Investors hate uncertainty, and unfortunately there's a lot at the moment. That said, despite the volatility, many UK smallcaps are not directly impacted by President Trump's trade tariffs.
Indeed, one could even argue that Supreme's quality, yet affordable everyday FMCG products might actually be a net beneficiary in an environment where household discretionary spend is under pressure. Plus, following last year's complementary acquisitions of Clearly Drinks (£15m) and Typhoo Tea (£10.2m), there's plenty of cost and sales synergises to realise over the next few years, alongside new product launches.
Ok, so how is the business performing?
Well, encouragingly today, the company released an 'in line' trading update for the Mar'25 year-end, saying that it had delivered record turnover and adjusted EBITDA of £235.0m (+6.2%, FY24 £221.2m) and at least £40.0m (+5%, FY24 £38.1m) respectively - ending the period with net cash, and being "confident in its prospects".
Additionally, with these two drinks brands now onboard, there's a nice product balance with non-vape revenues now representing approx half (annualised £120m) of the group.
Sure, going forward, the 1st June ban on disposable vapes is likely to affect the firm's UK distribution of Chinese brands ElfBar and Lost Mary (est FY26 impact -£18m sales, -£3.9m EBIT). Yet, this is set to be partly offset by the rest of the business, which is economically resilient, meaning overall FY26 sales and EBITDA are anticipated to come in at £231m (-£9m YoY) and £36.5m (-£3.5m YoY) respectively. Thus putting the stock at 167p on modest EV/EVITDA and PE multiples of 5.5x and 8.4x, with Equity Development valuing SUP at 225p/share.
Final FY25 results are scheduled for Tuesday 1st July 2025.
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