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Nordic Waterproofing

Protecting and waterproofing roofs

Nordic Waterproofing is a market-leading supplier of products used to protect and waterproof roofs. It was founded in 2011 as a merger of Trelleborg’s and Lemminkäinen’s waterproofing operations and was listed on OMXS Mid Cap in June 2016. The market is highly consolidated in terms of suppliers, while the customer base is fragmented. The company both supplies (through its Products & Solutions division) and installs (through its Installation Services division) waterproofing products using the materials bitumen and EPDM, but also PVC. Recent acquisitions have also been into prefabricated façade elements and green roofing products.

High barriers to entry, the price-to-weight ratio of waterproofing products benefits local players, while NWG’s economies of scale are also beneficial. Besides a strong balance sheet with plenty of attractive M&A opportunities, the core business offers a high cash flow conversion.

Bitumen and synthetic rubber costs have an impact on the company’s margin. Although the product renewal in the roofing industry is low and the pace of technology advances is small, new product introductions have historically resulted in some small provisions. Furthermore, M&A activity always brings the risk of lower than expected operational synergies and performance of acquired businesses.

SEKm 2018 2019e 2020e
Sales 2680 3005 3103
Sales growth (%) 22,6 12,1 3,3
EBITDA 274 376 383
EBITDA margin (%) 10,2 12,5 12,3
EBIT adj 224 289 299
EBIT adj margin (%) 8,3 9,6 9,6
Pretax profit 190 252 266
EPS rep 6,31 8,36 8,82
EPS growth (%) 11,5 32,6 5,5
EPS adj 7,86 9,44 9,99
DPS 4 4,3 4,45
EV/EBITDA (x) 7,7 6,6 6,2
EV/EBIT adj (x) 9,5 8,6 8
P/E (x) 11,3 9,8 9,3
P/E adj (x) 9,1 8,7 8,2
EV/sales (x) 0,8 0,8 0,8
FCF yield (%) -7,4 1,7 11,3
Dividend yield (%) 5,6 5,2 5,4
Net IB debt/EBITDA 1,6 1,5 1,2
SEKm 2018 2019e 2020e
Sales 2680 3005 3103
COGS -2000 -2189 -2273
Gross profit 680 815 829
Other operating items -406 -439 -446
EBITDA 274 376 383
Depreciation on tangibles -36 -81 -80
Depreciation on intangibles 0 0 0
EBITA 238 295 303
Goodwill impairment charges 0 0 0
Other impairment and amortisation -26 -16 -16
EBIT 212 279 287
Other financial items 0 0 0
Net financial items -22 -27 -21
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 190 252 266
Tax -38 -50 -53
Net profit 152 202 213
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 152 201 213
EPS 6,31 8,36 8,82
EPS Adj 7,86 9,44 9,99
Total extraordinary items after tax -11,5 -10 -12
Tax rate (%) -20,2 -20 -20
Gross margin (%) 25,4 27,1 26,7
EBITDA margin (%) 10,2 12,5 12,3
EBITA margin (%) 8,9 9,8 9,8
EBIT margin (%) 7,9 9,3 9,3
Pretax margin (%) 7,1 8,4 8,6
Net margin (%) 5,7 6,7 6,9
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 22,6 12,1 3,3
EBITDA growth (%) 17,9 37,2 1,9
EBIT growth (%) 9,7 31,5 2,9
Net profit growth (%) 10,7 32,7 5,6
EPS growth (%) 11,5 32,6 5,5
Profitability 2018 2019 2020
ROE (%) 14,5 17,6 17
ROE Adj (%) 18 19,9 19,2
ROCE (%) 14 15,2 13,8
ROCE Adj(%) 16,5 16,6 15,2
ROIC (%) 11,1 11,9 11
ROIC Adj (%) 11,7 12,3 11,5
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 386 395
EBITDA Adj margin (%) 10,7 12,8 12,7
EBITA Adj 250 305 315
EBITA Adj margin (%) 9,3 10,2 10,2
EBIT Adj 224 289 299
EBIT Adj margin (%) 8,3 9,6 9,6
Pretax profit Adj 228 278 294
Net profit Adj 189 228 241
Net profit to shareholders Adj 189 227 241
Net Adj margin (%) 7,1 7,6 7,8
SEKm 2018 2019e 2020e
EBITDA 274 376 383
Net financial items -22 -27 -21
Paid tax -38 -50 -53
Non-cash items 49 -22 -21
Cash flow before change in WC 263 277 288
Change in WC -78 -67 -15
Operating cash flow 185 210 274
CAPEX tangible fixed assets -35 -39 -37
CAPEX intangible fixed assets -20 -18 -12
Acquisitions and disposals -257 -120 0
Free cash flow -128 33 224
Dividend paid -90 -96 -104
Share issues and buybacks -1 0 0
Other non cash items -19 -67 -29
Decrease in net IB debt -238 -130 92
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 879 963 963
Indefinite intangible assets 97 99 95
Definite intangible assets 0 0 0
Tangible fixed assets 268 476 461
Other fixed assets 80 101 122
Fixed assets 1324 1638 1641
Inventories 346 391 406
Receivables 323 384 400
Other current assets 29 37 37
Cash and liquid assets 106 242 334
Total assets 2127 2691 2818
Shareholders equity 1090 1195 1304
Minority 16 16 16
Total equity 1106 1211 1320
Long-term debt 416 743 743
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 75 69 69
Other long-term liabilities 44 48 48
Short-term debt 131 71 71
Accounts payable 145 165 177
Other current liabilities 210 384 389
Total liabilities and equity 1568 1756 2127
Net IB debt 440 570 478
Net IB debt excl. pension debt 440 570 478
Capital invested 1693 2074 2091
Working capital 371 438 453
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1717 1982 1982
Net IB debt Adj 440 570 478
Market value of minority 16 16 16
Reversal of shares and participations -55 -76 -97
Reversal of conv. debt assumed equity 0 0 0
EV 2117 2492 2379
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 138 124,7 112,6
Capital invested turnover (%) 176,2 159,5 149
Capital employed turnover (%) 177,3 163,4 149,2
Inventories / sales (%) 11,3 12,3 12,8
Customer advances / sales (%) 5,3 5,4 5,6
Payables / sales (%) 4,4 5,2 5,5
Working capital / sales (%) 12,4 13,5 14,4
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 39,8 47 36,2
Net debt / market cap (%) 23,6 28,7 24,1
Equity ratio (%) 52 45 46,9
Net IB debt adj. / equity (%) 39,8 47 36,2
Current ratio (%) 165,2 169,9 184,9
EBITDA / net interest (%) 1254,9 1387,7 1824,5
Net IB debt / EBITDA (%) 160,3 151,5 124,8
Interest cover (%) 1090,1 1088,8 1443,5
SEKm 2018 2019e 2020e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 6,31 8,36 8,82
Dividend per share Adj 4 4,3 4,5
EPS Adj 7,86 9,44 9,99
BVPS 45,26 49,62 54,15
BVPS Adj 8,78 9,64 14,16
Net IB debt / share 18,3 23,7 19,8
Share price 77,37 82,3 82,3
Market cap. (m) 1863 1982 1982
Valuation 2018 2019 2020
P/E 11,3 9,8 9,3
EV/sales 0,79 0,83 0,77
EV/EBITDA 7,7 6,6 6,2
EV/EBITA 8,9 8,4 7,8
EV/EBIT 10 8,9 8,3
Dividend yield (%) 5,6 5,2 5,4
FCF yield (%) -7,4 1,7 11,3
P/BVPS 1,58 1,66 1,52
P/BVPS Adj 8,12 8,54 5,81
P/E Adj 9,1 8,7 8,2
EV/EBITDA Adj 7,4 6,5 6
EV/EBITA Adj 8,5 8,2 7,6
EV/EBIT Adj 9,5 8,6 8
EV/cap. employed 1,3 1,2 1,1
Investment ratios 2018 2019 2020
Capex / sales 2,1 1,9 1,6
Capex / depreciation 154,7 70,5 62,1
Capex tangibles / tangible fixed assets 13,2 8,2 8,1
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 13,4 17 17,4

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Main shareholders

Nordic Waterproofing

Main shareholders Share capital % Voting shares % Verified
Svolder 11.4 % 11.4 % 30 Apr 2019
Mawer Investment Management 11.1 % 11.1 % 31 Mar 2019
Swedbank Robur Fonder 9.1 % 9.1 % 30 Apr 2019
Carnegie Fonder 8.3 % 8.3 % 30 Apr 2019
Länsförsäkringar Fonder 5.5 % 5.5 % 30 Apr 2019
Catella Fonder 4.9 % 4.9 % 30 Apr 2019
Handelsbanken Fonder 3.7 % 3.7 % 30 Apr 2019
Tredje AP-fonden 3.6 % 3.6 % 30 Apr 2019
Canaccord Genuity Wealth Management 2.5 % 2.5 % 30 Apr 2019
AMF Försäkring & Fonder 2.4 % 2.4 % 30 Apr 2019
Source: Holdings by Modular Finance AB