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Bredband2

Bredband2

Broadband via fiber network

Bredband2 supplies broadband, IP Telephony, data storage and safety solutions through the fiber network. In addition, the company offers co-location for webservers, e-mail and other operation-critical systems with associated network services such as Internet and VPN. The customer base is mainly private clients, but Bredband2 also offers a variety of different products to companies. Today, Bredband2 is primarily operating in the open city networks, where there is free competition between different operators.

The digitalization trend favors Bredband2. There is an increasing demand on faster and more stable network connections. This is due to more and more connected devices, higher TV resolutions, video-on-demand and online games, to mention a few examples. Hence, there is a shift from older network connections to newer ones, like ADSL to fiber. Furthermore, the Swedish government has a set goal that 95% of the Swedish population should have access to broadband by 2020. If this market starts to saturate, there is an opportunity for Bredband2 to seize a better position in the B2B market.

The main risks for Bredband2 are 1) generic product, which makes price an important factor for customers. 2) Market maturity and increased competition, mainly from bigger players, could cause decline in growth without increased margins. 3) High dependence to the net owners, and their continued investments in market expansion.

SEKm 2019 2020e 2021e
Sales 671 725 781
Sales growth (%) 11,8 8,1 7,8
EBITDA 75 87 93
EBITDA margin (%) 11,1 12 11,9
EBIT adj 51 64 71
EBIT adj margin (%) 7,6 8,8 9,1
Pretax profit 51 64 71
EPS rep 0,06 0,07 0,08
EPS growth (%) 26,8 23,3 12,1
EPS adj 0,06 0,07 0,08
DPS 0,05 0,06 0,07
EV/EBITDA (x) 10,2 11,9 10,9
EV/EBIT adj (x) 15 16,2 14,1
P/E (x) 22,7 24,4 21,7
P/E adj (x) 22,7 24,4 21,7
EV/sales (x) 1,1 1,4 1,3
FCF yield (%) 6,9 5,3 5,6
Dividend yield (%) 3,8 3,4 4
Net IB debt/EBITDA -2,1 -2,1 -2,3
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 671 725 781
COGS -445 -488 -526
Gross profit 225 237 256
Other operating items -150 -150 -163
EBITDA 75 87 93
Depreciation on tangibles -24 -23 -21
Depreciation on intangibles 0 0 0
EBITA 51 64 71
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 51 64 71
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 51 64 71
Tax -10 -14 -15
Net profit 41 50 56
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 41 50 56
EPS 0,06 0,07 0,08
EPS Adj 0,06 0,07 0,08
Total extraordinary items after tax 0 0 0
Tax rate (%) -20,4 -21,4 -21,4
Gross margin (%) 33,6 32,7 32,7
EBITDA margin (%) 11,1 12 11,9
EBITA margin (%) 7,6 8,8 9,1
EBIT margin (%) 7,6 8,8 9,1
Pretax margin (%) 7,6 8,8 9,1
Net margin (%) 6,1 6,9 7,2
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 11,8 8,1 7,8
EBITDA growth (%) 14,7 16,4 6,6
EBIT growth (%) 23,8 25,1 12,1
Net profit growth (%) 26,8 23,3 12,1
EPS growth (%) 26,8 23,3 12,1
Profitability 2019 2020 2021
ROE (%) 53,4 76,4 94,5
ROE Adj (%) 53,4 76,4 94,5
ROCE (%) 66,5 97,1 120,2
ROCE Adj(%) 66,5 97,1 120,2
ROIC (%) -64,3 -49,2 -41,3
ROIC Adj (%) -64,3 -49,2 -41,3
Adj earnings numbers 2019 2020 2021
EBITDA Adj 75 87 93
EBITDA Adj margin (%) 11,1 12 11,9
EBITA Adj 51 64 71
EBITA Adj margin (%) 7,6 8,8 9,1
EBIT Adj 51 64 71
EBIT Adj margin (%) 7,6 8,8 9,1
Pretax profit Adj 51 64 71
Net profit Adj 41 50 56
Net profit to shareholders Adj 41 50 56
Net Adj margin (%) 6,1 6,9 7,2
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 75 87 93
Net financial items 0 0 0
Paid tax -10 -14 -15
Non-cash items 10 0 0
Cash flow before change in WC 75 73 77
Change in WC 8 11 11
Operating cash flow 83 84 89
CAPEX tangible fixed assets -10 -14 -14
CAPEX intangible fixed assets -8 -6 -6
Acquisitions and disposals 0 0 0
Free cash flow 64 65 68
Dividend paid -35 -35 -42
Share issues and buybacks 0 0 0
Other non cash items -6 0 0
Decrease in net IB debt 29 30 26
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 3 0 0
Indefinite intangible assets 14 14 14
Definite intangible assets 0 0 0
Tangible fixed assets 28 27 26
Other fixed assets 4 4 4
Fixed assets 48 45 44
Inventories 0 0 0
Receivables 116 80 86
Other current assets 0 0 0
Cash and liquid assets 154 183 209
Total assets 318 308 339
Shareholders equity 79 52 66
Minority 0 0 0
Total equity 79 52 66
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 5 5 5
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 73 78 84
Other current liabilities 161 172 184
Total liabilities and equity 318 308 339
Net IB debt -157 -187 -213
Net IB debt excl. pension debt -157 -187 -213
Capital invested -74 -130 -142
Working capital -118 -171 -182
EV breakdown 2019 2020 2021
Market cap. diluted (m) 923 1220 1220
Net IB debt Adj -157 -187 -213
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 765 1033 1007
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 218,4 231,7 241,8
Capital invested turnover (%) -1064,4 -713,5 -575,8
Capital employed turnover (%) 876,6 1105,7 1316,4
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 20,2 20,6 20,5
Payables / sales (%) 11,4 10,5 10,4
Working capital / sales (%) -16,5 -19,9 -22,6
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -199,5 -356,7 -320,9
Net debt / market cap (%) -20 -15,3 -17,5
Equity ratio (%) 24,8 17 19,6
Net IB debt adj. / equity (%) -199,5 -356,7 -320,9
Current ratio (%) 115 105 110,3
EBITDA / net interest (%) -62304,2 -299989,5 0
Net IB debt / EBITDA (%) -210,2 -214,6 -229,6
Interest cover (%) -42392,5 -219479,1 0
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 701 701 701
Fully diluted shares Adj 701 701 701
EPS 0,06 0,07 0,08
Dividend per share Adj 0,1 0,1 0,1
EPS Adj 0,06 0,07 0,08
BVPS 0,11 0,07 0,09
BVPS Adj 0,11 0,07 0,09
Net IB debt / share -0,2 -0,3 -0,3
Share price 1,12 1,74 1,74
Market cap. (m) 784 1220 1220
Valuation 2019 2020 2021
P/E 22,7 24,4 21,7
EV/sales 1,14 1,43 1,29
EV/EBITDA 10,2 11,9 10,9
EV/EBITA 15 16,2 14,1
EV/EBIT 15 16,2 14,1
Dividend yield (%) 3,8 3,4 4
FCF yield (%) 6,9 5,3 5,6
P/BVPS 11,71 23,3 18,37
P/BVPS Adj 12,11 23,39 18,37
P/E Adj 22,7 24,4 21,7
EV/EBITDA Adj 10,2 11,9 10,9
EV/EBITA Adj 15 16,2 14,1
EV/EBIT Adj 15 16,2 14,1
EV/cap. employed 9,7 19,7 15,2
Investment ratios 2019 2020 2021
Capex / sales 2,8 2,7 2,6
Capex / depreciation 78,7 83,8 94,9
Capex tangibles / tangible fixed assets 36,8 50,6 53,8
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 85,2 86,3 80,9
N/A N/A N/A

Equity research

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Media

Bredband2 - Company presentation with CEO Daniel Krook (in Swedish)
Bredband2 - Interview with CEO Daniel Krook (in Swedish)

Main shareholders - Bredband2

Main shareholders Share capital % Voting shares % Verified
Anders Lövgren 18.3 % 18.3 % 30 Sep 2020
ODIN Fonder 9.3 % 9.3 % 30 Sep 2020
Alcur Fonder 8.2 % 8.2 % 30 Sep 2020
BI Asset Mgmt Fondsmaeglerselskab A/S 3.6 % 3.6 % 30 Jun 2020
Berenberg Funds 3.3 % 3.3 % 30 Apr 2020
Ulf Östberg 3.1 % 3.1 % 30 Sep 2020
Nordnet Pensionsförsäkring 2.4 % 2.4 % 30 Sep 2020
Leif Danielsson 2.1 % 2.1 % 30 Sep 2020
SEB Fonder 2.1 % 2.1 % 30 Sep 2020
Avanza Pension 2.1 % 2.1 % 30 Sep 2020
Source: Holdings by Modular Finance AB

Insider list - Bredband2

Name Quantity Code Date
Joachim Landhager + 100 000 BUY 14 Sep 2020
Bo Anders Lövgren +1 500 000 BUY 29 Jul 2020
Loevgren Anders +10 000 000 BUY 7 May 2020
Claes Fägersten +1 300 000 BUY 23 Aug 2019
Rolf Johansson + 250 000 BUY 31 May 2019
Rolf Johansson + 250 000 BUY 27 May 2019
Advokat Rolf Johansson AB + 200 000 BUY 26 Nov 2018
Mats Robert Burén + 64 000 BUY 29 Oct 2018
Mats Robert Burén + 2 810 BUY 29 Oct 2018
Marand Group AB +2 000 000 BUY 29 Oct 2018

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