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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 2018 2019e 2020e
Sales 600 663 717
Sales growth (%) 13,9 10,4 8,1
EBITDA 65 71 84
EBITDA margin (%) 10,9 10,7 11,8
EBIT adj 41 48 61
EBIT adj margin (%) 6,8 7,2 8,5
Pretax profit 41 48 61
EPS rep 0,05 0,05 0,07
EPS growth (%) 2,8 17,7 26,8
EPS adj 0,05 0,05 0,07
DPS 0,05 0,05 0,06
EV/EBITDA (x) 11,3 8,3 6,7
EV/EBIT adj (x) 17,9 12,3 9,3
P/E (x) 27 19,7 15,5
P/E adj (x) 27 19,7 15,5
EV/sales (x) 1,2 0,9 0,8
FCF yield (%) 5,8 6 7
Dividend yield (%) 4,1 4,8 5,7
Net IB debt/EBITDA -1,9 -2 -2
SEKm 2018 2019e 2020e
Sales 600 663 717
COGS -388 -431 -464
Gross profit 212 232 253
Other operating items -147 -161 -168
EBITDA 65 71 84
Depreciation on tangibles -24 -23 -24
Depreciation on intangibles 0 0 0
EBITA 41 48 61
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 41 48 61
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 48 61
Tax -10 -11 -13
Net profit 32 37 47
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 32 37 47
EPS 0,05 0,05 0,07
EPS Adj 0,05 0,05 0,07
Total extraordinary items after tax 0 0 0
Tax rate (%) -23,2 -22 -22
Gross margin (%) 35,4 35 35,2
EBITDA margin (%) 10,9 10,7 11,8
EBITA margin (%) 6,8 7,2 8,5
EBIT margin (%) 6,8 7,2 8,5
Pretax margin (%) 6,9 7,2 8,5
Net margin (%) 5,3 5,6 6,6
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 13,9 10,4 8,1
EBITDA growth (%) 0,5 9,3 18,6
EBIT growth (%) 0,4 16,8 26,8
Net profit growth (%) 2,8 17,7 26,8
EPS growth (%) 2,8 17,7 26,8
Profitability 2018 2019 2020
ROE (%) 31,5 50,2 60,6
ROE Adj (%) 31,5 50,2 60,6
ROCE (%) 39,4 60,6 72,6
ROCE Adj(%) 39,4 60,6 72,6
ROIC (%) -358,4 -64,6 -62,6
ROIC Adj (%) -358,4 -64,6 -62,6
Adj earnings numbers 2018 2019 2020
EBITDA Adj 65 71 84
EBITDA Adj margin (%) 10,9 10,7 11,8
EBITA Adj 41 48 61
EBITA Adj margin (%) 6,8 7,2 8,5
EBIT Adj 41 48 61
EBIT Adj margin (%) 6,8 7,2 8,5
Pretax profit Adj 41 48 61
Net profit Adj 32 37 47
Net profit to shareholders Adj 32 37 47
Net Adj margin (%) 5,3 5,6 6,6
SEKm 2018 2019e 2020e
EBITDA 65 71 84
Net financial items 0 0 0
Paid tax -10 -11 -13
Non-cash items 0 0 0
Cash flow before change in WC 56 61 71
Change in WC 10 14 13
Operating cash flow 65 63 71
CAPEX tangible fixed assets -16 -19 -19
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 50 44 52
Dividend paid -35 -35 -35
Share issues and buybacks 0 0 0
Other non cash items 11 12 6
Decrease in net IB debt 25 21 23
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 5 3 0
Indefinite intangible assets 10 11 11
Definite intangible assets 0 0 0
Tangible fixed assets 38 35 33
Other fixed assets 0 0 0
Fixed assets 54 49 45
Inventories 0 0 0
Receivables 117 130 142
Other current assets 0 0 0
Cash and liquid assets 126 148 171
Total assets 296 327 358
Shareholders equity 73 75 81
Minority 0 0 0
Total equity 73 75 81
Long-term debt 4 6 6
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 219 246 271
Other current liabilities 0 0 0
Total liabilities and equity 283 321 296
Net IB debt -122 -143 -165
Net IB debt excl. pension debt -122 -143 -165
Capital invested -49 -67 -84
Working capital -102 -116 -129
EV breakdown 2018 2019 2020
Market cap. diluted (m) 855 733 733
Net IB debt Adj -122 -143 -165
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 733 591 568
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 194,4 212,6 209,2
Capital invested turnover (%) -6815,9 -1144 -944,9
Capital employed turnover (%) 574,8 837,4 854,9
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 34 35,1 36,1
Working capital / sales (%) -16,2 -16,5 -17,1
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -166,5 -189 -204,7
Net debt / market cap (%) -12,9 -19,5 -22,5
Equity ratio (%) 24,7 23,1 22,6
Net IB debt adj. / equity (%) -166,5 -189 -204,7
Current ratio (%) 110,7 113,1 115,3
EBITDA / net interest (%) -35808,8 48663,1 36750,9
Net IB debt / EBITDA (%) -187 -200,3 -195,6
Interest cover (%) -22571,4 32781,4 26481,1
SEKm 2018 2019e 2020e
Shares outstanding adj. 701 701 701
Fully diluted shares Adj 701 701 701
EPS 0,05 0,05 0,07
Dividend per share Adj 0,1 0,1 0,1
EPS Adj 0,05 0,05 0,07
BVPS 0,1 0,11 0,12
BVPS Adj 0,1 0,1 0,11
Net IB debt / share -0,2 -0,2 -0,2
Share price 1,35 1,05 1,05
Market cap. (m) 945 733 733
Valuation 2018 2019 2020
P/E 27 19,7 15,5
EV/sales 1,22 0,89 0,79
EV/EBITDA 11,3 8,3 6,7
EV/EBITA 17,9 12,3 9,3
EV/EBIT 17,9 12,3 9,3
Dividend yield (%) 4,1 4,8 5,7
FCF yield (%) 5,8 6 7
P/BVPS 11,68 9,72 9,09
P/BVPS Adj 12,57 10,09 9,13
P/E Adj 27 19,7 15,5
EV/EBITDA Adj 11,3 8,3 6,7
EV/EBITA Adj 17,9 12,3 9,3
EV/EBIT Adj 17,9 12,3 9,3
EV/cap. employed 9,5 7,3 6,6
Investment ratios 2018 2019 2020
Capex / sales 2,6 2,8 2,7
Capex / depreciation 65,7 80,1 82
Capex tangibles / tangible fixed assets 41,2 53,5 58,7
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 62,7 66,8 71,7

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Main shareholders

Bredband2

Main shareholders Share capital % Voting shares % Verified
Anders Lövgren 16.6 % 16.6 % 31 Mar 2019
Dan Örjan Berglund 13.3 % 13.3 % 31 Mar 2019
Leif Danielsson 7.9 % 7.9 % 31 Mar 2019
BI Asset Mgmt Fondsmaeglerselskab A/S 4.7 % 4.7 % 31 Jan 2019
Ulf Östberg 3.8 % 3.8 % 31 Mar 2019
Berenberg Funds 3.7 % 3.7 % 28 Feb 2019
Veralda Investment Ltd 2.4 % 2.4 % 31 Dec 2018
Daniel Krook 2.0 % 2.0 % 31 Mar 2019
Avanza Pension 1.7 % 1.7 % 31 Mar 2019
Pelagus Konsult AB 1.7 % 1.7 % 31 Mar 2019
Source: Holdings by Modular Finance AB

Insider list

Bredband2

Name Quantity Code Date
Advokat Rolf Johansson AB + 200 000 BUY 26 Nov 2018
Marand Group AB +2 000 000 BUY 29 Oct 2018
Mats Robert Burén + 92 911 BUY 29 Oct 2018
Mats Robert Burén + 64 000 BUY 29 Oct 2018
Mats Robert Burén + 16 000 BUY 29 Oct 2018
Mats Robert Burén + 24 279 BUY 29 Oct 2018
Mats Robert Burén + 2 810 BUY 29 Oct 2018
Mats Robert Burén + 200 000 BUY 25 Oct 2018
Mats Robert Burén + 500 BUY 25 Oct 2018
Mats Robert Burén + 76 037 BUY 25 Oct 2018

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