Original-Research: 123fahrschule SE (von NuWays AG): Buy

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Original-Research: 123fahrschule SE - from NuWays AG

07.11.2024 / 09:00 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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The issuer is solely responsible for the content of this research. The

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Classification of NuWays AG to 123fahrschule SE

Company Name: 123fahrschule SE

ISIN: DE000A2P4HL9

Reason for the research: Update

Recommendation: Buy

from: 07.11.2024

Target price: EUR 7.20

Target price on sight of: 12 months

Last rating change:

Analyst: Philipp Sennewald

Improved profitability and strong CFO in Q3

123f published a strong set of preliminary Q3 results, showing continuous

top-line growth as well as improved profitability. Q3 preliminary sales

increased by 11% to EUR 5.7m (eNuW: EUR 5.6m), which should have been

predominantly driven by the Private Customer segment (eNuW: EUR 4.5m).

Moreover, the Driving Instructor Training segment should have continued to

grow strongly to EUR 0.7m (eNuW: +50% yoy). On the other hand, the

Professional Driver Education segment is seen to have declined again in Q3

(eNuW: EUR 0.5m; -18% yoy).

Against this backdrop, Q3 adj. EBITDA significantly increased yoy to EUR 0.2m

(flat in Q3 '23), clearly demonstrating efficiency gains as well as

operating leverage. Mind you, 123f imposed some accounting changes in the

beginning of the year concerning build up of provisions, which is now made

throughout the year instead of only once in December. Unadjusted EBITDA came

in at EUR 0.1m.

The clear highlight of the release, however, was the improved operating cash

flow, which came in at EUR 0.6m, showing a further sequential improvement

compared to the first two quarters (H1 CFO: EUR 0.9m). With a CFO in 9M '24 of

EUR 1.5m, 123f already achieved 4x the amount of the entire FY '23 (EUR 0.4m).

Yet, FCF should still have been slightly negative following the ongoing

investments into the company's proprietary software solutions.

Strategy 2027. In early November, management passed the new Strategy 2027 in

reaction to the announced legislative changes, which are likely coming into

effect in Q1 2026. Next to the obvious scale advantages of the return of

online theory, 123f is going to focus on the practical training, which is

going to receive a "digitalization boost" going forward driven by the

comprehensive roll-out and further software development of the "digital

driving instructor" in the simulator. According to CEO Polenske, this will

enable 123f to reduce the price of a driver's license by up to EUR 1,000,

which should translate into massive market share gains in the company's

target regions. Thanks to the higher margin digital solutions and an

expected reduction in vehicles and instructors, this should further allow

for improving profitability.

Regarding the necessary financing of these projects as well as the roll-out

of simulators, management is currently considering raising further capital,

i.e. in the way of a convertible with a volume of EUR 4-5m.

Reiterate BUY with an unchanged PT of EUR 7.20 based on DCF.

You can download the research here: http://www.more-ir.de/d/31213.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

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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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2024421 07.11.2024 CET/CEST

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