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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 127 173 206
Sales growth (%) 27,9 36,1 19,4
EBITDA 40 52 60
EBITDA margin (%) 31,2 30,1 29
EBIT adj 37 48 56
EBIT adj margin (%) 29,1 28 27,1
Pretax profit 37 48 55
EPS rep 1,9 2,37 2,74
EPS growth (%) 28,3 24,9 15,6
EPS adj 1,86 2,37 2,74
DPS 0,7 0,95 1,1
EV/EBITDA (x) 35,8 21,9 18,6
EV/EBIT adj (x) 38,3 23,5 19,9
P/E (x) 48,8 32,1 27,8
P/E adj (x) 49,7 32,1 27,8
EV/sales (x) 11,2 6,6 5,4
FCF yield (%) 1,9 2,4 3,5
Dividend yield (%) 0,8 1,2 1,4
Net IB debt/EBITDA -1,2 -1,2 -1,5
SEKm 2019 2020e 2021e
Sales 127 173 206
COGS -34 -51 -62
Gross profit 93 122 144
Other operating items -53 -70 -85
EBITDA 40 52 60
Depreciation on tangibles -2 -2 -2
Depreciation on intangibles 0 0 0
EBITA 36 48 56
Goodwill impairment charges 0 0 0
Other impairment and amortisation 1 0 0
EBIT 37 48 56
Other financial items 0 0 0
Net financial items 0 0 0
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 37 48 55
Tax -7 -11 -12
Net profit 30 37 43
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 30 37 43
EPS 1,9 2,37 2,74
EPS Adj 1,86 2,37 2,74
Total extraordinary items after tax 0 0 0
Tax rate (%) -18,5 -22 -22
Gross margin (%) 73,3 70,5 70,1
EBITDA margin (%) 31,2 30,1 29
EBITA margin (%) 28,7 28 27,1
EBIT margin (%) 29,1 28 27,1
Pretax margin (%) 28,9 27,8 26,9
Net margin (%) 23,6 21,6 21
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 27,9 36,1 19,4
EBITDA growth (%) 33,1 31,6 14,9
EBIT growth (%) 25,4 30,8 15,5
Net profit growth (%) 28,3 24,9 15,6
EPS growth (%) 28,3 24,9 15,6
Profitability 2019 2020 2021
ROE (%) 26,1 25,9 25,1
ROE Adj (%) 25,6 25,9 25,1
ROCE (%) 30,8 33,2 32,3
ROCE Adj(%) 30,4 33,2 32,3
ROIC (%) 36,8 41,5 44,8
ROIC Adj (%) 36,8 41,5 44,8
Adj earnings numbers 2019 2020 2021
EBITDA Adj 40 52 60
EBITDA Adj margin (%) 31,2 30,1 29
EBITA Adj 36 48 56
EBITA Adj margin (%) 28,7 28 27,1
EBIT Adj 37 48 56
EBIT Adj margin (%) 29,1 28 27,1
Pretax profit Adj 36 48 55
Net profit Adj 29 37 43
Net profit to shareholders Adj 29 37 43
Net Adj margin (%) 23,2 21,6 21
SEKm 2019 2020e 2021e
EBITDA 40 52 60
Net financial items 0 0 0
Paid tax -7 -11 -12
Non-cash items 0 0 0
Cash flow before change in WC 33 41 47
Change in WC -1 -10 -2
Operating cash flow 33 31 45
CAPEX tangible fixed assets -5 -2 -3
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 28 29 43
Dividend paid 0 -11 -15
Share issues and buybacks 0 0 0
Other non cash items -1 0 0
Decrease in net IB debt 26 16 26
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 49 50 50
Indefinite intangible assets 3 4 4
Definite intangible assets 0 0 0
Tangible fixed assets 16 14 15
Other fixed assets 1 1 1
Fixed assets 70 70 71
Inventories 15 17 21
Receivables 20 29 31
Other current assets 0 0 0
Cash and liquid assets 46 62 87
Total assets 150 178 210
Shareholders equity 131 158 186
Minority 0 0 0
Total equity 131 158 186
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 0 0
Short-term debt 0 0 0
Accounts payable 18 19 23
Other current liabilities 0 0 0
Total liabilities and equity 150 178 210
Net IB debt -46 -62 -88
Net IB debt excl. pension debt -46 -62 -88
Capital invested 86 96 98
Working capital 17 27 29
EV breakdown 2019 2020 2021
Market cap. diluted (m) 1460 1199 1199
Net IB debt Adj -46 -62 -88
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 1415 1137 1111
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 94,5 105,1 106,4
Capital invested turnover (%) 154,8 190,2 212,2
Capital employed turnover (%) 105,8 118,6 119,3
Inventories / sales (%) 9,9 9,4 9,2
Customer advances / sales (%) 0 0 0
Payables / sales (%) 11,3 10,8 10,2
Working capital / sales (%) 12,9 12,6 13,5
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -34,9 -39,2 -47,1
Net debt / market cap (%) -4,3 -5,2 -7,3
Equity ratio (%) 87,3 88,6 88,7
Net IB debt adj. / equity (%) -34,9 -39,2 -47,1
Current ratio (%) 444,9 561 613,1
EBITDA / net interest (%) 17647,8 13002,5 14935,6
Net IB debt / EBITDA (%) -115,8 -118,8 -146,5
Interest cover (%) 16237,9 12072,5 13942,3
SEKm 2019 2020e 2021e
Shares outstanding adj. 16 16 16
Fully diluted shares Adj 16 16 16
EPS 1,9 2,37 2,74
Dividend per share Adj 0,7 0,9 1,1
EPS Adj 1,86 2,37 2,74
BVPS 8,33 10 11,79
BVPS Adj 5,21 6,81 8,6
Net IB debt / share -2,9 -3,9 -5,5
Share price 66,77 76 76
Market cap. (m) 1053 1199 1199
Valuation 2019 2020 2021
P/E 48,8 32,1 27,8
EV/sales 11,16 6,59 5,39
EV/EBITDA 35,8 21,9 18,6
EV/EBITA 38,9 23,5 19,9
EV/EBIT 38,3 23,5 19,9
Dividend yield (%) 0,8 1,2 1,4
FCF yield (%) 1,9 2,4 3,5
P/BVPS 11,12 7,6 6,45
P/BVPS Adj 17,77 11,16 8,84
P/E Adj 49,7 32,1 27,8
EV/EBITDA Adj 35,8 21,9 18,6
EV/EBITA Adj 38,9 23,5 19,9
EV/EBIT Adj 38,3 23,5 19,9
EV/cap. employed 10,7 7,2 5,9
Investment ratios 2019 2020 2021
Capex / sales 4 1,3 1,2
Capex / depreciation 316,6 118,7 116,6
Capex tangibles / tangible fixed assets 32,7 15,7 17,1
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 10,3 13,2 14,6

Equity research

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Media

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

Main shareholders - Swedencare

Main shareholders Share capital % Voting shares % Verified
Håkan Svanberg 29.3 % 29.3 % 18 Mar 2020
JCC Group Invest Sweden AB (Johan Bergdahl) 9.6 % 9.6 % 31 Dec 2019
DNCA Finance S.A 8.2 % 8.2 % 29 Feb 2020
Mastan AB (Håkan Lagerberg) 7.0 % 7.0 % 4 Nov 2019
AMF Försäkring & Fonder 4.8 % 4.8 % 29 Feb 2020
Handelsbanken Fonder 3.5 % 3.5 % 29 Feb 2020
Aktia Asset Management 3.1 % 3.1 % 31 Dec 2019
SEB Fonder 2.6 % 2.6 % 31 Dec 2019
Pie Funds Management Ltd 2.1 % 2.1 % 31 Dec 2019
Nordnet Pensionsförsäkring 2.0 % 2.0 % 31 Dec 2019
Source: Holdings by Modular Finance AB

Insider list - Swedencare

Name Quantity Code Date
Håkan Svanberg + 2 054 BUY 18 Mar 2020
Håkan Svanberg + 1 945 BUY 18 Mar 2020
JCC Group Invest Sweden AB - 40 000 SELL 29 Nov 2019
JCC Group Invest Sweden AB + 5 000 BUY 29 Nov 2019
Jenny Graflind - 5 000 SELL 29 Nov 2019
Håkan Svanberg - 40 000 SELL 22 Nov 2019
Håkan Svanberg + 16 282 BUY 22 Nov 2019
Håkan Svanberg & Co Health Care AB - 10 000 SELL 12 Nov 2019
Håkan Svanberg & Co Health Care AB + 5 192 BUY 7 Nov 2019
Håkan Svanberg - 40 000 SELL 7 Nov 2019

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