healthcare, sweden syntheticmr radiologists in the ‘reading room ’. strong revenue growth. sales...
TRANSCRIPT
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Commissioned Research – marketing material sponsored by SyntheticMR 1
SyntheticMR Solid finish to 2017 and entering an eventful 2018
A strong Q4 for SyntheticMR increased our confidence in our long-term growth projections
for the company’s software. We see a high likelihood that the software will be used on the
major magnetic resonance (MR) manufacturer cameras. In 2018, we see several important
milestones such as the launch of Siemens’ digital ecosystem and GE offering the software
to radiologists in the ‘reading room’.
Strong revenue growth. Sales grew 45% versus a strong Q4 16, proving that although
we have seen good growth in previous quarters of 2017, the seasonality with a strong finish
to the year was higher than we expected. The key driver for growth was GE and
SyntheticMR’s products sold under the Magic brand.
Building a platform for growth in 2018. An agreement has been reached with GE on
terms to offer the reading room functionality to clients. This allows for more than one
‘reading room’ licence to be sold per MR camera. Guidance is that sales for this functionality
are expected to commence in H2 18. Also, the Siemens digital ecosystem is set to be
launched in April 2018, allowing for a subscription-based growth from new Siemens
customers.
Estimate revisions. We have made minor changes to our estimates to reflect that we
expect ‘reading room’ sales to GE to be one-time rather than subscription based, making
the growth profile slightly more front-end loaded.
Valuation. We have increased our valuation range to SEK413-486 (from SEK360-416) per
share. The increased take rate from GE has lifted our conviction in our long-term sales
projections, hence we have cut the WACC by 50bp to 9.0%.
Key financials Price performance
Year-end Dec (SEK) 2016 2017 2018E 2019E 2020E
Revenues (m) 19 36 59 91 135
Revenues growth n.m. 87.6% 65.4% 55.1% 48.0%
EBITDA (m) 6 14 31 50 80
EBIT adj. (m) 3 11 28 46 76
EBIT growth n.m. n.m. n.m. 66.4% 64.4%
Pre-tax profit (m) 3 11 28 46 76
EPS adj. 0.59 2.07 5.39 8.96 14.7
DPS 0.00 0.00 0.00 0.00 0.00
Dividend yield
FCF yield (inc. recurring capex) 0.2% 0.7% 1.2% 1.9% 3.7%
EBIT margin (adj.) 16.6% 31.2% 47.3% 50.7% 56.4%
Net debt/EBITDA (x) -1.6 -1.2 -1.1 -1.2 -1.4
ROIC 19.9% 43.1% 90.0% 114.6% 149.0%
EV/sales (x) 26.1 31.1 23.7 15.0 9.7
EV/EBITDA (adj.) (x) 85.8 79.2 45.1 27.5 16.5
EV/EBIT (adj.) (x) n.m. 99.7 50.1 29.5 17.3
P/E (adj.) (x) n.m. n.m. 65.7 39.5 24.0
P/BV (x) 21.2 34.9 26.5 15.9 9.6
Source: Company data, Danske Bank Equity Research estimates Source: FactSet
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Jan 17Feb 17Mar 17Apr 17May 17Jun 17Jul 17Aug 17Sep 17Oct 17Nov 17Dec 17Jan 18Feb 18
Price for SyntheticMR (SE)
SyntheticMR
STOXX 600/Health Care (Rebased)
Commissioned Research 22 February 2018
Analyst(s)
Oscar Stjerngren
Carolina Elvind
This material should be viewed as marketing
material and does not constitute independent
research
Important disclosures and certifications are
contained from page 14 of this report
Healthcare, Sweden
Key data
Price*: SEK354
Country: Sweden
Bloomberg: SYNT SS
Reuters: SYNT.ST
Free float 66%
Market cap (SEKm) 1,430
Net debt (current Y/E) (SEKm) -34
No. of shares (m) 4.0
Next event: Q1: 25 Apr
* Price as at close on 21 February 2018
CEO Stefan Tell
CFO Fredrik Jeppsson
Company description
SyntheticMR provides software for MRI
(magnetic resonance imaging) visualisation
and analysis, and has agreements with some
of the largest global OEMs for marketing and
selling its product. SyntheticMR was founded in
2007 by Dr. Marcel Warntjes and was owned
by life science group Accelerator AB until 2013,
when it was listed on AktieTorget.
Ownership structure
Staffan Persson 34.4%
Marcel Warntjes 9.3%
Artisan Partners 6.6%
Johan Sedihn 5.8%
Swedbank Robur Fonder 5.2%
Source: Holdings.se 21 February 2018
Estimate changes
2018E 2019E 2020E
Sales 1.8% 3.3% 3.3%
EBITDA 1.6% 2.3% 1.8%
EBIT (adj.) 1.2% 2.6% 2.2%
EPS (adj.) 1.6% 2.8% 2.4%
Source: Danske Bank Equity Research estimates
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Contents
FDA approval for NEURO .......................................................................................................................................................... 3
Reading room agreement with GE Healthcare ................................................................................................................. 3
Siemens digital ecosystem ............................................................................................................................................................. 3
Estimates revisions ........................................................................................................................................................................... 3
Forecasts & Scenarios ..................................................................................................................................................................... 4
Valuation .............................................................................................................................................................................................. 5
Executive summary ......................................................................................................................6
MR market structure and top-line growth drivers .......................................................................................................... 7
Risks ......................................................................................................................................................................................................... 8
Company summary ................................................................................................................... 11
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FDA approval for NEURO
In January 2018, SyntheticMR’s software SyMRI NEURO was 510(k) cleared by the FDA for
marketing and selling on the US market. The clearance is initially tied to GE Healthcare scanners
since the GE Healthcare sequence is the only one cleared on the US market. The next step is
therefore for Siemens and Philips to get their sequences FDA cleared, and then for SyntheticMR
to add these to their FDA clearance for NEURO to fully be able to sell on the US market.
We believe this approval is more important for the Siemens and Philips sales, since through
these names the software is marketed under SyMRI. Through GE Healthcare, the software is
marketed as MAGiC, i.e. GE’s own branding, and GE has not yet released a MAGiC version
including the NEURO functions. However, it is possible for GE customers to purchase NEURO
directly from SyntheticMR.
Reading room agreement with GE Healthcare
The terms for GE to sell the reading room functionality are negotiated, and guidance is that sales
are expected to start in the later part of 2018. This means that the reading room part of IMAGE,
i.e. to be able to adjust pictures in retrospect, in the reading room, functionality will be sold as a
product in the same way MAGiC is now. (The functionality will not include Neuro for now.) We
did include this kind of sales in our estimates, but we have made a few adjustments.
Siemens digital ecosystem
Siemens launches its digital ecosystem at the end of April, and by then SyntheticMR’s software
will be available for download in its ‘app store’. This will make SyntheticMR’s software available
for download to a large number of customers at the same time. Note that this is only on markets
where SyntheticMR has the regulatory clearance to sell its software through Siemens, the
largest being Europe at the moment. We believe the clearance needed to sell through Siemens
and Philips on the US market will be in place soon.
Estimates revisions
We make some minor revisions to our estimates. In our old estimates, we had included sales
from GE Reading room, but make adjustments according to the new information. Prior to this,
we modelled reading room sales as subscription sales, but now we model one-time sales but
with higher pricing compared to the subscription. For 2018, we take down our attach rate for
Philips slightly, by 0.5pp, because of the comments in the report regarding Philips sales going a
bit slow. We also take up our cost estimates a few percent for all years in the forecast period.
Estimate revisions
New estimates Old estimates Estimate revisions
SEKm 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E
Sales 59.0 91.5 135.4 57.9 88.6 131 1.8% 3.3% 3.3%
Opex (incl D&A) -31.1 -45.1 -59.1 -30.3 -43.4 -56.3 2.6% 3.9% 4.9%
EBITDA 30.9 49.8 80.0 30.4 48.6 78.5 1.8% 2.4% 1.9%
EBIT 27.9 46.4 76.3 27.6 45.2 74.7 1.1% 2.7% 2.2%
Net profit 21.8 36.2 59.5 21.5 35.3 58.2 1.2% 2.5% 2.3%
Source: Danske Bank Equity Research
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Forecasts and scenarios
Scenario analysis and assumptions (SEKm)
Base case 2018E 2019E 2020E 2021E 2022E
Revenues 59.0 91.5 135.4 190.3 260.5
GE Healthcare 42.1 54.5 68.3 82.1 98.6
Philips 12.2 22.1 35.2 51.6 71.9
Siemens 4.7 14.8 31.9 56.7 90.1
OPEX -31 -45 -59 -76 -117
EBIT 27.9 46.4 76.3 114.3 143.3
EBIT margin 47% 51% 56% 60% 55%
Attach rate
GE MAGiC 25% 28% 32% 35% 38%
GE Reading room 5% 9% 13% 16% 20%
Philips 3% 4% 5% 7% 8%
Siemens 2% 5% 8% 10% 13%
Total users
GE MAGiC 774 1,285 1,891 2,602 3,429
GE Reading room 85 243 484 816 1,252
% of users use reading room software 11% 19% 26% 31% 36%
Philips 55 109 187 292 426
Siemens 47 148 319 567 901
Bull case
Revenues 80.7 133.6 204.2 291.3 402.6
GE Healthcare 56.5 79.7 105.5 131.1 162.0
Philips 18.1 33.2 52.8 77.4 107.5
Siemens 6.0 20.7 45.9 82.9 133.0
OPEX 31.1 -45.1 -59.1 -76.1 -117.2
EBIT 49.6 88.5 145.1 215.3 285.4
EBIT margin 61% 66% 71% 74% 71%
Attach rate
GE MAGiC 33% 39% 45% 51% 57%
GE Reading room 7% 15% 24% 32% 40%
Philips 4% 6% 8% 10% 12%
Siemens 3% 7% 11% 15% 20%
Total users
GE MAGiC 916 1,626 2,495 3,540 4,781
GE Reading room 119 395 847 1,497 2,367
% of users use reading room software 14% 24% 34% 42% 50%
Philips 74 158 277 435 637
Siemens 60 207 459 829 1,330
Bear case
Revenues 45.8 60.2 79.5 103.2 133.4
GE Healthcare 32.9 37.1 41.7 45.9 51.1
Philips 10.2 15.7 22.3 30.4 39.9
Siemens 2.7 7.5 15.4 26.9 42.3
OPEX 31.1 -45.1 -59.1 -76.1 -117.2
EBIT 14.7 15.2 20.4 27.1 16.2
EBIT margin 28% 25% 26% 26% 12%
Attach rate
GE MAGiC 20% 20% 20% 20% 20%
GE Reading room 3% 5% 7% 8% 10%
Philips 2% 3% 3% 4% 4%
Siemens 1% 2% 4% 5% 6%
Total users
GE MAGiC 689 1,051 1,436 1,845 2,280
GE Reading room 57 147 275 446 664
% of users use reading room software 8% 14% 19% 24% 29%
Philips 48 83 128 183 250
Siemens 27 75 154 269 423
Source: Danske Bank Equity Research
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Market assumptions
Market assumptions 2018E 2019E 2020E 2021E 2022E
Replacement cycle, years 12 12 12 12 12
Market growth 6.6% 6.6% 6.6% 6.6% 6.6%
MR systems sold 4,545 4,845 5,165 5,506 5,870
GE market share 22% 22% 22% 22% 22%
Philips market share 17% 17% 17% 17% 17%
Siemens market share 26% 26% 26% 26% 26%
Est. mid-life upgrades 3,186 3,377 3,580 3,795 4,023
Total sales opportunities 7,732 8,223 8,745 9,301 9,892
Sales opportunities (constant market shares)
GE 1,701 1,809 1,924 2,046 2,176
Philips 1,314 1,398 1,487 1,581 1,682
Siemens 2,010 2,138 2,274 2,418 2,572
Source: Company data, Danske Bank Equity Research estimates
Valuation
Following the Q4 report, we believe some confidence is added regarding sales growth, since
the reading room agreement with GE is negotiated. In general, everything seems to be going as
planned, and this was a strong report. We therefore lower our risk premia and therefore our
WACC by 0.5pp to 9%, which together with slightly higher earnings estimates, motivates higher
current values of the share price in our different valuation methods; our new valuation range is
SEK413-486, compared with our prior range of SEK360-416.
We see a value range of SEK413-486 per share, which we derive using three different valuation
methods. Two of these are based on our base case scenario, and the other is a kind of ‘project’
valuation. We value SyntheticMR on a peer multiple basis, 25x EBIT 2020E, which we discount
to the present day, yielding a value of SEK421. We have also developed two DCF valuations.
The first looks at the company as a ‘project’ based solely on discounting the cash flows
generated from SyntheticMR’s current products and eventual add-ons (yielding a value of
SEK413). The second more traditional DCF values SyntheticMR as a business that will become
larger and make investments over time, yielding a potential value of SEK486.
Valuation
SEK Per share Upside potential*
Multiple valuation 421 19%
DCF valuation 486 37%
Project valuation 413 17%
*Upside from share price as at close on 21 February 2018 of SEK354
Source: Danske Bank Equity Research.
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Executive summary
SyntheticMR provides a unique, software based, feature for MRI scanners that enables the
computerised interpretation and analysis of the images, as opposed to the predominant existing
approach in which images are subjectively interpreted, generally without quantitative support.
The software is brand agnostic and the key drivers for hospitals to opt for this extra specification
on a MR scanner are productivity and the increased possibility of analysing the results of the
scan after it is performed.
In terms of increased productivity, the average time for a scan can be reduced from 15-60
minutes to six minutes, which makes the payback on the investment very attractive, at less than
one year, and possibly half that if the machine is used in an efficient way. On top of the obvious
financial benefits of shorter scan time, discomfort such as claustrophobia, and uncomfortable,
long scans for children, can be avoided. The second benefit of the software is that by measuring
changes in, for example, the myelin levels in the brain it offers the possibility to analyse and
track the progress of certain diseases such as MS. Finally, a key aspect of SyntheticMR’s
software is that as the pictures are synthesised, the radiologists can, in the ‘reading room’ where
they examine and evaluate MR images, simulate new scans on the back of the pre-defined
picture sequence and using SyntheticMR’s algorithms. In simple terms, simulations can be made
using the software that would require a rescan without it.
No. months’ pay back, adjusted for 25% brain examinations of total examinations
Time difference, minutes
5 10 15 20
MRI system
utilisation (% of
business hours)
50% 14 7 5 4
65% 11 6 4 3
80% 9 5 3 2
100% 7 4 2 2
Source: Danske Bank Equity Research estimates
The company was founded in 2007 in order to commercialise the image processing software
developed by the founder of the company, Dr Marcel Warntjes. A number of clinical evaluation
projects involving the company’s technology have been performed both within and outside
Sweden. There are several independent studies supporting SyntheticMR’s business case, the
most recent being the American Journal of Neuroradiology’s discussion of SyntheticMR
products with Lawrence Tanenbaum. The conclusion is that SyntheticMR could become the
future standard for MRIs.
In terms of increased productivity,
the average time for a scan can be
reduced from 15-60 minutes to six
minutes.
SyMRI also offers the possibility of
deeper analysis based on
quantitative data obtained at the
MRI scan.
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Commissioned Research – marketing material sponsored by SyntheticMR 7
MR market structure and top-line growth drivers
The global MR market has an estimated value of USD6.6bn as of 2017, and is growing c.6.6%
per year (source: company data). Every year around 4,000-5,000 MR systems are sold globally.
SyntheticMR’s product is sold through cooperation agreements with three of the largest OEMs,
GE Healthcare, Philips and Siemens. This enables access to a very large market, 65% of the
global MR market, and offers potential for significant sales growth, despite SyntheticMR being
a small company, and thus very high sales growth going forward.
Sales opportunities – MRI sales and mid-life upgrades
Source: Company data, Danske Bank Equity Research estimates
To be able to use SyntheticMR’s software, a sequence has to be installed on the MRI scanner,
which these three OEMs have developed as an option on their MRI scanners. To create a
compatible base of MRI scanners, for which additional software can be sold, it is very important
to reach a high penetration rate when these OEMs sell MRI cameras. Volume is therefore the
key aspect to future success.
SyntheticMR estimated sales by source OEM
SEKm and attach rates
SyntheticMR estimated sales by source OEM
SEKm
Source: Danske Bank Equity Research estimates
Source: Danske Bank Equity Research estimates
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2017E 2018E 2019E 2020E 2021E
MR
I syste
ms s
ale
s
GE Healthcare systems Siemens systems Philips systems Mid-life upgrades
0%
10%
20%
30%
40%
0
25
50
75
100
125
150
175
200
2017E 2018E 2019E 2020E 2021E
Siemens Healthineers
Philips
GE Healthcare
0
25
50
75
100
125
150
175
200
2017E 2018E 2019E 2020E 2021E
GE Healthcare Philips Siemens Healthineers
SyntheticMR’s product is sold
through cooperation agreements with
three of the largest OEMs: GE
Healthcare, Philips and Siemens.
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Commissioned Research – marketing material sponsored by SyntheticMR 8
Today, a large majority of sales come through GE Healthcare, we believe, due to the current
licence agreement structure. The key reason for success with GE is that SyntheticMR’s products
are marketed as extra equipment for GE’s MR scanners. SyntheticMR’s software is sold under
the brand name ‘MAGiC’. We believe Philips and Siemens will sell significantly more than during
2017, through their co-marketing agreements with SyntheticMR, and there is especially large
potential in sales through the Siemens ‘ecosystem’, a sort of app store for software related to
their products, to be launched in 2018. All in all, the lion’s share of revenues is likely to stem
from GE within the forecast period, assuming that the other OEM agreements are not upgraded
to resemble the GE agreement. We believe revenues could exceed SEK200m in 2022. All this,
and the limited need to add operational expenses and investments, results in very strong cash
flow generation and high margins.
Risks
When estimating SyntheticMR’s sales potential, we assess the potential take rates of its product.
The key risk as we see it is a slower than expected adoption of the company’s products - how
many will adopt this new technology, and how fast will it happen? We are convinced of the
strength of the company’s product, but see the main risk in timing, i.e. that the projected growth
will take longer than anticipated.
Other risks are competitive pressure from existing players and new potential entrants. We argue,
however, that SyntheticMR’s product is superior to any existing competitors, which hence offer
limited threat to pricing and volumes. If similar software were to be launched by a competitor,
SyntheticMR’s headstart is significant, given the lead times for regulatory approval, testing etc.
in a very conservative industry.
The limited need to add operational
expenses and investments results in
very strong cash flow generation and
high margins.
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Commissioned Research – marketing material sponsored by SyntheticMR 9
SWOT analysis
Strengths Weaknesses
Superior product within a niche area, with potential to
revolutionise MRI.
Agreements with large OEMs enable access to a
global market.
Small company which may have a problem reaching
out to the market. The co-marketing agreements may
not be enough for SyntheticMR to reach high
penetration.
Opportunities Threats
Co-marketing agreement with Siemens enables
access to the market quickly through a digital
ecosystem.
Retrospective sales of reading room software.
Future agreements with OEMs, or extended contracts
with signed OEMs.
Future technology.
Source: Danske Bank Equity Research
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Quarterly and yearly estimates
SEKm Q1 17 Q2 17 Q3 17 Q4 17E 2017E Q1 18E Q2 18E Q3 18E Q4 18E 2018E 2019E 2020E
Sales 9.2 5.7 7.7 13.1 35.6 11.6 11.3 14.0 22.1 59.0 91.5 135.4
Sales growth 240% 58% 110% 45% 72% 20% 97% 83% 73% 65% 55% 48%
EBITDA 4.2 0.8 2.9 6.1 14.0 5.9 5.0 7.3 12.7 30.9 49.8 80.0
EBIT 3.5 0.0 2.2 5.4 11.1 5.1 4.3 6.5 12.0 27.9 46.4 76.3
EBIT-margin 38% 1% 29% 41% 31% 44% 38% 46% 54% 47% 51% 56%
PTP 3.5 0.0 2.2 5.4 11.1 5.1 4.3 6.5 12.0 27.9 46.4 76.3
Net profit 2.7 0.0 1.7 3.9 8.4 4.0 3.3 5.1 9.3 21.8 36.2 59.5
Source: Company data, Danske Bank Equity Research estimates
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Company summary
Sales breakdown, geographical areas Sales breakdown, divisions
n.a.
Company information
Main shareholders
SyntheticMR
Storgatan 11, 582 23 LINKÖPING
Sweden
www.syntheticmr.com
Name Votes (%) Capital (%)
Staffan Persson 34.4% 34.4%
Marcel Warntjes 9.3% 9.3%
Artisan Partners 6.6% 6.6%
Johan Sedihn 5.8% 5.8%
Swedbank Robur 4.4% 4.4%
Net sales and EBITDA margin (SEKm)
EBIT and EBIT-margin (SEKm)
P/E NTM
EV/Sales NTM
Source: FactSet, Company data, Danske Bank Equity Research estimates
Sweden6%
Other 94%
0%
20%
40%
60%
80%
0
50
100
150
20
13
20
14
20
15
20
16
20
17
E
20
18
E
20
19
E
20
20
E
Net sales
EBITDA-margin (RHS)
0%
20%
40%
60%
-50
0
50
10020
13
20
14
20
15
20
16
20
17
E
20
18
E
20
19
E
20
20
E
EBIT
EBIT- margin (RHS)
0.0x
50.0x
100.0x
150.0x
200.0x
Ap
r-1
6
Ju
n-1
6
Au
g-1
6
Oct-
16
De
c-1
6
Fe
b-1
7
Ap
r-1
7
Ju
n-1
7
Au
g-1
7
Oct-
17
De
c-1
7
SYNT PE
0.0x
10.0x
20.0x
30.0x
Ma
r-1
5
Ju
n-1
5
Se
p-1
5
De
c-1
5
Ma
r-1
6
Ju
n-1
6
Se
p-1
6
De
c-1
6
Ma
r-1
7
Ju
n-1
7
Se
p-1
7
De
c-1
7
SYNT EV/SALES
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Summary tables
INCOME STATEMENT
Year end Dec, SEKm 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
Net sales 1 1 2 6 19 36 59 91 135
Cost of sales and operating costs -6 -8 -9 -13 -17 -24 -30 -44 -58
EBITDA -3 -3 -4 -4 6 14 31 50 80
EBITDA, adj. -3 -3 -4 -4 6 14 31 50 80
Depreciation -0 -0 -0 -0 -0
EBITA -3 -3 -4 -4 6 14 31 50 80
Amortisation -1 -2 -2 -2 -3 -3 -3 -3 -4
EBIT incl. EO, bef. ass. -4 -5 -7 -6 3 11 28 46 76
EBIT, adj. -4 -5 -7 -6 3 11 28 46 76
Financial items, net 0 -0 -0 0 0 -0 -0 0 0 0
Pre-tax profit -4 -5 -7 -6 3 11 28 46 76
Taxes 6 -1 -3 -6 -10 -17
Net profit, rep. -4 -5 -7 0 2 8 22 36 60
Net profit, adj. -4 -5 -7 0 2 8 22 36 60
CASH FLOW
SEKm 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
EBITDA -3 -3 -4 -4 6 14 31 50 80
Change in working capital -0 -1 1 -1 -1 -3 -4 -8 -5
Net interest paid 0 -0 -0
Taxes paid -0 -0 -0 -0 -6 -10 -17
Other operating cash items -0 -0 0 0 0
Cash flow from operations -3 -4 -3 -5 4 11 21 32 58
Capex -2 -3 -3 -3 -3 -3 -4 -5 -5
Dividends to minorities
Free cash flow -5 -7 -6 -8 1 8 17 27 52
Disposals/(acquisitions)
Free cash flow to equity -5 -7 -6 -8 1 8 17 27 52
Dividend paid
Share buybacks
New issue common stock 6 10 15
Incr./(decr.) in debt -0 -0 -0
Minorities and other financing CF 2 -0 -0
Cash flow from financing 9 10 15 -0 -0 0 0 0 0
Disc. ops and other
Incr./(decr.) in cash 4 4 9 -8 1 8 17 27 52
BALANCE SHEET
SEKm 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
Cash and cash equivalents 4 7 16 8 9 17 34 61 113
Inventory
Trade receivables 1 1 1 4 6 12 17 25 34
Other current assets 0 0 0 0 1 0 0 0 0
Goodwill
Other intangible assets 5 6 6 7 7 8 8 9 11
Fixed tangible assets 0 0 0 0 0 0 0 0 0
Associated companies
Other non-current assets 6 6 3 3 3 3
Total assets 9 14 23 25 29 39 62 99 162
Shareholders' equity 8 13 21 21 24 32 54 90 150
Of which minority interests
Current liabilities 1 1 2 4 5 7 8 8 12
Interest-bearing debt 0 0 0
Pension liabilities
Other non-current liabilities
Total liabilities 1 1 2 4 5 7 8 8 12
Total liabilities and equity 9 14 23 25 29 39 62 99 162
Net debt -3 -7 -16 -8 -9 -17 -34 -61 -113
Working capital -0 0 -1 0 1 5 9 17 22
Source: Company data, Danske Bank Equity Research estimates
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Summary tables
PER SHARE DATA 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
No. of shares, fully diluted (y.e.) (m) 3.5 4.0 4.0 4.0 4.0 4.0 4.0 4.0
No. of shares, fully diluted (avg.) (m) 3.5 3.8 4.0 4.0 4.0 4.0 4.0 4.0
EPS (SEK) -1.37 -1.76 0.02 0.59 2.07 5.39 8.96 14.7
EPS adj. (SEK) -1.37 -1.76 0.02 0.59 2.07 5.39 8.96 14.7
DPS (SEK) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CFFO/share (SEK) -1.0 -0.9 -1.2 1.1 2.6 5.1 7.9 14.3
Book value/share (SEK) 3.81 5.30 5.31 5.91 7.98 13.4 22.3 37.1
MARGINS AND GROWTH 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
EBITDA margin n.m. n.m. n.m. -60.9% 30.4% 39.3% 52.5% 54.4% 59.1%
EBITA margin n.m. n.m. n.m. -61.0% 30.3% 39.3% 52.5% 54.4% 59.1%
EBIT margin n.m. n.m. n.m. n.m. 16.6% 31.2% 47.3% 50.7% 56.4%
EBIT adj. margin n.m. n.m. n.m. n.m. 16.6% 31.2% 47.3% 50.7% 56.4%
Sales growth 100.0% 40.0% n.m. n.m. 87.6% 65.4% 55.1% 48.0%
EBITDA growth -4.0% -46.4% 13.7% n.m. n.m. n.m. 60.8% 60.7%
EBITA growth -3.9% -45.8% 13.8% n.m. n.m. n.m. 60.8% 60.7%
EPS adj. growth -29.2% n.m. n.m. n.m. n.m. 66.4% 64.4%
PROFITABILITY 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
ROIC (after tax, incl. GW, adj.) -184.6% -89.1% -113.5% 1.3% 19.9% 43.1% 90.0% 114.6% 149.0%
ROIC (after tax, excl. GW, adj.) -184.6% -89.1% -113.5% 1.3% 19.9% 43.1% 90.0% 114.6% 149.0%
ROE (adj.) -106.6% -45.4% -38.3% 0.4% 10.6% 29.8% 50.5% 50.2% 49.6%
ROIC (adj.) - WACC -193.7% -98.2% -122.5% -7.8% 10.9% 34.1% 80.9% 105.5% 139.9%
MARKET VALUE 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
Share price (SEK) 44.3 59.5 100 125 279 354 354 354
No. shares reduced by buybacks (m) 3.5 4.0 4.0 4.0 4.0 4.0 4.0 4.0
Mkt cap used in EV (m) 153 240 404 505 1,125 1,430 1,430 1,430
Net debt, year-end (m) -3 -7 -16 -8 -9 -17 -34 -61 -113
MV of min/ass and other (m) 0 0 0 0 0 0 0 0 0
Enterprise value (m) 146 224 396 496 1,108 1,396 1,369 1,317
VALUATION 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
EV/sales (x) n.m. n.m. 63.9 26.1 31.1 23.7 15.0 9.7
EV/EBITDA (x) n.m. n.m. n.m. 85.8 79.2 45.1 27.5 16.5
EV/EBITA (x) n.m. n.m. n.m. 86.1 79.2 45.1 27.5 16.5
EV/EBIT (x) n.m. n.m. n.m. n.m. 99.7 50.1 29.5 17.3
P/E (reported) (x) n.m. n.m. n.m. n.m. n.m. 65.7 39.5 24.0
P/E (adj.) (x) n.m. n.m. n.m. n.m. n.m. 65.7 39.5 24.0
P/BV (x) 11.6 11.2 18.8 21.2 34.9 26.5 15.9 9.55
EV/invested capital (x)
Dividend yield
Total yield (incl. buybacks)
FCFE-yield -4.37% -2.44% -1.89% 0.23% 0.68% 1.17% 1.90% 3.67%
FINANCIAL RATIOS 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
Net debt/EBITDA (x) 1.1 2.3 3.6 2.2 -1.6 -1.2 -1.1 -1.2 -1.4
Net debt/equity (x), year-end -0.4 -0.5 -0.7 -0.4 -0.4 -0.5 -0.6 -0.7 -0.8
Dividend payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest coverage (x) n.m. n.m. n.m. 67.3
Cash conversion (FCF/net profit) n.m. n.m. n.m. n.m. 48.5% 91.7% 76.9% 75.2% 88.1%
Capex/sales 310.9% 238.9% 137.0% 47.7% 17.4% 8.4% 6.4% 5.0% 4.0%
NWC/sales -37.3% 11.7% -43.8% 2.7% 7.7% 13.4% 15.4% 18.4% 16.4%
QUARTERLY P&L Q1 17 Q2 17 Q3 17 Q4 17 Q1 18E Q2 18E Q3 18E Q4 18E
Sales (m) 9 6 8 13 12 11 14 22
EBITDA (m) 4 1 3 6 6 5 7 13
EBIT before non-recurring items (m) 4 0 2 5 5 4 7 12
Net profit (adj.) (m) 3 0 2 4 4 3 5 9
EPS (adj.) (SEK) 0.67 0.00 0.42 0.98 0.99 0.83 1.26 2.31
EBITDA margin 45.9% 13.4% 38.1% 46.5% 50.8% 44.5% 52.1% 57.8%
EBIT margin (adj.) 38.1% 0.6% 28.7% 41.0% 44.2% 37.7% 46.6% 54.3%
Source: Company data, Danske Bank Equity Research estimates
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Report completed: 22 February 2018 at 08:09 CET
Report disseminated: 22 February 2018 at 08:30 CET