Yü Group – £272m utility services group, making £1m profits a week, with over £100m cash in the bank, shares 1625p, TP 2677p

Mark Watson-Mitchell - 20.10.2025

In price, this group’s shares are the costliest that I have featured for some time – however, I consider that they are cheap, really cheap!

The Business

Yü Group (LON:YU) is a leading supplier of gas and electricity focused on servicing the corporate sector throughout the UK.

It drives innovation through a combination of user-friendly digital solutions and personalised, high quality customer service.

The Group plays a key role supporting businesses in their transition to lower carbon technologies with a commitment to providing sustainable energy solutions. 

The Yü Group has a clear strategy to deliver sustainable profitable growth (in a £50bn+ addressable market) and value for all of its stakeholders, built on strong foundations and with a robust hedging policy.

The Group has achieved a compound annual growth rate of over 60% over the last four years and has consistently improved margin and profitability performance.

Recent Interims

On Tuesday 23^rd September, the business reported its unaudited half-year results to end-June, revealing a 9% increase in revenue to £341m, compared to £312.7m in H1 24.

Adjusted EBITDA rose by 4% to £22.9m, up from £22.1m.

Profit before tax increased by 14% to £22.6m.

The company's net cash position strengthened by 27% to £109.9m.

Adjusted earnings per share increased by 2% to 96p.

The Board declared an interim dividend of 22p per share, a 16% increase from 19p in H1 24.

Meter points supplied increased by 48% to 106,900.

Contracted revenue for the next financial year is £481m, a 15% increase, and aggregate contracted revenue was £1,168m, up 24%.

Smart meter assets ILARR increased by 200% to £1.8m.

Management Comment

With the Interims CEO Bobby Kalar stated that:

“The Group has delivered a resilient first half with performance in line with management expectations, against the backdrop of a normalising commodity market.

Meter point growth has remained strong, supporting our operational momentum and strengthening our position in the market.

Strong cash generation during the period has enabled further material dividend growth whilst retaining ample earnings coverage, reinforcing our confidence in delivering against our targets.

Our forward contract book continues to expand despite recent declines in wholesale energy prices, providing a solid platform for the remainder of the year and beyond.

We remain focused on disciplined execution of our strategy, maintaining financial strength while delivering long-term shareholder value.”

The Equity

Excluding Treasury holdings, there are some 16.79m shares in issue.

The larger holders include Bobby Kalar (51.6%), Jamieson Principal Pension Fund (6.9%), Premier Miton Group (4.7%), Schroder Investment Management (5.1%), Jonathan Turner (3.2%) and Bayford & Co (2.6%).

Broker’s Views

Analyst Ian McInally, at Cavendish Capital Markets, rates the group’s shares as a Buy, with a Target Price of 2677p.

For the current year to end-December he is looking for revenues to have increased to £716.0m (£645.5m), with adjusted pre-tax profits of £47.2m (£46.3m), but with slightly lower earnings of 204.4p (210.4p), whilst increasing its dividend to 71.6p (60.0p) per share.

His estimate for next year is for £796.9m revenues, £53.7m in profits, 216.6p in earnings and paying out a dividend of 75.9p per share.

The bigger lift-up comes in 2027, with sales of £901.7m, £57.9m profits, 234.0p earnings and awarding a dividend of 82.0p per share.

“With a straightforward, steady growth strategy and benefiting from a high return on capital and good cash generation, we believe the shares look substantially undervalued.”

Over at Panmure Liberum, its analysts Joe Brent and Joe Walker also have a Buy out on the group’s shares, but with a Target Price of 2050p.

For this year they estimate £710.0m sales, £51.2m profits before tax, with 213.6p in earnings and giving a 71.2p per share dividend.

For 2026 they see £784.0m sales, £54.9m profits, 228.1p earnings and a dividend of 76.0p.

The year to end-December 2027, they suggest, could see £860.0m of sales, £57.9m profits, 240.0p in earnings and with a dividend of 80.0p per share.

The analysts claim that the group’s shares are “too cheap”.

In My View

On the basis of the broker’s estimates and also looking at the group’s balance sheet, my view is that the shares of the £272m-capitalised Yu Group are a ‘stonking purchase’ for any investor looking for sales and profits growth, backed by a massive cash balance of some £102m.

Now at 1625p, I see the shares lifting up through the 1964p level at which they peaked in early January this year – it will not be a straight line, so expect prices to sway somewhat, after all they were down to just 1446p two weeks ago.

But just look at that value!

Is it Blue Sky for the Yu Group shares?

I now set an easy Target Price of 2000p for the group's shares.

(Profile 20.10.25 @ 1625p set a Target Price of 2000p)