Ultimate Products plc (ULTP)
Ultimate Products hosted a Capital Markets presentation at the Exclusively Housewares Exhibition in London on Tuesday this week, where the company showcased its re-brand for Beldray®, having engaged in a similar process for Salter at the same event in 2023. Regarding trading, despite some sales and profit disruption so far in FY2024, we continue to expect above trend organic growth in FY2025. We retain our 200p fair value for the shares.
UP’s Brand Director Tracy Carroll presented key features of the Beldray (est 1872) re-brand. The overarching message was one of “collaboration” between UP and the product user with the simple tagline – “between us we’ve got this.” The company not only looks to have beautiful, affordable products for every home but also to inject humour into the experience of household chores such as laundry and cleaning. The Beldray – be beldray® - re-brand appears well positioned to achieve this.
Aside from the challenging task of making housework more “fun,” the Beldray re-brand seeks to bring all of UP’s legacy Beldray housewares products under a simple, unified umbrella. Within cleaning products, the company plans to use colour coding to break its product portfolio into discrete sub-categories, all of which will embrace the re-branded Beldray’s 6 key new messages.
These key 6 Beldray messages will aim to make the brand softer, friendlier and more fun while still being dependable for UP’s value seeking customer base. UP will use the “be” from Beldray as a prefix to “be achievable, be inclusive, be affordable, be fun, be present” and “be dependable” with the summary message to “be more Beldray.” As Beldray, like Salter, behaves increasingly like a unified, strong brand the implications for UP’s intrinsic equity value look positive.
UP’s core values and investor attractions remain intact despite recent sales disruption. The company generates around two thirds of sales from Salter and Beldray. While the focus remains on value for money rather than using the re-branding to push into premium price positions, their ability to retain market share and broaden their “competitive moat” should be enhanced by the increased vigour behind the brands illustrated above.
As a company which owns increasingly powerful consumer brands, UP’s valuation relative to peers continues to look attractive. The company’s yield is above its peers and the prospect of ongoing share buybacks should also be supportive, in our view. We retain our view that fair value for the shares is 200p and base this on 1.2x EV/sales,10.2 EV/EBITDA and a 16.4x P/E. Moreover, the dividend yield at 3.1% would be superior to peers even with a 200p share price.
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