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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 3862 3971
Sales growth (%) 16,3 10,6 2,8
EBITDA 529 583 592
EBITDA margin (%) 15,1 15,1 14,9
EBIT adj 418 470 476
EBIT adj margin (%) 12 12,2 12
Pretax profit 362 430 434
EPS rep 10,48 12,45 12,59
EPS growth (%) 16,9 18,8 1,1
EPS adj 11,74 13,72 13,85
DPS 4,5 4,4 4,5
EV/EBITDA (x) 7,2 7 6,6
EV/EBIT adj (x) 9,1 8,7 8,1
P/E (x) 12,1 11,1 11
P/E adj (x) 10,8 10,1 10
EV/sales (x) 1,1 1,1 1
FCF yield (%) 6,5 7,7 9,2
Dividend yield (%) 3,5 3,2 3,3
Net IB debt/EBITDA 1,2 1,1 0,7
SEKm 2018 2019e 2020e
Sales 3492 3862 3971
COGS -2302 -2528 -2605
Gross profit 1191 1335 1366
Other operating items -662 -752 -774
EBITDA 529 583 592
Depreciation on tangibles -80 -82 -84
Depreciation on intangibles 0 0 0
EBITA 449 501 508
Goodwill impairment charges 0 0 0
Other impairment and amortisation -31 -32 -31
EBIT 418 470 476
Other financial items -11 0 0
Net financial items -56 -40 -42
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 362 430 434
Tax -100 -118 -119
Net profit 262 311 315
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 262 311 315
EPS 10,48 12,45 12,59
EPS Adj 11,74 13,72 13,85
Total extraordinary items after tax 0 0 0
Tax rate (%) -27,6 -27,5 -27,5
Gross margin (%) 34,1 34,6 34,4
EBITDA margin (%) 15,1 15,1 14,9
EBITA margin (%) 12,9 13 12,8
EBIT margin (%) 12 12,2 12
Pretax margin (%) 10,4 11,1 10,9
Net margin (%) 7,5 8,1 7,9
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 16,3 10,6 2,8
EBITDA growth (%) 15,1 10,3 1,4
EBIT growth (%) 19,1 12,4 1,4
Net profit growth (%) 16,9 18,8 1,1
EPS growth (%) 16,9 18,8 1,1
Profitability 2018 2019 2020
ROE (%) 12,4 13,4 12,5
ROE Adj (%) 13,9 14,7 13,7
ROCE (%) 14,5 15,8 15,6
ROCE Adj(%) 15,6 16,9 16,6
ROIC (%) 10,1 10,8 10,7
ROIC Adj (%) 10,1 10,8 10,7
Adj earnings numbers 2018 2019 2020
EBITDA Adj 529 583 592
EBITDA Adj margin (%) 15,1 15,1 14,9
EBITA Adj 449 501 508
EBITA Adj margin (%) 12,9 13 12,8
EBIT Adj 418 470 476
EBIT Adj margin (%) 12 12,2 12
Pretax profit Adj 394 461 466
Net profit Adj 294 343 346
Net profit to shareholders Adj 294 343 346
Net Adj margin (%) 8,4 8,9 8,7
SEKm 2018 2019e 2020e
EBITDA 529 583 592
Net financial items -56 -40 -42
Paid tax -81 -118 -119
Non-cash items -139 -102 -49
Cash flow before change in WC 254 323 381
Change in WC -144 -71 -18
Operating cash flow 254 323 381
CAPEX tangible fixed assets -45 -54 -60
CAPEX intangible fixed assets -2 -4 -4
Acquisitions and disposals 0 0 0
Free cash flow 206 265 317
Dividend paid -81 -113 -110
Share issues and buybacks 2 0 0
Other non cash items -33 -132 0
Decrease in net IB debt 94 20 207
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 1129 1129 1129
Indefinite intangible assets 0 0 0
Definite intangible assets 799 771 744
Tangible fixed assets 349 484 491
Other fixed assets 64 64 64
Fixed assets 2340 2448 2427
Inventories 635 691 707
Receivables 578 645 663
Other current assets 0 0 0
Cash and liquid assets 371 524 731
Total assets 3924 4308 4528
Shareholders equity 2227 2425 2630
Minority 0 0 0
Total equity 2227 2425 2630
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 249 280 291
Other current liabilities 182 204 209
Total liabilities and equity 3577 3664 3924
Net IB debt 648 628 420
Net IB debt excl. pension debt 451 431 223
Capital invested 3058 3236 3233
Working capital 781 852 870
EV breakdown 2018 2019 2020
Market cap. diluted (m) 3171 3456 3456
Net IB debt Adj 648 628 420
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 4083 3876
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 92,1 93,8 89,9
Capital invested turnover (%) 116,6 122,7 122,7
Capital employed turnover (%) 124,2 130,3 130,1
Inventories / sales (%) 16,2 17,2 17,6
Customer advances / sales (%) 5 5 5,2
Payables / sales (%) 6,4 6,9 7,2
Working capital / sales (%) 20,3 21,1 21,7
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 29,1 25,9 16
Net debt / market cap (%) 18,7 18,2 12,2
Equity ratio (%) 56,7 56,3 58,1
Net IB debt adj. / equity (%) 29,1 25,9 16
Current ratio (%) 126,5 142,5 159
EBITDA / net interest (%) 1183,1 1457,9 1408,6
Net IB debt / EBITDA (%) 122,5 107,6 71
Interest cover (%) 1004,8 1252,9 1208,6
SEKm 2018 2019e 2020e
Shares outstanding adj. 25 25 25
Fully diluted shares Adj 25 25 25
EPS 10,48 12,45 12,59
Dividend per share Adj 4,5 4,4 4,5
EPS Adj 11,74 13,72 13,85
BVPS 89,05 97 105,19
BVPS Adj 11,96 21,02 30,31
Net IB debt / share 25,9 25,1 16,8
Share price 138,52 138,2 138,2
Market cap. (m) 3463 3456 3456
Valuation 2018 2019 2020
P/E 12,1 11,1 11
EV/sales 1,09 1,06 0,98
EV/EBITDA 7,2 7 6,6
EV/EBITA 8,5 8,1 7,6
EV/EBIT 9,1 8,7 8,1
Dividend yield (%) 3,5 3,2 3,3
FCF yield (%) 6,5 7,7 9,2
P/BVPS 1,42 1,42 1,31
P/BVPS Adj 10,6 6,57 4,56
P/E Adj 10,8 10,1 10
EV/EBITDA Adj 7,2 7 6,6
EV/EBITA Adj 8,5 8,1 7,6
EV/EBIT Adj 9,1 8,7 8,1
EV/cap. employed 1,3 1,3 1,3
Investment ratios 2018 2019 2020
Capex / sales 1,4 1,5 1,6
Capex / depreciation 59,2 70,7 75,6
Capex tangibles / tangible fixed assets 12,9 11,2 12,1
Capex intangibles / definite intangibles 0,3 0,5 0,5
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 22,9 16,9 17,1

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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 % 28 Feb 2019
Stiftelsen SLK-anställda 4.3 % 23.6 % 28 Feb 2019
Stiftelsen VBG-SLK 1.9 % 10.2 % 28 Feb 2019
Lannebo Fonder 13.3 % 7.2 % 31 Jan 2019
SEB Fonder 10.8 % 5.9 % 31 Jan 2019
Swedbank Robur Fonder 8.9 % 4.9 % 31 Jan 2019
Nordea Fonder 6.7 % 3.7 % 31 Jan 2019
VBG Group AB 4.6 % 2.5 % 28 Feb 2019
If Skadeförsäkring AB 4.2 % 2.3 % 28 Feb 2019
Didner & Gerge Fonder 3.9 % 2.1 % 31 Dec 2018
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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