In this equity report, analyst Hannes Thorstensson takes a deep-dive into Hövding AB. Hövding is a Swedish developer and seller of an airbag constructed bicycle helmet. The helmet has been awarded the safest bicycle helmet in the world and provides up to eight times better protection than traditional helmets. Our analyst, Hannes Thorstensson, estimates future top-line growth of 39,8% (CAGR) between 2020 and 2024 and the company to become profitable in 2022. The company’s future cash flows, assuming a discount rate (WACC) of 10,4%, suggest a fair share price of 23,1 SEK corresponding to an upside of 18,5%.

Investment highlights:

  • The company has historically been successful in the Nordics with sales growth of 64,2% CAGR 2015-2019 and has recently expanded to Germany and the UK, expanding its TAM to 35,4 million cyclists from 5,2 million 
  • Tests comparing Hövding with traditional helmets show more than three times better shock absorption and up to eight times better protection against concussion 
  • Strong future cash flows generated by margin expansion, a tax-free operation until 2027 and an average cash conversion ratio of 94,2% paves the way towards a profitable business in 2022

To get the analyst’s full view, please see the report below: