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

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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: Buy
from: 11.07.2024
Target price: EUR 1.20
Last rating change: 
Analyst: Frederik Jarchow

FY23 out // Softer topline but strong EBITDA; chg.
Topic: NAGA recently reported FY23 figures that came with a slight miss on
the topline and a positive
surprise on the bottom line. A D&A one-off makes EBIT look ugly. In detail:
Sales of EUR 39.7m (NAGA standalone), are below prelims of EUR 45.5m resulting
from the lower than anticipated avg. revenue per trade of only EUR 4.3 (vs.
eNuW: EUR 4.9) and 9.2m transactions (both NAGA standalone).
EBITDA came in higher than expected at EUR 8.4m (vs. prelims: EUR 7.0m), thanks
to significantly lower

marketing expenses (EUR 4.6m vs. eNuW: EUR 5.9m), personnel expenses (EUR 6.5m vs

eNuW: EUR 7.9m) andR&D costs (EUR 3.4m vs. eNuW: EUR 5.2m) overcompensating for
the weaker topline and higher other operating expenses (EUR 9.8m vs. eNuW: EUR
5.9m). EBT of EUR -61m (vs. eNuW: EUR -2.4m), is mainly burdenedone-off
amortization to the tune of EUR 57m as a result of the valuation related to
the merger with capex.
Looking into 2024, the outlook for the joint Group shines bright: Trading
activity of peers that seem to revitalize and cross-selling potentials
between NAGA and capex should fuel the number of transactions to15.9m and
hence sales to EUR 71.8m, assuming an avg. revenue per trade of EUR 5.0.
Synergy effects and
ongoing disciplined spending are expected to additionally drive EBITDA to EUR
11.5m. As we do not expect further meaningful amortizations in FY24, EBIT
should come in at EUR 1.6m (eNuW).
Going forward, management has ambitious growth plans expecting to generate
USD 250m sales with a 40% EBITDA margin until FY26. While we think this is
a rather optimistic scenario, the past has already shown that an
incremental positive change of the public markets' 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 90m in sales and EBITDA of EUR 19m (22% EBITDA margin),
leaving room for positive surprises.
Overall, the revitalization of customer activity in the brokerage space,
paired with cross-selling and synergy effects arising from the merger
should bode well for NAGA. Details of the growth plan should be unveiled
during today´s CDM starting at 4pm CEST.
BUY with an unchanged PT of EUR 1.20 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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The result of this research does not constitute investment advice
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