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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 2018 2019e 2020e
Sales 1017 1216 1272
Sales growth (%) 18,9 19,6 4,6
EBITDA 281 351 345
EBITDA margin (%) 27,7 28,9 27,1
EBIT adj 134 176 190
EBIT adj margin (%) 13,2 14,5 14,9
Pretax profit 118 163 175
EPS rep 3,16 3,86 4,16
EPS growth (%) 18,8 22,2 7,7
EPS adj 3,32 3,86 4,16
DPS 1,2 1,2 1,4
EV/EBITDA (x) 9,5 13,3 13,3
EV/EBIT adj (x) 19,9 26,6 24,1
P/E (x) 24,6 33,4 31
P/E adj (x) 23,4 33,4 31
EV/sales (x) 2,6 3,8 3,6
FCF yield (%) 0,3 -4,5 3,7
Dividend yield (%) 1,5 0,9 1,1
Net IB debt/EBITDA 0,9 1,3 1
SEKm 2018 2019e 2020e
Sales 1017 1216 1272
COGS 128 132 135
Gross profit 1144 1348 1407
Other operating items -863 -997 -1063
EBITDA 281 351 345
Depreciation on tangibles 0 0 0
Depreciation on intangibles -152 -175 -155
EBITA 129 176 190
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 129 176 190
Other financial items 0 0 0
Net financial items -12 -13 -15
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 118 163 175
Tax -20 -37 -38
Net profit 98 127 136
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 98 127 136
EPS 3,16 3,86 4,16
EPS Adj 3,32 3,86 4,16
Total extraordinary items after tax -5,1 0 0
Tax rate (%) -16,9 -22,4 -22
Gross margin (%) 112,5 110,9 110,6
EBITDA margin (%) 27,7 28,9 27,1
EBITA margin (%) 12,7 14,5 14,9
EBIT margin (%) 12,7 14,5 14,9
Pretax margin (%) 11,6 13,4 13,7
Net margin (%) 9,6 10,4 10,7
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 18,9 19,6 4,6
EBITDA growth (%) 20,4 24,9 -1,9
EBIT growth (%) 21,1 36,2 7,7
Net profit growth (%) 23,3 29,5 7,7
EPS growth (%) 18,8 22,2 7,7
Profitability 2018 2019 2020
ROE (%) 18,3 17,7 16,8
ROE Adj (%) 19,3 17,7 16,8
ROCE (%) 13 14,4 14,9
ROCE Adj(%) 13,6 14,4 14,9
ROIC (%) 12,8 12,7 12,3
ROIC Adj (%) 13,4 12,7 12,3
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 351 345
EBITDA Adj margin (%) 28,2 28,9 27,1
EBITA Adj 134 176 190
EBITA Adj margin (%) 13,2 14,5 14,9
EBIT Adj 134 176 190
EBIT Adj margin (%) 13,2 14,5 14,9
Pretax profit Adj 123 163 175
Net profit Adj 103 127 136
Net profit to shareholders Adj 103 127 136
Net Adj margin (%) 10,1 10,4 10,7
SEKm 2018 2019e 2020e
EBITDA 281 351 345
Net financial items -12 -13 -15
Paid tax -20 -37 -38
Non-cash items 0 0 0
Cash flow before change in WC 250 302 291
Change in WC -8 71 12
Operating cash flow 284 119 303
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -277 -311 -148
Acquisitions and disposals 0 0 0
Free cash flow 7 -192 155
Dividend paid -32 -37 -39
Share issues and buybacks 0 0 0
Other non cash items 100 46 0
Decrease in net IB debt 75 -183 116
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 283 283 283
Indefinite intangible assets 0 0 0
Definite intangible assets 848 1139 1136
Tangible fixed assets 40 98 95
Other fixed assets 9 11 11
Fixed assets 1180 1531 1524
Inventories 0 0 0
Receivables 260 301 318
Other current assets 0 0 0
Cash and liquid assets 235 34 80
Total assets 1676 1866 1922
Shareholders equity 670 764 861
Minority 0 0 0
Total equity 670 764 861
Long-term debt 509 493 423
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 0 0
Short-term debt 0 0 0
Accounts payable 497 609 637
Other current liabilities 0 0 0
Total liabilities and equity 1097 1262 1676
Net IB debt 265 448 332
Net IB debt excl. pension debt 265 448 332
Capital invested 934 1213 1193
Working capital -236 -308 -319
EV breakdown 2018 2019 2020
Market cap. diluted (m) 2404 4235 4235
Net IB debt Adj 265 448 332
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 2669 4683 4567
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 69,2 68,7 67,2
Capital invested turnover (%) 121,6 113,3 105,8
Capital employed turnover (%) 102,5 99,9 100,1
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 46,9 45,5 49
Working capital / sales (%) -23,6 -22,4 -24,6
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 39,5 58,6 38,6
Net debt / market cap (%) 10,6 10,7 8
Equity ratio (%) 40 41 44,8
Net IB debt adj. / equity (%) 39,5 58,6 38,6
Current ratio (%) 99,8 55,1 62,4
EBITDA / net interest (%) 2425,5 2755,1 2340
Net IB debt / EBITDA (%) 94,1 127,6 96,4
Interest cover (%) 1114,3 1379,9 1287,4
SEKm 2018 2019e 2020e
Shares outstanding adj. 31 32 32
Fully diluted shares Adj 31 33 33
EPS 3,16 3,86 4,16
Dividend per share Adj 1,2 1,2 1,4
EPS Adj 3,32 3,86 4,16
BVPS 21,92 23,64 26,63
BVPS Adj -15,1 -20,33 -17,22
Net IB debt / share 8,7 13,9 10,3
Share price 81,97 129 129
Market cap. (m) 2504 4172 4172
Valuation 2018 2019 2020
P/E 24,6 33,4 31
EV/sales 2,62 3,85 3,59
EV/EBITDA 9,5 13,3 13,3
EV/EBITA 20,7 26,6 24,1
EV/EBIT 20,7 26,6 24,1
Dividend yield (%) 1,5 0,9 1,1
FCF yield (%) 0,3 -4,5 3,7
P/BVPS 3,54 5,46 4,84
P/BVPS Adj -5,14 -6,34 -7,49
P/E Adj 23,4 33,4 31
EV/EBITDA Adj 9,3 13,3 13,3
EV/EBITA Adj 19,9 26,6 24,1
EV/EBIT Adj 19,9 26,6 24,1
EV/cap. employed 2,3 3,7 3,6
Investment ratios 2018 2019 2020
Capex / sales 27,2 25,5 11,6
Capex / depreciation 182,1 177,1 95,3
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 32,6 27,3 13
Depreciation on intangibles / definite intangibles 17,9 15,4 13,6
Depreciation on tangibles / tangibles 0 0 0

Equity research

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Media

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

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Main shareholders

Vitec

Main shareholders Share capital % Voting shares % Verified
Lars Stenlund 5.2 % 25.3 % 30 Jun 2019
Olov Sandberg 4.5 % 22.8 % 30 Jun 2019
Didner & Gerge Fonder 7.1 % 3.7 % 30 Jun 2019
SEB Fonder 6.2 % 3.2 % 30 Jun 2019
Thomas Eklund 5.4 % 2.8 % 30 Jun 2019
Mawer Investment Management 4.7 % 2.4 % 31 May 2019
Martin Gren (Grenspecialisten) 4.0 % 2.1 % 30 Jun 2019
Utah Retirement Systems 3.7 % 1.9 % 30 Jun 2019
Avanza Pension 2.9 % 1.5 % 30 Jun 2019
Cliens Fonder 2.5 % 1.3 % 30 Jun 2019
Source: Holdings by Modular Finance AB

Insider list

Vitec

Name Quantity Code Date
Maria Sofia Katarina Kröger - 5 000 SELL 11 Jun 2018
Maria Sofia Katarina Kröger + 50 000 Redemp 4 Jan 2018
Maria Sofia Katarina Kröger + 50 000 BUY 4 Jan 2018
Lars Stenlund + 25 000 Redemp 4 Jan 2018
Bernt Olof Sandberg + 250 000 Redemp 4 Jan 2018
Maria Sofia Katarina Kröger - 9 500 SELL 2 Jan 2018
Lars Eriksson 10 KONV 30 Nov 2017
Lars Eriksson 3 144 KONV 30 Nov 2017
Lars Eriksson + 25 TILLD 30 Nov 2017
Oscar Kröger + 1 572 GIFT 30 Nov 2017

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