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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 3897 4762
Sales growth (%) 26,3 20,2 22,2
EBITDA 322 437 514
EBITDA margin (%) 9,9 11,2 10,8
EBIT adj 274 351 424
EBIT adj margin (%) 8,4 9 8,9
Pretax profit 267 337 404
EPS rep 13,22 18,25 21,83
EPS growth (%) 63,9 38,1 19,6
EPS adj 14,18 18,25 21,83
DPS 7,5 6,5 8
EV/EBITDA (x) 4,8 4,6 3,5
EV/EBIT adj (x) 5,6 5,7 4,3
P/E (x) 9,6 8,4 7
P/E adj (x) 9 8,4 7
EV/sales (x) 0,5 0,5 0,4
FCF yield (%) 6,8 1,5 13,4
Dividend yield (%) 5,9 4,2 5,2
Net IB debt/EBITDA -0,9 -0,5 -0,8
SEKm 2018 2019e 2020e
EBITA 274 351 424
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 274 351 424
Other financial items -5 7 0
Net financial items -7 -14 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 267 337 404
Tax -58 -72 -87
Net profit 209 265 317
Minority interest -17 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 192 265 317
EPS 13,22 18,25 21,83
EPS Adj 14,18 18,25 21,83
Total extraordinary items after tax 0 0 0
Tax rate (%) -21,7 -21,4 -21,5
Gross margin (%) 19 19,5 19,3
EBITDA margin (%) 9,9 11,2 10,8
EBITA margin (%) 8,4 9 8,9
EBIT margin (%) 8,4 9 8,9
Pretax margin (%) 8,2 8,7 8,5
Net margin (%) 6,5 6,8 6,7
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 26,3 20,2 22,2
EBITDA growth (%) 50,4 36 17,6
EBIT growth (%) 46,1 28,3 20,8
Net profit growth (%) 38,2 26,8 19,6
EPS growth (%) 63,9 38,1 19,6
Profitability 2018 2019 2020
ROE (%) 30,3 36,1 34,3
ROE Adj (%) 30,3 36,1 34,3
ROCE (%) 39,5 38,4 33,5
ROCE Adj(%) 39,5 38,4 33,5
ROIC (%) 65,2 58,1 54,9
ROIC Adj (%) 65,2 58,1 54,9
Adj earnings numbers 2018 2019 2020
EBITDA Adj 322 437 514
EBITDA Adj margin (%) 9,9 11,2 10,8
EBITA Adj 274 351 424
EBITA Adj margin (%) 8,4 9 8,9
EBIT Adj 274 351 424
EBIT Adj margin (%) 8,4 9 8,9
Pretax profit Adj 267 337 404
Net profit Adj 209 265 317
Net profit to shareholders Adj 192 265 317
Net Adj margin (%) 6,5 6,8 6,7
Sales 3241 3897 4762
COGS -2627 -3137 -3843
Gross profit 614 760 919
Other operating items -293 -323 -405
EBITDA 322 437 514
Depreciation on tangibles -48 -86 -90
Depreciation on intangibles 0 0 0
SEKm 2018 2019e 2020e
EBITDA 322 437 514
Net financial items -7 -14 -20
Paid tax -58 -72 -87
Non-cash items -166 -65 0
Cash flow before change in WC 91 287 407
Change in WC 70 -176 -61
Operating cash flow 161 111 346
CAPEX tangible fixed assets -42 -74 -43
CAPEX intangible fixed assets -2 -4 -5
Acquisitions and disposals 10 0 0
Free cash flow 126 33 299
Dividend paid -30 -109 -94
Share issues and buybacks -80 0 0
Other non cash items -26 -5 -5
Decrease in net IB debt -9 -81 199
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 6 6 6
Tangible fixed assets 263 325 287
Other fixed assets 41 41 41
Fixed assets 310 371 334
Inventories 741 1013 1219
Receivables 320 411 478
Other current assets 0 0 0
Cash and liquid assets 357 563 762
Total assets 1727 2359 2793
Shareholders equity 656 812 1035
Minority 0 0 0
Total equity 656 812 1035
Long-term debt 28 78 78
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 26 264 264
Accounts payable 1014 1201 1413
Other current liabilities 0 0 0
Total liabilities and equity 1033 1414 1727
Net IB debt -303 -221 -420
Net IB debt excl. pension debt -303 -221 -420
Capital invested 357 594 618
Working capital 47 223 284
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1849 2223 2223
Net IB debt Adj -303 -221 -420
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 2002 1803
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 206,3 190,8 184,9
Capital invested turnover (%) 986,5 819,8 785,7
Capital employed turnover (%) 476,2 418,2 376,3
Inventories / sales (%) 21,2 22,5 23,4
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,4 28,4 27,4
Working capital / sales (%) 2,5 3,5 5,3
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -46,2 -27,3 -40,6
Net debt / market cap (%) -15,8 -10 -18,9
Equity ratio (%) 38 34,4 37,1
Net IB debt adj. / equity (%) -46,2 -27,3 -40,6
Current ratio (%) 136,3 135,7 146,7
EBITDA / net interest (%) 18024 2134 2570,3
Net IB debt / EBITDA (%) -94,2 -50,6 -81,8
Interest cover (%) 15341,4 1713,5 2120,3
SEKm 2018 2019e 2020e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 13,22 18,25 21,83
Dividend per share Adj 7,5 6,5 8
EPS Adj 14,18 18,25 21,83
BVPS 45,14 55,88 71,21
BVPS Adj 44,71 55,49 70,8
Net IB debt / share -20,8 -15,2 -28,9
Share price 131,47 153 153
Market cap. (m) 1911 2223 2223
Valuation 2018 2019 2020
P/E 9,6 8,4 7
EV/sales 0,48 0,51 0,38
EV/EBITDA 4,8 4,6 3,5
EV/EBITA 5,6 5,7 4,3
EV/EBIT 5,6 5,7 4,3
Dividend yield (%) 5,9 4,2 5,2
FCF yield (%) 6,8 1,5 13,4
P/BVPS 2,82 2,74 2,15
P/BVPS Adj 2,84 2,76 2,16
P/E Adj 9 8,4 7
EV/EBITDA Adj 4,8 4,6 3,5
EV/EBITA Adj 5,6 5,7 4,3
EV/EBIT Adj 5,6 5,7 4,3
EV/cap. employed 2,2 1,7 1,3
Investment ratios 2018 2019 2020
Capex / sales 1,4 2 1
Capex / depreciation 93,2 90,5 52,9
Capex tangibles / tangible fixed assets 16,1 22,8 14,9
Capex intangibles / definite intangibles 37,9 68,1 79,6
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 18,2 26,5 31,3

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Main shareholders

Ferronordic

Main shareholders Share capital % Voting shares % Verified
Håkan Eriksson (Skandinavkonsult) 15.6 % 15.6 % 31 Mar 2019
Erik Eberhardson 12.5 % 12.5 % 22 Mar 2019
Lars Corneliusson 7.1 % 7.1 % 31 Mar 2019
Man GLG 6.0 % 6.0 % 31 Mar 2019
Swedbank Robur Fonder 5.0 % 5.0 % 30 Apr 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
Catella Fonder 3.1 % 3.1 % 30 Apr 2019
Svenska Handelsbanken AB for PB 3.1 % 3.1 % 31 Mar 2019
Source: Holdings by Modular Finance AB

Insider list

Ferronordic

Name Quantity Code Date
Henrik Carlborg + 1 400 BUY 20 May 2019
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

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