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VBG Group

VBG Group

Long-term industrial group

VBG Group acquires and develops industrial companies with strong brands and good growth potential. It aims to have growth of 10% p.a. over five years, of which 5% organic and 5% acquired, with an op margin of 12%+. It offers friction springs for aircraft and buildings (45% market share), drawbar couplings for trucks with heavy trailers (55%), sliding roofs for tarpaulin-covered trailers, tipper vehicles and railway cars (40%), automatic tyre chains (65%) and climate control systems for buses, off-road, utility and defence vehicles (40%). It has 4 divisions: Truck Equipment, Edscha Trailer Systems, Mobile Climate Control and Ringfeder Power Transmission.

VBG’s strong market positions allows for pricing power and an ability to maintain, or even increase, profitability. Its historical ability to obtain high free cash flows (conversion historically above net profit) could allow for future profitable investments and M&A opportunities while its end-markets, such as climate control products for North American buses, could provide a strong growth profile for VBG.

The company is heavily exposed to the automotive industry, both through trucks, trailers and other commercial passenger vehicles. These markets are historically cyclical and both the European and North American truck markets have been strong in recent years. The large acquisition of MCC from Ratos in 2016 could still prove to be worse than expected in terms of revenue and/or profitability potential.

SEKm 2019 2020e 2021e
Sales 3725 3688 3810
Sales growth (%) 6,7 -1 3,3
EBITDA 548 545 595
EBITDA margin (%) 14,7 14,8 15,6
EBIT adj 435 425 473
EBIT adj margin (%) 11,7 11,5 12,4
Pretax profit 397 393 442
EPS rep 11,98 11,62 13,07
EPS growth (%) 9,7 -3 12,5
EPS adj 13,26 12,85 14,3
DPS 5 4,6 4,8
EV/EBITDA (x) 8,4 8,2 7,2
EV/EBIT adj (x) 10,6 10,5 9,1
P/E (x) 13,1 13,6 12,1
P/E adj (x) 11,9 12,3 11,1
EV/sales (x) 1,2 1,2 1,1
FCF yield (%) 8,5 8,5 7,5
Dividend yield (%) 3,2 2,9 3
Net IB debt/EBITDA 1,2 0,9 0,6
SEKm 2019 2020e 2021e
Sales 3725 3688 3810
COGS -2472 -2470 -2526
Gross profit 1254 1218 1284
Other operating items -706 -674 -689
EBITDA 548 545 595
Depreciation on tangibles -50 -55 -56
Depreciation on intangibles 0 0 0
EBITA 467 455 504
Goodwill impairment charges 0 0 0
Other impairment and amortisation -32 -31 -31
EBIT 435 425 473
Other financial items -6 0 0
Net financial items -38 -32 -32
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 397 393 442
Tax -98 -102 -115
Net profit 300 291 327
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 300 291 327
EPS 11,98 11,62 13,07
EPS Adj 13,26 12,85 14,3
Total extraordinary items after tax 0 0 0
Tax rate (%) -24,6 -26 -26
Gross margin (%) 33,7 33 33,7
EBITDA margin (%) 14,7 14,8 15,6
EBITA margin (%) 12,5 12,3 13,2
EBIT margin (%) 11,7 11,5 12,4
Pretax margin (%) 10,7 10,6 11,6
Net margin (%) 8 7,9 8,6
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 6,7 -1 3,3
EBITDA growth (%) 10,2 -0,6 9,3
EBIT growth (%) 4,2 -2,4 11,4
Net profit growth (%) 9,7 -3 12,5
EPS growth (%) 9,7 -3 12,5
Profitability 2019 2020 2021
ROE (%) 12,9 11,6 12,1
ROE Adj (%) 14,2 12,8 13,2
ROCE (%) 12,6 11,7 12,4
ROCE Adj(%) 13,6 12,5 13,2
ROIC (%) 10,2 9,5 10,5
ROIC Adj (%) 10,2 9,5 10,5
Adj earnings numbers 2019 2020 2021
EBITDA Adj 548 545 595
EBITDA Adj margin (%) 14,7 14,8 15,6
EBITA Adj 467 455 504
EBITA Adj margin (%) 12,5 12,3 13,2
EBIT Adj 435 425 473
EBIT Adj margin (%) 11,7 11,5 12,4
Pretax profit Adj 429 423 472
Net profit Adj 332 321 358
Net profit to shareholders Adj 332 321 358
Net Adj margin (%) 8,9 8,7 9,4
SEKm 2019 2020e 2021e
EBITDA 548 545 595
Net financial items -38 -32 -32
Paid tax -98 -102 -115
Non-cash items -9 0 0
Cash flow before change in WC 404 411 449
Change in WC -3 26 -57
Operating cash flow 439 437 392
CAPEX tangible fixed assets -75 -70 -61
CAPEX intangible fixed assets -31 -30 -34
Acquisitions and disposals 0 0 0
Free cash flow 333 337 297
Dividend paid -113 -125 -115
Share issues and buybacks 0 0 0
Other non cash items -203 0 0
Decrease in net IB debt -9 178 146
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 1143 1143 1143
Indefinite intangible assets 0 0 0
Definite intangible assets 797 796 799
Tangible fixed assets 382 397 402
Other fixed assets 67 67 67
Fixed assets 2545 2558 2567
Inventories 639 623 659
Receivables 543 531 564
Other current assets 0 0 0
Cash and liquid assets 473 650 796
Total assets 4199 4363 4587
Shareholders equity 2428 2593 2805
Minority 0 0 0
Total equity 2428 2593 2805
Long-term debt 743 743 743
Pension debt 230 230 230
Convertible debt 0 0 0
Deferred tax 220 220 220
Other long-term liabilities 24 24 24
Short-term debt 0 0 0
Accounts payable 212 212 218
Other current liabilities 186 185 190
Total liabilities and equity 3664 3924 4199
Net IB debt 657 479 333
Net IB debt excl. pension debt 427 249 103
Capital invested 3329 3316 3382
Working capital 784 758 815
EV breakdown 2019 2020 2021
Market cap. diluted (m) 3938 3963 3963
Net IB debt Adj 655 479 333
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 4593 4442 4297
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 91,7 86,2 85,1
Capital invested turnover (%) 115,5 111 113,8
Capital employed turnover (%) 109,5 101,3 99,5
Inventories / sales (%) 17,1 17,1 16,8
Customer advances / sales (%) 4,9 5 4,9
Payables / sales (%) 6,2 5,7 5,6
Working capital / sales (%) 21 20,9 20,6
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 27,1 18,5 11,9
Net debt / market cap (%) 18 12,1 8,4
Equity ratio (%) 57,8 59,4 61,2
Net IB debt adj. / equity (%) 27 18,5 11,9
Current ratio (%) 391,3 428,1 465,9
EBITDA / net interest (%) 1681,3 1701,8 1889,4
Net IB debt / EBITDA (%) 119,9 88 56
Interest cover (%) 1433,1 1423,1 1599,9
SEKm 2019 2020e 2021e
Shares outstanding adj. 25 25 25
Fully diluted shares Adj 25 25 25
EPS 11,98 11,62 13,07
Dividend per share Adj 5 4,6 4,8
EPS Adj 13,26 12,85 14,3
BVPS 97,09 103,71 112,18
BVPS Adj 19,48 26,16 34,49
Net IB debt / share 26,3 19,2 13,3
Share price 145,99 158,5 158,5
Market cap. (m) 3650 3963 3963
Valuation 2019 2020 2021
P/E 13,1 13,6 12,1
EV/sales 1,23 1,2 1,13
EV/EBITDA 8,4 8,2 7,2
EV/EBITA 9,8 9,8 8,5
EV/EBIT 10,6 10,5 9,1
Dividend yield (%) 3,2 2,9 3
FCF yield (%) 8,5 8,5 7,5
P/BVPS 1,62 1,53 1,41
P/BVPS Adj 8,08 6,06 4,6
P/E Adj 11,9 12,3 11,1
EV/EBITDA Adj 8,4 8,2 7,2
EV/EBITA Adj 9,8 9,8 8,5
EV/EBIT Adj 10,6 10,5 9,1
EV/cap. employed 1,3 1,2 1,1
Investment ratios 2019 2020 2021
Capex / sales 2,8 2,7 2,5
Capex / depreciation 213,3 180,4 169,5
Capex tangibles / tangible fixed assets 19,7 17,7 15,2
Capex intangibles / definite intangibles 3,8 3,7 4,3
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 13 13,9 14

Equity research

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Media

VBG Group - Interview with CEO Anders Birgersson (in Swedish)
VBG Group - Company presentation with CEO Anders Birgersson

Main shareholders - VBG Group

Main shareholders Share capital % Voting shares % Verified
Herman Kreftings Stiftelse för Allergi & Astmaforskning 22.6 % 27.6 % 31 Dec 2019
Stiftelsen SLK-anställda 4.3 % 23.6 % 31 Dec 2019
Stiftelsen VBG-SLK 1.9 % 10.2 % 31 Dec 2019
Lannebo Fonder 14.1 % 7.7 % 31 Jan 2020
SEB Fonder 11.3 % 6.2 % 31 Jan 2020
Swedbank Robur Fonder 8.9 % 4.9 % 31 Dec 2019
Nordea Fonder 7.2 % 3.9 % 31 Dec 2019
VBG Group AB 4.6 % 2.5 % 31 Dec 2019
If Skadeförsäkring AB 4.2 % 2.3 % 31 Dec 2019
Didner & Gerge Fonder 4.0 % 2.2 % 31 Jan 2020
Source: Holdings by Modular Finance AB

Insider list - VBG Group

Name Quantity Code Date
Bror Anders Erkén + 426 BUY 26 Oct 2018
Bror Anders Erkén + 681 BUY 25 Oct 2018
Bo Hedberg + 7 500 BUY 9 Oct 2018
Clas Gunneberg + 15 000 ALTM 8 Oct 2018
Anders Birgersson + 20 000 BUY 5 Oct 2018
Claes Wedin + 10 000 BUY 5 Oct 2018
Bror Anders Erkén + 15 000 ALTM 4 Oct 2018
Claes Wedin + 500 BUY 24 Aug 2017
NILS HEDBERG + 130 BUY 7 Feb 2017
BO HEDBERG + 876 BUY 6 Feb 2017

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