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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 1191 1235
Sales growth (%) 18,9 17,1 3,7
EBITDA 281 353 350
EBITDA margin (%) 27,7 29,6 28,3
EBIT adj 139 172 187
EBIT adj margin (%) 13,7 14,5 15,1
Pretax profit 118 151 173
EPS rep 3,16 3,6 4,07
EPS growth (%) 18,8 14 13,2
EPS adj 6,02 6,64 6,96
DPS 1,2 1,2 1,4
EV/EBITDA (x) 9,5 14,7 14,8
EV/EBIT adj (x) 19,1 30,1 27,6
P/E (x) 24,6 40,1 35,5
P/E adj (x) 12,9 21,8 20,8
EV/sales (x) 2,6 4,4 4,2
FCF yield (%) 0,3 -2,3 1
Dividend yield (%) 1,5 0,8 1
Net IB debt/EBITDA 0,9 1,2 1,1
SEKm 2018 2019e 2020e
Sales 1017 1191 1235
COGS 128 137 135
Gross profit 1144 1327 1370
Other operating items -863 -974 -1021
EBITDA 281 353 350
Depreciation on tangibles 0 0 0
Depreciation on intangibles -69 -51 -30
EBITA 213 264 282
Goodwill impairment charges -5 -9 0
Other impairment and amortisation -78 -92 -95
EBIT 129 164 187
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 118 151 173
Tax -20 -32 -38
Net profit 98 119 135
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 98 119 135
EPS 3,16 3,6 4,07
EPS Adj 6,02 6,64 6,96
Total extraordinary items after tax -5,1 0 0
Tax rate (%) -16,9 -21,1 -22
Gross margin (%) 112,5 111,5 110,9
EBITDA margin (%) 27,7 29,6 28,3
EBITA margin (%) 20,9 22,2 22,9
EBIT margin (%) 12,7 13,8 15,1
Pretax margin (%) 11,6 12,7 14
Net margin (%) 9,6 10 10,9
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 18,9 17,1 3,7
EBITDA growth (%) 20,4 25,5 -0,9
EBIT growth (%) 21,1 26,7 14,3
Net profit growth (%) 23,3 21,6 13,2
EPS growth (%) 18,8 14 13,2
Profitability 2018 2019 2020
ROE (%) 18,3 16,4 16,2
ROE Adj (%) 34,9 30,2 27,7
ROCE (%) 13 13,1 14
ROCE Adj(%) 22 21,1 21,1
ROIC (%) 12,8 12,1 11,8
ROIC Adj (%) 13,9 12,7 11,8
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 353 350
EBITDA Adj margin (%) 28,2 29,6 28,3
EBITA Adj 218 264 282
EBITA Adj margin (%) 21,4 22,2 22,9
EBIT Adj 139 172 187
EBIT Adj margin (%) 13,7 14,5 15,1
Pretax profit Adj 206 251 268
Net profit Adj 186 219 230
Net profit to shareholders Adj 186 219 230
Net Adj margin (%) 18,3 18,4 18,6
SEKm 2018 2019e 2020e
EBITDA 281 353 350
Net financial items -12 -13 -15
Paid tax -20 -32 -38
Non-cash items 0 0 0
Cash flow before change in WC 250 308 297
Change in WC -8 140 -66
Operating cash flow 284 202 193
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -277 -310 -147
Acquisitions and disposals 0 0 0
Free cash flow 7 -108 46
Dividend paid -32 -37 -40
Share issues and buybacks 0 0 0
Other non cash items 100 22 68
Decrease in net IB debt 75 -153 30
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 283 283 283
Indefinite intangible assets 0 0 0
Definite intangible assets 848 1153 1149
Tangible fixed assets 40 91 87
Other fixed assets 9 11 11
Fixed assets 1180 1588 1586
Inventories 0 0 0
Receivables 260 233 309
Other current assets 0 0 0
Cash and liquid assets 235 115 75
Total assets 1676 1935 1970
Shareholders equity 670 783 878
Minority 0 0 0
Total equity 670 783 878
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 497 609 619
Other current liabilities 0 0 0
Total liabilities and equity 1097 1262 1676
Net IB debt 265 418 387
Net IB debt excl. pension debt 265 418 387
Capital invested 934 1200 1265
Working capital -236 -376 -310
EV breakdown 2018 2019 2020
Market cap. diluted (m) 2404 4773 4773
Net IB debt Adj 265 418 387
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 5191 5161
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 69,2 66 63,3
Capital invested turnover (%) 121,6 111,6 100,2
Capital employed turnover (%) 102,5 95,1 92,3
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 46,9 46,4 49,7
Working capital / sales (%) -23,6 -25,7 -27,8
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 39,5 53,4 44,1
Net debt / market cap (%) 10,6 8,9 8,3
Equity ratio (%) 40 40,4 44,5
Net IB debt adj. / equity (%) 39,5 53,4 44,1
Current ratio (%) 99,8 57 62
EBITDA / net interest (%) 2425,5 2719,3 2403,7
Net IB debt / EBITDA (%) 94,1 118,4 110,8
Interest cover (%) 1834,3 2035,3 1940,5
SEKm 2018 2019e 2020e
Shares outstanding adj. 31 32 32
Fully diluted shares Adj 31 33 33
EPS 3,16 3,6 4,07
Dividend per share Adj 1,2 1,2 1,4
EPS Adj 6,02 6,64 6,96
BVPS 21,92 24,18 27,12
BVPS Adj -15,1 -20,16 -17,11
Net IB debt / share 8,7 12,9 12
Share price 81,97 144,5 144,5
Market cap. (m) 2504 4677 4677
Valuation 2018 2019 2020
P/E 24,6 40,1 35,5
EV/sales 2,62 4,36 4,18
EV/EBITDA 9,5 14,7 14,8
EV/EBITA 12,5 19,7 18,3
EV/EBIT 20,7 31,7 27,6
Dividend yield (%) 1,5 0,8 1
FCF yield (%) 0,3 -2,3 1
P/BVPS 3,54 5,98 5,33
P/BVPS Adj -5,14 -7,17 -8,45
P/E Adj 12,9 21,8 20,8
EV/EBITDA Adj 9,3 14,7 14,8
EV/EBITA Adj 12,3 19,7 18,3
EV/EBIT Adj 19,1 30,1 27,6
EV/cap. employed 2,3 3,9 3,8
Investment ratios 2018 2019 2020
Capex / sales 27,2 26 11,9
Capex / depreciation 403,9 605,8 494,5
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 32,6 26,9 12,8
Depreciation on intangibles / definite intangibles 8,1 4,4 2,6
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 % 31 Oct 2019
Olov Sandberg 4.5 % 22.8 % 31 Oct 2019
Didner & Gerge Fonder 6.9 % 3.6 % 31 Oct 2019
SEB Fonder 6.2 % 3.2 % 31 Oct 2019
Thomas Eklund 5.4 % 2.8 % 31 Oct 2019
Martin Gren (Grenspecialisten) 4.0 % 2.0 % 31 Oct 2019
Mawer Investment Management 3.8 % 2.0 % 31 Oct 2019
Utah Retirement Systems 3.7 % 1.9 % 31 Oct 2019
Avanza Pension 2.7 % 1.4 % 31 Oct 2019
Cliens Fonder 2.5 % 1.3 % 31 Oct 2019
Source: Holdings by Modular Finance AB

Insider list - Vitec

Name Quantity Code Date
Kerstin Maria Anderson + 700 BUY 30 Oct 2019
Kerstin Maria Anderson + 200 BUY 5 Sep 2019
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

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