Original-Research: THE NAGA GROUP AG - from NuWays AG
Classification of NuWays AG to THE NAGA GROUP AG
Company Name: 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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http://www.more-ir.de/d/29889.pdf
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www.nuways-ag.com/research.
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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