Original-Research
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ZEAL Network (von NuWays AG): Kaufen
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0 Kommentare- ZEAL Network: Wachstumskapitel eröffnet
- Umsatzwachstum von 25% erwartet
- Kaufempfehlung mit Kursziel 51 Euro
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Original-Research: ZEAL Network - from NuWays AG
Classification of NuWays AG to ZEAL Network
Company Name: ZEAL Network
ISIN: DE000ZEAL241
Reason for the research: Update
Recommendation: Kaufen
Target price: 51
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Henry Wendisch
New chapter of growth; added to NuWays AlphaList
ZEAL has openend a new chapter of growth stemming from rising monetization in the Lottery business and also the Games business from FY'24e onwards. In sum, we expect sales growth of 25% for this
year and a sales CAGR 23-26e of 17%, here's why:
Elevated lottery sales growth: ZEAL has relied on a more or less constant lottery billings margin (sales in % of billings) over the last years (12-13%), meaning that lottery sales grew more or less
proportionate to lottery billings. Billings continue to grow with c. 8-12% p.a. thanks to ZEAL's persistent user intake driven by the online transformation. Now, for the first time, sales look set
to outgrow billings (see p. 2 for details), as ZEAL takes steps to significantly increase the billings margin, which should lead to gross margin of more than 15% (+2pp) starting in H2'24e. In
general, we regard ZEAL's sales as recurring, as average lottery expense per user (APPU) grows slightly every year (+ 4% yoy in '23), while ZEAL also benefits from virtually no churn (below
5%).
How does ZEAL improve the lottery billings margin? First of all, by introducing a new social lottery, next to freiheit+, where ZEAL generates higher margins than in DLTB lottery brokerage (mix
effect). Secondly, ZEAL aims to steer customer behaviour to higher margin lottery products (e.g., lottery clubs & play-with-friends) by actively placing and promoting the products on the
platforms (mix effect). However, we regard the third measure as the most important one, as it can happen overnight: selective service fees (planned for H2'24e). As the lottery customers are
extremely loyal and hence price insensitive, it allows for ZEAL to charge some players selectively higher services fees than other players (price effect).
Operating leverage in action: While the billings margin improvements requires additional marketing expenses and initial set-up costs for the new social lottery in the short-term, should lead to a
flat EBITDA margin of 28% for FY'24e. However, in FY'25e and beyond, we expect the operating leverage to kick in an lift EBITDA margins to substantialy by 5pp yoy to 33%. This also includes the
complete Games portfolio rollout, which is expected to be finished by end of H1'24e, hence also showing its full effect on profitability in FY'25e.
During FY'23, Games contributed with EUR 1.3m EBITDA (25% margin), but after being completely rolled out, we expect incremental Games EBITDA margins of 85%, showing the strong earnings potential
stemming from Games.
Strong Q1'24 ahead: the first quarter of the year laid out a perfect start with 4x peaking jackpots (vs. only 3x during all of FY'23e), which should lead to c. 300-400k newly registered users
(i.e., +75-100k of additional MAU, assuming 25% conversion rate) for ZEAL in Q1'24 alone vs. 600k during all of FY'23. Additionally, Q1 Lottery bilings (currently +14% above average) and sales look
set to come in strong as the high jackpots massively elevate user activity, as the irregular players then also play the lottery and come on top of the regular players.
Unique mix of value and growth at an attractive valuation: In a no-user-growth and constant billings-margin-scenario and assuming only a 10y customer longevity, the CLTV of ZEAL's current Lottery
user base (eNuW: EUR 726m) reflects the current market capitalization of EUR 745m. However, our CLTV estimate grows by 25% to EUR 910m (see below) if the Lottery billings margin increases to 15%,
still factoring in no MAU growth.
This, coupled with the strong outlook ahead, leads us to add ZEAL to our NuWays' AlphaList and confirm our BUY recommendation with unchanged PT of EUR 51.00, based on DCF.
You can download the research here:
http://www.more-ir.de/d/29283.pdf
For additional information visit our website
www.nuways-ag.com/research.
Lesen Sie auch
Contact for questions
Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden: www.nuways-ag.com/research. 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
++++++++++
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. ++++++++++
transmitted by 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.
°
Die ZEAL Network Aktie wird zum Zeitpunkt der Veröffentlichung der Nachricht mit einem Minus von -0,29 % und einem Kurs von 34,20EUR auf Tradegate (02. April 2024, 08:21 Uhr) gehandelt.
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