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Allgon

Manufacturer of industrial radio remote control solutions

Allgon is a world-leading manufacturer of radio remote control solutions for industrial production with customers in the material handling, construction and transport sectors. It develops, manufactures and supplies solutions for industrial radio control to customers around the world. The company also has a long history of working with wireless communication. In recent years Allgon has focused its business on industrial radio control, in which it is one of the five largest manufacturers globally after the acquisition of Tele Radio in 2018, adding 220 employees and SEK 250m in sales to the group.

Allgon has decided to focus its efforts on the segment for industrial radio control solutions, leading to the acquisition of Tele Radio. As a result, Allgon is looking for new homes for its subsidiaries in the Connectivity segment. By streamlining its operations, Allgon wants to gain more exposure to the underlying market for radio remote control solutions, potentially boosting its organic growth and earnings. Also, M&A is possible, as the market for radio remote controllers is highly fragmented with a diverse range of manufacturers around the world.

Allgon acquired Tele Radio in Q3 2018 and management will focus on integrating it into the Allgon group in 2019. However, implementing a relatively large acquisition carries risks in terms of delays, realising synergies and managing foreign subsidiaries. Also, Allgon is sensitive to macroeconomic developments so a downturn in the macro economy could hurt its financial performance. Finally, Allgon operates in a highly technical niche market with highly qualified staff. Potential employees can therefore be hard to find and quite costly to hire.

SEKm 2018 2019e 2020e
Sales 322 563 637
Sales growth (%) 62,2 74,8 13
EBITDA 20 90 108
EBITDA margin (%) 6,3 16 17
EBIT adj 19 64 79
EBIT adj margin (%) 6 11,4 12,5
Pretax profit -4 40 55
EPS rep -0,15 0,46 0,67
EPS growth (%) -330,7 405,8 43,8
EPS adj 0,05 0,46 0,67
DPS 0 0 0
EV/EBITDA (x) 24,4 8,1 6,5
EV/EBIT adj (x) 25,8 11,3 8,8
P/E (x) -33,6 19,6 13,6
P/E adj (x) 110,3 19,6 13,6
EV/sales (x) 1,5 1,3 1,1
FCF yield (%) -76,4 4,2 6,1
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 10,3 2,4 1,7
SEKm 2018 2019e 2020e
Sales 322 563 637
COGS -95 -148 -166
Gross profit 227 415 471
Other operating items -206 -325 -363
EBITDA 20 90 108
Depreciation on tangibles -4 -9 -10
Depreciation on intangibles -8 -7 -11
EBITA 8 64 79
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 8 64 79
Other financial items 0 0 0
Net financial items -12 -24 -24
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -4 40 55
Tax -3 -10 -14
Net profit -8 31 41
Minority interest -1 -5 -4
Net profit discontinued 0 0 0
Net profit to shareholders -9 26 37
EPS -0,15 0,46 0,67
EPS Adj 0,05 0,46 0,67
Total extraordinary items after tax -11,1 0 0
Tax rate (%) 85,4 -24,1 -25
Gross margin (%) 70,4 73,8 73,9
EBITDA margin (%) 6,3 16 17
EBITA margin (%) 2,5 11,4 12,5
EBIT margin (%) 2,5 11,4 12,5
Pretax margin (%) -1,3 7,2 8,7
Net margin (%) -2,3 5,5 6,5
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 62,2 74,8 13
EBITDA growth (%) 121,6 342,5 20
EBIT growth (%) 246,3 695,7 23,5
Net profit growth (%) -998,4 509,2 35,2
EPS growth (%) -330,7 405,8 43,8
Profitability 2018 2019 2020
ROE (%) -4,2 8,8 11,4
ROE Adj (%) 1,3 8,8 11,4
ROCE (%) 2,1 10,5 12,1
ROCE Adj(%) 5 10,5 12,1
ROIC (%) 4,1 8,8 10,3
ROIC Adj (%) 9,7 8,8 10,3
Adj earnings numbers 2018 2019 2020
EBITDA Adj 31 90 108
EBITDA Adj margin (%) 9,8 16 17
EBITA Adj 19 64 79
EBITA Adj margin (%) 6 11,4 12,5
EBIT Adj 19 64 79
EBIT Adj margin (%) 6 11,4 12,5
Pretax profit Adj 7 40 55
Net profit Adj 4 31 41
Net profit to shareholders Adj 3 26 37
Net Adj margin (%) 1,1 5,5 6,5
SEKm 2018 2019e 2020e
EBITDA 20 90 108
Net financial items -12 -24 -24
Paid tax -3 -10 -14
Non-cash items 8 0 0
Cash flow before change in WC 13 56 70
Change in WC -27 -6 -10
Operating cash flow -14 50 61
CAPEX tangible fixed assets -1 -3 -3
CAPEX intangible fixed assets 0 -1 -1
Acquisitions and disposals -204 -25 -25
Free cash flow -219 21 31
Dividend paid 0 0 0
Share issues and buybacks 127 0 0
Other non cash items -74 -30 0
Decrease in net IB debt -161 -8 32
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 371 396 421
Indefinite intangible assets 0 0 0
Definite intangible assets 69 63 54
Tangible fixed assets 16 10 3
Other fixed assets 14 14 14
Fixed assets 469 502 502
Inventories 96 107 121
Receivables 87 96 108
Other current assets 0 0 0
Cash and liquid assets 84 96 128
Total assets 737 800 859
Shareholders equity 283 309 346
Minority 8 13 17
Total equity 291 322 363
Long-term debt 281 281 281
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 9 9 9
Other long-term liabilities 27 27 27
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 72 67,5 51
Net debt / market cap (%) 57,8 42,4 36,2
Equity ratio (%) 39,5 40,2 42,3
Net IB debt adj. / equity (%) 72 67,5 51
Current ratio (%) 207,8 210 224,6
EBITDA / net interest (%) 167,8 378,1 449,9
Net IB debt / EBITDA (%) 1029,8 241,3 171,3
Interest cover (%) 66,6 270 330,5
Short-term debt 13 13 13
Accounts payable 116 130 146
Other current liabilities 0 0 0
Total liabilities and equity 191 239 737
Net IB debt 209 217 185
Net IB debt excl. pension debt 209 217 185
Capital invested 537 575 585
Working capital 67 73 83
EV breakdown 2018 2019 2020
Market cap. diluted (m) 287 512 512
Net IB debt Adj 209 217 185
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 496 729 697
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 66,1 73,3 76,7
Capital invested turnover (%) 88 101,3 109,8
Capital employed turnover (%) 84,2 92,5 97,2
Inventories / sales (%) 20,3 18 17,9
Customer advances / sales (%) 0 0 0
Payables / sales (%) 23,1 21,8 21,7
Working capital / sales (%) 16,7 12,5 12,3
SEKm 2018 2019e 2020e
Shares outstanding adj. 56 56 56
Fully diluted shares Adj 56 56 56
EPS -0,15 0,46 0,67
Dividend per share Adj 0 0 0
EPS Adj 0,05 0,46 0,67
BVPS 5,03 5,49 6,16
BVPS Adj -2,8 -2,68 -2,29
Net IB debt / share 3,7 3,9 3,3
Share price 6,44 9,1 9,1
Market cap. (m) 362 512 512
Valuation 2018 2019 2020
P/E -33,6 19,6 13,6
EV/sales 1,54 1,29 1,09
EV/EBITDA 24,4 8,1 6,5
EV/EBITA 61,5 11,3 8,8
EV/EBIT 61,5 11,3 8,8
Dividend yield (%) 0 0 0
FCF yield (%) -76,4 4,2 6,1
P/BVPS 1,01 1,66 1,48
P/BVPS Adj -1,82 -3,4 -3,98
P/E Adj 110,3 19,6 13,6
EV/EBITDA Adj 15,8 8,1 6,5
EV/EBITA Adj 25,8 11,3 8,8
EV/EBIT Adj 25,8 11,3 8,8
EV/cap. employed 0,8 1,1 1
Investment ratios 2018 2019 2020
Capex / sales 0,4 0,7 0,7
Capex / depreciation 10,5 25,9 21,6
Capex tangibles / tangible fixed assets 8,3 32,1 115,6
Capex intangibles / definite intangibles 0 1,6 2,4
Depreciation on intangibles / definite intangibles 11,5 10,6 19,7
Depreciation on tangibles / tangibles 27,6 93,9 364,1

Equity research

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Media

Allgon - Interview with CEO Johan Hårdén (in Swedish)
Allgon - Company presentation with CEO Johan Hårdén & CFO Sten Hildemar (in Swedish)

Main shareholders - Allgon

Main shareholders Share capital % Voting shares % Verified
Verdane Capital 32.7 % 32.7 % 7 May 2019
Tibia Konsult AB 10.2 % 10.2 % 30 Sep 2019
Arne Wennberg 7.6 % 7.6 % 30 Jun 2018
Danica Pension 4.2 % 4.2 % 30 Sep 2019
Bertil Görling 4.2 % 4.2 % 30 Sep 2019
Avanza Pension 3.7 % 3.7 % 30 Sep 2019
Jan Robert Pärsson 3.3 % 3.3 % 30 Sep 2019
Bo Lengholt 2.8 % 2.8 % 30 Jun 2018
Ola Samelius 2.5 % 2.5 % 30 Sep 2019
Nordnet Pensionsförsäkring 2.1 % 2.1 % 30 Sep 2019
Source: Holdings by Modular Finance AB

Insider list - Allgon

Name Quantity Code Date
Björn Lindblom + 43 194 SUBS 12 Jul 2018
Per Johan Hårdén + 61 326 SUBS 11 Jul 2018

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