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Ferronordic

Ferronordic

Authorised dealer of construction equipment in Russia

Ferronordic is an authorised dealer of Volvo CE, Terex, Dressta, Mecalac and Rottne in Russia and for Volvo CE and Mecalac in Kazakhstan. In parts of Russia, Ferronordic is an appointed aftermarket partner for Volvo and Renault Trucks and dealer for Volvo Penta. As of 2020, Ferronordic is also the authorised dealer for Volvo and Renault Trucks in parts of Germany. The company aims to be the leading service and sales company in its markets. It is currently the only dealer in Russia, and one of few in Europe, allowing it to offer the ‘Certified Rebuild’ warranty extension on Volvo equipment following repairs and service. The company, founded in 2010, has ~100 outlets and 1,500 employees currently.

The underlying market for western, high-quality CE in Russia/CIS could offer high double-digit growth for several years to come due to general economic recovery, pent-up demand for at least 60,000 units and a change in purchasing behaviour from a focus on initial price to total cost of ownership. Improved operations and market share gains in Germany could generate profit. As a certified Volvo CE distributor, Ferronordic’s ability to gain market share would imply high sales 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 CE. Approximately 80% of Ferronordic’s sold units are Volvo, which implies a high reliance on that relationship.

SEKm 2019 2020e 2021e
Sales 3747 4452 5126
Sales growth (%) 15,6 18,8 15,2
EBITDA 494 501 582
EBITDA margin (%) 13,2 11,2 11,3
EBIT adj 365 300 385
EBIT adj margin (%) 9,7 6,7 7,5
Pretax profit 318 247 345
EPS rep 17,26 13,38 18,49
EPS growth (%) 30,6 -22,5 38,2
EPS adj 17,74 12,63 18,49
DPS 0 5 8
EV/EBITDA (x) 6 5,1 4
EV/EBIT adj (x) 8,1 8,5 6
P/E (x) 9,4 12,4 9
P/E adj (x) 9,2 13,1 9
EV/sales (x) 0,8 0,6 0,5
FCF yield (%) -21,5 20,8 14,7
Dividend yield (%) 0 3 4,8
Net IB debt/EBITDA 1,2 0,3 -0,2
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITA 358 311 385
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 358 311 385
Other financial items 12 -3 0
Net financial items -39 -64 -40
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 318 247 345
Tax -68 -53 -76
Net profit 251 194 269
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 251 194 269
EPS 17,26 13,38 18,49
EPS Adj 17,74 12,63 18,49
Total extraordinary items after tax -7 11 0
Tax rate (%) -21,2 -21,3 -22
Gross margin (%) 20,7 17,9 18,9
EBITDA margin (%) 13,2 11,2 11,3
EBITA margin (%) 9,5 7 7,5
EBIT margin (%) 9,5 7 7,5
Pretax margin (%) 8,5 5,6 6,7
Net margin (%) 6,7 4,4 5,2
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 15,6 18,8 15,2
EBITDA growth (%) 53,6 1,4 16,2
EBIT growth (%) 30,7 -13 23,6
Net profit growth (%) 19,9 -22,5 38,2
EPS growth (%) 30,6 -22,5 38,2
Profitability 2019 2020 2021
ROE (%) 32,4 19,7 22,7
ROE Adj (%) 33,3 18,6 22,7
ROCE (%) 27,3 14,7 17,2
ROCE Adj(%) 27,8 14,2 17,2
ROIC (%) 30,4 17,9 24,7
ROIC Adj (%) 31 17,3 24,7
Adj earnings numbers 2019 2020 2021
EBITDA Adj 501 490 582
EBITDA Adj margin (%) 13,4 11 11,3
EBITA Adj 365 300 385
EBITA Adj margin (%) 9,7 6,7 7,5
EBIT Adj 365 300 385
EBIT Adj margin (%) 9,7 6,7 7,5
Pretax profit Adj 325 236 345
Net profit Adj 258 183 269
Net profit to shareholders Adj 258 183 269
Net Adj margin (%) 6,9 4,1 5,2
Sales 3747 4452 5126
COGS -2972 -3654 -4156
Gross profit 775 798 970
Other operating items -281 -297 -389
EBITDA 494 501 582
Depreciation on tangibles -108 -149 -155
Depreciation on intangibles 0 0 0
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA 494 501 582
Net financial items -39 -64 -40
Paid tax -68 -53 -76
Non-cash items -20 0 0
Cash flow before change in WC 367 384 466
Change in WC -698 188 -20
Operating cash flow -330 572 446
CAPEX tangible fixed assets -160 -67 -87
CAPEX intangible fixed assets -4 -4 -4
Acquisitions and disposals -14 0 0
Free cash flow -509 501 355
Dividend paid -109 0 -73
Share issues and buybacks 0 0 0
Other non cash items -248 0 0
Decrease in net IB debt -896 458 234
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 3 3 3
Indefinite intangible assets 0 0 0
Definite intangible assets 9 8 6
Tangible fixed assets 609 532 470
Other fixed assets 51 51 51
Fixed assets 763 688 630
Inventories 1290 1309 1502
Receivables 405 461 491
Other current assets 0 0 0
Cash and liquid assets 519 958 1112
Total assets 2978 3415 3736
Shareholders equity 890 1085 1281
Minority 0 0 0
Total equity 890 1085 1281
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 1180 1384
Other current liabilities 44 44 44
Total liabilities and equity 2978 3415 3736
Net IB debt 593 135 -99
Net IB debt excl. pension debt 593 135 -99
Capital invested 1497 1234 1196
Working capital 734 546 566
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2369 2412 2412
Net IB debt Adj 593 135 -99
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 2548 2314
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 159,3 139,3 143,4
Capital invested turnover (%) 404,3 326 421,9
Capital employed turnover (%) 276,3 212,9 229,2
Inventories / sales (%) 27,1 29,2 27,4
Customer advances / sales (%) 1 1 0,9
Payables / sales (%) 25,3 23,6 25
Working capital / sales (%) 10,4 14,4 10,8
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 66,6 12,5 -7,7
Net debt / market cap (%) 28,1 5,6 -4,1
Equity ratio (%) 29,9 31,8 34,3
Net IB debt adj. / equity (%) 66,6 12,5 -7,7
Current ratio (%) 130,5 140,4 144,7
EBITDA / net interest (%) 955,5 827,3 1453,9
Net IB debt / EBITDA (%) 120,1 27,1 -17
Interest cover (%) 691,8 514,3 961,4
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 17,26 13,38 18,49
Dividend per share Adj 0 5 8
EPS Adj 17,74 12,63 18,49
BVPS 61,27 74,65 88,14
BVPS Adj 60,46 73,93 87,55
Net IB debt / share 40,8 9,3 -6,8
Share price 145,09 166 166
Market cap. (m) 2109 2412 2412
Valuation 2019 2020 2021
P/E 9,4 12,4 9
EV/sales 0,79 0,57 0,45
EV/EBITDA 6 5,1 4
EV/EBITA 8,3 8,2 6
EV/EBIT 8,3 8,2 6
Dividend yield (%) 0 3 4,8
FCF yield (%) -21,5 20,8 14,7
P/BVPS 2,66 2,22 1,88
P/BVPS Adj 2,7 2,25 1,9
P/E Adj 9,2 13,1 9
EV/EBITDA Adj 5,9 5,2 4
EV/EBITA Adj 8,1 8,5 6
EV/EBIT Adj 8,1 8,5 6
EV/cap. employed 1,5 1,2 1
Investment ratios 2019 2020 2021
Capex / sales 4,4 1,6 1,8
Capex / depreciation 151,8 47,7 58,9
Capex tangibles / tangible fixed assets 26,3 12,5 18,5
Capex intangibles / definite intangibles 47,5 56,8 68
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 17,8 28,1 32,9
N/A N/A N/A

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 % 30 Jun 2020
Erik Eberhardson (Scandsib Holding Ltd) 8.3 % 8.3 % 30 Jun 2020
Lars Corneliusson 7.2 % 7.2 % 30 Jun 2020
Per Arwidsson med närstående 6.1 % 6.1 % 30 Jun 2020
Svenska Handelsbanken AB for PB 5.4 % 5.4 % 30 Jun 2020
Avanza Pension 5.0 % 5.0 % 17 Aug 2020
Swedbank Robur Fonder 5.0 % 5.0 % 31 Aug 2020
Unionen 4.0 % 4.0 % 30 Jun 2020
Investor Asset Management BVBA 2.6 % 2.6 % 30 Jun 2020
Magallanes Value Investors SGIIC 1.6 % 1.6 % 31 Aug 2020
Source: Holdings by Modular Finance AB

Insider list - Ferronordic

Name Quantity Code Date
Dan Håkan Ulf Eliasson + 1 402 BUY 10 Jul 2020
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

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