Yü Group (LSE:YU) has been one of the most remarkable success stories on the AIM market in recent years. The energy and utility supplier, which focuses on UK businesses, has seen its share price skyrocket by more than 1,300% over the past five years. Despite this rise, I still believe it’s one of the cheapest stocks in the UK.
Impressive momentum
Yü Group’s most recent results for 2024 were nothing short of impressive. Revenue surged by 40% to £645.5m, driven by a 78% increase in energy volumes supplied and a near doubling of market share to 2.7%. The company’s ability to win new customers and scale up its smart metering operations is very exciting.
Notably, Yü Group entered 2025 with £566m in contracted revenue already secured, a figure that represents a 9% increase on the previous year. Management has guided for full-year revenue in 2025 to reach between £730m and £760m, with consensus forecasts pointing to continued double-digit growth in subsequent years.
Profitability gains
Profitability is rising alongside revenue. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) in 2024 climbed 11% to £48.8m, while profit before tax increased by 12% to £44.5m. Earnings per share (EPS) also rose, reaching 210p on an adjusted, fully diluted basis.
Looking ahead, analyst estimates suggest that net income will rise from £39.8m in 2024 to £46.5m in 2026, with basic EPS forecast to increase from 222p to 266p over the same period.
This strong earnings momentum is also reflected in the dividend. The board increased the full-year payout by 50% to 60p per share in 2024 and is expected to lift this further to 84p in 2025, 90p in 2026, and 95p in 2027. This equates to 3.3% yield today, rising to 5.1% for 2027.
The importance of a strong balance sheet
Yü Group’s cash generation is another key strength. Net cash rose to £80.2m in 2024, supported by a hedging agreement with Shell Energy Europe that removed the need for cash collateral. Forecasts suggest net cash will reach £117m by 2025 and could rise to £168m by 2027.
Despite these impressive numbers, Yü Group’s valuation remains undemanding. The shares trade at just 7.5 times forecast earnings for 2025, falling to seven times for 2026. Enterprise value-to-EBITDA is similarly low, dropping from 3.3 times in 2025 to just 2.1 times by 2027. These are multiples more commonly associated with mature, slow-growth utility stocks and not with a company delivering double-digit revenue and profit growth.
The bottom line
Of course, there are risks. Energy price volatility could impact revenue per customer. Rapid growth brings its own execution challenges, and the UK energy market remains highly competitive. Regulatory changes could also affect profitability. It’s also AIM-listed, which does mean it can go under the market’s radar.
Nonetheless, the company’s disciplined approach to growth and impressive cash position provide reassurance. I had previously suggested that I liked this company but it wasn’t the type of stock I typically invest in. However, it’s certainly a business I’m going to keep a closer eye on. I may even change my mind and invest.
