display incredible stamina, determination and wherewithal to raise themselves to peak performance.

They are also extremely tenacious, focused and goal-oriented and have the patience to see through the process to achieve their objective - to win.

Champion yachtsman Mark Richards is said to be that type of man. Not least because he applied these qualities to turn around a once-drifting Singapore-listed boatmaker into a profitable company.

Mr Richards was brought on board the struggling mainboard-listed Grand Banks Yachts in August 2014.

At the time, the company had been swimming in red ink for five years and was on the Singapore Exchange' s (SGX) dreaded watch list.

Its board - led by Genting Group' s owner Lim Kok Tay (who owns 29 per cent of Grand Banks) - decided a different kind of person was needed to skipper this boat.

At the time, Mr Richards was running his own Sydney-based Palm Beach Motor Yachts, which he founded in 1995. Palm Beach had developed a reputation for producing top-quality, fuel-efficient luxury motor yachts.

In 2014, Palm Beach was bought out by Grand Banks. Mr Richards came as part of the package, or, as some would have it, the proverbial prize.

The Australian was already a well-known yachtsman with over three decades of experience in boat building and open-ocean boat racing.

He was a two-time world champion and record-breaking eight-time winner of the prestigious and gruelling Rolex Sydney-to-Hobart race in his yacht Wild Oats XI. He also led Australia to victory in the 2003 Admiral' s Cup and has represented his country in dozens of international regattas, including two editions of the America' s Cup.

The new chief executive was seen as the man to rescue the struggling ship.

Set up in 1956 and based in Hong Kong, Grand Banks was originally called American Marine. Two decades later, it was incorporated in Singapore, and in 1987, it was initially listed on Sesdaq (Singapore' s junior board) as GB Holdings. Six years later, it was promoted to the mainboard and renamed Grand Banks Yachts.

Since coming on board in 2014, Mr Richards - who now owns 6 per cent of the company - has set about rejuvenating the company.

Its 15ha Pasir Gudang facility in Johor was upgraded with state-of-the-art equipment and machinery. Operations were streamlined and automated to improve efficiency. Wastage and dependence on middlemen were cut. More professionals and designers were brought in. The management structure was flattened.

The moves have paid off.

Since 2016, Grand Banks has been consistently profitable every year.

It posted record earnings of $4.2 million in the 12 months to June 30, and paid a dividend of 0.5 cent. This was despite a 27 per cent fall in revenue to $42.6 million, largely due to Covid-19-related countrywide work stoppages in Malaysia.

While Mr Richards has played a huge role in turning around the business, the bottom line has also been driven lately by a massive pickup in demand in the luxury boat market, especially in the United States, which accounts for some 80 per cent of Grand Banks' business.

Sales of boat and marine products in the US surged 9 per cent to US$47 billion (S$63.4  billion) last year, and are up another 30 per cent so far this year.

The US National Marine Manufacturers Association (NMMA) reports that new boat sales remain at " elevated levels" , and dealers are selling boats as fast as they receive them.

Industry observers attribute this to the fact that boating is seen as the perfect getaway sport amid the pandemic. It enables boaters to be off on their own, protected, socially distanced, while remaining with their families.

But what is interesting - and could potentially sustain demand for boats over the longer term - is the fact that there has also been a surge in first-time boat buyers.

NMMA data shows that 415,000 first-time buyers entered the market last year. And the average age was much younger than that of the traditional boating community, suggesting that the interest in this sport could grow in the years to come.

Grand Banks' 42- to 65-foot boats have been hot sellers in the US market, and the company has been busy trying to keep up with demand at its Pasir Gudang facility. These boats sell for around US$1.4 million to US$4.5 million each.

New products are being developed and introduced - the company recently unveiled its all-new luxury Grand Banks 54 at the Cannes Yachting Festival 2021.

Grand Banks' order book has been growing strongly and was at a record $117 million as at June 30, more than double the $49 million a year earlier.

The robust business conditions have boosted its balance sheet.

Cash balances stood at around $45.2 million as at June 30, compared with $10.7 million a year earlier. This translated to cash per share of some 25 cents.

Net asset value per share stood at about 33 cents, compared with the last traded price of the stock at 31 cents.

Given that the company is somewhat unappreciated here (the stock is thinly traded) and its market is overseas (primarily the US), there have been rumours of a potential delisting. But that is just speculation, for now.

As this company rides the wave of demand  and starts rewarding its shareholders, it should catch the market' s attention.

Also, sportsmen like Mr Richards are no quitters.