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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 1127 1232
Sales growth (%) 12,2 5,5 9,3
EBITDA 67 93 108
EBITDA margin (%) 6,3 8,2 8,8
EBIT adj 49 54 69
EBIT adj margin (%) 4,6 4,8 5,6
Pretax profit 26 39 49
EPS rep 0,3 0,7 0,88
EPS growth (%) 34 129 26,2
EPS adj 0,8 0,98 1,16
DPS 0,55 0,65 0,8
EV/EBITDA (x) 6,7 6,4 5,2
EV/EBIT adj (x) 9,2 11 8,1
P/E (x) 29,3 16 12,7
P/E adj (x) 11,1 11,4 9,6
EV/sales (x) 0,4 0,5 0,5
FCF yield (%) 6,3 7,3 7
Dividend yield (%) 6,2 5,8 7,2
Net IB debt/EBITDA 0,8 1 0,6
NOKm 2018 2019e 2020e
Sales 1068 1127 1232
COGS -535 -586 -641
Gross profit 533 540 591
Other operating items -466 -448 -482
EBITDA 67 93 108
Depreciation on tangibles -19 -39 -39
Depreciation on intangibles 0 0 0
EBITA 49 54 69
Goodwill impairment charges 0 0 0
Other impairment and amortisation -19 -16 -16
EBIT 30 38 53
Other financial items -1 5 0
Net financial items -4 1 -4
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 26 39 49
Tax -13 -8 -10
Net profit 13 31 39
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 13 31 39
EPS 0,3 0,7 0,88
EPS Adj 0,8 0,98 1,16
Total extraordinary items after tax -19,1 -16,2 -16,1
Tax rate (%) -48,3 -20,3 -21
Gross margin (%) 49,9 48 47,9
EBITDA margin (%) 6,3 8,2 8,8
EBITA margin (%) 4,6 4,8 5,6
EBIT margin (%) 2,8 3,3 4,3
Pretax margin (%) 2,4 3,4 4
Net margin (%) 1,3 2,7 3,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 12,2 5,5 9,3
EBITDA growth (%) 28,6 37,2 17,2
EBIT growth (%) 50,1 25,8 41,9
Net profit growth (%) 34 129,2 26,4
EPS growth (%) 34 129 26,2
Profitability 2018 2019 2020
ROE (%) 4,9 11,9 15
ROE Adj (%) 18,9 24,4 27,5
ROCE (%) 8,1 11,8 14,5
ROCE Adj(%) 18,7 20,8 23,3
ROIC (%) 3 5,6 8
ROIC Adj (%) 4,8 8,1 10,4
Adj earnings numbers 2018 2019 2020
EBITDA Adj 87 109 125
EBITDA Adj margin (%) 8,1 9,7 10,1
EBITA Adj 68 70 86
EBITA Adj margin (%) 6,4 6,2 6,9
EBIT Adj 49 54 69
EBIT Adj margin (%) 4,6 4,8 5,6
Pretax profit Adj 64 71 82
Net profit Adj 52 63 71
Net profit to shareholders Adj 52 63 71
Net Adj margin (%) 4,8 5,6 5,8
NOKm 2018 2019e 2020e
EBITDA 67 93 108
Net financial items -4 1 -4
Paid tax -13 -8 -10
Non-cash items 0 0 0
Cash flow before change in WC 51 86 94
Change in WC -48 0 -14
Operating cash flow 18 53 52
CAPEX tangible fixed assets -11 -17 -17
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 18 0 0
Free cash flow 25 36 35
Dividend paid -22 -24 -29
Share issues and buybacks 0 -1 0
Other non cash items -5 -43 22
Decrease in net IB debt -3 -42 27
Balance Sheet (NOKm) 2018 2019 2020
Goodwill 141 134 134
Indefinite intangible assets 60 43 27
Definite intangible assets 0 0 0
Tangible fixed assets 58 107 85
Other fixed assets 14 10 10
Fixed assets 274 294 256
Inventories 128 135 123
Receivables 200 203 251
Other current assets 26 28 34
Cash and liquid assets 27 23 29
Total assets 655 683 693
Shareholders equity 265 254 264
Minority 0 0 0
Total equity 265 254 264
Long-term debt 50 87 65
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 33 33
Accounts payable 81 91 113
Other current liabilities 207 209 209
Total liabilities and equity 659 696 655
Net IB debt 55 96 69
Net IB debt excl. pension debt 55 96 69
Capital invested 521 541 517
Working capital 247 247 262
EV breakdown 2018 2019 2020
Market cap. diluted (m) 395 495 495
Net IB debt Adj 55 96 69
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 450 591 564
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 158 168,3 179
Capital invested turnover (%) 204,5 212,1 232,8
Capital employed turnover (%) 296,3 312,9 335
Inventories / sales (%) 12,1 11,7 10,5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,2 7,7 8,3
Working capital / sales (%) 20,9 21,9 20,6
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 20,6 37,9 26,1
Net debt / market cap (%) 12,8 19,5 13,9
Equity ratio (%) 40,5 37,2 38,1
Net IB debt adj. / equity (%) 20,6 37,9 26,1
Current ratio (%) 119,2 116,9 123,3
EBITDA / net interest (%) 2155,9 2431,4 2711,6
Net IB debt / EBITDA (%) 80,9 104 63,6
Interest cover (%) 1563,6 1412,4 1736
NOKm 2018 2019e 2020e
Shares outstanding adj. 44 44 44
Fully diluted shares Adj 44 44 44
EPS 0,3 0,7 0,88
Dividend per share Adj 0,6 0,7 0,8
EPS Adj 0,8 0,98 1,16
BVPS 5,97 5,72 5,95
BVPS Adj 2,79 2,69 2,92
Net IB debt / share 1,2 2,2 1,6
Share price 9,62 11,15 11,15
Market cap. (m) 427 495 495
Valuation 2018 2019 2020
P/E 29,3 16 12,7
EV/sales 0,42 0,52 0,46
EV/EBITDA 6,7 6,4 5,2
EV/EBITA 9,2 11 8,1
EV/EBIT 15,1 15,7 10,6
Dividend yield (%) 6,2 5,8 7,2
FCF yield (%) 6,3 7,3 7
P/BVPS 1,49 1,95 1,88
P/BVPS Adj 3,19 4,14 3,82
P/E Adj 11,1 11,4 9,6
EV/EBITDA Adj 5,2 5,4 4,5
EV/EBITA Adj 6,6 8,4 6,6
EV/EBIT Adj 9,2 11 8,1
EV/cap. employed 1,3 1,6 1,6
Investment ratios 2018 2019 2020
Capex / sales 1 1,5 1,4
Capex / depreciation 59,7 44,1 43,8
Capex tangibles / tangible fixed assets 19,1 16 20,1
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 36,2 45,8

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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 % 31 Aug 2019
Holmen Fondsforvaltning AS 8.2 % 8.2 % 31 Aug 2019
Avanza Pension 5.9 % 5.9 % 31 Aug 2019
Canaccord Genuity Wealth Management 4.5 % 4.5 % 31 Aug 2019
Probitas Holding AS 4.0 % 4.0 % 31 Aug 2019
V. Eiendom Holding AS 3.9 % 3.9 % 31 Aug 2019
Georg Zetterberg 3.7 % 3.7 % 31 Aug 2019
Nordnet Pensionsförsäkring 3.4 % 3.4 % 31 Aug 2019
Nordnet Livsforsikring AS 3.1 % 3.1 % 31 Aug 2019
Verdadero AS 2.5 % 2.5 % 31 Aug 2019
Source: Holdings by Modular Finance AB