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CTT Systems

Systems for climate control in airplanes

CTT Systems develops climate control products for aircraft, including dehumidification systems to prevent condensation and humidifiers for crew and passenger wellbeing. CTT’s products are offered on the Boeing 787 and 777X as well as the Airbus A380 and A350. The company holds a majority market share within both dehumidification and humidification products and is a tier-1 supplier to the Boeing 787 and 777X.

CTT holds virtually a 100% market share in airplane dehumidification systems and a big majority share of the market for humidification systems. Its dehumidification products offer large fuel and cost savings while its humidification products increase humidity levels and comfort for passengers. Should the company be able to penetrate the market for narrow-body aircraft (Boeing 737 MAX/Airbus A320Neo), it would have a strong pipeline of sales and high profitability from aftermarket sales for 20-40 years ahead. The market also offers considerable barriers to entry due to customer relationships, certifications and proven reliability among OEM suppliers.

The high profitability in CTT’s systems could attract new competitors, or result in the OEM suppliers providing their own solutions. While CTT’s relationships with Airbus and Boeing are highly valuable, they have little influence over pricing and therefore are sensitive to contract renegotiations. Almost all revenues are dollar-based, implying a strong currency sensitivity. The main risks entail a lack of market penetration due to low willingness among airliners to have dehumidifiers and humidifiers installed.

SEKm 2018 2019e 2020e
Sales 315 362 365
Sales growth (%) 15,4 14,9 0,7
EBITDA 96 117 124
EBITDA margin (%) 30,5 32,2 33,9
EBIT adj 92 109 116
EBIT adj margin (%) 29,3 30,2 31,9
Pretax profit 89 109 115
EPS rep 5,56 6,77 7,16
EPS growth (%) 46,5 21,7 5,8
EPS adj 5,74 6,77 7,16
DPS 4,05 4,4 4,65
EV/EBITDA (x) 15,7 17,6 16,4
EV/EBIT adj (x) 16,3 18,7 17,4
P/E (x) 22,2 24,6 23,3
P/E adj (x) 21,4 24,6 23,3
EV/sales (x) 4,8 5,6 5,6
FCF yield (%) 2,4 2,8 3,5
Dividend yield (%) 3,3 2,6 2,8
Net IB debt/EBITDA -0,4 -0,4 -0,5
SEKm 2018 2019e 2020e
Sales 315 362 365
COGS 0 0 0
Gross profit 315 362 365
Other operating items -219 -246 -241
EBITDA 96 117 124
Depreciation on tangibles -3 -3 -3
Depreciation on intangibles -3 -4 -4
EBITA 90 109 116
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 90 109 116
Other financial items 0 0 0
Net financial items -1 -1 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 89 109 115
Tax -20 -24 -25
Net profit 70 85 90
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 70 85 90
EPS 5,56 6,77 7,16
EPS Adj 5,74 6,77 7,16
Total extraordinary items after tax -2,3 0 0
Tax rate (%) -22,1 -21,9 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 30,5 32,2 33,9
EBITA margin (%) 28,6 30,2 31,9
EBIT margin (%) 28,6 30,2 31,9
Pretax margin (%) 28,4 30 31,5
Net margin (%) 22,1 23,4 24,6
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 15,4 14,9 0,7
EBITDA growth (%) 46,8 21,1 6,2
EBIT growth (%) 55,6 21,3 6,3
Net profit growth (%) 46,5 21,7 5,8
EPS growth (%) 46,5 21,7 5,8
Profitability 2018 2019 2020
ROE (%) 38,6 39,4 35,9
ROE Adj (%) 39,8 39,4 35,9
ROCE (%) 42,8 44,4 41,4
ROCE Adj(%) 43,9 44,4 41,4
ROIC (%) 46,3 47 44,6
ROIC Adj (%) 47,5 47 44,6
Adj earnings numbers 2018 2019 2020
EBITDA Adj 99 117 124
EBITDA Adj margin (%) 31,2 32,2 33,9
EBITA Adj 92 109 116
EBITA Adj margin (%) 29,3 30,2 31,9
EBIT Adj 92 109 116
EBIT Adj margin (%) 29,3 30,2 31,9
Pretax profit Adj 92 109 115
Net profit Adj 72 85 90
Net profit to shareholders Adj 72 85 90
Net Adj margin (%) 22,8 23,4 24,6
SEKm 2018 2019e 2020e
EBITDA 96 117 124
Net financial items -1 -1 -1
Paid tax -20 -24 -25
Non-cash items 3 0 0
Cash flow before change in WC 79 92 97
Change in WC -18 -7 -3
Operating cash flow 61 85 94
CAPEX tangible fixed assets -5 -6 -6
CAPEX intangible fixed assets -20 -21 -15
Acquisitions and disposals 0 0 0
Free cash flow 37 58 74
Dividend paid -35 -51 -55
Share issues and buybacks 0 0 0
Other non cash items 0 0 0
Decrease in net IB debt 2 7 19
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 43 60 71
Tangible fixed assets 41 43 46
Other fixed assets 2 2 2
Fixed assets 86 105 118
Inventories 78 93 95
Receivables 87 94 97
Other current assets 0 0 0
Cash and liquid assets 69 75 94
Total assets 319 368 404
Shareholders equity 198 232 267
Minority 0 0 0
Total equity 198 232 267
Long-term debt 31 31 31
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 7 7 7
Short-term debt 0 0 0
Accounts payable 83 98 98
Other current liabilities 0 0 0
Total liabilities and equity 245 262 319
Net IB debt -37 -44 -63
Net IB debt excl. pension debt -37 -44 -63
Capital invested 168 195 211
Working capital 82 90 93
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1544 2090 2090
Net IB debt Adj -37 -44 -63
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 1506 2046 2027
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 108,6 105,4 94,5
Capital invested turnover (%) 208 199,5 179,5
Capital employed turnover (%) 149,6 146,9 129,8
Inventories / sales (%) 23 23,7 25,8
Customer advances / sales (%) 0 0 0
Payables / sales (%) 23,1 24,9 26,9
Working capital / sales (%) 23,3 23,8 25,1
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -18,8 -19 -23,5
Net debt / market cap (%) -1,7 -2,1 -3
Equity ratio (%) 62,2 63,1 66,1
Net IB debt adj. / equity (%) -18,8 -19 -23,5
Current ratio (%) 282,9 269 289,9
EBITDA / net interest (%) 13750 14568,3 10312,9
Net IB debt / EBITDA (%) -38,6 -37,8 -50,6
Interest cover (%) 12878,6 13674,6 9687,9
SEKm 2018 2019e 2020e
Shares outstanding adj. 13 13 13
Fully diluted shares Adj 13 13 13
EPS 5,56 6,77 7,16
Dividend per share Adj 4 4,4 4,7
EPS Adj 5,74 6,77 7,16
BVPS 15,83 18,55 21,31
BVPS Adj 12,39 13,74 15,66
Net IB debt / share -3 -3,5 -5
Share price 170,2 166,8 166,8
Market cap. (m) 2133 2090 2090
Valuation 2018 2019 2020
P/E 22,2 24,6 23,3
EV/sales 4,78 5,65 5,56
EV/EBITDA 15,7 17,6 16,4
EV/EBITA 16,7 18,7 17,4
EV/EBIT 16,7 18,7 17,4
Dividend yield (%) 3,3 2,6 2,8
FCF yield (%) 2,4 2,8 3,5
P/BVPS 7,78 8,99 7,83
P/BVPS Adj 9,95 12,14 10,65
P/E Adj 21,4 24,6 23,3
EV/EBITDA Adj 15,3 17,6 16,4
EV/EBITA Adj 16,3 18,7 17,4
EV/EBIT Adj 16,3 18,7 17,4
EV/cap. employed 6,6 7,8 6,8
Investment ratios 2018 2019 2020
Capex / sales 7,8 7,4 5,6
Capex / depreciation 404,9 375 272,4
Capex tangibles / tangible fixed assets 12,5 13,4 12,8
Capex intangibles / definite intangibles 45,5 34,9 20,6
Depreciation on intangibles / definite intangibles 7,6 6,4 5,7
Depreciation on tangibles / tangibles 6,9 7,6 7,6

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Main shareholders

CTT Systems

Main shareholders Share capital % Voting shares % Verified
Tomas Torlöf 13.0 % 13.0 % 31 May 2019
Rockwell Collins / Collins Aerospace 9.0 % 9.0 % 31 May 2019
Swedbank Robur Fonder 8.0 % 8.0 % 31 May 2019
Catron Design AB 4.3 % 4.3 % 31 May 2019
Nya Jorame Holding AB 4.3 % 4.3 % 31 May 2019
If Skadeförsäkring AB 4.1 % 4.1 % 31 May 2019
AMF Försäkring & Fonder 2.1 % 2.1 % 31 May 2019
Christer Torlöf 2.1 % 2.1 % 31 May 2019
Bellevue Asset Management 1.9 % 1.9 % 31 May 2019
Allianz Global Investors 1.8 % 1.8 % 31 Mar 2019
Source: Holdings by Modular Finance AB

Insider list

CTT Systems

Name Quantity Code Date
Hans Torbjörn Erland Johansson + 400 BUY 22 May 2019
Peter Landquist + 457 BUY 8 May 2019
Hans Torbjörn Erland Johansson + 1 755 BUY 8 May 2019
Maria Vester + 275 BUY 8 May 2019
Per Gustafsson + 271 BUY 8 May 2019
Daniel Ekstrand + 354 BUY 8 May 2019
Tony Rosendal + 870 BUY 21 Nov 2018
Mats Lundin + 500 BUY 20 Nov 2018
Mats Lundin + 500 BUY 19 Nov 2018
Mats Lundin + 500 BUY 19 Nov 2018

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