UP Global Sourcing Holdings
Ticker: UPGS Exchange: LSE www.upgs.com

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.

Broadening the scope for growth

UPGS’s success in online and supermarkets, combined with the ability of key brands to resonate with its end-customers’ desire for quality affordable homebased products, shows that the company is well positioned for further growth as the Covid19 pandemic eases. Moreover, the potential for more M&A and new geographies implies substantial headroom for future expansion. We upgrade our profit forecasts and fair value in this report.

UPGS’s FY2021 half-year report, released today, re-confirms the £75.4m (+11.4%) sales number which was released in its end-period trading statement on 8th February 2021 and the favourable net bank debt position of only £1.5m. Profits in the six months to end-January 2021 increased at a significantly faster pace than sales. Underlying EBITDA increased 20.8% to £8.8m and underlying pre-tax profits rose 24.4% to £7.7m. Interim dividends will be 45.7% higher at 1.69p.

UPGS’s valuation appears undemanding in the light of the management’s ability to make it prosper during prolonged periods of Covid-19 related lockdown, the shift in distribution channels, Germany as a core region, and potential for further M&A. Our assessment of fair value rises to 200p / share, which would equate to an 18.0x prospective 2022 P/E ratio that better reflects track record and prospects.

UPGS audiogram


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