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Bergs Timber

Timber pure-play

Bergs Timber is the only listed timber pure-play in Sweden. It sells sawn and processed wood products. ~80% of the group’s products are exported, mainly to the UK, US and other European countries. In January 2018, the company announced its intention to acquire Norvik Timber, a transformational acquisition that will approximately double the group’s production capacity and revenues. Norvik Timber is a vertically integrated group with sawmills, production of processed wood products like windows, houses and furniture, and distribution of own and third-party products.

Historically, Bergs Timber has been a typical sawmill group with a high degree of commoditised wood products. Going forward, however, the group’s strategy is to increase focus on value-added processing and perform complementary acquisitions. Combined with strong macroeconomic fundamentals, industry consolidation and improvement programs there should be room for earnings uplift over the coming years. The acquisition of Norvik Timber will transform the group into a more vertically integrated player with potential for margin improvement and a higher degree of earnings stability.

The primary end-market for the group’s products is the building and construction industry. As a result, demand for the group’s products is cyclical and depends on global economic developments. Due to a high degree of commoditised products, the group’s earnings are highly sensitive to the market prices of its products. An increase in the price of saw logs could have negative impact the group’s earnings since it is the most important input factor in its operations. ~80% of the group’s products are sold in foreign currencies like GDP, EUR and USD. Currency fluctuations is therefore another major risk factor.

SEKm 2018 2019e 2020e
Sales 3064 3378 3382
Sales growth (%) 151,9 10,2 0,1
EBITDA 307 178 239
EBITDA margin (%) 10 5,3 7,1
EBIT adj 236 82 131
EBIT adj margin (%) 7,7 2,4 3,9
Pretax profit 214 78 113
EPS rep 0,77 0,22 0,26
EPS growth (%) 407,2 -71,6 19,1
EPS adj 0,8 0,16 0,26
DPS 0,1 0,09 0,1
EV/EBITDA (x) 5,2 8,8 6,7
EV/EBIT adj (x) 6,8 19,1 12,3
P/E (x) 3,9 11,4 9,6
P/E adj (x) 3,7 15,8 9,6
EV/sales (x) 0,5 0,5 0,5
FCF yield (%) -5 -1,6 -0,9
Dividend yield (%) 3,4 3,5 4,2
Net IB debt/EBITDA 1,9 4 3,1
SEKm 2018 2019e 2020e
Sales 3064 3378 3382
COGS -2021 -2312 -2107
Gross profit 1044 1066 1275
Other operating items -737 -888 -1036
EBITDA 307 178 239
Depreciation on tangibles -71 -95 -108
Depreciation on intangibles 0 0 0
EBITA 236 82 131
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 236 82 131
Other financial items 0 0 0
Net financial items -15 -25 -18
Associated income 0 0 0
Other EO items -7 21 0
Pretax profit 214 78 113
Tax -26 -3 -23
Net profit 188 75 90
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 188 75 90
EPS 0,77 0,22 0,26
EPS Adj 0,8 0,16 0,26
Total extraordinary items after tax -6,5 21 0
Tax rate (%) -12,1 -3,8 -20
Gross margin (%) 34,1 31,5 37,7
EBITDA margin (%) 10 5,3 7,1
EBITA margin (%) 7,7 2,4 3,9
EBIT margin (%) 7,7 2,4 3,9
Pretax margin (%) 7 2,3 3,3
Net margin (%) 6,1 2,2 2,7
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 151,9 10,2 0,1
EBITDA growth (%) 278 -42,2 34,4
EBIT growth (%) 554,7 -65,4 60,2
Net profit growth (%) 646 -60,1 20,1
EPS growth (%) 407,2 -71,6 19,1
Profitability 2018 2019 2020
ROE (%) 25,9 6,8 7,7
ROE Adj (%) 26,8 4,9 7,7
ROCE (%) 20,6 5,8 6,9
ROCE Adj(%) 21,2 4,7 6,9
ROIC (%) 19,2 4,5 5,4
ROIC Adj (%) 19,2 4,5 5,4
Adj earnings numbers 2018 2019 2020
EBITDA Adj 307 178 239
EBITDA Adj margin (%) 10 5,3 7,1
EBITA Adj 236 82 131
EBITA Adj margin (%) 7,7 2,4 3,9
EBIT Adj 236 82 131
EBIT Adj margin (%) 7,7 2,4 3,9
Pretax profit Adj 220 57 113
Net profit Adj 195 54 90
Net profit to shareholders Adj 195 54 90
Net Adj margin (%) 6,3 1,6 2,7
SEKm 2018 2019e 2020e
EBITDA 307 178 239
Net financial items -15 -25 -18
Paid tax -26 -3 -23
Non-cash items 0 0 0
Cash flow before change in WC 266 150 198
Change in WC -435 -41 -118
Operating cash flow 236 135 80
CAPEX tangible fixed assets -273 -149 -88
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow -37 -14 -8
Dividend paid -9 -34 -31
Share issues and buybacks 0 0 0
Other non cash items -419 -93 0
Decrease in net IB debt -458 -122 -38
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 191 194 194
Definite intangible assets 0 0 0
Tangible fixed assets 771 957 937
Other fixed assets 8 8 9
Fixed assets 970 1159 1140
Inventories 653 716 809
Receivables 377 406 411
Other current assets 0 0 0
Cash and liquid assets 74 69 31
Total assets 2074 2350 2392
Shareholders equity 1052 1142 1202
Minority 0 0 0
Total equity 1052 1142 1202
Long-term debt 238 611 681
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 7 26 26
Short-term debt 416 160 90
Accounts payable 361 412 393
Other current liabilities 0 0 0
Total liabilities and equity 663 693 2074
Net IB debt 580 702 740
Net IB debt excl. pension debt 580 702 740
Capital invested 1639 1869 1968
Working capital 669 710 828
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1021 856 863
Net IB debt Adj 580 702 740
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 1601 1558 1604
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 221,5 152,7 142,7
Capital invested turnover (%) 283,7 192,6 176,3
Capital employed turnover (%) 275,1 186,7 174,1
Inventories / sales (%) 14,3 20,3 22,5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,7 11,4 11,9
Working capital / sales (%) 14,7 20,4 22,7
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 55,1 61,5 61,6
Net debt / market cap (%) 57,1 82 85,7
Equity ratio (%) 50,7 48,6 50,2
Net IB debt adj. / equity (%) 55,1 61,5 61,6
Current ratio (%) 142,1 208,2 259,1
EBITDA / net interest (%) 2005,9 724,6 1325,8
Net IB debt / EBITDA (%) 189 395,3 310,2
Interest cover (%) 1531,2 307,4 612
SEKm 2018 2019e 2020e
Shares outstanding adj. 344 344 347
Fully diluted shares Adj 344 344 347
EPS 0,77 0,22 0,26
Dividend per share Adj 0,1 0,1 0,1
EPS Adj 0,8 0,16 0,26
BVPS 3,06 3,32 3,47
BVPS Adj 3,06 3,32 3,47
Net IB debt / share 1,7 2 2,1
Share price 2,95 2,49 2,49
Market cap. (m) 1016 856 863
Valuation 2018 2019 2020
P/E 3,9 11,4 9,6
EV/sales 0,52 0,46 0,47
EV/EBITDA 5,2 8,8 6,7
EV/EBITA 6,8 19,1 12,3
EV/EBIT 6,8 19,1 12,3
Dividend yield (%) 3,4 3,5 4,2
FCF yield (%) -5 -1,6 -0,9
P/BVPS 0,97 0,75 0,72
P/BVPS Adj 0,97 0,75 0,72
P/E Adj 3,7 15,8 9,6
EV/EBITDA Adj 5,2 8,8 6,7
EV/EBITA Adj 6,8 19,1 12,3
EV/EBIT Adj 6,8 19,1 12,3
EV/cap. employed 0,9 0,8 0,8
Investment ratios 2018 2019 2020
Capex / sales 8,9 4,4 2,6
Capex / depreciation 382,9 156,8 81,5
Capex tangibles / tangible fixed assets 35,4 15,6 9,4
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 9,2 9,9 11,5

Equity Research

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Media

Bergs Timber - Interview with CEO Peter Nilsson (in Swedish)
Bergs Timber - Company presentation with CEO Peter Nilsson & CFO Anders Marklund (in Swedish)

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Main shareholders - Bergs Timber

Main shareholders Share capital % Voting shares % Verified
Norvik Hf 63.6 % 63.6 % 30 Sep 2019
Danica Pension 4.9 % 4.9 % 18 Apr 2019
Åke Bergh 3.1 % 3.1 % 30 Sep 2019
Niklas Sjöfors 2.9 % 2.9 % 30 Sep 2019
Setra Trävaror AB 1.7 % 1.7 % 30 Sep 2019
AB Fogelfors Bruk 1.7 % 1.7 % 30 Sep 2019
Per Anders Bendt 1.4 % 1.4 % 30 Sep 2019
Swedbank Försäkring 1.1 % 1.1 % 30 Sep 2019
Nordnet Pensionsförsäkring 0.8 % 0.8 % 30 Sep 2019
Íslandsbanki hf. 0.7 % 0.7 % 30 Sep 2019
Source: Holdings by Modular Finance AB

Insider list - Bergs Timber

Name Quantity Code Date
Patrik Ivarsson - 20 336 SELL 28 Mar 2019
Patrik Ivarsson - 5 239 SELL 18 Mar 2019
Peter Nilsson + 50 000 BUY 11 Mar 2019
Patrik Ivarsson - 7 425 SELL 25 Oct 2018
Patrik Ivarsson - 9 000 SELL 15 Oct 2018
Christina Marianne Brav + 7 000 BUY 11 Oct 2018
Anders Marklund + 25 000 BUY 5 Oct 2018
Norvik hf. +170 000 000 BUY 8 Jun 2018
Patrik Larsson + 1 000 BUY 28 Feb 2018
Sampsa Auvinen + 500 000 BUY 1 Sep 2017

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