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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 2020 2021e 2022e
Sales 1164 1184 1301
Sales growth (%) 4,7 1,7 9,9
EBITDA 103 112 127
EBITDA margin (%) 8,9 9,4 9,7
EBIT adj 102 81 96
EBIT adj margin (%) 8,8 6,9 7,4
Pretax profit 127 68 83
EPS rep 2,33 1,2 1,45
EPS growth (%) 223,8 -48,6 21,3
EPS adj 2,59 1,36 1,61
DPS 0,65 0,8 0,9
EV/EBITDA (x) 16,3 14,9 13
EV/EBIT adj (x) 16,5 20,5 17,2
P/E (x) 16 31,1 25,6
P/E adj (x) 14,3 27,4 23,1
EV/sales (x) 1,5 1,4 1,3
FCF yield (%) 4 3,1 3,3
Dividend yield (%) 1,7 2,2 2,4
Net IB debt/EBITDA 0,4 0,1 0
Lease adj. FCF yield (%) 4 3,1 3,3
Lease adj. ND/EBITDA 0,3 0,1 0
NOKm 2020 2021e 2022e
Sales 1164 1184 1301
COGS -615 -629 -691
Gross profit 549 555 610
Other operating items -445 -443 -484
EBITDA 103 112 127
Depreciation on tangibles -36 -30 -31
Depreciation on intangibles 0 0 0
EBITA 97 81 96
Goodwill impairment charges 0 0 0
Other impairment and amortisation -10 -9 -9
EBIT 88 72 87
Other financial items 43 0 0
Net financial items 39 -4 -4
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 127 68 83
Tax -23 -15 -18
Net profit 103 53 64
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 103 53 64
EPS 2,33 1,2 1,45
EPS Adj 2,59 1,36 1,61
Total extraordinary items after tax -14,5 -9,1 -9,1
Tax rate (%) -18,4 -22 -22
Gross margin (%) 47,1 46,9 46,9
EBITDA margin (%) 8,9 9,4 9,7
EBITA margin (%) 8,4 6,9 7,4
EBIT margin (%) 7,6 6,1 6,7
Pretax margin (%) 10,9 5,7 6,3
Net margin (%) 8,9 4,5 4,9
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 4,7 1,7 9,9
EBITDA growth (%) 5,4 7,9 13,3
EBIT growth (%) 94 -18,1 20,1
Net profit growth (%) 224,5 -48,6 21,3
EPS growth (%) 223,8 -48,6 21,3
Profitability 2020 2021 2022
ROE (%) 32,2 13,6 15,4
ROE Adj (%) 39,6 18,3 19,8
ROCE (%) 28,2 13,5 15,5
ROCE Adj(%) 33,4 17 18,8
ROIC (%) 18,1 13,3 15,8
ROIC Adj (%) 21,1 15 17,4
Adj earnings numbers 2020 2021 2022
EBITDA Adj 118 121 136
EBITDA Adj margin (%) 10,1 10,2 10,4
EBITA Adj 112 90 105
EBITA Adj margin (%) 9,6 7,6 8,1
EBIT Adj 102 81 96
EBIT Adj margin (%) 8,8 6,9 7,4
Pretax profit Adj 151 86 101
Net profit Adj 127 71 83
Net profit to shareholders Adj 127 71 83
Net Adj margin (%) 10,9 6 6,3
Depreciation and amortisation -36 -30 -31
Of which leasing depreciation 0 0 0
EO items -15 -9 -9
Impairment and PPA amortisation -10 -9 -9
EBITDA lease Adj 118 121 136
EBITDA lease Adj margin (%) 10,1 10,2 10,4
Leasing payments 0 0 0
NOKm 2020 2021e 2022e
EBITDA 103 112 127
Net financial items 39 -4 -4
Paid tax -23 -15 -18
Non-cash items 0 0 0
Cash flow before change in WC 119 93 104
Change in WC -104 -27 -34
Operating cash flow 15 65 70
CAPEX tangible fixed assets -13 -14 -16
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 65 0 0
Free cash flow 66 51 54
Dividend paid -27 -29 -36
Share issues and buybacks 1 0 0
Other non cash items 27 0 0
Decrease in net IB debt 64 22 19
Balance Sheet (NOKm) 2020 2021 2022
Goodwill 153 153 153
Indefinite intangible assets 43 34 24
Definite intangible assets 0 0 0
Tangible fixed assets 93 94 97
Other fixed assets 2 2 2
Fixed assets 290 282 276
Inventories 166 184 199
Receivables 261 260 270
Other current assets 36 38 41
Cash and liquid assets 103 125 144
Total assets 856 889 931
Shareholders equity 378 403 432
Minority 0 0 0
Total equity 378 403 432
Long-term debt 91 91 91
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 5 5 5
Short-term debt 50 50 50
Accounts payable 126 135 148
Other current liabilities 205 205 205
Total liabilities and equity 856 889 931
Net IB debt 39 16 -3
Net IB debt excl. pension debt 39 16 -3
Capital invested 422 423 433
Working capital 132 141 157
EV breakdown 2020 2021 2022
Market cap. diluted (m) 1651 1651 1651
Net IB debt Adj 39 16 -3
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 1689 1667 1648
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 150,5 135,7 143
Capital invested turnover (%) 293,8 280,2 303,8
Capital employed turnover (%) 251,3 222,5 233
Inventories / sales (%) 13,1 14,8 14,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,5 11 10,9
Working capital / sales (%) 8,5 11,5 11,5
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 10,2 4 -0,6
Net debt / market cap (%) 5,8 1 -0,2
Equity ratio (%) 44,2 45,3 46,4
Net IB debt adj. / equity (%) 10,2 4 -0,6
Current ratio (%) 148,4 155,4 162,4
EBITDA / net interest (%) 2645,8 2791 3163,1
Net IB debt / EBITDA (%) 37,3 14,5 -2,1
Interest cover (%) 2493,4 2028,8 2391,5
Lease liability amortisation 0 0 0
Other intangible assets 43 34 24
Right-of-use asset 0 0 0
Total other fixed assets 2 2 2
Leasing liability 0 0 0
Total other long-term liabilities 5 5 5
Net IB debt excl. leasing 39 16 -3
Net IB debt / EBITDA lease Adj (%) 32,7 13,4 -1,9
NOKm 2020 2021e 2022e
Shares outstanding adj. 44 44 44
Fully diluted shares Adj 44 44 44
EPS 2,33 1,2 1,45
Dividend per share Adj 0,7 0,8 0,9
EPS Adj 2,59 1,36 1,61
BVPS 8,53 9,07 9,72
BVPS Adj 5,08 5,63 6,28
Net IB debt / share 0,9 0,4 -0,1
Share price 14,9 37,2 37,2
Market cap. (m) 661 1651 1651
Valuation 2020 2021 2022
P/E 16 31,1 25,6
EV/sales 1,45 1,41 1,27
EV/EBITDA 16,3 14,9 13
EV/EBITA 17,3 20,5 17,2
EV/EBIT 19,2 23,1 19
Dividend yield (%) 1,7 2,2 2,4
FCF yield (%) 4 3,1 3,3
P/BVPS 4,36 4,1 3,83
P/BVPS Adj 7,32 6,61 5,92
P/E Adj 14,3 27,4 23,1
EV/EBITDA Adj 14,3 13,8 12,2
EV/EBITA Adj 15,1 18,5 15,7
EV/EBIT Adj 16,5 20,5 17,2
EV/cap. employed 3,2 3,1 2,9
Investment ratios 2020 2021 2022
Capex / sales 1,1 1,2 1,2
Capex / depreciation 35,8 46,5 50,5
Capex tangibles / tangible fixed assets 13,9 15 16,1
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 38,9 32,4 31,8
Lease adj. FCF yield (%) 4 3,1 3,3

Equity research

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Media

StrongPoint - Company presentation with CEO Jacob Tveraabak
StrongPoint - Company presentation with CEO Jacob Tveraabak (in English)

Main Shareholders - Strongpoint

Main shareholders Share capital % Voting shares % Verified
Strømstangen AS 8.9 % 8.9 % 19 Apr 2021
Holmen Fondsforvaltning AS 6.8 % 6.8 % 19 Apr 2021
Canaccord Genuity Wealth Management 4.5 % 4.5 % 31 Dec 2020
Sole Active AS 4.1 % 4.1 % 19 Apr 2021
V. Eiendom Holding AS 4.1 % 4.1 % 19 Apr 2021
Avanza Pension 3.6 % 3.6 % 31 May 2020
Georg Zetterberg 3.6 % 3.6 % 31 May 2020
Nordnet Pensionsförsäkring 3.5 % 3.5 % 31 Dec 2019
DNB Fonder 3.2 % 3.2 % 12 Apr 2021
Verdadero AS 2.6 % 2.6 % 19 Apr 2021
Source: Holdings by Modular Finance AB