Hope you liked this analyse. Sorry for not posting in a while and for posting in Swedish. Have done a lot of things lately.


This is an analyze that I made is for an investment valuation case as a part of the recruitment. The company, New Nordic HealthBrands, is a supplements company. I had just one page to write an entire analyze, which is way harder than it sounds. There are so many important things that you want to say, but you know that it does not fit. The company, Nordic HealthBrands, is a company with a market value of around 160 MSEK, so a very small company. No analytics are following the stock, so there is no analytics who have made estimations. So EVERYTHING you read is made by me. Have taken away the logo of Venture Capital company there I was a part of the recruitment.


Next analyze will be about Cherry Casino.


Disclaimer – You need to do your own analyse before buying shares. You cannot base any investment on just this analysis.

If you want to know how I calculated it, feel free to contact me on twitter or e-mail. Follow me on twitter, I post every time a new analyse is out.
@InWester
InWesterblog@gmail.com

Hope you liked this analyse.

Move your blog to Nouw - now you can import your old blog - click here!

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Estimation (Tables in the bottom)

B3IT are right now traded at a P/E ratio of 26.8, based on the annual report of 2016. Quite expesive for a consultant firm and well above the industry average. B3IT are estimated to have a revenue growth of 30 % in 2017. Reaching sales of 635 million SEK with an EBIT-margin of around 9.4 %, thus giving an earning per share of 5.6 SEK. On 2017 estimation the P/E ratio goes down to 15.3. The CEO and also the biggest shareholder, Sven Uthorn, have said that we can expect that earning per share to have an annual growth of 20 %.


About B3IT

B3IT was founded in 2003 with aspirations of becoming Sweden’s top IT-consulting firm. They have grown rapidly with a distinct focus on both senior consultants (premium consultants) within IT and Management as well as focus on the most demanding clients on the market. Since 2006, B3IT have had a revenue growth of 26 % CARG, and have been profitable all the time. Right now, B3IT have 330 employed and is rapidly growing.

B3IT is a company who offers qualified senior consultants or as they also call it, premium consultants, to the areas of IT and Management. The average working experience for a consultant in B3IT is around 19 years, which well over the industry. This can be seen as both good and bad, depending on your own view on IT. Can the older experience consultants keep up with the fast-moving IT-markets or not? The CEO, Sven Uthorn, said that they have many efficient ways of making sure that their employees always are updated. Boosting both the individuals and the company.

Nearly 50 % of B3IT sales come from non-cyclic industry. The entire consumer portfolio is well diversified, no risk of major dropp in sales thanks to one costumer. The public procurement is B3IT specialty, winning more and more framework agreement, and thereby creating a steady stream of future revenue.

Future

The CEO and biggest shareholder, Sven Uthorn, said in November 2016 that they can grow five times their size with their current costumer portfolio, without touching unknown territories. He also believed that the consultant market is a fragmented market were they could M&A other companies at an attractive valuation. That is the reason why I think that we are going to see further M&A activities in 2017. Considering that B3IT already have done two M&A in 2017 and one of a bigger size. In January they bought Init for 31,8 million SEK. A company with a revenue of 58 million SEK and an ADJ EBIT of 4.8 million SEK and an net cash position of 8 million SEK, thereby buying a the company at a valuation of around 5 EV/ADJ-EBIT. A valuation of 5 EV/ ADJ-EBIT can be compared with B3IT:s of 13,5 EV/ADJ-EBIT. If B3IT manage to continue to do M&A at the same valuation as Init they will be able to create value for its shareholders.


The CEO and the board members owns together more than 28 % of the outstanding shares and recently Cleas Wiberg bought 1 540 shares. Uthorn also said that 50 % of the employers owns shares in B3IT, thereby creating incentive for the workers to work harder, a win-win situation for both the company and the employees. The big position of the board members, CEO and the employers are going make the entire organization more focused on growth of B3IT.


In 2016 B3IT came on the third place in the competition ‘’Great place to work’’ and in 2017 they came on the forth place. This is going to make it easy for them to hire new high quality employees. Uthorn said he was very proud of this achievement. Because for him the hard part of running a consultant firm isn’t to sell products, but to acquire good talented personnel. This achievement is going to make it a lot easier for B3IT to acquire high skilled personnel.


Financials: (Look in the tables)

B3IT have three main financial targets, organic growth of 15 %, an EBIT margin of 9 - 12% and a growth in earnings per share of 20 % annually. I think that all of their goal is reachable. This was also shown in their last interim report, there all of their financial targets were meet. I believe that B3IT are going to grow with an organic rate of around 17 % and 13 % from M&A activity, thereby reaching a revenue growth of 30 % in 2017. In 2018, I chose to be more conservative. With a revenue growth of just 15 %, which I think they will be able to beat. The IT-consultants market is a very fragmented market, so the M&A activity is certainly going to continue. I think that B3IT will make some M&A activity in 2018, and consequently grow with more than 15 %. B3IT will be able to increase their EBIT-margin by economics of scale and a more efficient recruitment method. As seen in the table below, B3IT is traded at a P/E-ratio of 15.3 and EV/EBIT of 9.9 for 2017 fast dropping. I think that with continuous work with M&A activity and continuous work with employer satisfaction we will be able to see even more impressive numbers than in my table.


Disclaimer – You need to do your own analyse before buying shares. You cannot base any investment on just this analysis.

If you want to know how I calculated it, feel free to contact me on twitter or e-mail. Follow me on twitter, I post every time a new analyse is out.
@InWester
InWesterblog@gmail.com

Hope you liked this analyse.

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Estimation

Right now, LINK Mobility are traded at a P/E ratio of 14.6 for 2017, and 9.3 for 2018. The estimations are based on analyses from Danske Bank, Swedbank markets and Arctic security. The mean Price Target is currently 191 NSEK, a potential gain of 61.8 % from the current price (Look in the table).

About LINK Mobility

LINK Mobility group (LINK) is a company traded at Oslo Børs who are a leading provider of Mobile Messaging. LINK Mobility have three main segments, Mobile Messaging, Mobile Solution and Mobile Intelligence. 78 % of their revenue comes from the business segment of Mobile Messaging. LINKs segment of Mobile Messaging provides text-message functions to companies so they can reach their clients in an efficient way. For example, when you order a package on the Internet you receive a text message from the company you ordered it from. When the package arrives, you will get a new text message telling that your package has arrived.


Thanks to their recent acquisition of the Spanish companies, Global Messaging Solutions and Didimo Group, and thereby becoming the leading provider of Mobile Messaging in Spain. LINK is now seen to be one of the biggest and the fastest growing provider in the entire Europe. The CEO, Arild E Hustad, said that LINKs has an internal target of reaching 400 MNOK in ADJ EBITDA in 2018 and to have a long term EBITDA-M at 15 %. In 2016 LINK Mobility had an ADJ EBITDA of 67 MNOK. To reach their target of 400 MNOK they need to grow ADJ EBITDA with more than 490 %. Impossible? Don’t think so.

The latest interim report

LINK had a revenue growth QonQ of 115 %, consisting of 29 % organic growth and 86 % acquired growth. The Adj EBITDA in Q4 was 30 MNOK, nearly half of the full year. Q4 was a record both in terms of growth and in absolute numbers. The massive growth of Adj EBITDA confirms that LINKs strategy of acquiring companies is very beneficial for the shareholders. For example, the latest acquisition was a small Swedish company, and was acquired at a EV/EBITDA ratio of 4. The growth of both revenue and EBITDA confirms that LINK Mobility strategy of acquiring is functioning great (Look in the table).

Future

Right now, the growth of mobile messaging are growing in double digit numbers, and it is estimated to do so for at least 5 more years to come. The COE, Arild E Hustad, said that he estimated that LINKs organic growth is going to be in between 25-30 % in the years to come. Companies in Scandinavia are in general 2-4 years ahead when it comes to implementing Mobile Messaging as a part of their business idea, compared to their counterparties from other countries. Being the biggest provider in Scandinavia and focusing on acquiring companies from countries were the progress of Mobile Messaging have yet not been established, are going to make the long term growth of the company. That was one of the reason of their last acquisition in Spain. Aggressively expanding their geographic location, and thereby becoming the biggest provider in Spain. The ambition to grow with acquisitions was also showed in the last interim report were LINK contemplating to issue a bond of 50 million EUR, with a borrowing limit of Euro 175 million to finance the outlook through 2018.


Risk

Some people might think that applications are going to take over the text message functions. Arild E Hustad have said that they are working together with Facebook in their segment of mobile solutions, but it is too early to say anything. The other risk is that LINK will not be able to make as successful acquisitions as they have done before, and thereby not reaching their internal target of 400 MNEK Adj EBITDA in 2018. It is also important to look at the coming quarters of 2017. That is why I included the estimations for all quarter reports in 2017.

Disclaimer – You need to do your own analyse before buying shares. You cannot base any investment on just this analysis.

If you want to know how I calculated it, feel free to contact me on twitter or e-mail. Follow me on twitter, I post every time a new analyse is out.
@InWester
InWesterblog@gmail.com

Tables and the future of LINK

As seen in the table, LINK Mobility group valuation is very attractive if LINK succeeds with their financial targets. If the company succeeds with their financial targets they are valued at P/E ratio of 14.6 for 2017, 9.3 for 2018. This is very cheap considering the future growth of LINK. We might see that the market is going to upgrade their view in LINK, and therefore the stock market is going to value LINK at 24 in P/E, in the end of 2017. That means that the stock can reach 194 NOK already in the beginning of 2018.

Hope you liked this analyse.

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If you have been watching TV the last 2 years you know that almost all commercials are from different casino/gambling companies. Even though this in a competitive industry, most of the companies seems to be growing. The last year LeoVegas increased their revenue by 73 % and the EBIT increased more than 29 times. When hearing this, you might think that this company is going to be valued way over 50 in P/E-ratio. The reality is that LeoVegas is just valued a bit over a P/E-ratio of 30 for 2016, looking at estimated earnings of 2017 the P/E-ratio goes as low as 16.6. This thanks to their high earnings growth (Look in the table). Even though this competitive gambling market and the amount of commercial, LeoVegas still showed in Q4 that their marketing campaign is able to scale very well. The marketing expenses grew with just 13 %, but deposits from new costumers grew with 83 % Y-Y. The more efficient marketing campaign makes so that Costumer Acquisition Cost decreased with 38 % compared with last year.


The future of LeoVegas

LeoVegas own financial goal is to have a revenue of 300 million Euro in 2018 and an EBITDA margin of 15 %. To reach this target they need to grow with 46 % annually. The CEO of LeoVegas, Gustaf Hagman, said that LeoVegas in January had a Y-Y revenue growth of 40 %, which was less than LeoVegas wanted to. Hagman also said that due to the new legislation in Czech Republic, they needed to stop their business and are currently waiting to get a license. 4 % of their revenues comes from Czech Republic.

LeoVegas launched both Casino and Live Casino in the Danish market in Q1, 2017. The company sees continued strong demand for gaming services and believes that the opportunities for continued expansion in new markets are very favorable. LeoVegas also got the cash to cover many further expansions. The past quarter LeoVegas had a cash position of more than 55 million. The big cash position and the eager to grow made LeoVegas make their first M&A ever, by acquiring Winga.it, for 6.1 million Euro. 6.1 million Euro is not much by taking to account that LeoVegas in the Q4 had a growth in cash position by 11.9 million Euros. I think that “Winga.it” is a very good acquisition, just like the Italian gambling market is huge and the market are regulated by the authorities. Most of the Italian gambling market are traditional gambling, and not online/mobile gambling. As in many other countries, LeoVegas expects that the market shares of online- and mobile gaming to growth. Hagman also said that they have been looking on dozens of possible acquisitions. I think that it is very possible to see more acquisitions, both in short- and long term. To meet their target of 300 million Euro in 2018, they need to grow their revenue with 43 % annually. Therefor I think that acquisitions is going to be needed. In January LeoVegas grew their revenue with 40 % in revenue and that is without any sales from Czech Republic.

Authentic Gaming is a new daughter company within LeoVegas. Authentic Gaming is a business to business provider of live casino solution, like Evolution gaming. In the beginning of 2017 some of the more well-known operators started to use Authentic Gaming. This have led to that LeoVegas now are focusing on deliver this solution to more operators. If Authentic Gaming is going to be a success, we might see this as a potential spin-off from LeoVegas, like Betsson’s spinoff NetEnt. Worth adding is that this will take a while

Worries – Taxes, quarter to quarter.
As many of you know the gambling industry have some political difficulties. Many people think that the industry should be more regulated. It has been discussions about regulating the Swedish gambling industry, but nothing has happened. Right now, the sales of LeoVegas consist of, 57 % Nordic countries, 10 % UK, 17 % rest of Europe and 16 % rest of the world. Sweden is expected to have a new gambling regulation in Q3 2018- how this regulation is going to look is still unclear. From what I think, this market is always going to have some political issues. LeoVegas long term financial goals includes the political risk. Long term goal is to have an 15 % EBITDA and all business on a regulated market.

If LeoVegas are able to meet their own financial goal it is looks like a very promising trip for the InWesters. With a P/E-ratio of 16.6 for 2017 and with a PEG of 0.38, this is really not considered expensive. LeoVegas has much to live up to, but if they succeed, we are going to see a new rising star in the industry of all this annoying commercials.

Disclaimer – You need to do your own analyse before buying shares. You cannot base any investment on just this analysis.

If you want to know how I calculated it, feel free to contact me on twitter or e-mail. Follow me on twitter, I post every time a new analysis is out.
@InWester
InWesterblog@gmail.com

Hope you liked this analysis.


Stay tuned for this Saturday, where I’m going to analyze another company! Feel free to contact me about any suggestions for companies that I could analyze.


Growth in revenue in 2019 is just 20 %, just to make it ''conservative''.

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All tables in the bottom


Future

The launch of Elocta and Alprolix has opened a market many times bigger than their current revenue. Still it is not showed in the valuation. That SOBI missed the Q4 estimate by -18% did not matter, since the focus was on the new selling products: Elocta and Alprolix. In Q4 Elocta grew with 137 % Q-Q and Aprolix with 144 % Q-Q. Most analytics firms did not expect that sales and administration expenses would be that high, this was the only disappointment in the report. SOBIs CEO, Geoffrey McDonough, said that the expenses in both R&D and Sales and Administration will be higher than in 2016. They want to be a 1 billion euro franchise in hemophilia, and build a longer term R&D department for the future. The OPEX is expected to grow in a low double digit number. The hemophilia market is very interesting, while SOBI’s market is leaning towards taking more and more market shares, where the underlying market is supposed to growth between 5.6 % to 8 % annually. World Federation of Hemophilia believes that 75 % of the hemophilia patients either has not received the right treatment or has not been diagnosed. The total number who have hemophilia in 2013 was 400 000. In Hemophila A, 50 % are treated on demand, whereas Hemophilia B has around 60 %. Making patients’ use the method prophylaxis instead of on demand will increase the sales of both Elocta and Alprolix, also making the patients’ life much better. A more developed world, better hospitals and more knowledge about hemophilia will make the sales of Bioverativ and SOBIs products grow in a faster pace.

The Launch
For a quite long while ago, Biogen launched Alprolix and Elocta in the United States. Both products have been selling really well in USA, and only in the last quarter they sold for 2158 million SEK(look in the table). This indicates that the products are better than the predecessors, something that will improve the patients’ quality of life. SOBI also has a royalty of 12 % of the Bioverativs (Biogen) sales of both Elocta and Aprolix. In this quarter the royalty was 277 million SEK, reaching easily over 1 billion SEK in royalty per year, and it continues to grow. McDonought says that he thinks that it is possible to get a 10 % market share for Elocta in each market, this in a period of 20 months- the same as Biogen did in USA and Japan (look in the table). This is very pleasing to hear for us investors. SOBI currently have reimbursement for around 27 000 hemophilia A and B patients, that does not include Spain. There is not any data available for that the Spanish market. This can be compared with the Bioverativ market right now, that is consisting of 28 468 patients, where it mostly only sells In USA, who consists of 18 596 patients. Sobi has also started to discuss about the price with many other countries, something that consists of 12 563 patients, well over Bioverativs current market. The total market for both the market who has reimbursement, as well as the market under discussion about price/reimbursement are well over 40 000 patients.

M&A
I think that we will see some M&A in this market. SOBI is also right now about to sell their area of product partners, which has a revenue of 12 % of the total revenue. The expected sale of this area are around 1.9-2.8 billion SEK, which gives it a P/S of 2.3 to 3.4. If this sale will be executed, it is worth would be between 7.08 to 10,4 SEK per share. The CEO, Geoffrey McDonough, says that the product partners can grow better with the right focus. I think that we will see the sell kind of soon, this mostly due to that I see this as a way of showing the potential of their main products: Elocata and Aprolix. But also to make it easier for another company to acquire both Bioverative and SOBI at the same time. The buyer would then have two companies who has the rights to sell both products to the entire world, and to get access to the ever growing hemophilia market. McDonough has said that he is not interested in selling SOBI, that he wants to build SOBI to be a huge global orphan drugs company is has the potential of becoming. This also feels strange to me considering that he now wants to sell a part of SOBI. If Roches ACE910 will fail, which not is impossible due to the problem they had with some patients, the result is likely to be that SOBIs portfolio becomes more and more interesting for other big pharmaceuticals. This interest would increase when it comes to buy out both, SOBI and Bioverativ, and to get access to the hemophilia market. ACE910 is not a ‘’direct’’ competitor with Elocta and Aprolix, but if Roche develops ACE910 this product may compete with SOBIs products. To develop this product will take a while, therefor it is too early to say anything specific.


Summary
The launch in USA out of Bioverativ have gone really well- reaching high market shares at a fast pace. SOBI is now in the same phase at Bioverativ has been, but now will be a see huge increase in SOBI for the many years to come. Their main competitor Roche has problems with their launch of ACE910 (Phase 3), but if this launch will fail, Sobi will certainly have a very attractive portfolio for other big pharmaceutical companies. This quarter SOBI still showed that the sales of both Alprolix and Elocta was growing in a fast pace. The CEO, Geoffrey McDonough, thinks that it is possible to reach the same market shares in Europe as Bioverativ did in USA and Japan. SOBI also has a lot of cash, this means that we might see them buying a last phase drug for adding to their portfolio, this for reaching the market in 2018. Sobi is now traded at 2017 EST, P/E-ratio of 26.2 to 25.1, this depending on Sobis own estimate or analytics average estimate. In just 2018 this will be as low as 16.3 P/E and an EV/EBIT at just 12.7. This ratio is very low considering the growth of the company and the ever exciting M&A possibility. I see a great potential for us investors when it comes to this stock. (look at the table)

Disclaimer – You need to do your own analyse before buying shares. You cannot base any investment on just this analysis.

If you want to know how I calculated it, feel free to contact me on twitter or e-mail. Follow me on twitter, I post every time a new analyse is out.
@InWester
InWesterblog@gmail.com

Hope you liked this analyse.

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All tables in the bottom


When thinking about Kopparbergs you don’t think about sitting down enjoying a cider and listen to Dean Martin. Even though the share has been a rocket for many years. Since 2014 Kopparberg share has increased more than 270 % but in 2016 the share fell 7 % including dividend. The fall in the share was mostly due to the exposure to the British market. In 2016 the pound fell with around 10 %. CEO of Kopparberg, Peter Bronsman, said that the growth in liters sold to UK where about 10 %. Kopparberg have a revenue growth of 11 % since 2014 and have improved their Ebit margin from 11.48 % in 2014 to 17.21 % 2016. The increase in Ebit-m is thanks to continues product development, those selling products with higher gross margin. In 2016 they released many new products like, Fruit Lager, which has seen an incredible growth in sales.

Future
Kopparberg are working to always increase their efficiency, which can be seen in the table below about Ebit-m. The cider market is growing fast, just in 2016 the cider market in Sweden grew with 7 %. It’s these trends, increased export and a countiues product development that I used as a base for revenue growth through the estimation periods. I think that Kopparbergs can achieve a revenue growth of 8 % to 2020. The Ebit-m is as seen improving but to not make it to optimistic I chose to keep it at 17 % through the estimation period. In this analysis of both revenue and Ebit-m I don’t take FX inconsideration, the company says that a part of the FX movement are hedged. The new product, Fruit Lager, is the perfect combination of both beer and cider. I have been abroad (Poland) for 5 months and a thing that got me surprised was that every girl were ordering beer with concentrated juice and were drinking it with a straw. Fruit Lager is for them the perfect product, so the demand certainly exits! Kopparbergs are going to continue focusing on their strong brands like, Kopparbergs Cider, this has made their cider the most sold in the premium segment in UK. They also plan to go to new countries and test their cider market, and to make the costumers used to drink their sweet tasting cider. Right now they don’t have any long term debt, so it’s also possible to see them buying a brand which they can implement in their own product portfolio. I still don’t think that is about to happen, they seem to develop a culture where own product development is important.

Disclaimer – You need to do your own analyze beforebuying shares. You can’t base an investment on just this analysis.

If you want to know how I calculated it feel free to contact me on twitter or e-mail. Follow me on twitter, will post everytime a new analyze is out!
@InWester
InWesterblog@gmail.com

Next time on Thursday I will analyze SOBI’s Q4. Feel free to contact me about any suggestions for companies that I could analyze.

As seen in the table. They are right now valued at a P/E ratio of 19,8 with an estimated growth in earning of around 8 %.

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Fortnox released their Q4 and things wasn’t as good as many investors had expected. Revenue was in line of the estimate, 53,5 million excluding capitalized work for own account, but the rest was not as good as excepted. The EBIT missed with about -22 % and the same with the earnings per share -22 %. Fortnox isn’t like Academedia with a low P/E-ratio. Fortnox is currently trading at a P/Eratio of 59, based on the result of 2016. Their share have just been falling with about -3,8 % which can mostly be explained that the company still grew alot. Revenue grew with 9 % Q-Q, EBIT grew 12,6 % Q-Q if you exclude the holiday leave payment, backlog increased with 10 % Q-Q, costumer base increased with 8,4 % Q-Q but the average revenue per costumer stayed flat.

Fortnox future – Are their financial goals reachable?
Fortnox goal is to have an Y/Y revenue growth of 25 % and 20 % EBIT margin.This quarter they easily succeeded with both the growth and the margin. Y/Y revenue growth was 38 % and adjusted Ebit margin 30 %. The question is how they are going to be able to maintain their growth in the future. Remium have estimated that Fortnox in 2017 will grow revenue with about 31 % Y/Y and an adjusted Ebit margin at 33 %. Remium’s estimate for 2018 points out that they believe that Fortnox are ‘’just’’ going to increase with 20 %, which is not inline with Fortnox own financial goals of 25 %. How they will reach their goal is a good question. They’re right now working together with the biggest Swedish accounting and auditing firm, like EY. Their purpose of working close to the accounting and auditing firm is to use them as sale channels and R&D for new products. Many of these accounting firms are international so an expansion with help from the accounting firms shouldn’t be impossible. The new CEO, Nils Carlsson, haven’t said anything about going abroad so it’s hard to tell when that’s about to happen. Carlsson said in an interview with Remium that Fortnox is going to have full focus on reaching their financial goals of 25 % revenue growth to 2020. He didn’t talk about how they are supposed to reach this goal just that it’s their main focus. They doesn’t have any long term debt, so M&A is possible from a financial perspective. The question is how to implement and create synergies with the other company. Fortnox has developed a large platform, so it shouldn’t be hard for them to implement any smart solutions their platform/ecosystem.

Disclaimer – You need to do your own analyze beforebuying shares. You can’t base an investment on just this analysis.

When doing this table I used Remium’s estimate for 2017 and the Fortnox own financial goals of 25 % increase in revenue and an adj Ebit margin at 25% in the period of 2018-2020.

If you want to know how I calculated it feel free to contact me on twitter or mail. Follow me on twitter, will post everytime a new analyze is out!
@InWester
Inwesterblog@gmail.com

As seen in the table Fortnox is very expensive. If they manage to hold their financial goals they’re still traded at a P/E ratio of 20,4 for 2020. The problem is that no one can’t deny to be impressed by the growth and the potential of this company.

Stay tuned for this Saturday, where I’m going to analyze another company! Feel free to contact me about any suggestions for companies that I could analyze.

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Table in the bottom
The report

There’s no such feeling like waking up in the morning and seeing that one company in your portfolio is crushing the estimates. Academedia crushed all expectations! Net sales increased by 12 % to SEK 2,508 million (2,239). Operating profit (EBIT) increased by 57,8 % to SEK 142 million (90). Adjusted for non-recurring items, operating profit was SEK 142 million (97). Net profit for the period was SEK 89 million (48) which is an increase by 85,4 %.

Academedia crushed the expectations but the stock has only increased by 3,9 %. This is mostly due that many bigger investors are using this moment when it’s higher liquidity to sell off their shares. Academedia is not rather liquid share otherwise, so it’s understandable that the share doesn’t increase more. I think that this interim report proves that the company is doing fine and the growth, both revenue and net profit is very attractive by taking inconsideration the valuation of the firm. Right now Academedia is trading at rolling 12 months at a P/E-ratio of 13.62, which I consider to cheap.

Future expectations – Without interference from politicians
Academedia’s goal is to have a growth of 5-7 % per year and adjusted Ebit margin at 7-8 %. The growth 5-7 % in revenue doesn’t include large strategic investments. This quarter they succeeded with both. Growth in revenue was 12 % and adj Ebit margin at 7,2 %. Academedia have now also reach their goal of indebtedness, 3< net debt/adj Ebitda. Therefor I believe that we might see a bigger strategic M&A fairly soon. When listening to the conference call it sounded that the CEO, Marcus Strömberg, was looking at some bigger M&A but didn’t want to tell too much to us investors. He also said that the Swedish market still have room for M&A, and the prices wasn’t expensive, mostly due the political risk. I think that Strömberg see this as a possibility to expand their market share in Sweden then the prices are relatively cheap. I think that it’s now a really good period to make some M&A at discounted price. The company is still under stable structural growth with more and more students pouring in. This quarter students increased with 5,1 %.

Political threats
As you can imagine there are many problems due the politician disturbance, this has scared many investors in a long time but I think that the tide has change. Today (7 feb 2017) the Minister of Public Administration, Ardalan Sherkarabi, said ‘’our goal is to make an agreement in the areas where we might can agree in’’. He also said that he want them to prioritize the schools, and the comment who made us as investors extra happy was ‘’We want to have a model who allows profit for commercial operators who are investing long term and being serious’’. I think that the politicians are going to be focused on the quality of education and not the profits. The educational quality is very good at Academedia so I don’t see that as being any problem.

Disclaimer – You need to do your own analyze before buying shares. You can’t base an investment on just this analysis.

If you want to know how I calculated it feel free to contact me on twitter or mail
@InWester
Inwesterblog@gmail.com

Next time this thursday 9 February I will analyze Fortnox Q4

Table: Estimates are made by me​

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The result of the Jensen Alpha model is that the higher alpha the lower actual return. Quite fun considerate that the model should be the higher alpha the higher potential gain. I know that this sample size isn’t big, but the correlation was quite clear. If you don’t take inconsideration Fenix Outdoor. In the table we can see that Fenix Outdoor, Sobi and Academedia was the winners. Strange considering that both Sobi and Academedia had negative Alphas.


Time period. 20th Dec 2016 - 20th Jan 2017 (one month)

Actual returns:
Sobi: 5,58 %
Academedia: 8,65 %
Fenix Outdoor: 28 %
Vostok New Ventures: -5,51%
Hansa Medical: -7,04 %

Jensen Alpha:
Sobi: -0,7 %
Academedia: -1,7 %
Fenix Outdoor: 2,6 %
Vostok New Ventures: 3,1 %
Hansa Medical: 11,5 %

The difference between Actual Return and Jensen: (Actual-Jensen)
Sobi: 6,28%
Academedia: 10,35 %
Fenix Outdoor: 25,4 %
Vostok New Ventures: -8,61%
Hansa Medical: -18,54 %

We can see that the actual movement of the stocks was way bigger than Jensen model. The most important conclusion of this small sample test is that the higher the Alpha the lower return and the opposite. You can’t just calculate the Alpha and expect arbitrage if Alpha differs from 0. We need to remember that it’s just the flow of capital and sometimes doesn’t reflect how the company are preforming. This result was really good for my portfolio, because I have a huge exposure to both Sobi and Academedia.

How could Alpha have a negative correlation with the actual return?

Academedia – Which before had a huge political exposure have now cold down a bit. The government and PWC have released a report about what would happen if companies wouldn’t be allowed to make more than 7 % + gov bond return on operating capital. The result and the political exposure have decreased and thereby increase the value of the stock.
Sobi – In December Sobi was oversold by foreign banks, the anonymous was selling out huge amount of stocks which lower the stock price. Now the American peer, Bioverativ, is going to the the secondary market. It’s a spinoff from Biogen. This have created a peer, which the investors now can compare with. The in first day in the market was good for Bioverativ and thereby good for SOBI.
Fenix Outdoor – Nothing happened in the company. They had a huge pressure on the sell side at 600 Swedish crones which was pushed through.
Vostok and Hansa Medical – Nothing special.

Tomorrow Academedia have their second quater report (broken fiscal year) and I will be making some comments about their 2Q result. See ya tomorrow!

If you want to know how I calculated it feel free to contact me on twitter or mail
InWester
Inwesterblog@gmail.com

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Jensen Model – Seeking Alpha

In 20th of December I made an analyze of the five stocks who have varied in return the past year.
The companies who're analyzed are Sobi, Academedia, Fenix Outdoor, Vostok New Ventures and Hansa Medical.

Sobi, a pharmaceutical company with a focus on orphan drugs was one of the biggest loser last year. The stock dropped 20,3 % in 2016, even who the company outperformed the consensus estimates.
Academedia is an educational company who owns many school. They had their IPO in 13 of June. Academedia had a brilliant start but the stock later dropped because of their political exposure. Still the stock increased with 22,5 %, but if you take away the underpricing of the IPO, the stock actually fell 15 %.
Fenix Outdoor are in the clothing industry, mostly famous of their backpacks with the brand Fjällräven. Fenix had a great year with an estimated revenue growth of nearly 10 % and an even more impressive earnings growth of 52,4 %. This growth was even more valid in the stock, who increased with 67,5 %, one of the biggest winner.
Vostok New Ventures had a great year, mostly due the upswing in Russia, the risk willingness towards Russian investments and small increasing value of the investment portfolio. The stock shined with a return of 43 %.
Hansa Medical a pharmaceutical who have had some great results from their development portfolio. This company has just one medicine in their portfolio, so it's a very risky investment. Hansa have a huge potential if the medicine succeeds. This was also shown after the good results who came for the phase 2 studies. The bank, SEB, thinks that it’s 70 % possibility of success and have an extreme price target of 250 swedish crones, a potential gain of 121 %.

As seen, the stock with the highest alpha is Hansa medical and the lowest is Academedia.
In one month we’ll see the result and I will to comment the results.

Jensen Alpha:
Sobi: -0,7 %
Academedia: -1,7 %
Fenix Outdoor: 2,6 %
Vostok New Ventures: 3,1 %
Hansa Medical: 11,5 %

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If you want to know how I calculated it feel free to contact me on twitter or mail
InWester
Inwesterblog@gmail.com

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