Original-Research: q.beyond AG - from NuWays AG
29.10.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this research. The result of this research does not constitute investment advice or an invitation to conclude certain stock exchange transactions.
Classification of NuWays AG to q.beyond AG
Company Name: q.beyond AG
ISIN: DE0005137004
Reason for the research: Update
Recommendation: Buy
from: 29.10.2024
Target price: EUR 1.10
Target price on sight of: 12 months
Last rating change:
Analyst: Philipp Sennewald
Q3 preview: Stable development & improved consulting; chg.
q.beyond will release its Q3 report on November 11th. We expect a further positive development, as well as an improvement in the consulting segment. Here is what to expect:
Q3 sales are seen to increase by 4.1% yoy to EUR 47.3m (eNuW). The main driver should again be the managed service segment, where we expect sales to grow by 6% yoy to EUR 32.8m with a stable segment gross margin of 21% (eNuW). Moreover, we expect a sequential improvement in the consulting segment with sales being flat yoy at EUR 14.5m (eNuW). While the company is still trimming the segment on efficiency, thus reducing the amount of low-margin projects, we estimate an improved utilization, allowing for a stable segment gross margin of 6.5% (eNuW). Keep in mind, that management targets to substantially increase the consulting margin going forward, driven by an increased utilization as well as a higher near- and off-shoring ratio (target: 20%; eNuW: 14% at Q3 '24e). Overall, we expect the gross margin to be stable at 16.6% (eNuW).
Against this backdrop, Q3 EBITDA looks set to come in at EUR 2.2m (eNuW; Q3 '23: EUR 0.1m), implying a margin of 4.3%. Next to the already imposed measures regarding near- and off-shoring the strong yoy improvement is driven by the continuous implementation of the One q.beyond strategy, leading to cost reduction in sales & marketing as well as G&A.
On this basis, we expect management to confirm the FY guidance of EUR 192-198m sales (eNuW: EUR 193m), EUR 8-10m EBITDA (eNuW: EUR 9.3m) and positive FCF (eNuW: EUR 5.6m). While our EBTIDA estimate might look bullish at first sight, mind you that QBY's strongest quarter is still ahead with Q4 and further efficiency gains are expected to come.
All in all, the Q3 figures are seen to fully support the equity story in accordance with QBY's Strategy 2025, where management is targeting an EBITDA margin of 7-8% (eNuW: 7.1%) as well as sustained positive net income. Valuation remains undemanding with shares trading at only 6.6x EV/EBITDA '24e (3.5x '25e). We hence reiterate BUY with an unchanged EUR 1.10 PT based on DCF.
You can download the research here: http://www.more-ir.de/d/31135.pdf For additional information visit our website: 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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