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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 2020 2021e 2022e
Sales 3147 3215 3364
Sales growth (%) -15,5 2,1 4,7
EBITDA 462 552 562
EBITDA margin (%) 14,7 17,2 16,7
EBIT adj 353 447 452
EBIT adj margin (%) 11,2 13,9 13,4
Pretax profit 326 425 432
EPS rep 9,07 12,46 12,62
EPS growth (%) -24,3 37,3 1,3
EPS adj 10,35 13,66 13,88
DPS 4,5 4,8 4,8
EV/EBITDA (x) 8,9 8,5 8,1
EV/EBIT adj (x) 11,7 10,6 10
P/E (x) 17 14,9 14,7
P/E adj (x) 14,9 13,5 13,3
EV/sales (x) 1,3 1,5 1,3
FCF yield (%) 10,2 7,1 7,2
Dividend yield (%) 2,9 2,6 2,6
Net IB debt/EBITDA 0,6 0,2 -0,2
Lease adj. FCF yield (%) 9,6 6,4 6,5
Lease adj. ND/EBITDA 0,3 -0,1 -0,4
SEKm 2020 2021e 2022e
Sales 3147 3215 3364
COGS -2084 -2069 -2190
Gross profit 1064 1145 1174
Other operating items -601 -593 -612
EBITDA 462 552 562
Depreciation on tangibles -43 -43 -45
Depreciation on intangibles 0 0 0
EBITA 385 477 484
Goodwill impairment charges 0 0 0
Other impairment and amortisation -32 -31 -31
EBIT 353 447 452
Other financial items -10 0 0
Net financial items -27 -22 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 326 425 432
Tax -100 -114 -117
Net profit 227 311 316
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 227 311 316
EPS 9,07 12,46 12,62
EPS Adj 10,35 13,66 13,88
Total extraordinary items after tax 0 0 0
Tax rate (%) -30,6 -26,8 -27
Gross margin (%) 33,8 35,6 34,9
EBITDA margin (%) 14,7 17,2 16,7
EBITA margin (%) 12,2 14,8 14,4
EBIT margin (%) 11,2 13,9 13,4
Pretax margin (%) 10,4 13,2 12,9
Net margin (%) 7,2 9,7 9,4
Growth rates Y/Y 2020 2021 2022
Sales growth (%) -15,5 2,1 4,7
EBITDA growth (%) -15,6 19,5 1,8
EBIT growth (%) -18,8 26,5 1,2
Net profit growth (%) -24,4 37,4 1,3
EPS growth (%) -24,3 37,3 1,3
Profitability 2020 2021 2022
ROE (%) 9,2 12 11,3
ROE Adj (%) 10,5 13,1 12,4
ROCE (%) 9,5 11,8 11,4
ROCE Adj(%) 10,4 12,6 12,2
ROIC (%) 7,7 10,8 10,8
ROIC Adj (%) 7,7 10,8 10,8
Adj earnings numbers 2020 2021 2022
EBITDA Adj 462 552 562
EBITDA Adj margin (%) 14,7 17,2 16,7
EBITA Adj 385 477 484
EBITA Adj margin (%) 12,2 14,8 14,4
EBIT Adj 353 447 452
EBIT Adj margin (%) 11,2 13,9 13,4
Pretax profit Adj 359 455 464
Net profit Adj 259 342 347
Net profit to shareholders Adj 259 342 347
Net Adj margin (%) 8,2 10,6 10,3
Depreciation and amortisation -77 -75 -79
Of which leasing depreciation -34 -34 -34
EO items 0 0 0
Impairment and PPA amortisation -32 -30 -31
EBITDA lease Adj 436 521 529
EBITDA lease Adj margin (%) 13,9 16,2 15,7
Leasing payments -26 -31 -33
SEKm 2020 2021e 2022e
EBITDA 462 552 562
Net financial items -27 -22 -20
Paid tax -79 -114 -117
Non-cash items -14 0 0
Cash flow before change in WC 343 417 426
Change in WC 103 -36 -37
Operating cash flow 446 381 389
CAPEX tangible fixed assets -46 -51 -50
CAPEX intangible fixed assets -1 -3 -3
Acquisitions and disposals -4 0 0
Free cash flow 396 327 335
Dividend paid 0 -113 -120
Share issues and buybacks 0 0 0
Other non cash items 15 -7 0
Decrease in net IB debt 387 112 153
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 1102 1110 1110
Indefinite intangible assets 0 0 0
Definite intangible assets 762 734 705
Tangible fixed assets 351 361 367
Other fixed assets 54 54 54
Fixed assets 2392 2381 2358
Inventories 552 579 606
Receivables 414 450 481
Other current assets 0 0 0
Cash and liquid assets 899 1086 1268
Total assets 4257 4497 4713
Shareholders equity 2500 2699 2895
Minority 0 0 0
Total equity 2500 2699 2895
Long-term debt 808 810 810
Pension debt 234 237 237
Convertible debt 0 0 0
Deferred tax 215 215 215
Other long-term liabilities 27 26 26
Short-term debt 0 0 0
Accounts payable 175 203 214
Other current liabilities 170 170 180
Total liabilities and equity 4257 4497 4713
Net IB debt 270 92 -90
Net IB debt excl. pension debt 37 -145 -327
Capital invested 3012 3037 3051
Working capital 620 656 693
EV breakdown 2020 2021 2022
Market cap. diluted (m) 3863 4626 4626
Net IB debt Adj 269 92 -90
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 4132 4718 4536
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 74,4 73,4 73,1
Capital invested turnover (%) 99,3 106 110,1
Capital employed turnover (%) 87,1 85,8 86,2
Inventories / sales (%) 18,9 17,6 17,6
Customer advances / sales (%) 5,7 5,3 5,1
Payables / sales (%) 6,2 5,6 5,7
Working capital / sales (%) 22,3 19,8 20
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 10,8 3,4 -3,1
Net debt / market cap (%) 7,6 2 -1,9
Equity ratio (%) 58,7 60 61,4
Net IB debt adj. / equity (%) 10,8 3,4 -3,1
Current ratio (%) 507,5 535,9 566,2
EBITDA / net interest (%) 2817,5 2953,8 2811,8
Net IB debt / EBITDA (%) 58,5 16,7 -16
Interest cover (%) 2348,9 2551,2 2418,8
Lease liability amortisation -26 -31 -33
Other intangible assets 762 735 706
Right-of-use asset 124 121 120
Total other fixed assets 54 55 55
Leasing liability 128 132 132
Total other long-term liabilities 241 246 246
Net IB debt excl. leasing 141 -40 -222
Net IB debt / EBITDA lease Adj (%) 32,3 -7,6 -41,9
SEKm 2020 2021e 2022e
Shares outstanding adj. 25 25 25
Fully diluted shares Adj 25 25 25
EPS 9,07 12,46 12,62
Dividend per share Adj 4,5 4,8 4,8
EPS Adj 10,35 13,66 13,88
BVPS 99,99 107,95 115,77
BVPS Adj 25,46 34,18 43,12
Net IB debt / share 10,8 3,7 -3,6
Share price 142,01 185 185
Market cap. (m) 3551 4626 4626
Valuation 2020 2021 2022
P/E 17 14,9 14,7
EV/sales 1,31 1,47 1,35
EV/EBITDA 8,9 8,5 8,1
EV/EBITA 10,7 9,9 9,4
EV/EBIT 11,7 10,6 10
Dividend yield (%) 2,9 2,6 2,6
FCF yield (%) 10,2 7,1 7,2
P/BVPS 1,55 1,71 1,6
P/BVPS Adj 6,07 5,41 4,29
P/E Adj 14,9 13,5 13,3
EV/EBITDA Adj 8,9 8,5 8,1
EV/EBITA Adj 10,7 9,9 9,4
EV/EBIT Adj 11,7 10,6 10
EV/cap. employed 1,1 1,2 1,1
Investment ratios 2020 2021 2022
Capex / sales 1,5 1,7 1,6
Capex / depreciation 107,7 132,3 120,7
Capex tangibles / tangible fixed assets 13 14,3 13,8
Capex intangibles / definite intangibles 0,1 0,4 0,5
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 12,2 11,4 12,2
Lease adj. FCF yield (%) 9,6 6,4 6,5

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 % 1 Apr 2021
Stiftelsen SLK-anställda 4.3 % 23.6 % 1 Apr 2021
SEB Fonder 11.1 % 6.0 % 31 Mar 2021
Lannebo Fonder 10.6 % 5.8 % 1 Apr 2021
Nordea Fonder 7.4 % 4.0 % 31 Mar 2021
Swedbank Robur Fonder 5.8 % 3.1 % 31 Mar 2021
VBG Group AB 4.6 % 2.5 % 1 Apr 2021
If Skadeförsäkring AB 4.2 % 2.3 % 1 Apr 2021
Didner & Gerge Fonder 4.0 % 2.2 % 31 Mar 2021
Fjärde AP-fonden 3.9 % 2.1 % 1 Apr 2021
Source: Holdings by Modular Finance AB

Insider list - VBG Group

Name Quantity Code Date
Bror Anders Erkén + 1 570 BUY 24 Feb 2021
Fredrik Jignéus + 300 BUY 23 Jul 2020
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
Claes Wedin + 10 000 BUY 5 Oct 2018
Anders Birgersson + 20 000 BUY 5 Oct 2018
Bror Anders Erkén + 15 000 ALTM 4 Oct 2018
Claes Wedin + 500 BUY 24 Aug 2017

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