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Ferronordic

Authorised dealer of construction equipment in Russia

Ferronordic is an authorised dealer of construction equipment in Russia, selling equipment from Volvo CE (80%), Terex Trucks, Dressta, Mecalac and Rottne. The company’s goal is to become the leading service and sales company in the CIS markets. It is currently the only dealer in Russia, and one of the few in Europe, that is allowed to offer the ‘Certified Rebuild’ warranty extension on Volvo equipment following repairs and service. The company was founded in 2010 and currently has over 70 outlets and 800 employees throughout Russia.

The underlying market for western, high-quality CE equipment in Russia could offer high double-digit growth for several years ahead due to both a general Russian economic recovery, pent-up demand of 60,000 machines and a change in purchasing behaviour from a focus on initial price to total cost of ownership. As a certified Volvo CE distributor, Ferronordic’s ability to also gain market share would imply high sales growth potential.

Russia has historically been notorious for low transparency, poor corporate governance and corruption. Sanctions have also proven to have a significant impact on the Russian economy, which in turn could hamper the recovering market for construction equipment. Approximately 80% of Ferronordic’s sold units are Volvo, which implies a high reliance on that relationship.

SEKm 2018 2019e 2020e
Sales 3241 3893 4844
Sales growth (%) 26,3 20,1 24,4
EBITDA 322 402 482
EBITDA margin (%) 9,9 10,3 10
EBIT adj 274 342 417
EBIT adj margin (%) 8,4 8,8 8,6
Pretax profit 267 331 410
EPS rep 13,22 17,79 22,01
EPS growth (%) 63,9 34,6 23,7
EPS adj 14,18 17,79 22,01
DPS 7,5 6,5 8
EV/EBITDA (x) 4,8 4,7 3,6
EV/EBIT adj (x) 5,6 5,6 4,2
P/E (x) 9,6 8,6 7
P/E adj (x) 9 8,6 7
EV/sales (x) 0,5 0,5 0,4
FCF yield (%) 6,8 5,5 11,5
Dividend yield (%) 5,9 4,2 5,2
Net IB debt/EBITDA -0,9 -0,8 -1
SEKm 2018 2019e 2020e
EBITA 274 342 417
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 274 342 417
Other financial items -5 -4 0
Net financial items -7 -11 -7
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 267 331 410
Tax -58 -73 -90
Net profit 209 258 320
Minority interest -17 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 192 258 320
EPS 13,22 17,79 22,01
EPS Adj 14,18 17,79 22,01
Total extraordinary items after tax 0 0 0
Tax rate (%) -21,7 -22 -22
Gross margin (%) 19 19,1 18,8
EBITDA margin (%) 9,9 10,3 10
EBITA margin (%) 8,4 8,8 8,6
EBIT margin (%) 8,4 8,8 8,6
Pretax margin (%) 8,2 8,5 8,5
Net margin (%) 6,5 6,6 6,6
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 26,3 20,1 24,4
EBITDA growth (%) 50,4 25 20
EBIT growth (%) 46,1 24,9 22
Net profit growth (%) 38,2 23,6 23,7
EPS growth (%) 63,9 34,6 23,7
Profitability 2018 2019 2020
ROE (%) 30,3 35,4 34,8
ROE Adj (%) 30,3 35,4 34,8
ROCE (%) 82,5 80,4 80,1
ROCE Adj(%) 82,5 80,4 80,1
ROIC (%) 74,6 69,5 67,3
ROIC Adj (%) 74,6 69,5 67,3
Adj earnings numbers 2018 2019 2020
EBITDA Adj 322 402 482
EBITDA Adj margin (%) 9,9 10,3 10
EBITA Adj 274 342 417
EBITA Adj margin (%) 8,4 8,8 8,6
EBIT Adj 274 342 417
EBIT Adj margin (%) 8,4 8,8 8,6
Pretax profit Adj 267 331 410
Net profit Adj 209 258 320
Net profit to shareholders Adj 192 258 320
Net Adj margin (%) 6,5 6,6 6,6
Sales 3241 3893 4844
COGS -2627 -3150 -3933
Gross profit 614 743 911
Other operating items -293 -342 -429
EBITDA 322 402 482
Depreciation on tangibles -48 -60 -65
Depreciation on intangibles 0 0 0
SEKm 2018 2019e 2020e
EBITDA 322 402 482
Net financial items -7 -11 -7
Paid tax -58 -73 -90
Non-cash items -166 0 0
Cash flow before change in WC 91 318 385
Change in WC 70 -156 -81
Operating cash flow 161 162 304
CAPEX tangible fixed assets -42 -35 -44
CAPEX intangible fixed assets -2 -4 -5
Acquisitions and disposals 10 0 0
Free cash flow 126 123 255
Dividend paid -30 -109 -94
Share issues and buybacks -80 0 0
Other non cash items -26 0 0
Decrease in net IB debt -9 14 161
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 6 7 9
Tangible fixed assets 263 241 223
Other fixed assets 41 41 41
Fixed assets 310 288 272
Inventories 741 973 1235
Receivables 320 391 486
Other current assets 0 0 0
Cash and liquid assets 357 371 532
Total assets 1727 2024 2525
Shareholders equity 656 805 1031
Minority 0 0 0
Total equity 656 805 1031
Long-term debt 28 28 28
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 1 1 1
Other long-term liabilities 2 2 2
Short-term debt 26 26 26
Accounts payable 1014 1161 1437
Other current liabilities 0 0 0
Total liabilities and equity 1033 1414 1727
Net IB debt -303 -317 -478
Net IB debt excl. pension debt -303 -317 -478
Capital invested 316 451 516
Working capital 47 203 285
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1849 2223 2223
Net IB debt Adj -303 -317 -478
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 1546 1906 1746
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 206,3 207,6 213
Capital invested turnover (%) 1128,2 1014,9 1001,6
Capital employed turnover (%) 993,7 925,3 930,2
Inventories / sales (%) 21,2 22 22,8
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,4 27,9 26,8
Working capital / sales (%) 2,5 3,2 5
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -46,2 -39,4 -46,3
Net debt / market cap (%) -15,8 -14,3 -21,5
Equity ratio (%) 38 39,8 40,8
Net IB debt adj. / equity (%) -46,2 -39,4 -46,3
Current ratio (%) 136,3 146,2 154
EBITDA / net interest (%) 18024 5741,4 6887,1
Net IB debt / EBITDA (%) -94,2 -78,9 -99,1
Interest cover (%) 15341,4 4884,3 5958,6
SEKm 2018 2019e 2020e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 13,22 17,79 22,01
Dividend per share Adj 7,5 6,5 8
EPS Adj 14,18 17,79 22,01
BVPS 45,14 55,42 70,93
BVPS Adj 44,71 54,94 70,34
Net IB debt / share -20,8 -21,8 -32,9
Share price 131,47 153 153
Market cap. (m) 1911 2223 2223
Valuation 2018 2019 2020
P/E 9,6 8,6 7
EV/sales 0,48 0,49 0,36
EV/EBITDA 4,8 4,7 3,6
EV/EBITA 5,6 5,6 4,2
EV/EBIT 5,6 5,6 4,2
Dividend yield (%) 5,9 4,2 5,2
FCF yield (%) 6,8 5,5 11,5
P/BVPS 2,82 2,76 2,16
P/BVPS Adj 2,84 2,78 2,18
P/E Adj 9 8,6 7
EV/EBITDA Adj 4,8 4,7 3,6
EV/EBITA Adj 5,6 5,6 4,2
EV/EBIT Adj 5,6 5,6 4,2
EV/cap. employed 4,4 3,9 3,2
Investment ratios 2018 2019 2020
Capex / sales 1,4 1 1
Capex / depreciation 93,2 64,9 74,5
Capex tangibles / tangible fixed assets 16,1 14,5 19,6
Capex intangibles / definite intangibles 37,9 55,4 56,2
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 18,2 24,9 29,2

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Main shareholders

Ferronordic

Main shareholders Share capital % Voting shares % Verified
Håkan Eriksson (Skandinavkonsult) 15.6 % 15.6 % 31 Dec 2018
Erik Eberhardson 12.5 % 12.5 % 22 Mar 2019
Lars Corneliusson 7.1 % 7.1 % 31 Mar 2019
GLG Partners 6.0 % 6.0 % 31 Mar 2019
Swedbank Robur Fonder 5.0 % 5.0 % 31 Mar 2019
Avanza Pension 3.7 % 3.7 % 31 Mar 2019
Unionen 3.4 % 3.4 % 31 Mar 2019
Per Arwidsson med närstående 3.4 % 3.4 % 31 Mar 2019
Svenska Handelsbanken AB for PB 3.1 % 3.1 % 31 Mar 2019
Catella Fonder 3.0 % 3.0 % 31 Mar 2019
Source: Holdings by Modular Finance AB

Insider list

Ferronordic

Name Quantity Code Date
Lars Erik Mikael Corneliusson + 20 000 BUY 22 Mar 2019
Lars Corneliusson + 80 000 BUY 22 Mar 2019
Erik Eberhardson - 80 000 SELL 22 Mar 2019
Erik Eberhardson - 20 000 SELL 22 Mar 2019
Erik Eberhardson - 14 300 SELL 22 Mar 2019
Erik Eberhardson - 350 000 SELL 22 Mar 2019
ERIK EBERHARDSON +1 193 000 BUY 15 Mar 2019
Henrik Carlborg - 100 000 SELL 4 Mar 2019
JONATHAN TUBB + 135 BUY 21 Feb 2019
JONATHAN TUBB + 33 BUY 21 Feb 2019

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