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Napatech

Napatech

Smart network adapter solutions

Napatech is a tech company that develops and markets smart network adaptors and related solutions (both software and hardware). It sells primarily to large global OEMs (+140 customers), which then sell to end-users. The end-users of Napatech solutions are typically large firms within sectors such as telecommunications, financial services, and governments.

Napatech is positioned in a global market where we expect to see double-digit demand growth for the foreseeable future. If the company can grow with the market over time, we assess that it could potentially scale its operating margin significantly, towards 20%.

Napatech is a small company (<100 employees), which faces major global competition. it is uncertain whether napatech will be able to grow with the market. also, napatech needs to ramp-up and establish new market verticals in order to achieve double-digit growth over time, and its ability to achieve this is uncertain.></100>

DKKm 2019 2020e 2021e
Sales 171 205 250
Sales growth (%) 0 20,1 22,2
EBITDA 15 36 45
EBITDA margin (%) 9 17,4 18
EBIT adj -10 12 19
EBIT adj margin (%) -5,9 5,6 7,5
Pretax profit -14 10 18
EPS rep -0,16 0,1 0,17
EPS growth (%) 0 158,6 74,4
EPS adj -0,16 0,1 0,17
DPS 0 0 0
EV/EBITDA (x) 18 17 13,3
EV/EBIT adj (x) -27,3 52,7 31,7
P/E (x) -21,7 78,9 45,3
P/E adj (x) -21,7 78,9 45,3
EV/sales (x) 1,6 3 2,4
FCF yield (%) 3,7 -0,1 1,5
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,3 -0,6 -0,7
N/A N/A N/A
DKKm 2019 2020e 2021e
Sales 171 205 250
COGS -43 -58 -73
Gross profit 127 147 178
Other operating items -112 -111 -133
EBITDA 15 36 45
Depreciation on tangibles 0 0 0
Depreciation on intangibles -23 -22 -25
EBITA -10 12 19
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -10 12 19
Other financial items 0 0 0
Net financial items -4 -2 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -14 10 18
Tax 1 -2 -4
Net profit -14 8 14
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -14 8 14
EPS -0,16 0,1 0,17
EPS Adj -0,16 0,1 0,17
Total extraordinary items after tax 0 0 0
Tax rate (%) -4,6 -17,8 -22
Gross margin (%) 74,5 71,8 71
EBITDA margin (%) 9 17,4 18
EBITA margin (%) -5,9 5,6 7,5
EBIT margin (%) -5,9 5,6 7,5
Pretax margin (%) -8,4 4,7 7,1
Net margin (%) -8 3,9 5,5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 0 20,1 22,2
EBITDA growth (%) -84,3 133,5 26,4
EBIT growth (%) 0 214,2 63,9
Net profit growth (%) 0 158,6 74,4
EPS growth (%) 0 158,6 74,4
Profitability 2019 2020 2021
ROE (%) -17,3 9,5 14,2
ROE Adj (%) -17,3 9,5 14,2
ROCE (%) -7,7 9,5 14,6
ROCE Adj(%) -7,7 9,5 14,6
ROIC (%) -14,5 13,6 19,8
ROIC Adj (%) -14,5 13,6 19,8
Adj earnings numbers 2019 2020 2021
EBITDA Adj 15 36 45
EBITDA Adj margin (%) 9 17,4 18
EBITA Adj -10 12 19
EBITA Adj margin (%) -5,9 5,6 7,5
EBIT Adj -10 12 19
EBIT Adj margin (%) -5,9 5,6 7,5
Pretax profit Adj -14 10 18
Net profit Adj -14 8 14
Net profit to shareholders Adj -14 8 14
Net Adj margin (%) -8 3,9 5,5
N/A N/A N/A
DKKm 2019 2020e 2021e
EBITDA 15 36 45
Net financial items -4 -2 -1
Paid tax -2 0 0
Non-cash items 0 0 0
Cash flow before change in WC 9 34 44
Change in WC 17 -15 -9
Operating cash flow 26 19 35
CAPEX tangible fixed assets -1 0 0
CAPEX intangible fixed assets -15 -19 -26
Acquisitions and disposals 0 0 0
Free cash flow 11 0 9
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -2 -2 -1
Decrease in net IB debt 0 3 9
Balance Sheet (DKKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 41 39 40
Tangible fixed assets 1 1 1
Other fixed assets 1 1 1
Fixed assets 56 51 51
Inventories 10 16 20
Receivables 33 40 50
Other current assets 0 0 0
Cash and liquid assets 64 58 65
Total assets 163 164 185
Shareholders equity 78 89 107
Minority 0 0 0
Total equity 78 89 107
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 9 12 12
Short-term debt 33 26 26
Accounts payable 21 22 27
Other current liabilities 8 12 14
Total liabilities and equity 163 173 196
Net IB debt -19 -22 -31
Net IB debt excl. pension debt -19 -22 -31
Capital invested 68 71 78
Working capital 13 21 28
EV breakdown 2019 2020 2021
Market cap. diluted (m) 295 629 629
Net IB debt Adj -19 -22 -31
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 275 607 598
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 104,9 125,4 143,2
Capital invested turnover (%) 256,7 294,7 337,2
Capital employed turnover (%) 136,5 163,4 186,8
Inventories / sales (%) 5,6 6,2 7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 12,3 10,5 9,9
Working capital / sales (%) 6,9 8,5 9,8
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -24,5 -24,8 -29
Net debt / market cap (%) -10,7 -3,5 -4,9
Equity ratio (%) 48,2 54,2 57,6
Net IB debt adj. / equity (%) -24,5 -24,8 -29
Current ratio (%) 162,8 177,1 189,5
EBITDA / net interest (%) 366,3 1961,9 4243,4
Net IB debt / EBITDA (%) -125,9 -62 -68,7
Interest cover (%) -209 544,9 1139,6
N/A N/A N/A
DKKm 2019 2020e 2021e
Shares outstanding adj. 83 83 83
Fully diluted shares Adj 83 83 83
EPS -0,16 0,1 0,17
Dividend per share Adj 0 0 0
EPS Adj -0,16 0,1 0,17
BVPS 0,94 1,07 1,29
BVPS Adj 0,45 0,61 0,8
Net IB debt / share -0,2 -0,3 -0,4
Share price 2,15 7,57 7,57
Market cap. (m) 179 629 629
Valuation 2019 2020 2021
P/E -21,7 78,9 45,3
EV/sales 1,61 2,96 2,39
EV/EBITDA 18 17 13,3
EV/EBITA -27,3 52,7 31,7
EV/EBIT -27,3 52,7 31,7
Dividend yield (%) 0 0 0
FCF yield (%) 3,7 -0,1 1,5
P/BVPS 3,76 7,07 5,89
P/BVPS Adj 7,9 12,49 9,43
P/E Adj -21,7 78,9 45,3
EV/EBITDA Adj 18 17 13,3
EV/EBITA Adj -27,3 52,7 31,7
EV/EBIT Adj -27,3 52,7 31,7
EV/cap. employed 2,2 4,8 4,2
Investment ratios 2019 2020 2021
Capex / sales 9,2 9,3 10,5
Capex / depreciation 67,6 85 106
Capex tangibles / tangible fixed assets 42,7 26,5 0
Capex intangibles / definite intangibles 36,8 48,6 65,3
Depreciation on intangibles / definite intangibles 56,2 57,9 61,7
Depreciation on tangibles / tangibles 0 0 0
N/A N/A N/A

Equity research

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Media

Napatech - Company presentation with CFO Heine Thorsgaard (in English)
Napatech - Interview with CFO Heine Thorsgaard

Main shareholders - Napatech

Main shareholders Share capital % Voting shares % Verified
Verdane Capital 27.2 % 27.2 % 31 Aug 2020
Sundt AS 12.3 % 12.3 % 31 Aug 2020
Ludvig Lorentzen AS 7.2 % 7.2 % 31 Aug 2020
SEB Fonder 4.4 % 4.4 % 31 Aug 2020
Haakon Sæter 3.8 % 3.8 % 31 Aug 2020
Brownske Bevegelser AS 3.2 % 3.2 % 31 Aug 2020
MP Pensjon PK 2.8 % 2.8 % 31 Aug 2020
Nordnet Pensionsförsäkring 2.3 % 2.3 % 31 Aug 2020
Storebrand Asset Management 2.0 % 2.0 % 31 Aug 2020
Arepo AS 1.2 % 1.2 % 31 Aug 2020
Source: Holdings by Modular Finance AB