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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 1191 1235 1285
Sales growth (%) 17,1 3,7 4
EBITDA 353 350 361
EBITDA margin (%) 29,6 28,3 28,1
EBIT adj 172 187 199
EBIT adj margin (%) 14,5 15,1 15,5
Pretax profit 151 173 186
EPS rep 3,6 4,07 4,4
EPS growth (%) 14 13,2 7,9
EPS adj 6,64 6,96 7,43
DPS 1,2 1,4 1,4
EV/EBITDA (x) 20,4 20,5 19,5
EV/EBIT adj (x) 41,7 38,3 35,4
P/E (x) 57 50,3 46,6
P/E adj (x) 30,9 29,5 27,6
EV/sales (x) 6 5,8 5,5
FCF yield (%) -1,6 0,7 2
Dividend yield (%) 0,6 0,7 0,7
Net IB debt/EBITDA 1,2 1,1 0,7
SEKm 2019 2020e 2021e
Sales 1191 1235 1285
COGS 137 135 135
Gross profit 1327 1370 1420
Other operating items -974 -1021 -1059
EBITDA 353 350 361
Depreciation on tangibles 0 0 0
Depreciation on intangibles -51 -30 -25
EBITA 264 282 299
Goodwill impairment charges -9 0 0
Other impairment and amortisation -92 -95 -100
EBIT 164 187 199
Other financial items 0 0 0
Net financial items -13 -15 -13
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 151 173 186
Tax -32 -38 -41
Net profit 119 135 145
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 119 135 145
EPS 3,6 4,07 4,4
EPS Adj 6,64 6,96 7,43
Total extraordinary items after tax 0 0 0
Tax rate (%) -21,1 -22 -22
Gross margin (%) 111,5 110,9 110,5
EBITDA margin (%) 29,6 28,3 28,1
EBITA margin (%) 22,2 22,9 23,3
EBIT margin (%) 13,8 15,1 15,5
Pretax margin (%) 12,7 14 14,5
Net margin (%) 10 10,9 11,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 17,1 3,7 4
EBITDA growth (%) 25,5 -0,9 3,3
EBIT growth (%) 26,7 14,3 6,2
Net profit growth (%) 21,6 13,2 7,9
EPS growth (%) 14 13,2 7,9
Profitability 2019 2020 2021
ROE (%) 16,4 16,2 15,7
ROE Adj (%) 30,2 27,7 26,5
ROCE (%) 13,1 14 14,6
ROCE Adj(%) 21,1 21,1 21,9
ROIC (%) 12,1 11,8 12,3
ROIC Adj (%) 12,7 11,8 12,3
Adj earnings numbers 2019 2020 2021
EBITDA Adj 353 350 361
EBITDA Adj margin (%) 29,6 28,3 28,1
EBITA Adj 264 282 299
EBITA Adj margin (%) 22,2 22,9 23,3
EBIT Adj 172 187 199
EBIT Adj margin (%) 14,5 15,1 15,5
Pretax profit Adj 251 268 286
Net profit Adj 219 230 245
Net profit to shareholders Adj 219 230 245
Net Adj margin (%) 18,4 18,6 19,1
SEKm 2019 2020e 2021e
EBITDA 353 350 361
Net financial items -13 -15 -13
Paid tax -32 -38 -41
Non-cash items 0 0 0
Cash flow before change in WC 308 297 308
Change in WC 140 -66 12
Operating cash flow 202 193 283
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -310 -147 -148
Acquisitions and disposals 0 0 0
Free cash flow -108 46 135
Dividend paid -37 -40 -46
Share issues and buybacks 0 0 0
Other non cash items 22 68 68
Decrease in net IB debt -153 30 118
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 283 283 283
Indefinite intangible assets 0 0 0
Definite intangible assets 1153 1149 1145
Tangible fixed assets 91 87 84
Other fixed assets 11 11 11
Fixed assets 1588 1586 1580
Inventories 0 0 0
Receivables 233 309 321
Other current assets 0 0 0
Cash and liquid assets 115 75 123
Total assets 1935 1970 2024
Shareholders equity 783 878 977
Minority 0 0 0
Total equity 783 878 977
Long-term debt 493 423 353
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 609 619 644
Other current liabilities 0 0 0
Total liabilities and equity 1262 1676 1935
Net IB debt 418 387 269
Net IB debt excl. pension debt 418 387 269
Capital invested 1200 1265 1246
Working capital -376 -310 -323
EV breakdown 2019 2020 2021
Market cap. diluted (m) 6772 6772 6772
Net IB debt Adj 418 387 269
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 7190 7159 7041
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 66 63,3 64,3
Capital invested turnover (%) 111,6 100,2 102,3
Capital employed turnover (%) 95,1 92,3 94,1
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 46,4 49,7 49,1
Working capital / sales (%) -25,7 -27,8 -24,6
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 53,4 44,1 27,6
Net debt / market cap (%) 11,1 5,8 4,1
Equity ratio (%) 40,4 44,5 48,3
Net IB debt adj. / equity (%) 53,4 44,1 27,6
Current ratio (%) 57 62 69
EBITDA / net interest (%) 2719,3 2403,7 2884,4
Net IB debt / EBITDA (%) 118,4 110,8 74,5
Interest cover (%) 2035,3 1940,5 2385,5
SEKm 2019 2020e 2021e
Shares outstanding adj. 32 32 32
Fully diluted shares Adj 33 33 33
EPS 3,6 4,07 4,4
Dividend per share Adj 1,2 1,4 1,4
EPS Adj 6,64 6,96 7,43
BVPS 24,18 27,12 30,18
BVPS Adj -20,16 -17,11 -13,94
Net IB debt / share 12,9 12 8,3
Share price 116,61 205 205
Market cap. (m) 3774 6635 6635
Valuation 2019 2020 2021
P/E 57 50,3 46,6
EV/sales 6,04 5,79 5,48
EV/EBITDA 20,4 20,5 19,5
EV/EBITA 27,2 25,4 23,6
EV/EBIT 43,9 38,3 35,4
Dividend yield (%) 0,6 0,7 0,7
FCF yield (%) -1,6 0,7 2
P/BVPS 8,48 7,56 6,79
P/BVPS Adj -10,17 -11,98 -14,71
P/E Adj 30,9 29,5 27,6
EV/EBITDA Adj 20,4 20,5 19,5
EV/EBITA Adj 27,2 25,4 23,6
EV/EBIT Adj 41,7 38,3 35,4
EV/cap. employed 5,4 5,3 5,1
Investment ratios 2019 2020 2021
Capex / sales 26 11,9 11,5
Capex / depreciation 605,8 494,5 593,8
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 26,9 12,8 12,9
Depreciation on intangibles / definite intangibles 4,4 2,6 2,2
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)

Main shareholders - Vitec

Main shareholders Share capital % Voting shares % Verified
Lars Stenlund 5.2 % 25.2 % 10 Jan 2020
Olov Sandberg 4.5 % 22.7 % 10 Jan 2020
SEB Fonder 6.5 % 3.4 % 31 Dec 2019
Didner & Gerge Fonder 6.1 % 3.1 % 31 Dec 2019
Thomas Eklund 5.4 % 2.8 % 31 Dec 2019
Martin Gren (Grenspecialisten) 3.9 % 2.0 % 31 Dec 2019
Mawer Investment Management 3.8 % 2.0 % 30 Nov 2019
Swedbank Robur Fonder 3.3 % 1.7 % 31 Dec 2019
Utah Retirement Systems 3.0 % 1.6 % 31 Dec 2019
Cliens Fonder 2.2 % 1.2 % 31 Dec 2019
Source: Holdings by Modular Finance AB

Insider list - Vitec

Name Quantity Code Date
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
Maria Sofia Katarina Kröger - 5 000 SELL 11 Jun 2018
Maria Sofia Katarina Kröger + 50 000 BUY 4 Jan 2018

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