Yü Group shares were firmly higher on Tuesday after the utilities company posted bumper 2023 results and provided an outlook that lays the foundations for further growth in the coming years.
Yü Group profits ballooned in 2023 as the business-focused utilities supplier’s revenue jumped 65%, and contracted revenue for 2024FY rose to £520m.
By all accounts, Yü Group’s 2023 results were nothing short of spectacular.
Increased customer numbers drove a whopping 439% increase in adjusted EBITDA to £42.6m, up from £7.9m in 2022. EBITDA margin exploded to 9.3% in 2023 from 2.8% in 2022.
Speaking with UK Investor Magazine shortly after the results were released on Tuesday, Yü Group CEO Bobby Kalar said EBITDA margins were expected to ease back next year but remain in the 7%—8% region—significantly higher than in 2022.
The company’s smart metering installations surged to 8,300 during the year, and the group said it is targeting 25,000 installations by the end of 2024. The company currently has a 1.4% market share of a £50 billion market, up from 1% in the prior year. Kalar said he expects market share to grow double digits each year in the medium term.
Although Yü Group shares have soared in recent years, the company is still undervalued compared to sector peers. Given the wave of takeovers of UK companies, we asked CEO Bobby Kalar if he was concerned the company may become a takeover target with earnings set for further growth in the future.
After today’s results, Yü Group trades at an EV/EBITDA multiple well below that of sector peers that have attracted suitors. In response, Kalar said that while a takeover approach is a concern for the ‘entrepreneurial’ company, as the founder and holder of 51.8% of the group’s shares, he remained committed to pushing forward with the company’s growth strategy as a publicly traded entity.
Yü Group shares were 5% higher at the time of writing on Tuesday.
