Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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Supreme (AIM:SUP), a leading manufacturer, supplier and brand owner of fast-moving consumer products, will be conducting an Investor Presentation covering its interim results for the period to 30th September 2023.
The online event will be hosted by Sandy Chadha (CEO) and Suzanne Smith (CFO) and will take place at 2.00pm on Tuesday 28th November.
This is open to all existing and potential shareholders. Questions can be submitted during the presentation and will be addressed at the end.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/supreme-investor-presentation-28november2023
It’s strange to think we was 240p before, no dilution and record top and bottom lines and cash on hand coming (see trading update) and we are languishing at 103p ish these days. [Horrible UK markets, that seem to ignore consistent growth and success). SP’s always find their true levels and I’m sure Sandy and team will have some more good news in the results current and forward statement segments. When people will realize SUP is going places and we get back to nearer 200p I don’t know……
Supreme plc issued a trading update for the 6 months ended 30th September this morning. Trading is in line with management’s expectations for FY24 revenue of around £195 - £205 million and Adjusted EBITDA of approximately £28 - £30 million. This would equate to FY topline growth of 28% and adjusted EBITDA growth of over 50%. The Elf distribution opportunity has exceeded initial expectations and contributed to around half of the reported revenue and gross profit growth in the Period. Profitability ratios are high, the balance sheet is solid. Valuation also looks very attractive with forward PE ratio at 6.9x top quartile for the sector, dividend yield at nearly 3.6% is decent too. Share price lacks positive momentum, there is no rush to buy. But SUP is certainly worth monitoring for the longer run...
...from WealthOracle
wealthoracle.co.uk/detailed-result-full/SUP/822
Couple of key phrases in the RNS:
"revenue in excess of £100 million" - remember this is just the first half of a growing year, the idea that ED's forecast revenue would be £204m seems too low.
"Adjusted EBITDA of no less than £15 million" so the forecast EBITDA of ED of £29m full year seems too low too.
"the Group's four other categories that have, without exception, all reported strong revenue and gross profit growth."
The words I pick out are WITHOUT EXCEPTION so that's growth in all of batteries, lighting, sports and household.
This along with their proactive actions today, are extremely positive. I bet you the SUP team watched that recent Panorama episode on Vaping and had a Board Meeting straight after - and today is the outcome from that meeting. Well played.
Lots of time to migrate to refillable of which they have an excellent range. It’s just a government consulting paper anyway. Also option to change the disposables to halogen free / bio degradable as well. SUP are just taking earlier than needed moves and responsibilities way ahead of BAT & IMB etc, need to be commended. A total non issue at the end of the day regarding continuing revenue and bottom line growth.
Sandy is an excellent CEO with a lot of skin in the game. The lighting LED overhang is sorted, the new warehouse consolidation with growth capacity completed. (Improving margins more). Bigger and better financials coming out each half than when the SP was 240p P/S. Normal market logic would dictate we should now be above 240p on like for like P/E and much higher probably on a forward P/E ratio. Of course we are in a very negative UK sentiment market right now but this will change immediately inflation drops to less than 3% and interest rate drops are on the horizon. When that is signaled shares like SUP will get a huge uplift. Back to 240p should be a achievable in 6-12 months market, interest rates and inflation dependent.
The note says it contributed 50% of revenue growth, not 50% of revenue
Revenue in excess of £100 million for H1.
Elf a disposable contributed 50% to that.
Guidance for the year for elf was £40m.
It really needs those disposables, doesn't it?
New note & audio summary here: https://www.equitydevelopment.co.uk/research/positive-trading-update-and-vaping-safety-measures
In a Trading Update for the six months to 30 September 2023, Supreme reports strong performance in line with a consensus market (adj.) FY24 EBITDA outlook of £29.0m; matching our estimates. The Group expects H1 24 revenue of above £100.0m (+55%YoY) and (adj.) EBITDA of at least £15.0m (H1 23: £8.1m). Previously, to accompany the 26th September AGM, the Group indicated FY24 revenue of £195m-£205m, and (adj.) EBITDA of £28m-£30m, leading to an increase in our (adj.) EBITDA outlook of 13%. Supreme reports that the Elf distribution agreement has exceeded initial expectations, contributing c.50% of H1 revenue and gross profit growth, whilst all of the other four Business Categories have reported both revenue and profits growth. The Group has guided to FY24 revenue from the Elf opportunity of c.£40.0m and a contribution to (adj.) EBITDA of c.£4.0m.
At the AGM, Supreme had reiterated its awareness of concerns surrounding youth vaping in the UK. The Group has now announced an eight-point series of measures and recommendations designed to “ensure its owned brands do not create any interest from underage vapers” (full details in the body of the note).
Following our recent AGM upgrade, our estimates remain unchanged and Fair Value remains at 200p/share, indicative of a FY24 EV/EBITDA of 8.2x.
Way lower (should say).
Now making more money with a way layer capitalization than when we were 240p. Directors topping up today and for good reason. No brainer cash generator
Https://open.substack.com/pub/theoakbloke/p/shall-we-sup-or-get-smoked-out
Having spent considerable time the day this dropped calculating numbers with limited details, I'm now in a much better position to fully understand this business and up 32% which has paid me well for my time. I think the disposables should be excluded from all calculations to get a fair value so that is what I've just done. Having looked at my numbers and those of the analysts, I think their (ED) fair price 2025 would be nearer 180p. However, for me, I see fair value at 140p possible spike to 170p with a base around 98p. I don't see 200p or 250p without some new information. Numbers are not far off the frantic calculations a few weeks ago. It appears to me however the market has suddenly forgotten about the proposed ban and got a bit wrapped up in upgrades which i personally feel are a little optimistic. No offense ED but I think your numbers (whilst current) seem to ignore very likely events. Gap has also appeared at 100p so will that be closed on any news of an actual ban? DYOR as always.
Also with their new extra large warehouse consolidations and reduced logistics costs coming through, they are set for margin improvements going forward. Story gets better and better. Should be back to 250p when markets normalize
Supreme (LON:SUP) - AGM update - FY24 significantly ahead (new research report is here: https://www.equitydevelopment.co.uk/research/agm-update-fy24-significantly-ahead)
In today’s AGM statement, Supreme plc reported that the strong momentum evident in FY23 has continued into the first half, as a result of which the Group now expects revenue for FY24 to be in the range £195-£205m, with (adj.) EBITDA of £28-£30m. This guidance is up to 6% ahead of our previous revenue outlook of £193.5m and up to 17% above our (adj.) EBITDA estimate of £25.6m.
The Group notes that of the incremental £3.5m in (adj.) EBITDA - versus a prior market consensus of £26.5m - £2.0m arises from the distribution of Elf Bar branded vaping products, and the remaining £1.5m from other core operations.
Our Fair Value remains at 200p/share, indicative of a FY24 EV/EBITDA of 8.5x.
88vape pod system https://www.linkedin.com/posts/supreme-imports_coming-soon-88vape-rechargeable-pod-system-activity-7108048000907632640-PbqU
I often find myself at complete odds with Paul Scott and others on Stockopedia. It was almost his disdain for vapes , while tobacco alcohol and gambling seem to be ok in his view that encouraged me to get back into this stock. At least they are helping with an alternative to nicotine addiction. Kids are always going to want to try something they should be prohibited from. O and then there was the cardinal sun of a donation to the Conservative party. He does make me chuckle old Scotty. Hypocritical moi? The management are right on this and whatever happens they are definitely worth more than half the sum of parts, a lot more. Whatever they like to say on Stockopedia there is no wurst ion that their opinions have some sway on small cap share prices, creating some great opportunities in some of the discarded ones.
Every cloud... we now get more shares if and when we reinvest our dividends right....
FWIW, Vox believe Supreme are on top of the potential regulatory changes:
"According to the World Health Organization approximately 1.8m people die each year from lung cancer, including 35,000 in the UK. The vast majority of fatalities, around 80% in fact, are tragically caused by either direct or passive smoking.
One of most effective ways of encouraging hardened smokers to quit cigarettes is to switch them to vaping. That is why the NHS is in the process of handing out 1m free devices - indeed it's been proven that people are twice as likely to give up tobacco by using e-cigarettes, as opposed to other nicotine replacements such as patches or gum.
However the only problems with vaping is preventing underage usage and disposing of cartridges, which mostly contain hard-to-recycle lithium ion batteries. That dual issue has prompted current media speculation that the UK government will soon ban single-use devices.
But one leading vape manufacturer has been pre-empting this problem: Supreme, which as well as distributing vapes sells other everyday products across batteries, lighting, and sports & nutrition. It operates best-in-class regulatory compliance to stop underage vaping, conducting third-party testing to ensure products are consistently in compliance with all UK laws, and spot checking retail stores to ensure adequate age verification protocols are being implemented.
The company also announced today that - in addition to its existing non-disposable product range - it would soon launch its own rechargeable 88Vape pod system that is much better for the environment.
In a brief trading update today, Supreme added that it remains on track to deliver "adjusted FY24 EBITDA in line with market expectations" of £25.6m. It also said it will "undertake a comprehensive review to measure the impact of any proposed changes across the medium to long term, once further clarity is provided."
At 96p, the stock trades on compelling FY24 PER, EBIT & EBITDA multiples of 7.1x, 5.2x & 4.4x, respectively, based on my forecasts of £25.5m and 13.5p in adjusted EBITDA and EPS on revenues up +16% to £181m. The associated sum-of-the-parts valuation remains unchanged at 195p a share."
To curb the escalating concerns regarding the environmental and health impacts of single-use “disposable” vaping devices, the Local Government Association (LGA) recently issued a rallying cry for an outright ban on producing and selling such products - because bans always work!
This news has not gone down well with Supreme (AIM SUP) or Chill Brands (AIM: CHIL); it is the former we concern ourselves with because it was a featured Company by my father earlier this year. Steered by a range of disturbing factors, including the attraction of these bright-coloured fruit-flavoured vapes marketed to a young teenage market, are not the most responsibly minded individuals when it comes to disposing of them after their use, have unwittingly created a problem for themselves and the public. Their fire hazard potential and the escalating issue of littering become a problem. Nonetheless, it provokes a pertinent question: Would a total ban be the optimum solution, or could it inadvertently do more harm than good, and how could a ban impact Surpeme?
https://is.gd/xLGCjf
From The Telegraph:
"A call to evidence was issued last April, with the aim of clamping down on youth vaping.
A new consultation, honing in on specific proposals, will put forward the disposable vape ban.
The ban would apply in England, with other devolved administrations having to set policy for Scotland, Wales and Northern Ireland.
A law change would likely be needed, but it remains to be seen if time could be found in Parliament before the next general election, expected in autumn 2024."
Yes 12m. My main concern is on future regulations on the display of vaping products. 88 vape have carved out a niche selling to value Conscience ex smokers, customers average age is in the 40 year olds bracket. Company has clearly not been Targeting underage groups. The product the company sells are the cheapest on the market and are normally displayed on the counter of various shops and supermarkets. The company also has a £10 million contract for the prison service and also is in discussion with the NHS with a similar deal. This has not been signed yet. I think new policy of banning disposables will be a positive Long-term. Short term, it's just a guessing game.
My take is that a disposal vape ban was inevitable and, although I still have a holding and am feeling the pain this morning, I did sell a few in the past month in anticipation of this.
Taking a broader view, it is absolutely right that these cheap, nasty, environmentally unfriendly products marketed to teens should be banned and it would just align the UK with other sensible countries.
I also have no doubt that while Supreme will be hurt, it can navigate through the new regime. Management are smart and entrepreneurial and I'm sure have been preparing for this. Vapes are here to stay - they have clear health benefits vs smoking - but a higher quality product will be required.
I'm trying to look at this logically with the information I have, I'm not seeing huge profit reductions here just an overreaction (understandably).....extracts from research note........Supreme has announced a master distributor agreement for the Elf Bar and Lost Mary disposable vaping ranges which we estimate could add c.£25m in revenue and c.£2.0m in (adj.) EBITDA in FY24, accounted in the Branded Household Goods / Other product segment. (£2m ebitda really is that all?)
The launch of a range of disposable vapes, augmenting the hero e-liquid range, generated a reported £12.0m in additional revenue. ( i assume £1-2m gone there too)
I'm not seeing huge losses here in the bottom line these products are not exactly high margin like liquids (unaffected) as the info says, i say probably 3-4m off net anticipated for 2024 is likely so £13m net eps 11p, same net as i calculated earlier. And yes as said people just stop using disposable and move to non-disposable therefore more juice sales. my target price changed from 180p to 150p.
I have to correct myself it was just £12 million from disposables.