Märkte & Kurse

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Original-Research: NFON AG - from NuWays AG

09.01.2025 / 09:00 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 NFON AG

     Company Name:                NFON AG
     ISIN:                        DE000A0N4N52

     Reason for the research:     Update
     Recommendation:              BUY
     from:                        09.01.2025
     Target price:                EUR 11.70
     Target price on sight of:    12 months
     Last rating change:
     Analyst:                     Philipp Sennewald

NFON remains an Alpha pick after strong operations in FY24e

Topic: After a strong operating performance in FY24e, NFON looks set to
continuously expand margins at an increased top-line growth throughout
FY25e.

Sales in FY25e are expected to increase by 12.7% to EUR 97.1m (eNuW; eCons: EUR
95.2m) based on an increased cloud adoption and hence further key customer
wins in the company's key markets as well as the initial full FY
contribution of botario (acquisition closed in 09/24; eNuW: EUR 3.1m sales in
FY25e). Hereby, the share of recurring revenues looks set to further
increase to 94.6% (eNuW FY24e: 94.2%), given the decreasing importance of
hardware sales also in connection with new customer wins.

Moreover, we expect NFON to improve its adj. EBITDA to EUR 15.7m (eNuW; eCons:
EUR 14m unadj. EBITDA), implying disproportionate growth of 31% and a margin
of 16.2%. This should come on the back of an improved sales mix, meaning
less hardware sales as well as an increased ARPU following a higher share of
premium solutions sold, as well as cost saving measures imposed during
FY23/24, allowing for reduced personnel cost and marketing ratios. Also, the
botario acquisition (23.5% EBITDA margin in FY24e) will also be a main
driver of the margin expansion. Against this backdrop, FCF is seen to
improve to EUR 5.5m (eNuW: EUR 3.8m in FY24e).

Speaking of botario, we anticipate the acquisition to not only be margin
accretive but significantly enhance NFON's capabilities regarding AI and
process automation, thus marking a substantial competitive edge. In our
view, this should help the company gain additional market share in the still
highly fragmented market for integrated business communication going
forward.

Overall, the above is seen to allow for notably improving returns (eNuW:
ROIC 10% by FY25e) as well as cash generation, thus driving shareholder
value.

That said, current valuation remains highly attractive given that the stock
is trading on a 7.2x trailing EV/adj. EBITDA and a 5.2x EV/adj. EBITDA
FY25e. In our view, this is not justified, as it does not at all reflect the
significant operating improvements over the past 18 months.

We hence reiterate BUY with an unchanged PT of EUR 11.70, based on DCF, as
NFON remains part of our NuWays Alpha List.

You can download the research here: http://www.more-ir.de/d/31607.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
++++++++++
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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2064081 09.01.2025 CET/CEST

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