Reinforcing the online offering

UPGS today announces two important steps forward in relation to the company’s direct to consumer and online offering. UPGS has purchased the Salter.com domain name for Salter measuring devices and will soon complete an overhaul of the Beldray.com web portal. Arguably, both steps will help the company to achieve its objective of transacting 30% of sales online.

The company's shares continue to trade in line with its peer group’s average on both EV/sales and EV/EBITDA. However, there are clear discounts in terms of P/E ratio and dividend yield which arguably reflects UPGS’s superior profitability and cash generating capabilities. The company specifically targets a 50% dividend pay-out ratio or 2x cover.

Being adaptable to changes outside of its control enabled UPGS to navigate significant headwinds in the past two years – notably COVID-19 and prolonged lockdowns. The company continues to manage supply chain complexities associated with Chinese manufacturing and occasional import bottlenecks at UK ports. UPGS’s ability to counter such headwinds without issuing any profit warnings should also be noted, setting it apart from some of the peers listed in our comparable valuation, and seen as positive for valuation. We base our 250p fair value assumption on an EV/sales ratio of 1.6x and 13.4x EV/EBITDA.