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StrongPoint

StrongPoint

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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 2019 2020e 2021e
Sales 1108 1210 1280
Sales growth (%) 3,7 9,3 5,8
EBITDA 92 109 119
EBITDA margin (%) 8,3 9 9,3
EBIT adj 54 70 80
EBIT adj margin (%) 4,9 5,8 6,3
Pretax profit 40 50 61
EPS rep 0,71 0,9 1,09
EPS growth (%) 133,6 26,6 21
EPS adj 0,98 1,17 1,36
DPS 0,65 0,8 0,95
EV/EBITDA (x) 6,5 5,3 4,5
EV/EBIT adj (x) 11,1 8,3 6,7
P/E (x) 16 12,6 10,4
P/E adj (x) 11,6 9,7 8,4
EV/sales (x) 0,5 0,5 0,4
FCF yield (%) 6,6 7 9,5
Dividend yield (%) 5,7 7 8,4
Net IB debt/EBITDA 1,1 0,7 0,3
NOKm 2019 2020e 2021e
Sales 1108 1210 1280
COGS -577 -631 -667
Gross profit 530 579 613
Other operating items -438 -471 -494
EBITDA 92 109 119
Depreciation on tangibles -38 -39 -39
Depreciation on intangibles 0 0 0
EBITA 54 70 80
Goodwill impairment charges 0 0 0
Other impairment and amortisation -15 -15 -15
EBIT 39 54 65
Other financial items 4 0 0
Net financial items 1 -4 -4
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 40 50 61
Tax -8 -11 -13
Net profit 31 40 48
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 31 40 48
EPS 0,71 0,9 1,09
EPS Adj 0,98 1,17 1,36
Total extraordinary items after tax -14,9 -15,2 -15,2
Tax rate (%) -21 -21 -21
Gross margin (%) 47,9 47,9 47,9
EBITDA margin (%) 8,3 9 9,3
EBITA margin (%) 4,9 5,8 6,3
EBIT margin (%) 3,5 4,5 5,1
Pretax margin (%) 3,6 4,2 4,8
Net margin (%) 2,8 3,3 3,8
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 3,7 9,3 5,8
EBITDA growth (%) 37,1 17,4 9,8
EBIT growth (%) 31,4 38,8 19,5
Net profit growth (%) 133,6 26,9 21
EPS growth (%) 133,6 26,6 21
Profitability 2019 2020 2021
ROE (%) 12 15,2 17,6
ROE Adj (%) 23,4 26,7 28,6
ROCE (%) 11,5 13,3 16,3
ROCE Adj(%) 19,3 20,8 23,9
ROIC (%) 5,9 8,4 10,6
ROIC Adj (%) 8,2 10,8 13,1
Adj earnings numbers 2019 2020 2021
EBITDA Adj 107 124 134
EBITDA Adj margin (%) 9,7 10,2 10,5
EBITA Adj 69 85 95
EBITA Adj margin (%) 6,2 7 7,5
EBIT Adj 54 70 80
EBIT Adj margin (%) 4,9 5,8 6,3
Pretax profit Adj 70 81 91
Net profit Adj 61 70 79
Net profit to shareholders Adj 61 70 79
Net Adj margin (%) 5,5 5,8 6,1
NOKm 2019 2020e 2021e
EBITDA 92 109 119
Net financial items 1 -4 -4
Paid tax -8 -11 -13
Non-cash items 0 0 0
Cash flow before change in WC 85 94 102
Change in WC 20 -12 -13
Operating cash flow 51 53 66
CAPEX tangible fixed assets -18 -18 -18
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 33 35 48
Dividend paid -24 -29 -36
Share issues and buybacks -1 0 0
Other non cash items -22 22 22
Decrease in net IB debt -45 28 34
Balance Sheet (NOKm) 2019 2020 2021
Goodwill 135 135 135
Indefinite intangible assets 45 29 14
Definite intangible assets 0 0 0
Tangible fixed assets 107 86 65
Other fixed assets 8 8 8
Fixed assets 295 259 223
Inventories 120 121 127
Receivables 210 244 258
Other current assets 32 39 42
Cash and liquid assets 57 63 76
Total assets 714 727 725
Shareholders equity 257 268 281
Minority 0 0 0
Total equity 257 268 281
Long-term debt 82 60 39
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 9 9 9
Short-term debt 74 74 74
Accounts payable 104 127 134
Other current liabilities 188 188 188
Total liabilities and equity 696 655 714
Net IB debt 99 72 37
Net IB debt excl. pension debt 99 72 37
Capital invested 522 497 474
Working capital 226 239 251
EV breakdown 2019 2020 2021
Market cap. diluted (m) 504 504 504
Net IB debt Adj 99 72 37
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 603 575 541
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 161,7 168 176,4
Capital invested turnover (%) 212,4 237,5 263,6
Capital employed turnover (%) 291,3 296,3 321,1
Inventories / sales (%) 11,2 10 9,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,3 9,5 10,2
Working capital / sales (%) 21,4 19,2 19,1
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 38,6 26,6 13,3
Net debt / market cap (%) 21,6 14,2 7,4
Equity ratio (%) 36 37 38,8
Net IB debt adj. / equity (%) 38,6 26,6 13,3
Current ratio (%) 114,6 120,4 126,9
EBITDA / net interest (%) 2434,6 2713,1 2978,6
Net IB debt / EBITDA (%) 107,6 65,9 31,3
Interest cover (%) 1425,8 1741,2 2006,7
NOKm 2019 2020e 2021e
Shares outstanding adj. 44 44 44
Fully diluted shares Adj 44 44 44
EPS 0,71 0,9 1,09
Dividend per share Adj 0,7 0,8 0,9
EPS Adj 0,98 1,17 1,36
BVPS 5,8 6,05 6,34
BVPS Adj 2,75 3 3,29
Net IB debt / share 2,2 1,6 0,8
Share price 10,38 11,35 11,35
Market cap. (m) 460 504 504
Valuation 2019 2020 2021
P/E 16 12,6 10,4
EV/sales 0,54 0,48 0,42
EV/EBITDA 6,5 5,3 4,5
EV/EBITA 11,1 8,3 6,7
EV/EBIT 15,4 10,6 8,3
Dividend yield (%) 5,7 7 8,4
FCF yield (%) 6,6 7 9,5
P/BVPS 1,96 1,88 1,79
P/BVPS Adj 4,13 3,79 3,45
P/E Adj 11,6 9,7 8,4
EV/EBITDA Adj 5,6 4,6 4
EV/EBITA Adj 8,7 6,8 5,7
EV/EBIT Adj 11,1 8,3 6,7
EV/cap. employed 1,5 1,4 1,4
Investment ratios 2019 2020 2021
Capex / sales 1,6 1,5 1,4
Capex / depreciation 46,4 45,7 45,7
Capex tangibles / tangible fixed assets 16,6 20,6 27,4
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 35,8 45,2 59,9

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Media

StrongPoint - Company presentation with CEO Jacob Tveraabak

Main Shareholders - Strongpoint

Main shareholders Share capital % Voting shares % Verified
Holmen Fondsforvaltning AS 9.0 % 9.0 % 30 Nov 2019
Strømstangen AS 8.9 % 8.9 % 30 Nov 2019
Avanza Pension 6.1 % 6.1 % 30 Nov 2019
Canaccord Genuity Wealth Management 4.5 % 4.5 % 30 Nov 2019
Probitas Holding AS 4.0 % 4.0 % 30 Nov 2019
V. Eiendom Holding AS 4.0 % 4.0 % 30 Nov 2019
Georg Zetterberg 3.7 % 3.7 % 30 Nov 2019
Nordnet Pensionsförsäkring 3.6 % 3.6 % 30 Nov 2019
Nordnet Livsforsikring AS 2.8 % 2.8 % 30 Nov 2019
Verdadero AS 2.5 % 2.5 % 30 Nov 2019
Source: Holdings by Modular Finance AB