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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 2018 2019e 2020e
Sales 106 165 187
Sales growth (%) -48,5 55,6 12,9
EBITDA -75 7 22
EBITDA margin (%) -70,6 4 12
EBIT adj -163 -18 4
EBIT adj margin (%) -153,1 -11 2
Pretax profit -192 -19 2
EPS rep 0 -0,24 0,02
EPS growth (%) N/A 0 108,2
EPS adj 0 -0,24 0,02
DPS 0 0 0
EV/EBITDA (x) -1,4 46,7 13,8
EV/EBIT adj (x) -0,6 -16,8 83
P/E (x) N/A -15,2 186,1
P/E adj (x) N/A -15,2 186,1
EV/sales (x) 1 1,9 1,7
FCF yield (%) 0 -5,5 -1,1
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -0,3 1 0,5
DKKm 2018 2019e 2020e
Sales 106 165 187
COGS -57 -47 -57
Gross profit 49 118 130
Other operating items -124 -112 -107
EBITDA -75 7 22
Depreciation on tangibles 0 0 0
Depreciation on intangibles -108 -23 -17
EBITA -183 -18 4
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -183 -18 4
Other financial items 0 0 0
Net financial items -10 -1 -2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -192 -19 2
Tax 13 -1 0
Net profit -179 -20 2
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -179 -20 2
EPS 0 -0,24 0,02
EPS Adj 0 -0,24 0,02
Total extraordinary items after tax -16 0 0
Tax rate (%) -6,7 4,7 -22
Gross margin (%) 46,2 71,5 69,5
EBITDA margin (%) -70,6 4 12
EBITA margin (%) -171,9 -11 2
EBIT margin (%) -171,9 -11 2
Pretax margin (%) -181 -11,3 1,1
Net margin (%) -168,9 -11,9 0,9
Growth rates Y/Y 2018 2019 2020
Sales growth (%) -48,5 55,6 12,9
EBITDA growth (%) -639,9 108,7 242,1
EBIT growth (%) -664,7 90 120,5
Net profit growth (%) -633,9 89 108,2
EPS growth (%) N/A 0 108,2
Profitability 2018 2019 2020
ROE (%) -164,6 -37,2 2,2
ROE Adj (%) -149,9 -37,2 2,2
ROCE (%) -122,6 -18,5 3,6
ROCE Adj(%) -109,2 -18,5 3,6
ROIC (%) -127,8 -20,9 2,8
ROIC Adj (%) -113,8 -20,9 2,8
Adj earnings numbers 2018 2019 2020
EBITDA Adj -55 7 22
EBITDA Adj margin (%) -51,8 4 12
EBITA Adj -163 -18 4
EBITA Adj margin (%) -153,1 -11 2
EBIT Adj -163 -18 4
EBIT Adj margin (%) -153,1 -11 2
Pretax profit Adj -172 -19 2
Net profit Adj -163 -20 2
Net profit to shareholders Adj -163 -20 2
Net Adj margin (%) -153,8 -11,9 0,9
DKKm 2018 2019e 2020e
EBITDA -75 7 22
Net financial items -10 -1 -2
Paid tax 13 -2 0
Non-cash items 0 0 0
Cash flow before change in WC -72 4 21
Change in WC 20 -9 -6
Operating cash flow -48 -2 15
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -35 -14 -19
Acquisitions and disposals 0 0 0
Free cash flow -84 -17 -3
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items 26 45 1
Decrease in net IB debt -32 18 -4
Balance Sheet (DKKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 43 39 41
Tangible fixed assets 3 1 1
Other fixed assets 2 2 2
Fixed assets 48 55 55
Inventories 17 17 19
Receivables 45 44 50
Other current assets 0 0 0
Cash and liquid assets 17 35 29
Total assets 127 151 154
Shareholders equity 35 71 73
Minority 0 0 0
Total equity 35 71 73
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 13 14 14
Short-term debt 45 31 31
Accounts payable 25 15 17
Other current liabilities 13 7 8
Total liabilities and equity 262 267 131
Net IB debt 25 7 10
Net IB debt excl. pension debt 25 7 10
Capital invested 83 99 106
Working capital 37 46 53
EV breakdown 2018 2019 2020
Market cap. diluted (m) 77 299 299
Net IB debt Adj 25 7 10
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 102 306 310
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 54 118,7 122,2
Capital invested turnover (%) 79,6 181,6 182,2
Capital employed turnover (%) 71,3 170 162
Inventories / sales (%) 25,3 10,4 9,8
Customer advances / sales (%) 0 0 0
Payables / sales (%) 30,5 11,9 8,4
Working capital / sales (%) 44,6 25,3 26,5
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 72,4 9,4 14,3
Net debt / market cap (%) 8,8 2,2 3,5
Equity ratio (%) 27,3 46,9 47,3
Net IB debt adj. / equity (%) 72,4 9,4 14,3
Current ratio (%) 96 162,3 160,1
EBITDA / net interest (%) -782,9 1163,6 1340
Net IB debt / EBITDA (%) -33,5 102,4 46,5
Interest cover (%) -1906,1 -2450,7 200,5
DKKm 2018 2019e 2020e
Shares outstanding adj. 40 83 83
Fully diluted shares Adj 40 83 83
EPS 0 -0,24 0,02
Dividend per share Adj 0 0 0
EPS Adj 0 -0,24 0,02
BVPS 0,88 0,85 0,88
BVPS Adj -0,21 0,38 0,39
Net IB debt / share 0,6 0,1 0,1
Share price 7,24 3,6 3,6
Market cap. (m) 287 299 299
Valuation 2018 2019 2020
P/E N/A -15,2 186,1
EV/sales 0,96 1,85 1,66
EV/EBITDA -1,4 46,7 13,8
EV/EBITA -0,6 -16,8 83
EV/EBIT -0,6 -16,8 83
Dividend yield (%) 0 0 0
FCF yield (%) 0 -5,5 -1,1
P/BVPS 2,23 4,22 4,1
P/BVPS Adj -9,4 9,46 9,35
P/E Adj N/A -15,2 186,1
EV/EBITDA Adj -1,9 46,7 13,8
EV/EBITA Adj -0,6 -16,8 83
EV/EBIT Adj -0,6 -16,8 83
EV/cap. employed 1,3 2,7 2,7
Investment ratios 2018 2019 2020
Capex / sales 33,8 8,7 10
Capex / depreciation 33,4 63,6 110,1
Capex tangibles / tangible fixed assets 18,2 9 0
Capex intangibles / definite intangibles 82,5 36,2 45,5
Depreciation on intangibles / definite intangibles 250,5 57,4 41,4
Depreciation on tangibles / tangibles 0 0 0

Equity research

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Media

Napatech - Interview with CFO Heine Thorsgaard
Napatech - Company presentation with CFO Heine Thorsgaard

Main shareholders - Napatech

Main shareholders Share capital % Voting shares % Verified
Verdane Capital 27.2 % 27.2 % 2 Dec 2019
Sundt AS 14.6 % 14.6 % 2 Dec 2019
Ludvig Lorentzen AS 7.1 % 7.1 % 2 Dec 2019
Tigerstaden AS 4.6 % 4.6 % 13 May 2019
Haakon Sæter 4.3 % 4.3 % 2 Dec 2019
MP Pensjon PK 3.4 % 3.4 % 2 Dec 2019
Storebrand Asset Management 3.1 % 3.1 % 30 Nov 2019
Brownske Bevegelser AS 2.9 % 2.9 % 2 Dec 2019
Salina Holding AS 2.0 % 2.0 % 2 Dec 2019
Nordnet Pensionsförsäkring 1.7 % 1.7 % 2 Dec 2019
Source: Holdings by Modular Finance AB