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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 2019 2020e 2021e
Sales 1156 1307 1364
Sales growth (%) 13,7 13 4,3
EBITDA 354 425 460
EBITDA margin (%) 30,6 32,5 33,7
EBIT adj 124 176 203
EBIT adj margin (%) 10,7 13,5 14,9
Pretax profit 110 164 191
EPS rep 2,5 4,09 4,76
EPS growth (%) -20,1 63,5 16,4
EPS adj 5,28 7,26 8,07
DPS 1,2 1,35 1,45
EV/EBITDA (x) 18,6 13,9 12,6
EV/EBIT adj (x) 53,2 33,6 28,5
P/E (x) 74 40,9 35,2
P/E adj (x) 35 23 20,7
EV/sales (x) 5,7 4,5 4,2
FCF yield (%) -1,5 2,4 4
Dividend yield (%) 0,6 0,8 0,9
Net IB debt/EBITDA 1,4 1 0,6
SEKm 2019 2020e 2021e
Sales 1156 1307 1364
COGS 0 0 0
Gross profit 1156 1307 1364
Other operating items -802 -882 -904
EBITDA 354 425 460
Depreciation on tangibles -45 -44 -44
Depreciation on intangibles -67 -73 -75
EBITA 216 281 312
Goodwill impairment charges 0 0 0
Other impairment and amortisation -92 -105 -109
EBIT 124 176 203
Other financial items 0 0 0
Net financial items -14 -12 -12
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 110 164 191
Tax -28 -30 -34
Net profit 82 134 156
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 82 134 156
EPS 2,5 4,09 4,76
EPS Adj 5,28 7,26 8,07
Total extraordinary items after tax 0 0 0
Tax rate (%) -25,3 -18,2 -18
Gross margin (%) 100 100 100
EBITDA margin (%) 30,6 32,5 33,7
EBITA margin (%) 18,6 21,5 22,9
EBIT margin (%) 10,7 13,5 14,9
Pretax margin (%) 9,5 12,6 14
Net margin (%) 7,1 10,3 11,5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 13,7 13 4,3
EBITDA growth (%) 23,4 20,2 8,1
EBIT growth (%) -3,5 42,3 15
Net profit growth (%) -15,2 63,5 16,4
EPS growth (%) -20,1 63,5 16,4
Profitability 2019 2020 2021
ROE (%) 11,6 16,6 16,7
ROE Adj (%) 24,5 29,5 28,4
ROCE (%) 10,2 13,2 13,8
ROCE Adj(%) 17,6 21 21,3
ROIC (%) 7,1 9,5 10,8
ROIC Adj (%) 7,1 9,5 10,8
Adj earnings numbers 2019 2020 2021
EBITDA Adj 354 425 460
EBITDA Adj margin (%) 30,6 32,5 33,7
EBITA Adj 216 281 312
EBITA Adj margin (%) 18,6 21,5 22,9
EBIT Adj 124 176 203
EBIT Adj margin (%) 10,7 13,5 14,9
Pretax profit Adj 202 269 300
Net profit Adj 174 239 266
Net profit to shareholders Adj 174 239 266
Net Adj margin (%) 15 18,3 19,5
SEKm 2019 2020e 2021e
EBITDA 354 425 460
Net financial items -14 -12 -12
Paid tax -25 -42 -48
Non-cash items 0 0 0
Cash flow before change in WC 316 372 400
Change in WC 5 25 70
Operating cash flow 278 336 381
CAPEX tangible fixed assets -16 -15 -15
CAPEX intangible fixed assets -141 -131 -145
Acquisitions and disposals -214 -60 0
Free cash flow -92 130 222
Dividend paid -39 -44 -47
Share issues and buybacks 0 0 0
Other non cash items 18 -36 -50
Decrease in net IB debt -238 83 137
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 639 639 639
Indefinite intangible assets 0 0 0
Definite intangible assets 820 878 947
Tangible fixed assets 73 73 73
Other fixed assets 9 9 9
Fixed assets 1598 1656 1726
Inventories 5 5 5
Receivables 228 216 225
Other current assets 35 39 41
Cash and liquid assets 17 103 240
Total assets 1883 2019 2237
Shareholders equity 751 867 1004
Minority 0 0 0
Total equity 751 867 1004
Long-term debt 467 467 467
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 174 174 174
Other long-term liabilities 79 79 79
Short-term debt 3 7 7
Accounts payable 35 39 41
Other current liabilities 316 329 408
Total liabilities and equity 1883 2019 2237
Net IB debt 502 419 282
Net IB debt excl. pension debt 502 419 282
Capital invested 1506 1539 1539
Working capital -83 -108 -177
EV breakdown 2019 2020 2021
Market cap. diluted (m) 6087 5502 5502
Net IB debt Adj 502 419 282
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 6590 5921 5784
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 65 67 64,1
Capital invested turnover (%) 89 85,9 88,6
Capital employed turnover (%) 94,1 97,6 93
Inventories / sales (%) 0,5 0,4 0,4
Customer advances / sales (%) 11,5 9,3 8,6
Payables / sales (%) 2,8 2,8 2,9
Working capital / sales (%) -6,9 -7,3 -10,5
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 66,8 48,3 28,1
Net debt / market cap (%) 13,3 7,7 5,2
Equity ratio (%) 39,9 42,9 44,9
Net IB debt adj. / equity (%) 66,8 48,3 28,1
Current ratio (%) 80,4 97,1 112,3
EBITDA / net interest (%) 2547,1 3544,5 3830,1
Net IB debt / EBITDA (%) 141,9 98,5 61,5
Interest cover (%) 1438,2 2341 2599,7
SEKm 2019 2020e 2021e
Shares outstanding adj. 32 32 32
Fully diluted shares Adj 33 33 33
EPS 2,5 4,09 4,76
Dividend per share Adj 1,2 1,4 1,5
EPS Adj 5,28 7,26 8,07
BVPS 23,16 26,72 30,93
BVPS Adj -21,79 -20,02 -17,95
Net IB debt / share 15,5 12,9 8,7
Share price 116,61 167,2 167,2
Market cap. (m) 3783 5425 5425
Valuation 2019 2020 2021
P/E 74 40,9 35,2
EV/sales 5,7 4,53 4,24
EV/EBITDA 18,6 13,9 12,6
EV/EBITA 30,6 21,1 18,5
EV/EBIT 53,2 33,6 28,5
Dividend yield (%) 0,6 0,8 0,9
FCF yield (%) -1,5 2,4 4
P/BVPS 7,99 6,26 5,41
P/BVPS Adj -8,49 -8,35 -9,32
P/E Adj 35 23 20,7
EV/EBITDA Adj 18,6 13,9 12,6
EV/EBITA Adj 30,6 21,1 18,5
EV/EBIT Adj 53,2 33,6 28,5
EV/cap. employed 5,2 4,2 3,8
Investment ratios 2019 2020 2021
Capex / sales 13,5 11,1 11,7
Capex / depreciation 140,6 125,2 134,5
Capex tangibles / tangible fixed assets 21,3 20,6 20,5
Capex intangibles / definite intangibles 17,2 14,9 15,3
Depreciation on intangibles / definite intangibles 8,1 8,3 7,9
Depreciation on tangibles / tangibles 60,8 60,1 59,7

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 5.1 % 25.2 % 12 Mar 2020
Olov Sandberg 4.5 % 22.7 % 29 Feb 2020
SEB Fonder 6.6 % 3.4 % 29 Feb 2020
Thomas Eklund 5.4 % 2.8 % 29 Feb 2020
Didner & Gerge Fonder 5.1 % 2.7 % 29 Feb 2020
Swedbank Robur Fonder 5.1 % 2.6 % 29 Feb 2020
Martin Gren (Grenspecialisten) 3.9 % 2.0 % 29 Feb 2020
Mawer Investment Management 3.6 % 1.9 % 29 Feb 2020
Utah Retirement Systems 3.0 % 1.6 % 29 Feb 2020
ODIN Fonder 2.5 % 1.3 % 29 Feb 2020
Source: Holdings by Modular Finance AB

Insider list - Vitec

Name Quantity Code Date
Lars Eriksson - 852 SELL 20 Mar 2020
Lars Stenlund + 10 000 Redemp 12 Mar 2020
Gert Ulf Patrik Gustafsson + 30 000 Redemp 10 Jan 2020
Olov Sandberg + 15 000 Redemp 10 Jan 2020
Gert Ulf Patrik Gustafsson + 30 000 BUY 10 Jan 2020
Olov Sandberg - 15 000 SELL 10 Jan 2020
Lars Stenlund + 15 000 Redemp 10 Jan 2020
Lars Eriksson - 4 640 SELL 28 Nov 2019
Kerstin Maria Anderson + 700 BUY 30 Oct 2019
Kerstin Maria Anderson + 200 BUY 5 Sep 2019

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