H1’23 results buoyed by strong performance from Vaping
For the six months to 30 September, Supreme reported revenue growth of 6%YoY to £64.6m, EBITDA (adj.) of £8.1m, -19%YoY and PBT (adj.) of £5.8m, -31%YoY. Revenue was underpinned by 47%YoY growth in the Vaping division, with, notably, 31%YoY organic growth. Interim revenue was 5% ahead of our outlook and EBITDA (adj.) 4% below. The Group notes that trading in the Lighting division, which had negatively impacted the FY23 outlook, is now recovering; Supreme notes that improved overall revenue momentum indicates that full year Group performance should be ahead of prior market expectations.Interim operating cashflow was £4.9m (H1 22, £4.2m), with (adj.) net debt of £14.6m and cash of £5.4m (FY22, £3.9m). Reflecting a policy of 25% net profit pay-out, the Board has proposed an Interim dividend of 0.8p/share (payable: 13.01.2023). We have raised our FY23 revenue outlook by 7% from £129.5m to £138.3m, based principally on strong organic growth in Vaping, and raised our FY23 EBITDA (adj.) outlook from by 6% to £18.5m. For FY24, we have raised our revenue forecast by 6% from £142.2m to £150.5m. However, given continued uncertainties for the impact of inflation on consumer demand, input costs and pricing, we have maintained our FY24 EBITDA outlook at £22.2m. Our estimates indicate a FY24 EV/EBITDA of 5.6x.
Our Fair Value remains 190p/share.
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