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Eltel

Eltel

Eltel is a leading Nordic field service provider for critical power and communication networks – infranets. The company builds, maintains and upgrades these essential lifelines for national network operators and owners. For example, Eltel provides infrastructure that allows renewable energy generation, electric vehicle charging and high-capacity communication networks. Eltel has divided its business operations into two business areas: Power and Communication. Meanwhile, the company has divided its business segments into four different geographical areas: Finland, Sweden, Norway and Denmark.

Eltel has focused on reducing its operational risk and improving its balance sheet in recent years, since the company initiated a turnaround strategy. Eltel may therefore now be in a position to start focusing more on opportunities. With improved profitability and strong cash generation, we expect the company to be able to start paying dividends, but also to look at potential opportunities to grow through mergers and acquisitions. Furthermore, there may be opportunities to upsell services by broadening the scope of the company’s offering in large framework agreements.

There are many competitors but few customers in Eltel’s markets. Thus the company is exposed to fierce price competition and substantial customer dependency. In 2020, the two largest customers accounted for 37% of sales. If one or several customers were to reduce their investment levels, the impact on Eltel would be notable. Furthermore, the business model is highly seasonal and weather-sensitive, meaning that abnormal weather conditions may affect the company’s results.

EURm 2020 2021e 2022e
Sales 938 826 834
Sales growth (%) -13,8 -11,9 1
EBITDA 63 51 57
EBITDA margin (%) 6,7 6,1 6,9
EBIT adj 11 18 26
EBIT adj margin (%) 1,1 2,1 3,1
Pretax profit 15 11 17
EPS rep 0,03 0,04 0,09
EPS growth (%) 118,2 40 106,4
EPS adj -0,05 0,05 0,09
DPS 0 0 0,04
EV/EBITDA (x) 7,6 7,9 6,7
EV/EBIT adj (x) 44,8 22,6 15
P/E (x) 74,5 42,9 20,8
P/E adj (x) -46,7 38,5 19,3
EV/sales (x) 0,5 0,5 0,5
FCF yield (%) 23,7 9,3 13,6
Dividend yield (%) 0 0 2,4
Net IB debt/EBITDA 1,9 2,2 1,7
Lease adj. FCF yield (%) 5,4 1,6 4,3
Lease adj. ND/EBITDA 2,9 2,4 1,3
EURm 2020 2021e 2022e
Sales 938 826 834
COGS -839 -728 -730
Gross profit 99 98 104
Other operating items -36 -48 -47
EBITDA 63 51 57
Depreciation and amortisation -38 -33 -31
Of which leasing depreciation -27 -26 -23
EBITA 26 18 26
EO items 14 0 0
Impairment and PPA amortisation -1 0 -1
EBIT 25 18 26
Net financial items -10 -7 -8
Pretax profit 15 11 17
Tax -10 -4 -4
Net profit 5 7 14
Minority interest 1 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 6 7 14
EPS 0,03 0,04 0,09
EPS Adj -0,05 0,05 0,09
Total extraordinary items after tax 14,1 -0,1 0
Leasing payments -27 -26 -23
Tax rate (%) -64,7 -37,5 -20,6
Gross margin (%) 10,6 11,9 12,5
EBITDA margin (%) 6,7 6,1 6,9
EBITA margin (%) 2,7 2,2 3,2
EBIT margin (%) 2,6 2,1 3,1
Pretax margin (%) 1,6 1,3 2,1
Net margin (%) 0,6 0,8 1,7
Growth rates Y/Y 2020 2021 2022
Sales growth (%) -13,8 -11,9 1
EBITDA growth (%) 112,1 -19,5 12,8
EBIT growth (%) 321,4 -28,9 45,8
Net profit growth (%) 120,9 26,1 106,3
EPS growth (%) 118,2 40 106,4
Profitability 2020 2021 2022
ROE (%) 2,8 3,2 6,2
ROE Adj (%) -3,5 3,4 6,5
ROCE (%) 5,7 4,4 6,2
ROCE Adj(%) 2,7 4,6 6,4
ROIC (%) 2,3 3,1 5,8
ROIC Adj (%) 1 3,1 5,8
Adj earnings numbers 2020 2021 2022
EBITDA Adj 49 51 57
EBITDA Adj margin (%) 5,2 6,2 6,9
EBITDA lease Adj 22 25 35
EBITDA lease Adj margin (%) 2,4 3 4,2
EBITA Adj 11 18 26
EBITA Adj margin (%) 1,2 2,2 3,2
EBIT Adj 11 18 26
EBIT Adj margin (%) 1,1 2,1 3,1
Pretax profit Adj 2 11 18
Net profit Adj -8 7 14
Net profit to shareholders Adj -8 7 15
Net Adj margin (%) -0,9 0,9 1,7
EURm 2020 2021e 2022e
Shareholders equity 212 218 232
Minority 8 8 8
Total equity 219 226 239
Long-term debt 28 25 25
Pension debt 17 15 11
Convertible debt 0 0 0
Leasing liability 61 57 57
Total other long-term liabilities 14 14 14
Short-term debt 62 88 88
Accounts payable 197 173 179
Other current liabilities 79 70 70
Total liabilities and equity 677 668 684
Net IB debt 122 111 95
Net IB debt excl. pension debt 105 96 84
Net IB debt excl. leasing 64 59 47
Capital invested 355 351 349
Working capital -27 -24 -29
EV breakdown 2020 2021 2022
Market cap. diluted (m) 350 282 282
Net IB debt Adj 122 111 95
Market value of minority 8 8 8
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 480 401 385
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 126,4 122,8 123,3
Working capital / sales (%) -2,1 -3,1 -3,2
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 55,7 49,1 39,8
Net debt / market cap (%) 41,2 39,3 33,8
Equity ratio (%) 32,4 33,8 35
Net IB debt adj. / equity (%) 55,7 49,1 39,8
Current ratio (%) 76,4 77,7 80,3
EBITDA / net interest (%) 642,9 731,3 686,2
Net IB debt / EBITDA (%) 193,7 218,6 166,7
Net IB debt / EBITDA lease Adj (%) 287,4 236,1 134,5
Interest cover (%) 252,4 260,7 316,2
EBITDA 63 51 57
Net financial items -10 -7 -8
Paid tax -4 -4 -4
Non-cash items -17 -4 -4
Cash flow before change in WC 33 36 42
Change in WC 17 -2 4
Operating cash flow 49 34 46
CAPEX tangible fixed assets -4 -4 -8
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 45 30 39
Dividend paid -1 0 0
Share issues and buybacks 0 0 0
Lease liability amortisation -26 -26 -26
Other non cash items 0 1 0
Balance Sheet (EURm) 2020 2021 2022
Goodwill 265 265 265
Other intangible assets 38 41 40
Tangible fixed assets 20 12 11
Right-of-use asset 59 57 61
Total other fixed assets 20 20 20
Fixed assets 402 395 397
Inventories 12 11 11
Receivables 202 173 175
Other current assets 35 35 35
Cash and liquid assets 26 54 66
Total assets 677 668 684
EURm 2020 2021e 2022e
Shares outstanding adj. 157 157 157
Fully diluted shares Adj 157 157 157
EPS 0,03 0,04 0,09
Dividend per share Adj 0 0 0
EPS Adj -0,05 0,05 0,09
BVPS 1,35 1,39 1,48
BVPS Adj -0,34 -0,3 -0,21
Net IB debt / share 0,8 0,7 0,7
Share price 1,89 1,8 1,8
Market cap. (m) 296 282 282
Valuation 2020 2021 2022
P/E 74,5 42,9 20,8
EV/sales 0,51 0,48 0,46
EV/EBITDA 7,6 7,9 6,7
EV/EBITA 18,8 22,2 14,6
EV/EBIT 19,3 22,7 15
Dividend yield (%) 0 0 2,4
FCF yield (%) 23,7 9,3 13,6
Lease adj. FCF yield (%) 5,4 1,6 4,3
P/BVPS 1,65 1,29 1,22
P/BVPS Adj -6,58 -6,04 -8,52
P/E Adj -46,7 38,5 19,3
EV/EBITDA Adj 9,8 7,9 6,7
EV/EBITA Adj 42,1 22 14,6
EV/EBIT Adj 44,8 22,6 15
EV/cap. employed 1,2 1 0,9
Investment ratios 2020 2021 2022
Capex / sales 0,5 0,5 0,9
Capex / depreciation 40,7 62 90
Capex tangibles / tangible fixed assets 22 33,5 65,6
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 54 54 72,9

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Media

Eltel - Company presentation with CEO Casimir Lindholm

Main shareholders -

Main shareholders Share capital % Voting shares % Verified
Triton 16.3 % 16.4 % 30 Sep 2021
Wipunen varainhallinta Oy 13.5 % 13.5 % 27 Apr 2021
Fjärde AP-fonden 9.5 % 9.6 % 30 Sep 2021
Heikintorppa Oy 6.7 % 6.8 % 27 Apr 2021
Mariatorp Oy 6.3 % 6.4 % 27 Apr 2021
Första AP-fonden 5.8 % 5.9 % 30 Sep 2021
Fidelity International (FIL) 4.5 % 4.5 % 31 Aug 2021
Swedbank Robur Fonder 4.0 % 4.1 % 30 Sep 2021
Lancelot Asset Management AB 2.5 % 2.6 % 30 Jun 2021
Mandatum Life Funds 1.8 % 1.8 % 30 Sep 2021
Source: Holdings by Modular Finance AB