Up Global Sourcing Share Discussion Threads

[someuwin] 22/3/2017 09:53

Looks like an interesting play.

[fozzyb] 16/3/2017 13:53

The market should be more forward facing than this and I believe whilst short term horizon looks positive, the ability of management to drive much beyond that remains in doubt. Let's not disguise IPO for anything other than get shareholders illiquid shares turned into cash at a public price versus a private price

[croasdalelfc] 15/3/2017 17:22

Fozzy - my biggest fears/worries are that UPGS is heavily reliant on B&M and Action and will become more so, and that none of the proceeds of IPO will help grow the company. Still growth of 62% in H1 can't be refuted and the comparatives are good at least for 5 months or so.

[fozzyb] 15/3/2017 15:45

This optimism may be overplayed, this is a company that has struggled to meaningfully grow profits for years, in not saying they won't grow them but actually the rate of growth may not be as stellar as predicted here and as such the growth multiples being thrown around look generous

[croasdalelfc] 15/3/2017 08:54

Johny - probably after April as H1 results were buried in the prospectus.

[johnyee 7] 14/3/2017 13:41

When are we due an update/results?

[ramridge] 10/3/2017 12:36

Good write-up in yesterday's weekly Shares Magazine. Didn't realise that the CEO is ex Poundland chief.

[croasdalelfc] 10/3/2017 12:13

Will 898 - I'm sure I'll have a few questions in the future. As you can see I'm a numbers man :)Happy that this stays quiet for a few weeks as a number of my shares have results coming up and I'd like to put profits into this share

[will989] 09/3/2017 09:54

Hi folks, good to see you here. I checked on the day of the float and there wasn't a thread yet and then forgot to set an alert up for a few days!

I too am struggling to see many negatives. I actually work in this exact industry, we are a smaller scale importer doing things at a higher end of the spectrum, so fire away any questions. It's an odd industry, because nowadays it's not hard for anyone to go to a trade fair in China and think they can effectively import product, whether or not it's as easy as they think. Importers in this field scale all the way from companies such as UPGS to a bloke in his living room. What happens regularly is that a buyer or someone fairly high up in an importing business will learn a lot, think they can do it themselves, and then try and go it alone, sometimes taking a couple of customers with them.

I'm not particularly attuned with the B&M type area of the market, but a potential competitor and similar business to examine is someone like Li & Fung. A lot of competition would probably come from agents in the Far East, rather than other UK importers. Essentially these companies have a big catalogue of production sites that they audit and bring on board, and then when they get a requirement for product they use one of these.

In this marketplace, the trend for clients wanting to save money means that the larger threat is probably businesses trying to do the importing themselves, and cutting the UPGS step out of the supply chain. It's therefore imperative that 1. They get contracts that last some time, and 2. That they can clearly show how they add value. I've had a browse of the prospectus and website, and all the right signs are there. There's a lot of discussion about the software and systems they have to monitor orders etc, which is important, and the correct emphasis seems to be placed on auditing, Sedex membership etc. It would be interesting to find out more about how they do business with their main clients, whether it's very much on an agency basis and all open-book etc, who handles the shipping (if they do they are adding more value), or whether they're literally doing a full service, delivered to the customer in the UK. Also interesting to find out what currency their main customers are paying in and any currency hedging arrangements, they'll be reliant on USD or RMB to pay suppliers. I don't know anything about the licensing side of the business as that's not something we do at all, but it seems to have been a good move for them.

I've been looking for an investment like this for a while, because once the logistics and systems setup is set up to a high standard the business becomes very scalable, so I've added 3 times this week up to my self-imposed limit. DYOR of course..

[croasdalelfc] 09/3/2017 08:08

I have upped my estimate of Revenue and earnings for FY 17 to £120m and £9.6m profit

Heres why:

Revenue

Q1 16 A £22.2m
Q2 16 A£19.8m
H2 16 A £37.0m Total £79m

Q1 17 A £33.3m
Q2 17 A £34.8m
H2 17 E £51.9m Total £120m

Q1 Growth 50%
Q2 Growth 76%!!!!!

I have factored in H2 growth at a modest 40% so still a lot of potential for upside.

NB £9.2m profit gives a current PER of 13 on a company growing at 60%!!!!

a rerating to PER 25 would give a share price of 280p

[croasdalelfc] 08/3/2017 13:22

Comparing UPGs with G4M : similar market cap, similar growth (tho one could argue G4M is slowing in U.K.), UPGS with 7-8% profit against 4.5% G4M.G4M EpS 11-12pUPGS EPS 9-10pG4m PER circa 50UPGS PER circa 16

[croasdalelfc] 08/3/2017 13:18

Ram - The most negative thing I can find is that they rely heavily on 2 customers B&M and Action.Also the license for Russell Hobbs expires on 3 yearsThe 9 year tie in with B&M mitigates any worry on that front.I can't find a deal with Action

[ramridge] 08/3/2017 12:50

The admission document says little about competition. There is mention that they consider B&M as a competitor in some of the product categories.
So I did a quick comparison of B&M ratios and metrics against UPGS, and UPGS come out a lot better on almost all counts.

We are in danger of violently agreeing with each other. I don't believe in Santa, so can you spot anything negative to say?

[croasdalelfc] 08/3/2017 12:10

I've factored a conservative £115m this year - July.If anything growth is accelerating and could easily outperform to £125m - then the PER will be very low about 13 at current share price levels.A rerating to a PER of 25 ( remember this company is growing at >60%) would see an share price of 300pThe case is compelling.

[croasdalelfc] 08/3/2017 12:00

Action Reported today 34% sales growth and 197 new stores in 2016 and set to open greater than 200 new stores in 2017. LFL is very good too 7%Also B&m opening 50 stores this year.B&m plan is to open another 320 stores over the next few years.Growth over the last 2 years has been largely (80%) due to these two retailers.They have a 10 year agreement with B&m which started 1 year ago.

[ramridge] 08/3/2017 11:16

Hi Croasdalefc - Like you, I ran through the numbers on the first day of dealing and liked the numbers. I took a small position. Today I have revisited the numbers this time looking at what MorningStar have got in their database. Here is my take

- looking only upto FY2016, PE=26.7 but eps growth was 72%, giving a PEG =0.4
- The Q12016 and Q12017 data shows the growth if anything is accelerating. I compared my FY2017 estimates to yours and they are not many miles apart.
- so based on forecast 2017, PE drops to 15.7, PEG 0.2 and EV/EBItDA 12

Debt position is OK and cashflows are also OK.

So I think this is all down to the company repeating its tremendous growth rate. If it does say at least 50% growth in revenue and earnings in FY2017 then the share price will go north. Based on Q1 2017 data, it looks as if it is on its way.

I topped up this morning to the limit of holding in any one share.

[croasdalelfc] 08/3/2017 09:48

The dividend will also be about 3%

[croasdalelfc] 08/3/2017 09:42

Need to keep quiet about this one for a month or two so I can accumulate. It's already my 2nd largest holding and can't believe how undervalued it is.The last 12 months up to Jan 17 I estimate revenue of £104m @ 7% margin giving an EPS of 9p. By July that should be 10p minimum on £115m revenue and then EBITDa gets a 22% bonus as Shareholder bonuses stop.So looking at July 18 with a modest 30% growth : £150m revenue and 9% margin gives EPS of 15.SP? 300p = PER 20400p = PER 26

[croasdalelfc] 08/3/2017 08:15

62% growth @ 7% margin which is increasing!Current PER about 16 which is silly for a company growing at >50%.Short term value is 200p with 240 my target in 4 -6 months

[johnyee 7] 07/3/2017 21:34

I'll add more info when I find it. Looks interesting but need to do more poking about.

Prospectus