Original-Research: ZEAL Network SE - from NuWays AG
20.12.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS Group.
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Classification of NuWays AG to ZEAL Network SE
Company Name: ZEAL Network SE
ISIN: DE000ZEAL241
Reason for the research: Update
Recommendation: Buy
from: 20.12.2024
Target price: EUR 60.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch
Early X-Mas present for shareholders, guidance raised again
FY'24 sales should arrive between EUR 175-185m (eNuW old: EUR 170m), whereas EBITDA should range between EUR 55 and EUR 59m (eNuW old: EUR 45m). This corresponds to an EUR 17m increase over the old sales guidance and a EUR 13m increase over the old EBITDA guidance, implying a strong incremental EBITDA margin of 75%. At mid-point of the new guidance, this implies Q4 sales growth of 100% and an EBITDA expansion by 130% yoy, highlighting the strong Q4 performance.
The record and historically unprecedented 7x peak and consecutively rolled-over jackpots (vs. 5x in 2023 and 6x per 9M'24), which put Germany in a never seen before lottery fever, explains our EUR 11m top-line underestimation. Consequently, we raise our Q4 estimates for MAU (eNuW: 1.5m old vs. 1.6m MAU new), average pay-in per user APPU (eNuW: EUR 51.40 old vs. EUR 56.60 new) and lottery billings margin (eNuW: 16.3% old vs. 17.3% new) above our previous assumption. As we model with statistically average jackpots, these KPIs should normalize again going forward. Regarding EBITDA, by adding the EUR 11m of underestimated sales and keeping our Q4 OPEX estimate mainly unchangend, we arrive at our new FY'24e EBITDA estimate of EUR 57m (+ 75% yoy).
Additional to that, a key highlight should be the acquisiton of new customers during the peak jackpot time. Previously, we anticipated a user intake of 400k in Q4, which now seems too low. Therefore, we now expect 590k users to have registered during Q4, which would imply a staggering 1.4m new registrations (+134% yoy) for FY'24e. This bodes extremely well for the future, as the larger customer base (with its extremely loyal and steady spending behaviour) expands the revenue base even more. On average, 1 of 4 registrations becomes a monthly active user (MAU). Given the overall elevated online marketing activity during black and cyber week, we expect a slightly higher, but a still very attractive Q4 CPL of EUR 40 (FY'24e average: EUR 37, -19% yoy). To put this into perspective, we calculate a marketing ROI of 34% (net income effect per user divided by effective customer acquisition cost) for FY'24e (vs.
20% in FY'23), highlighting the improving and value accretive marketing operations. - see p.2 for details
Against this backdrop, we maintain our positive view on the stock and reiterate our BUY recommendation. Furthermore, we leave our FY'25e and beyond estimates unchanged, explaining our unchanged PT of EUR 60.00, based on DCF.
You can download the research here: http://www.more-ir.de/d/31579.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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