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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 171 193 227
Sales growth (%) 60,7 13 18
EBITDA 15 23 39
EBITDA margin (%) 9 12 17
EBIT adj -10 0 16
EBIT adj margin (%) -5,9 0,1 7
Pretax profit -14 -1 14
EPS rep -0,16 -0,01 0,14
EPS growth (%) 0 92,5 1212,7
EPS adj -0,16 -0,01 0,14
DPS 0 0 0
EV/EBITDA (x) 18 6,4 3,6
EV/EBIT adj (x) -27,3 867,9 8,8
P/E (x) -21,7 -154,3 13,9
P/E adj (x) -21,7 -154,3 13,9
EV/sales (x) 1,6 0,8 0,6
FCF yield (%) 3,7 -6,9 5,6
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,3 -0,3 -0,4
DKKm 2019 2020e 2021e
Sales 171 193 227
COGS -43 -57 -64
Gross profit 127 136 163
Other operating items -112 -113 -124
EBITDA 15 23 39
Depreciation on tangibles 0 0 0
Depreciation on intangibles -23 -21 -21
EBITA -10 0 16
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -10 0 16
Other financial items 0 0 0
Net financial items -4 -1 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -14 -1 14
Tax 1 0 -3
Net profit -14 -1 11
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -14 -1 11
EPS -0,16 -0,01 0,14
EPS Adj -0,16 -0,01 0,14
Total extraordinary items after tax 0 0 0
Tax rate (%) -4,6 -22 -22
Gross margin (%) 74,5 70,6 71,6
EBITDA margin (%) 9 12 17
EBITA margin (%) -5,9 0,1 7
EBIT margin (%) -5,9 0,1 7
Pretax margin (%) -8,4 -0,7 6,4
Net margin (%) -8 -0,5 5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 60,7 13 18
EBITDA growth (%) 120,4 51,4 67,2
EBIT growth (%) 94,5 101,7 9173
Net profit growth (%) 92,4 92,5 1212,6
EPS growth (%) 0 92,5 1212,7
Profitability 2019 2020 2021
ROE (%) -24 -1,3 13,4
ROE Adj (%) -24 -1,3 13,4
ROCE (%) -9,4 0,6 13
ROCE Adj(%) -9,4 0,6 13
ROIC (%) -14,3 0,2 16
ROIC Adj (%) -14,3 0,2 16
Adj earnings numbers 2019 2020 2021
EBITDA Adj 15 23 39
EBITDA Adj margin (%) 9 12 17
EBITA Adj -10 0 16
EBITA Adj margin (%) -5,9 0,1 7
EBIT Adj -10 0 16
EBIT Adj margin (%) -5,9 0,1 7
Pretax profit Adj -14 -1 14
Net profit Adj -14 -1 11
Net profit to shareholders Adj -14 -1 11
Net Adj margin (%) -8 -0,5 5
DKKm 2019 2020e 2021e
EBITDA 15 23 39
Net financial items -4 -1 -1
Paid tax -2 0 0
Non-cash items 0 0 0
Cash flow before change in WC 9 22 37
Change in WC 14 -13 -6
Operating cash flow 26 8 32
CAPEX tangible fixed assets -1 0 0
CAPEX intangible fixed assets -15 -19 -23
Acquisitions and disposals 0 0 0
Free cash flow 11 -11 9
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items 48 -4 0
Decrease in net IB debt 44 -11 8
Balance Sheet (DKKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 41 39 41
Tangible fixed assets 1 1 1
Other fixed assets 1 0 0
Fixed assets 56 51 51
Inventories 10 22 25
Receivables 30 34 40
Other current assets 0 0 0
Cash and liquid assets 64 51 58
Total assets 160 158 174
Shareholders equity 78 77 92
Minority 0 0 0
Total equity 78 77 92
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 9 9
Short-term debt 33 31 31
Accounts payable 21 18 22
Other current liabilities 8 13 14
Total liabilities and equity 163 161 178
Net IB debt -19 -8 -16
Net IB debt excl. pension debt -19 -8 -16
Capital invested 65 75 80
Working capital 10 24 29
EV breakdown 2019 2020 2021
Market cap. diluted (m) 295 157 157
Net IB debt Adj -19 -8 -16
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 275 149 141
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 119 121,5 137,1
Capital invested turnover (%) 252,9 275 292,8
Capital employed turnover (%) 167 157,1 179,3
Inventories / sales (%) 7,9 8,1 10,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 13,4 10,2 8,9
Working capital / sales (%) 10,2 8,9 11,7
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -24,5 -10,2 -17,7
Net debt / market cap (%) -10,7 -5 -10,3
Equity ratio (%) 49,1 49 52,6
Net IB debt adj. / equity (%) -24,5 -10,2 -17,7
Current ratio (%) 158,3 159,3 172,9
EBITDA / net interest (%) 366,3 1568,6 2714,2
Net IB debt / EBITDA (%) -125,9 -33,9 -41,9
Interest cover (%) -209 37,6 817,9
DKKm 2019 2020e 2021e
Shares outstanding adj. 83 83 83
Fully diluted shares Adj 83 83 83
EPS -0,16 -0,01 0,14
Dividend per share Adj 0 0 0
EPS Adj -0,16 -0,01 0,14
BVPS 0,94 0,93 1,1
BVPS Adj 0,45 0,46 0,61
Net IB debt / share -0,2 -0,1 -0,2
Share price 2,15 1,89 1,89
Market cap. (m) 179 157 157
Valuation 2019 2020 2021
P/E -21,7 -154,3 13,9
EV/sales 1,61 0,77 0,62
EV/EBITDA 18 6,4 3,6
EV/EBITA -27,3 867,9 8,8
EV/EBIT -27,3 867,9 8,8
Dividend yield (%) 0 0 0
FCF yield (%) 3,7 -6,9 5,6
P/BVPS 3,76 2,03 1,71
P/BVPS Adj 7,9 4,15 3,09
P/E Adj -21,7 -154,3 13,9
EV/EBITDA Adj 18 6,4 3,6
EV/EBITA Adj -27,3 867,9 8,8
EV/EBIT Adj -27,3 867,9 8,8
EV/cap. employed 2,2 1,2 1,1
Investment ratios 2019 2020 2021
Capex / sales 9,2 10 10
Capex / depreciation 67,6 91,3 107,5
Capex tangibles / tangible fixed assets 42,7 0 0
Capex intangibles / definite intangibles 36,8 49 55,6
Depreciation on intangibles / definite intangibles 56,2 53,7 51,7
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 Mar 2020
Sundt AS 14.6 % 14.6 % 2 Mar 2020
Ludvig Lorentzen AS 7.1 % 7.1 % 2 Mar 2020
Tigerstaden AS 4.6 % 4.6 % 13 May 2019
Haakon Sæter 4.3 % 4.3 % 2 Mar 2020
MP Pensjon PK 3.4 % 3.4 % 2 Mar 2020
Storebrand Asset Management 2.9 % 2.9 % 29 Feb 2020
Brownske Bevegelser AS 2.9 % 2.9 % 2 Mar 2020
Salina Holding AS 2.1 % 2.1 % 2 Mar 2020
Nordnet Pensionsförsäkring 1.9 % 1.9 % 2 Mar 2020
Source: Holdings by Modular Finance AB