Ori­gi­nal-Re­se­arch: The NAGA Group AG (von GBC AG): BUY

Ori­gi­nal-Re­se­arch: The NAGA Group AG – from GBC AG

Clas­si­fi­ca­ti­on of GBC AG to The NAGA Group AG

Com­pa­ny Name: The NAGA Group AG
ISIN: DE000A161NR7

Re­ason for the re­se­arch: GBC Re­se­arch FactS­heet
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: EUR 2.90
Tar­get pri­ce on sight of: 31.12.2024
Last ra­ting ch­an­ge:
Ana­lyst: Cos­min Fil­ker

Strong ear­nings growth achie­ved in the first nine months of 2023, lower sa­les growth but in­crease in pro­fi­ta­bi­li­ty ex­pec­ted, pri­ce tar­get: € 2.90, ra­ting: BUY

The NAGA Group AG re­cent­ly pu­blished its an­nu­al re­port for the 2022 fi­nan­cial year, which is the­r­e­fo­re late. The de­lay­ed pu­bli­ca­ti­on is main­ly due to a ch­an­ge of au­di­tor, the in­clu­si­on of new busi­ness ac­ti­vi­ties and new sub­si­dia­ries, but abo­ve all due to the cla­ri­fi­ca­ti­on of va­lua­ti­on is­sues re­gar­ding the cryp­to­cur­ren­cy port­fo­lio.

Alt­hough it is clear from the an­nu­al re­port that the com­pa­ny re­cor­ded fur­ther sa­les growth of 8.9% to € 57.60 mil­li­on (pre­vious year: € 52.88 mil­li­on) in the past 2022 fi­nan­cial year, EBIT of € ‑36.86 mil­li­on (pre­vious year: € ‑9.55 mil­li­on) was si­gni­fi­cant­ly be­low the pre­vious year’s le­vel. In par­ti­cu­lar, wri­te-downs on cryp­to­cur­ren­ci­es held long-term and in­ten­ded for tra­ding to­tal­ling € 18.57 mil­li­on and a bad debt pro­vi­si­on of € 1.45 mil­li­on led to the si­gni­fi­cant de­cli­ne in ear­nings, as ex­pec­ted. The wri­te-downs on cryp­to­cur­ren­ci­es are re­la­ted to the sharp fall in the pri­ce of NAGA Coin (NGC). Even ad­jus­ted for the­se spe­cial ef­fects, NAGA would have re­por­ted a ne­ga­ti­ve EBIT of € ‑16.84 mil­li­on. This re­flects the stra­tegy of strong cus­to­mer and sa­les growth pur­sued un­til the 2022 fi­nan­cial year, which was ac­com­pa­nied, for ex­am­p­le, by un­ch­an­ged high mar­ke­ting ex­pen­ses of € 28.35 mil­li­on (pre­vious year: € 30.97 mil­li­on). In or­der to reach the ope­ra­ting break-even point, the­se high ex­pen­ses must ge­ne­ra­te hig­her sa­les growth. Ho­we­ver, this was off­set by a ge­ne­ral­ly dif­fi­cult mar­ket en­vi­ron­ment, which was cha­rac­te­ri­sed by a si­gni­fi­cant de­cli­ne in cryp­to­cur­ren­cy pri­ces on the one hand and fal­ling tran­sac­tion fi­gu­res on the other.

In re­spon­se to de­ve­lo­p­ments in the past fi­nan­cial year 2022, NAGA’s ma­nage­ment ch­an­ged its stra­tegy and in­itia­ted a re­or­ga­ni­sa­ti­on. The fo­cus was shifted from sa­les growth to pro­fit growth and the cor­po­ra­te and cost struc­tures were ad­jus­ted ac­cor­din­gly. This ch­an­ge in stra­tegy be­ne­fits the ‚one-stop-shop‘ ap­proach of the Naga app, which has now been ful­ly de­ve­lo­ped and in­tro­du­ced to the mar­ket. With the in­tro­duc­tion of Naga Pay and NAGAX, the aspects of a Ne­o­Bank, a Neo­Bro­ker and so­cial in­ves­t­ing are com­bi­ned with a cryp­to eco­sys­tem wi­thin one app or ap­pli­ca­ti­on.

The de­ve­lo­p­ment of the cur­rent fi­nan­cial year 2023 re­flects the suc­cess of the stra­te­gic rea­lignment that has been in­tro­du­ced. Ac­cor­ding to preli­mi­na­ry nine-month fi­gu­res, EBITDA of € 4.2 mil­li­on (pre­vious year: € ‑11.2 mil­li­on) was al­re­a­dy no­ti­ce­ab­ly hig­her than the pre­vious year’s fi­gu­re de­spi­te a si­gni­fi­cant de­cli­ne in sa­les to € 28.7 mil­li­on (pre­vious year: € 46.7 mil­li­on). The EBITDA mar­gin was 14.6% af­ter a ne­ga­ti­ve fi­gu­re in the pre­vious year. The main re­ason for this de­ve­lo­p­ment was the re­duc­tion in to­tal ex­pen­ses. Mar­ke­ting and sa­les ex­pen­ses in par­ti­cu­lar were re­du­ced to € 3.7 mil­li­on (pre­vious year: € 26.1 mil­li­on). In this con­text, the cos­ts per cus­to­mer ac­qui­red fell si­gni­fi­cant­ly to € 181. In the past fi­nan­cial year, they still pea­k­ed at over € 1,650. In ad­di­ti­on to cus­to­mer ac­qui­si­ti­on in for­eign mar­kets, which is as­so­cia­ted with lower cos­ts, this sharp fall in cos­ts is due to de­li­be­ra­te cost sa­vings in the area of mar­ke­ting. In­ef­fi­ci­ent me­a­su­res were dis­con­tin­ued and all agree­ments in this area were scru­ti­ni­sed.

De­spi­te the cost sa­vings in cus­to­mer ac­qui­si­ti­on, the num­ber of ac­ti­ve cus­to­mers rose to 20,700 as at 30/09/2023 (30/09/2022: 17,700). This was ac­com­pa­nied by an in­crease in the num­ber of trades in the first nine months to 10.9 mil­li­on (pre­vious year: 8.4 mil­li­on), alt­hough sa­les per trade fell due to mar­ket con­di­ti­ons, which ex­plains the de­cli­ne in sa­les.

Ba­sed on the nine-month de­ve­lo­p­ment, a vi­si­ble de­cli­ne in sa­les to € 39.17 mil­li­on (pre­vious year: € 57.60 mil­li­on) should be re­por­ted in the cur­rent fi­nan­cial year 2023, but EBITDA should, ac­cor­ding to our esti­ma­tes, reach € 5.13 mil­li­on (pre­vious year: € ‑13.73 mil­li­on), the best fi­gu­re in the company’s histo­ry.

We also an­ti­ci­pa­te lower growth mo­men­tum in the co­ming fi­nan­cial ye­ars com­pared to pre­vious ye­ars, alt­hough we ex­pect a fur­ther im­pro­ve­ment in pro­fi­ta­bi­li­ty. On the one hand, the cost-cut­ting me­a­su­res ta­ken, which are also at­tri­bu­ta­ble to a sharp re­duc­tion in the num­ber of em­ployees to 117 (31/12/22: 171), are li­kely to have a full im­pact in the co­ming fi­nan­cial year. On the other hand, the de­ve­lo­p­ment of the so-cal­led Su­per-app has been com­ple­ted, mea­ning that si­gni­fi­cant­ly lower de­ve­lo­p­ment cos­ts can be ex­pec­ted in the co­ming fi­nan­cial ye­ars. Fi­nal­ly, the NAGA tech­no­lo­gy will also be of­fe­red to third par­ties as a white la­bel so­lu­ti­on, a high-mar­gin busi­ness mo­del. A first re­gu­la­ted on­line bro­kera­ge com­pa­ny from Ku­wait will soon launch a so­cial tra­ding pro­duct ba­sed on NAGA tech­no­lo­gy.

For the co­ming fi­nan­cial ye­ars 2024 and 2025, we ex­pect sa­les growth of 10% each to € 43.08 mil­li­on (2024) and € 47.39 mil­li­on (2025) re­spec­tively. NAGA should break even in the co­ming fi­nan­cial year due to the ex­pec­ted re­duc­tion in to­tal cos­ts at all ear­nings le­vels. The EBITDA mar­gin should rise to 15.4% and to 19.4% in the 2025 fi­nan­cial year.

As part of our DCF va­lua­ti­on mo­del, we have de­ter­mi­ned a new pri­ce tar­get of € 2.90 (pre­vious­ly: € 3.60). The re­duc­tion in the pri­ce tar­get is due in par­ti­cu­lar to our re­du­ced sa­les growth mo­men­tum. Alt­hough we ex­pect a ge­ne­ral in­crease in pro­fi­ta­bi­li­ty, the ab­so­lu­te ear­nings fi­gu­res are be­low our pre­vious esti­ma­tes. We con­ti­nue to rate the share as BUY.

Die voll­stän­di­ge Ana­ly­se kön­nen Sie hier down­loa­den:
http://​www​.more​-ir​.de/​d​/​2​8​3​4​3​.​pdf

Kon­takt für Rück­fra­gen
GBC AG
Hal­der­stras­se 27
86150 Augs­burg
⁰⁸²¹⁄₂₄₁₁₃₃ 0
research@​gbc-​ag.​de
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Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR. Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (5a,11); Ei­nen Ka­ta­log mög­li­cher In­ter­es­sen­kon­flik­te fin­den Sie un­ter:
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Date (time) com­ple­ti­on: 20/11/23 (09:32 am)
Date (time) first trans­mis­si­on: 20/11/23 (11:30 am)

——————-über­mit­telt durch die EQS Group AG.——————-

Für den In­halt der Mit­tei­lung bzw. Re­se­arch ist al­lei­ne der Her­aus­ge­ber bzw.
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