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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 3861 4553
Sales growth (%) 26,3 19,1 17,9
EBITDA 322 456 519
EBITDA margin (%) 9,9 11,8 11,4
EBIT adj 274 349 409
EBIT adj margin (%) 8,4 9 9
Pretax profit 267 335 389
EPS rep 13,22 18,12 21,04
EPS growth (%) 63,9 37,1 16,1
EPS adj 14,18 18,12 21,04
DPS 7,5 6,5 8
EV/EBITDA (x) 4,8 4,2 3,3
EV/EBIT adj (x) 5,6 5,5 4,1
P/E (x) 9,6 8 6,9
P/E adj (x) 9 8 6,9
EV/sales (x) 0,5 0,5 0,4
FCF yield (%) 6,8 3,3 15,7
Dividend yield (%) 5,9 4,5 5,5
Net IB debt/EBITDA -0,9 -0,4 -0,8
SEKm 2018 2019e 2020e
EBITA 274 349 409
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 274 349 409
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 267 335 389
Tax -58 -72 -84
Net profit 209 263 306
Minority interest -17 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 192 263 306
EPS 13,22 18,12 21,04
EPS Adj 14,18 18,12 21,04
Total extraordinary items after tax 0 0 0
Tax rate (%) -21,7 -21,4 -21,5
Gross margin (%) 19 19,5 19,4
EBITDA margin (%) 9,9 11,8 11,4
EBITA margin (%) 8,4 9 9
EBIT margin (%) 8,4 9 9
Pretax margin (%) 8,2 8,7 8,6
Net margin (%) 6,5 6,8 6,7
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 26,3 19,1 17,9
EBITDA growth (%) 50,4 41,8 14
EBIT growth (%) 46,1 27,4 17,4
Net profit growth (%) 38,2 25,9 16,1
EPS growth (%) 63,9 37,1 16,1
Profitability 2018 2019 2020
ROE (%) 30,3 35,9 33,4
ROE Adj (%) 30,3 35,9 33,4
ROCE (%) 39,5 42,2 37,9
ROCE Adj(%) 39,5 42,2 37,9
ROIC (%) 65,2 56,4 52,1
ROIC Adj (%) 65,2 56,4 52,1
Adj earnings numbers 2018 2019 2020
EBITDA Adj 322 456 519
EBITDA Adj margin (%) 9,9 11,8 11,4
EBITA Adj 274 349 409
EBITA Adj margin (%) 8,4 9 9
EBIT Adj 274 349 409
EBIT Adj margin (%) 8,4 9 9
Pretax profit Adj 267 335 389
Net profit Adj 209 263 306
Net profit to shareholders Adj 192 263 306
Net Adj margin (%) 6,5 6,8 6,7
Sales 3241 3861 4553
COGS -2627 -3107 -3670
Gross profit 614 754 883
Other operating items -293 -298 -364
EBITDA 322 456 519
Depreciation on tangibles -48 -107 -110
Depreciation on intangibles 0 0 0
SEKm 2018 2019e 2020e
EBITDA 322 456 519
Net financial items -7 -14 -20
Paid tax -58 -72 -84
Non-cash items -166 0 0
Cash flow before change in WC 91 370 416
Change in WC 70 -220 -21
Operating cash flow 161 150 394
CAPEX tangible fixed assets -42 -77 -59
CAPEX intangible fixed assets -2 -4 -5
Acquisitions and disposals 10 0 0
Free cash flow 126 69 331
Dividend paid -30 -109 -94
Share issues and buybacks -80 0 0
Other non cash items -26 -65 -28
Decrease in net IB debt -9 -105 208
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 6 5 4
Tangible fixed assets 263 303 286
Other fixed assets 41 41 41
Fixed assets 310 348 330
Inventories 741 1050 1184
Receivables 320 407 457
Other current assets 0 0 0
Cash and liquid assets 357 362 570
Total assets 1727 2168 2541
Shareholders equity 656 810 1021
Minority 0 0 0
Total equity 656 810 1021
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 86 86
Accounts payable 1014 1190 1352
Other current liabilities 0 0 0
Total liabilities and equity 1033 1414 1727
Net IB debt -303 -198 -406
Net IB debt excl. pension debt -303 -198 -406
Capital invested 357 615 619
Working capital 47 267 288
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1849 2100 2100
Net IB debt Adj -303 -198 -406
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 1902 1694
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 206,3 198,2 193,4
Capital invested turnover (%) 986,5 794,3 737,8
Capital employed turnover (%) 476,2 458,5 421,6
Inventories / sales (%) 21,2 23,2 24,5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 27,4 28,5 27,9
Working capital / sales (%) 2,5 4,1 6,1
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -46,2 -24,5 -39,8
Net debt / market cap (%) -15,8 -9,4 -19,3
Equity ratio (%) 38 37,4 40,2
Net IB debt adj. / equity (%) -46,2 -24,5 -39,8
Current ratio (%) 136,3 142,6 153,7
EBITDA / net interest (%) 18024 2225 2597,1
Net IB debt / EBITDA (%) -94,2 -43,5 -78,2
Interest cover (%) 15341,4 1702 2047,1
SEKm 2018 2019e 2020e
Shares outstanding adj. 15 15 15
Fully diluted shares Adj 15 15 15
EPS 13,22 18,12 21,04
Dividend per share Adj 7,5 6,5 8
EPS Adj 14,18 18,12 21,04
BVPS 45,14 55,75 70,29
BVPS Adj 44,71 55,44 70,04
Net IB debt / share -20,8 -13,6 -28
Share price 131,47 144,5 144,5
Market cap. (m) 1911 2100 2100
Valuation 2018 2019 2020
P/E 9,6 8 6,9
EV/sales 0,48 0,49 0,37
EV/EBITDA 4,8 4,2 3,3
EV/EBITA 5,6 5,5 4,1
EV/EBIT 5,6 5,5 4,1
Dividend yield (%) 5,9 4,5 5,5
FCF yield (%) 6,8 3,3 15,7
P/BVPS 2,82 2,59 2,06
P/BVPS Adj 2,84 2,61 2,06
P/E Adj 9 8 6,9
EV/EBITDA Adj 4,8 4,2 3,3
EV/EBITA Adj 5,6 5,5 4,1
EV/EBIT Adj 5,6 5,5 4,1
EV/cap. employed 2,2 2 1,4
Investment ratios 2018 2019 2020
Capex / sales 1,4 2,1 1,4
Capex / depreciation 93,2 75,7 57,9
Capex tangibles / tangible fixed assets 16,1 25,5 20,7
Capex intangibles / definite intangibles 37,9 83,3 123,4
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 18,2 35,3 38,5

Equity research

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Media

Ferronordic - Interview with CFO Anders Blomqvist (in Swedish)
Ferronordic - Company presentation with CFO Anders Blomqvist (in Swedish)

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Main shareholders

Ferronordic

Main shareholders Share capital % Voting shares % Verified
Håkan Eriksson (Skandinavkonsult) 15.6 % 15.6 % 15 Apr 2019
Erik Eberhardson 8.3 % 8.3 % 10 Jul 2019
Lars Corneliusson 7.1 % 7.1 % 30 Jun 2019
Man GLG 6.0 % 6.0 % 31 Mar 2019
Swedbank Robur Fonder 5.0 % 5.0 % 30 Jun 2019
Avanza Pension 3.8 % 3.8 % 30 Jun 2019
Per Arwidsson med närstående 3.8 % 3.8 % 30 Jun 2019
Unionen 3.4 % 3.4 % 30 Jun 2019
Catella Fonder 3.4 % 3.4 % 30 Jun 2019
Svenska Handelsbanken AB for PB 3.1 % 3.1 % 30 Jun 2019
Source: Holdings by Modular Finance AB

Insider list

Ferronordic

Name Quantity Code Date
Erik Eberhardson - 310 905 SELL 10 Jul 2019
Erik Eberhardson - 300 000 SELL 3 Jul 2019
Nadezhda Arzumanova + 1 003 BUY 5 Jun 2019
Nadezhda Arzumanova + 141 BUY 5 Jun 2019
Nadezhda Arzumanova + 186 BUY 5 Jun 2019
Lars Erik Mikael Corneliusson + 1 500 BUY 21 May 2019
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

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