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Swedencare

Swedencare

Premium animal health products

Swedencare is a high-growth animal health company that develops, promotes and sells OTC premium products within animal dental care. The company's main product, ProDen PlaqueOff, is proprietary, patented until 2021-2028 and sold in more than 50 countries. It reduces the amount of plaque, tartar as well as problems with bleeding gums and the target group is cats and dogs. Following acquisitions of its three largest distribution/sales partners in 2016, Swedencare has around 85% of its sales via direct sales and the remaining from external distributors.

Margin expansion from selling high margin ”PlaqueOff Powder ingredient” to food producers. Growth potential from continued launch of new products and/or products on new markets. We view China, Russia and Brazil as interesting growth markets. The net cash position and solid cash generation also leave room for more M&A and/or future dividends.

Strong dependency on the PlaqueOff formula, for which the patent runs out in 2021 in most markets. Increased competition from larger animal health care companies entering Swedencare’s niche in the animal dental care market. With a poor M&A track record, there are risks for acquisition integration issues and inflated acquisition multiples if Swedencare decides to embark on the M&A path. New product and market launches involve risk and Swedencare has a high release tempo.

SEKm 2019 2020e 2021e
Sales 127 191 290
Sales growth (%) 27,7 50,4 52,1
EBITDA 40 54 82
EBITDA margin (%) 31,6 28,2 28,4
EBIT adj 37 51 77
EBIT adj margin (%) 29,1 26,6 26,4
Pretax profit 37 49 75
EPS rep 1,9 2,35 3,48
EPS growth (%) 28,3 23,8 48,3
EPS adj 1,9 2,44 3,48
DPS 0,7 0,7 0,75
EV/EBITDA (x) 35,4 67,9 45,4
EV/EBIT adj (x) 38,4 72 48,8
P/E (x) 48,8 94,5 63,7
P/E adj (x) 48,8 91,1 63,7
EV/sales (x) 11,2 19,1 12,9
FCF yield (%) 1,9 -3,7 1,3
Dividend yield (%) 0,8 0,3 0,3
Net IB debt/EBITDA -1,1 -1,3 -1,3
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 127 191 290
COGS -34 -57 -103
Gross profit 93 134 187
Other operating items -53 -80 -104
EBITDA 40 54 82
Depreciation on tangibles -2 -2 -3
Depreciation on intangibles 0 0 0
EBITA 37 49 77
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 37 49 77
Other financial items 0 0 0
Net financial items 0 -1 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 37 49 75
Tax -7 -9 -15
Net profit 30 39 60
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 30 39 60
EPS 1,9 2,35 3,48
EPS Adj 1,9 2,44 3,48
Total extraordinary items after tax 0 -1,5 0
Tax rate (%) -18,5 -18,9 -20
Gross margin (%) 73,3 70,1 64,4
EBITDA margin (%) 31,6 28,2 28,4
EBITA margin (%) 29,1 25,8 26,4
EBIT margin (%) 29,1 25,8 26,4
Pretax margin (%) 28,9 25,5 26
Net margin (%) 23,6 20,7 20,8
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 27,7 50,4 52,1
EBITDA growth (%) 31,2 34,2 53,2
EBIT growth (%) 25,4 33,3 55,6
Net profit growth (%) 28,3 31,8 53
EPS growth (%) 28,3 23,8 48,3
Profitability 2019 2020 2021
ROE (%) 26,1 18,8 19,3
ROE Adj (%) 26,1 19,5 19,3
ROCE (%) 30,5 23,2 24,4
ROCE Adj(%) 30,5 23,9 24,4
ROIC (%) 35,9 22,5 22,3
ROIC Adj (%) 35,9 23,2 22,3
Adj earnings numbers 2019 2020 2021
EBITDA Adj 40 55 82
EBITDA Adj margin (%) 31,6 29 28,4
EBITA Adj 37 51 77
EBITA Adj margin (%) 29,1 26,6 26,4
EBIT Adj 37 51 77
EBIT Adj margin (%) 29,1 26,6 26,4
Pretax profit Adj 37 50 75
Net profit Adj 30 41 60
Net profit to shareholders Adj 30 41 60
Net Adj margin (%) 23,6 21,4 20,8
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 40 54 82
Net financial items 0 -1 -1
Paid tax -7 -9 -15
Non-cash items 0 0 0
Cash flow before change in WC 33 44 66
Change in WC 0 -19 -15
Operating cash flow 33 24 51
CAPEX tangible fixed assets -5 -2 -3
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 -159 0
Free cash flow 28 -137 48
Dividend paid 0 -11 -12
Share issues and buybacks 0 129 0
Other non cash items -5 46 -7
Decrease in net IB debt 23 29 33
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 49 129 129
Indefinite intangible assets 3 3 3
Definite intangible assets 0 0 0
Tangible fixed assets 12 91 92
Other fixed assets 1 1 1
Fixed assets 69 228 228
Inventories 15 25 35
Receivables 17 32 44
Other current assets 2 3 6
Cash and liquid assets 46 74 107
Total assets 149 362 419
Shareholders equity 131 288 336
Minority 0 0 0
Total equity 131 288 336
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 1 1
Short-term debt 0 0 0
Accounts payable 5 7 9
Other current liabilities 9 13 20
Total liabilities and equity 149 311 368
Net IB debt -43 -72 -106
Net IB debt excl. pension debt -43 -72 -106
Capital invested 88 267 282
Working capital 20 40 55
EV breakdown 2019 2020 2021
Market cap. diluted (m) 1460 3725 3841
Net IB debt Adj -43 -72 -106
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 1417 3652 3735
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 94,9 74,6 74,3
Capital invested turnover (%) 151,4 107,6 105,8
Capital employed turnover (%) 104,8 89,8 92,3
Inventories / sales (%) 9,9 10,5 10,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 3,4 3,2 2,6
Working capital / sales (%) 14,8 15,8 16,4
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -33 -25,2 -31,5
Net debt / market cap (%) -4,1 -1,9 -2,7
Equity ratio (%) 87,9 79,5 80,1
Net IB debt adj. / equity (%) -33 -25,2 -31,5
Current ratio (%) 498,8 622,4 625,5
EBITDA / net interest (%) 17889,7 8798,6 6862,9
Net IB debt / EBITDA (%) -108 -134,8 -128,2
Interest cover (%) 16479,9 8056 6380,4
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 16 17 17
Fully diluted shares Adj 16 17 17
EPS 1,9 2,35 3,48
Dividend per share Adj 0,7 0,7 0,8
EPS Adj 1,9 2,44 3,48
BVPS 8,33 17,14 19,41
BVPS Adj 5,21 9,46 11,96
Net IB debt / share -2,7 -4,3 -6,1
Share price 66,77 222 222
Market cap. (m) 1053 3725 3841
Valuation 2019 2020 2021
P/E 48,8 94,5 63,7
EV/sales 11,17 19,15 12,87
EV/EBITDA 35,4 67,9 45,4
EV/EBITA 38,4 74,2 48,8
EV/EBIT 38,4 74,2 48,8
Dividend yield (%) 0,8 0,3 0,3
FCF yield (%) 1,9 -3,7 1,3
P/BVPS 11,12 12,95 11,44
P/BVPS Adj 17,77 23,46 18,56
P/E Adj 48,8 91,1 63,7
EV/EBITDA Adj 35,4 66,1 45,4
EV/EBITA Adj 38,4 72 48,8
EV/EBIT Adj 38,4 72 48,8
EV/cap. employed 10,5 12,6 11
Investment ratios 2019 2020 2021
Capex / sales 4 1,1 1
Capex / depreciation 316,6 96,8 104
Capex tangibles / tangible fixed assets 42,2 2,3 3,2
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 13,3 2,4 3
N/A N/A N/A

Equity research

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Media

Swedencare - Company presentation with CEO Håkan Lagerberg
Swedencare - Interview with CEO Håkan Lagerberg

Main shareholders - Swedencare

Main shareholders Share capital % Voting shares % Verified
Håkan Svanberg 26.8 % 26.8 % 31 Aug 2020
JCC Group Invest Sweden AB (Johan Bergdahl) 8.8 % 8.8 % 31 Aug 2020
DNCA Finance S.A 7.4 % 7.4 % 31 Aug 2020
Mastan AB (Håkan Lagerberg) 7.0 % 7.0 % 30 Jun 2020
AMF Försäkring & Fonder 4.8 % 4.8 % 31 Aug 2020
SEB Fonder 3.8 % 3.8 % 31 Aug 2020
Aktia Asset Management 3.6 % 3.6 % 30 Jun 2020
Handelsbanken Fonder 3.4 % 3.4 % 31 Aug 2020
Matthew Shaw 3.0 % 3.0 % 25 Sep 2020
Pie Funds Management Ltd 2.1 % 2.1 % 30 Jun 2020
Source: Holdings by Modular Finance AB

Insider list - Swedencare

Name Quantity Code Date
Håkan Svanberg +1 500 000 Received loan 24 Jul 2020
Håkan Svanberg -1 500 000 Received loan 23 Jun 2020
Håkan Svanberg + 5 000 BUY 25 Mar 2020
Håkan Svanberg + 1 945 BUY 18 Mar 2020
Håkan Svanberg + 2 054 BUY 18 Mar 2020
JCC Group Invest Sweden AB + 5 000 BUY 29 Nov 2019
Jenny Graflind - 5 000 SELL 29 Nov 2019
JCC Group Invest Sweden AB - 40 000 SELL 29 Nov 2019
Håkan Svanberg - 40 000 SELL 22 Nov 2019
Håkan Svanberg + 16 282 BUY 22 Nov 2019

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