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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 356 338 379
Sales growth (%) 12,8 -5,1 12,2
EBITDA 130 132 145
EBITDA margin (%) 36,5 39,1 38,3
EBIT adj 118 125 137
EBIT adj margin (%) 33,3 36,9 36,2
Pretax profit 121 124 136
EPS rep 7,56 7,69 8,46
EPS growth (%) 36 1,7 10
EPS adj 7,19 7,69 8,46
DPS 5,5 5,75 6
EV/EBITDA (x) 18,9 18,4 16,7
EV/EBIT adj (x) 20,7 19,6 17,7
P/E (x) 26,6 26,1 23,8
P/E adj (x) 27,9 26,1 23,8
EV/sales (x) 6,9 7,2 6,4
FCF yield (%) 3,2 3,4 3,5
Dividend yield (%) 2,7 2,9 3
Net IB debt/EBITDA -0,5 -0,6 -0,7
SEKm 2019 2020e 2021e
Sales 356 338 379
COGS 0 0 0
Gross profit 356 338 379
Other operating items -226 -206 -234
EBITDA 130 132 145
Depreciation on tangibles -3 -3 -4
Depreciation on intangibles -4 -4 -4
EBITA 123 125 137
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 123 125 137
Other financial items 0 0 0
Net financial items -2 -1 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 121 124 136
Tax -26 -27 -30
Net profit 95 96 106
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 95 96 106
EPS 7,56 7,69 8,46
EPS Adj 7,19 7,69 8,46
Total extraordinary items after tax 4,6 0 0
Tax rate (%) -21,5 -22 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 36,5 39,1 38,3
EBITA margin (%) 34,6 36,9 36,2
EBIT margin (%) 34,6 36,9 36,2
Pretax margin (%) 33,9 36,6 35,8
Net margin (%) 26,6 28,5 28
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 12,8 -5,1 12,2
EBITDA growth (%) 35,1 1,7 9,7
EBIT growth (%) 36,5 1,3 9,9
Net profit growth (%) 36 1,7 10
EPS growth (%) 36 1,7 10
Profitability 2019 2020 2021
ROE (%) 43 37,6 37
ROE Adj (%) 40,9 37,6 37
ROCE (%) 48,5 42,8 42,6
ROCE Adj(%) 46,7 42,8 42,6
ROIC (%) 54,2 50,3 51,5
ROIC Adj (%) 52,2 50,3 51,5
Adj earnings numbers 2019 2020 2021
EBITDA Adj 125 132 145
EBITDA Adj margin (%) 35,2 39,1 38,3
EBITA Adj 118 125 137
EBITA Adj margin (%) 33,3 36,9 36,2
EBIT Adj 118 125 137
EBIT Adj margin (%) 33,3 36,9 36,2
Pretax profit Adj 116 124 136
Net profit Adj 90 96 106
Net profit to shareholders Adj 90 96 106
Net Adj margin (%) 25,3 28,5 28
SEKm 2019 2020e 2021e
EBITDA 130 132 145
Net financial items -2 -1 -1
Paid tax -26 -27 -30
Non-cash items 0 0 0
Cash flow before change in WC 102 104 114
Change in WC -5 -2 -13
Operating cash flow 97 102 101
CAPEX tangible fixed assets -9 -7 -6
CAPEX intangible fixed assets -14 -8 -8
Acquisitions and disposals 5 0 0
Free cash flow 79 86 87
Dividend paid -51 -69 -72
Share issues and buybacks 0 0 0
Other non cash items -5 0 0
Decrease in net IB debt 25 17 15
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 53 57 61
Tangible fixed assets 46 50 52
Other fixed assets 2 2 2
Fixed assets 101 109 115
Inventories 91 90 102
Receivables 93 91 102
Other current assets 0 0 0
Cash and liquid assets 97 115 130
Total assets 382 404 449
Shareholders equity 242 270 304
Minority 0 0 0
Total equity 242 270 304
Long-term debt 35 35 35
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 96 91 102
Other current liabilities 0 0 0
Total liabilities and equity 262 319 382
Net IB debt -62 -79 -94
Net IB debt excl. pension debt -62 -79 -94
Capital invested 188 198 217
Working capital 87 90 102
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2518 2518 2518
Net IB debt Adj -62 -79 -94
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 2456 2439 2424
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 101,6 86 88,8
Capital invested turnover (%) 199,7 174,8 182,4
Capital employed turnover (%) 140,3 116 117,8
Inventories / sales (%) 24,1 26,7 25,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 25,1 27,7 25,5
Working capital / sales (%) 23,8 26,2 25,3
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -25,6 -29,4 -31,1
Net debt / market cap (%) -3,1 -3,2 -3,8
Equity ratio (%) 63,5 66,7 67,6
Net IB debt adj. / equity (%) -25,6 -29,4 -31,1
Current ratio (%) 291,9 323,8 326,7
EBITDA / net interest (%) 5417,6 11018,9 12088,2
Net IB debt / EBITDA (%) -47,7 -60 -65,1
Interest cover (%) 5128 10393,9 11421,5
SEKm 2019 2020e 2021e
Shares outstanding adj. 13 13 13
Fully diluted shares Adj 13 13 13
EPS 7,56 7,69 8,46
Dividend per share Adj 5,5 5,8 6
EPS Adj 7,19 7,69 8,46
BVPS 19,34 21,53 24,24
BVPS Adj 15,12 16,96 19,34
Net IB debt / share -4,9 -6,3 -7,5
Share price 158,02 201 201
Market cap. (m) 1980 2518 2518
Valuation 2019 2020 2021
P/E 26,6 26,1 23,8
EV/sales 6,9 7,22 6,39
EV/EBITDA 18,9 18,4 16,7
EV/EBITA 20 19,6 17,7
EV/EBIT 20 19,6 17,7
Dividend yield (%) 2,7 2,9 3
FCF yield (%) 3,2 3,4 3,5
P/BVPS 10,39 9,34 8,29
P/BVPS Adj 13,3 11,85 10,39
P/E Adj 27,9 26,1 23,8
EV/EBITDA Adj 19,6 18,4 16,7
EV/EBITA Adj 20,7 19,6 17,7
EV/EBIT Adj 20,7 19,6 17,7
EV/cap. employed 8,9 8 7,2
Investment ratios 2019 2020 2021
Capex / sales 6,3 4,5 3,7
Capex / depreciation 322,5 202,7 175,3
Capex tangibles / tangible fixed assets 19,2 13,6 11
Capex intangibles / definite intangibles 25,6 14,7 13,6
Depreciation on intangibles / definite intangibles 7,1 7,1 7
Depreciation on tangibles / tangibles 6,9 6,9 7,1

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Media

CTT Systems - Interview with CEO Torbjörn Johansson
CTT Systems - Company presentation with CEO Torbjörn Johansson

Main shareholders - CTT Systems

Main shareholders Share capital % Voting shares % Verified
Tomas Torlöf 13.0 % 13.0 % 31 Dec 2019
Rockwell Collins / Collins Aerospace 9.0 % 9.0 % 31 Dec 2019
Swedbank Robur Fonder 8.0 % 8.0 % 31 Dec 2019
Catron Design AB 4.3 % 4.3 % 31 Dec 2019
Nya Jorame Holding AB 4.3 % 4.3 % 31 Dec 2019
If Skadeförsäkring AB 4.1 % 4.1 % 31 Dec 2019
Lannebo Fonder 3.8 % 3.8 % 31 Dec 2019
SEB Fonder 2.2 % 2.2 % 31 Dec 2019
Christer Torlöf 2.1 % 2.1 % 31 Dec 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
Per Anders Fyrenius + 340 BUY 12 Nov 2019
Daniel Ekstrand + 500 BUY 28 Oct 2019
Hans Torbjörn Erland Johansson + 2 000 BUY 28 Oct 2019
Hans Torbjörn Erland Johansson + 400 BUY 22 May 2019
Maria Vester + 275 BUY 8 May 2019
Per Gustafsson + 271 BUY 8 May 2019
Peter Landquist + 457 BUY 8 May 2019
Daniel Ekstrand + 354 BUY 8 May 2019
Hans Torbjörn Erland Johansson + 1 755 BUY 8 May 2019
Tony Rosendal + 870 BUY 21 Nov 2018

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