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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 171 203 248
Sales growth (%) 0 18,9 22,2
EBITDA 15 24 42
EBITDA margin (%) 9 11,9 17
EBIT adj -10 1 17
EBIT adj margin (%) -5,9 0,4 7
Pretax profit -14 0 16
EPS rep -0,16 -0,01 0,15
EPS growth (%) 0 95,3 2054
EPS adj -0,16 -0,01 0,15
DPS 0 0 0
EV/EBITDA (x) 18 13,7 7,7
EV/EBIT adj (x) -27,3 376,2 18,8
P/E (x) -21,7 -527 27
P/E adj (x) -21,7 -527 27
EV/sales (x) 1,6 1,6 1,3
FCF yield (%) 3,7 -5,6 1,7
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,3 -0,1 -0,2
DKKm 2019 2020e 2021e
Sales 171 203 248
COGS -43 -60 -74
Gross profit 127 143 174
Other operating items -112 -119 -131
EBITDA 15 24 42
Depreciation on tangibles 0 0 0
Depreciation on intangibles -23 -21 -23
EBITA -10 1 17
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -10 1 17
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 0 16
Tax 1 0 -3
Net profit -14 -1 12
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -14 -1 12
EPS -0,16 -0,01 0,15
EPS Adj -0,16 -0,01 0,15
Total extraordinary items after tax 0 0 0
Tax rate (%) -4,6 131,7 -22
Gross margin (%) 74,5 70,6 70,1
EBITDA margin (%) 9 11,9 17
EBITA margin (%) -5,9 0,4 7
EBIT margin (%) -5,9 0,4 7
Pretax margin (%) -8,4 -0,1 6,4
Net margin (%) -8 -0,3 5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 0 18,9 22,2
EBITDA growth (%) -84,3 57,8 74,8
EBIT growth (%) 0 108,7 1873,1
Net profit growth (%) 0 95,3 2054,1
EPS growth (%) 0 95,3 2054
Profitability 2019 2020 2021
ROE (%) -17,3 -0,8 14,3
ROE Adj (%) -17,3 -0,8 14,3
ROCE (%) -7,7 1,3 13,9
ROCE Adj(%) -7,7 1,3 13,9
ROIC (%) -14,5 2,8 16,3
ROIC Adj (%) -14,5 2,8 16,3
Adj earnings numbers 2019 2020 2021
EBITDA Adj 15 24 42
EBITDA Adj margin (%) 9 11,9 17
EBITA Adj -10 1 17
EBITA Adj margin (%) -5,9 0,4 7
EBIT Adj -10 1 17
EBIT Adj margin (%) -5,9 0,4 7
Pretax profit Adj -14 0 16
Net profit Adj -14 -1 12
Net profit to shareholders Adj -14 -1 12
Net Adj margin (%) -8 -0,3 5
DKKm 2019 2020e 2021e
EBITDA 15 24 42
Net financial items -4 -1 -1
Paid tax -2 0 0
Non-cash items 0 0 0
Cash flow before change in WC 9 23 41
Change in WC -4 -14 -8
Operating cash flow 26 1 30
CAPEX tangible fixed assets -1 0 0
CAPEX intangible fixed assets -15 -20 -25
Acquisitions and disposals 0 0 0
Free cash flow 11 -19 6
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items -2 -2 0
Decrease in net IB debt 0 -16 5
Balance Sheet (DKKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 41 40 41
Tangible fixed assets 1 1 1
Other fixed assets 1 1 1
Fixed assets 56 53 53
Inventories 10 22 27
Receivables 33 37 46
Other current assets 0 0 0
Cash and liquid assets 64 44 48
Total assets 163 156 175
Shareholders equity 78 78 94
Minority 0 0 0
Total equity 78 78 94
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 11 11
Short-term debt 33 31 31
Accounts payable 21 19 23
Other current liabilities 8 13 14
Total liabilities and equity 163 164 184
Net IB debt -19 -3 -8
Net IB debt excl. pension debt -19 -3 -8
Capital invested 68 79 87
Working capital 13 28 36
EV breakdown 2019 2020 2021
Market cap. diluted (m) 295 334 334
Net IB debt Adj -19 -3 -8
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 275 331 325
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 104,9 127,3 149,9
Capital invested turnover (%) 256,7 275,7 298
Capital employed turnover (%) 136,5 164,8 193
Inventories / sales (%) 5,6 7,8 10
Customer advances / sales (%) 0 0 0
Payables / sales (%) 12,3 9,8 8,5
Working capital / sales (%) 6,9 10,1 12,8
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -24,5 -3,8 -8,8
Net debt / market cap (%) -10,7 -0,9 -2,5
Equity ratio (%) 48,2 50,2 54
Net IB debt adj. / equity (%) -24,5 -3,8 -8,8
Current ratio (%) 162,8 155,2 167,2
EBITDA / net interest (%) 366,3 2091 2845
Net IB debt / EBITDA (%) -125,9 -12,4 -19,6
Interest cover (%) -209 85,2 891,8
DKKm 2019 2020e 2021e
Shares outstanding adj. 83 83 83
Fully diluted shares Adj 83 83 83
EPS -0,16 -0,01 0,15
Dividend per share Adj 0 0 0
EPS Adj -0,16 -0,01 0,15
BVPS 0,94 0,94 1,14
BVPS Adj 0,45 0,46 0,64
Net IB debt / share -0,2 0 -0,1
Share price 2,15 4,02 4,02
Market cap. (m) 179 334 334
Valuation 2019 2020 2021
P/E -21,7 -527 27
EV/sales 1,61 1,63 1,31
EV/EBITDA 18 13,7 7,7
EV/EBITA -27,3 376,2 18,8
EV/EBIT -27,3 376,2 18,8
Dividend yield (%) 0 0 0
FCF yield (%) 3,7 -5,6 1,7
P/BVPS 3,76 4,26 3,54
P/BVPS Adj 7,9 8,67 6,32
P/E Adj -21,7 -527 27
EV/EBITDA Adj 18 13,7 7,7
EV/EBITA Adj -27,3 376,2 18,8
EV/EBIT Adj -27,3 376,2 18,8
EV/cap. employed 2,2 2,7 2,4
Investment ratios 2019 2020 2021
Capex / sales 9,2 9,8 10
Capex / depreciation 67,6 92,4 106,6
Capex tangibles / tangible fixed assets 42,7 16,5 0
Capex intangibles / definite intangibles 36,8 49,1 59,8
Depreciation on intangibles / definite intangibles 56,2 53,7 56,1
Depreciation on tangibles / tangibles 0 0 0

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 % 15 Jun 2020
Sundt AS 14.6 % 14.6 % 15 Jun 2020
Ludvig Lorentzen AS 7.2 % 7.2 % 15 Jun 2020
Haakon Sæter 4.2 % 4.2 % 15 Jun 2020
MP Pensjon PK 3.4 % 3.4 % 15 Jun 2020
Brownske Bevegelser AS 3.2 % 3.2 % 15 Jun 2020
Storebrand Asset Management 2.7 % 2.7 % 30 Jun 2020
Tigerstaden AS 2.4 % 2.4 % 15 Jun 2020
Salina Holding AS 2.1 % 2.1 % 15 Jun 2020
Nordnet Pensionsförsäkring 2.0 % 2.0 % 11 May 2020
Source: Holdings by Modular Finance AB