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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 4083 5021
Sales growth (%) 26,3 26 23
EBITDA 322 383 468
EBITDA margin (%) 9,9 9,4 9,3
EBIT adj 274 323 403
EBIT adj margin (%) 8,4 7,9 8
Pretax profit 267 322 402
EPS rep 13,22 17,31 21,57
EPS growth (%) 63,9 30,9 24,7
EPS adj 14,18 17,31 21,57
DPS 7,5 6,5 8
EV/EBITDA (x) 4,8 5,3 4
EV/EBIT adj (x) 5,6 6,3 4,7
P/E (x) 9,6 9,2 7,4
P/E adj (x) 9 9,2 7,4
EV/sales (x) 0,5 0,5 0,4
FCF yield (%) 6,8 4,4 10,6
Dividend yield (%) 5,9 4,1 5
Net IB debt/EBITDA -0,9 -0,8 -1
SEKm 2018 2019e 2020e
EBITA 274 323 403
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 274 323 403
Other financial items -5 -2 -2
Net financial items -7 -1 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 267 322 402
Tax -58 -71 -88
Net profit 209 251 314
Minority interest -17 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 192 251 314
EPS 13,22 17,31 21,57
EPS Adj 14,18 17,31 21,57
Total extraordinary items after tax 0 0 0
Tax rate (%) -21,7 -22 -22
Gross margin (%) 19 18,5 18,4
EBITDA margin (%) 9,9 9,4 9,3
EBITA margin (%) 8,4 7,9 8
EBIT margin (%) 8,4 7,9 8
Pretax margin (%) 8,2 7,9 8
Net margin (%) 6,5 6,2 6,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 26,3 26 23
EBITDA growth (%) 50,4 19,2 22,1
EBIT growth (%) 46,1 18,1 24,6
Net profit growth (%) 38,2 20,3 24,7
EPS growth (%) 63,9 30,9 24,7
Profitability 2018 2019 2020
ROE (%) 30,3 34,6 34,5
ROE Adj (%) 30,3 34,6 34,5
ROCE (%) 82,5 75,2 74,9
ROCE Adj(%) 82,5 75,2 74,9
ROIC (%) 74,6 64,6 63,1
ROIC Adj (%) 74,6 64,6 63,1
Adj earnings numbers 2018 2019 2020
EBITDA Adj 322 383 468
EBITDA Adj margin (%) 9,9 9,4 9,3
EBITA Adj 274 323 403
EBITA Adj margin (%) 8,4 7,9 8
EBIT Adj 274 323 403
EBIT Adj margin (%) 8,4 7,9 8
Pretax profit Adj 267 322 402
Net profit Adj 209 251 314
Net profit to shareholders Adj 192 251 314
Net Adj margin (%) 6,5 6,2 6,2
Sales 3241 4083 5021
COGS -2627 -3328 -4097
Gross profit 614 756 924
Other operating items -293 -372 -456
EBITDA 322 383 468
Depreciation on tangibles -48 -60 -65
Depreciation on intangibles 0 0 0
SEKm 2018 2019e 2020e
EBITDA 322 383 468
Net financial items -7 -1 -1
Paid tax -58 -71 -88
Non-cash items -166 0 0
Cash flow before change in WC 91 311 379
Change in WC 70 -168 -81
Operating cash flow 161 144 297
CAPEX tangible fixed assets -42 -37 -45
CAPEX intangible fixed assets -2 -4 -5
Acquisitions and disposals 10 0 0
Free cash flow 126 103 247
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 -6 152
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 263 243 226
Other fixed assets 41 41 41
Fixed assets 310 290 276
Inventories 741 1021 1280
Receivables 320 410 504
Other current assets 0 0 0
Cash and liquid assets 357 350 503
Total assets 1727 2072 2563
Shareholders equity 656 798 1017
Minority 0 0 0
Total equity 656 798 1017
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 1216 1488
Other current liabilities 0 0 0
Total liabilities and equity 1033 1414 1727
Net IB debt -303 -297 -449
Net IB debt excl. pension debt -303 -297 -449
Capital invested 316 465 531
Working capital 47 215 296
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1849 2322 2322
Net IB debt Adj -303 -297 -449
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 2026 1873
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 206,3 215 216,7
Capital invested turnover (%) 1128,2 1046,3 1008,5
Capital employed turnover (%) 993,7 955,4 938,5
Inventories / sales (%) 21,2 21,6 22,9
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,4 27,3 26,9
Working capital / sales (%) 2,5 3,2 5,1
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -46,2 -37,2 -44,1
Net debt / market cap (%) -15,8 -12,8 -19,3
Equity ratio (%) 38 38,5 39,7
Net IB debt adj. / equity (%) -46,2 -37,2 -44,1
Current ratio (%) 136,3 143,4 151,1
EBITDA / net interest (%) 18024 -31935,4 -38977,4
Net IB debt / EBITDA (%) -94,2 -77,4 -96
Interest cover (%) 15341,4 -26935,4 -33560,8
SEKm 2018 2019e 2020e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 13,22 17,31 21,57
Dividend per share Adj 7,5 6,5 8
EPS Adj 14,18 17,31 21,57
BVPS 45,14 54,94 70,01
BVPS Adj 44,71 54,45 69,4
Net IB debt / share -20,8 -20,4 -30,9
Share price 131,47 159,8 159,8
Market cap. (m) 1911 2322 2322
Valuation 2018 2019 2020
P/E 9,6 9,2 7,4
EV/sales 0,48 0,5 0,37
EV/EBITDA 4,8 5,3 4
EV/EBITA 5,6 6,3 4,7
EV/EBIT 5,6 6,3 4,7
Dividend yield (%) 5,9 4,1 5
FCF yield (%) 6,8 4,4 10,6
P/BVPS 2,82 2,91 2,28
P/BVPS Adj 2,84 2,94 2,3
P/E Adj 9 9,2 7,4
EV/EBITDA Adj 4,8 5,3 4
EV/EBITA Adj 5,6 6,3 4,7
EV/EBIT Adj 5,6 6,3 4,7
EV/cap. employed 4,4 4 3,3
Investment ratios 2018 2019 2020
Capex / sales 1,4 1 1
Capex / depreciation 93,2 68,1 77,2
Capex tangibles / tangible fixed assets 16,1 15,2 20
Capex intangibles / definite intangibles 37,9 56,6 55,9
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 18,2 24,7 28,8

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Main shareholders

Ferronordic

Main shareholders Share capital % Voting shares % Verified
Håkan Eriksson (Skandinavkonsult) 15.6 % 15.6 % 31 May 2018
Rune Andersson (Mellby Gård) 8.2 % 8.2 % 31 Dec 2018
Erik Eberhardson 7.4 % 7.4 % 30 Jun 2018
Lars Corneliusson 6.4 % 6.4 % 31 Dec 2018
Avanza Pension 3.7 % 3.7 % 31 Dec 2018
Swedbank Robur Fonder 3.6 % 3.6 % 28 Feb 2019
Anders Blomqvist 3.5 % 3.5 % 31 Dec 2018
Unionen 3.4 % 3.4 % 31 Dec 2018
Per Arwidsson 3.4 % 3.4 % 31 Dec 2018
Svenska Handelsbanken AB for PB 2.9 % 2.9 % 31 Dec 2018
Source: Holdings by Modular Finance AB

Insider list

Ferronordic

Name Quantity Code Date
Henrik Carlborg - 100 000 SELL 4 Mar 2019
JONATHAN TUBB + 135 BUY 21 Feb 2019
JONATHAN TUBB + 33 BUY 21 Feb 2019
JONATHAN TUBB + 492 BUY 21 Feb 2019
Lars Erik Mikael Corneliusson + 100 BUY 19 Jun 2017
Hans Anders Blomqvist + 90 BUY 16 Jun 2017
Henrik Carlborg + 85 BUY 15 Jun 2017
Henrik Carlborg + 85 BUY 15 Jun 2017
HENRIK CARLBORG + 125 BUY 23 Dec 2016
ANDERS BLOMQVIST + 118 BUY 13 Dec 2016

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