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Original-Research: ZEAL Network SE - from NuWays AG

01.10.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of 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.

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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: Kaufen
from: 01.10.2024
Target price: EUR 54.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch

Solid Q3 ahead despite a normalized lottery environment

Following two very strong lottery quarters, overall demand for ZEAL's most
important products from lottery brokerage have normalized in Q3, as no peak
jackpots have been reached. For ZEAL, we nevertheless expect solid Q3
results. In detail:

Lotto 6aus49 continues its negative streak: Q3 finished off as the fourth
quarter in a row without a peak jackpot. Furthermore, the largest jackpot
came in at only EUR 30m (out of max. EUR 50m), showing that the jackpot
situation was well below maximum. Consequently, demand for this product
continued to be weak with nationwide stakes of only EUR 850m in Q3, implying a
15% yoy decline and standing 8% below its LTM average.

EuroJackpot normalized: Without a peak EuroJackpot and only one run-up to EUR
96m (out of max EUR 120m), the strong demand from Q1 and Q2 could not be
sustained into Q3. Hence, nationwide stakes for the EuroJackpot came in at EUR
1.06bn, which is nevertheless up 9% yoy, but sequentially down 17% qoq and
thus only 2% below its LTM average.

Combined, nationwide lottery stakes stood at EUR 1.91bn in the third quarter,
which is down 3% yoy, down 10% qoq and 5% below its LTM average, implying a
constant user activity yoy, but a lower one qoq. - see p.2 for details

Nevertheless solid Q3 results ahead: At ZEAL, billings should grow 7% yoy
(eNuW), driven by (1) strong H1 user intake offsetting lower Q3 user
activity, and (2) stable average billing per user of EUR 61 (eNuW). More
importantly, measures to raise the billings margin to 'above 15%' (eNuW: 15%
vs. 13% LTM average) should boost lottery sales by 27% yoy in Q3 (eNuW; c.
90% of group sales). With marketing expenses expected to be at EUR 11m, group
EBITDA is projected up 15% at EUR 11m in Q3 (eNuW). Moreover, first tangible
results of the newly launched lottery product 'Traumhausverlosung' are
expected with the Q3 release, giving more visibility into the product's
potential.

Against this backdrop, we reiterate our BUY recommendation with unchanged PT
of EUR 54.00, as ZEAL continues the current chapter of elevated growth and
market share gains.

You can download the research here: http://www.more-ir.de/d/30967.pdf
For additional information visit our website: www.nuways-ag.com/research

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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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.
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1999063 01.10.2024 CET/CEST

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