PRESS RELEASE
from NFON AG
Original-Research: NFON AG (von NuWays AG): BUY
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.
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 € 97.1m (eNuW; eCons: € 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: € 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 € 15.7m (eNuW; eCons: € 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 € 5.5m (eNuW: € 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 € 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
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2064081 09.01.2025 CET/CEST