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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 2018 2019e 2020e
Sales 3492 3814 3918
Sales growth (%) 16,3 9,2 2,7
EBITDA 498 588 595
EBITDA margin (%) 14,2 15,4 15,2
EBIT adj 418 476 482
EBIT adj margin (%) 12 12,5 12,3
Pretax profit 373 427 437
EPS rep 10,92 12,59 12,89
EPS growth (%) 23,9 15,3 2,4
EPS adj 12,18 13,85 14,14
DPS 4,5 4,4 4,5
EV/EBITDA (x) 7,7 7,4 7
EV/EBIT adj (x) 9,1 9,1 8,6
P/E (x) 11,6 11,9 11,6
P/E adj (x) 10,4 10,8 10,6
EV/sales (x) 1,1 1,1 1,1
FCF yield (%) 6,5 8 9,2
Dividend yield (%) 3,5 2,9 3
Net IB debt/EBITDA 1,3 1,1 0,7
SEKm 2018 2019e 2020e
Sales 3492 3814 3918
COGS -2302 -2518 -2613
Gross profit 1191 1296 1305
Other operating items -693 -709 -710
EBITDA 498 588 595
Depreciation on tangibles -48 -80 -82
Depreciation on intangibles 0 0 0
EBITA 449 508 514
Goodwill impairment charges 0 0 0
Other impairment and amortisation -31 -32 -31
EBIT 418 476 482
Other financial items -11 -6 0
Net financial items -45 -50 -45
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 373 427 437
Tax -100 -112 -115
Net profit 273 315 322
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 273 315 322
EPS 10,92 12,59 12,89
EPS Adj 12,18 13,85 14,14
Total extraordinary items after tax 0 0 0
Tax rate (%) -26,8 -26,2 -26,3
Gross margin (%) 34,1 34 33,3
EBITDA margin (%) 14,2 15,4 15,2
EBITA margin (%) 12,9 13,3 13,1
EBIT margin (%) 12 12,5 12,3
Pretax margin (%) 10,7 11,2 11,2
Net margin (%) 7,8 8,3 8,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 16,3 9,2 2,7
EBITDA growth (%) 16,2 18,1 1,3
EBIT growth (%) 19,1 14 1,2
Net profit growth (%) 23,9 15,3 2,4
EPS growth (%) 23,9 15,3 2,4
Profitability 2018 2019 2020
ROE (%) 12,9 13,5 12,7
ROE Adj (%) 14,4 14,9 14
ROCE (%) 12,9 13,8 13,1
ROCE Adj(%) 13,9 14,7 13,9
ROIC (%) 10 11 10,8
ROIC Adj (%) 10 11 10,8
Adj earnings numbers 2018 2019 2020
EBITDA Adj 498 588 595
EBITDA Adj margin (%) 14,2 15,4 15,2
EBITA Adj 449 508 514
EBITA Adj margin (%) 12,9 13,3 13,1
EBIT Adj 418 476 482
EBIT Adj margin (%) 12 12,5 12,3
Pretax profit Adj 405 458 469
Net profit Adj 305 346 354
Net profit to shareholders Adj 305 346 354
Net Adj margin (%) 8,7 9,1 9
SEKm 2018 2019e 2020e
EBITDA 498 588 595
Net financial items -45 -50 -45
Paid tax -81 -112 -115
Non-cash items 36 0 0
Cash flow before change in WC 408 426 435
Change in WC -144 -59 -21
Operating cash flow 254 367 414
CAPEX tangible fixed assets -45 -61 -59
CAPEX intangible fixed assets -2 -8 -12
Acquisitions and disposals 0 0 0
Free cash flow 206 298 344
Dividend paid -81 -113 -110
Share issues and buybacks 2 0 0
Other non cash items -31 -157 -25
Decrease in net IB debt 94 29 209
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 1129 1129 1129
Indefinite intangible assets 0 0 0
Definite intangible assets 799 775 755
Tangible fixed assets 349 487 489
Other fixed assets 64 64 64
Fixed assets 2340 2454 2437
Inventories 635 683 697
Receivables 578 637 654
Other current assets 0 0 0
Cash and liquid assets 371 532 741
Total assets 3924 4306 4529
Shareholders equity 2227 2429 2641
Minority 0 0 0
Total equity 2227 2429 2641
Long-term debt 1 133 133
Pension debt 197 197 197
Convertible debt 0 0 0
Deferred tax 225 225 225
Other long-term liabilities 22 22 22
Short-term debt 822 822 822
Accounts payable 249 277 284
Other current liabilities 182 202 207
Total liabilities and equity 3577 3664 3924
Net IB debt 648 619 410
Net IB debt excl. pension debt 451 422 213
Capital invested 3121 3295 3298
Working capital 781 841 862
EV breakdown 2018 2019 2020
Market cap. diluted (m) 3171 3738 3738
Net IB debt Adj 648 619 410
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 3818 4357 4148
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 92,1 92,7 88,7
Capital invested turnover (%) 114,5 118,9 118,9
Capital employed turnover (%) 110,6 111,8 106,3
Inventories / sales (%) 16,2 17,3 17,6
Customer advances / sales (%) 5 5 5,2
Payables / sales (%) 6,4 6,9 7,2
Working capital / sales (%) 20,3 21,3 21,7
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 29,1 25,5 15,5
Net debt / market cap (%) 18,7 16,6 11
Equity ratio (%) 56,7 56,4 58,3
Net IB debt adj. / equity (%) 29,1 25,5 15,5
Current ratio (%) 126,5 142,4 159,5
EBITDA / net interest (%) 1474,1 1354,2 1322,7
Net IB debt / EBITDA (%) 130,2 105,3 68,9
Interest cover (%) 1331 1170,3 1141,3
SEKm 2018 2019e 2020e
Shares outstanding adj. 25 25 25
Fully diluted shares Adj 25 25 25
EPS 10,92 12,59 12,89
Dividend per share Adj 4,5 4,4 4,5
EPS Adj 12,18 13,85 14,14
BVPS 89,05 97,14 105,62
BVPS Adj 11,96 21,01 30,28
Net IB debt / share 25,9 24,8 16,4
Share price 138,52 149,5 149,5
Market cap. (m) 3463 3738 3738
Valuation 2018 2019 2020
P/E 11,6 11,9 11,6
EV/sales 1,09 1,14 1,06
EV/EBITDA 7,7 7,4 7
EV/EBITA 8,5 8,6 8,1
EV/EBIT 9,1 9,1 8,6
Dividend yield (%) 3,5 2,9 3
FCF yield (%) 6,5 8 9,2
P/BVPS 1,42 1,54 1,42
P/BVPS Adj 10,6 7,12 4,94
P/E Adj 10,4 10,8 10,6
EV/EBITDA Adj 7,7 7,4 7
EV/EBITA Adj 8,5 8,6 8,1
EV/EBIT Adj 9,1 9,1 8,6
EV/cap. employed 1,2 1,2 1,1
Investment ratios 2018 2019 2020
Capex / sales 1,4 1,8 1,8
Capex / depreciation 97,7 86 86,4
Capex tangibles / tangible fixed assets 12,9 12,5 12
Capex intangibles / definite intangibles 0,3 1 1,6
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 13,9 16,4 16,7

Equity research

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Media

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

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Main shareholders

VBG Group

Main shareholders Share capital % Voting shares % Verified
Herman Kreftings Stiftelse för Allergi & Astmaforskning 22.6 % 27.6 % 31 Aug 2019
Stiftelsen SLK-anställda 4.3 % 23.6 % 31 Aug 2019
Stiftelsen VBG-SLK 1.9 % 10.2 % 31 Aug 2019
Lannebo Fonder 13.1 % 7.1 % 31 Aug 2019
SEB Fonder 11.1 % 6.0 % 31 Aug 2019
Swedbank Robur Fonder 8.9 % 4.9 % 31 Jul 2019
Nordea Fonder 6.9 % 3.8 % 31 Jul 2019
VBG Group AB 4.6 % 2.5 % 31 Aug 2019
If Skadeförsäkring AB 4.2 % 2.3 % 31 Aug 2019
Didner & Gerge Fonder 4.0 % 2.2 % 31 Aug 2019
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 TILLD 8 Oct 2018
Clas Gunneberg + 15 000 TILLD 8 Oct 2018
Anders Birgersson + 20 000 BUY 5 Oct 2018
Claes Wedin + 10 000 BUY 5 Oct 2018
Anders Birgersson + 20 000 BUY 5 Oct 2018
Bror Anders Erkén + 15 000 TILLD 4 Oct 2018
Claes Wedin + 500 BUY 24 Aug 2017

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