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A quick background
In late 2023, I published a deep-dive on Singapore marina operator SUTL Enterprise (SUTL SP – US$63 million). You can find the link to it here:
Michael Fritzell
The company is the marina subsidiary of the unlisted conglomerate SUTL Group, which is known locally as a consumer goods distributor and retailer. Here's what the corporate structure looks like.
Patriarch Tay Choo Hye established SUTL back in 1968. Initially, the group focused on supplying goods and services to ships passing by Singapore. But it also began distributing cigarettes and Nike products across the Asia-Pacific.
After Tay Choo Hye passed away in 2002, his son Arthur Tay took over the business. He had spent time in SUTL's finance division, so he's widely seen as a "numbers guy".
Back in the early 2000s, the Singaporean island of Sentosa was being redeveloped into a mecca for international tourism and luxury housing. Arthur saw an opening and bid for the contract to develop, own and manage a marina, right on Sentosa.
SUTL won the bid. And in the following few years, it developed the marina that's now known as the "One°15 Sentosa Cove" — named that way because it's just 1 degree and 15 minutes north of the equator.
It became an instant success. Just a few months after opening in 2007, membership subscriptions reached overflow levels, and the occupancy rate of the marina quickly reached its limits.
What made One°15 Sentosa Cove special was that it was one of the very few marinas in Singapore able to accommodate vessels up to 200 feet. It was also close to several residential areas on Sentosa, allowing the ultra-rich to have easy access to their yachts. Later, it also added a customs and immigration facility, enabling yacht owners to enter and exit the country directly through the marina.
The marina has a capacity for 270 yachts. And following a 2021 reconfiguration, it can now accommodate 32 super-yachts of up to 220 feet. Having your yacht in the marina can cost up to SG$50,000 per year. But that hasn't deterred customers, given that the marina has a 97% occupancy rate. There's no space left, as you can tell from the following photos:
Connected to the marina is the One°15 Marina Sentosa Cove clubhouse, which you can get access to if you're a member. You don't have to be a member to berth your yacht in the marina, but you do get a discount if you're a member. The membership also gives you unrestricted access to all One°15 marinas across Southeast Asia. The membership entrance fee has been SG$60,000 per person, with a monthly fee of around SG$200.
The membership gives you access to all facilities, including:
- Playgrounds and a game room for children
- Dining privileges at the on-site restaurants, overlooking the marina
- Fitness center
- Spa
- Swimming pool
- Private members lounge
I get the feeling that many of Singapore's well-heeled buy memberships to gain access to a location where they can hold business meetings in quiet, beautiful surroundings.
Finally, there's a hotel operation, with 26 rooms right next to the marina. It's often used for wedding banquets and corporate events. Members get preferential prices on the rooms.
It's an exceptional marina. The Google reviews are positive, almost across the board, with an average rating of 4.5/5. Here are a few highlights from the reviews:
"One of the best marinas in Singapore"
"Very impressed to how it have grown over the years"
"An experience that I'll remember for life"
"Nice place to go for yachting and many more holiday activities"
So it's no surprise that One°15 Sentosa Cove has won prizes, including the MIA award for "International Marina of the Year" in 2023. And it was selected as the best marina in Asia for 8 separate years between 2009 and 2019.
Plus, there aren't many alternatives. Especially not if you own a super-yacht, as those tend to be too big for the other marinas, and for Sentosa houses that come with waterfront berths.
The main competitor, Marina at Keppel Bay, sits just across the bridge from Sentosa, and is about to be taken over by SUTL, though subject to an ongoing anti-trust review. The Republic of Singapore Yacht Club is member-owned. Then there's the Raffles Marina up in Tuas, close to Malaysia, which has deep berths but is mostly used for smaller sailing boats.
I consider ONE°15 Sentosa Cove to be the clear market leader, followed by Marina at Keppel Bay, and then Republic of Singapore Yacht Club. Partly because they're close to central Singapore, and partly because of their water depth.
To conclude, I think that the One°15 Sentosa Cove is in a league of its own. SUTL has previously guided for 7-10% yearly price increases, with unconstrained pricing power. In other words, there's no limit to how high prices can eventually go.
In addition to SUTL's Singapore marina business, SUTL also operates marinas on Nirup Island and Jakarta through long-term contracts with the owners. And it's in the process of setting up a 60:40 joint venture for a marina in Phuket. These do not materially contribute to SUTL's EBITDA, but there might be network effects. The company has previously described its strategy of building a "string of pearls", with members being able to sail from marina to marina, without ever leaving the One°15 service umbrella.
Some investors have expressed concerns about SUTL Enterprise's status as part of a larger group. But the company has historically treated minority shareholders well, paying out 50% of earnings and a SG$10-cent special dividend back in 2021.
The bigger question mark in investors' minds is that the One°15 Sentosa Cove marina's concession is set to expire in 2034. SUTL has been trying to extend the lease, but the outcome remains uncertain. If the lease expires, SUTL's SG$70 million+ investment in the marina might eventually prove worthless.
On the other hand, SUTL has a cash pile of SG$69 million, against a market cap of SG$81 million. The company has vowed to use the cash pile to expand the business, most importantly through the SG$40 million acquisition of Marina at Keppel Bay.
Another mitigating factor is that the One°15 Sentosa Cove marina is seen as one of the best in the world. Many investors question whether the Sentosa Development Corporation would want to get rid of SUTL and risk Sentosa's reputation. When I wrote my deep-dive in 2023, I judged that the lease would probably be extended, but with strings attached. SUTL will likely be forced to invest additional capital in the marina, which, on the positive side, could also improve the asset's quality.
An update to my original post
Since my initial write-up in 2023, the stock price has slowly inched upwards:
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