UP Global Sourcing Holdings plc

https://www.upgs.com/ TICKER: UPGS     EXCHANGE: Main Market

Established in 1997, UPGS has evolved from a local business into a global success. They develop new, innovative concepts and bring professional, sought-after products to the mass market. Their offices span two continents, with headquarters in the UK, Hong Kong, Guangzhou, and Belgium.

LATEST REPORTS

 
Underlying H1 sales soar 21% - Game on!
Published: Feb 11 2019

UPGS’ latest trading statement confirms the group’s improved sales momentum.  Moreover, with all four growth pillars performing positively, FY2018’s setback can be seen as exceptional, rather than the norm.  We remain positive on the outlook for both UPGS’ sales and profitability, which is in our view available to investors at a very attractive share price valuation.
UPGS’ financials and valuation tend to support a positive investment view.  We take this opportunity to raise our FY2019 EBITDA forecast from £7.9m to £8.7m as we increase our sales forecast from £108.2m to £117.5m. Based on a 58p closing price and our new numbers, UPGS trades on 7.5x EV/EBITDA, an 8.3x P/E ratio and boasts a generous 6.0% dividend yield.  Interim results are due 29th April. Game on!
 
Sustaining strong growth momentum
Published: Jan 08 2019

UPGS’s positive trading update, released yesterday, prompts us to raise our key estimates by more than 10% for all of revenue, EBITDA and adjusted EPS.  Importantly, the company distinguishes itself from the more troubled UK consumer facing businesses with 24% potential sales growth in FY2019.   
The RNS revealed that the positive momentum referenced in its last trading statement - issued 6th November 2018 - has continued.  As a result, we upgrade our FY2019 forecasts only a couple of months later.  We raise our FY2019 revenue forecast from £97.0m to £108.2m and EBITDA from £7.1m to £7.9m.  Revenues are expected to grow by 24% in FY2019 compared with 11% previously envisaged, and that brings the company back close to its £110.0m FY2017 peak sales revenue number. 
Every one of UPGS’s strategic distribution pillars - discounters, UK supermarkets, online and international customers – is contributing positively to revenue growth.  International continues to progress well and is increasing its share of the company’s overall revenue. This represents a healthy diversification given apparent uncertainty in the UK consumer facing sector overall.
We raise our FY2019 basic adjusted EPS forecast by 12.5% to 6.3p, which assumes a 22.3% tax rate compared with 21.0% in FY2018 and a higher finance charge due to increased working capital requirements. The company’s next update relates to the FY2019 half year and is due on 11th February 2019.  
The positive newsflow tends to confirm inherent sales growth and the strength of the UPGS business model under its resolute management team.  Moreover, key valuation measures continue to look attractive with the company’s shares trading on 0.5x EV/sales, a 7.3x P/E ratio and boast an attractive 6.8% prospective dividend yield.
 
Presenting at the ED Investor Forum November 2018
Published: Dec 04 2018

If you missed out Investor Forum on the 28th of November, or simply want to hear the presentation again, the recording of UP Global Sourcing is now available on our website
Managing Director, Andrew Gossage, discusses the last 12 months of trading, and the opportunities they have exploited to turn momentum in their favour.
 
UP Global Sourcing Full Year results interview 2018
Published: Nov 07 2018

Andy Gossage, Managing Director, and Graham Screawn, Finance Director, discuss the last 12 months of trading, and the opportunities they have exploited to turn momentum in their favour.
 
Feeling good about FY2019
Published: Nov 06 2018

UPGS develops new, innovative concepts and brings professional, sought-after products to the mass market. Their offices span two continents, with headquarters in the UK, offices and a showroom in Guangzhou and a showroom in Germany.
After an unquestionably challenging year, UPGS delivered FY2018 preliminary earnings results in line with consensus as underlying EPS was 5.4p. Sales revenue of £88m and £6.5m adjusted EBITDA reconfirmed an earlier announcement.  UPGS’s international business continued to gain ground as a portion of sales due to a strong H2.  Moreover, FY2019 appears to have started well and we raise our EBITDA estimate from £6.9m to £7.1m, largely due to better than expected sales revenue: the future feels good.  
Overall, there were few surprises in UPGS’s FY2018 results. Revenue and EBITDA were pre-released in a 10th September trading statement, which reported that FY2019 orders were ahead of last year and that online rose 52% to be 7.9% of sales revenue.  Importantly, international regained ground in the second half of FY2018 and comprised 36.9% of sales compared with 19.8% in the first half and 27.4% in the year as a whole.  International sales grew 16.4% in the 6 months.  German business doubled in FY2018.
UPGS reconfirmed that FY2019 started well and we infer good reason for ongoing optimism.  A well-positioned brand portfolio and good growth prospects in both online and international prompt us to raise our FY2019 sales forecast from £95.4m to £97.0m, EBITDA from £6.9m to £7.1m and EPS from 5.5p to 5.6p.  Dividend policy is for a 2x cover, while debt headroom and projected cash conversion underpin future dividends.
The longer-term investment case for UPGS remains intact.  The company is committed to driving its brands’ revenue growth through its four strategic pillars: discount retailers, raised supermarket penetration, online and international. We retain our future expectations of sustainable 5% organic sales revenue growth.
Based on our revised forecasts for FY2019, UPGS trades on 6.2x EV/EBITDA, a 6.8x P/E ratio and offers a generous 7.4% prospective dividend yield.  Investors should probably feel good about the share price potential.
 
UP Global Sourcing initiation summarised by analyst Chris Wickham
Published: Oct 04 2018

Equity Development analyst, Chris Wickham, discusses the business opportunities, the strength of its core brands, and why international expansion provides the necessary diversity to its growth platform.
 
Ultimately, there is Growth
Published: Oct 02 2018

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 share. 

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.

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