Original-Research: Cantourage Group SE - from NuWays AG
14.04.2025 / 09:00 CET/CEST
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Classification of NuWays AG to Cantourage Group SE
Company Name: Cantourage Group SE
ISIN: DE000A3DSV01
Reason for the research: Update
Recommendation: BUY
from: 14.04.2025
Target price: EUR 13.00
Target price on sight of: 12 months
Last rating change:
Analyst: Christian Sandherr
Growth beating expectations, again; PT up
Q1 sales surged to EUR 25.6m, more than quadrupling compared to the previous year's figure of EUR 6.1m and clearly exceeding our expectations of EUR 22m. Sequentially, sales grew by 21% qoq, marking a new record high. In March alone, sales stood at EUR 10.7m, beating the previous best month, December with EUR 8.5m. This increase should largely be the result of successful de-bottlenecking efforts on Cantourage's side during the past few months. With strongly growing demand, the company has been working on raising its processing capacities at it German site as well as through partnerships (e.g. with a Portuguese contract manufacturer). Securing sufficient supply (incl. processing capacities) could allow Cantourage to reach the EUR 100m sales level already this year.
Scale to kick in. While Cantourage only announced sales figures, we would also expect a further improving margins as scale effects begin to kick in. We would expect an EBITDA margin of around 10% to be in the cards (for Q1) despite ongoing investments into growth.
No FY25 guidance issued yet. So far, management has not issued a guidance for the current year. We would expect a first FY25 outlook with the publication of final FY24 figures at the end of April. In light of the better than expected start into the year, unbroken demand and further de-bottlenecking efforts, we have increased our sales growth expectations from 67% to 81%, implying EUR 93m sales.
Easing political risks. Last week, Germany's new government published the coalition agreement, which states an open-ended evaluation of the cannabis legalization law for autumn 2025. In our view, this is a clear positive and a return to the pre-April 1st, 2024 legal framework or a reclassification of cannabis as a narcotic now appears increasingly unlikely, not only due to the high degree of complexity as well as a wave of lawsuits but also a seemingly low importance to the new law-makers (postponed discussions and only one sentence across a 146 page document).
Share price de-coupled from fundamentals. While operations have been strongly improving quarter over quarter for roughly a year, the valuation has decreased to some EUR 56m. Despite expected FY25e sale growth of 81% yoy, Cantourage should be able to reach a 10% EBITDA margin, implying an attractive EV/EBITDA multiple of 5.2x.
We confirm our BUY rating with a new EUR 13 PT (EUR 12.50) based on DCF.
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2116712 14.04.2025 CET/CEST
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