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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 1112 1220 1313
Sales growth (%) 4,1 9,7 7,6
EBITDA 98 112 124
EBITDA margin (%) 8,8 9,1 9,4
EBIT adj 59 70 82
EBIT adj margin (%) 5,3 5,8 6,2
Pretax profit 43 55 67
EPS rep 0,72 0,96 1,16
EPS growth (%) 136,7 33,3 20,9
EPS adj 1,01 1,15 1,35
DPS 0,6 0,7 0,85
EV/EBITDA (x) 6,5 4,8 4,3
EV/EBIT adj (x) 10,8 7,6 6,4
P/E (x) 16,7 10,5 8,7
P/E adj (x) 11,8 8,8 7,5
EV/sales (x) 0,6 0,4 0,4
FCF yield (%) 7,5 9,1 9,1
Dividend yield (%) 5 6,9 8,4
Net IB debt/EBITDA 1 0,8 0,6
NOKm 2019 2020e 2021e
Sales 1112 1220 1313
COGS -579 -634 -682
Gross profit 532 586 630
Other operating items -434 -474 -507
EBITDA 98 112 124
Depreciation on tangibles -39 -41 -42
Depreciation on intangibles 0 0 0
EBITA 59 70 82
Goodwill impairment charges 0 0 0
Other impairment and amortisation -14 -11 -11
EBIT 45 59 71
Other financial items 1 0 0
Net financial items -2 -4 -4
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 43 55 67
Tax -11 -13 -15
Net profit 32 43 51
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 32 43 51
EPS 0,72 0,96 1,16
EPS Adj 1,01 1,15 1,35
Total extraordinary items after tax -13,7 -11,2 -11,2
Tax rate (%) -26,1 -23 -23
Gross margin (%) 47,9 48 48
EBITDA margin (%) 8,8 9,1 9,4
EBITA margin (%) 5,3 5,8 6,2
EBIT margin (%) 4,1 4,9 5,4
Pretax margin (%) 3,9 4,5 5,1
Net margin (%) 2,9 3,5 3,9
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 4,1 9,7 7,6
EBITDA growth (%) 45,6 13,6 10,9
EBIT growth (%) 51,8 30,6 19,5
Net profit growth (%) 136,7 33,5 20,9
EPS growth (%) 136,7 33,3 20,9
Profitability 2019 2020 2021
ROE (%) 12 15,6 17,7
ROE Adj (%) 22,4 23,9 25,5
ROCE (%) 12,4 14,3 16,4
ROCE Adj(%) 19,7 19,7 21,6
ROIC (%) 9,4 12,3 14,4
ROIC Adj (%) 12,3 14,6 16,7
Adj earnings numbers 2019 2020 2021
EBITDA Adj 112 123 135
EBITDA Adj margin (%) 10,1 10,1 10,3
EBITA Adj 73 82 93
EBITA Adj margin (%) 6,5 6,7 7,1
EBIT Adj 59 70 82
EBIT Adj margin (%) 5,3 5,8 6,2
Pretax profit Adj 70 78 89
Net profit Adj 59 65 74
Net profit to shareholders Adj 59 65 74
Net Adj margin (%) 5,3 5,3 5,6
NOKm 2019 2020e 2021e
EBITDA 98 112 124
Net financial items -2 -4 -4
Paid tax -11 -13 -15
Non-cash items 0 0 0
Cash flow before change in WC 85 95 104
Change in WC 1 -14 -22
Operating cash flow 55 58 60
CAPEX tangible fixed assets -16 -17 -19
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 1 0 0
Free cash flow 40 41 41
Dividend paid -24 -27 -31
Share issues and buybacks -1 0 0
Other non cash items -49 0 0
Decrease in net IB debt -48 14 10
Balance Sheet (NOKm) 2019 2020 2021
Goodwill 138 138 138
Indefinite intangible assets 47 36 24
Definite intangible assets 0 0 0
Tangible fixed assets 113 112 112
Other fixed assets 7 7 7
Fixed assets 306 293 282
Inventories 138 148 159
Receivables 180 190 204
Other current assets 27 30 33
Cash and liquid assets 39 54 64
Total assets 691 715 741
Shareholders equity 264 280 300
Minority 0 0 0
Total equity 264 280 300
Long-term debt 84 84 84
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 4 4 4
Short-term debt 59 59 59
Accounts payable 71 80 85
Other current liabilities 210 210 210
Total liabilities and equity 691 715 741
Net IB debt 103 89 79
Net IB debt excl. pension debt 103 89 79
Capital invested 371 372 383
Working capital 65 79 101
EV breakdown 2019 2020 2021
Market cap. diluted (m) 533 448 448
Net IB debt Adj 103 89 79
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 635 537 527
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 165,2 173,6 180,2
Capital invested turnover (%) 312,7 328,4 347,6
Capital employed turnover (%) 295,3 294,6 303,7
Inventories / sales (%) 12 11,7 11,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 6,8 6,2 6,3
Working capital / sales (%) 5,9 5,9 6,9
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 39 31,7 26,2
Net debt / market cap (%) 22,3 19,8 17,6
Equity ratio (%) 38,2 39,1 40,5
Net IB debt adj. / equity (%) 39 31,7 26,2
Current ratio (%) 113,5 121,3 129,9
EBITDA / net interest (%) 2759,9 2787,9 3090,5
Net IB debt / EBITDA (%) 104,7 79,5 63,7
Interest cover (%) 1659,8 1760,2 2049,1
NOKm 2019 2020e 2021e
Shares outstanding adj. 44 44 44
Fully diluted shares Adj 44 44 44
EPS 0,72 0,96 1,16
Dividend per share Adj 0,6 0,7 0,8
EPS Adj 1,01 1,15 1,35
BVPS 5,95 6,3 6,76
BVPS Adj 2,84 3,2 3,66
Net IB debt / share 2,3 2 1,8
Share price 10,38 10,1 10,1
Market cap. (m) 460 448 448
Valuation 2019 2020 2021
P/E 16,7 10,5 8,7
EV/sales 0,57 0,44 0,4
EV/EBITDA 6,5 4,8 4,3
EV/EBITA 10,8 7,6 6,4
EV/EBIT 14 9,1 7,4
Dividend yield (%) 5 6,9 8,4
FCF yield (%) 7,5 9,1 9,1
P/BVPS 2,02 1,6 1,49
P/BVPS Adj 4,23 3,16 2,76
P/E Adj 11,8 8,8 7,5
EV/EBITDA Adj 5,7 4,4 3,9
EV/EBITA Adj 8,7 6,6 5,7
EV/EBIT Adj 10,8 7,6 6,4
EV/cap. employed 1,6 1,3 1,2
Investment ratios 2019 2020 2021
Capex / sales 1,4 1,4 1,4
Capex / depreciation 39,7 41,6 45,1
Capex tangibles / tangible fixed assets 13,7 15,2 16,8
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 34,5 36,6 37,1

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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 9.5 % 9.5 % 30 Mar 2020
Strømstangen AS 8.9 % 8.9 % 30 Mar 2020
Avanza Pension 6.1 % 6.1 % 31 Dec 2019
Canaccord Genuity Wealth Management 4.5 % 4.5 % 31 Dec 2019
V. Eiendom Holding AS 4.0 % 4.0 % 30 Mar 2020
Probitas Holding AS 4.0 % 4.0 % 30 Mar 2020
Georg Zetterberg 3.7 % 3.7 % 31 Dec 2019
Nordnet Pensionsförsäkring 3.5 % 3.5 % 31 Dec 2019
Verdadero AS 2.6 % 2.6 % 30 Mar 2020
Sole Active AS 2.4 % 2.4 % 30 Mar 2020
Source: Holdings by Modular Finance AB