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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 3741 3687 3797
Sales growth (%) 7,1 -1,4 3
EBITDA 563 545 600
EBITDA margin (%) 15,1 14,8 15,8
EBIT adj 452 432 485
EBIT adj margin (%) 12,1 11,7 12,8
Pretax profit 410 395 445
EPS rep 12,01 11,54 13,01
EPS growth (%) 10 -3,9 12,7
EPS adj 13,28 12,79 14,24
DPS 4,6 4,7 4,8
EV/EBITDA (x) 9,5 9,4 8,2
EV/EBIT adj (x) 11,8 11,9 10,1
P/E (x) 15,7 16,3 14,5
P/E adj (x) 14,2 14,7 13,2
EV/sales (x) 1,4 1,4 1,3
FCF yield (%) 7 7,1 8
Dividend yield (%) 2,4 2,5 2,5
Net IB debt/EBITDA 1,1 0,8 0,4
SEKm 2019 2020e 2021e
Sales 3741 3687 3797
COGS -2469 -2472 -2513
Gross profit 1272 1215 1284
Other operating items -708 -670 -684
EBITDA 563 545 600
Depreciation on tangibles -49 -50 -51
Depreciation on intangibles 0 0 0
EBITA 484 463 516
Goodwill impairment charges 0 0 0
Other impairment and amortisation -32 -31 -31
EBIT 452 432 485
Other financial items -6 0 0
Net financial items -42 -37 -40
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 410 395 445
Tax -109 -107 -120
Net profit 300 289 325
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 300 289 325
EPS 12,01 11,54 13,01
EPS Adj 13,28 12,79 14,24
Total extraordinary items after tax 0 0 0
Tax rate (%) -26,7 -27 -27
Gross margin (%) 34 33 33,8
EBITDA margin (%) 15,1 14,8 15,8
EBITA margin (%) 12,9 12,6 13,6
EBIT margin (%) 12,1 11,7 12,8
Pretax margin (%) 11 10,7 11,7
Net margin (%) 8 7,8 8,6
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 7,1 -1,4 3
EBITDA growth (%) 13,2 -3,2 10,1
EBIT growth (%) 8,2 -4,3 12,3
Net profit growth (%) 10 -3,9 12,7
EPS growth (%) 10 -3,9 12,7
Profitability 2019 2020 2021
ROE (%) 12,9 11,5 12,1
ROE Adj (%) 14,3 12,8 13,2
ROCE (%) 13,1 11,8 12,5
ROCE Adj(%) 14 12,6 13,3
ROIC (%) 10,3 9,6 10,9
ROIC Adj (%) 10,3 9,6 10,9
Adj earnings numbers 2019 2020 2021
EBITDA Adj 563 545 600
EBITDA Adj margin (%) 15,1 14,8 15,8
EBITA Adj 484 463 516
EBITA Adj margin (%) 12,9 12,6 13,6
EBIT Adj 452 432 485
EBIT Adj margin (%) 12,1 11,7 12,8
Pretax profit Adj 441 426 476
Net profit Adj 332 320 356
Net profit to shareholders Adj 332 320 356
Net Adj margin (%) 8,9 8,7 9,4
SEKm 2019 2020e 2021e
EBITDA 563 545 600
Net financial items -42 -37 -40
Paid tax -109 -107 -120
Non-cash items 0 0 0
Cash flow before change in WC 412 402 440
Change in WC -16 1 1
Operating cash flow 396 403 441
CAPEX tangible fixed assets -60 -55 -57
CAPEX intangible fixed assets -7 -11 -8
Acquisitions and disposals 0 0 0
Free cash flow 329 337 376
Dividend paid -113 -115 -118
Share issues and buybacks 0 0 0
Other non cash items -159 0 0
Decrease in net IB debt 26 188 223
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 1129 1129 1129
Indefinite intangible assets 0 0 0
Definite intangible assets 775 755 731
Tangible fixed assets 359 365 370
Other fixed assets 64 64 64
Fixed assets 2486 2474 2459
Inventories 677 675 668
Receivables 602 594 608
Other current assets 0 0 0
Cash and liquid assets 556 743 966
Total assets 4322 4485 4702
Shareholders equity 2414 2588 2796
Minority 0 0 0
Total equity 2414 2588 2796
Long-term debt 820 820 820
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 1 1 1
Accounts payable 276 273 280
Other current liabilities 206 200 201
Total liabilities and equity 3664 3924 4322
Net IB debt 622 434 211
Net IB debt excl. pension debt 425 238 15
Capital invested 3283 3269 3254
Working capital 797 796 795
EV breakdown 2019 2020 2021
Market cap. diluted (m) 4713 4713 4713
Net IB debt Adj 622 434 211
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 5335 5148 4925
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 90,7 83,7 82,7
Capital invested turnover (%) 116,8 112,5 116,4
Capital employed turnover (%) 109,4 100,2 98,1
Inventories / sales (%) 17,5 18,3 17,7
Customer advances / sales (%) 5,2 5,5 5,3
Payables / sales (%) 7 7,4 7,3
Working capital / sales (%) 21,1 21,6 20,9
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 25,8 16,8 7,6
Net debt / market cap (%) 17 9,2 4,5
Equity ratio (%) 55,9 57,7 59,5
Net IB debt adj. / equity (%) 25,8 16,8 7,6
Current ratio (%) 361 403,4 442,3
EBITDA / net interest (%) 1547,8 1474 1501,2
Net IB debt / EBITDA (%) 110,4 79,7 35,2
Interest cover (%) 1328,3 1252,7 1291
SEKm 2019 2020e 2021e
Shares outstanding adj. 25 25 25
Fully diluted shares Adj 25 25 25
EPS 12,01 11,54 13,01
Dividend per share Adj 4,6 4,7 4,8
EPS Adj 13,28 12,79 14,24
BVPS 96,56 103,5 111,81
BVPS Adj 20,44 28,18 37,42
Net IB debt / share 24,9 17,4 8,5
Share price 145,99 188,5 188,5
Market cap. (m) 3650 4713 4713
Valuation 2019 2020 2021
P/E 15,7 16,3 14,5
EV/sales 1,43 1,4 1,3
EV/EBITDA 9,5 9,4 8,2
EV/EBITA 11 11,1 9,5
EV/EBIT 11,8 11,9 10,1
Dividend yield (%) 2,4 2,5 2,5
FCF yield (%) 7 7,1 8
P/BVPS 1,95 1,82 1,69
P/BVPS Adj 9,22 6,69 5,04
P/E Adj 14,2 14,7 13,2
EV/EBITDA Adj 9,5 9,4 8,2
EV/EBITA Adj 11 11,1 9,5
EV/EBIT Adj 11,8 11,9 10,1
EV/cap. employed 1,5 1,4 1,2
Investment ratios 2019 2020 2021
Capex / sales 1,8 1,8 1,7
Capex / depreciation 136,6 133 126,3
Capex tangibles / tangible fixed assets 16,7 15,2 15,4
Capex intangibles / definite intangibles 1 1,5 1
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 13,7 13,7 13,8

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 Dec 2019
SEB Fonder 11.4 % 6.2 % 31 Dec 2019
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 Dec 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 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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