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Ferronordic

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 2019 2020e 2021e
Sales 3747 4178 5516
Sales growth (%) 15,6 11,5 32
EBITDA 494 464 613
EBITDA margin (%) 13,2 11,1 11,1
EBIT adj 365 269 416
EBIT adj margin (%) 9,7 6,4 7,5
Pretax profit 318 199 376
EPS rep 17,26 10,42 20,18
EPS growth (%) 30,6 -39,6 93,7
EPS adj 17,74 10,42 20,18
DPS 0 5 8
EV/EBITDA (x) 6 4,1 2,8
EV/EBIT adj (x) 8,1 7,1 4,1
P/E (x) 9,4 10,5 5,4
P/E adj (x) 9,2 10,5 5,4
EV/sales (x) 0,8 0,5 0,3
FCF yield (%) -21,5 20,4 20,5
Dividend yield (%) 0 4,6 7,3
Net IB debt/EBITDA 1,2 0,7 0,2
SEKm 2019 2020e 2021e
EBITA 358 269 416
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 358 269 416
Other financial items 12 -8 0
Net financial items -39 -71 -40
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 318 199 376
Tax -68 -47 -83
Net profit 251 151 293
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 251 151 293
EPS 17,26 10,42 20,18
EPS Adj 17,74 10,42 20,18
Total extraordinary items after tax -7 0 0
Tax rate (%) -21,2 -23,8 -22
Gross margin (%) 20,7 19,1 18,8
EBITDA margin (%) 13,2 11,1 11,1
EBITA margin (%) 9,5 6,4 7,5
EBIT margin (%) 9,5 6,4 7,5
Pretax margin (%) 8,5 4,8 6,8
Net margin (%) 6,7 3,6 5,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 15,6 11,5 32
EBITDA growth (%) 53,6 -6 32
EBIT growth (%) 30,7 -24,7 54,5
Net profit growth (%) 19,9 -39,6 93,7
EPS growth (%) 30,6 -39,6 93,7
Profitability 2019 2020 2021
ROE (%) 32,4 15,7 25,5
ROE Adj (%) 33,3 15,7 25,5
ROCE (%) 27,3 12,5 18,4
ROCE Adj(%) 27,8 12,5 18,4
ROIC (%) 30,4 14,3 23,6
ROIC Adj (%) 31 14,3 23,6
Adj earnings numbers 2019 2020 2021
EBITDA Adj 501 464 613
EBITDA Adj margin (%) 13,4 11,1 11,1
EBITA Adj 365 269 416
EBITA Adj margin (%) 9,7 6,4 7,5
EBIT Adj 365 269 416
EBIT Adj margin (%) 9,7 6,4 7,5
Pretax profit Adj 325 199 376
Net profit Adj 258 151 293
Net profit to shareholders Adj 258 151 293
Net Adj margin (%) 6,9 3,6 5,3
Sales 3747 4178 5516
COGS -2972 -3381 -4478
Gross profit 775 797 1038
Other operating items -281 -333 -425
EBITDA 494 464 613
Depreciation on tangibles -108 -155 -155
Depreciation on intangibles 0 0 0
SEKm 2019 2020e 2021e
EBITDA 494 464 613
Net financial items -39 -71 -40
Paid tax -68 -47 -83
Non-cash items -20 0 0
Cash flow before change in WC 367 347 490
Change in WC -687 41 -49
Operating cash flow -330 387 441
CAPEX tangible fixed assets -160 -58 -110
CAPEX intangible fixed assets -4 -4 -4
Acquisitions and disposals -14 0 0
Free cash flow -509 325 327
Dividend paid -109 0 -73
Share issues and buybacks 0 0 0
Other non cash items -248 0 0
Decrease in net IB debt -896 282 206
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 3 3 3
Indefinite intangible assets 0 0 0
Definite intangible assets 9 7 6
Tangible fixed assets 609 518 480
Other fixed assets 51 51 51
Fixed assets 763 674 640
Inventories 1290 1337 1765
Receivables 405 444 526
Other current assets 0 0 0
Cash and liquid assets 519 836 962
Total assets 2978 3291 3893
Shareholders equity 890 1042 1262
Minority 0 0 0
Total equity 890 1042 1262
Long-term debt 205 240 160
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 7 7 7
Other long-term liabilities 7 7 7
Short-term debt 639 639 639
Accounts payable 917 1044 1506
Other current liabilities 44 44 44
Total liabilities and equity 2978 3291 3893
Net IB debt 593 311 105
Net IB debt excl. pension debt 593 311 105
Capital invested 1497 1367 1381
Working capital 734 693 742
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2369 1590 1590
Net IB debt Adj 593 311 105
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 2962 1901 1695
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 159,3 133,3 153,6
Capital invested turnover (%) 404,3 291,7 401,4
Capital employed turnover (%) 276,3 199,3 244,2
Inventories / sales (%) 27,1 31,4 28,1
Customer advances / sales (%) 1 1 0,8
Payables / sales (%) 25,3 23,5 23,1
Working capital / sales (%) 10,4 17,1 13
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 66,6 29,9 8,3
Net debt / market cap (%) 28,1 19,6 6,6
Equity ratio (%) 29,9 31,7 32,4
Net IB debt adj. / equity (%) 66,6 29,9 8,3
Current ratio (%) 130,5 143,5 142,4
EBITDA / net interest (%) 955,5 737,8 1532,5
Net IB debt / EBITDA (%) 120,1 67 17,2
Interest cover (%) 691,8 427,7 1040
SEKm 2019 2020e 2021e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 17,26 10,42 20,18
Dividend per share Adj 0 5 8
EPS Adj 17,74 10,42 20,18
BVPS 61,27 71,68 86,86
BVPS Adj 60,46 71 86,28
Net IB debt / share 40,8 21,4 7,2
Share price 145,09 109,4 109,4
Market cap. (m) 2109 1590 1590
Valuation 2019 2020 2021
P/E 9,4 10,5 5,4
EV/sales 0,79 0,46 0,31
EV/EBITDA 6 4,1 2,8
EV/EBITA 8,3 7,1 4,1
EV/EBIT 8,3 7,1 4,1
Dividend yield (%) 0 4,6 7,3
FCF yield (%) -21,5 20,4 20,5
P/BVPS 2,66 1,53 1,26
P/BVPS Adj 2,7 1,54 1,27
P/E Adj 9,2 10,5 5,4
EV/EBITDA Adj 5,9 4,1 2,8
EV/EBITA Adj 8,1 7,1 4,1
EV/EBIT Adj 8,1 7,1 4,1
EV/cap. employed 1,5 0,9 0,7
Investment ratios 2019 2020 2021
Capex / sales 4,4 1,5 2,1
Capex / depreciation 151,8 40,4 74
Capex tangibles / tangible fixed assets 26,3 11,3 23
Capex intangibles / definite intangibles 47,5 56,5 74,8
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 17,8 29,9 32,3

Equity research

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Media

Ferronordic - Company presentation with CFO Erik Danemar (in English)
Ferronordic - Interview with CFO Erik Danemar

Main shareholders - Ferronordic

Main shareholders Share capital % Voting shares % Verified
Håkan Eriksson (Skandinavkonsult) 15.6 % 15.6 % 31 Mar 2020
Erik Eberhardson (Scandsib Holding Ltd) 8.3 % 8.3 % 31 Mar 2020
Lars Corneliusson 7.2 % 7.2 % 31 Mar 2020
Per Arwidsson med närstående 6.1 % 6.1 % 31 Mar 2020
Avanza Pension 5.0 % 5.0 % 15 Jun 2020
Swedbank Robur Fonder 5.0 % 5.0 % 31 May 2020
Svenska Handelsbanken AB for PB 4.9 % 4.9 % 31 Mar 2020
Unionen 4.0 % 4.0 % 31 Mar 2020
Investor Asset Management BVBA 2.6 % 2.6 % 31 Mar 2020
Magallanes Value Investors SGIIC 1.6 % 1.6 % 30 Jun 2020
Source: Holdings by Modular Finance AB

Insider list - Ferronordic

Name Quantity Code Date
Dan Håkan Ulf Eliasson + 2 500 BUY 22 Jun 2020
Carl Erik Mikael Danemar + 1 380 BUY 15 Jun 2020
Dan Håkan Ulf Eliasson + 2 000 BUY 13 May 2020
Dan Håkan Ulf Eliasson + 497 BUY 16 Mar 2020
Lars Erik Mikael Corneliusson + 10 000 BUY 13 Mar 2020
Nadezhda Arzumanova + 1 600 BUY 6 Mar 2020
Carl Erik Mikael Danemar + 5 550 BUY 24 Feb 2020
Henrik Carlborg + 2 200 BUY 24 Feb 2020
Dan Håkan Ulf Eliasson + 1 000 BUY 21 Feb 2020
Dan Håkan Ulf Eliasson + 4 000 BUY 20 Feb 2020

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