^
Original-Research: ZEAL Network SE - from NuWays AG

07.11.2024 / 09:11 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of 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.

---------------------------------------------------------------------------

Classification of NuWays AG to ZEAL Network SE

Company Name: ZEAL Network SE
ISIN: DE000ZEAL241

Reason for the research: Update
Recommendation: Buy
from: 07.11.2024
Target price: EUR 57.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch

Q3: improved KPIs and share buyback announced; chg. est

Yesterday, ZEAL released final Q3 results, in line with preliminary sales
and EBITDA figures, announced a EUR 25m share buyback offer and showed
improved KPIs.

Share repurchase at a premium: From 18th - 29th Nov.'24, ZEAL offers to buy
back c. 568k shares at EUR 44 per share, which implies a solid 10% premium on
yesterday's closing price. Through that, EUR 25m (i.e. 3% yield on Tuesday's
market cap) are being returned to shareholders, which comes on top of
dividends (EUR 23.8m for FY'23; eNuW: EUR 26m for FY'24e), showing that
management not only focuses on value creation but also on its distribution
to shareholders.

Reduction of shares: as of today, ZEAL owns 3.2% in treasury shares, which
will be subsequently be canceled. Following the share buy back (assuming
568k shares are tendered), another 2.5% of future treasury shares are to be
cancelled. In sum, this should reduce the share count by 5.7% to 21.09m
(from now: 22.4m) by Nov. 29th (end of acceptance period), positively
affecting EPS and DPS.

Superb start of new product: Following the launch of 'Traumhausverlosung'
(eng.: Dream House Raffle) in mid-Q3, 417k customers (334k cross-sold from
Lotto24 & 83k new customers acquired via D2C) have spent some EUR 8.6m in
billings on the first draw (ABPU: EUR 20), which ended on Nov. 4th. With a
stellar billings margin of c. 43% (vs. 1517%
in lottery brokerage), the first draw should have generated some EUR 3.7m in
sales (eNuW, thereof c. 50% in Q3, i.e. EUR 1.9m). Mind you, the sales figure
is seen as net sales, meaning after costs for prizes (c. EUR 1.3m this draw),
charities (EUR 1.7m, 20% of billings), lottery taxes (EUR 1m, 11% of billings)
and VAT (EUR 0.43m; 5% of billings).

Further improvement an all fronts: In Q3, MAU grew by 10% yoy to 1.33m MAU,
while the ARPU climbed by a staggering 30% following the price increases in
the lottery brokerage business, which was visible in a strong billings
margin of 16.8% (+ 4.1pp yoy). Moreover, the strong user intake of H1 was
largely maintained at 215k new registrations in Q3 (thereof c. 40-50k from
'Traumhausverlosung', eNuW), despite the absence of peak jackpots. This
should stem from ZEAL's marketing shift towards brand awareness and reduces
jackpot dependencies. (see p.2 for details)

All in all, ZEAL clearly shows the positive effects of compounding and
operating leverage. Therefore, we reiterate our BUY recommendation with
unchanged PT of EUR 57.00, based on DCF.

You can download the research here: http://www.more-ir.de/d/31201.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.
++++++++++

---------------------------------------------------------------------------

The EQS Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Archive at www.eqs-news.com

---------------------------------------------------------------------------

2024403 07.11.2024 CET/CEST

°