Original-Research: THE NAGA GROUP AG (von NuWays AG): Kaufen

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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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Contact for questions
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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