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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 106 162 183
Sales growth (%) -48,5 53 12,9
EBITDA -75 2 21
EBITDA margin (%) -70,6 1,5 11,5
EBIT adj -163 -22 3
EBIT adj margin (%) -153,1 -13,7 1,5
Pretax profit -192 -24 1
EPS rep 0 -0,28 0,01
EPS growth (%) N/A 0 103,2
EPS adj 0 -0,28 0,01
DPS 0 0 0
EV/EBITDA (x) -1,4 125,5 14,7
EV/EBIT adj (x) -0,6 -13,7 112,3
P/E (x) N/A -12,4 388,6
P/E adj (x) N/A -12,4 388,6
EV/sales (x) 1 1,9 1,7
FCF yield (%) 0 -7,2 -1,4
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -0,3 4,4 0,8
DKKm 2018 2019e 2020e
Sales 106 162 183
COGS -57 -51 -56
Gross profit 49 111 128
Other operating items -124 -109 -106
EBITDA -75 2 21
Depreciation on tangibles 0 0 0
Depreciation on intangibles -108 -22 -16
EBITA -183 -22 3
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -183 -22 3
Other financial items 0 0 0
Net financial items -10 -2 -2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -192 -24 1
Tax 13 0 0
Net profit -179 -24 1
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -179 -24 1
EPS 0 -0,28 0,01
EPS Adj 0 -0,28 0,01
Total extraordinary items after tax -16 0 0
Tax rate (%) -6,7 -2 -22
Gross margin (%) 46,2 68,5 69,5
EBITDA margin (%) -70,6 1,5 11,5
EBITA margin (%) -171,9 -13,7 1,5
EBIT margin (%) -171,9 -13,7 1,5
Pretax margin (%) -181 -14,9 0,5
Net margin (%) -168,9 -14,6 0,4
Growth rates Y/Y 2018 2019 2020
Sales growth (%) -48,5 53 12,9
EBITDA growth (%) -639,9 103,2 771,4
EBIT growth (%) -664,7 87,8 112,4
Net profit growth (%) -633,9 86,8 103,2
EPS growth (%) N/A 0 103,2
Profitability 2018 2019 2020
ROE (%) -164,6 -47,4 1,2
ROE Adj (%) -149,9 -47,4 1,2
ROCE (%) -122,6 -23,1 2,8
ROCE Adj(%) -109,2 -23,1 2,8
ROIC (%) -127,8 -24 2,1
ROIC Adj (%) -113,8 -24 2,1
Adj earnings numbers 2018 2019 2020
EBITDA Adj -55 2 21
EBITDA Adj margin (%) -51,8 1,5 11,5
EBITA Adj -163 -22 3
EBITA Adj margin (%) -153,1 -13,7 1,5
EBIT Adj -163 -22 3
EBIT Adj margin (%) -153,1 -13,7 1,5
Pretax profit Adj -172 -24 1
Net profit Adj -163 -24 1
Net profit to shareholders Adj -163 -24 1
Net Adj margin (%) -153,8 -14,6 0,4
DKKm 2018 2019e 2020e
EBITDA -75 2 21
Net financial items -10 -2 -2
Paid tax 13 -2 0
Non-cash items 0 0 0
Cash flow before change in WC -72 -1 19
Change in WC 20 -9 -6
Operating cash flow -48 -8 14
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -35 -13 -18
Acquisitions and disposals 0 0 0
Free cash flow -84 -21 -4
Dividend paid 0 0 0
Share issues and buybacks 0 0 0
Other non cash items 26 43 -1
Decrease in net IB debt -32 14 -7
Balance Sheet (DKKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 43 37 39
Tangible fixed assets 3 2 2
Other fixed assets 2 2 2
Fixed assets 48 55 57
Inventories 17 17 19
Receivables 45 44 50
Other current assets 0 0 0
Cash and liquid assets 17 33 26
Total assets 127 149 153
Shareholders equity 35 65 66
Minority 0 0 0
Total equity 35 65 66
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 13 13
Short-term debt 45 31 31
Accounts payable 25 15 17
Other current liabilities 13 10 10
Total liabilities and equity 262 267 131
Net IB debt 25 11 18
Net IB debt excl. pension debt 25 11 18
Capital invested 83 99 108
Working capital 37 46 53
EV breakdown 2018 2019 2020
Market cap. diluted (m) 77 293 293
Net IB debt Adj 25 11 18
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 102 304 311
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 54 117,8 121,8
Capital invested turnover (%) 79,6 178,8 177,6
Capital employed turnover (%) 71,3 170,5 164,4
Inventories / sales (%) 25,3 10,6 9,9
Customer advances / sales (%) 0 0 0
Payables / sales (%) 30,5 12,1 8,5
Working capital / sales (%) 44,6 25,7 26,9
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 72,4 16,5 26,8
Net debt / market cap (%) 8,8 3,7 6
Equity ratio (%) 27,3 43,8 43,3
Net IB debt adj. / equity (%) 72,4 16,5 26,8
Current ratio (%) 96 152,3 148,4
EBITDA / net interest (%) -782,9 129,4 1171,8
Net IB debt / EBITDA (%) -33,5 442,6 83,9
Interest cover (%) -1906,1 -1025,3 145
DKKm 2018 2019e 2020e
Shares outstanding adj. 40 83 83
Fully diluted shares Adj 40 83 83
EPS 0 -0,28 0,01
Dividend per share Adj 0 0 0
EPS Adj 0 -0,28 0,01
BVPS 0,88 0,78 0,8
BVPS Adj -0,21 0,34 0,33
Net IB debt / share 0,6 0,1 0,2
Share price 7,24 3,53 3,53
Market cap. (m) 287 293 293
Valuation 2018 2019 2020
P/E N/A -12,4 388,6
EV/sales 0,96 1,87 1,7
EV/EBITDA -1,4 125,5 14,7
EV/EBITA -0,6 -13,7 112,3
EV/EBIT -0,6 -13,7 112,3
Dividend yield (%) 0 0 0
FCF yield (%) 0 -7,2 -1,4
P/BVPS 2,23 4,5 4,44
P/BVPS Adj -9,4 10,39 10,81
P/E Adj N/A -12,4 388,6
EV/EBITDA Adj -1,9 125,5 14,7
EV/EBITA Adj -0,6 -13,7 112,3
EV/EBIT Adj -0,6 -13,7 112,3
EV/cap. employed 1,3 2,7 2,8
Investment ratios 2018 2019 2020
Capex / sales 33,8 8,2 10
Capex / depreciation 33,4 59,3 112,7
Capex tangibles / tangible fixed assets 18,2 7,3 0
Capex intangibles / definite intangibles 82,5 35,7 47,1
Depreciation on intangibles / definite intangibles 250,5 60,8 41,8
Depreciation on tangibles / tangibles 0 0 0

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Main shareholders - Napatech

Main shareholders Share capital % Voting shares % Verified
Verdane Capital 27.2 % 27.2 % 21 Oct 2019
Sundt AS 14.6 % 14.6 % 21 Oct 2019
Ludvig Lorentzen AS 7.1 % 7.1 % 21 Oct 2019
Tigerstaden AS 4.6 % 4.6 % 13 May 2019
Haakon Sæter 4.1 % 4.1 % 21 Oct 2019
Storebrand Asset Management 3.8 % 3.8 % 30 Sep 2019
MP Pensjon PK 3.4 % 3.4 % 21 Oct 2019
Brownske Bevegelser AS 2.9 % 2.9 % 21 Oct 2019
Nordnet Pensionsförsäkring 1.8 % 1.8 % 21 Oct 2019
Salina Holding AS 1.7 % 1.7 % 21 Oct 2019
Source: Holdings by Modular Finance AB