Yü Group (YU. ) shares jumped 18% on Monday after the company delivered an upbeat FY22 trading update.
The supplier of energy and utility solutions to UK businesses announced "exceptional" trading performance, expected to continue into FY23. Yü said its revenue, adjusted EBITDA, and operational cashflow were all expected to significantly exceed current market forecasts for FY22.
Yü upgraded its forecast after it saw record average monthly bookings from new and existing customer contracts over the past 3 months, resulting in expected revenue of approx. £260m for FY22. This represents a c. 67% annual growth rate.
Yü said EBITDA profitability was also set to continue its trajectory, with 2H22 expected to exceed the 2.1% achieved in 1H22. EBITDA growth was driven by strong demand and efficiencies enabled by the company's "Digital by Default" initiative.
Operational cash flow remained strong, supported by the increased EBITDA and robust customer collection performance, with overdue customer receivables remaining stable and proportionate to the growth of the business.
As a result, Yü now expects net cash on 31 December 2022 to significantly exceed market expectations.
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Another positive update from Yü Group after 1H22's doubling of revenues and quintupling of profits. Results for 1H exceeded forecasts even after 2 recent upgrades, and today's announcement removed any doubt that the trend will continue into FY23.
Revenue, adjusted EBITDA, and operational cashflow are all set to outperform in FY22, with revenues coming in at 67% year-on-year growth. Investors cheered the news, sending YU. shares up as much as 18% on Monday in London. YU. shares are now up 79% over the past 6 months and up 45% YTD.
Investors have placed their trust into the company's "Digital by Default" initiative, which has been a springboard to rapidly scale Yü's business, utilising the benefits of operational leverage to enhance margins on an ongoing basis.
Additionally, Yü Smart will enable the company to own its own smart meters, beginning in Q4 2022, which will provide a long-term recurring annuity. With soaring energy prices, more and more businesses are looking to optimise their energy usage through digital monitoring, with an estimated £50bn addressable market in that space. Yü Smart is forecast to become profitable in FY23.
Yü's robust commodity hedging position further underpins its continued strong financial performance as the business is protected from high price volatility in energy markets. Yü estimates the value of its hedge book, on an MtM basis, to be £300m as of 20 September 2022, providing a significant market opportunity for the rest of FY22, as well as FY23 and FY24.
Yü is now in regular dialogue with BEIS, forming part of the BEIS supplier forum committee, and has received its first monthly Energy Bills Relief Scheme (EBRS) payment, in line with the Government's plan.
Yü was recently featured in our ESG roundup as a company that has placed significant emphasis on sustainability and employee well-being. If you are an ESG-minded investor, we recommend you add YU. to your list and the company, so you do not miss future coverage.
Yü is well on its way to a 5th consecutive half-year period of growth. Momentum is continuing into next year with £119m of contracted revenue already secured for 2023, providing good forward revenue visibility. The company is well-funded with £15.7m in cash, not including today's announced upgrade, and well-positioned to meet its stated medium-term goal of £500m in revenues with an adjusted EBITDA margin of over 4%.
Yü will provide a full FY22 trading update and outlook for FY23 in January 2023.
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