Original-Research: THE NAGA GROUP AG - from NuWays AG

Classification of NuWays AG to THE NAGA GROUP AG


ISIN: DE000A161NR7

Reason for the research: Update

Recommendation: Kaufen

from: 27.05.2024

Target price: EUR 1.20

Target price on sight of: 12 Monaten

Last rating change:

Analyst: Frederik Jarchow

EGM approved merger with CAPEX chg est. & PT

Topic: During the recently held extraordinary general meeting, NAGA

received the approval for the merger with CAPEX with a 99.81% majority. As

the pending regulatory change of control process is rather a formality, we

adjust our estimates, now fully reflecting the merger with CAPEX. For FY24

we now expect:

Sales of EUR 77.8m, resulting from 15.9m transactions (eNuW) and an avg.

revenue per trade of EUR 4.9 (eNuw). Apart from the technical impact of the

merger, the stronger trading figures from peers that indicate an upswing of

customer activity in the market, paired with cross-selling potentials

between NAGA and CAPEX, are driving sales. The number of active customers

(eNuW: 46k) and trading volumes (eNuW: EUR 340bn; EUR 21.4k per trade) should

develop accordingly.

EBITDA is expected to come in at a solid EUR 10.1m, thanks to the strong

topline development as well as anticipated synergy effects. While

management expects an OPEX reduction of some EUR 10m, we are a bit more

conservative, anticipating only EUR 8.5m (eNuW: marketing spending: EUR 4m,

personnel expenses: EUR 2.5m, other operating expenses EUR 2m). EBT is seen at

negative EUR 0.7m.

Despite the fact, that the merger looks like an unfavourable deal for

existing shareholder due to its dilutive nature(existing shareholders

possess only 25% of all outstanding shares post merger and the outstanding

convertible bond as well as management's long-term incentive scheme could

dilute them further), the growth potential of the joint Group is huge: In

2026, management plans to generate USD 250m in sales with 40% EBITDA

margins. While we think this is a rather optimistic scenario, the past has

already shown that an incremental positive change in the sentiment could

have an enormous effect on the P&L of NAGA. The leverage of the joint Group

could even scale this effect. Still, in our base case scenario we

conservatively only anticipating EUR 98m in sales and an EBITDA EUR 20m (20%

EBITDA margin), leaving room for positive surprises.

In light of the revitalization of customer activity in the brokerage space,

paired with cross-selling and synergy effects arising from the merger, we

see significant growth potential again.

BUY with a new PT of EUR 1.20 (old: EUR 1.30), based on DCF.

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NuWays AG - Equity Research

Web: www.nuways-ag.com

Email: research@nuways-ag.com

LinkedIn: https://www.linkedin.com/company/nuwaysag

Adresse: Mittelweg 16-17, 20148 Hamburg, Germany


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