UPGS’s interim results strongly suggest that the company is well placed for sales growth acceleration in H2 and to meet current market expectations. Online sales in H1 increased by 78% to represent 26% of group total, which is positive as this distribution channel has a smaller skew to H1 than others. Moreover, UPGS’s brands continue to demonstrate an ability to gain market share and grow through volume rather than pricing.
We maintain our view that the company’s current valuation does not fairly reflect UPGS’s three key growth drivers - brands, online & supermarkets distribution, and international. With external headwinds easing, an H2 acceleration is in prospect. In addition, growth is volume driven off a strong financial base. We base our 250p fair value / share assumption on an FY2023 EV/sales ratio of 1.5x, 12x EV/EBITDA and 16.6x P/E.
28 Mar 2023
Well placed for sales growth acceleration in H2
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Well placed for sales growth acceleration in H2
Ultimate Products PLC (ULTP:LON) | 146 0 0.0% | Mkt Cap: 130.8m
- Published:
28 Mar 2023 -
Author:
Chris Wickham -
Pages:
11
UPGS’s interim results strongly suggest that the company is well placed for sales growth acceleration in H2 and to meet current market expectations. Online sales in H1 increased by 78% to represent 26% of group total, which is positive as this distribution channel has a smaller skew to H1 than others. Moreover, UPGS’s brands continue to demonstrate an ability to gain market share and grow through volume rather than pricing.
We maintain our view that the company’s current valuation does not fairly reflect UPGS’s three key growth drivers - brands, online & supermarkets distribution, and international. With external headwinds easing, an H2 acceleration is in prospect. In addition, growth is volume driven off a strong financial base. We base our 250p fair value / share assumption on an FY2023 EV/sales ratio of 1.5x, 12x EV/EBITDA and 16.6x P/E.