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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 2890 2981
Sales growth (%) 22,6 7,9 3,2
EBITDA 274 325 331
EBITDA margin (%) 9,5 10,6 10,4
EBIT adj 224 292 299
EBIT adj margin (%) 7,6 9,4 9,4
Pretax profit 190 262 271
EPS rep 6,31 8,67 8,96
EPS growth (%) 11,5 37,6 3,3
EPS adj 7,86 9,67 9,95
DPS 4 4,3 4,45
EV/EBITDA (x) 8,3 7,6 7,1
EV/EBIT adj (x) 10,3 8,5 7,9
P/E (x) 11,3 9,5 9,2
P/E adj (x) 9,1 8,5 8,2
EV/sales (x) 0,8 0,8 0,7
FCF yield (%) -7,4 8,1 9,8
Dividend yield (%) 5,6 5,2 5,4
Net IB debt/EBITDA 1,6 1,2 0,9
SEKm 2018 2019e 2020e
Sales 2680 2890 2981
COGS -2000 -2113 -2184
Gross profit 680 778 798
Other operating items -406 -453 -467
EBITDA 274 325 331
Depreciation on tangibles -36 -33 -32
Depreciation on intangibles 0 0 0
EBITA 238 292 299
Goodwill impairment charges 0 0 0
Other impairment and amortisation -26 -12 -12
EBIT 212 280 287
Other financial items 0 0 0
Net financial items -22 -18 -16
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 190 262 271
Tax -38 -52 -54
Net profit 152 210 217
Minority interest 0 -1 -1
Net profit discontinued 0 0 0
Net profit to shareholders 152 209 216
EPS 6,31 8,67 8,96
EPS Adj 7,86 9,67 9,95
Total extraordinary items after tax -11,5 -12 -12
Tax rate (%) -20,2 -20 -20
Gross margin (%) 25,4 26,9 26,8
EBITDA margin (%) 9,5 10,6 10,4
EBITA margin (%) 8,2 9,4 9,4
EBIT margin (%) 7,2 9 9
Pretax margin (%) 6,4 8,4 8,4
Net margin (%) 4,9 6,6 6,6
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 22,6 7,9 3,2
EBITDA growth (%) 17,9 18,6 1,7
EBIT growth (%) 9,7 32 2,3
Net profit growth (%) 10,7 38,1 3,3
EPS growth (%) 11,5 37,6 3,3
Profitability 2018 2019 2020
ROE (%) 14,5 18,2 17,1
ROE Adj (%) 18 20,3 19
ROCE (%) 15,4 17,8 17,7
ROCE Adj(%) 18,1 19,3 19,1
ROIC (%) 11,1 12,6 12,6
ROIC Adj (%) 11,7 13,1 13,1
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 337 343
EBITDA Adj margin (%) 9,9 11 10,8
EBITA Adj 250 304 311
EBITA Adj margin (%) 8,6 9,8 9,8
EBIT Adj 224 292 299
EBIT Adj margin (%) 7,6 9,4 9,4
Pretax profit Adj 228 286 295
Net profit Adj 189 234 241
Net profit to shareholders Adj 189 233 240
Net Adj margin (%) 6,3 7,4 7,4
SEKm 2018 2019e 2020e
EBITDA 274 325 331
Net financial items -22 -18 -16
Paid tax -38 -52 -54
Non-cash items 195 0 0
Cash flow before change in WC 409 255 261
Change in WC -224 -40 -19
Operating cash flow 185 214 242
CAPEX tangible fixed assets -35 -38 -36
CAPEX intangible fixed assets -20 -17 -12
Acquisitions and disposals -257 0 0
Free cash flow -128 159 194
Dividend paid -90 -96 -104
Share issues and buybacks -1 0 0
Other non cash items -21 -11 -8
Decrease in net IB debt -240 52 82
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 879 879 879
Indefinite intangible assets 96 102 102
Definite intangible assets 0 0 0
Tangible fixed assets 268 273 276
Other fixed assets 80 90 100
Fixed assets 1324 1344 1357
Inventories 346 376 391
Receivables 316 340 355
Other current assets 36 37 35
Cash and liquid assets 106 158 240
Total assets 2127 2255 2379
Shareholders equity 1090 1203 1315
Minority 16 16 17
Total equity 1106 1219 1332
Long-term debt 416 416 416
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 75 75 75
Other long-term liabilities 44 44 44
Short-term debt 131 131 131
Accounts payable 145 159 170
Other current liabilities 210 210 210
Total liabilities and equity 1568 1756 2127
Net IB debt 442 390 307
Net IB debt excl. pension debt 442 390 307
Capital invested 1760 1811 1833
Working capital 517 557 576
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1717 1975 1975
Net IB debt Adj 442 390 307
Market value of minority 15 15 15
Reversal of shares and participations -64 -74 -84
Reversal of conv. debt assumed equity 0 0 0
EV 2110 2306 2213
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 138 131,9 128,7
Capital invested turnover (%) 175,2 161,9 163,6
Capital employed turnover (%) 194,3 183,2 183,6
Inventories / sales (%) 11,3 12,5 12,9
Customer advances / sales (%) 2,5 0 0
Payables / sales (%) 4,4 5,3 5,5
Working capital / sales (%) 15,1 18,6 19
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 39,9 32 23,1
Net debt / market cap (%) 23,7 19,7 15,6
Equity ratio (%) 52 54,1 56
Net IB debt adj. / equity (%) 39,9 32 23,1
Current ratio (%) 165,3 182,1 199,8
EBITDA / net interest (%) 1254,9 1806,3 2066,7
Net IB debt / EBITDA (%) 161,1 119,8 92,9
Interest cover (%) 1090,1 1623 1866,7
SEKm 2018 2019e 2020e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 6,31 8,67 8,96
Dividend per share Adj 4 4,3 4,5
EPS Adj 7,86 9,67 9,95
BVPS 45,26 49,93 54,59
BVPS Adj 8,76 13,44 18,09
Net IB debt / share 18,3 16,2 12,8
Share price 77,37 82 82
Market cap. (m) 1863 1975 1975
Valuation 2018 2019 2020
P/E 11,3 9,5 9,2
EV/sales 0,79 0,8 0,74
EV/EBITDA 8,3 7,6 7,1
EV/EBITA 9,7 8,5 7,9
EV/EBIT 11 8,9 8,3
Dividend yield (%) 5,6 5,2 5,4
FCF yield (%) -7,4 8,1 9,8
P/BVPS 1,58 1,64 1,5
P/BVPS Adj 8,14 6,1 4,53
P/E Adj 9,1 8,5 8,2
EV/EBITDA Adj 7,9 7,3 6,9
EV/EBITA Adj 9,2 8,1 7,6
EV/EBIT Adj 10,3 8,5 7,9
EV/cap. employed 1,4 1,4 1,4
Investment ratios 2018 2019 2020
Capex / sales 2,1 1,9 1,6
Capex / depreciation 154,7 166,4 149,1
Capex tangibles / tangible fixed assets 13,2 13,8 12,9
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 12,1 11,6

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Main shareholders

Nordic Waterproofing

Main shareholders Share capital % Voting shares % Verified
Mawer Investment Management 11.1 % 11.1 % 31 Jan 2019
Svolder 10.4 % 10.4 % 28 Feb 2019
Swedbank Robur Fonder 9.1 % 9.1 % 28 Feb 2019
Carnegie Fonder 8.3 % 8.3 % 28 Feb 2019
Länsförsäkringar Fonder 5.1 % 5.1 % 28 Feb 2019
Catella Fonder 4.9 % 4.9 % 28 Feb 2019
Tredje AP-fonden 3.5 % 3.5 % 28 Feb 2019
Handelsbanken Fonder 3.3 % 3.3 % 28 Feb 2019
Canaccord Genuity Wealth Management 2.5 % 2.5 % 28 Feb 2019
Traction 2.5 % 2.5 % 28 Feb 2019
Source: Holdings by Modular Finance AB