Continuous acquisitions are expected to continue, which enables further growth. Actic had a growth of 9.2% CAGR between 2015 and 2017, of which 6.6 percentage points came from acquisitions. Actic paid an average price of 3.18x EBITDA for their acquisitions between 2016 and 2017. Further acquisitions are expected, which is enabled by strong cash flows.

Growth potential in the high-margin PT-segment. With a historical growth of 68% CAGR in the PT-segment between 2014 and 2017, Actic is expected to continue growing in the segment with a 18.9% CAGR between 2018E and 2022E, and an expansion from 12% of revenues to 19% of revenues in the same period. Growth in the PT-segment has boosted average revenue per member (ARPM) from 273 to 339 SEK between 2014 and 2017. The gross- and EBITDA-margin of the PT-segment is estimated at 55% and 40% respectively, which is significantly higher than Actic’s current expected EBITDA-margin for 2018 of 15.8%. As a result, the EBITDA-margin is expected to increase to 20.8% in 2022E.

Recent transformation in ownership. Strong ownership control is necessary in order to make efficient acquisitions and maintain cost control. The new main owner and chairman of the board is Göran Carlsson, who has a long history of working in the board of listed companies. The second largest owner, Athanase, increased their ownership from 7.90% to 15.66% in November 2017. Athanase is represented in the board by Stefan Charette, who has previously been the CEO of the listed investment companies Creades and Öresund.

The DCF valuation indicates an upside of 6.1% in a base case. A DCF valuation gives an enterprise value of 1 125 MSEK, which, adjusted for Actic’s net debt of 425 MSEK, indicates a target equity share price of 44.05 SEK.

Analysts: Melker Melin & David Raso