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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 2021 2022e 2023e
Sales 1571 1778 1843
Sales growth (%) 19,7 13,1 3,7
EBITDA 569 665 698
EBITDA margin (%) 36,2 37,4 37,9
EBIT adj 298 353 374
EBIT adj margin (%) 18,9 19,9 20,3
Pretax profit 262 320 349
EPS rep 5,91 7 7,6
EPS growth (%) 21,7 18,6 8,5
EPS adj 10,38 12,01 12,49
DPS 2 2,33 2,53
EV/EBITDA (x) 35,6 24,9 23,4
EV/EBIT adj (x) 68,1 46,9 43,8
P/E (x) 94,3 63,9 58,9
P/E adj (x) 53,7 37,3 35,8
EV/sales (x) 12,9 9,3 8,9
FCF yield (%) -5,2 1,5 2,2
Dividend yield (%) 0,4 0,5 0,6
Net IB debt/EBITDA 1,3 0,8 0,5
Lease adj. FCF yield (%) -5,5 1,2 1,9
Lease adj. ND/EBITDA 1,2 0,7 0,3
SEKm 2021 2022e 2023e
Sales 1571 1778 1843
COGS 0 0 0
Gross profit 1571 1778 1843
Other operating items -1003 -1113 -1145
EBITDA 569 665 698
Depreciation on tangibles -50 -59 -48
Depreciation on intangibles -75 -80 -92
EBITA 425 509 539
Goodwill impairment charges 0 0 0
Other impairment and amortisation -109 -131 -137
EBIT 283 342 369
Other financial items 0 0 0
Net financial items -21 -21 -20
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 262 320 349
Tax -55 -70 -77
Net profit 207 251 272
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 207 251 272
EPS 5,91 7 7,6
EPS Adj 10,38 12,01 12,49
Total extraordinary items after tax -14,6 -11,5 -5
Tax rate (%) -21 -21,8 -22
Gross margin (%) 100 100 100
EBITDA margin (%) 36,2 37,4 37,9
EBITA margin (%) 27,1 28,7 29,2
EBIT margin (%) 18 19,2 20
Pretax margin (%) 16,7 18 18,9
Net margin (%) 13,2 14,1 14,8
Growth rates Y/Y 2021 2022 2023
Sales growth (%) 19,7 13,1 3,7
EBITDA growth (%) 24,5 16,9 4,9
EBIT growth (%) 27,4 20,7 7,8
Net profit growth (%) 28,7 21 8,5
EPS growth (%) 21,7 18,6 8,5
Profitability 2021 2022 2023
ROE (%) 14,6 12 12
ROE Adj (%) 25,7 20,6 19,7
ROCE (%) 13,1 11,6 11,8
ROCE Adj(%) 20,4 17,7 17,4
ROIC (%) 9,9 8,9 9,6
ROIC Adj (%) 10,4 9,1 9,7
Adj earnings numbers 2021 2022 2023
EBITDA Adj 583 676 703
EBITDA Adj margin (%) 37,1 38 38,1
EBITA Adj 440 521 544
EBITA Adj margin (%) 28 29,3 29,5
EBIT Adj 298 353 374
EBIT Adj margin (%) 18,9 19,9 20,3
Pretax profit Adj 419 500 524
Net profit Adj 364 430 447
Net profit to shareholders Adj 364 430 447
Net Adj margin (%) 23,1 24,2 24,3
Depreciation and amortisation -143 -155 -159
Of which leasing depreciation -47 -47 -50
EO items -15 -11 -5
Impairment and PPA amortisation -142 -168 -170
EBITDA lease Adj 536 629 653
EBITDA lease Adj margin (%) 34,1 35,4 35,4
Leasing payments -47 -47 -50
SEKm 2021 2022e 2023e
EBITDA 569 665 698
Net financial items -21 -21 -20
Paid tax -55 -70 -77
Non-cash items 0 0 0
Cash flow before change in WC 493 574 601
Change in WC -5 -16 3
Operating cash flow 488 557 604
CAPEX tangible fixed assets -19 -20 -20
CAPEX intangible fixed assets -210 -220 -227
Acquisitions and disposals -1282 -77 0
Free cash flow -1022 240 357
Dividend paid -53 -67 -83
Share issues and buybacks 904 0 0
Other non cash items -24 51 0
Decrease in net IB debt 27 9 150
Balance Sheet (SEKm) 2021 2022 2023
Goodwill 1689 1751 1751
Indefinite intangible assets 0 0 0
Definite intangible assets 917 1015 1119
Tangible fixed assets 75 86 88
Other fixed assets 6 6 6
Fixed assets 3316 3357 3325
Inventories 3 5 6
Receivables 262 284 295
Other current assets 51 0 0
Cash and liquid assets 120 287 501
Total assets 3752 3934 4126
Shareholders equity 1989 2173 2362
Minority 0 0 0
Total equity 1989 2173 2362
Long-term debt 676 676 676
Pension debt 4 4 4
Convertible debt 65 65 65
Deferred tax 186 195 205
Other long-term liabilities 34 34 34
Short-term debt 3 -7 -17
Accounts payable 47 44 46
Other current liabilities 470 481 493
Total liabilities and equity 3752 3934 4126
Net IB debt 738 561 337
Net IB debt excl. pension debt 734 557 333
Capital invested 3017 3023 2988
Working capital -201 -235 -239
EV breakdown 2021 2022 2023
Market cap. diluted (m) 19521 16013 16013
Net IB debt Adj 738 561 337
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 20259 16574 16350
Capital efficiency (%) 2021 2022 2023
Total assets turnover (%) 52,7 46,3 45,7
Capital invested turnover (%) 86,2 95,7 92,6
Capital employed turnover (%) 95,9 96,4 86,3
Inventories / sales (%) 0,3 0,2 0,2
Customer advances / sales (%) 12 12,5 12,9
Payables / sales (%) 2,7 2,5 2,6
Working capital / sales (%) -13,5 -12,3 -12,9
Financial risk and debt service 2021 2022 2023
Net debt / equity (%) 37,1 25,8 14,3
Net debt / market cap (%) 5,2 3,5 2,1
Equity ratio (%) 53 55,2 57,2
Net IB debt adj. / equity (%) 37,1 25,8 14,3
Current ratio (%) 78,2 103,8 143,2
EBITDA / net interest (%) 2713,1 3104,9 3487,6
Net IB debt / EBITDA (%) 129,8 84,4 48,3
Interest cover (%) 2004,1 2377,1 2693,1
Lease liability amortisation -47 -47 -50
Other intangible assets 1429 1398 1364
Right-of-use asset 116 116 116
Total other fixed assets 6 6 6
Leasing liability 116 116 116
Total other long-term liabilities 382 382 382
Net IB debt excl. leasing 622 444 220
Net IB debt / EBITDA lease Adj (%) 116 70,6 33,8
SEKm 2021 2022e 2023e
Shares outstanding adj. 33 36 36
Fully diluted shares Adj 35 36 36
EPS 5,91 7 7,6
Dividend per share Adj 2 2,3 2,5
EPS Adj 10,38 12,01 12,49
BVPS 59,56 61,05 66,02
BVPS Adj -33,82 -27,42 -21,05
Net IB debt / share 22,1 15,8 9,4
Share price 426,2 447,6 447,6
Market cap. (m) 14234 15931 16013
Valuation 2021 2022 2023
P/E 94,3 63,9 58,9
EV/sales 12,89 9,32 8,87
EV/EBITDA 35,6 24,9 23,4
EV/EBITA 47,6 32,5 30,4
EV/EBIT 71,6 48,5 44,4
Dividend yield (%) 0,4 0,5 0,6
FCF yield (%) -5,2 1,5 2,2
P/BVPS 9,35 7,33 6,78
P/BVPS Adj -16,47 -16,32 -21,26
P/E Adj 53,7 37,3 35,8
EV/EBITDA Adj 34,7 24,5 23,3
EV/EBITA Adj 46,1 31,8 30,1
EV/EBIT Adj 68,1 46,9 43,8
EV/cap. employed 7,1 5,5 5,1
Investment ratios 2021 2022 2023
Capex / sales 14,5 13,5 13,4
Capex / depreciation 237,5 221,1 226,6
Capex tangibles / tangible fixed assets 24,7 22,9 22,9
Capex intangibles / definite intangibles 14,7 15,7 16,6
Depreciation on intangibles / definite intangibles 5,7 6,6 6,7
Depreciation on tangibles / tangibles 20 19,6 20,5
Lease adj. FCF yield (%) -5,5 1,2 1,9

Equity research

Read earlier research

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 4.4 % 24.0 % 31 May 2022
Olov Sandberg 3.3 % 18.2 % 31 May 2022
SEB Fonder 7.8 % 4.5 % 31 May 2022
Capital Group 6.4 % 3.6 % 31 Mar 2022
Thomas Eklund 4.8 % 2.7 % 31 May 2022
Första AP-fonden 4.7 % 2.7 % 31 May 2022
Lannebo Fonder 3.9 % 2.2 % 31 May 2022
Invesco 3.4 % 1.9 % 31 May 2022
Martin Gren (Grenspecialisten) 3.1 % 1.7 % 31 May 2022
ODIN Fonder 2.6 % 1.5 % 31 May 2022
Source: Holdings by Modular Finance AB

Insider list - Vitec

Name Quantity Code Date
Sara Nilsson + 10 000 BUY 1 Jun 2021
Olle Backman + 10 000 BUY 1 Jun 2021
Sara Nilsson + 100 000 BUY 1 Jun 2021
Olle Backman + 100 000 SUBS 1 Jun 2021
Patrik Fransson + 10 000 BUY 1 Jun 2021
Olov Sandberg - 5 779 SELL 10 May 2021
Patrik Fransson + 10 000 BUY 19 Feb 2021
Patrik Fransson - 10 000 SELL 19 Feb 2021
Kaj- Sandart - 2 000 SELL 15 Oct 2020
Jan Friedman + 6 000 BUY 15 Oct 2020

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