UP Global Sourcing Holdings plc

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

Watch back - trading update presentation

Published: 7th September 2020

Andy Gossage, MD of UP Global Sourcing, discusses how the company has successfully grown both the online, supermarket and international segments of the business, how they stayed ahead of the competition during the pandemic, and which sector shifts caused by the pandemic will persist in the 'new normal'.

Brand strength reaps rewards

Published: 7th September 2020

Better than expected sales revenue and profits, substantial growth in the online business, robust finances and a strong start to FY2021 were salient features of UPGS’s FY2020 year-end trading statement, which was released today. Despite Covid-19 challenges, their brand portfolio and distribution strength show clear, positive momentum: evidenced by resuming dividends and repayment of furlough monies.

Our valuation metrics suggest scope for more upside as revenue and earnings grow with international demonstrating strong potential. As a result, we raise our fair value for the shares from 100p to 150p. At this price key valuation multiples would be only a 1.1x EV/sales ratio and a 17x P/E ratio based on FY2022 forecasts.

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Brisk growth rate supports higher valuation

Published: 6th July 2020

The ongoing pandemic only serves to underline business models that are robust, and those that aren’t. This morning’s trading update from UPGS puts them firmly in the winners’ category. As the company approaches the final weeks of FY2020, it not only reports “better than expected progress” against an uncertain business backdrop, but also that revenue and key profit measures for the year should be ahead of current market expectations. Furthermore, online as a portion of total business should record a fourth consecutive increase, providing additional flexibility and strength in the case of a second wave.

Brisk growth, higher online sales and demonstrable management flexibility is overdue more recognition from investors and a higher valuation for the business.

The unscheduled trading update released today includes three important upgrades. Revenue for the year ending 31st July 2020 is now expected to be above £111m, which compares with our most recent £105m forecast that we published in an 8th June 2020 report "Equity Development - Satisfying customer demand". New EBITDA and underlying pre-tax profits expectations also represent upgrades from our most recent forecasts: rising from £7.9m to above £9.6m and from £5.9m to above £7.4m, respectively.

The company’s 0.6x EV sales ratio appears surprisingly low given its ability to grow sales rapidly and profitably on a cash positive basis. Moreover, based on our revised estimates EV/EBITDA and the P/E ratios also look good value. Given the company’s proven track record, we see a 0.8x EV/sales ratio, 9.4x EV/EBITDA and a 14.0x P/E ratio as being more appropriate.

The implied share price at these multiples is 100p.

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Satisfying customer demand

Published: 8th June 2020

UPGS released an unscheduled trading statement this morning which confirms better numbers (FY2020 sales revenue, profitability and net debt) than previously envisaged when the company reported its interim results on 30th April. 

A commitment to being flexible enough to ensure employee safety while satisfying customer demand is clearly working well. Accordingly, we make positive adjustments to our own forecasts.

UPGS’s shares performed well in the past two months: since end-March they rallied by 51%. 

But, based on our revised FY2020 sales estimate and our current projections for end-year net debt, the implied EV/sales ratio is still only 0.6x

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UPGS Webinar discussion of their Interim Results

Published: 1st May 2020

If you missed our live webinar with Andy Gossage, Managing Director of UPGS, you can watch the recording here.  

Andy discusses the impact COVID-19 has had on the business, how they have responded, and what opportunities might arise from both an increase in online sales, and a relentless focus on good execution for all their clients.  

We begin with a presentation, or you can jump straight to Q&A at 23mins.  


Benefits of underlying strengths

Published: 30th April 2020

UPGS’s interim results included a number of positive outcomes for underlying sales growth, profits and free cash flow in the half. Despite some Covid-19 related setbacks since then, UPGS appears well placed to emerge positively from the current pandemic crisis. In particular, the business benefited from underlying strengths built up over time. Moreover, we welcome the greater importance of UPGS’s online pillar in a post Covid-19 environment.

This year will see a sharp reduction in both sales revenue and profits, clearly. However, a significant portion of that expected decrease appears to have been reflected in the company’s share price decline – a 43% drop in the calendar year to date. Company guidance has been suspended for FY2021 and is currently of the order of £93m of sales revenue for FY2020. 

On that marked-down basis the FY2020 EV/sales ratio would be only 0.6x.  Listen to, and read, what our analyst Chris Wickham thinks:

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Coronavirus disrupts H2 sales revenue

Published: 19th March 2020

Ultimate Products (UP Global Sourcing Holdings PLC), which in recent half-years significantly accelerated its trading momentum, looks set to suffer from coronavirus related disruption to its business in the second half. The company has made a trading update announcement this morning and as a result we are withdrawing our financial forecasts until there is greater certainty.

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EBITDA margin sustains profit growth

Published: 10th February 2020
UPGS reconfirmed FY2020 profit guidance in a trading statement released today. 

While FY2020 sales guidance has been reduced, adjusted EBITDA margins will be slightly higher at 8.1% compared with 7.9% envisaged previously.  

Group banking facilities, that gave £13.2m headroom at end-January were extended until 2024. 

With the majority of its manufactured product sourced from China, UPGS’s Board is closely monitoring coronavirus developments and highlights that the extension to the Chinese New Year holiday of 9 days will cause production delays.  That said, the company will take necessary steps to mitigate any disruption and highlights its extensive experience of managing supply chain disruptions in China, including virus related ones. 

UPGS’s trading proved more resilient than a number of UK consumer-facing companies in recent months.  As a result, we continue to argue for a 100p share price, which would imply 9.6x FY2020 EV/EBITDA and an 11.8x P/E ratio.

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UPGS FY Results November 2019

Published: 6th November 2019
Andrew Gossage, Managing Director, talks through the international and online opportunity, in addition to their unrelenting focus on execution which sets them apart from the competition.

Execution strength fuels growth

Published: 5th November 2019
Excellent execution underpinned a strong recovery year for UPGS in FY2019, which augurs well for future growth.  Headline results confirm the company’s 9th September trading statement.  Detailed sales data reflect the company’s ability to enhance core domestic growth with strong progress in both international and online.  In our view, growth should remain positive in FY2020.

UPGS’s preliminary results lap last year’s announcement that was the start of the company consistently reporting much better newsflow.  While we maintain our FY2020 forecasts from our 9th September update, investors should in our view note both the quality of earnings and the clear path to growth.  As a result, we continue to argue for a 100p share price, which would imply 9.6x FY2020 EV/EBITDA and an 11.8x P/E ratio.
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Positive End to FY2019 Confirmed

Published: 8th September 2019
UPGS’s pre-close FY2019 trading statement confirmed a previously stated view on 17th July that FY2019 would end on a positive note.  The company will announce preliminary full year results on 5th November 2019.  Ahead of then, underlying trends remain firmly positive.  We upgrade FY2020 forecasts too.

Sales revenue in FY2019 grew by 40.8% to £123.3m.  The company’s most recently guided range was £121.5m to £122.0m.  EBITDA is expected to be 53.4% higher at £9.9m compared with our £9.7m forecast.  PBT is expected to be £8.5m compared with £8.3m envisaged previously.  We raise FY2019 EPS from 7.9p to 8.1p.  Importantly, UPGS continues to deliver ahead of its own guidance and associated market expectations.  After disappointment a year earlier, FY2019 has been a year of upgrades.  

Key drivers of faster sales growth include international business which was 39.4% of revenue compared with 27.4% in FY2018 and online which was 9.2% of group business compared with 7.9% a year earlier.  What is impressive is that UPGS continues to deliver brisk consumer goods oriented organic growth in mature markets.  Right now, that is a rare quality.

We update our FY2019 forecasts to reflect the trading statement.  In addition we upgrade FY2020 revenue from £127.6m to £129.5m and adjusted EBITDA from £10.1m to £10.4m.  The impact of these upgrades on adjusted pre-tax profits is an increase from £8.7m to £8.9m and we raise our FY2020 EPS forecast from 8.3p to 8.5p.    

UPGS’s financial position remains strong.  Net debt/EBITDA at 31st July 2019 was 1.5x, well down from 2.0x a year earlier.  Headroom against facilities rose £10.1m compared with £9.1m at end-FY2018.

In the past year UPGS has consistently delivered trading news ahead of market expectations.  In our view, investors should take this into account when assessing valuation and we continue to argue that a 100p share price seems sensible.  We base that view on 0.8x EV/Sales, 10.0x EV/EBITDA and a 12.3x prospective P/E ratio.

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Interim Results Interview

Published: 7th May 2019
Andrew Gossage, Managing Director, and Graham Screawn, Finance Director, discuss the first half results for UPGS, the strength of their international business, and their proven ability to maintain margins.

Good reasons for optimism

Published: 29th April 2019
UPGS’s half-year results included a 47.3% rise in underlying pre-tax profits, bolstered significantly by a 21% normalised increase in sales revenue. An optimistic tone on H2 sales prompts us to raise our full year forecasts and that has positive implications for both the group’s financial strength and valuation.

UPGS translated brisk sales growth into strong profit gains in its first half.  Underlying EBITDA increased by 48.4% to £6.6m, underlying pre-tax profits by 47.3% to £5.9m and adjusted EPS increased by 48.7% to 5.8 pence with a 39.8% increase in the interim dividend to 1.16p.  Net debt:EBITDA improved to 1.6x from 2.0x at end FY2018.

Current trading was cited as being in line with previous expectations.  However, we infer enough optimism in the statement to raise our full year forecasts.  We now look for FY2019 sales revenue to be £119.5m, compared with a £117.5m estimate previously, and raise our EBITDA forecast to £8.95m from £8.70m.  

A switch from Free on Board (FOB) to Landed terms with a key Continental European retail customer prompted major distortion to FY2018 H1 sales.  As a result, the reported 36% growth in FY2019 H1 was much larger than the 21% underlying.  Germany and other Continental Europe accounted for 38% of group sales.  Domestic sales grew at a slower 2.1% rate, but strong momentum in supermarkets and online suggests that UK sales should accelerate significantly in H2. 

UPGS’ strategy remains to develop its portfolio of mass-market consumer goods in its four strategically targeted distribution channels.  Importantly, the company delivers not only a value-led proposition but one that maintains a “feel-good” factor.  Its offering is not reliant solely on “cheapness”.  The “tried and tested” focus on these four channels – UK and European discounters, UK supermarkets, Online platforms and International retailers - appears to underpin the company’s confidence in its growth outlook.

The 9.8x prospective P/E ratio and 5.2% dividend yield, sits alongside the prospective EV/sales ratio of 0.6x. Given a return to sustainable brisk sales growth, an EV/sales valuation closer to 0.8x appears reasonable, which would imply a fair value for the shares of 100p and a still appealing 13.9x prospective P/E ratio.

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Underlying H1 sales soar 21% - Game on!

Published: 11th February 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!
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Sustaining strong growth momentum

Published: 8th January 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.

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Presenting at the ED Investor Forum November 2018

Published: 4th December 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: 7th November 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: 6th November 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.

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Ultimately, there is Growth

Published: 1st October 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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UP Global Sourcing initiation summarised by analyst Chris Wickham

Published: 3rd October 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.

Further positive surprises – growing well!

Published: 16th July 2019
UPGS looks to end FY2019 on an extremely positive note. Its trading statement issued today indicates that sales revenue will be above both our own and market expectations.  Moreover, profits (EBITDA and pre-tax) should also beat our estimates.  With sales growth outperforming across the group, management strategy appears on track.  After recent share price weakness, valuation metrics look supportive for the share price.

In terms of valuation, we remain firmly of the view that 100p is a reasonable near term share price.  Based on our revised numbers that would imply 0.8x EV/sales and an undemanding 12.7x P/E ratio, dropping to a 12.0x P/E in FY2020.  
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