^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: 24.04.2024Target price: EUR 51.00Target price on sight of: 12 MonatenLast rating change: Analyst: Henry WendischQ1 preview: EuroJackpot to deliver remarkable top-line Topic: Q1 results are due May 8th 2024 and we expect ZEAL to show aremarkable top-line thanks to a superb jackpot environment, leading toelevated user activity. In detail: Thanks to the EuroJackpot peaking 4x at the start of Q1, the nationwidestakes amounted to EUR 2.07bn in Q1 (EuroJackot and Lotto 6aus49 together),which are 16% above the quarterly average of EUR 1.79bn and 12% higher thanQ1'23 (see p. 2). For ZEAL, this should translate into increased useractivity with 1.26m MAUs (+15% yoy) and an ABPU of EUR 62.00 (+2% yoy), thuselevating Lottery billings to EUR 234m (+17% yoy), according to ourestimates. Lottery sales are seen at EUR 31m (+24% yoy) thanks to the elevated billings,but also driven by our estimate of an improving billings margin of 13.2%(eNuW; +0.8pp yoy), as during high jackpot environments, ZEAL's product mixusually shifts towards higher margin products like lottery clubs. For Games, we conservatively expect a slight pick-up in MAUs to 20k (Q4'24:18k), as the roll-out should have remained slightly burdened by later thanexpected regulatory approvals of each new game. Also, assuming a constantpay-in to billings ratio of 4.9x and a constant billings-margin of 7.5%,billings from Games are hence expected at EUR 25m and sales at EUR 1.9mrespectively. In sum, Q1 sales should arrive at EUR 34.8m (+30% yoy), showing a remarkabletop-line dynamic. On the other hand, we expect a significant marketing pushof EUR 14m (vs. EUR 7m in Q1'23 with no peak jackpot) to burden profitabilitywith an EBITDA of EUR 5.1m (15% margin; -20pp yoy). In return, this should have led to a strongly increased user base, as ZEALusually gains c. 100k new registrations per peak jackpot. We hence expectc. 300-400k new registrations and c. 75-100k new MAUs (25% conversion rate)for the Lottery business, adding some EUR 47-63m in CLTVs to ZEAL's totalLottery user base; CLTV of EUR 726m as of Y/E'23. This looks set to more thancompensate the EUR 14m expected marketing expense, showing thevalue-accretive nature of ZEAL's customer acquisition strategy. Against this backdrop, we expect ZEAL to capitalize strongly from Q1's jackpot environment as the company's value accretive performance marketingdrives user intake and market share gains. Reiterate BUY with unchanged PTof EUR 51.00, based on DCF.You can download the research here:http://www.more-ir.de/d/29509.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.°