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StrongPoint

Retail technology solutions

StrongPoint is a retail technology company that sells a wide variety of technology solutions that save costs, increase productivity, reduce theft or facilitate e-commerce sales for retailers. Its product portfolio includes electronic shelf labels, cash management systems, self-checkout terminals, click & collect lockers and digital e-commerce solutions. In addition, it holds strong positions in security cases for cash-in-transit and in adhesive labels. The company has strong positions in Norway, Sweden and the Baltics and is targeting to grow significantly in Spain.

The retail technology market is growing healthily, driven by e-commerce and a tough competitive landscape, forcing retailers to adopt new technology solutions to remain competitive. For StrongPoint, this creates a double opportunity: 1) StrongPoint delivers technology solutions that help retailers improve efficiency, and 2) StrongPoint sells e-commerce solutions to physical retailers that have their own online offerings. StrongPoint has a solid potential for future growth in Spain, which is a large and fragmented market and where the cash share is very high at 87%.

StrongPoint’s earnings are to some degree dependent on large product orders. If StrongPoint is unable to win large contracts from new or existing customers, it could pose a risk to its future sales and earnings growth. The Nordic grocery retail market is highly concentrated and several of these large chains are StrongPoint customers. Losing one of these customers could result in a significant loss of repeat business for StrongPoint. As there are some competing products, StrongPoint could be exposed to price pressure from new or existing competitors. Other risk factors include FX, macroeconomy, warranty issues and regulatory risks.

Financials

NOKm 2018 2019e 2020e
Sales 1068 1108 1210
Sales growth (%) 12,2 3,7 9,3
EBITDA 67 92 109
EBITDA margin (%) 6,3 8,3 9
EBIT adj 49 54 70
EBIT adj margin (%) 4,6 4,9 5,8
Pretax profit 26 40 50
EPS rep 0,3 0,71 0,9
EPS growth (%) 34 133,6 26,6
EPS adj 0,8 0,98 1,17
DPS 0,55 0,65 0,8
EV/EBITDA (x) 6,7 6,5 5,3
EV/EBIT adj (x) 9,2 11,1 8,2
P/E (x) 29,3 15,9 12,6
P/E adj (x) 11,1 11,6 9,7
EV/sales (x) 0,4 0,5 0,5
FCF yield (%) 6,3 6,6 7
Dividend yield (%) 6,2 5,8 7,1
Net IB debt/EBITDA 0,8 1,1 0,7
NOKm 2018 2019e 2020e
Sales 1068 1108 1210
COGS -535 -577 -631
Gross profit 533 530 579
Other operating items -466 -438 -471
EBITDA 67 92 109
Depreciation on tangibles -19 -38 -39
Depreciation on intangibles 0 0 0
EBITA 49 54 70
Goodwill impairment charges 0 0 0
Other impairment and amortisation -19 -15 -15
EBIT 30 39 54
Other financial items -1 4 0
Net financial items -4 1 -4
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 26 40 50
Tax -13 -8 -11
Net profit 13 31 40
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 13 31 40
EPS 0,3 0,71 0,9
EPS Adj 0,8 0,98 1,17
Total extraordinary items after tax -19,1 -14,9 -15,2
Tax rate (%) -48,3 -21 -21
Gross margin (%) 49,9 47,9 47,9
EBITDA margin (%) 6,3 8,3 9
EBITA margin (%) 4,6 4,9 5,8
EBIT margin (%) 2,8 3,5 4,5
Pretax margin (%) 2,4 3,6 4,2
Net margin (%) 1,3 2,8 3,3
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 12,2 3,7 9,3
EBITDA growth (%) 28,6 37,1 17,4
EBIT growth (%) 50,1 31,4 38,8
Net profit growth (%) 34 133,6 26,9
EPS growth (%) 34 133,6 26,6
Profitability 2018 2019 2020
ROE (%) 4,9 12 15,2
ROE Adj (%) 18,9 23,4 26,7
ROCE (%) 8,1 11,5 13,3
ROCE Adj(%) 18,7 19,3 20,8
ROIC (%) 3 5,9 8,4
ROIC Adj (%) 4,8 8,2 10,8
Adj earnings numbers 2018 2019 2020
EBITDA Adj 87 107 124
EBITDA Adj margin (%) 8,1 9,7 10,2
EBITA Adj 68 69 85
EBITA Adj margin (%) 6,4 6,2 7
EBIT Adj 49 54 70
EBIT Adj margin (%) 4,6 4,9 5,8
Pretax profit Adj 64 70 81
Net profit Adj 52 61 70
Net profit to shareholders Adj 52 61 70
Net Adj margin (%) 4,8 5,5 5,8
NOKm 2018 2019e 2020e
EBITDA 67 92 109
Net financial items -4 1 -4
Paid tax -13 -8 -11
Non-cash items 0 0 0
Cash flow before change in WC 51 85 94
Change in WC -48 20 -12
Operating cash flow 18 51 53
CAPEX tangible fixed assets -11 -18 -18
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 18 0 0
Free cash flow 25 33 35
Dividend paid -22 -24 -29
Share issues and buybacks 0 -1 0
Other non cash items -5 -22 22
Decrease in net IB debt -3 -45 28
Balance Sheet (NOKm) 2018 2019 2020
Goodwill 141 135 135
Indefinite intangible assets 60 45 29
Definite intangible assets 0 0 0
Tangible fixed assets 58 107 86
Other fixed assets 14 8 8
Fixed assets 274 295 259
Inventories 128 120 121
Receivables 200 210 244
Other current assets 26 32 39
Cash and liquid assets 27 57 63
Total assets 655 714 727
Shareholders equity 265 257 268
Minority 0 0 0
Total equity 265 257 268
Long-term debt 50 82 60
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 21 9 9
Short-term debt 32 74 74
Accounts payable 81 104 127
Other current liabilities 207 188 188
Total liabilities and equity 659 696 655
Net IB debt 55 99 72
Net IB debt excl. pension debt 55 99 72
Capital invested 521 522 497
Working capital 247 226 239
EV breakdown 2018 2019 2020
Market cap. diluted (m) 395 501 501
Net IB debt Adj 55 99 72
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 450 601 573
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 158 161,7 168
Capital invested turnover (%) 204,5 212,4 237,5
Capital employed turnover (%) 296,3 291,3 296,3
Inventories / sales (%) 12,1 11,2 10
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,2 8,3 9,5
Working capital / sales (%) 20,9 21,4 19,2
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 20,6 38,6 26,6
Net debt / market cap (%) 12,8 19,8 14,3
Equity ratio (%) 40,5 36 37
Net IB debt adj. / equity (%) 20,6 38,6 26,6
Current ratio (%) 119,2 114,6 120,4
EBITDA / net interest (%) 2155,9 2434,6 2713,1
Net IB debt / EBITDA (%) 80,9 107,6 65,9
Interest cover (%) 1563,6 1425,8 1741,2
NOKm 2018 2019e 2020e
Shares outstanding adj. 44 44 44
Fully diluted shares Adj 44 44 44
EPS 0,3 0,71 0,9
Dividend per share Adj 0,6 0,7 0,8
EPS Adj 0,8 0,98 1,17
BVPS 5,97 5,8 6,05
BVPS Adj 2,79 2,75 3
Net IB debt / share 1,2 2,2 1,6
Share price 9,62 11,3 11,3
Market cap. (m) 427 501 501
Valuation 2018 2019 2020
P/E 29,3 15,9 12,6
EV/sales 0,42 0,54 0,47
EV/EBITDA 6,7 6,5 5,3
EV/EBITA 9,2 11,1 8,2
EV/EBIT 15,1 15,3 10,5
Dividend yield (%) 6,2 5,8 7,1
FCF yield (%) 6,3 6,6 7
P/BVPS 1,49 1,95 1,87
P/BVPS Adj 3,19 4,11 3,77
P/E Adj 11,1 11,6 9,7
EV/EBITDA Adj 5,2 5,6 4,6
EV/EBITA Adj 6,6 8,7 6,8
EV/EBIT Adj 9,2 11,1 8,2
EV/cap. employed 1,3 1,5 1,4
Investment ratios 2018 2019 2020
Capex / sales 1 1,6 1,5
Capex / depreciation 59,7 46,4 45,7
Capex tangibles / tangible fixed assets 19,1 16,6 20,6
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 31,9 35,8 45,2

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Media

StrongPoint - Company presentation with CEO Jacob Tveraabak

Main Shareholders - Strongpoint

Main shareholders Share capital % Voting shares % Verified
Strømstangen AS 8.9 % 8.9 % 30 Sep 2019
Holmen Fondsforvaltning AS 8.2 % 8.2 % 30 Sep 2019
Avanza Pension 6.0 % 6.0 % 30 Sep 2019
Canaccord Genuity Wealth Management 4.5 % 4.5 % 30 Sep 2019
Probitas Holding AS 4.0 % 4.0 % 30 Sep 2019
V. Eiendom Holding AS 3.9 % 3.9 % 30 Sep 2019
Georg Zetterberg 3.7 % 3.7 % 30 Sep 2019
Nordnet Pensionsförsäkring 3.4 % 3.4 % 30 Sep 2019
Nordnet Livsforsikring AS 2.9 % 2.9 % 30 Sep 2019
Verdadero AS 2.5 % 2.5 % 30 Sep 2019
Source: Holdings by Modular Finance AB