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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 1544 1609
Sales growth (%) 13,5 17,6 4,2
EBITDA 457 535 569
EBITDA margin (%) 34,8 34,7 35,4
EBIT adj 202 249 277
EBIT adj margin (%) 15,4 16,1 17,2
Pretax profit 188 233 261
EPS rep 4,25 5,77 6,46
EPS growth (%) 70,1 35,7 11,9
EPS adj 7,55 9,73 10,59
DPS 1,35 1,64 1,76
EV/EBITDA (x) 25,8 26,2 24,4
EV/EBIT adj (x) 58,2 56,4 50,2
P/E (x) 80,2 71,1 63,5
P/E adj (x) 45,1 42,1 38,7
EV/sales (x) 9 9,1 8,6
FCF yield (%) 0,8 0,9 1,9
Dividend yield (%) 0,4 0,4 0,4
Net IB debt/EBITDA 1 0,9 0,6
Lease adj. FCF yield (%) 0,8 0,8 1,8
Lease adj. ND/EBITDA 0,9 0,8 0,5
SEKm 2020 2021e 2022e
Sales 1313 1544 1609
COGS 0 0 0
Gross profit 1313 1544 1609
Other operating items -856 -1009 -1039
EBITDA 457 535 569
Depreciation on tangibles -50 -59 -48
Depreciation on intangibles -75 -80 -92
EBITA 312 380 414
Goodwill impairment charges 0 0 0
Other impairment and amortisation -109 -131 -137
EBIT 202 249 277
Other financial items 0 0 0
Net financial items -15 -16 -16
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 188 233 261
Tax -47 -42 -47
Net profit 141 191 214
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 141 191 214
EPS 4,25 5,77 6,46
EPS Adj 7,55 9,73 10,59
Total extraordinary items after tax 0 0 0
Tax rate (%) -25 -18 -18
Gross margin (%) 100 100 100
EBITDA margin (%) 34,8 34,7 35,4
EBITA margin (%) 23,7 24,6 25,7
EBIT margin (%) 15,4 16,1 17,2
Pretax margin (%) 14,3 15,1 16,2
Net margin (%) 10,7 12,4 13,3
Growth rates Y/Y 2020 2021 2022
Sales growth (%) 13,5 17,6 4,2
EBITDA growth (%) 29,1 17,1 6,4
EBIT growth (%) 63,3 23,1 11,2
Net profit growth (%) 71,2 35,7 11,9
EPS growth (%) 70,1 35,7 11,9
Profitability 2020 2021 2022
ROE (%) 17,7 20,8 19,2
ROE Adj (%) 31,4 35,1 31,5
ROCE (%) 14,8 15,5 14,8
ROCE Adj(%) 22,8 23,7 22,2
ROIC (%) 10 12,7 13,1
ROIC Adj (%) 10 12,7 13,1
Adj earnings numbers 2020 2021 2022
EBITDA Adj 457 535 569
EBITDA Adj margin (%) 34,8 34,7 35,4
EBITA Adj 312 380 414
EBITA Adj margin (%) 23,7 24,6 25,7
EBIT Adj 202 249 277
EBIT Adj margin (%) 15,4 16,1 17,2
Pretax profit Adj 297 364 398
Net profit Adj 250 322 351
Net profit to shareholders Adj 250 322 351
Net Adj margin (%) 19,1 20,9 21,8
Depreciation and amortisation -145 -155 -156
Of which leasing depreciation -20 -16 -16
EO items 0 0 0
Impairment and PPA amortisation -109 -131 -137
EBITDA lease Adj 457 519 553
EBITDA lease Adj margin (%) 34,8 33,6 34,4
Leasing payments 0 -16 -16
SEKm 2020 2021e 2022e
EBITDA 457 535 569
Net financial items -15 -16 -16
Paid tax -18 -59 -66
Non-cash items 0 0 0
Cash flow before change in WC 425 460 488
Change in WC 11 -14 -14
Operating cash flow 436 447 474
CAPEX tangible fixed assets -10 -16 -16
CAPEX intangible fixed assets -163 -178 -196
Acquisitions and disposals -167 -130 0
Free cash flow 96 123 262
Dividend paid -33 -53 -57
Share issues and buybacks 0 0 0
Other non cash items -145 -89 -59
Decrease in net IB debt 27 9 150
Balance Sheet (SEKm) 2020 2021 2022
Goodwill 770 926 926
Indefinite intangible assets 0 0 0
Definite intangible assets 917 1015 1119
Tangible fixed assets 67 40 24
Other fixed assets 6 6 6
Fixed assets 1797 2024 2112
Inventories 3 3 3
Receivables 219 224 233
Other current assets 53 73 75
Cash and liquid assets 134 280 430
Total assets 2207 2604 2854
Shareholders equity 843 994 1234
Minority 0 0 0
Total equity 843 994 1234
Long-term debt 555 685 685
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 42 43
Other current liabilities 493 588 587
Total liabilities and equity 2207 2604 2854
Net IB debt 475 465 315
Net IB debt excl. pension debt 475 465 315
Capital invested 1539 1688 1787
Working capital -253 -330 -319
EV breakdown 2020 2021 2022
Market cap. diluted (m) 11293 13578 13578
Net IB debt Adj 475 465 315
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 14043 13893
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 64,2 64,2 58,9
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 -18,9 -20,2
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 56,4 46,7 25,5
Net debt / market cap (%) 6 3,5 2,4
Equity ratio (%) 38,2 38,2 43,2
Net IB debt adj. / equity (%) 56,4 46,7 25,5
Current ratio (%) 77,2 91 116,2
EBITDA / net interest (%) 3126,8 3344,7 3559,1
Net IB debt / EBITDA (%) 104,1 86,8 55,3
Interest cover (%) 2065,7 2376,2 2584,4
Lease liability amortisation 0 -16 -16
Other intangible assets 917 1015 1119
Right-of-use asset 37 37 37
Total other fixed assets 6 6 6
Leasing liability 58 58 58
Total other long-term liabilities 220 229 239
Net IB debt excl. leasing 418 407 257
Net IB debt / EBITDA lease Adj (%) 91,5 78,4 46,5
SEKm 2020 2021e 2022e
Shares outstanding adj. 33 33 33
Fully diluted shares Adj 33 33 33
EPS 4,25 5,77 6,46
Dividend per share Adj 1,4 1,6 1,8
EPS Adj 7,55 9,73 10,59
BVPS 25,89 30,53 37,87
BVPS Adj -25,91 -29,05 -24,91
Net IB debt / share 14,6 14,3 9,7
Share price 242,26 410 410
Market cap. (m) 7891 13355 13355
Valuation 2020 2021 2022
P/E 80,2 71,1 63,5
EV/sales 8,96 9,09 8,64
EV/EBITDA 25,8 26,2 24,4
EV/EBITA 37,8 36,9 33,6
EV/EBIT 58,2 56,4 50,2
Dividend yield (%) 0,4 0,4 0,4
FCF yield (%) 0,8 0,9 1,9
P/BVPS 13,17 13,43 10,83
P/BVPS Adj -13,16 -14,11 -16,46
P/E Adj 45,1 42,1 38,7
EV/EBITDA Adj 25,8 26,2 24,4
EV/EBITA Adj 37,8 36,9 33,6
EV/EBIT Adj 58,2 56,4 50,2
EV/cap. employed 8,1 8 7
Investment ratios 2020 2021 2022
Capex / sales 13,2 12,5 13,2
Capex / depreciation 138,1 139,3 151,7
Capex tangibles / tangible fixed assets 14,4 39,9 67
Capex intangibles / definite intangibles 17,8 17,5 17,5
Depreciation on intangibles / definite intangibles 8,2 7,9 8,2
Depreciation on tangibles / tangibles 74,5 146,2 202,1
Lease adj. FCF yield (%) 0,8 0,8 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 4.8 % 26.0 % 31 Mar 2021
Olov Sandberg 3.5 % 18.6 % 31 Mar 2021
SEB Fonder 7.2 % 3.9 % 31 Mar 2021
Capital Group 6.0 % 3.3 % 31 Dec 2020
Thomas Eklund 5.1 % 2.8 % 31 Mar 2021
Didner & Gerge Fonder 4.5 % 2.4 % 31 Mar 2021
ODIN Fonder 4.3 % 2.3 % 31 Mar 2021
Swedbank Robur Fonder 4.2 % 2.3 % 31 Mar 2021
Martin Gren (Grenspecialisten) 3.3 % 1.8 % 31 Mar 2021
Utah Retirement Systems 2.6 % 1.4 % 31 Oct 2020
Source: Holdings by Modular Finance AB

Insider list - Vitec

Name Quantity Code Date
Patrik Fransson - 10 000 SELL 19 Feb 2021
Patrik Fransson + 10 000 BUY 19 Feb 2021
Kaj- Sandart - 2 000 SELL 15 Oct 2020
Jan Friedman + 6 000 BUY 15 Oct 2020
Gert Ulf Patrik Gustafsson + 10 BUY 24 Sep 2020
Gert Ulf Patrik Gustafsson - 10 SELL 21 Sep 2020
Olle Backman + 10 000 BUY 4 Sep 2020
Lars Stenlund + 10 000 BUY 4 Sep 2020
Gert Ulf Patrik Gustafsson + 100 000 ALTM 1 Sep 2020
Patrik Fransson + 100 000 ALTM 1 Sep 2020

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