I wrote this early 2018 after buying stock on the plunge:


And this is an update in early 2019:


I'm pretty happy with Up Global Sourcing Holdings (LON:UPGS) as a holding still. Its at least decent value and I think the outlook for more meaningful durable growth and upside remains highly probable...so I've got a really nice undervalued growth option.

This is is mainly a quick place keeper post copying in some long comments I made in SCVR last week to a more discoverable future format and place.

Parsing the outlook statement in FY2020 results:

UPGS is a stock that has been quite well liked but imagine that some are fatigued by it and there are many non-believers viewing it to be a mere import reseller.

Its probable that last week's forward guidance in FY2020 results indicates that they are trading quite strongly even if they downplay it. If I parse historic numbers and announcements that they say FY21 is trading ahead of this time time last year. That could be really quite (maybe very) bullish relative to current expectations. A summary of why:

  • H1 2020 had a significant disappointment at the tail end of the period (after they had provided their outlook in FY20 at this time of year) as stopped trading with their largest German customer (discounter). Note this was their decision as they viewed them to be a credit risk as they seemed to put themselves into 'strategic review'. The extent of the impact is not broken out but the decline in the discounter segment was £5.6m for half year and this client was the biggest contributor. There was also a channel indigestion effect from prior client wins in European discounters.
  • H1 2020 saw £2m sales gain YoY despite the significant lost client
  • FY2021 estimates are at same level as FY2019. Caveat required in that FY2019 was a bounce back year from FY2018 so like for like a bit scratchy -> means that 'steady state' pinpointing the business is a bit tricky and that has been muddied by FY2020 and covid.
  • Underlying the disappointing H1 2020 german result was a very strong growth from other German clients. UPGS has invested in breaking Europe and they seem to have momentum

So assuming that FY2019 was steady-state-ish then FY2021 could be tracking as much as c.£5m head on H1 2021 and perhaps…

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