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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 315 344 346
Sales growth (%) 15,4 9,2 0,4
EBITDA 96 102 108
EBITDA margin (%) 30,5 29,6 31,3
EBIT adj 92 94 101
EBIT adj margin (%) 29,3 27,3 29,1
Pretax profit 89 93 99
EPS rep 5,56 5,8 6,19
EPS growth (%) 46,5 4,3 6,8
EPS adj 5,74 5,8 6,19
DPS 4,05 4,1 4,35
EV/EBITDA (x) 15,7 19 17,8
EV/EBIT adj (x) 16,3 20,6 19,1
P/E (x) 22,2 27,1 25,4
P/E adj (x) 21,4 27,1 25,4
EV/sales (x) 4,8 5,6 5,6
FCF yield (%) 2,4 2,7 2,9
Dividend yield (%) 3,3 2,6 2,8
Net IB debt/EBITDA -0,4 -0,4 -0,4
SEKm 2018 2019e 2020e
Sales 315 344 346
COGS 0 0 0
Gross profit 315 344 346
Other operating items -219 -243 -238
EBITDA 96 102 108
Depreciation on tangibles -3 -4 -3
Depreciation on intangibles -3 -4 -4
EBITA 90 94 101
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 90 94 101
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 93 99
Tax -20 -20 -22
Net profit 70 73 78
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 70 73 78
EPS 5,56 5,8 6,19
EPS Adj 5,74 5,8 6,19
Total extraordinary items after tax -2,3 0 0
Tax rate (%) -22,1 -22 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 30,5 29,6 31,3
EBITA margin (%) 28,6 27,3 29,1
EBIT margin (%) 28,6 27,3 29,1
Pretax margin (%) 28,4 27 28,8
Net margin (%) 22,1 21,1 22,4
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 15,4 9,2 0,4
EBITDA growth (%) 46,8 5,8 6,2
EBIT growth (%) 55,6 4,4 7
Net profit growth (%) 46,5 4,3 6,8
EPS growth (%) 46,5 4,3 6,8
Profitability 2018 2019 2020
ROE (%) 38,6 34,7 33,3
ROE Adj (%) 39,8 34,7 33,3
ROCE (%) 62,3 54,9 52,5
ROCE Adj(%) 63,9 54,9 52,5
ROIC (%) 47,4 41,6 39,9
ROIC Adj (%) 48,7 41,6 39,9
Adj earnings numbers 2018 2019 2020
EBITDA Adj 99 102 108
EBITDA Adj margin (%) 31,2 29,6 31,3
EBITA Adj 92 94 101
EBITA Adj margin (%) 29,3 27,3 29,1
EBIT Adj 92 94 101
EBIT Adj margin (%) 29,3 27,3 29,1
Pretax profit Adj 92 93 99
Net profit Adj 72 73 78
Net profit to shareholders Adj 72 73 78
Net Adj margin (%) 22,8 21,1 22,4
SEKm 2018 2019e 2020e
EBITDA 96 102 108
Net financial items -1 -1 -1
Paid tax -20 -20 -22
Non-cash items 3 0 0
Cash flow before change in WC 79 80 85
Change in WC -18 -2 -4
Operating cash flow 61 78 81
CAPEX tangible fixed assets -5 -6 -6
CAPEX intangible fixed assets -20 -21 -19
Acquisitions and disposals 0 0 0
Free cash flow 37 52 57
Dividend paid -35 -51 -51
Share issues and buybacks 0 0 0
Other non cash items 0 0 0
Decrease in net IB debt 2 2 5
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 43 60 75
Tangible fixed assets 41 43 45
Other fixed assets 2 2 2
Fixed assets 86 104 121
Inventories 78 88 90
Receivables 87 90 92
Other current assets 0 0 0
Cash and liquid assets 69 70 75
Total assets 319 351 378
Shareholders equity 198 220 246
Minority 0 0 0
Total equity 198 220 246
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 93 93
Other current liabilities 0 0 0
Total liabilities and equity 245 262 319
Net IB debt -37 -39 -44
Net IB debt excl. pension debt -37 -39 -44
Capital invested 166 187 207
Working capital 82 84 88
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1544 1972 1972
Net IB debt Adj -37 -39 -44
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 1933 1928
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 108,6 102,8 94,8
Capital invested turnover (%) 213,1 195,3 175,5
Capital employed turnover (%) 218 201,1 180,2
Inventories / sales (%) 23 24,1 25,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 23,1 25,5 26,9
Working capital / sales (%) 23,3 24,2 25
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -18,8 -17,6 -17,9
Net debt / market cap (%) -1,7 -2 -2,2
Equity ratio (%) 62,2 62,7 65,2
Net IB debt adj. / equity (%) -18,8 -17,6 -17,9
Current ratio (%) 282,9 266 275,2
EBITDA / net interest (%) 13750 11319,7 9016,6
Net IB debt / EBITDA (%) -38,6 -38 -40,8
Interest cover (%) 12878,6 10453,1 8391,6
SEKm 2018 2019e 2020e
Shares outstanding adj. 13 13 13
Fully diluted shares Adj 13 13 13
EPS 5,56 5,8 6,19
Dividend per share Adj 4 4,1 4,3
EPS Adj 5,74 5,8 6,19
BVPS 15,83 17,58 19,67
BVPS Adj 12,39 12,82 13,72
Net IB debt / share -3 -3,1 -3,5
Share price 170,2 157,4 157,4
Market cap. (m) 2133 1972 1972
Valuation 2018 2019 2020
P/E 22,2 27,1 25,4
EV/sales 4,78 5,61 5,58
EV/EBITDA 15,7 19 17,8
EV/EBITA 16,7 20,6 19,1
EV/EBIT 16,7 20,6 19,1
Dividend yield (%) 3,3 2,6 2,8
FCF yield (%) 2,4 2,7 2,9
P/BVPS 7,78 8,95 8
P/BVPS Adj 9,95 12,27 11,47
P/E Adj 21,4 27,1 25,4
EV/EBITDA Adj 15,3 19 17,8
EV/EBITA Adj 16,3 20,6 19,1
EV/EBIT Adj 16,3 20,6 19,1
EV/cap. employed 9,4 10,7 9,5
Investment ratios 2018 2019 2020
Capex / sales 7,8 7,6 7,1
Capex / depreciation 404,9 335,6 327,4
Capex tangibles / tangible fixed assets 12,5 12,9 12,4
Capex intangibles / definite intangibles 45,5 34,7 25,5
Depreciation on intangibles / definite intangibles 7,6 7,1 5,4
Depreciation on tangibles / tangibles 6,9 8,4 7,7

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Main shareholders

CTT Systems

Main shareholders Share capital % Voting shares % Verified
Tomas Torlöf 13.0 % 13.0 % 28 Feb 2019
Rockwell Collins Inc 9.0 % 9.0 % 31 Dec 2018
Swedbank Robur Fonder 8.0 % 8.0 % 28 Feb 2019
Catron Design AB 4.3 % 4.3 % 28 Feb 2019
Nya Jorame Holding AB 4.3 % 4.3 % 28 Feb 2019
If Skadeförsäkring AB 4.1 % 4.1 % 28 Feb 2019
AMF Försäkring & Fonder 2.3 % 2.3 % 28 Feb 2019
Bellevue Asset Management 2.2 % 2.2 % 31 Jan 2019
Christer Torlöf 2.1 % 2.1 % 28 Feb 2019
Allianz Global Investors 2.0 % 2.0 % 31 Dec 2018
Source: Holdings by Modular Finance AB

Insider list

CTT Systems

Name Quantity Code Date
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
Tony Rosendal + 840 BUY 15 Nov 2018
Tommy Ahlsved + 280 BUY 7 Nov 2018
Trulscom Förvaltning AB + 29 372 BUY 5 Nov 2018
Hans Torbjörn Erland Johansson + 5 000 BUY 1 Nov 2018
Peter Landquist + 325 BUY 1 Nov 2018
Torleif Nilsson + 1 128 BUY 1 Nov 2018

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