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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 5793 6370
Sales growth (%) 15,6 54,6 10
EBITDA 494 541 641
EBITDA margin (%) 13,2 9,3 10,1
EBIT adj 365 377 476
EBIT adj margin (%) 9,7 6,5 7,5
Pretax profit 318 307 436
EPS rep 17,26 16,33 23,38
EPS growth (%) 30,6 -5,4 43,2
EPS adj 17,74 16,33 23,38
DPS 4,25 5 8
EV/EBITDA (x) 6 3,6 2,5
EV/EBIT adj (x) 8,1 5,1 3,3
P/E (x) 9,4 5,2 3,6
P/E adj (x) 9,2 5,2 3,6
EV/sales (x) 0,8 0,3 0,2
FCF yield (%) -21,5 -1,1 38,9
Dividend yield (%) 2,6 5,9 9,5
Net IB debt/EBITDA 1,2 1,3 0,6
SEKm 2019 2020e 2021e
EBITA 358 377 476
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 358 377 476
Other financial items 12 -4 0
Net financial items -39 -70 -40
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 318 307 436
Tax -68 -70 -96
Net profit 251 237 340
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 251 237 340
EPS 17,26 16,33 23,38
EPS Adj 17,74 16,33 23,38
Total extraordinary items after tax -7 0 0
Tax rate (%) -21,2 -22,7 -22
Gross margin (%) 20,7 18,5 18,8
EBITDA margin (%) 13,2 9,3 10,1
EBITA margin (%) 9,5 6,5 7,5
EBIT margin (%) 9,5 6,5 7,5
Pretax margin (%) 8,5 5,3 6,8
Net margin (%) 6,7 4,1 5,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 15,6 54,6 10
EBITDA growth (%) 53,6 9,6 18,4
EBIT growth (%) 30,7 5,5 26,1
Net profit growth (%) 19,9 -5,4 43,2
EPS growth (%) 30,6 -5,4 43,2
Profitability 2019 2020 2021
ROE (%) 32,4 24,3 28,3
ROE Adj (%) 33,3 24,3 28,3
ROCE (%) 27,3 17,4 19,9
ROCE Adj(%) 27,8 17,4 19,9
ROIC (%) 30,4 17,7 21,2
ROIC Adj (%) 31 17,7 21,2
Adj earnings numbers 2019 2020 2021
EBITDA Adj 501 541 641
EBITDA Adj margin (%) 13,4 9,3 10,1
EBITA Adj 365 377 476
EBITA Adj margin (%) 9,7 6,5 7,5
EBIT Adj 365 377 476
EBIT Adj margin (%) 9,7 6,5 7,5
Pretax profit Adj 325 307 436
Net profit Adj 258 237 340
Net profit to shareholders Adj 258 237 340
Net Adj margin (%) 6,9 4,1 5,3
Sales 3747 5793 6370
COGS -2972 -4722 -5172
Gross profit 775 1071 1197
Other operating items -281 -530 -557
EBITDA 494 541 641
Depreciation on tangibles -108 -124 -123
Depreciation on intangibles 0 0 0
SEKm 2019 2020e 2021e
EBITDA 494 541 641
Net financial items -39 -70 -40
Paid tax -68 -70 -96
Non-cash items -31 0 0
Cash flow before change in WC 357 401 505
Change in WC -687 -209 84
Operating cash flow -330 192 589
CAPEX tangible fixed assets -160 -104 -108
CAPEX intangible fixed assets -4 -5 -5
Acquisitions and disposals -14 -96 0
Free cash flow -509 -13 476
Dividend paid -109 -62 -73
Share issues and buybacks 0 0 0
Other non cash items -248 0 0
Decrease in net IB debt -896 -120 353
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 3 3 3
Indefinite intangible assets 0 0 0
Definite intangible assets 9 9 10
Tangible fixed assets 609 643 633
Other fixed assets 51 51 51
Fixed assets 763 850 848
Inventories 1290 1854 2038
Receivables 405 558 584
Other current assets 0 0 0
Cash and liquid assets 519 514 787
Total assets 2978 3776 4258
Shareholders equity 890 1066 1333
Minority 0 0 0
Total equity 890 1066 1333
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 639 719 719
Accounts payable 961 1469 1764
Other current liabilities 0 0 0
Total liabilities and equity 2978 3776 4258
Net IB debt 593 713 360
Net IB debt excl. pension debt 593 713 360
Capital invested 1497 1793 1707
Working capital 734 943 859
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2369 1224 1224
Net IB debt Adj 593 713 360
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 1937 1584
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 159,3 171,6 158,6
Capital invested turnover (%) 404,3 352,1 364
Capital employed turnover (%) 276,3 269,7 266,9
Inventories / sales (%) 27,1 27,1 30,6
Customer advances / sales (%) 0 0 0
Payables / sales (%) 26,4 21 25,4
Working capital / sales (%) 10,4 14,5 14,1
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 66,6 66,9 27
Net debt / market cap (%) 28,1 58,3 29,4
Equity ratio (%) 29,9 28,2 31,3
Net IB debt adj. / equity (%) 66,6 66,9 27
Current ratio (%) 130,5 128,1 132,2
EBITDA / net interest (%) 955,5 819,9 1601,6
Net IB debt / EBITDA (%) 120,1 131,8 56,2
Interest cover (%) 691,8 571,4 1189,1
SEKm 2019 2020e 2021e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 17,26 16,33 23,38
Dividend per share Adj 4,3 5 8
EPS Adj 17,74 16,33 23,38
BVPS 61,27 73,35 91,73
BVPS Adj 60,46 72,52 90,89
Net IB debt / share 40,8 49,1 24,8
Share price 145,09 84,2 84,2
Market cap. (m) 2109 1224 1224
Valuation 2019 2020 2021
P/E 9,4 5,2 3,6
EV/sales 0,79 0,33 0,25
EV/EBITDA 6 3,6 2,5
EV/EBITA 8,3 5,1 3,3
EV/EBIT 8,3 5,1 3,3
Dividend yield (%) 2,6 5,9 9,5
FCF yield (%) -21,5 -1,1 38,9
P/BVPS 2,66 1,15 0,92
P/BVPS Adj 2,7 1,16 0,93
P/E Adj 9,2 5,2 3,6
EV/EBITDA Adj 5,9 3,6 2,5
EV/EBITA Adj 8,1 5,1 3,3
EV/EBIT Adj 8,1 5,1 3,3
EV/cap. employed 1,5 0,8 0,6
Investment ratios 2019 2020 2021
Capex / sales 4,4 1,9 1,8
Capex / depreciation 151,8 88,3 92,2
Capex tangibles / tangible fixed assets 26,3 16,2 17,1
Capex intangibles / definite intangibles 47,5 55,7 53,6
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 17,8 19,3 19,4

Equity research

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Media

Ferronordic - Interview with CFO Erik Danemar
Ferronordic - Company presentation with CFO Erik Danemar

Main shareholders - Ferronordic

Main shareholders Share capital % Voting shares % Verified
Håkan Eriksson (Skandinavkonsult) 15.6 % 15.6 % 31 Dec 2019
Erik Eberhardson 8.9 % 8.9 % 31 Dec 2019
Lars Corneliusson 7.2 % 7.2 % 13 Mar 2020
Per Arwidsson med närstående 5.4 % 5.4 % 26 Feb 2020
Swedbank Robur Fonder 5.0 % 5.0 % 29 Feb 2020
Avanza Pension 4.4 % 4.4 % 31 Dec 2019
Unionen 4.0 % 4.0 % 31 Dec 2019
Svenska Handelsbanken AB for PB 3.5 % 3.5 % 31 Dec 2019
Investor Asset Management BVBA 2.4 % 2.4 % 31 Dec 2019
Magallanes Value Investors SGIIC 1.6 % 1.6 % 29 Feb 2020
Source: Holdings by Modular Finance AB

Insider list - Ferronordic

Name Quantity Code Date
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
Dan Håkan Ulf Eliasson + 3 000 BUY 20 Feb 2020
Dan Håkan Ulf Eliasson + 500 BUY 20 Feb 2020
Carl Erik Mikael Danemar + 4 770 BUY 27 Dec 2019

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