Shareholder value creation at its core

UPGS’s interim FY2022 results show a company that is creating shareholder value through its core activities. Sustainable sales growth, higher margins, positive cash flow and a 50% dividend pay-out should combine to generate earnings accretion and multiple expansion. UPGS is a brand-driven, international business, which is reinvesting in its operating practices. In our view, the share price does not reflect this and clearly lags our revised 250p fair value.

At 250p, UPGS would trade on an EV/sales ratio of 1.6x and 13.4x EV/EBITDA. Both multiples look appropriate for a branded consumer goods company with visible organic growth and a clear competence in acquiring and accelerating brands.