Märkte & Kurse

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Original-Research: ZEAL Network SE - from NuWays AG

29.04.2025 / 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 ZEAL Network SE

     Company Name:                ZEAL Network SE
     ISIN:                        DE000ZEAL241

     Reason for the research:     Update
     Recommendation:              BUY
     from:                        29.04.2025
     Target price:                EUR 62.00
     Target price on sight of:    12 months
     Last rating change:
     Analyst:                     Henry Wendisch

Q1 preview: building on past success; chg. est & PT up

Normalized lottery environment. Following the exceptionally strong Q4'24,
Q1'25 came down to normalized levels. Spending for the Eurojackpot declined
by 1% yoy (-25% qoq) to EUR 1.14bn, whereas the 6aus49 lottery spending
declined by 5% yoy (-1% qoq) to EUR 871m.

Sales expansion to be driven by higher user base and price increases. We
expect Q1 sales to come in at EUR 50.5m (+40% yoy), driven by (1) higher
lottery billings (eNuW: EUR 267m; +9% yoy) thanks to a mix of a higher lottery
user base (eNuW: 1.525m MAUs; +14% yoy) but also due to a lower ABPU (eNuW:
EUR 58.50, -5% yoy), (2) a higher billings margin (sales in % of billings) of
17% (eNuW; +3.6pp yoy) as a result of the price increase imposed in June
'24, (3) the new lottery product "Traumhausverlosung" with Q1 sales of EUR 4m
(eNuW), and (4) sales from the Games business of EUR 3.4m in Q1 (eNuW; +56%
yoy).

Operating leverage to deliver stellar profitability. Q1 EBITDA looks set to
rise disproportionately by 73% yoy to EUR 16.3m (32.5% margin) thanks to an
ever increasing fix cost coverage. Especially marketing expense (eNuW: EUR
14.5m) should be substantially lower than in Q4'24 (EUR 20m) thanks to the
absence of peak jackpots. Nevertheless, this should have led to a user
intake of 125k (eNuW; vs. 452k in Q4'24 with 7x peak jackpots), thanks to
the strategic shift towards brand awareness marketing.

Upbeat cash generation allows for high shareholder returns. During FY'24,

ZEAL increased its cash position by EUR 57m to EUR 115m, of which EUR 75m came in

from operating cashflows and EUR 71m from debt intake, which stood against a EUR
24m dividend, a EUR 25m share buyback and a EUR 41m squeeze-out payment for
Lotto24. Mind you, the asset-light business model incurs no CAPEX.
Consequently, excess cash can be returned to shareholders, which is why
management proposed a EUR 2.40 DPS (EUR 52m; 5.1% current yield) for FY'24 to be
paid next month.

All in all, ZEAL looks set to report another strong quarter, showing that
past initiatives lead to significant sales and earnings growth. With our
updated estimates for MAUs and billings margin in the lottery brokerage
business, we are now positioned significantly above the guidance. Against
this backdrop, a guidance hike as early as Q1 results seems likely, in our
view. Therefore, we confirm (1) ZEAL's position in the NuWays' AlphaList and
(2) our BUY recommendation with an increased PT of EUR 62.00 (old: EUR 61.00),
based on DCF.

You can download the research here: http://www.more-ir.de/d/32362.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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2125938 29.04.2025 CET/CEST

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