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Research: Consumer
Unbound Group’s (UBG’s) Q123 trading update to the end of April 2022 shows continuing strong momentum, in contrast to recent trends in the wider consumer space. Management’s outlook for FY23 is unchanged despite the more challenging macroeconomic environment due to inflationary pressures. The company is making good progress with signing new partner brands to the Unbound platform, which should launch in July 2022. Our forecasts are unchanged ahead of the June publication of results for the 12 months ended January 2022 and do not reflect a recent property disposal that would help UBG’s financial position (£1.75m). Our DCF-based valuation remains 165p per share.
Unbound Group |
Strong momentum in Q123 |
Q123 trading update |
Retail |
16 May 2022 |
Share price performance
Business description
Next events
Analysts
Unbound Group is a research client of Edison Investment Research Limited |
Unbound Group’s (UBG’s) Q123 trading update to the end of April 2022 shows continuing strong momentum, in contrast to recent trends in the wider consumer space. Management’s outlook for FY23 is unchanged despite the more challenging macroeconomic environment due to inflationary pressures. The company is making good progress with signing new partner brands to the Unbound platform, which should launch in July 2022. Our forecasts are unchanged ahead of the June publication of results for the 12 months ended January 2022 and do not reflect a recent property disposal that would help UBG’s financial position (£1.75m). Our DCF-based valuation remains 165p per share.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
01/20 |
85.5 |
0.5 |
N/A |
N/A |
N/A |
N/A |
01/21 |
44.5 |
(14.3) |
N/A |
N/A |
N/A |
N/A |
01/22e |
51.9 |
0.3 |
0.9 |
0.0 |
39.1 |
N/A |
01/23e |
59.5 |
2.0 |
3.8 |
0.0 |
9.1 |
N/A |
01/24e |
65.1 |
4.7 |
8.3 |
0.0 |
4.2 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q123: Strong sales versus wider industry
UBG’s Q123 double-digit revenue growth and improved gross margin compare favourably with recent trends in the wider industry. The Office for National Statistics reported non-store retailing declined 5.6% y-o-y in February 2022 and 12% y-o-y in March 2022, albeit against tough comparatives (+46% in February 2021, +40% in March 2021 and +19% in April 2022) due to COVID-19-related restrictions. Recent newsflow from a range of consumer-facing companies suggests weaker demand in April, supported by the British Retail Consortium reporting that online sales fell by 13.9% in April 2022 and total sales fell 0.3%. UBG has growing customer (currently 4.6 million customers) and email customer databases (1.0 million customers).
Optimistic about future relative performance
Management’s outlook for the year is unchanged, as it believes UBG is well placed to continue performing relatively well in a more challenging external environment due to the strength of the brand, resilience of the business model and ability to adapt at pace. The Unbound platform will be introduced July 2022 before a full launch in early September. Management indicates a high level of interest from partner brands with a number already secured to join the platform.
Valuation: DCF-based valuation 165p per share
The share price has been weak since the relisting in February 2022, as have those of the wider e-commerce and general retail peers. For FY23e, UBG’s EV/sales multiple of 0.4x compares with the median for online peers of 0.5x (source: Refinitiv). We feel UBG’s prospects for greater revenue growth in FY23e (15% vs 7% for the peer group) and higher margin potential (5.5% vs 2.8% for the peer group median in FY23e) justify a higher multiple.
Exhibit 1: Financial summary
£'m |
2020 |
2021 |
2022e |
2023e |
2024e |
||
Year end 31 January |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
85.5 |
44.5 |
51.9 |
59.5 |
65.1 |
Cost of Sales |
(32.1) |
(21.3) |
(18.9) |
(21.1) |
(22.9) |
||
Gross Profit |
53.5 |
23.2 |
33.0 |
38.4 |
42.2 |
||
EBITDA |
|
|
10.9 |
(6.9) |
5.5 |
7.5 |
10.6 |
Operating profit (before amort. and excepts.) |
|
2.2 |
(13.1) |
1.8 |
3.3 |
5.9 |
|
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Share-based payments |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
2.2 |
(13.1) |
1.8 |
3.3 |
5.9 |
||
Net Interest |
(1.7) |
(1.1) |
(1.5) |
(1.3) |
(1.2) |
||
Exceptionals |
(9.2) |
2.7 |
(0.7) |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
0.5 |
(14.3) |
0.3 |
2.0 |
4.7 |
Profit Before Tax (reported) |
|
|
(8.7) |
(11.6) |
(0.5) |
2.0 |
4.7 |
Reported tax |
0.3 |
2.6 |
0.1 |
(0.4) |
(1.2) |
||
Profit After Tax (norm) |
0.4 |
(11.5) |
0.4 |
1.6 |
3.5 |
||
Profit After Tax (reported) |
(8.3) |
(9.0) |
(0.4) |
1.6 |
3.5 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
0.4 |
(11.5) |
0.4 |
1.6 |
3.5 |
||
Net income (reported) |
(8.3) |
(9.0) |
(0.4) |
1.6 |
3.5 |
||
Average Number of Shares Outstanding (m) |
N/A |
N/A |
42 |
42 |
42 |
||
EPS - normalised (p) |
|
|
N/A |
N/A |
0.9 |
3.8 |
8.3 |
EPS - normalised fully diluted (p) |
|
|
N/A |
N/A |
0.9 |
3.8 |
8.3 |
EPS - basic reported (p) |
|
|
N/A |
N/A |
(0.9) |
3.8 |
8.3 |
Dividend (p) |
N/A |
N/A |
0.0 |
0.0 |
0.0 |
||
Revenue growth (%) |
(8.1) |
(48.0) |
16.7 |
14.6 |
9.5 |
||
Gross Margin (%) |
62.5 |
52.2 |
63.5 |
64.5 |
64.8 |
||
EBITDA Margin (%) |
12.8 |
(15.5) |
10.6 |
12.6 |
16.3 |
||
Normalised Operating Margin |
2.6 |
(29.5) |
3.5 |
5.5 |
9.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
31.9 |
19.2 |
20.4 |
20.2 |
18.6 |
Intangible Assets |
3.1 |
4.1 |
4.2 |
4.6 |
4.8 |
||
Tangible Assets |
27.4 |
11.6 |
11.2 |
10.9 |
10.2 |
||
Investments & other |
1.4 |
3.5 |
5.0 |
4.7 |
3.5 |
||
Current Assets |
|
|
23.5 |
12.9 |
13.6 |
14.9 |
18.7 |
Stocks |
11.2 |
6.0 |
5.3 |
5.9 |
6.4 |
||
Debtors |
3.6 |
2.5 |
2.9 |
3.3 |
3.7 |
||
Cash & cash equivalents |
8.6 |
4.3 |
5.3 |
5.6 |
8.5 |
||
Other |
0.2 |
0.1 |
0.1 |
0.1 |
0.1 |
||
Current Liabilities |
|
|
(33.9) |
(32.0) |
(25.6) |
(25.1) |
(23.8) |
Creditors |
(10.8) |
(10.9) |
(12.1) |
(13.5) |
(14.2) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
(17.8) |
(19.8) |
(12.3) |
(10.3) |
(8.3) |
||
Leases |
(5.3) |
(1.3) |
(1.3) |
(1.3) |
(1.3) |
||
Long Term Liabilities |
|
|
(21.0) |
(8.6) |
(8.6) |
(8.6) |
(8.6) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
(18.9) |
(7.6) |
(7.6) |
(7.6) |
(7.6) |
||
Other long term liabilities |
(2.1) |
(1.0) |
(1.0) |
(1.0) |
(1.0) |
||
Net Assets |
|
|
0.5 |
(8.5) |
(0.2) |
1.4 |
4.9 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
0.5 |
(8.5) |
(0.2) |
1.4 |
4.9 |
CASH FLOW |
|||||||
Operating Cash Flow |
10.9 |
(6.9) |
5.5 |
7.5 |
10.6 |
||
Working capital |
(0.3) |
6.3 |
1.4 |
0.4 |
(0.2) |
||
Exceptional & other |
(1.6) |
2.5 |
(1.3) |
(0.6) |
(0.6) |
||
Tax |
0.0 |
0.7 |
0.0 |
0.0 |
0.0 |
||
Net operating cash flow |
|
|
9.0 |
2.6 |
5.7 |
7.4 |
9.8 |
Capex |
(6.1) |
(2.7) |
(1.6) |
(2.5) |
(2.5) |
||
Acquisitions/disposals |
0.0 |
0.4 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(1.7) |
(1.1) |
(1.5) |
(1.3) |
(1.2) |
||
Equity financing |
0.0 |
0.0 |
8.7 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(4.8) |
(3.3) |
(2.8) |
(1.2) |
(1.2) |
||
Net Cash Flow |
(3.6) |
(4.1) |
8.5 |
2.3 |
4.9 |
||
Opening net debt/(cash) excluding IFRS 16 |
|
|
9.2 |
15.5 |
7.0 |
4.7 |
|
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
10.4 |
(17.0) |
(4.6) |
(9.9) |
||
Closing net debt/(cash) |
|
|
9.2 |
15.5 |
7.0 |
4.7 |
(0.3) |
Closing net debt/(cash) including IFRS 16 |
|
33.4 |
24.4 |
15.9 |
13.6 |
8.7 |
Source: Unbound Group, Edison Investment Research
|
|
Research: Healthcare
OpGen reported Q122 revenues of $470k, compared to $830k in the prior year period. The decline was largely attributable to the discontinuation of the FISH business, the conclusion of the NY Department of Health collaboration and softness in Unyvero international. In contrast, US Unyvero sales increased 76% from the prior year. In light of the current performance and anticipated slower ramp-up in China, we have trimmed our FY22–24 revenue estimates and pushed profitability to FY26 (versus FY24 previously).
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