Small Cap Value Report (Mon 11 Feb 2019) - UPGS, AVAP, STR

Monday, Feb 11 2019 by

Good morning, it's Paul here!

It's a very quiet day for trading updates, and results.

Graham and I had a natter about some stocks in my portfolio, just after the market closed on Friday evening. Here's that podcast, which is a potentially painful 1 hour long. We continued chatting about Brexit for another 1.5 hours after that, but you'll be relieved to hear that Graham had switched off the red button before that started!

Incidentally, the picture that Graham chose to illustrate the podcast, of some people playing football, perfectly sums up my school memories of football - namely the player (in red) on the right, who is recoiling in horror, in a slightly camp way, as the football comes in his direction & he feels the pressure of having to do something with it. Yep, that was just like me;


UP Global Sourcing Holdings (LON:UPGS)

Share price: 65.2p (up 12.4% today, at 11:38)
No. shares: 82.2m
Market cap: £53.6m

Trading update

Ultimate Products, the owner, manager, designer and developer of an extensive range of value-focused consumer goods brands, announces the following trading update for the six months ended 31 January 2019 ("the period").

This company, which imports consumer goods from China, I think, was a very disappointing stock market float in March 2017. It floated at 128p per share. Note that the float did not raise any cash for the company, it was a sale of 50% of the company, raising £52.6m for the selling shareholders. I'm really not keen on this type of float, as they often seem to go wrong later.

Initially UPGS shares did well, and rose to a high of about 223p. Then came the (first) profit warning, in Sept 2017, just 6 months after floating. I really do think that selling shareholders should be legally required to repay some or all of the proceeds, if a share price collapses so soon after listing. Maybe listing proceeds should be put into escrow, and released gradually over say 3 years? Or have a clawback clause?

After languishing for a while, the share price has had something of a recovery recently, so this share could be worth a fresh look. People who…

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UP Global Sourcing Holdings plc is a United Kingdom-based owner, licensee, designer, developer and manager of a series of brands focused on the home. The Company develops, designs, sources and distributes a range of consumer products, focused on six product categories: small domestic appliances (SDA), housewares, audio, laundry, heating and cooling, and luggage. Its owned brands include Beldray, intempo, Constellation and Progress, and its brands under license include Salter and Russell Hobbs. It also offers products under brands, such as American Originals, George Wilkinson, Giles & Posner, Inspire, Portobello, Prolectrix and ZFrame. It products are sold to a cross-section of both national and international multi-channel retailers, as well as other national retail chains. It sells its range of products to over 300 retailers across approximately 40 countries. The Company caters to retailers, supermarkets, general retailers and online retailers. more »

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Avation PLC is a United Kingdom-based company engaged in leasing of aircraft. The Company is a commercial passenger aircraft leasing group managing a fleet of 47 aircraft, which are leased to airlines globally. The Company's fleet includes Airbus A220, A220-300 A320 and A321 narrow-body jets, Boeing 777-300ER and Airbus A330-300 twin-aisle jets, Boeing 737-800 NG, ATR 72 twin engine turboprop aircraft and five older Fokker 100 jets. It supplies regional, narrow-body and twin-aisle aircraft to the airline industry. It serves the commercial airlines. It owns, through its subsidiaries, a range of commercial passenger jet aircraft, which are leased to various airlines in Europe, Asia and Australia. The Company's subsidiaries include Avation Capital S.A., which is engaged in financing, and Capital Lease Aviation Limited and MSN429 Leaseco Limited, which are engaged in aircraft leasing. more »

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Stride Gaming plc is an online gaming operator in both the Bingo-led and social gaming market. The Company's segments include real money gaming and social gaming. The real money gaming segment focuses on bingo-led online operation, using its purchased software to provide online bingo and related gaming activities to players. The real money gaming segment operates in regulated markets, principally the United Kingdom. The social gaming segment provides players with entertaining applications and games internationally. The Company has over 143 brands. Its online bingo brands include Kitty Bingo, Lucky Pants Bingo, Bingo Extra, Jackpot Cafe, Jackpot Liner and King Jackpot. Its online casino and slots brands include Spin, Magical Vegas, Big Top Casino and Slots Bonanza. In addition, the Company is engaged in development of Panda Slots application, a multi-technology platform for the creation of mobile social slot games customized on a player level. more »

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  Is LON:UPGS fundamentally strong or weak? Find out More »

26 Comments on this Article show/hide all

Paul Scott 11th Feb 7 of 26

In reply to post #445778

Hi Matylda,

That's a really good idea - maybe Graham & I could do a weekly roundup podcast, of all the things that caught our eye that week.

I'll run it past Graham & see what he thinks.


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LeoInvestorUK 11th Feb 8 of 26

UP Global Sourcing Holdings (LON:UPGS) - Equity Development have published new research paid for by UPGS:

To expand on my earlier post, compare that with this from October:

So we've gone from:
* In September I thought we had a timing issue and short term growth setback in FY2018 meaning FY2019 revenue would be slightly above FY2018's £110m (albeit at lower margins / EPS).
* In October they forecast FY2019 revenue of £95m (and 5%pa growth thereafter).
* Today, they forecast FY2019 revenue of £118m, above FY2017 and in line with my September expectations.

While clearly things have gone well, I strong suspect there has been some expectation management going on here in order to create and maintain momentum. On this basis I think FY2019 is on course be modestly ahead of today's forecasts and FY2020 should show growth significantly above 5% on top of that. EPS back to 10p for FY2020 looks quite possible vs. latest forecast of 7.3p.

Blog: LeoInvestorUK
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matylda 11th Feb 9 of 26

In reply to post #445853

Hi Paul,

Great, look forward to hearing how that might progress, thanks again to both, have a great week.

Blog: Briefed Up
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Lion Tamer 11th Feb 10 of 26

In reply to post #445778

As Fridays are usually quiet, perhaps you could consider a 1 hour audio on markets/holdings instead - Would probably also be much easier on both of you time wise too.

1 hour audio.... every week!!

I might have found time when I was employed but I'm retired now. How am I going to find that much free time?!!

(Joking apart, thanks for the audio Paul & Graham. I've not played it yet but very much look forward to doing so sometime over the weekend, sooner if we get some poor weather).
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Howard Adams 11th Feb 11 of 26


Excellent Podcast. I would be an avid listener if you did more like this.


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yamaha865 11th Feb 12 of 26

+1 for the podcast- really enjoyed the last one

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Paul Scott 11th Feb 13 of 26

In reply to post #445913

Hi liontamer,

Oh God no, it wouldn't be an hour every week!!!

If we do a weekly (or fortnightly) podcast, then it would be much shorter. Think 20-30 mins max. After all, at 4:30pm on a Friday, I'm limbering up to get stuck into some tinnies!


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ezlifeme 11th Feb 14 of 26

In reply to post #445948

Great initiative to spruce up slow Fridays (credit to Matylda)
Don't push yourself to an each week fixed podcast commitment Paul / Graham
Why not also include some catch up on wider topical news / views you couldn't get to in the week-
- (From today) Expound on IPO Sell out into Escrow
- Where is the High street going?
- What has Mike Ashley bid for this week?
- Will Just in time supply work during the critical period of Br**it?

Or what ever floats your boat from the week

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purpleski 11th Feb 15 of 26

“We continued chatting about Brexit for another 1.5 hours after that, but you'll be relieved to hear that Graham had switched off the red button before that started!”

What a shame I bet it would have been fascinating!!

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brballs 11th Feb 16 of 26

Can I suggest the Friday podcast commences with a review of the prior night's Question Time...

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Martin5760 11th Feb 17 of 26

Podcast would be a fantastic idea. Or even just doing a verbal SCVR. Having seen Paul do an early morning SCVR on the stage at Mello it was really interesting seeing the way he proceeded though company reports.

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andyfwwrench 11th Feb 18 of 26

IPO - blame gullible Other People's Money investors for setting the price, and gullible their own money investors for thoughtlessly chasing a price higher if the listing price was risk discounted. An IPO is very high risk where the sellers know infinitely more about the company. If the market was in any way efficient the first exit would be at a discount, and there would be minimal trading until sufficient news announcements for trends and assumptions to be verified. The market for an IPO'd company is not efficient for most of the business cycle, being too cheap at the beginning of the cycle when prices are low but prospects high, and too expensive when the cycle is mature when the reverse is true. The value of the former, and subsequent good returns, is a root cause of the latter.
Thanks fully for investors it is easy to come up with a winning and non-losing strategy; don't invest in new listings apart from in the foot hills of a recovery from a recession.

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simoan 11th Feb 19 of 26

In reply to post #445963

“We continued chatting about Brexit for another 1.5 hours after that, but you'll be relieved to hear that Graham had switched off the red button before that started!”

What a shame I bet it would have been fascinating!!

Well I share Paul's relief. I'm not sure there's anything more boring currently than listening to  people discussing Brexit. I voted Remain but now really honestly don't care what happens. I just hope one day I'll be able to listen to and enjoy the Radio 4 Today programme again.

All the best, Si

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andyi 11th Feb 20 of 26

In reply to post #445968

Please no, I can't watch QT because of the half-wits spouting their opinions, and that includes both panel and audience members!

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brballs 11th Feb 21 of 26

In reply to post #446013

It was said in jest, Andy. You clearly don't follow Paul on Twitter!

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gus 1065 11th Feb 22 of 26

In reply to post #445988

Hi Simoan.

I thought it was just me! Since the mid December Brexit flare up, I’ve stopped taking a daily paper (shame as I liked to do the crossword), switched from Radio 4 to Classic FM (should’ve done that years ago) and stopped reading the BBC news website (not really found a non-Brexit alternative yet). Who said Brexit wasn’t likely to change anything?


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mintshite 11th Feb 23 of 26

was tipped elsewhere on saturday and added growth portfolio

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ISAallowance 12th Feb 24 of 26

Regarding UP Global Sourcing Holdings (LON:UPGS) (I hold), I can't reconcile their statement that there has been "good growth across each of the Group's four strategic pillars - i.e. discounters, UK supermarkets, online platforms and international customers" with their other statement that international has increased from 20% to 40% of revenue. By my calculations based on the numbers given, that leaves non-international roughly flat from H1 '18 to H1 '19. There may be some scope for error in how I/they have handled the 2 exceptionals in the international percentage calculation, but however I work it out I can't get to "strong growth" in all catagories based on that international percentage increase.

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rhomboid1 12th Feb 25 of 26

In reply to post #446488

Re UP Global Sourcing Holdings (LON:UPGS) surely major customers can be both discounters & International...I believe B&M is a major customer so they could have their business split U.K. & International ?

Also Action is a discounter/supermarket & operates in 7 non U.K. markets & is a customer so no idea where that would sit..either

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ISAallowance 12th Feb 26 of 26

In reply to post #446508

UP Global Sourcing Holdings (LON:UPGS) Yes, I think you're correct, that there is overlap between catagories. In the annual reports the segmental analysis is split between discounters, UK supermarkets, online and other, and the UK / non-UK split is given separately. There is no segmental split in the interims.

I think they've probably just been a bit careless in the trading statement in lumping international customers in with their segmental split in a way that they don't in the annual reports (and omitting other), and that I was reading too much into it. However, it does seem clear from the numbers that UK is flat, and international is booming. UK flat is probably not a bad performance in the present retail climate though.

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 Are LON:UPGS's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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