Original-Research: ZEAL Network SE - from NuWays AG Classification of NuWays AG to ZEAL Network SE Company Name: ZEAL Network SE ISIN: DE000ZEAL241 Reason for the research: Update Recommendation: Kaufen from: 24.04.2024 Target price: EUR 51.00 Target price on sight of: 12 Monaten Last rating change: Analyst: Henry Wendisch Q1 preview: EuroJackpot to deliver remarkable top-line Topic: Q1 results are due May 8th 2024 and we expect ZEAL to show a remarkable top-line thanks to a superb jackpot environment, leading to elevated user activity.
24.04.2024 - 09:02:37Original-Research: ZEAL Network SE (von NuWays AG): Kaufen
Original-Research: ZEAL Network SE - from NuWays AG Classification of NuWays AG to ZEAL Network SE Company Name: ZEAL Network SE ISIN: DE000ZEAL241 Reason for the research: Update Recommendation: Kaufen from: 24.04.2024 Target price: EUR 51.00 Target price on sight of: 12 Monaten Last rating change: Analyst: Henry Wendisch Q1 preview: EuroJackpot to deliver remarkable top-line Topic: Q1 results are due May 8th 2024 and we expect ZEAL to show a remarkable top-line thanks to a superb jackpot environment, leading to elevated user activity. In detail: Thanks to the EuroJackpot peaking 4x at the start of Q1, the nationwide stakes 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 than Q1'23 (see p. 2). For ZEAL, this should translate into increased user activity with 1.26m MAUs (+15% yoy) and an ABPU of EUR 62.00 (+2% yoy), thus elevating Lottery billings to EUR 234m (+17% yoy), according to our estimates. 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 mix usually 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 than expected regulatory approvals of each new game. Also, assuming a constant pay-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 1.9m respectively. In sum, Q1 sales should arrive at EUR 34.8m (+30% yoy), showing a remarkable top-line dynamic. On the other hand, we expect a significant marketing push of EUR 14m (vs. EUR 7m in Q1'23 with no peak jackpot) to burden profitability with an EBITDA of EUR 5.1m (15% margin; -20pp yoy). In return, this should have led to a strongly increased user base, as ZEAL usually gains c. 100k new registrations per peak jackpot. We hence expect c. 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 total Lottery user base; CLTV of EUR 726m as of Y/E'23. This looks set to more than compensate the EUR 14m expected marketing expense, showing the value-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 marketing drives user intake and market share gains. Reiterate BUY with unchanged PT of EUR 51.00, based on DCF. You can download the research here: http://www.more-ir.de/d/29509.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 ++++++++++ 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.
