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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 130 172 206
Sales growth (%) 30,7 32,5 20
EBITDA 43 54 66
EBITDA margin (%) 33,3 31,5 32,1
EBIT adj 41 52 63
EBIT adj margin (%) 32 30,3 30,3
Pretax profit 41 52 63
EPS rep 2,08 2,59 3,11
EPS growth (%) 41 24 20,4
EPS adj 2 2,5 3,11
DPS 0,83 1,03 1,25
EV/EBITDA (x) 37 29,1 23,4
EV/EBIT adj (x) 38,6 30,3 24,7
P/E (x) 49,9 40,2 33,4
P/E adj (x) 51,9 41,5 33,4
EV/sales (x) 12,3 9,2 7,5
FCF yield (%) 1,3 2,4 2,8
Dividend yield (%) 0,8 1 1,2
Net IB debt/EBITDA -1 -1,2 -1,4
SEKm 2019 2020e 2021e
Sales 130 172 206
COGS -35 -49 -60
Gross profit 95 122 146
Other operating items -52 -68 -80
EBITDA 43 54 66
Depreciation on tangibles -1 -2 -2
Depreciation on intangibles 0 0 0
EBITA 40 51 63
Goodwill impairment charges 0 0 0
Other impairment and amortisation 1 1 0
EBIT 41 52 63
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 41 52 63
Tax -8 -12 -14
Net profit 33 41 49
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 33 41 49
EPS 2,08 2,59 3,11
EPS Adj 2 2,5 3,11
Total extraordinary items after tax 0 0 0
Tax rate (%) -20,4 -22 -22
Gross margin (%) 73,4 71,2 70,7
EBITDA margin (%) 33,3 31,5 32,1
EBITA margin (%) 31 29,5 30,3
EBIT margin (%) 32 30,3 30,3
Pretax margin (%) 31,8 30,4 30,5
Net margin (%) 25,4 23,7 23,8
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 30,7 32,5 20
EBITDA growth (%) 45,3 25,5 22,2
EBIT growth (%) 40,7 25,5 20,3
Net profit growth (%) 41 24 20,4
EPS growth (%) 41 24 20,4
Profitability 2019 2020 2021
ROE (%) 28,1 27,3 27,3
ROE Adj (%) 27 26,4 27,3
ROCE (%) 34,2 35 35
ROCE Adj(%) 33,2 34,2 35
ROIC (%) 38,2 42,1 48,4
ROIC Adj (%) 38,2 42,1 48,4
Adj earnings numbers 2019 2020 2021
EBITDA Adj 43 54 66
EBITDA Adj margin (%) 33,3 31,5 32,1
EBITA Adj 40 51 63
EBITA Adj margin (%) 31 29,5 30,3
EBIT Adj 41 52 63
EBIT Adj margin (%) 32 30,3 30,3
Pretax profit Adj 40 51 63
Net profit Adj 32 39 49
Net profit to shareholders Adj 32 39 49
Net Adj margin (%) 24,4 23 23,8
SEKm 2019 2020e 2021e
EBITDA 43 54 66
Net financial items 0 0 0
Paid tax -8 -12 -14
Non-cash items 0 0 0
Cash flow before change in WC 35 43 53
Change in WC -5 -3 -5
Operating cash flow 30 41 48
CAPEX tangible fixed assets -9 -2 -3
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 21 39 45
Dividend paid 0 -13 -16
Share issues and buybacks 0 0 0
Other non cash items 1 0 0
Decrease in net IB debt 21 24 28
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 53 53 53
Indefinite intangible assets 2 2 2
Definite intangible assets 0 0 0
Tangible fixed assets 18 18 19
Other fixed assets 1 1 1
Fixed assets 75 75 75
Inventories 13 17 21
Receivables 22 26 31
Other current assets 0 0 0
Cash and liquid assets 39 63 91
Total assets 149 181 218
Shareholders equity 136 163 196
Minority 0 0 0
Total equity 136 163 196
Long-term debt -2 -2 -2
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 15 19 23
Other current liabilities 0 0 0
Total liabilities and equity 100 118 149
Net IB debt -41 -65 -93
Net IB debt excl. pension debt -41 -65 -93
Capital invested 94 98 103
Working capital 21 24 29
EV breakdown 2019 2020 2021
Market cap. diluted (m) 1640 1640 1640
Net IB debt Adj -41 -65 -93
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 1599 1575 1547
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 97 104 103,4
Capital invested turnover (%) 150,3 178,6 204,7
Capital employed turnover (%) 107,2 115,7 115,4
Inventories / sales (%) 8,8 8,8 9,2
Customer advances / sales (%) 0 0 0
Payables / sales (%) 9,8 9,8 10,1
Working capital / sales (%) 14,1 13 12,8
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -30,4 -39,9 -47,3
Net debt / market cap (%) -3,9 -4 -5,7
Equity ratio (%) 90,8 90,1 90
Net IB debt adj. / equity (%) -30,4 -39,9 -47,3
Current ratio (%) 504,9 561,2 627,2
EBITDA / net interest (%) 31300,5 -18288,9 -15924,9
Net IB debt / EBITDA (%) -95,6 -120,2 -140,1
Interest cover (%) 29105,1 -17120,2 -15049,3
SEKm 2019 2020e 2021e
Shares outstanding adj. 16 16 16
Fully diluted shares Adj 16 16 16
EPS 2,08 2,59 3,11
Dividend per share Adj 0,8 1 1,2
EPS Adj 2 2,5 3,11
BVPS 8,6 10,35 12,43
BVPS Adj 5,24 6,99 9,07
Net IB debt / share -2,6 -4,1 -5,9
Share price 66,77 104 104
Market cap. (m) 1053 1640 1640
Valuation 2019 2020 2021
P/E 49,9 40,2 33,4
EV/sales 12,34 9,17 7,51
EV/EBITDA 37 29,1 23,4
EV/EBITA 39,8 31,1 24,7
EV/EBIT 38,6 30,3 24,7
Dividend yield (%) 0,8 1 1,2
FCF yield (%) 1,3 2,4 2,8
P/BVPS 12,1 10,05 8,37
P/BVPS Adj 19,86 14,88 11,47
P/E Adj 51,9 41,5 33,4
EV/EBITDA Adj 37 29,1 23,4
EV/EBITA Adj 39,8 31,1 24,7
EV/EBIT Adj 38,6 30,3 24,7
EV/cap. employed 11,9 9,7 7,9
Investment ratios 2019 2020 2021
Capex / sales 7,1 1,3 1,2
Capex / depreciation 618,5 114,7 119,3
Capex tangibles / tangible fixed assets 51,1 12 13,4
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 8,3 10,5 11,2

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 % 31 Dec 2019
JCC Group Invest Sweden AB (Johan Bergdahl) 9.6 % 9.6 % 31 Dec 2019
DNCA Finance S.A 7.7 % 7.7 % 31 Dec 2019
Mastan AB (Håkan Lagerberg) 7.0 % 7.0 % 4 Nov 2019
AMF Försäkring & Fonder 4.8 % 4.8 % 31 Dec 2019
Aktia Asset Management 4.5 % 4.5 % 30 Sep 2019
Handelsbanken Fonder 3.5 % 3.5 % 31 Dec 2019
SEB Fonder 2.6 % 2.6 % 31 Dec 2019
Nordnet Pensionsförsäkring 2.0 % 2.0 % 31 Dec 2019
Martin Shimko 1.9 % 1.9 % 30 Sep 2019
Source: Holdings by Modular Finance AB

Insider list - Swedencare

Name Quantity Code Date
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
Lars Håkan Lagerberg - 480 000 SELL 4 Nov 2019
Håkan Svanberg - 330 000 SELL 3 May 2019

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