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Vitec

Vitec

Vertical market software

Vitec's business idea is to acquire and develop market leading, vertical software companies in niche markets. These are normally restricted to certain geographies as the software can be hard to sell in some areas. The business strategy is a combination of making use of the M&A arbitrage from buying unlisted companies, rationalization and maximisation of current business, as well as geographical and market diversification. The company rather than the niche in which it operates is in focus when Vitec makes an acquisition.

Engaging in vertical market software, the opportunity for Vitec to find further possible targets is still good and the fast acquisition pace is likely to continue. Previous targets have been acquired at lower and attractive multiples, something we believe could still drive further growth. Furthermore, changing internal software is difficult for Vitec’s customers to do in their niche markets, making Vitec’s offering sticky and enabling it to generate stable revenue streams ahead.

There is a risk of larger customers developing their own software due to weak maintenance and development from Vitec’s side. As software becomes easier to develop, a future risk is found in start-ups developing similar software that could be easier for customers to implement. Additionally, some of the markets in which Vitec operates are experiencing lower growth, potentially dampening the organic growth for the group.

SEKm 2020 2021e 2022e
Sales 1313 1592 1655
Sales growth (%) 13,5 21,3 3,9
EBITDA 457 607 619
EBITDA margin (%) 34,8 38,1 37,4
EBIT adj 202 311 318
EBIT adj margin (%) 15,4 19,5 19,2
Pretax profit 188 292 302
EPS rep 4,25 6,91 7,4
EPS growth (%) 70,1 62,5 7,2
EPS adj 7,55 10,94 11,61
DPS 1,35 1,64 1,76
EV/EBITDA (x) 25,8 28,3 27,4
EV/EBIT adj (x) 58,2 55,3 53,4
P/E (x) 80,2 70,5 65,8
P/E adj (x) 45,1 44,5 42
EV/sales (x) 9 10,8 10,3
FCF yield (%) 0,8 -2 1,8
Dividend yield (%) 0,4 0,3 0,4
Net IB debt/EBITDA 1 1,4 1,1
Lease adj. FCF yield (%) 0,8 -2,1 1,8
Lease adj. ND/EBITDA 0,9 1,4 1
SEKm 2020 2021e 2022e
Sales 1313 1592 1655
COGS 0 0 0
Gross profit 1313 1592 1655
Other operating items -856 -985 -1036
EBITDA 457 607 619
Depreciation on tangibles -50 -59 -48
Depreciation on intangibles -75 -80 -92
EBITA 312 445 459
Goodwill impairment charges 0 0 0
Other impairment and amortisation -109 -131 -137
EBIT 202 311 318
Other financial items 0 0 0
Net financial items -15 -19 -16
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 188 292 302
Tax -47 -61 -54
Net profit 141 231 248
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 141 231 248
EPS 4,25 6,91 7,4
EPS Adj 7,55 10,94 11,61
Total extraordinary items after tax 0 0 0
Tax rate (%) -25 -20,7 -18
Gross margin (%) 100 100 100
EBITDA margin (%) 34,8 38,1 37,4
EBITA margin (%) 23,7 28 27,7
EBIT margin (%) 15,4 19,5 19,2
Pretax margin (%) 14,3 18,3 18,3
Net margin (%) 10,7 14,5 15
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 13,5 21,3 3,9
EBITDA growth (%) 29,1 32,9 2
EBIT growth (%) 63,3 53,5 2,5
Net profit growth (%) 71,2 64,3 7,2
EPS growth (%) 70,1 62,5 7,2
Profitability 2020 2021 2022
ROE (%) 17,7 24,6 21,2
ROE Adj (%) 31,4 39 33,2
ROCE (%) 14,8 17,4 14,2
ROCE Adj(%) 22,8 25 20,5
ROIC (%) 10 13,6 12,2
ROIC Adj (%) 10 13,6 12,2
Adj earnings numbers 2020 2021 2022
EBITDA Adj 457 607 619
EBITDA Adj margin (%) 34,8 38,1 37,4
EBITA Adj 312 445 459
EBITA Adj margin (%) 23,7 28 27,7
EBIT Adj 202 311 318
EBIT Adj margin (%) 15,4 19,5 19,2
Pretax profit Adj 297 427 443
Net profit Adj 250 366 389
Net profit to shareholders Adj 250 366 389
Net Adj margin (%) 19,1 23 23,5
Depreciation and amortisation -145 -162 -160
Of which leasing depreciation -20 -16 -16
EO items 0 0 0
Impairment and PPA amortisation -109 -135 -141
EBITDA lease Adj 457 591 603
EBITDA lease Adj margin (%) 34,8 37,1 36,4
Leasing payments 0 -16 -16
SEKm 2020 2021e 2022e
EBITDA 457 607 619
Net financial items -15 -19 -16
Paid tax -18 -85 -76
Non-cash items 0 0 0
Cash flow before change in WC 425 504 527
Change in WC 11 6 6
Operating cash flow 436 510 533
CAPEX tangible fixed assets -10 -16 -16
CAPEX intangible fixed assets -163 -222 -215
Acquisitions and disposals -167 -599 0
Free cash flow 96 -328 301
Dividend paid -33 -54 -58
Share issues and buybacks 0 0 0
Other non cash items -145 -11 -44
Decrease in net IB debt 27 9 150
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 770 1226 1226
Indefinite intangible assets 0 0 0
Definite intangible assets 917 1015 1119
Tangible fixed assets 67 37 19
Other fixed assets 6 6 6
Fixed assets 1797 2363 2467
Inventories 3 3 3
Receivables 219 231 240
Other current assets 53 76 77
Cash and liquid assets 134 198 388
Total assets 2207 2871 3174
Shareholders equity 843 1034 1307
Minority 0 0 0
Total equity 843 1034 1307
Long-term debt 555 1007 1007
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 186 195 205
Other long-term liabilities 34 34 34
Short-term debt 3 8 8
Accounts payable 35 43 45
Other current liabilities 493 532 545
Total liabilities and equity 2207 2871 3174
Net IB debt 475 869 680
Net IB debt excl. pension debt 475 869 680
Capital invested 1539 2092 2191
Working capital -253 -265 -270
EV breakdown 2020 2021 2022
Market cap. diluted (m) 11293 16304 16304
Net IB debt Adj 475 869 680
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 11768 17172 16983
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 64,2 62,7 54,8
Capital invested turnover (%) 86,2 95,7 92,6
Capital employed turnover (%) 95,9 96,4 86,3
Inventories / sales (%) 0,3 0,2 0,2
Customer advances / sales (%) 12 12,5 12,9
Payables / sales (%) 2,7 2,5 2,6
Working capital / sales (%) -11,9 -16,3 -16,2
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 56,4 84 52
Net debt / market cap (%) 6 5,4 4,2
Equity ratio (%) 38,2 36 41,2
Net IB debt adj. / equity (%) 56,4 84 52
Current ratio (%) 77,2 87,1 118,3
EBITDA / net interest (%) 3126,8 3252,3 3868,6
Net IB debt / EBITDA (%) 104,1 143,1 109,8
Interest cover (%) 2065,7 2364,6 2868,7
Lease liability amortisation 0 -16 -16
Other intangible assets 917 1057 1178
Right-of-use asset 37 37 37
Total other fixed assets 6 6 6
Leasing liability 58 58 58
Total other long-term liabilities 220 190 205
Net IB debt excl. leasing 418 811 622
Net IB debt / EBITDA lease Adj (%) 91,5 137,2 103,2
SEKm 2020 2021e 2022e
Shares outstanding adj. 33 33 33
Fully diluted shares Adj 33 33 33
EPS 4,25 6,91 7,4
Dividend per share Adj 1,4 1,6 1,8
EPS Adj 7,55 10,94 11,61
BVPS 25,89 31,32 39,58
BVPS Adj -25,91 -37,85 -33,25
Net IB debt / share 14,6 26,3 20,6
Share price 242,26 487 487
Market cap. (m) 7891 16075 16075
Valuation 2020 2021 2022
P/E 80,2 70,5 65,8
EV/sales 8,96 10,78 10,26
EV/EBITDA 25,8 28,3 27,4
EV/EBITA 37,8 38,6 37
EV/EBIT 58,2 55,3 53,4
Dividend yield (%) 0,4 0,3 0,4
FCF yield (%) 0,8 -2 1,8
P/BVPS 13,17 15,55 12,3
P/BVPS Adj -13,16 -12,87 -14,65
P/E Adj 45,1 44,5 42
EV/EBITDA Adj 25,8 28,3 27,4
EV/EBITA Adj 37,8 38,6 37
EV/EBIT Adj 58,2 55,3 53,4
EV/cap. employed 8,1 8,2 7,1
Investment ratios 2020 2021 2022
Capex / sales 13,2 15 14
Capex / depreciation 138,1 163,6 160,5
Capex tangibles / tangible fixed assets 14,4 43,3 82,8
Capex intangibles / definite intangibles 17,8 21 18,3
Depreciation on intangibles / definite intangibles 8,2 7,9 8
Depreciation on tangibles / tangibles 74,5 167,3 257,1
Lease adj. FCF yield (%) 0,8 -2,1 1,8

Equity research

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Media

Vitec - Interview with CEO Lars Stenlund (in Swedish)
Vitec - Company presentation with CEO Lars Stenlund (in Swedish)

Main shareholders - Vitec

Main shareholders Share capital % Voting shares % Verified
Lars Stenlund 4.5 % 25.1 % 30 Sep 2021
Olov Sandberg 3.3 % 18.0 % 30 Sep 2021
SEB Fonder 7.6 % 4.3 % 30 Sep 2021
Capital Group 6.4 % 3.6 % 30 Sep 2021
Thomas Eklund 4.8 % 2.7 % 30 Sep 2021
Didner & Gerge Fonder 3.9 % 2.2 % 30 Sep 2021
ODIN Fonder 3.5 % 2.0 % 30 Sep 2021
Martin Gren (Grenspecialisten) 3.1 % 1.7 % 30 Sep 2021
Swedbank Robur Fonder 3.1 % 1.7 % 30 Sep 2021
Invesco 2.6 % 1.4 % 30 Jun 2021
Source: Holdings by Modular Finance AB

Insider list - Vitec

Name Quantity Code Date
Sara Nilsson + 10 000 BUY 1 Jun 2021
Olle Backman + 10 000 BUY 1 Jun 2021
Sara Nilsson + 100 000 BUY 1 Jun 2021
Olle Backman + 100 000 SUBS 1 Jun 2021
Patrik Fransson + 10 000 BUY 1 Jun 2021
Olov Sandberg - 5 779 SELL 10 May 2021
Patrik Fransson + 10 000 BUY 19 Feb 2021
Patrik Fransson - 10 000 SELL 19 Feb 2021
Kaj- Sandart - 2 000 SELL 15 Oct 2020
Jan Friedman + 6 000 BUY 15 Oct 2020

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