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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 127 234 436
Sales growth (%) 27,7 84,7 86,2
EBITDA 40 70 144
EBITDA margin (%) 31,6 29,7 33,1
EBIT adj 37 68 138
EBIT adj margin (%) 29,1 28,9 31,5
Pretax profit 37 64 135
EPS rep 1,9 2,88 5,34
EPS growth (%) 28,3 52 85,4
EPS adj 1,9 3,05 5,34
DPS 0,7 0,7 0,75
EV/EBITDA (x) 35,4 65,7 35,5
EV/EBIT adj (x) 38,4 67,4 37,2
P/E (x) 48,8 87,4 47,2
P/E adj (x) 48,8 82,6 47,2
EV/sales (x) 11,2 19,5 11,7
FCF yield (%) 1,9 -12,9 1,7
Dividend yield (%) 0,8 0,3 0,3
Net IB debt/EBITDA -1,1 1,2 0,1
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 127 234 436
COGS -34 -80 -156
Gross profit 93 154 280
Other operating items -53 -85 -136
EBITDA 40 70 144
Depreciation on tangibles -2 -3 -4
Depreciation on intangibles 0 0 0
EBITA 37 65 138
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 37 65 138
Other financial items 0 0 0
Net financial items 0 -1 -2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 37 64 135
Tax -7 -12 -27
Net profit 30 51 108
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 30 51 108
EPS 1,9 2,88 5,34
EPS Adj 1,9 3,05 5,34
Total extraordinary items after tax 0 -3 0
Tax rate (%) -18,5 -19,5 -20
Gross margin (%) 73,3 65,9 64,2
EBITDA margin (%) 31,6 29,7 33,1
EBITA margin (%) 29,1 27,6 31,5
EBIT margin (%) 29,1 27,6 31,5
Pretax margin (%) 28,9 27,2 31
Net margin (%) 23,6 21,9 24,8
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 27,7 84,7 86,2
EBITDA growth (%) 31,2 73,5 107,7
EBIT growth (%) 25,4 75,5 112,3
Net profit growth (%) 28,3 71,5 111,1
EPS growth (%) 28,3 52 85,4
Profitability 2019 2020 2021
ROE (%) 26,1 13,4 15,9
ROE Adj (%) 26,1 14,2 15,9
ROCE (%) 30,5 15,1 17,9
ROCE Adj(%) 30,5 15,8 17,9
ROIC (%) 35,9 12,7 14,8
ROIC Adj (%) 35,9 13,3 14,8
Adj earnings numbers 2019 2020 2021
EBITDA Adj 40 72 144
EBITDA Adj margin (%) 31,6 30,9 33,1
EBITA Adj 37 68 138
EBITA Adj margin (%) 29,1 28,9 31,5
EBIT Adj 37 68 138
EBIT Adj margin (%) 29,1 28,9 31,5
Pretax profit Adj 37 67 135
Net profit Adj 30 54 108
Net profit to shareholders Adj 30 54 108
Net Adj margin (%) 23,6 23,2 24,8
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 40 70 144
Net financial items 0 -1 -2
Paid tax -7 -12 -27
Non-cash items 0 0 0
Cash flow before change in WC 33 56 115
Change in WC 0 -10 -22
Operating cash flow 33 46 93
CAPEX tangible fixed assets -5 -2 -8
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 -622 0
Free cash flow 28 -578 85
Dividend paid 0 -11 -12
Share issues and buybacks 0 464 0
Other non cash items -5 -27 -21
Decrease in net IB debt 23 -125 67
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 49 351 351
Indefinite intangible assets 3 65 65
Definite intangible assets 0 0 0
Tangible fixed assets 12 264 268
Other fixed assets 1 1 1
Fixed assets 69 684 688
Inventories 15 21 35
Receivables 17 51 79
Other current assets 2 4 8
Cash and liquid assets 46 7 74
Total assets 149 768 883
Shareholders equity 131 633 726
Minority 0 0 0
Total equity 131 633 726
Long-term debt 0 74 74
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 16 16
Short-term debt 0 13 13
Accounts payable 5 7 11
Other current liabilities 9 22 40
Total liabilities and equity 149 768 883
Net IB debt -43 82 15
Net IB debt excl. pension debt -43 82 15
Capital invested 88 731 757
Working capital 20 48 70
EV breakdown 2019 2020 2021
Market cap. diluted (m) 1460 4485 5107
Net IB debt Adj -43 82 15
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 4567 5122
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 94,9 51,1 52,9
Capital invested turnover (%) 151,4 57,2 58,6
Capital employed turnover (%) 104,8 54,7 56,7
Inventories / sales (%) 9,9 7,8 6,4
Customer advances / sales (%) 0 0 0
Payables / sales (%) 3,4 2,7 2,1
Working capital / sales (%) 14,8 14,6 13,5
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -33 13 2
Net debt / market cap (%) -4,1 1,8 0,3
Equity ratio (%) 87,9 82,4 82,2
Net IB debt adj. / equity (%) -33 13 2
Current ratio (%) 498,8 195,5 299,9
EBITDA / net interest (%) 17889,7 6588,7 6562,2
Net IB debt / EBITDA (%) -108 117,9 10,3
Interest cover (%) 16479,9 6141,2 6253,6
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 16 18 20
Fully diluted shares Adj 16 18 20
EPS 1,9 2,88 5,34
Dividend per share Adj 0,7 0,7 0,8
EPS Adj 1,9 3,05 5,34
BVPS 8,33 35,56 35,82
BVPS Adj 5,21 15,84 18,5
Net IB debt / share -2,7 4,6 0,7
Share price 66,77 252 252
Market cap. (m) 1053 4485 5107
Valuation 2019 2020 2021
P/E 48,8 87,4 47,2
EV/sales 11,17 19,49 11,73
EV/EBITDA 35,4 65,7 35,5
EV/EBITA 38,4 70,5 37,2
EV/EBIT 38,4 70,5 37,2
Dividend yield (%) 0,8 0,3 0,3
FCF yield (%) 1,9 -12,9 1,7
P/BVPS 11,12 7,09 7,03
P/BVPS Adj 17,77 15,91 13,62
P/E Adj 48,8 82,6 47,2
EV/EBITDA Adj 35,4 63 35,5
EV/EBITA Adj 38,4 67,4 37,2
EV/EBIT Adj 38,4 67,4 37,2
EV/cap. employed 10,5 6,3 6,3
Investment ratios 2019 2020 2021
Capex / sales 4 0,8 1,7
Capex / depreciation 316,6 68,2 200,4
Capex tangibles / tangible fixed assets 42,2 0,7 2,8
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 13,3 1 1,4
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 23.0 % 23.0 % 31 Oct 2020
JCC Group Invest Sweden AB (Johan Bergdahl) 7.5 % 7.5 % 31 Oct 2020
DNCA Finance S.A 6.9 % 6.9 % 31 Oct 2020
Mastan AB (Håkan Lagerberg) 6.4 % 6.4 % 30 Sep 2020
AMF Pension & Fonder 4.6 % 4.6 % 31 Oct 2020
Handelsbanken Fonder 3.9 % 3.9 % 31 Oct 2020
SEB Fonder 3.9 % 3.9 % 31 Oct 2020
Aktia Asset Management 3.3 % 3.3 % 31 Oct 2020
Matthew Shaw 3.0 % 3.0 % 25 Sep 2020
Berenberg Funds 2.0 % 2.0 % 31 Oct 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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