Original-Research: Global Fashion Group S.A. (von NuWays AG): BUY

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Original-Research: Global Fashion Group S.A. - from NuWays AG

08.05.2025 / 09:00 CET/CEST
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Classification of NuWays AG to Global Fashion Group S.A.

     Company Name:                Global Fashion Group S.A.
     ISIN:                        LU2010095458

     Reason for the research:     Initiation
     Recommendation:              BUY
     from:                        08.05.2025
     Target price:                EUR 0.80
     Target price on sight of:    12 months
     Last rating change:
     Analyst:                     Henry Wendisch

Turnaround play in global fashion, Initiate GFG with BUY

Emerging markets are poised for growth in online fashion, driven by a young,
tech-savvy population that is growing at a rate faster than the global
average. With GDP growth expected to outpace that of developed economies, an
emerging middle class is gaining purchasing power, while online penetration,
though still relatively low, is rapidly increasing. These dynamic trends set
the stage for significant, midterm growth opportunities in the online
fashion sector.

Here, Global Fashion Group (GFG), a global fashion marketplace and retailer,
connects global and local partner brands to more than 800m consumers. In
doing so, GFG is the only pure online fashion-focussed platform of scale in
its respective markets, combining the advantages of a global scale with deep
local expertise and data-driven operations. It operates under its three well
recognized local brands: "Dafiti" in LATAM, "ZALORA" in SEA and "THE ICONIC"
in ANZ. The assortment reflects a combination of retail (61% of NMV) and the
asset-light and growing marketplace business (39% of NMV), which serves as a
flexible business model for partner brands and incurs no inventory risk and
higher margins for GFG.

Having been burdened by a lacklustre consumer sentiment over the past years,
a turnaround is soon to materialize. The comfortable gross margin of 45%
(FY'24) looks set to improve further thanks to an ongoing shift towards the
asset-light Marketplace business model. Additionally, GFG continues to face
underutilization of its fulfilment capacity (c. 57% in FY'24, eNuW).
However, based on an optimistic consumer sentiment outlook in GFG's key
regions, we anticipate growth to return as early as FY'26e. Thanks to
operating leverage (due to high fixed costs in fulfilment and G&A), the
adjusted EBITDA should improve significantly. As GFG's solid working capital
management (neg. EUR 56m NWC in FY'24) comes with a negative 70 days cash
conversion cycle, a return to growth should also lead to disproportionately
improving cash generation.

With EUR 156m of net cash (Y/E'24), the market currently values GFG with a
negative EV of EUR 95m. In light of a materialising turnaround and positive
cash generation visible on the horizon, we regard the stock as mispriced.
Hence, we recommend to BUY and initiate GFG with a PT of EUR 0.80, based on
DCF.

You can download the research here: http://www.more-ir.de/d/32510.pdf
For additional information visit our website:
https://www.nuways-ag.com/research-feed

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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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
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2132720 08.05.2025 CET/CEST

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