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Cavotec

International engineering group

Cavotec is an international engineering group that designs and manufactures systems within power transmission and distribution, remote controlling and automation for end markets such as ports, maritime, airports, mining and tunnelling. Its Ports & Maritime segment provides systems such as automated mooring, motorised cable reels, shore power connection systems. The Airports & Industry segment offers ground-support equipment (GSE) for aircraft at airports such as power and pre-conditioned air (PCA), while also providing motorised cable reels and radio remote controls (RRC) for mining and general industry.

Cavotec’s product offering enables substantial efficiency improvements in terms of both cost and environmental savings, such as the automated mooring system that greatly reduces mooring time and space for ships in ports. Its ground-support equipment for aircraft greatly reduces the need for fossil-fuel-generated operations by the aircraft themselves. Should sales efforts and penetration of Cavotec’s end markets prove successful, above-market growth is likely. Cavotec is undergoing a large internal transformation project, which, if successful, will significantly improve the company’s profitability and growth prospects.

Cavotec has a history of declining sales, high fixed costs and poor acquisitions. A positive future for Cavotec is heavily reliant on the success of the current transformational turnaround initiatives. While there are concrete arguments for using Cavotec’s products and solutions, it is always difficult for a smaller firm to penetrate large end markets where investments are large and decision-making often takes a long time.

EURm 2018 2019e 2020e
Sales 197 207 218
Sales growth (%) -7,3 5 5,4
EBITDA -9 12 21
EBITDA margin (%) -4,7 5,7 9,8
EBIT adj 5 9 17
EBIT adj margin (%) 2,6 4,4 7,8
Pretax profit -15 5 15
EPS rep -0,23 0,04 0,11
EPS growth (%) 42 117,1 186,1
EPS adj 0,01 0,06 0,11
DPS 0 0 0
EV/EBITDA (x) -14,5 11 5,9
EV/EBIT adj (x) 25,8 14,4 7,4
P/E (x) -5,5 30,2 10,6
P/E adj (x) 164,1 19,7 10,6
EV/sales (x) 0,7 0,6 0,6
FCF yield (%) -7,6 13,2 4,4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -3,4 1,4 0,5
EURm 2018 2019e 2020e
Sales 197 207 218
COGS 0 0 0
Gross profit 197 207 218
Other operating items -206 -195 -197
EBITDA -9 12 21
Depreciation on tangibles -5 -5 -4
Depreciation on intangibles 0 0 0
EBITA -14 7 17
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -14 7 17
Other financial items 0 0 0
Net financial items -1 -2 -2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -15 5 15
Tax -3 -1 -4
Net profit -18 4 11
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -18 4 11
EPS -0,23 0,04 0,11
EPS Adj 0,01 0,06 0,11
Total extraordinary items after tax -19,1 -2 0
Tax rate (%) 20,3 -28,2 -28
Gross margin (%) 100 100 100
EBITDA margin (%) -4,7 5,7 9,8
EBITA margin (%) -7 3,4 7,8
EBIT margin (%) -7 3,4 7,8
Pretax margin (%) -7,8 2,5 6,9
Net margin (%) -9,4 1,8 4,9
Growth rates Y/Y 2018 2019 2020
Sales growth (%) -7,3 5 5,4
EBITDA growth (%) 26,8 228,6 80,4
EBIT growth (%) 22,8 150,7 140,8
Net profit growth (%) 41,5 120,4 186,1
EPS growth (%) 42 117,1 186,1
Profitability 2018 2019 2020
ROE (%) -18 3,7 9,9
ROE Adj (%) 0,6 5,7 9,9
ROCE (%) -10,5 5,6 13,7
ROCE Adj(%) 4,4 7,2 13,7
ROIC (%) -13,3 4 10,1
ROIC Adj (%) 5 5,1 10,1
Adj earnings numbers 2018 2019 2020
EBITDA Adj 10 14 21
EBITDA Adj margin (%) 5 6,7 9,8
EBITA Adj 5 9 17
EBITA Adj margin (%) 2,6 4,4 7,8
EBIT Adj 5 9 17
EBIT Adj margin (%) 2,6 4,4 7,8
Pretax profit Adj 4 7 15
Net profit Adj 1 6 11
Net profit to shareholders Adj 1 6 11
Net Adj margin (%) 0,3 2,8 4,9
EURm 2018 2019e 2020e
EBITDA -9 12 21
Net financial items -1 -2 -2
Paid tax -3 -1 -4
Non-cash items 30 -4 -2
Cash flow before change in WC 16 4 13
Change in WC -15 16 -2
Operating cash flow 1 21 11
CAPEX tangible fixed assets -7 -4 -4
CAPEX intangible fixed assets -2 -2 -2
Acquisitions and disposals 0 0 0
Free cash flow -8 15 5
Dividend paid -1 0 0
Share issues and buybacks 0 0 0
Other non cash items -3 0 0
Decrease in net IB debt -12 15 5
Balance Sheet (EURm) 2018 2019 2020
Goodwill 45 45 45
Indefinite intangible assets 0 0 0
Definite intangible assets 8 9 9
Tangible fixed assets 20 21 22
Other fixed assets 18 18 18
Fixed assets 92 93 94
Inventories 39 41 43
Receivables 72 56 58
Other current assets 6 6 6
Cash and liquid assets 21 36 41
Total assets 230 232 242
Shareholders equity 100 104 115
Minority 0 0 0
Total equity 100 104 115
Long-term debt 49 49 49
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 2 2 2
Other long-term liabilities 9 9 9
Short-term debt 4 4 4
Accounts payable 27 29 31
Other current liabilities 38 34 32
Total liabilities and equity 244 211 230
Net IB debt 32 17 12
Net IB debt excl. pension debt 32 17 12
Capital invested 134 119 123
Working capital 61 44 47
EV breakdown 2018 2019 2020
Market cap. diluted (m) 102 114 114
Net IB debt Adj 32 17 12
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 134 130 125
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 89,4 89,6 92,1
Capital invested turnover (%) 156,6 163,3 180,4
Capital employed turnover (%) 153,9 164 176,7
Inventories / sales (%) 19,4 19,5 19,4
Customer advances / sales (%) 8,4 11,4 10,8
Payables / sales (%) 15,4 13,5 13,7
Working capital / sales (%) 27,1 25,5 21
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 31,7 16,1 10,2
Net debt / market cap (%) 18,5 14,7 10,3
Equity ratio (%) 43,5 44,8 47,3
Net IB debt adj. / equity (%) 31,7 16,1 10,2
Current ratio (%) 198,1 205,6 220,1
EBITDA / net interest (%) -491,3 657,9 1068
Net IB debt / EBITDA (%) -343,9 141,1 54,6
Interest cover (%) -740,5 391,2 848
EURm 2018 2019e 2020e
Net IB debt / share 0,4 0,2 0,1
Share price 2,17 1,21 1,21
Market cap. (m) 172 114 114
Valuation 2018 2019 2020
P/E -5,5 30,2 10,6
EV/sales 0,68 0,63 0,57
EV/EBITDA -14,5 11 5,9
EV/EBITA -9,6 18,5 7,4
EV/EBIT -9,6 18,5 7,4
Dividend yield (%) 0 0 0
FCF yield (%) -7,6 13,2 4,4
P/BVPS 1,02 1,1 0,99
P/BVPS Adj 2,19 2,27 1,87
P/E Adj 164,1 19,7 10,6
EV/EBITDA Adj 13,6 9,4 5,9
EV/EBITA Adj 25,8 14,4 7,4
EV/EBIT Adj 25,8 14,4 7,4
EV/cap. employed 1 1,1 1
Investment ratios 2018 2019 2020
Capex / sales 4,7 2,8 2,6
Capex / depreciation 197,9 120,7 128,9
Capex tangibles / tangible fixed assets 37,2 19,8 18,9
Capex intangibles / definite intangibles 21,2 19,2 17,3
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 23,3 23 20,1
Shares outstanding adj. 79 94 94
Fully diluted shares Adj 79 94 94
EPS -0,23 0,04 0,11
Dividend per share Adj 0 0 0
EPS Adj 0,01 0,06 0,11
BVPS 1,26 1,1 1,22
BVPS Adj 0,59 0,53 0,64

Equity research

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Main shareholders

Cavotec

Main shareholders Share capital % Voting shares % Verified
Bure Equity 27.4 % 27.4 % 28 Feb 2019
Fjärde AP-fonden 9.9 % 9.9 % 28 Feb 2019
Fabio Cannavale 8.0 % 8.0 % 31 Jan 2019
LCL Life & Pension Ltd 6.4 % 6.4 % 31 Jan 2019
Catella Fonder 5.6 % 5.6 % 28 Feb 2019
Michael Colaco 4.2 % 4.2 % 28 Feb 2019
Fondita Fonder 3.5 % 3.5 % 31 Dec 2018
Brevetti Stendalto 3.0 % 3.0 % 31 Jan 2019
Emma Jeppson 2.3 % 2.3 % 31 Jan 2019
Lotten Widegren 2.2 % 2.2 % 28 Feb 2019
Source: Holdings by Modular Finance AB

Insider list

Cavotec

Name Quantity Code Date
Mikael Norin + 28 186 BUY 12 Mar 2019
Mikael Norin + 21 812 BUY 11 Mar 2019
Mikael Norin + 34 505 BUY 15 Jan 2019
Mikael Norin + 7 357 BUY 14 Jan 2019
Patrik Tigerschiöld + 500 000 BUY 14 Jan 2019
Patrick Rosenwald + 23 968 BUY 31 Dec 2018
Liselott Byström - 10 000 SELL 28 Dec 2018
Patrick Rosenwald + 23 334 TILLD 27 Dec 2018
Mikael Norin + 11 894 BUY 27 Dec 2018
Anna Tigerschiöld + 8 000 TECKN 21 Dec 2018

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