Petra acquisition to enhance international business
Today’s announcement that UPGS has acquired German electrical kitchen brand Petra is a continuation of a strategy which has turned UPGS into a highly successful developer of brands. Petra not only adds to the company’s German offering, but further ahead will enhance the company’s international range of quality and affordable “feel good” household products. Brand management skills remain a key driver of UPGS’s ability to continue to grow at a brisk pace in both the online and supermarket channels.Despite last week’s 5% share price increase, UPGS’ valuation appears undemanding. Based on our current forecasts – which exclude any impact from Petra – it trades on just a 0.9x EV/sales ratio and a 14x prospective P/E ratio. Moreover, given the company’s growth credentials, a 3.5% yield also looks attractive. We continue to argue for a fair value of closer to 150p for the shares.
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