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Original-Research: ZEAL Network SE - from NuWays AG

20.12.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group.
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: Buy
from: 20.12.2024
Target price: EUR 60.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch

Early X-Mas present for shareholders, guidance raised again

FY'24 sales should arrive between EUR 175-185m (eNuW old: EUR 170m), whereas
EBITDA should range between EUR 55 and EUR 59m (eNuW old: EUR 45m). This
corresponds to an EUR 17m increase over the old sales guidance and a EUR 13m
increase over the old EBITDA guidance, implying a strong incremental EBITDA
margin of 75%. At mid-point of the new guidance, this implies Q4 sales
growth of 100% and an EBITDA expansion by 130% yoy, highlighting the strong
Q4 performance.

The record and historically unprecedented 7x peak and consecutively
rolled-over jackpots (vs. 5x in 2023 and 6x per 9M'24), which put Germany in
a never seen before lottery fever, explains our EUR 11m top-line
underestimation. Consequently, we raise our Q4 estimates for MAU (eNuW: 1.5m
old vs. 1.6m MAU new), average pay-in per user APPU (eNuW: EUR 51.40 old vs. EUR
56.60 new) and lottery billings margin (eNuW: 16.3% old vs. 17.3% new) above
our previous assumption. As we model with statistically average jackpots,
these KPIs should normalize again going forward. Regarding EBITDA, by adding
the EUR 11m of underestimated sales and keeping our Q4 OPEX estimate mainly
unchangend, we arrive at our new FY'24e EBITDA estimate of EUR 57m (+ 75%
yoy).

Additional to that, a key highlight should be the acquisiton of new
customers during the peak jackpot time. Previously, we anticipated a user
intake of 400k in Q4, which now seems too low. Therefore, we now expect 590k
users to have registered during Q4, which would imply a staggering 1.4m new
registrations (+134% yoy) for FY'24e. This bodes extremely well for the
future, as the larger customer base (with its extremely loyal and steady
spending behaviour) expands the revenue base even more. On average, 1 of 4
registrations becomes a monthly active user (MAU). Given the overall
elevated online marketing activity during black and cyber week, we expect a
slightly higher, but a still very attractive Q4 CPL of EUR 40 (FY'24e average:
EUR 37, -19% yoy). To put this into perspective, we calculate a marketing ROI
of 34% (net income effect per user divided by effective customer acquisition
cost) for FY'24e (vs.
20% in FY'23), highlighting the improving and value accretive marketing
operations. - see p.2 for details

Against this backdrop, we maintain our positive view on the stock and
reiterate our BUY recommendation. Furthermore, we leave our FY'25e and
beyond estimates unchanged, explaining our unchanged PT of EUR 60.00, based on
DCF.

You can download the research here: http://www.more-ir.de/d/31579.pdf
For additional information visit our website:
https://www.nuways-ag.com/research-feed

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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