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Swedencare

Premium animal health products

Swedencare is a high-growth animal health company that develops, promotes and sells OTC premium products within animal dental care. The company's main product, ProDen PlaqueOff, is proprietary, patented until 2021-2028 and sold in more than 50 countries. It reduces the amount of plaque, tartar as well as problems with bleeding gums and the target group is cats and dogs. Following acquisitions of its three largest distribution/sales partners in 2016, Swedencare has around 85% of its sales via direct sales and the remaining from external distributors.

Margin expansion from selling high margin ”PlaqueOff Powder ingredient” to food producers. Growth potential from continued launch of new products and/or products on new markets. We view China, Russia and Brazil as interesting growth markets. The net cash position and solid cash generation also leave room for more M&A and/or future dividends.

Strong dependency on the PlaqueOff formula, for which the patent runs out in 2021 in most markets. Increased competition from larger animal health care companies entering Swedencare’s niche in the animal dental care market. With a poor M&A track record, there are risks for acquisition integration issues and inflated acquisition multiples if Swedencare decides to embark on the M&A path. New product and market launches involve risk and Swedencare has a high release tempo.

SEKm 2018 2019e 2020e
Sales 99 131 168
Sales growth (%) 16 32,4 27,8
EBITDA 30 42 54
EBITDA margin (%) 30 31,7 32
EBIT adj 29 40 52
EBIT adj margin (%) 29,7 30,1 30,8
Pretax profit 29 39 52
EPS rep 1,48 1,95 2,57
EPS growth (%) 37,1 31,9 31,6
EPS adj 1,43 1,95 2,57
DPS 0 0 0
EV/EBITDA (x) 23,7 20,3 15,3
EV/EBIT adj (x) 23,9 21,4 15,8
P/E (x) 31 29 22
P/E adj (x) 32,2 29 22
EV/sales (x) 7,1 6,5 4,9
FCF yield (%) 1,7 2,8 4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -0,7 -1,1 -1,4
SEKm 2018 2019e 2020e
Sales 99 131 168
COGS -26 -35 -46
Gross profit 74 96 122
Other operating items -44 -54 -68
EBITDA 30 42 54
Depreciation on tangibles -1 -2 -2
Depreciation on intangibles 0 0 0
EBITA 29 40 52
Goodwill impairment charges 0 0 0
Other impairment and amortisation 1 0 0
EBIT 29 40 52
Other financial items 0 0 0
Net financial items 0 0 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 29 39 52
Tax -6 -9 -11
Net profit 23 31 40
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 23 31 40
EPS 1,48 1,95 2,57
EPS Adj 1,43 1,95 2,57
Total extraordinary items after tax 0 0 0
Tax rate (%) -19,8 -22 -22
Gross margin (%) 74,2 73,2 72,5
EBITDA margin (%) 30 31,7 32
EBITA margin (%) 28,8 30,1 30,8
EBIT margin (%) 29,7 30,1 30,8
Pretax margin (%) 29,3 30 30,9
Net margin (%) 23,5 23,4 24,1
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 16 32,4 27,8
EBITDA growth (%) 26,3 40,1 28,9
EBIT growth (%) 34,4 34,4 30,8
Net profit growth (%) 37,1 31,9 31,6
EPS growth (%) 37,1 31,9 31,6
Profitability 2018 2019 2020
ROE (%) 27 27,1 27,9
ROE Adj (%) 26,1 27,1 27,9
ROCE (%) 40,7 48,9 60,2
ROCE Adj(%) 39,5 48,9 60,2
ROIC (%) 32,6 38,2 47
ROIC Adj (%) 32,6 38,2 47
Adj earnings numbers 2018 2019 2020
EBITDA Adj 30 42 54
EBITDA Adj margin (%) 30 31,7 32
EBITA Adj 29 40 52
EBITA Adj margin (%) 28,8 30,1 30,8
EBIT Adj 29 40 52
EBIT Adj margin (%) 29,7 30,1 30,8
Pretax profit Adj 28 39 52
Net profit Adj 22 31 40
Net profit to shareholders Adj 22 31 40
Net Adj margin (%) 22,7 23,4 24,1
SEKm 2018 2019e 2020e
EBITDA 30 42 54
Net financial items 0 0 0
Paid tax -6 -9 -11
Non-cash items 0 0 0
Cash flow before change in WC 24 33 42
Change in WC -3 -6 -6
Operating cash flow 22 27 37
CAPEX tangible fixed assets -9 -1 -1
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 13 25 36
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items 0 0 -8
Decrease in net IB debt 12 25 28
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 50 50 50
Indefinite intangible assets 0 0 0
Definite intangible assets 0 0 0
Tangible fixed assets 12 11 10
Other fixed assets 1 1 1
Fixed assets 63 62 61
Inventories 10 15 21
Receivables 17 22 25
Other current assets 0 0 0
Cash and liquid assets 28 46 74
Total assets 118 145 181
Shareholders equity 98 129 162
Minority 0 0 0
Total equity 98 129 162
Long-term debt 9 1 1
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 11 15 18
Other current liabilities 0 0 0
Total liabilities and equity 90 100 118
Net IB debt -20 -46 -73
Net IB debt excl. pension debt -20 -46 -73
Capital invested 78 84 88
Working capital 16 22 28
EV breakdown 2018 2019 2020
Market cap. diluted (m) 724 893 893
Net IB debt Adj -20 -46 -73
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 704 847 819
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 91,1 100 103
Capital invested turnover (%) 137 162,4 195,4
Capital employed turnover (%) 137 162,4 195,4
Inventories / sales (%) 9,1 9,3 10,6
Customer advances / sales (%) 0 0 0
Payables / sales (%) 9,7 9,6 9,9
Working capital / sales (%) 14,6 14,5 14,8
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -20,4 -35,3 -45,4
Net debt / market cap (%) -2,9 -5,1 -8,2
Equity ratio (%) 83,4 89,2 89,2
Net IB debt adj. / equity (%) -20,4 -35,3 -45,4
Current ratio (%) 518,7 562,4 648,9
EBITDA / net interest (%) 8764,3 32627,1 -29934,9
Net IB debt / EBITDA (%) -67,6 -109,3 -136,5
Interest cover (%) 8432,2 31005,7 -28851,4
SEKm 2018 2019e 2020e
Shares outstanding adj. 16 16 16
Fully diluted shares Adj 16 16 16
EPS 1,48 1,95 2,57
Dividend per share Adj 0 0 0
EPS Adj 1,43 1,95 2,57
BVPS 6,23 8,18 10,24
BVPS Adj 3,07 5,02 7,08
Net IB debt / share -1,3 -2,9 -4,6
Share price 43,24 56,6 56,6
Market cap. (m) 682 893 893
Valuation 2018 2019 2020
P/E 31 29 22
EV/sales 7,1 6,45 4,88
EV/EBITDA 23,7 20,3 15,3
EV/EBITA 24,6 21,4 15,8
EV/EBIT 23,9 21,4 15,8
Dividend yield (%) 0 0 0
FCF yield (%) 1,7 2,8 4
P/BVPS 7,37 6,92 5,53
P/BVPS Adj 14,95 11,27 7,99
P/E Adj 32,2 29 22
EV/EBITDA Adj 23,7 20,3 15,3
EV/EBITA Adj 24,6 21,4 15,8
EV/EBIT Adj 23,9 21,4 15,8
EV/cap. employed 9 10,1 9,3
Investment ratios 2018 2019 2020
Capex / sales 9,5 1 0,6
Capex / depreciation 834,2 63,5 51,5
Capex tangibles / tangible fixed assets 77,6 11,6 9,6
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 9,3 18,2 18,7

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Main shareholders

Swedencare

Main shareholders Share capital % Voting shares % Verified
Håkan Svanberg 31.8 % 31.8 % 6 Mar 2019
Mastan AB (Håkan Lagerberg) 12.6 % 12.6 % 6 Mar 2019
JCC Group Invest Sweden AB (Johan Bergdahl) 12.5 % 12.5 % 6 Mar 2019
Staffan Persson 5.1 % 5.1 % 31 Dec 2018
AMF Försäkring & Fonder 4.8 % 4.8 % 28 Feb 2019
Handelsbanken Fonder 3.2 % 3.2 % 28 Feb 2019
Aktia Asset Management 2.6 % 2.6 % 31 Dec 2018
Nordnet Pensionsförsäkring 2.5 % 2.5 % 31 Dec 2018
Investment AB Öresund 2.2 % 2.2 % 31 Dec 2018
Martin Shimko 1.9 % 1.9 % 30 Jun 2018
Source: Holdings by Modular Finance AB

Insider list

Swedencare

Name Quantity Code Date
Håkan Svanberg & Co Health Care AB - 50 000 SELL 6 Mar 2019
Håkan Svanberg & Co Health Care AB - 50 000 SELL 6 Mar 2019
Lars Håkan Lagerberg + 10 000 BUY 17 Dec 2018
JCC Group Invest Sweden AB - 40 000 SELL 12 Jan 2018
Tammeo Aktiebolag + 40 000 BUY 12 Jan 2018
Lars Håkan Lagerberg + 3 010 BUY 8 Dec 2017
Mastan AB - 100 000 SELL 7 Jul 2017
JCC Group Invest Sweden AB - 100 000 SELL 7 Jul 2017
Håkan Svanberg & Co Health Care AB - 100 000 SELL 7 Jul 2017
Håkan Svanberg & Co Health Care AB - 100 000 SELL 7 Jul 2017

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