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CTT Systems

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 2019 2020e 2021e
Sales 355 210 289
Sales growth (%) 12,5 -40,7 37,5
EBITDA 126 52 93
EBITDA margin (%) 35,6 24,8 32,3
EBIT adj 113 45 86
EBIT adj margin (%) 31,7 21,3 29,7
Pretax profit 118 43 85
EPS rep 7,39 2,66 5,29
EPS growth (%) 32,9 -63,9 98,5
EPS adj 6,84 2,66 5,29
DPS 4,05 1,87 3,7
EV/EBITDA (x) 16,9 27,3 15
EV/EBIT adj (x) 19 31,8 16,3
P/E (x) 23,9 44,3 22,3
P/E adj (x) 25,8 44,3 22,3
EV/sales (x) 6 6,8 4,8
FCF yield (%) 4,1 1,7 3,3
Dividend yield (%) 2,3 1,6 3,1
Net IB debt/EBITDA -0,6 -1 -0,8
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 355 210 289
COGS 0 0 0
Gross profit 355 210 289
Other operating items -229 -158 -196
EBITDA 126 52 93
Depreciation on tangibles -4 -5 -3
Depreciation on intangibles -2 -2 -4
EBITA 120 45 86
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 120 45 86
Other financial items 0 0 0
Net financial items -2 -2 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 118 43 85
Tax -25 -9 -19
Net profit 93 33 66
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 93 33 66
EPS 7,39 2,66 5,29
EPS Adj 6,84 2,66 5,29
Total extraordinary items after tax 6,9 0 0
Tax rate (%) -21,5 -21,6 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 35,6 24,8 32,3
EBITA margin (%) 33,7 21,3 29,7
EBIT margin (%) 33,7 21,3 29,7
Pretax margin (%) 33,2 20,2 29,4
Net margin (%) 26,1 15,9 22,9
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 12,5 -40,7 37,5
EBITDA growth (%) 31,2 -58,7 79,1
EBIT growth (%) 32,6 -62,4 91,6
Net profit growth (%) 32,9 -63,9 98,5
EPS growth (%) 32,9 -63,9 98,5
Profitability 2019 2020 2021
ROE (%) 42,2 14,4 27,1
ROE Adj (%) 39,1 14,4 27,1
ROCE (%) 47,6 17 31,1
ROCE Adj(%) 44,8 17 31,1
ROIC (%) 55,4 20,1 35,8
ROIC Adj (%) 52,2 20,1 35,8
Adj earnings numbers 2019 2020 2021
EBITDA Adj 119 52 93
EBITDA Adj margin (%) 33,6 24,8 32,3
EBITA Adj 113 45 86
EBITA Adj margin (%) 31,7 21,3 29,7
EBIT Adj 113 45 86
EBIT Adj margin (%) 31,7 21,3 29,7
Pretax profit Adj 111 43 85
Net profit Adj 86 33 66
Net profit to shareholders Adj 86 33 66
Net Adj margin (%) 24,2 15,9 22,9
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 126 52 93
Net financial items -2 -2 -1
Paid tax -14 -9 -19
Non-cash items -15 0 0
Cash flow before change in WC 96 41 74
Change in WC 13 8 -4
Operating cash flow 109 49 70
CAPEX tangible fixed assets -9 -5 -6
CAPEX intangible fixed assets -14 -19 -14
Acquisitions and disposals 5 0 0
Free cash flow 91 25 49
Dividend paid -51 -51 -23
Share issues and buybacks 0 0 0
Other non cash items -2 0 0
Decrease in net IB debt 40 -25 26
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 55 71 81
Tangible fixed assets 45 45 48
Other fixed assets 2 2 2
Fixed assets 102 118 131
Inventories 76 61 69
Receivables 76 48 61
Other current assets 0 0 0
Cash and liquid assets 110 85 111
Total assets 363 312 372
Shareholders equity 240 223 266
Minority 0 0 0
Total equity 240 223 266
Long-term debt 33 33 33
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 8 8 8
Short-term debt 0 0 0
Accounts payable 82 48 65
Other current liabilities 0 0 0
Total liabilities and equity 363 312 372
Net IB debt -78 -52 -78
Net IB debt excl. pension debt -78 -52 -78
Capital invested 171 179 196
Working capital 70 61 65
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2215 1478 1478
Net IB debt Adj -78 -52 -78
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 2138 1426 1400
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 104,1 62,4 84,6
Capital invested turnover (%) 209,3 120,2 154,3
Capital employed turnover (%) 141,3 79,7 104,6
Inventories / sales (%) 22 32,5 22,5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 23,1 30,9 19,6
Working capital / sales (%) 21,4 31 21,8
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -32,3 -23,4 -29,4
Net debt / market cap (%) -3,9 -3,5 -5,3
Equity ratio (%) 66,2 71,4 71,5
Net IB debt adj. / equity (%) -32,3 -23,4 -29,4
Current ratio (%) 319,4 400,9 369,9
EBITDA / net interest (%) 7890,6 2268,4 9346,6
Net IB debt / EBITDA (%) -61,4 -99,9 -83,6
Interest cover (%) 7468,8 1951 8596,6
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 13 13 13
Fully diluted shares Adj 13 13 13
EPS 7,39 2,66 5,29
Dividend per share Adj 4,1 1,9 3,7
EPS Adj 6,84 2,66 5,29
BVPS 19,17 17,79 21,21
BVPS Adj 14,82 12,12 14,72
Net IB debt / share -6,2 -4,2 -6,2
Share price 158,02 118 118
Market cap. (m) 1980 1478 1478
Valuation 2019 2020 2021
P/E 23,9 44,3 22,3
EV/sales 6,02 6,78 4,84
EV/EBITDA 16,9 27,3 15
EV/EBITA 17,9 31,8 16,3
EV/EBIT 17,9 31,8 16,3
Dividend yield (%) 2,3 1,6 3,1
FCF yield (%) 4,1 1,7 3,3
P/BVPS 9,22 6,63 5,56
P/BVPS Adj 11,93 9,73 8,02
P/E Adj 25,8 44,3 22,3
EV/EBITDA Adj 17,9 27,3 15
EV/EBITA Adj 19 31,8 16,3
EV/EBIT Adj 19 31,8 16,3
EV/cap. employed 7,8 5,6 4,7
Investment ratios 2019 2020 2021
Capex / sales 6,3 11,3 7
Capex / depreciation 330,4 325,8 270,2
Capex tangibles / tangible fixed assets 18,8 10,7 12,2
Capex intangibles / definite intangibles 25,3 26,7 17,8
Depreciation on intangibles / definite intangibles 4,2 3,5 5
Depreciation on tangibles / tangibles 9,8 10,6 7,3
N/A N/A N/A

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Media

CTT Systems - Company presentation with CEO Torbjörn Johansson (in English)
CTT Systems - Interview with CEO Torbjörn Johansson

Main shareholders - CTT Systems

Main shareholders Share capital % Voting shares % Verified
Tomas Torlöf 13.4 % 13.4 % 31 Aug 2020
Rockwell Collins / Collins Aerospace 9.0 % 9.0 % 30 Jun 2020
Swedbank Robur Fonder 8.0 % 8.0 % 31 Aug 2020
ODIN Fonder 4.4 % 4.4 % 31 Aug 2020
Catron Design AB 4.3 % 4.3 % 31 Aug 2020
Nya Jorame Holding AB 4.3 % 4.3 % 31 Aug 2020
If Skadeförsäkring AB 4.1 % 4.1 % 31 Aug 2020
SEB Fonder 3.5 % 3.5 % 31 Aug 2020
Lannebo Fonder 3.5 % 3.5 % 31 Aug 2020
Allianz Global Investors 2.4 % 2.4 % 31 Jul 2020
Source: Holdings by Modular Finance AB

Insider list - CTT Systems

Name Quantity Code Date
Tony Rosendal + 800 BUY 10 Sep 2020
Anna Höjer + 337 BUY 27 Aug 2020
Margaretha Rahm + 85 BUY 26 Aug 2020
Henrik Höjer + 1 000 BUY 26 Aug 2020
Peter Landquist + 520 BUY 24 Aug 2020
Truls Tomas Ingemar Torlöf + 44 000 BUY 20 Aug 2020
Hans Torbjörn Erland Johansson + 1 500 BUY 19 Aug 2020
Daniel Ekstrand + 442 BUY 19 Aug 2020
Daniel Ekstrand + 1 000 BUY 18 Aug 2020
Tony Rosendal + 300 BUY 11 Jun 2020

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