Ultimate Products Global Sourcing Holdings PLC (UPGS) looks well placed to
return to growth. UPGS enjoys a combination of well-known household brands,
a proprietary approach to managing those brands, and significant growth
headroom within its distribution channels. Moreover, after a challenging H1,
sales trends improved in FY2018 H2. With a strong management team and,
arguably, an attractive valuation, the shares should attract investors’ attention.
UPGS is a consumer goods company with a robust portfolio of household durable goods
brands. Its premier offering includes Beldray, Salter, Russell Hobbs, Intempo and
Progress. Uniquely, the company offers these brands at attractive prices and in
categories which expand the overall footprint of the brand names.
In our view, UPGS’s brand management approach positions these key names for growth
but in a way which will generate shareholder value. UPGS’s portfolio should experience
what we refer to as mature market volume growth, which is arguably the strongest driver
of value creation in the UK consumer goods sector. Overall management quality tends
to be confirmed by clear vision and smart strategic positioning.
Given the UK retail climate at the moment, it is challenging to set a precise value on the
shares. But to give some guidance we look at our revenue estimate for FY2019 and,
even applying a conservative 1x EV/sales multiple, come out with a share price of £1 per
Furthermore, we are encouraged by the resilience that UPGS has shown in these
challenging times when others have floundered. We highlight the strength of their
balance sheet, as well as their ability to adapt quickly to external challenges - e.g. by
focusing on international and online opportunities.