Please refer to important disclosures at the end of this report
This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.
Eurocon Consulting Reason: Post-results comment
Company sponsored research Not rated
Lower COVID-19 impact than feared
Manages to win new orders in Q1
Visibility in H2 lower than normal, a risk
Trading at EV/EBIT 8.7x for ’21e, 6.3% div. yield
Q1: Profitability trend has turned positive
Eurocon reported net sales of SEK 67.9m (74.4), corresponding to a y-o- y decline of 9%. The year started off slowly, and the company
experienced some project delays in the end of March on the back of COVID-19. However, net sales were 4% better than ABGSCe as we anticipated a larger disturbance from COVID-19. EBIT was SEK 3.1m (4.7m) vs. our forecast of SEK 1.5m. The positive deviation stems from higher sales volume and improved utilisation following a disappointing end to 2019. Looking into Q2, management is confident about the current order backlog where new projects were signed in the latter part of Q1.
Eurocon will utilise short-term layoffs to a small extent in Q2, and stated that the visibility going into H2 is lower than normal. All in all, we were positively surprised by the relatively low COVID-19 impact that has been experienced so far.
Raising estimates on lower than expected COVID-19 impact In our preview to the Q1 result, we pencilled in a bigger COVID-19 impact than what seems to be the case for Eurocon. We now make large positive revisions to our estimates following the surprisingly positive outlook in the Q1 report. For 2020, we think Eurocon can deliver an EBIT margin of ~4%, up from 0% in our previous forecast. It will also have a positive effect on the ability to recover the margin in the following years, and we raise our margin assumptions for ’21e-’22e, resulting in positive EBIT revisions of 27% and 21%, respectively.
More improvements needed to reach margin target The share has taken a hit from the COVID-19 uncertainty and now is trading at 8.7x EV/EBIT for ’21e, with a dividend yield of 6.3%. Our anticipated EBIT margin of 6.5% for ’21e is still some way below the margin target of 10% as we are a bit unsure about the margin following the weak end to 2019. Looking at peer valuation, Eurocon is trading
~40% below its more well-known Swedish peers on EV/EBIT for ’21e.
13/05/2020
Performance Equity Research - 15 May 2020 07:44 CET
SEKm 2018 2019 2020e 2021e 2022e
Sales 253 261 247 266 278
EBITDA 28 18 24 30 34
EBITDA margin (%) 11.3 6.8 9.5 11.4 12.2
EBIT adj 25 5 10 17 21
EBIT adj margin (%) 9.8 2.0 4.1 6.5 7.5
Pretax profit 31 6 10 17 21
EPS rep 0.60 0.12 0.18 0.30 0.37
EPS adj 0.60 0.12 0.18 0.30 0.37
Sales growth (%) 5.8 3.3 -5.3 7.7 4.4
EPS growth (%) 18.8 -80.3 50.6 71.3 21.3
Source: ABG Sundal Collier, Company data
Lead analyst: Stefan Knutsson Victor Forssell
Estimate changes (%)
2020e 2021e 2022e
Sales 21.5% 8.6% 4.7%
EBIT (rep) 6,759.6% 27.4% 20.9%
EPS (rep) 4,077.0% 27.6% 21.0%
Source: ABG Sundal Collier
Share price (SEK) 3.2
Services, Sweden EUROC.TE/EURO SS
MCap (SEKm) 136
MCap (EURm) 12.8
Net debt (EURm) 2
No. of shares (m) 42.7
Free float (%) 90.0
Av. daily volume (k) 1.1
Next event Q2 report: 28 Aug
40 50 60 70 80 90 100 110 120 130
Ma y 1 7 Ju l 1 7 S e p 1 7 N o v 1 7 Ja n 1 8 Ma r 1 8 Ma y 1 8 Ju l 1 8 S e p 1 8 N o v 1 8 Ja n 1 9 Ma r 1 9 Ma y 1 9 Ju l 1 9 Se p 1 9 N o v 1 9 Ja n 2 0 Ma r 2 0
Eurocon Consulting OMX STH PI
1m 3m 12m
Absolute (%) -0.6 -38.8 -48.7
OMX STH PI (%) 2.4 -18.9 -0.4
Source: FactSet
2020e 2021e 2022e
P/E (x) 18.0 10.5 8.6
P/E adj (x) 18.0 10.5 8.6
P/BVPS (x) 1.50 1.37 1.28
EV/EBITDA (x) 6.8 5.0 4.3
EV/EBIT adj (x) 15.9 8.7 6.9
EV/sales (x) 0.65 0.57 0.52
ROE adj (%) 8.7 13.7 15.3
Dividend yield (%) 3.1 6.3 7.9
FCF yield (%) 8.2 18.2 18.3
Lease adj. FCF yld (%) 0.2 10.3 10.3
Net IB debt/EBITDA 0.9 0.3 0.1
Lease adj. ND/EBITDA -0.4 -0.8 -0.9
15 May 2020 ABG Sundal Collier 2 Geographical breakdown, sales, SEKm
Source: ABG Sundal Collier, Company data
Business area breakdown, sales, SEKm
Source: ABG Sundal Collier, Company data
EPS estimate changes, 2020e, SEK
Source: ABG Sundal Collier, FactSet
EPS estimate changes, 2021e, SEK
Source: ABG Sundal Collier, FactSet
Quarterly sales and adj. EBIT, SEKm
Source: ABG Sundal Collier, Company data
Opportunities
Eurocon has a solid financial position with stable cash flows. This positions Eurocon for further acquisitions, which in turn will generate most of the firm’s future growth.
Together with its consultancy offering, Eurocon also provides customers with its developed software Sitebase.
The software scales well with increased volumes and can hence strengthen the company’s operating margins.
Risks
The markets that Eurocon is exposed to are cyclical markets such as mining and forestry, and hence, Eurocon is dependent on investments in these markets. As other consulting businesses are experiencing as well, hiring consultants is hard, and especially within engineering. As the company grows, keeping competent and experienced employees is essential.
230 235 240 245 250 255 260 265 270 275 280 285
2019 2020e 2021e 2022e
Sales
252 253 254 255 256 257 258 259 260 261 262
Q2'19 Q3'19 Q4'19 Q1'20
Sales
-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6
ABGSC FactSet Consensus Mean
0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60
ABGSC FactSet Consensus Mean
-4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0
0 10 20 30 40 50 60 70 80
quarterly sales quarterly adj. EBIT
Company description
Eurocon Consulting, a consulting service company founded in 1990, provides the forestry, energy, mining, and chemistry markets with engineering services. The offering covers the whole life cycle of customer investment, from preliminary study to implementation, deployment and maintenance. The customers are almost exclusively major industrial companies and municipalities. The company’s main vision is to be the obvious choice for customers and employees who want to build and optimize for a
sustainable future.
15 May 2020 ABG Sundal Collier 3 Q1 deviations, improvements from a disappointing Q4
Source: ABG Sundal Collier, company data
Forecast changes, lower COVID-19 impact expected
Source: ABG Sundal Collier, company data SEKm
P&L Q1'19 Q1'20 Q1'20e Diff vs. ABGSC
Net sales 74.4 67.9 65.4 4%
Other income 0.2 0.3 0.2 47%
Purchases of services and materials -7.9 -5.9 -6.1 -3%
Personnel costs -51.4 -49.5 -48.6 2%
Other external costs -7.4 -6.0 -6.1 -2%
-of which non-recurring items 0.0 0.0 0.0 -
EBITDA 7.8 6.8 4.8 43%
Depreciations and amortizations -3.1 -3.7 -3.2 14%
EBIT 4.7 3.1 1.5 104%
Adj. EBIT 4.7 3.1 1.5 104%
Net Financials -0.1 -0.3 -0.3 11%
Profit before tax 4.7 2.8 1.2 127%
Tax -0.9 -0.7 -0.3 147%
Net incom e 3.8 2.3 1.0 137%
Grow th
Sales grow th y-o-y 5.5% -8.7% -12.1% 3.4 pp
Sales grow th q-o-q 11.7% 4.1% 0.2% 3.9 pp
Adj. EBIT grow th -52.7% -33.8% -67.6% 33.8 pp
Margins
Adj. EBITDA margin 10.5% 10.1% 7.3% 2.8 pp
Adj. EBIT margin 6.3% 4.6% 2.3% 2.3 pp
SEKm Old forecast New forecast Change
P&L 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e
Net sales 203.6 245.3 265.6 247.4 266.3 278.0 21.5% 8.6% 4.7%
Personnel costs -154.4 -162.9 -172.6 -174.6 -177.9 -181.1 13.1% 9.2% 4.9%
Other Opex -37.3 -56.8 -63.6 -50.2 -59.0 -63.9 34.5% 4.0% 0.5%
-of which non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0 - - -
D&A -13.0 -13.1 -13.1 -13.4 -13.1 -13.1 3.6% 0.0% 0.0%
Adj. EBIT -0.2 13.6 17.3 10.1 17.3 20.9 -6759.7% 27.4% 20.9%
Adj. EBIT margin -0.1% 5.5% 6.5% 4.1% 6.5% 7.5% 4.2 pp 1.0 pp 1.0 pp
Net Financials -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 0.0% 0.0% 0.0%
Profit before tax -0.3 13.5 17.2 10.0 17.2 20.8 -4076.8% 27.6% 21.0%
Tax 0.1 -3.0 -3.8 -2.2 -3.8 -4.6 -4076.8% 27.6% - 21.0% -
Net incom e -0.2 10.5 13.4 7.8 13.4 16.2 -4076.8% 27.6% 21.0%
15 May 2020 ABG Sundal Collier 4 Quarterly and yearly overview
Source: ABG Sundal Collier, company data
Sales growth y-o-y, and growth target
Source: ABG Sundal Collier, company data
EBIT margin, and margin target
Source: ABG Sundal Collier, company data SEKm
P&L Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20e Q3'20e Q4'20e 2017 2018 2019 2020e 2021e 2022e
Net sales 74.4 68.6 52.9 65.3 67.9 59.9 49.7 69.8 236.5 252.9 261.2 247.4 266.3 278.0
Other income 0.2 0.2 0.2 0.3 0.3 0.2 0.2 0.3 2.6 1.1 0.8 1.0 1.0 1.0
Purchases of services and materials -7.9 -6.1 -6.5 -7.0 -5.9 -4.9 -5.1 -6.7 -21.0 -19.6 -27.6 -22.5 -23.7 -24.5
Personnel costs -51.4 -51.1 -38.3 -51.1 -49.5 -42.9 -33.3 -48.9 -158.3 -174.0 -191.9 -174.6 -177.9 -181.1
Other external costs -7.4 -5.3 -4.9 -7.0 -6.0 -6.2 -7.6 -8.0 -28.9 -31.3 -24.7 -27.7 -35.3 -39.4
-of which non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0
EBITDA 7.8 6.2 3.4 0.5 6.8 6.1 4.0 6.6 30.9 28.5 17.8 23.6 30.3 34.0
Depreciations and amortizations -3.1 -3.4 -3.3 -2.8 -3.7 -3.2 -3.2 -3.2 -3.1 -3.7 -12.6 -13.4 -13.1 -13.1
EBIT 4.7 2.8 0.1 -2.4 3.1 2.9 0.8 3.3 27.8 24.8 5.2 10.1 17.3 20.9
Adj. EBIT 4.7 2.8 0.1 -2.4 3.1 2.9 0.8 3.3 25.8 24.8 5.2 10.1 17.3 20.9
Net Financials -0.1 0.5 0.0 0.7 -0.3 -0.3 -0.3 -0.3 0.2 6.5 1.1 -0.1 -0.1 -0.1
Profit before tax 4.7 3.3 0.1 -1.7 2.8 2.6 0.5 3.0 28.0 31.3 6.4 10.0 17.2 20.8
Tax -0.9 -0.6 -0.1 0.2 -0.7 -0.6 -0.1 -0.7 -6.5 -5.8 -1.3 -2.2 -3.8 -4.6
Net incom e 3.8 2.7 0.0 -1.4 2.3 2.0 0.4 2.4 21.5 25.5 5.0 7.8 13.4 16.2
Grow th
Sales grow th y-o-y 5.5% 1.6% 9.6% -2.0% -8.7% -12.7% -6.0% 6.9% 10.4% 7.0% 3.3% -5% 7.7% 4.4%
Sales grow th q-o-q 11.7% -7.8% -22.9% 23.4% 4.1% -11.8% -17.0% 40.4%
Adj. EBIT grow th -52.7% -59.5% -97.0% -146% -33.8% 3% 840% -241% 24.8% -3.8% -78.9% 93% 71% 21.1%
Margins
Adj. EBITDA margin 10.5% 9.0% 6.3% 0.7% 10.1% 10.3% 8.0% 9.4% 12.2% 11.3% 6.8% 9.5% 11.4% 12.2%
Adj. EBIT margin 6.3% 4.1% 0.2% -3.6% 4.6% 4.8% 1.5% 4.8% 10.9% 9.8% 2.0% 4.1% 6.5% 7.5%
14% 14%
8%
10%
7%
3%
-5%
8%
4%
10%
-10%
-5%
0%
5%
10%
15%
20%
2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Growth y-o-y Growth target
7.1%
7.9%
9.6%
11.7%
9.8%
2.0%
4.1%
6.5%
7.5%
10%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
EBIT margin EBIT margin target
15 May 2020 ABG Sundal Collier 5
Valuation
Net sales, SEKm
Source: ABG Sundal Collier, company data
EBIT, SEKm, and EBIT margins
Source: ABG Sundal Collier, company data
Quarterly sales, SEKm
Source: ABG Sundal Collier, company data
Quarterly EBIT and margins
Source: ABG Sundal Collier, company data
173.7 198.8
214.2 236.5
252.9 261.2 247.4
266.3 278.0
14% 14%
8%
10%
7%
3%
-5%
8%
4%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0.0 50.0 100.0 150.0 200.0 250.0 300.0
2014 2015 2016 2017 2018 2019 2020e 2021e 2022e Net Sales Growth y-o-y
12.3 15.8
20.6 27.8
24.8
5.2 10.1
17.3 20.9 7.1%
7.9%
9.6%
11.7%
9.8%
2.0%
4.1%
6.5%
7.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0.0 10.0 20.0 30.0 40.0 50.0 60.0
2014 2015 2016 2017 2018 2019 2020e 2021e 2022e EBIT EBIT margin
59.2
45.0
70.6 70.5 67.5
48.2 66.6
74.4 68.6
52.9
65.3 67.9
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
7.1
2.7 6.2
10.0 6.9
2.7
5.2 4.7 2.8
0.1
-2.4 3.1 12.0%
6.0%
8.8%
14.1%
10.3%
5.6%
7.8%
6.3%
4.1%
0.2%
-3.6%
4.6%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
-5.0 0.0 5.0 10.0 15.0 20.0 25.0
Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Adj EBIT, SEKm Adj EBIT margin
Peer table
Source: ABG Sundal Collier, company data
Com pany Market 3-year CAGR ('19-'22e)
cap (SEKm ) 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e 2020e 2021e 2022e Sales EBITDA EBIT
Addnode 6,196 17% 7% 5% 1.4 1.3 1.2 12.8 11.3 10.5 25.9 19.7 15.1 33.8 26.3 26.3 10% 12% 10% 6.5%
Data Respons 3,780 na na na na na na na na na na na na na na na na na na na
eWork Group 1,362 -6% 10% 9% 0.1 0.1 0.1 12.2 10.5 9.4 16.6 13.6 11.8 22.7 19.0 16.3 4% 3% 4% 0.8%
HiQ 2,747 -6% 6% 6% 1.1 1.1 1.0 9.8 7.6 7.0 12.8 9.2 8.4 22.8 16.6 15.1 2% 4% 5% 11.0%
Know it 3,539 1% 7% -2% 0.8 0.7 0.8 7.0 6.2 6.4 8.9 7.7 8.0 15.7 14.0 14.7 2% 8% 1% 9.2%
Rejlers 2,242 12% 5% -3% 0.8 0.8 0.8 7.7 6.6 6.5 17.3 13.1 13.9 23.1 18.1 18.9 4% 15% 12% 5.6%
Sem con 1,320 -1% 5% 3% 0.5 0.5 0.5 4.6 3.9 3.7 6.2 4.9 4.6 11.9 9.5 8.7 3% 8% 10% 9.2%
Sw eco 41,323 5% 5% 3% 2.2 2.1 2.1 17.1 15.7 15.1 25.1 22.3 20.7 27.8 24.6 22.4 4% 3% 7% 9.5%
Tieto 32,677 61% 3% 2% 1.3 1.3 1.3 8.9 7.9 7.4 12.3 10.6 9.9 14.4 12.2 11.2 19% 19% 24% 11.8%
ÅF 25,741 0% 4% 4% 1.4 1.3 1.3 12.0 10.7 9.7 18.2 15.3 13.7 23.3 19.3 16.6 3% 7% 6% 8.7%
Average 12,093 9% 6% 3% 1.1 1.0 1.0 10.2 8.9 8.4 15.9 12.9 11.8 28.3 22.7 21.3 6% 9% 9% 8.0%
Median 3,659 1% 5% 3% 1.1 1.1 1.0 9.8 7.9 7.4 16.6 13.1 11.8 28.3 22.7 21.3 4% 8% 7% 9.2%
Eurocon (ABGSCe) 212 -5% 8% 4% 0.7 0.6 0.5 6.8 5.0 4.3 15.9 8.7 6.9 18.0 10.5 8.6 2% 2% -11% 4.2%
Eurocon prem ium /discount (+/-) -461% 45% 53% -43% -48% -49% -31% -37% -43% -4% -33% -41% -36% -54% -59% -57% -72% -271% -54%
Key Peers
Rejlers 2,242 12% 5% -3% 0.8 0.8 0.8 7.7 6.6 6.5 17.3 13.1 13.9 23.1 18.1 18.9 4% 15% 12% 5.6%
Sem con 1,320 -1% 5% 3% 0.5 0.5 0.5 4.6 3.9 3.7 6.2 4.9 4.6 11.9 9.5 8.7 3% 8% 10% 9.2%
Sw eco 41,323 5% 5% 3% 2.2 2.1 2.1 17.1 15.7 15.1 25.1 22.3 20.7 25.2 23.6 22.4 4% 3% 7% 9.5%
ÅF 25,741 0% 4% 4% 1.4 1.3 1.3 12.0 10.7 9.7 18.2 15.3 13.7 17.7 16.2 14.5 3% 7% 6% 8.7%
Average 17,657 4% 5% 2% 1.2 1.2 1.2 10.4 9.2 8.7 16.7 13.9 13.2 19.5 16.8 16.1 3% 8% 9% 8.2%
Median 13,992 2% 5% 3% 1.1 1.1 1.1 9.8 8.6 8.1 17.7 14.2 13.8 20.4 17.1 16.7 3% 7% 8% 8.9%
Eurocon (ABGSCe) 212 -5% 8% 4% 0.7 0.6 0.5 6.8 5.0 4.3 15.9 8.7 6.9 18.0 10.5 8.6 2% 2% -11% 4.2%
Eurocon prem ium /discount (+/-) -332% 67% 58% -42% -47% -51% -31% -42% -47% -10% -39% -50% -12% -39% -48% -48% -70% -237% -53%
EBIT-% Avg ('20e-'22e)
Sales grow th (%) EV/Sales (x) EV/EBITDA (x) EV/EBIT (x) P/E (x)
15 May 2020 ABG Sundal Collier 6 Source: ABG Sundal Collier, Company data
Income Statement (SEKm) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020e Q3 2020e Q4 2020e
Sales 74 69 53 65 68 60 50 70
COGS 0 -13 -14 -25 -19 -16 -13 -16
Gross profit 74 56 38 40 49 44 36 54
Other operating items -67 -50 -35 -39 -42 -37 -32 -47
EBITDA 8 6 3 0 7 6 4 7
Depreciation and amortisation -3 -3 -3 -3 -4 -3 -3 -3
EBITA 5 3 0 -2 3 3 1 3
EO items 0 0 0 0 0 0 0 0
Impairment and PPA amortisation 0 0 0 0 0 0 0 0
EBIT 5 3 0 -2 3 3 1 3
Net financial items -0 0 0 1 1 -0 -0 -0
Pretax profit 5 3 0 -1 4 3 0 3
Tax -1 -1 -0 0 -1 -1 -0 -1
Net profit 4 3 0 -1 3 2 0 2
Minority interest 0 0 0 0 0 0 0 0
Net profit discontinued 0 0 0 0 0 0 0 0
Net profit to shareholders 4 3 0 -1 3 2 0 2
EPS 0.09 0.06 0.00 -0.02 0.07 0.05 0.01 0.05
EPS Adj 0.09 0.06 0.00 -0.02 0.07 0.05 0.01 0.05
Total extraordinary items after tax 0 0 0 0 0 0 0 0
Tax rate (%) 18.9 19.8 32.0 22.7 17.6 22.0 22.0 22.0
Gross margin (%) 100.0 81.3 72.7 61.1 71.5 72.7 73.4 76.8
EBITDA margin (%) 10.5 9.0 6.3 0.7 10.1 10.3 8.0 9.4
EBITA margin (%) 6.3 4.1 0.2 -3.6 4.6 4.8 1.5 4.8
EBIT margin (%) 6.3 4.1 0.2 -3.6 4.6 4.8 1.5 4.8
Pretax margin (%) 6.3 4.6 0.3 -1.5 5.6 4.3 0.9 4.4
Net margin (%) 5.1 3.7 0.2 -1.1 4.6 3.4 0.7 3.4
Growth rates Y/Y Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020e Q3 2020e Q4 2020e
Sales growth (%) 5.5 1.6 9.6 -2.0 -8.7 -12.7 -6.0 6.9
EBITDA growth (%) -28.4 -21.2 -6.4 -92.4 -12.5 -1.0 19.3 1,314.9
EBIT growth (%) -52.7 -59.5 -97.0 -chg -33.8 3.2 839.5 +chg
Net profit growth (%) -68.9 -49.7 -97.1 -chg -17.1 -20.7 207.4 +chg
EPS growth (%) -68.9 -49.7 -97.1 -chg -17.1 -20.7 207.4 +chg
Adj earnings numbers Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020e Q3 2020e Q4 2020e
EBITDA Adj 8 6 3 0 7 6 4 7
EBITDA Adj margin (%) 10.5 9.0 6.3 0.7 10.1 10.3 8.0 9.4
EBITA Adj 5 3 0 -2 3 3 1 3
EBITA Adj margin (%) 6.3 4.1 0.2 -3.6 4.6 4.8 1.5 4.8
EBIT Adj 5 3 0 -2 3 3 1 3
EBIT Adj margin (%) 6.3 4.1 0.2 -3.6 4.6 4.8 1.5 4.8
Pretax profit Adj 5 3 0 -1 4 3 0 3
Net profit Adj 4 3 0 -1 3 2 0 2
Net profit to shareholders Adj 4 3 0 -1 3 2 0 2
Net Adj margin (%) 5.1 3.7 0.2 -1.1 4.6 3.4 0.7 3.4
15 May 2020 ABG Sundal Collier 7 Source: ABG Sundal Collier, Company data
Income Statement (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Sales 152 174 199 215 239 253 261 247 266 278
COGS -16 -13 -16 -12 -21 -20 -28 -22 -24 -25
Gross profit 136 161 183 203 218 233 234 225 243 254
Other operating items -122 -146 -164 -180 -187 -205 -216 -201 -212 -220
EBITDA 14 15 19 24 31 28 18 24 30 34
Depreciation and amortisation -3 -3 -3 -3 -3 -4 -13 -13 -13 -13
Of which leasing depreciation 0 0 0 0 0 0 -13 -11 -11 -11
EBITA 11 12 16 21 28 25 5 10 17 21
EO items 0 -2 -2 0 2 0 0 0 0 0
Impairment and PPA amortisation 0 0 0 0 0 0 0 0 0 0
EBIT 11 12 16 21 28 25 5 10 17 21
Net financial items -1 1 1 -1 0 6 1 -0 -0 -0
Pretax profit 10 13 17 20 28 31 6 10 17 21
Tax -3 -3 -4 -5 -6 -6 -1 -2 -4 -5
Net profit 8 10 13 15 21 26 5 8 13 16
Minority interest 0 0 0 0 0 0 0 0 0 0
Net profit discontinued 0 0 0 0 0 0 0 0 0 0
Net profit to shareholders 8 10 13 15 21 26 5 8 13 16
EPS 0.19 0.23 0.31 0.36 0.50 0.60 0.12 0.18 0.30 0.37
EPS Adj 0.19 0.27 0.35 0.36 0.46 0.60 0.12 0.18 0.30 0.37
Total extraordinary items after tax 0 -2 -2 0 2 0 0 0 0 0
Leasing payments 0 0 0 0 0 0 -12 -12 -12 -12
Tax rate (%) 25.5 25.7 22.6 24.6 23.2 18.4 21.1 22.0 22.0 22.0
Gross margin (%) 89.2 92.4 91.9 94.6 91.2 92.3 89.4 90.9 91.1 91.2
EBITDA margin (%) 9.1 8.8 9.5 11.0 12.9 11.3 6.8 9.5 11.4 12.2
EBITA margin (%) 7.4 7.0 7.9 9.6 11.6 9.8 2.0 4.1 6.5 7.5
EBIT margin (%) 7.4 7.0 7.9 9.6 11.6 9.8 2.0 4.1 6.5 7.5
Pretax margin (%) 6.9 7.4 8.3 9.3 11.7 12.4 2.4 4.1 6.4 7.5
Net margin (%) 5.1 5.5 6.4 7.0 9.0 10.1 1.9 3.2 5.0 5.8
Growth rates Y/Y 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Sales growth (%) -5.7 14.7 14.6 7.8 11.2 5.8 3.3 -5.3 7.7 4.4
EBITDA growth (%) -31.1 10.7 23.5 25.4 30.7 -7.9 -37.4 32.2 28.8 12.0
EBIT growth (%) -27.3 8.6 29.6 30.8 34.5 -10.7 -78.9 93.3 70.6 21.1
Net profit growth (%) -25.8 22.8 33.9 17.7 42.6 18.8 -80.3 55.2 71.3 21.3
EPS growth (%) -27.3 22.1 33.9 16.6 39.6 18.8 -80.3 50.6 71.3 21.3
Profitability 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
ROE (%) 15.9 19.3 24.1 25.3 30.4 30.6 5.8 8.7 13.7 15.3
ROE Adj (%) 15.9 22.3 27.6 25.3 27.6 30.6 5.8 8.7 13.7 15.3
ROCE (%) 21.1 21.6 27.0 31.8 36.8 28.1 4.8 8.0 12.7 14.5
ROCE Adj(%) 21.1 24.3 30.2 31.8 34.2 28.1 4.8 8.0 12.7 14.5
ROIC (%) 29.2 20.0 25.4 36.0 35.2 24.8 4.2 6.9 11.7 14.2
ROIC Adj (%) 29.2 22.4 28.4 36.0 32.7 24.8 4.2 6.9 11.7 14.2
Adj earnings numbers 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
EBITDA Adj 14 17 21 24 29 28 18 24 30 34
EBITDA Adj margin (%) 9.1 9.6 10.4 11.0 12.1 11.3 6.8 9.5 11.4 12.2
EBITDA lease Adj 14 17 21 24 29 28 6 12 19 22
EBITDA lease Adj margin (%) 9.1 9.6 10.4 11.0 12.1 11.3 2.4 4.9 7.1 8.1
EBITA Adj 11 14 18 21 26 25 5 10 17 21
EBITA Adj margin (%) 7.4 7.9 8.8 9.6 10.8 9.8 2.0 4.1 6.5 7.5
EBIT Adj 11 14 18 21 26 25 5 10 17 21
EBIT Adj margin (%) 7.4 7.9 8.8 9.6 10.8 9.8 2.0 4.1 6.5 7.5
Pretax profit Adj 10 14 18 20 26 31 6 10 17 21
Net profit Adj 8 11 15 15 19 26 5 8 13 16
Net profit to shareholders Adj 8 11 15 15 19 26 5 8 13 16
Net Adj margin (%) 5.1 6.4 7.3 7.0 8.1 10.1 1.9 3.2 5.0 5.8
15 May 2020 ABG Sundal Collier 8 Source: ABG Sundal Collier, Company data
Cash Flow Statement (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
EBITDA 14 15 19 24 31 28 18 24 30 34
Net financial items -1 1 1 -1 0 6 1 -0 -0 -0
Paid tax 0 -3 -4 -5 -6 -6 -1 -2 -4 -5
Non-cash items -3 1 -5 0 0 0 0 0 0 0
Cash flow before change in WC 10 13 11 18 25 29 18 21 26 29
Change in WC -4 -12 6 2 -3 -5 -4 0 2 -1
Operating cash flow 7 1 16 20 23 6 6 21 28 29
CAPEX tangible fixed assets -14 -3 -5 -3 -1 9 9 -2 -3 -3
CAPEX intangible fixed assets 0 0 0 0 0 0 0 0 0 0
Acquisitions and disposals 0 0 0 0 -21 0 -7 -7 0 0
Free cash flow -8 -2 12 18 1 15 8 11 26 26
Dividend paid -11 -9 -6 -10 -13 -15 -15 0 -4 -9
Share issues and buybacks 0 0 0 0 -21 0 0 0 0 0
Lease liability amortisation 0 0 0 0 0 0 -11 -11 -11 -11
Other non cash items -3 -0 6 4 9 8 -17 7 0 0
Decrease in net IB debt -23 -5 7 11 -13 -3 -35 8 10 6
Balance Sheet (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Goodwill 20 20 20 20 52 52 62 62 62 62
Other intangible assets 1 1 1 1 5 4 4 4 4 4
Tangible fixed assets 7 7 8 7 7 7 2 3 3 4
Right-of-use asset 0 0 0 0 0 0 25 24 25 25
Total other fixed assets 8 6 6 5 5 4 2 2 2 2
Fixed assets 36 35 35 33 69 66 95 95 96 96
Inventories 0 0 0 0 0 0 0 0 0 0
Receivables 41 53 62 60 71 82 73 73 75 78
Other current assets 0 0 0 0 0 0 0 0 0 0
Cash and liquid assets 18 9 17 27 14 12 10 17 27 33
Total assets 96 97 114 120 154 160 177 185 198 208
Shareholders equity 49 50 56 63 78 89 86 93 102 110
Minority 0 0 0 0 0 0 -0 -0 -0 -0
Total equity 49 50 56 63 78 89 85 93 102 109
Long-term debt 8 3 3 3 3 3 0 0 0 0
Pension debt 0 0 0 0 0 0 0 0 0 0
Convertible debt 0 0 0 0 0 0 0 0 0 0
Leasing liability 0 0 0 0 0 0 25 25 25 25
Total other long-term liabilities 1 5 1 0 12 1 2 2 2 2
Short-term debt 0 2 2 2 2 2 13 13 13 13
Accounts payable 38 37 51 52 59 65 53 53 56 58
Other current liabilities 0 0 0 0 0 0 0 0 0 0
Total liabilities and equity 96 97 114 120 154 160 177 185 198 208
Net IB debt -10 -4 -11 -22 -10 -7 28 21 11 5
Net IB debt excl. pension debt -10 -4 -11 -22 -10 -7 28 21 11 5
Net IB debt excl. leasing -10 -4 -11 -22 -10 -7 3 -4 -14 -20
Capital invested 40 51 46 41 80 83 115 115 114 116
Working capital 4 16 10 8 11 17 20 20 19 19
EV breakdown 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Market cap. diluted (m) 142 138 214 207 303 257 244 140 140 140
Net IB debt Adj -10 -4 -11 -22 -10 -7 28 21 11 5
Market value of minority 0 0 0 0 0 0 0 0 0 0
Reversal of shares and participations 0 0 0 0 0 0 0 0 0 0
Reversal of conv. debt assumed equity 0 0 0 0 0 0 0 0 0 0
EV 133 134 202 185 294 250 272 161 151 145
Capital efficiency 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Total assets turnover (%) 166.8 181.1 189.7 184.0 174.7 161.4 155.1 136.5 139.2 137.2
Working capital/sales (%) 1.4 5.7 6.6 4.2 4.0 5.5 7.1 8.3 7.3 6.9
Financial risk and debt service 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Net debt/equity -0.20 -0.09 -0.20 -0.36 -0.12 -0.08 0.33 0.22 0.10 0.04
Net debt/market cap -0.07 -0.03 -0.07 -0.11 -0.04 -0.02 0.11 0.15 0.08 0.04
Equity ratio (%) 51.6 51.6 49.5 52.4 50.8 55.6 48.1 50.3 51.6 52.7
Net IB debt adj./equity -0.20 -0.09 -0.20 -0.36 -0.12 -0.08 0.33 0.22 0.10 0.04
Current ratio 1.57 1.61 1.46 1.61 1.38 1.38 1.08 1.18 1.27 1.34
EBITDA/net interest 18.10 -22.28 -25.03 35.50 -161.03 -4.39 -15.53 235.68 303.50 340.00
Net IB debt/EBITDA -0.71 -0.28 -0.60 -0.95 -0.31 -0.24 1.58 0.87 0.35 0.14
Net IB debt/EBITDA lease Adj -0.71 -0.26 -0.55 -0.95 -0.33 -0.24 0.53 -0.35 -0.77 -0.91
Interest cover 14.69 -17.75 -20.94 30.98 -144.63 -3.82 -4.56 101.20 172.66 209.16
15 May 2020 ABG Sundal Collier 9 Source: ABG Sundal Collier, Company data
Valuation and Ratios (SEKm) 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Shares outstanding adj. 41 41 41 42 43 43 43 44 44 44
Fully diluted shares Adj 41 41 41 42 43 43 43 44 44 44
EPS 0.19 0.23 0.31 0.36 0.50 0.60 0.12 0.18 0.30 0.37
Dividend per share Adj 0.2 0.2 0.3 0.3 0.4 0.4 0 0.1 0.2 0.3
EPS Adj 0.19 0.27 0.35 0.36 0.46 0.60 0.12 0.18 0.30 0.37
BVPS 1.20 1.20 1.36 1.50 1.83 2.08 2.00 2.12 2.32 2.49
BVPS Adj 0.68 0.68 0.84 0.99 0.50 0.77 0.46 0.62 0.82 0.99
Net IB debt / share -0.2 -0.1 -0.3 -0.5 -0.2 -0.2 0.7 0.5 0.2 0.1
Share price 3.45 3.34 5.15 4.96 7.10 6.02 5.70 3.18 3.18 3.18
Market cap. (m) 142 138 214 207 303 257 244 140 140 140
Valuation 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
P/E 18.3 14.5 16.7 13.8 14.1 10.1 48.5 18.0 10.5 8.6
EV/sales 0.87 0.77 1.01 0.86 1.23 0.99 1.04 0.65 0.57 0.52
EV/EBITDA 9.6 8.8 10.7 7.8 9.5 8.8 15.3 6.8 5.0 4.3
EV/EBITA 11.8 11.0 12.8 9.0 10.6 10.1 52.0 15.9 8.7 6.9
EV/EBIT 11.8 11.0 12.8 9.0 10.6 10.1 52.0 15.9 8.7 6.9
Dividend yield (%) 5.8 4.5 4.9 6.0 4.9 5.8 0 3.1 6.3 7.9
FCF yield (%) -5.4 -1.3 5.5 8.5 0.4 5.8 3.2 8.2 18.2 18.3
Lease adj. FCF yield (%) -5.4 -1.3 5.5 8.5 0.4 5.8 -1.4 0.2 10.3 10.3
P/BVPS 2.88 2.78 3.79 3.30 3.88 2.90 2.85 1.50 1.37 1.28
P/BVPS Adj 5.06 4.91 6.12 4.99 14.26 7.82 12.45 5.12 3.85 3.20
P/E Adj 18.3 12.5 14.6 13.8 15.6 10.1 48.5 18.0 10.5 8.6
EV/EBITDA Adj 9.6 8.0 9.8 7.8 10.2 8.8 15.3 6.8 5.0 4.3
EV/EBITA Adj 11.8 9.8 11.5 9.0 11.4 10.1 52.0 15.9 8.7 6.9
EV/EBIT Adj 11.8 9.8 11.5 9.0 11.4 10.1 52.0 15.9 8.7 6.9
EV/cap. employed 2.3 2.4 3.3 2.7 3.5 2.7 2.2 1.2 1.1 1.0
Investment ratios 2013 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e
Capex/sales 9.3 1.7 2.3 1.2 0.2 -3.4 -3.3 1.0 1.0 1.0
Capex/depreciation 546.3 95.9 149.8 88.7 17.0 -234.2 nm 121.3 126.8 132.4
Capex tangibles/tangible fixed assets 191.4 42.0 57.5 38.8 7.7 -125.0 -388.1 92.9 82.6 71.2
Capex intangibles/definite intangibles 0 0 0 0 0 0 0 0 0 0
Depreciation on intangibles/definite intangibles 0 0 0 0 0 0 0 0 0 0
Depreciation on tangibles/tangibles 35.0 43.8 38.4 43.8 45.2 53.4 0 76.6 65.1 53.8
15 May 2020 ABG Sundal Collier 10 Analyst certification
I/We, Stefan Knutsson, Victor Forssell, the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our personal view about the companies and securities covered in this report.
Analyst valuation methods
ABG Sundal Collier analysts may publish valuation ranges for stocks covered under Company Sponsored Research. These valuation ranges rely on various valuation methods. One of the most frequently used methods is the valuation of a company by calculation of that company's discounted cash flow (DCF). Another valuation method is the analysis of a company's return on capital employed relative to its cost of capital.
Finally, the analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and investment companies, the ratio of price to net asset value is considered.
Valuation ranges may be changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of a company's assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change.
Important Company Specific Disclosure
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The following disclosures relate to the relationship between ABG Sundal Collier and its affiliates and the companies covered by ABG Sundal Collier referred to in this research report.
Unless disclosed in this section, ABG Sundal Collier has no required regulatory disclosures to make in relation to an ownership position for the analyst(s) and members of the analyst's household, ownership by ABG Sundal Collier, ownership in ABG Sundal Collier by the company(ies) to whom the report(s) refer(s) to, market making, managed or co-managed public offerings, compensation for provision of certain services, directorship of the analyst, or a member of the analyst's household, or in relation to any contractual obligations to the issuance of this research report.
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