Intellego Technologies. A 10-Bagger in the Making?
Intellego’s Roadmap to Massive Returns
Investment Report
STO: INT
Market capitalization: 632.46 million SEK
Stock price: 24 SEK
P/E ratio: 7.92
Div yield: N/A
Key points:
Pioneering Position in UV Disinfection: Intellego leads in a niche and growing industry, offering reliable, single-use UV dosimeters with minimal competition, especially in Europe.
Strategic Vertical Integration: Through subsidiaries Yuvio and Daro, Intellego combines disinfection machines with consumable dosimeters, strengthening its recurring revenue model and simplifying sales.
Strong Growth Potential: With expanding international presence, particularly in North America and Asia, Intellego is well-positioned to scale in a high-demand market as industry regulations and quality standards rise.
Index
Introduction
Product lines
Competitive advantages
Acquisitions
Growth opportunities
CEO and incentive program
Valuation
Conclusion
1. Introduction:
Intellego has developed a unique and innovative technology centered around its patented photochromic ink, which changes color when exposed to various frequencies of UV light—UVA, UVB, or UVC. This technology can be printed on different substrates, including dosimeter cards and adhesive labels, providing users with a simple, real-time visual indication of accumulated UV radiation. The core of Intellego’s solution is not only its ability to measure UV exposure, but also its potential to help users control and optimize the use of UV light. Whether for disinfection, UV curing, or other applications like plant growth, Intellego’s platform allows for easy monitoring of energy transfer, offering an efficient way to ensure that sufficient radiation has been applied. The effectiveness of this technology has been confirmed through rigorous testing by the Research Institutes of Sweden (RISE).
Intellego’s dosimeters, which are central to their product line, are used across various industries. In healthcare, UVC dosimeters ensure that surfaces are properly disinfected by confirming that they have been exposed to enough UV radiation to neutralize harmful bacteria, viruses, and spores. These tools provide an easy and reliable solution to maintain high hygiene standards, especially in hospitals and other medical facilities. Beyond healthcare, Intellego’s UV indicators are also aimed at consumers, helping individuals monitor their sun exposure and adjust their sun protection routines accordingly. The company's ongoing commercialization process for these UV indicators represents a significant step toward expanding its reach in the consumer market.
On the industrial side, Intellego’s technology also plays a role in processes such as UV curing, where precise energy application is critical for achieving desired results in manufacturing, coating, or adhesive applications. The company’s ability to develop and expand its photochromic ink technology for different wavelengths opens up even more potential use cases, making their solutions adaptable to new markets as they continue to evolve.
Financially, Intellego presents an attractive opportunity. With a current market capitalization of around 650 million SEK, the company expects to close 2024 with over 300 million SEK in revenue and 110 million SEK in EBIT. This means they are trading at less than seven times EBIT, offering a compelling valuation given their strong growth trajectory. Intellego is well-positioned for the future, with existing contracts and opportunities that could potentially triple their revenue in the coming years. As the company continues to expand its reach across healthcare, consumer, and industrial sectors, its innovative technology and growth potential make it a business worth watching closely.
2. Product lines:
Intellego has developed an extensive range of innovative products that leverage its patented UV technology, now further enhanced by strategic acquisitions. The core of its product line is the use of photochromic ink in UV dosimeters, which change color in real time to indicate the accumulated exposure to UV radiation. These dosimeters are vital across multiple sectors, providing essential verification in processes where precise UV energy application is critical. Intellego’s UV dosimeters are used in healthcare settings for surface disinfection, as well as in industrial applications like UV curing, which is commonly required in manufacturing, packaging, and medical technology.
Additionally, Intellego has ventured into the direct-to-consumer (DTC) market with its Smartsun UV wristbands and stickers. These products offer consumers an easy and effective way to monitor their sun exposure, helping them determine when to reapply sunscreen or seek shade. This segment taps into the growing trends of skincare and self-care, both of which are gaining momentum as awareness about the dangers of excessive sun exposure increases. While Intellego has not yet disclosed specific revenue figures for this segment, it represents a promising avenue for growth if marketed effectively.
Intellego's recent acquisitions of Yuvio and Daro have significantly broadened its offering and market presence. Yuvio focuses on providing UVC disinfection lamps, which are primarily used in hospital settings and other high-demand hygiene environments. Daro, on the other hand, specializes in water disinfection solutions. While these products carry lower margins compared to Intellego’s core offerings, they are high-ticket items that appeal to sales teams and distributors, making it easier to push these products in the market. More importantly, these acquisitions support the sales of Intellego’s UV dosimeters, which are essential for the correct use of Yuvio’s and Daro’s equipment. The dosimeters come with an impressive margin of 95%, creating a complementary relationship between the equipment and dosimeter sales, where both are needed for effective disinfection processes.
In healthcare, Intellego’s dosimeters are used to ensure that surfaces in hospitals, gyms, cinemas, and schools have been exposed to sufficient UVC radiation for proper disinfection. When used in conjunction with Yuvio’s UVC disinfection lamps, the dosimeters allow users to confirm that the right amount of UV energy has been applied, thus maintaining high hygiene standards. This integration of products not only enhances disinfection processes but also strengthens Intellego’s market position in the healthcare sector.
On the industrial side, Intellego's UV Assure products are used in any process where UV curing is critical, such as in the electronics industry, packaging, and the production of medical devices. By ensuring accurate UV energy application, these products help manufacturers maintain quality control and efficiency in their operations. Moreover, Intellego has also developed software solutions that integrate with its UV technology, further improving the ease of use and accuracy of its products in both healthcare and industrial settings.
Intellego’s potential market is vast, spanning multiple industries. UV irradiation is used in healthcare disinfection, water and food sterilization, UV curing, crop cultivation, and even consumer sun protection. Today, Intellego operates in key regions such as North America, where UVC disinfection is widespread, and Asia, where consumer use of UVC products is common. While the European market is less developed in terms of UVC disinfection, it is growing steadily. The global market for UV disinfection is significant, with around 75-100 companies conducting approximately 16 million disinfection runs per year. This equates to roughly 1.6 billion runs annually, and if Intellego’s color-changing dosimeters were integrated into each process, the market potential would be substantial—estimated at up to 16 billion SEK annually. While Intellego’s current revenue is far from this figure, the opportunity for growth is immense as the company works to integrate its dosimeters as a standard tool in these disinfection processes.
In summary, Intellego’s product lines span across healthcare disinfection, industrial UV curing, and consumer sun protection. With its high-margin dosimeters and newly acquired equipment from Yuvio and Daro, Intellego is well-positioned to capitalize on growing demand across multiple markets. The combination of high-ticket equipment sales and the complementary need for dosimeters offers a unique business model that drives both revenue growth and market expansion in healthcare, industrial, and consumer sectors.
3. Competitive advantages:
While Intellego’s patented UV dosimeter technology is a valuable asset, it is not the company’s primary competitive advantage. What truly sets Intellego apart is its business model and the strategic synergy created by its acquisitions of Yuvio and Daro. These subsidiaries, which provide UVC disinfection lamps and water disinfection solutions, respectively, have enhanced Intellego’s competitive position by creating a recurring revenue stream tied to their core products.
Intellego’s UV dosimeters, though a small and inexpensive component, are critical to the effective operation of the equipment provided by Yuvio and Daro. This means that once a customer purchases or leases equipment from these subsidiaries, they will continue to need Intellego’s high-margin dosimeters to ensure the correct application of UV energy. This creates a dependable source of recurring revenue, as the dosimeters are consumables that need to be regularly replenished. The fact that 70% of Intellego’s revenue currently comes from existing customers speaks to the company’s ability to retain clients and build long-term relationships.
Moreover, Intellego’s strategy of offering both equipment and consumables gives it a dual advantage. By bundling their dosimeters with Yuvio’s and Daro’s disinfection equipment, they make it easier for sales teams to promote the entire product line, ensuring that customers purchase both hardware and the necessary monitoring tools in one package. As Intellego continues to expand its market share and integrates its products more deeply into client workflows, switching to another provider becomes less appealing. The cost savings of switching to a cheaper dosimeter, which may cost a few cents less, are negligible compared to the operational risks or the potential liability issues that might arise if disinfection processes are compromised.
This customer reliance on Intellego’s products offers the company a strong pricing power advantage. Over time, as Intellego’s products become more ingrained in healthcare and industrial processes, they will have the ability to raise prices without significant pushback. Given that UV dosimeters represent a tiny fraction of a hospital’s or industrial facility’s overall budget, Intellego can adjust pricing upward without customers being incentivized to switch providers.
In addition, Intellego’s ability to adapt its UV technology to a wide range of applications—from healthcare disinfection to industrial UV curing and consumer sun protection—further solidifies its market positioning. The company’s technology isn’t just versatile; it’s crucial in industries where precision and reliability are key.