Business utilities supplier Yu (YU.) has grown at a breakneck pace since it floated on the LSE. Prior to the 2016 IPO, it set performance targets, including revenues of £30m by the end of 2017. With the benefit of hindsight, that hurdle rate appears lacking in ambition, but the huge leap in revenues was achieved partly through a move into the higher volume half-hourly metered market, which effectively sapped the gross margin from 21.2 per cent to 17.4 per cent year on year.
To keep up this growth, the group intends to “stick to its knitting”. The water licence granted in the year is expected to remain a relatively small part of the business and management dismissed suggestions it might move into the consumer market, saying the business sector had opportunities enough to generate increased scale. Analysts at Shore Capital seem to agree, upping their forecasts. They now expect adjusted pre tax profit of £5.4m, giving EPS of 26.9p in 2018 (from £3.1m and 17p in 2017). Management said Yu already has contracted revenue exceeding £50m for 2018, leading them to predict sales would be well ahead of expectations this year and next.
| YU (YU) | ||||
| ORD PRICE: | 1,325p | MARKET VALUE: | £187m | |
| TOUCH: | 1,300-1,350p | 12-MONTH HIGH: | 1,425p | LOW: 270p |
| DIVIDEND YIELD: | 0.2% | PE RATIO: | 102 | |
| NET ASSET VALUE: | 63p | NET CASH: | £4.89m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015* | 3.88 | -1.02 | -8.0 | na |
| 2016 | 16.3 | -1.53 | -10.0 | 2.3 |
| 2017 | 47.0 | 2.24 | 13.0 | 3.0 |
| % change | +189 | - | - | +33 |
| Ex-div: | 2 Aug | |||
| Payment: | 11 Sep | |||
| *14-month period, pre-IPO figures | ||||
