n equity research - 04 september 2018 08:31 cet s eurocon ...€¦ · eurocon consulting reason:...

Please refer to important disclosures at the end of this report

Eurocon Consulting

Reason: Post-results comment

Solid end to H1 for Eurocon

Sales growth of 14% in Q2

Lower number of employees than expected

Trading at a premium vs. key peers

Still seeing strong demand in forestry

Eurocon delivered sales growth of 14% and operating profit of 10.3% for

Q2. Sales were in line with our expectations and were still mainly driven

by last year’s acquisition of KLT Konsult. Moreover, Eurocon is still

seeing strong demand from forestry, together with the demand from

mining, which continues to recover. However, we expected a stronger

EBIT (-12.7% vs ABGSC), with the main deviation coming from the sales

miss and slightly higher opex than anticipated. Average employees

amounted to 240, up one employee from Q1. However, note that

Eurocon reports sub-consultants in the same figure. As some of these

sub-consultants should have completed their projects in Östrand during

the quarter, the implication is that Eurocon has still recruited new

employees in the quarter.

Lower utilization in the short term

Some of the projects in Östrand for Eurocon have already finished or will

do so in H2. Therefore, we have lowered our expectations somewhat for

utilization in Q3. We argue that there should be a slight delay before the

consultants on these projects are re-deployed, together with late new

recruitments in the quarter. We also argue that the average number of

employees will only slightly increase for the rest of 2018, but to a lower

figure than anticipated, so we lower 2018e sales by 1.6%, somewhat

offset by earlier price hikes during the year. The slightly lower y-o-y opex

per employee we have seen during the year is likely to continue, but due

to lower sales than we previously anticipated, we have lowered our

margin estimates. 2018e EBIT is therefore down by 6.7% (including the

miss of the quarter), which implies a full-year margin of 10.6%.

Currently trading at a premium to sector peers

Eurocon is trading on a 2019e EV/EBIT of 8.7x. In relation to other

engineering consultancy companies (see table on page 5), this is a slight

premium of 6% for 2019.

03/09/2018

Performance

Equity Research - 04 September 2018 08:31 CET

SEKm 2016 2017 2018e 2019e 2020e

Sales 214 237 260 275 283

EBITDA 24 31 31 34 36

EBITDA margin (%) 11.0 13.1 12.1 12.4 12.7

EBIT adj 21 26 28 30 33

EBIT adj margin (%) 9.6 10.9 10.6 11.1 11.5

Pretax profit 20 28 32 30 33

EPS rep 0.36 0.50 0.60 0.54 0.58

EPS adj 0.36 0.46 0.60 0.54 0.58

Sales growth (%) 7.8 10.4 10.1 5.7 2.9

EPS growth (%) 16.5 39.7 19.4 -9.2 6.8

Source: ABG Sundal Collier, Company data

Lead analyst: Stefan Knutsson

Victor Forssell

Share price (SEK) 6.5

Commercial Services & Supplies, Sweden

EUROC.TE/EURO SS

MCap (SEKm) 278

MCap (EURm) 26.1

Net debt (EURm) -2

No. of shares (m) 42.7

Free float (%) 90.0

Av. daily volume (k) 0.7

Next event Q3 report: 30 Oct

80

100

120

140

160

180

200

Se

p 1

5

No

v 15

Jan

16

Mar

16

May

16

Jul 1

6

Se

p 1

6

No

v 16

Jan

17

Mar

17

May

17

Jul 1

7

Se

p 1

7

No

v 17

Jan

18

Mar

18

May

18

Jul 1

8

Se

p 1

8

Eurocon Consulting OMX STH PI

1m 3m 12m

Absolute (%) -1.2 -5.8 3.2

OMX STH PI (%) 3.5 5.9 9.6

Source: FactSet

2018e 2019e 2020e

P/E (x) 10.8 11.9 11.2

P/E adj (x) 10.8 11.9 11.2

P/BVPS (x) 3.13 2.97 2.76

EV/EBITDA (x) 8.2 7.7 7.2

EV/EBIT adj (x) 9.3 8.7 8.0

EV/sales (x) 0.99 0.96 0.92

ROE adj (%) 30.7 25.8 25.6

Dividend yield (%) 6.2 6.5 6.9

FCF yield (%) 9.5 6.0 7.9

Net IB debt/EBITDA -0.7 -0.7 -0.8

Eurocon Consulting

4 September 2018 ABG Sundal Collier 2

Net sales, SEKm


Average number of employees


EPS estimate changes, 2018e, SEK

Source: ABG Sundal Collier, FactSet

EPS estimate changes, 2019e, SEK

Source: ABG Sundal Collier, FactSet

Quarterly sales and adj. EBIT, SEKm


OpportunitiesEurocon has a solid financial position with stable cash

flows. This positions Eurocon for further acquisitions, which

in turn will generate most of the firm’s future growth.

Together with its consultancy offering, Eurocon also

provides customers with its developed software Sitebase.

The software scales well with increased volumes and can

hence strengthen the company’s operating margins.

RisksThe markets that Eurocon is exposed to are cyclical

markets such as mining and forestry, and hence, Eurocon

is dependent on investments in these markets. As other

consulting businesses are experiencing as well, hiring

consultants is hard, and especially within engineering. As

the company grows, keeping competent and experienced

employees is essential.

210

220

230

240

250

260

270

280

290

2017 2018e 2019e 2020e

Sales

0.50

0.52

0.54

0.56

0.58

0.60

0.62

0.64

ABGSC FactSet Consensus Mean

0.54

0.56

0.58

0.60

0.62

0.64

0.66

0.68

ABGSC FactSet Consensus Mean

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0

10

20

30

40

50

60

70

80

quarterly sales quarterly adj. EBIT

Company descriptionEurocon Consulting, a consulting service company

founded in 1990, provides the forestry, energy, mining, and

chemistry markets with engineering services. The offering

covers the whole life cycle of customer investment, from

preliminary study to implementation, deployment and

maintenance. The customers are almost exclusively major

industrial companies and municipalities. The company’s

main vision is to be the obvious choice for customers and

employees who want to build and optimize for a

sustainable future.

0

50

100

150

200

250

300

Q3'17 Q4'17 Q1'18 Q2'18

Employees

Eurocon Consulting


Quick thoughts and estimate changes

H1 ended well for Eurocon, with sales growth still mainly due to its previous

acquisition. However, H2 will end with tougher comps, as Q4 will be the first clean

quarter after the acquisition of KLT Konsult. Eurocon argues that the demand for the

services is still high in forestry and mining. On our estimates, 2018 should end just

above double-digit growth, which is Eurocons financial goal. Furthermore, we argue

that growth will amount to 2-4% organically in 2019 and 2020, which calls for more

acquisitions. The estimate changes for 2019 and 2020 primarily stem from our lower

sales assumptions in accordance with lower organic growth than foreseen.

Sales miss, and slightly higher opex explains the deviations on EBIT

Source: ABG Sundal Collier, company data

Forecast changes


Q2'17 Q2'18 Q2'18 Deviation

SEKm Actual Actual ABGSCe SEKm %

Net sales 59.2 67.5 68.3 -0.8 -1.2%

Growth % y-o-y 4.8% 14.0% 15.4%

Adj EBIT 7.13 6.94 7.95 -1.01 -12.7%

Adj EBIT margin 12.0% 10.3% 11.6%

Old forecast New forecast Change

SEKm 2018e 2019e 2020e 2018e 2019e 2020e 2018e 2019e 2020e

Net sales 264.5 284.3 299.7 260.3 275.0 283.1 -1.6% -3.3% -5.6%

Adj. EBIT 29.6 32.0 34.4 27.7 30.4 32.5 -6.7% -4.8% -5.6%

Net profit 27.5 25.0 26.9 25.6 23.8 25.4 -6.8% -4.8% -5.6%

Adj. EBIT margin 11.2% 11.2% 11.5% 10.6% 11.1% 11.5%

Eurocon Consulting


Sales & EBIT y-o-y, SEKm


Net Debt & Net Debt/EBITDA


Sales growth (R12m)


EBIT margin (R12m)


0

5

10

15

20

25

30

35

0

50

100

150

200

250

300

2014 2015 2016 2017 2018e 2019e 2020e

Net Sales EBIT

-1.8

-1.6

-1.4

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

-35

-30

-25

-20

-15

-10

-5

0

2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Net Debt Net Debt/EBITDA

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3eQ4e

2014 2015 2016 2017 2018

Sales growth Target

0%

2%

4%

6%

8%

10%

12%

14%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3eQ4e

2014 2015 2016 2017 2018

EBIT margin Target

Quarterly and yearly overview


Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18e Q4'18e 2015 2016 2017 2018e 2019e 2020e

Net Sales 61.7 59.2 45.0 70.6 70.5 67.5 51.4 70.8 198.8 214.2 236.5 260.3 275.0 283.1

Opex -51.4 -51.6 -41.8 -63.4 -59.7 -59.8 -47.5 -62.4 -181 -191 -208 -229 -242 -248

EO items 0.0 0.0 2.0 0.0 0.0 0.0 0.0 0.0 -1.8 0.0 2.0 0.0 0.0 0.0

Adj EBITDA 10.5 7.9 3.4 7.1 10.9 7.9 4.1 8.5 20.7 23.7 28.9 31.8 34.0 36.0

D&A -0.8 -0.8 -0.7 -0.9 -0.9 -0.9 -0.9 -0.9 -3.1 -3.0 -3.1 -3.7 -3.6 -3.5

Adj EBIT 9.7 7.1 2.7 6.2 10.0 6.9 3.2 7.6 17.6 20.6 25.8 27.7 30.4 32.5

Net f inancials 0.0 0.4 -0.5 0.3 4.4 -0.3 0.0 0.0 0.8 -0.7 0.2 4.1 0.0 0.0

PTP 9.7 7.5 4.2 6.5 14.4 6.6 3.2 7.6 16.5 20.0 28.0 31.8 30.5 32.5

Taxes -2.1 -1.6 -0.6 -2.2 -2.2 -1.5 -0.7 -1.7 -3.7 -4.9 -6.5 -6.1 -6.7 -7.2

Net profit 7.6 6.0 3.6 4.3 12.1 5.1 2.5 5.9 12.8 15.0 21.5 25.6 23.8 25.4

EPS basic (SEK) 0.18 0.14 0.09 0.10 0.28 0.12 0.06 0.14 0.31 0.36 0.50 0.60 0.54 0.58

EPS diluted (SEK) 0.18 0.14 0.09 0.10 0.28 0.12 0.06 0.14 0.31 0.36 0.50 0.59 0.54 0.58

Sales grow th q-o-q -0.4% -4.1% -24.0% 56.8% 0.0% -4.3% -23.9% 37.7% N/A N/A N/A N/A N/A N/A

Sales grow th y-o-y 21.1% 4.8% 0.6% 13.8% 14.3% 14.0% 14.2% 0.3% 14.4% 7.8% 10.4% 10.1% 5.7% 2.9%

Adj EBITDA margin 17.0% 13.3% 7.6% 10.1% 15.4% 11.7% 8.0% 12.0% 10.4% 11.0% 12.2% 12.2% 12.4% 12.7%

Adj EBIT margin 15.7% 12.0% 6.0% 8.8% 14.1% 10.3% 6.2% 10.7% 8.9% 9.6% 10.9% 10.6% 11.1% 11.5%

P/L

SEKm

Eurocon Consulting


Peer tables

Source: ABG Sundal Collier, company data, FactSet

Company Market 3-year CAGR ('17-'20e)

Consulting firms cap (SEKm) 2018e 2019e 2020e 2018e 2019e 2020e 2018e 2019e 2020e 2018e 2019e 2020e Sales EBITDA EBIT

Acando 3,632 16% 9% 5% 1.4 1.2 1.2 12.4 11.0 10.3 13.2 11.7 11.0 10% 13% 13% 11%

Addnode 3,244 13% 5% 5% 1.1 1.1 1.0 10.9 10.2 9.3 17.7 16.5 14.4 7% 14% na 7%

Capacent 129 22% 9% 4% 0.5 0.5 0.5 8.8 5.8 5.0 10.8 6.1 5.2 11% 27% 64% 8%

Data Respons 1,602 15% 7% 6% 1.1 1.1 1.0 12.1 11.0 10.2 13.6 12.2 11.2 9% 11% 12% 9%

EVRY 13,146 2% 2% 2% 1.3 1.3 1.2 9.5 8.9 8.7 12.0 10.7 9.9 2% -3% 3% 12%

Eurocon Consulting 273 10% 6% 3% 1.0 1.0 0.9 8.2 7.7 7.2 9.3 8.7 8.0 6% 5% 5% 11%

eWork Group 1,741 18% 14% 11% 0.2 0.2 0.1 17.6 13.5 10.9 18.6 13.7 11.1 14% 19% na 1%

Hifab 161 -3% 3% 2% 0.3 0.3 0.3 7.6 6.3 5.7 7.6 6.4 5.8 0% 13% 12% 5%

HiQ 3,257 5% 7% 6% 1.7 1.6 1.5 14.4 12.8 12.1 15.4 13.5 12.7 6% 5% 5% 11%

Knowit 3,510 14% 6% 5% 1.1 1.1 1.0 10.9 9.8 9.3 11.3 10.2 9.7 8% 10% 10% 10%

Rejlers 980 -2% 1% 3% 0.5 0.5 0.5 11.3 6.0 5.4 20.2 7.8 6.8 1% 51% na 5%

Semcon 1,020 4% 6% 4% 0.5 0.5 0.5 7.9 6.5 6.0 8.7 7.1 6.5 5% na 17% 7%

Sweco 28,171 10% 4% 4% 1.7 1.6 1.5 15.7 14.7 14.0 18.7 17.3 16.3 6% 8% 9% 9%

Tieto 22,027 4% 3% 3% 1.4 1.4 1.3 10.4 10.1 9.7 13.7 13.2 12.5 3% 3% 4% 10%

ÅF 15,237 8% 5% 5% 1.2 1.1 1.1 11.6 10.8 10.3 12.9 12.0 11.4 6% 9% 9% 9%

Average 6,542 9% 6% 5% 1.0 1.0 0.9 11.3 9.7 8.9 13.6 11.1 10.2 6% 13% 14% 8%

Median 3,244 10% 6% 4% 1.1 1.1 1.0 10.9 10.1 9.3 13.2 11.7 11.0 6% 11% 10% 9%

Eurocon (ABGSCe) 273 10% 6% 3% 1.0 1.0 0.9 8.2 7.7 7.2 9.3 8.7 8.0 6% 5% 5% 11%

Eurocon premium/discount (+/-) 1% 0% -25% -13% -10% -10% -25% -24% -22% -30% -26% -27% 2% -50% -45% 20%

Key Peers

Eurocon Consulting 273 10% 6% 3% 1.0 1.0 0.9 8.2 7.7 7.2 9.3 8.7 8.0 6% 5% 5% 11%

Hifab 161 -3% 3% 2% 0.3 0.3 0.3 7.6 6.3 5.7 7.6 6.4 5.8 0% 13% 12% 5%

Projektengagemang 874 5% 4% 5% 0.4 0.4 0.4 4.0 3.7 3.6 5.0 4.7 4.4 9% 5% 8% 9%

Rejlers 980 -2% 1% 3% 0.5 0.5 0.5 11.3 6.0 5.4 20.2 7.8 6.8 5% 1% 51% 5%

Sweco 28,171 10% 4% 4% 1.7 1.6 1.5 15.7 14.7 14.0 18.7 17.3 16.3 9% 6% 8% 9%

ÅF 15,237 8% 5% 5% 1.2 1.1 1.1 11.6 10.8 10.3 12.9 12.0 11.4 9% 6% 9% 9%

Average 7,616 5% 4% 4% 0.9 0.8 0.8 9.7 8.2 7.7 12.3 9.5 8.8 7% 6% 15% 8%

Median 927 7% 4% 4% 0.7 0.7 0.7 9.7 7.0 6.4 11.1 8.2 7.4 7% 6% 9% 9%

Eurocon (ABGSCe) 273 10% 6% 3% 1.0 1.0 0.9 8.2 7.7 7.2 9.3 8.7 8.0 6% 5% 5% 11%

Eurocon premium/discount (+/-) 50% 33% -19% 33% 32% 32% -16% 10% 12% -16% 6% 8% -17% -6% -37% 23%

EBIT-% Avg

('18-'20e)

Sales growth (%) EV/Sales (x) EV/EBITDA (x) EV/EBIT (x)

Eurocon Consulting



Income Statement (SEKm) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018e Q4 2018e

Sales 62 59 45 71 71 68 51 71

COGS -4 -5 -4 -8 -5 -5 -4 -5

Gross profit 57 54 41 63 65 63 47 66

Other operating items -47 -46 -36 -56 -55 -55 -43 -58

EBITDA 10 8 5 7 11 8 4 9

Depreciation on tangibles -1 -1 -1 -1 -1 -1 -1 -1

Depreciation on intangibles 0 0 0 0 0 0 0 0

EBITA 10 7 5 6 10 7 3 8

Goodwill impairment charges 0 0 0 0 0 0 0 0

Other impairment and amortisation 0 0 0 0 0 0 0 0

EBIT 10 7 5 6 10 7 3 8

Interest Net 0 0 -1 0 4 0 0 0

Other financial items 0 0 0 0 0 0 0 0

Associated income 0 0 0 0 0 0 0 0

Other EO items 0 0 0 0 0 0 0 0

Pretax profit 10 8 4 6 14 7 3 8

Tax -2 -2 -1 -2 -2 -2 -1 -2

Net profit 8 6 4 4 12 5 2 6

Minority interest 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0

Net profit to shareholders 8 6 4 4 12 5 2 6

EPS 0.18 0.14 0.09 0.10 0.28 0.13 0.06 0.14

EPS Adj 0.18 0.14 0.09 0.10 0.28 0.13 0.06 0.14

Total extraordinary items after tax 0 0 2 0 0 0 0 0

Tax rate (%) 22.0 20.6 13.9 34.1 15.5 22.1 22.0 22.0

Gross margin (%) 93.1 91.3 91.6 88.9 92.7 93.3 92.1 93.3

EBITDA margin (%) 17.0 13.3 12.0 10.1 15.4 11.7 8.0 12.0

EBITA margin (%) 15.7 12.0 10.5 8.8 14.1 10.3 6.2 10.7

EBIT margin (%) 15.7 12.0 10.5 8.8 14.1 10.3 6.2 10.7

Pretax margin (%) 15.8 12.7 9.3 9.2 20.4 10.3 6.2 10.7

Net margin (%) 12.3 10.1 8.0 6.1 17.2 8.0 4.8 8.4

Growth rates Y/Y Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018e Q4 2018e

Sales growth (%) 21.1 4.8 0.6 13.8 14.3 14.0 14.2 0.3

EBITDA growth (%) 167.2 0.7 24.4 -5.6 3.9 -0.2 -24.2 19.1

EBIT growth (%) 209.3 0.5 31.5 -9.0 2.7 -2.6 -32.9 21.9

Net profit growth (%) 217.6 6.4 57.6 -10.0 59.8 -9.3 -31.2 38.2

EPS growth (%) 217.6 6.4 57.6 -10.0 59.8 -9.3 -31.2 38.2

Adj earnings numbers Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018e Q4 2018e

EBITDA Adj 10 8 3 7 11 8 4 9

EBITDA Adj margin (%) 17.0 13.3 7.6 10.1 15.4 11.7 8.0 12.0

EBITA Adj 10 7 3 6 10 7 3 8

EBITA Adj margin (%) 15.7 12.0 6.0 8.8 14.1 10.3 6.2 10.7

EBIT Adj 10 7 3 6 10 7 3 8

EBIT Adj margin (%) 15.7 12.0 6.0 8.8 14.1 10.3 6.2 10.7

Pretax profit Adj 10 8 2 6 14 7 3 8

Net profit Adj 8 6 2 4 12 5 2 6

Net profit to shareholders Adj 8 6 2 4 12 5 2 6

Net Adj margin (%) 12.3 10.1 3.6 6.1 17.2 8.0 4.8 8.4

Eurocon Consulting



Income Statement (SEKm) 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Sales 0 0 151 174 199 214 237 260 275 283

COGS 0 0 0 0 0 0 0 0 0 0

Gross profit 0 0 151 174 199 214 237 260 275 283

Other operating items 0 0 -138 -158 -180 -191 -206 -229 -241 -247

EBITDA 0 0 14 15 19 24 31 31 34 36

Depreciation on tangibles 0 0 -3 -3 -3 -3 -3 -4 -4 -4

Depreciation on intangibles 0 0 0 0 0 0 0 0 0 0

EBITA 0 0 11 12 16 21 28 28 30 33

Goodwill impairment charges 0 0 0 0 0 0 0 0 0 0

Other impairment and amortisation 0 0 0 0 0 0 0 0 0 0

EBIT 0 0 11 12 16 21 28 28 30 33

Interest Net 0 0 -1 1 1 -1 0 4 0 0

Other financial items 0 0 0 0 0 0 0 0 0 0

Associated income 0 0 0 0 0 0 0 0 0 0

Other EO items 0 0 0 0 0 0 0 0 0 0

Pretax profit 0 0 10 13 17 20 28 32 30 33

Tax 0 0 -3 -3 -4 -5 -6 -6 -7 -7

Net profit 0 0 8 10 13 15 21 26 24 25

Minority interest 0 0 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0 0 0

Net profit to shareholders 0 0 8 10 13 15 21 26 24 25

EPS 0 0 0.19 0.23 0.31 0.36 0.50 0.60 0.54 0.58

EPS Adj 0 0 0.19 0.27 0.35 0.36 0.46 0.60 0.54 0.58

Total extraordinary items after tax 0 0 0 -2 -2 0 2 0 0 0

Tax rate (%) ns ns 25.5 25.3 22.6 24.7 23.2 19.3 22.0 22.0

Gross margin (%) nm nm 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

EBITDA margin (%) nm nm 9.1 8.8 9.5 11.0 13.1 12.1 12.4 12.7

EBITA margin (%) nm nm 7.4 7.1 7.9 9.6 11.7 10.6 11.1 11.5

EBIT margin (%) nm nm 7.4 7.1 7.9 9.6 11.7 10.6 11.1 11.5

Pretax margin (%) nm nm 6.9 7.4 8.3 9.3 11.8 12.2 11.1 11.5

Net margin (%) nm nm 5.1 5.6 6.4 7.0 9.1 9.8 8.6 9.0

Growth rates Y/Y 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Sales growth (%) na na na 14.7 14.4 7.8 10.4 10.1 5.7 2.9

EBITDA growth (%) na na high 10.7 23.5 25.4 30.7 1.5 8.5 5.8

EBIT growth (%) na na high 9.3 28.8 30.8 34.5 -0.4 10.0 6.8

Net profit growth (%) na na high 24.2 32.4 17.6 42.7 19.4 -7.3 6.8

EPS growth (%) na na high 23.5 32.4 16.5 39.7 19.4 -9.2 6.8

Profitability 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

ROE (%) nm nm 31.6 19.4 23.9 25.2 30.4 30.7 25.8 25.6

ROE Adj (%) nm nm 31.6 22.4 27.4 25.2 27.6 30.7 25.8 25.6

ROCE (%) nm nm 70.2 32.7 37.4 55.2 52.7 40.2 44.0 43.9

ROCE Adj(%) nm nm 70.2 36.7 41.8 55.2 49.0 40.2 44.0 43.9

ROIC (%) na na 51.4 24.2 28.7 41.1 39.9 31.9 33.8 33.7

ROIC Adj (%) na na 51.4 27.1 32.0 41.1 37.0 31.9 33.8 33.7

Adj earnings numbers 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

EBITDA Adj 0 0 14 17 21 24 29 31 34 36

EBITDA Adj margin (%) nm nm 9.1 9.7 10.4 11.0 12.2 12.1 12.4 12.7

EBITA Adj 0 0 11 14 18 21 26 28 30 33

EBITA Adj margin (%) nm nm 7.4 7.9 8.9 9.6 10.9 10.6 11.1 11.5

EBIT Adj 0 0 11 14 18 21 26 28 30 33

EBIT Adj margin (%) nm nm 7.4 7.9 8.9 9.6 10.9 10.6 11.1 11.5

Pretax profit Adj 0 0 10 14 18 20 26 32 30 33

Net profit Adj 0 0 8 11 15 15 19 26 24 25

Net profit to shareholders Adj 0 0 8 11 15 15 19 26 24 25

Net Adj margin (%) nm nm 5.1 6.4 7.4 7.0 8.2 9.8 8.6 9.0

Eurocon Consulting



Cash Flow Statement (SEKm) 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

EBITDA 0 0 14 15 19 24 31 31 34 36

Net financial items 0 0 -1 1 1 -1 0 4 0 0

Paid tax 0 0 -3 -3 -4 -5 -6 -6 -7 -7

Non-cash items 0 0 -0 -1 -1 0 0 0 0 0

Cash flow before change in WC 0 0 10 11 15 18 25 29 27 29

Change in WC 0 0 -4 -10 2 7 -4 6 -2 -2

Operating cash flow 0 0 7 1 16 20 23 22 25 27

CAPEX tangible fixed assets 0 0 -14 -2 -3 -1 -23 4 -8 -4

CAPEX intangible fixed assets 0 0 0 0 0 0 0 0 0 0

Acquisitions and disposals 0 0 0 0 0 0 0 0 0 0

Free cash flow 0 0 -8 -1 13 20 -0 27 17 22

Dividend paid 0 0 -10 -8 -6 -10 -13 -15 -17 -18

Share issues and buybacks 0 0 0 0 0 0 0 0 0 0

Other non cash items 0 0 35 -1 0 5 -10 5 0 0

Decrease in net IB debt 0 0 17 -10 7 15 -23 17 -0 4

Balance Sheet (SEKm) 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Goodwill 0 0 20 21 20 20 52 52 52 52

Indefinite intangible assets 0 0 0 0 0 0 0 0 0 0

Definite intangible assets 0 0 1 1 1 1 5 5 5 5

Tangible fixed assets 0 0 7 7 8 7 7 7 12 12

Other fixed assets 0 0 7 6 6 5 5 3 3 3

Fixed assets 0 0 36 35 35 33 69 67 71 72

Inventories 0 0 0 0 0 0 0 0 0 0

Receivables 0 0 41 53 62 60 71 72 76 79

Other current assets 0 0 0 0 0 0 0 0 0 0

Cash and liquid assets 0 0 18 9 17 27 14 25 24 29

Total assets 0 0 95 97 114 120 154 163 171 179

Shareholders equity 0 0 49 51 56 63 78 89 96 103

Minority 0 0 0 0 0 0 0 0 0 0

Total equity 0 0 49 51 56 63 78 89 96 103

Long-term debt 0 0 8 8 8 3 13 5 5 5

Pension debt 0 0 0 0 0 0 0 0 0 0

Convertible debt 0 0 0 0 0 0 0 0 0 0

Deferred tax 0 0 1 0 1 0 1 1 1 1

Other long-term liabilities 0 0 0 0 0 0 0 0 0 0

Short-term debt 0 0 0 0 0 0 0 0 0 0

Accounts payable 0 0 38 38 49 54 61 69 70 71

Other current liabilities 0 0 0 0 0 0 0 0 0 0

Total liabilities and equity 0 0 95 97 114 120 154 163 171 179

Net IB debt 0 0 -17 -8 -15 -29 -6 -23 -23 -27

Net IB debt excl. pension debt 0 0 -17 -8 -15 -29 -6 -23 -23 -27

Capital invested 0 0 32 43 42 34 73 67 74 77

Working capital 0 0 4 14 12 6 9 4 6 8

EV breakdown 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Market cap. diluted (m) na na 142 138 214 207 303 278 284 284

Net IB debt Adj 0 0 -10 -2 -9 -25 -1 -20 -20 -24

Market value of minority 0 0 0 0 0 0 0 0 0 0

Reversal of shares and participations 0 0 0 0 0 0 0 0 0 0

Reversal of conv. debt assumed equity 0 0 0 0 0 0 0 0 0 0

EV na na 132 137 204 183 302 258 264 260

Capital efficiency (%) 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Total assets turnover (%) nm nm 317.8 180.6 188.6 183.4 172.8 164.2 164.3 161.5

Capital invested turnover (%) nm nm 932.7 458.7 466.6 565.4 442.3 371.7 391.1 376.8

Capital employed turnover (%) nm nm 948.0 463.5 470.9 572.5 449.3 378.1 397.5 382.5

Inventories/sales (%) nm nm 0 0 0 0 0 0 0 0

Customer advances/sales (%) nm nm 0 0 0 0 0 0 0 0

Payables/sales (%) nm nm 12.4 21.9 22.0 24.1 24.4 25.0 25.2 24.9

Working capital/sales (%) nm nm 1.3 5.2 6.7 4.2 3.1 2.5 1.7 2.4

Financial risk and debt service 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Net debt/equity (%) nm nm -35.2 -14.9 -26.5 -46.8 -8.1 -25.9 -24.0 -26.4

Net debt/market cap (%) na na -11.8 -5.3 -9.4 -14.4 -2.4 -8.3 -8.1 -9.6

Equity ratio (%) nm nm 51.8 52.1 49.5 52.4 50.8 54.4 55.7 57.3

Net IB debt adj./equity (%) nm nm -20.6 -3.1 -16.3 -39.2 -1.8 -22.3 -20.7 -23.4

Current ratio (%) nm nm 158.3 161.3 159.5 161.5 138.4 140.9 143.1 151.6

EBITDA/net interest (%) na na 1,809.7 -2,231.7 -2,503.1 3,480.0 -16,103.1 -762.5 ######## ########

Net IB debt/EBITDA (%) nm nm -125.9 -49.2 -79.1 -124.4 -20.4 -73.4 -67.4 -75.3

Interest cover (%) nm nm 1,469.2 -1,788.9 -2,093.8 3,036.6 -14,463.0 -672.1 ######## ########

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Valuation and Ratios (SEKm) 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Shares outstanding adj. 0 40 41 41 41 42 43 43 44 44

Fully diluted shares Adj 0 40 41 41 41 42 43 43 44 44

EPS 0 0 0.19 0.23 0.31 0.36 0.50 0.60 0.54 0.58

Dividend per share Adj 0 0.3 0.2 0.2 0.3 0.3 0.4 0.4 0.4 0.5

EPS Adj 0 0 0.19 0.27 0.35 0.36 0.46 0.60 0.54 0.58

BVPS 0 0 1.20 1.22 1.36 1.50 1.83 2.08 2.19 2.35

BVPS Adj 0 0 0.68 0.69 0.84 0.99 0.50 0.76 0.90 1.06

Net IB debt / share na 0 -0.4 -0.2 -0.4 -0.7 -0.1 -0.5 -0.5 -0.6

Share price na na 3.45 3.34 5.15 4.96 7.10 6.50 6.50 6.50

Market cap. (m) na na 142 138 214 207 303 278 284 284

Valuation 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

P/E na na 18.3 14.3 16.7 13.8 14.1 10.8 11.9 11.2

EV/sales na na 0.87 0.79 1.03 0.85 1.28 0.99 0.96 0.92

EV/EBITDA na na 9.6 9.0 10.8 7.7 9.8 8.2 7.7 7.2

EV/EBITA na na 11.8 11.2 12.9 8.9 10.9 9.3 8.7 8.0

EV/EBIT na na 11.8 11.2 12.9 8.9 10.9 9.3 8.7 8.0

Dividend yield (%) na na 5.8 4.5 4.9 6.0 4.9 6.2 6.5 6.9

FCF yield (%) na na -5.4 -0.7 6.2 9.5 -0.1 9.5 6.0 7.9

P/BVPS na na 2.88 2.74 3.79 3.30 3.88 3.13 2.97 2.76

P/BVPS Adj na na 5.06 4.86 6.12 4.99 14.26 8.55 7.25 6.14

P/E Adj na na 18.3 12.4 14.6 13.8 15.6 10.8 11.9 11.2

EV/EBITDA Adj na na 9.6 8.2 9.9 7.7 10.4 8.2 7.7 7.2

EV/EBITA Adj na na 11.8 10.0 11.6 8.9 11.7 9.3 8.7 8.0

EV/EBIT Adj na na 11.8 10.0 11.6 8.9 11.7 9.3 8.7 8.0

EV/cap. employed na na 4.1 3.2 4.9 5.5 4.2 3.9 3.6 3.4

Investment ratios 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

Capex/sales nm nm 9.4 1.2 1.6 0.3 9.9 -1.6 3.0 1.5

Capex/depreciation nm nm 546.3 68.3 104.5 21.5 740.2 -108.8 224.5 120.7

Capex tangibles/tangible fixed assets nm nm 191.4 29.2 40.1 9.4 334.3 -57.6 70.5 34.6

Capex intangibles/definite intangibles nm nm 0 0 0 0 0 0 0 0

Depreciation on intangibles/definite intangibles nm nm 0 0 0 0 0 0 0 0

Depreciation on tangibles/tangibles nm nm 35.0 42.8 38.4 43.8 45.2 53.0 31.4 28.7

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Analyst valuation methods ABG Sundal Collier analysts may publish valuation ranges for stocks covered under Company Sponsored Research. These valuation ranges rely on various valuation methods. One of the most frequently used methods is the valuation of a company by calculation of that company's discounted cash flow (DCF). Another valuation method is the analysis of a company's return on capital employed relative to its cost of capital. Finally, the analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and investment companies, the ratio of price to net asset value is considered. Valuation ranges may be changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of a company's assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change.

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Production of report: 04/09/2018 08:32 CET.

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