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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 2020 2021e 2022e
Sales 194 218 273
Sales growth (%) 13,8 12,4 25
EBITDA 35 46 64
EBITDA margin (%) 18,2 21,1 23,5
EBIT adj 10 23 37
EBIT adj margin (%) 5,2 10,6 13,5
Pretax profit 5 23 37
EPS rep 0,12 0,21 0,35
EPS growth (%) 170,7 84,5 61,9
EPS adj 0,12 0,21 0,35
DPS 0 0 0
EV/EBITDA (x) 18,6 21,8 15,1
EV/EBIT adj (x) 65,4 43,3 26,2
P/E (x) 73,4 59,5 36,8
P/E adj (x) 73,4 59,5 36,8
EV/sales (x) 3,4 4,6 3,6
FCF yield (%) 4,4 0,7 3,1
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,3 -1,2 -1,3
N/A N/A N/A
Lease adj. FCF yield (%) 3,9 0,6 3
Lease adj. ND/EBITDA -1,7 -1,4 -1,5
DKKm 2020 2021e 2022e
Sales 194 218 273
COGS -55 -64 -81
Gross profit 139 155 192
Other operating items -104 -109 -127
EBITDA 35 46 64
Depreciation on tangibles 0 0 0
Depreciation on intangibles -24 -22 -26
EBITA 10 23 37
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 10 23 37
Other financial items 0 0 0
Net financial items -5 0 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 5 23 37
Tax 5 -5 -8
Net profit 10 18 29
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 10 18 29
EPS 0,12 0,21 0,35
EPS Adj 0,12 0,21 0,35
Total extraordinary items after tax 0 0 0
Tax rate (%) 89,2 -22 -22
Gross margin (%) 71,5 70,8 70,3
EBITDA margin (%) 18,2 21,1 23,5
EBITA margin (%) 5,2 10,6 13,5
EBIT margin (%) 5,2 10,6 13,5
Pretax margin (%) 2,6 10,4 13,5
Net margin (%) 4,9 8,1 10,5
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 13,8 12,4 25
EBITDA growth (%) 131,5 30,1 39,7
EBIT growth (%) 200 129,3 59,8
Net profit growth (%) 170,7 84,5 61,9
EPS growth (%) 170,7 84,5 61,9
Profitability 2020 2021 2022
ROE (%) 11,4 17,5 21,9
ROE Adj (%) 11,4 17,5 21,9
ROCE (%) 10,1 19,3 25
ROCE Adj(%) 10,1 19,3 25
ROIC (%) 32,5 33,5 47,8
ROIC Adj (%) 32,5 33,5 47,8
Adj earnings numbers 2020 2021 2022
EBITDA Adj 35 46 64
EBITDA Adj margin (%) 18,2 21,1 23,5
EBITA Adj 10 23 37
EBITA Adj margin (%) 5,2 10,6 13,5
EBIT Adj 10 23 37
EBIT Adj margin (%) 5,2 10,6 13,5
Pretax profit Adj 5 23 37
Net profit Adj 10 18 29
Net profit to shareholders Adj 10 18 29
Net Adj margin (%) 4,9 8,1 10,5
N/A N/A N/A
Depreciation and amortisation -25 -23 -27
Of which leasing depreciation -2 -1 -1
EO items 0 0 0
Impairment and PPA amortisation 0 0 0
EBITDA lease Adj 33 44 63
EBITDA lease Adj margin (%) 17,1 20,3 23
DKKm 2020 2021e 2022e
EBITDA 35 46 64
Net financial items -5 0 0
Paid tax 0 0 0
Non-cash items 0 0 0
Cash flow before change in WC 30 46 64
Change in WC 17 -16 -5
Operating cash flow 48 30 60
CAPEX tangible fixed assets -1 0 0
CAPEX intangible fixed assets -15 -23 -27
Acquisitions and disposals 0 0 0
Free cash flow 31 7 32
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items 8 -4 -1
Decrease in net IB debt 28 7 32
Balance Sheet (DKKm) 2020 2021 2022
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 35 36 37
Tangible fixed assets 2 2 2
Other fixed assets 6 6 6
Fixed assets 52 52 52
Inventories 19 13 16
Receivables 19 32 40
Other current assets 0 0 0
Cash and liquid assets 63 68 99
Total assets 153 165 208
Shareholders equity 90 113 149
Minority 0 0 0
Total equity 90 113 149
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 6 6 6
Short-term debt 13 13 13
Accounts payable 33 26 32
Other current liabilities 2 6 8
Total liabilities and equity 153 172 216
Net IB debt -47 -54 -86
Net IB debt excl. pension debt -47 -54 -86
Capital invested 49 59 62
Working capital 3 13 16
EV breakdown 2020 2021 2022
Market cap. diluted (m) 706 1055 1055
Net IB debt Adj -47 -54 -86
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 659 1002 970
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 123,2 137,3 146,3
Capital invested turnover (%) 331,3 405,6 453
Capital employed turnover (%) 163,9 177,9 180,4
Inventories / sales (%) 7,4 7,3 5,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 13,8 13,4 10,6
Working capital / sales (%) 4,3 3,7 5,3
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) -52,1 -47,6 -57,3
Net debt / market cap (%) -10,6 -5,1 -8,1
Equity ratio (%) 58,8 68 71,9
Net IB debt adj. / equity (%) -52,1 -47,6 -57,3
Current ratio (%) 200,9 237,6 278,7
EBITDA / net interest (%) 706,7 11820,8 44929,4
Net IB debt / EBITDA (%) -132,2 -116,5 -133,2
Interest cover (%) 174,3 2383,7 3993,2
N/A N/A N/A
Lease liability amortisation -4 -1 -1
Other intangible assets 35 36 37
Right-of-use asset 9 8 7
Total other fixed assets 6 6 6
Leasing liability 10 8 7
Total other long-term liabilities 6 6 6
Net IB debt excl. leasing -57 -62 -93
Net IB debt / EBITDA lease Adj (%) -170,6 -140,1 -147,9
DKKm 2020 2021e 2022e
Shares outstanding adj. 83 83 83
Fully diluted shares Adj 83 83 83
EPS 0,12 0,21 0,35
Dividend per share Adj 0 0 0
EPS Adj 0,12 0,21 0,35
BVPS 1,08 1,35 1,8
BVPS Adj 0,66 0,92 1,35
Net IB debt / share -0,6 -0,6 -1
Share price 5,29 12,71 12,71
Market cap. (m) 440 1055 1055
Valuation 2020 2021 2022
P/E 73,4 59,5 36,8
EV/sales 3,39 4,59 3,55
EV/EBITDA 18,6 21,8 15,1
EV/EBITA 65,4 43,3 26,2
EV/EBIT 65,4 43,3 26,2
Dividend yield (%) 0 0 0
FCF yield (%) 4,4 0,7 3,1
P/BVPS 7,86 9,38 7,07
P/BVPS Adj 12,84 13,81 9,42
P/E Adj 73,4 59,5 36,8
EV/EBITDA Adj 18,6 21,8 15,1
EV/EBITA Adj 65,4 43,3 26,2
EV/EBIT Adj 65,4 43,3 26,2
EV/cap. employed 5,9 7,5 5,7
Investment ratios 2020 2021 2022
Capex / sales 8,4 10,5 10
Capex / depreciation 69 106,1 104,4
Capex tangibles / tangible fixed assets 78,7 0 0
Capex intangibles / definite intangibles 43,2 63,3 73,3
Depreciation on intangibles / definite intangibles 67,7 59,7 70,2
Depreciation on tangibles / tangibles 0 0 0
N/A N/A N/A
Lease adj. FCF yield (%) 3,9 0,6 3

Equity research

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Media

Napatech - Company presentation with CEO Ray Smets
Napatech - Company presentation with CFO Heine Thorsgaard (in English)

Main shareholders - Napatech

Main shareholders Share capital % Voting shares % Verified
Verdane Capital 27.2 % 27.2 % 26 Feb 2021
Sundt AS 12.3 % 12.3 % 26 Feb 2021
Ludvig Lorentzen AS 7.2 % 7.2 % 26 Feb 2021
SEB Fonder 5.3 % 5.3 % 31 Jan 2021
Brownske Bevegelser AS 3.0 % 3.0 % 26 Feb 2021
MP Pensjon PK 2.6 % 2.6 % 26 Feb 2021
Haakon Sæter 2.3 % 2.3 % 26 Feb 2021
Nordnet Pensionsförsäkring 2.0 % 2.0 % 26 Feb 2021
SEBinvest 1.8 % 1.8 % 30 Nov 2020
Extellus AS 1.7 % 1.7 % 26 Feb 2021
Source: Holdings by Modular Finance AB