^Original-Research: ZEAL Network SE - from NuWays AGClassification of NuWays AG to ZEAL Network SECompany Name: ZEAL Network SEISIN: DE000ZEAL241Reason for the research: UpdateRecommendation: Kaufenfrom: 10.04.2024Target price: EUR 51.00Target price on sight of: 12 MonatenLast rating change: Analyst: Henry WendischGames business - a second EBITDA accelerator? Following recent additions to the Games portfolio, we take this opportunityfor another deep dive into the new Games business, highlighting thefavourable business metrics and showing its enormous potential for ZEAL,once scaled. Here's our take: User metrics exceed those of lottery by far: thanks to the repetitivecharacter of Games, the customer journey gives ZEAL much more monetizationopportunities, as users can play 24/7 and for mutliple times a day vs. 1-3days Lottery players need to wait for the next jackpot draw. This isreflected at much higher ARPU (average revenues per user) of currently EUR25.82 at Games vs. only EUR 7.68 at Lottery. Change in Games KPIs ahead: While the business is still in roll-out, ZEALis about to add higher billings margin Games to the now 59 games countingportfolio. Hence, we expect changing KPIs as billings margins directlyinfluence the pay-in to billings ratio, the pay-in margin and ultimatelyARPU. Finding the sweet spot: maximizing the ARPU at Games should be one ofZEAL's main target. As it controls the average billings margin (i.e., bychanging the Games product mix), it can experiment to some extent, ashigher billings margins reduce RTP and thus user activity. By finding theoptimal billings margin, the pay-in margin and thus ARPU can be maximized. Conservative estimates already show promising bottom line effects:According to our current estimates, the new business should account for 12%of group EBITDA in '24 (EUR 5m) and for 17% of group EBITDA by FY'26e (EUR11m), based on conservative user growth assumptions (40k by FY'26 vs. 17kin FY'23) and only slight EBITDA margin improvements (50% in FY'26e vs. 42%in FY'23). Huge potential, once scaled: To asses the impact of the Games business oncemeaningful user numbers are reached, our sensitiviy analysis shows theenormous potential stemming from Games: Asuming 200k MAUs, an ARPU of EUR 30and a 50% EBITDA margin, the annually recurring EBITDA contribution fromGames alone could amount to EUR 36m (vs. EUR 33m on group level in '23). In sum, the Games business has the potential to become a significant secondpillar of growth and profitability for ZEAL. Hence, we confirm ZEAL'sposition in the NuWays' AlphaList and reiterate our BUY recommendation withan unchangend PT of EUR 51.00, based on DCF.You can download the research here:http://www.more-ir.de/d/29371.pdfFor additional information visit our websitewww.nuways-ag.com/research.Contact for questionsNuWays AG - Equity ResearchWeb: www.nuways-ag.comEmail: research@nuways-ag.comLinkedIn: https://www.linkedin.com/company/nuwaysagAdresse: 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 adviceor an invitation to conclude certain stock exchange transactions.°