healthcare, sweden syntheticmr radiologists in the ‘reading room ’. strong revenue growth. sales...

Not for US distribution.

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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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



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



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



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


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


Philips 48 83 128 183 250

Siemens 27 75 154 269 423




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.



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


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.



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


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



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.



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.



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.




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




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



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




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%




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Report completed: 22 February 2018 at 08:09 CET

Report disseminated: 22 February 2018 at 08:30 CET

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