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Allgon

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 2019 2020e 2021e
Sales 565 639 714
Sales growth (%) 75,4 13 11,8
EBITDA 96 110 129
EBITDA margin (%) 16,9 17,2 18
EBIT adj 69 81 97
EBIT adj margin (%) 12,3 12,7 13,5
Pretax profit 46 57 73
EPS rep 0,58 0,69 0,9
EPS growth (%) 479,8 20,4 29,3
EPS adj 0,58 0,69 0,9
DPS 0 0 0
EV/EBITDA (x) 9 7,5 6
EV/EBIT adj (x) 12,4 10,2 7,9
P/E (x) 19,7 16,4 12,6
P/E adj (x) 19,7 16,4 12,6
EV/sales (x) 1,5 1,3 1,1
FCF yield (%) 2,4 4,9 9,8
Dividend yield (%) 0 0 0
Net IB debt/EBITDA 2,3 1,7 1
SEKm 2019 2020e 2021e
Sales 565 639 714
COGS -150 -166 -185
Gross profit 415 473 529
Other operating items -319 -363 -401
EBITDA 96 110 129
Depreciation on tangibles -9 -10 -11
Depreciation on intangibles -7 -11 -15
EBITA 69 81 97
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 69 81 97
Other financial items 0 0 0
Net financial items -23 -24 -24
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 46 57 73
Tax -9 -14 -18
Net profit 38 43 54
Minority interest -5 -4 -4
Net profit discontinued 0 0 0
Net profit to shareholders 32 39 50
EPS 0,58 0,69 0,9
EPS Adj 0,58 0,69 0,9
Total extraordinary items after tax 0 0 0
Tax rate (%) -19 -25 -25
Gross margin (%) 73,4 74 74,1
EBITDA margin (%) 16,9 17,2 18
EBITA margin (%) 12,3 12,7 13,5
EBIT margin (%) 12,3 12,7 13,5
Pretax margin (%) 8,2 9 10,2
Net margin (%) 6,7 6,7 7,6
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 75,4 13 11,8
EBITDA growth (%) 370,6 15,1 16,7
EBIT growth (%) 759,2 17,3 18,8
Net profit growth (%) 601,4 14,4 26,6
EPS growth (%) 479,8 20,4 29,3
Profitability 2019 2020 2021
ROE (%) 10,8 11,7 13,3
ROE Adj (%) 10,8 11,7 13,3
ROCE (%) 11,3 12,3 13,6
ROCE Adj(%) 11,3 12,3 13,6
ROIC (%) 10 10,3 12,2
ROIC Adj (%) 10 10,3 12,2
Adj earnings numbers 2019 2020 2021
EBITDA Adj 96 110 129
EBITDA Adj margin (%) 16,9 17,2 18
EBITA Adj 69 81 97
EBITA Adj margin (%) 12,3 12,7 13,5
EBIT Adj 69 81 97
EBIT Adj margin (%) 12,3 12,7 13,5
Pretax profit Adj 46 57 73
Net profit Adj 38 43 54
Net profit to shareholders Adj 32 39 50
Net Adj margin (%) 6,7 6,7 7,6
SEKm 2019 2020e 2021e
EBITDA 96 110 129
Net financial items -23 -24 -24
Paid tax -9 -14 -18
Non-cash items 0 0 0
Cash flow before change in WC 64 72 86
Change in WC -16 -11 -11
Operating cash flow 47 61 75
CAPEX tangible fixed assets -6 -3 -9
CAPEX intangible fixed assets -1 -1 -4
Acquisitions and disposals -25 -25 0
Free cash flow 16 31 63
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -30 0 0
Decrease in net IB debt -14 32 63
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 396 421 421
Indefinite intangible assets 0 0 0
Definite intangible assets 63 54 42
Tangible fixed assets 12 5 3
Other fixed assets 14 14 14
Fixed assets 504 504 484
Inventories 107 121 136
Receivables 106 120 134
Other current assets 0 0 0
Cash and liquid assets 89 122 185
Total assets 807 867 939
Shareholders equity 315 354 404
Minority 13 17 21
Total equity 328 371 425
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 2019 2020 2021
Net debt / equity (%) 68,1 51,5 30
Net debt / market cap (%) 49,8 29,9 20
Equity ratio (%) 40,6 42,8 45,3
Net IB debt adj. / equity (%) 68,1 51,5 30
Current ratio (%) 212,7 227,9 257,5
EBITDA / net interest (%) 417,6 458,8 535,5
Net IB debt / EBITDA (%) 233,4 173,4 99,3
Interest cover (%) 302,7 339 402,6
Short-term debt 13 13 13
Accounts payable 130 147 164
Other current liabilities 0 0 0
Total liabilities and equity 239 737 807
Net IB debt 223 191 128
Net IB debt excl. pension debt 223 191 128
Capital invested 588 599 590
Working capital 84 95 106
EV breakdown 2019 2020 2021
Market cap. diluted (m) 638 638 638
Net IB debt Adj 223 191 128
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 861 829 766
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 73,2 76,3 79,1
Capital invested turnover (%) 100,5 107,7 120,2
Capital employed turnover (%) 92,3 96,5 100,5
Inventories / sales (%) 18 17,9 18
Customer advances / sales (%) 0 0 0
Payables / sales (%) 21,8 21,7 21,8
Working capital / sales (%) 13,4 13,9 14
SEKm 2019 2020e 2021e
Shares outstanding adj. 56 56 56
Fully diluted shares Adj 56 56 56
EPS 0,58 0,69 0,9
Dividend per share Adj 0 0 0
EPS Adj 0,58 0,69 0,9
BVPS 5,6 6,29 7,19
BVPS Adj -2,57 -2,15 -1,05
Net IB debt / share 4 3,4 2,3
Share price 7,97 11,35 11,35
Market cap. (m) 448 638 638
Valuation 2019 2020 2021
P/E 19,7 16,4 12,6
EV/sales 1,52 1,3 1,07
EV/EBITDA 9 7,5 6
EV/EBITA 12,4 10,2 7,9
EV/EBIT 12,4 10,2 7,9
Dividend yield (%) 0 0 0
FCF yield (%) 2,4 4,9 9,8
P/BVPS 2,03 1,8 1,58
P/BVPS Adj -4,42 -5,27 -10,76
P/E Adj 19,7 16,4 12,6
EV/EBITDA Adj 9 7,5 6
EV/EBITA Adj 12,4 10,2 7,9
EV/EBIT Adj 12,4 10,2 7,9
EV/cap. employed 1,3 1,2 1
Investment ratios 2019 2020 2021
Capex / sales 1,2 0,7 1,8
Capex / depreciation 41,8 21,6 49,7
Capex tangibles / tangible fixed assets 46,8 63,7 281,5
Capex intangibles / definite intangibles 2 2,4 8,4
Depreciation on intangibles / definite intangibles 11,2 19,9 35,1
Depreciation on tangibles / tangibles 77,5 200,7 333,5

Equity research

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Media

Allgon - Company presentation with CEO Johan Hårdén & CFO Sten Hildemar
Allgon - Interview with CEO Johan Hårdén (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 % 31 Dec 2019
Arne Wennberg 7.6 % 7.6 % 30 Jun 2018
Avanza Pension 4.3 % 4.3 % 31 Dec 2019
Bertil Görling 4.2 % 4.2 % 31 Dec 2019
Danica Pension 4.1 % 4.1 % 31 Dec 2019
Jan Robert Pärsson 3.3 % 3.3 % 31 Dec 2019
Bo Lengholt 2.8 % 2.8 % 30 Jun 2018
Ola Samelius 2.5 % 2.5 % 31 Dec 2019
Nordnet Pensionsförsäkring 2.1 % 2.1 % 31 Dec 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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