NAGA : Hauck & Aufhäuser Research - 12.01.2021

Company description:

The NAGA Group AG is a financial technology and services company that develops and markets disruptive online brokerage applications

22.4 %

15.4 %

12.1 %

3.4 %

1.4 %

Fosun Fintech Holdings Others Management

Free Float H&A

Fosun Management

45.3 %

Major shareholders:

NAGA Group AG

Germany - Services

	Buy (old: Buy)					12-January-21
	Price target: EUR 7.00 (old: EUR 5.90)			Frederik Jarchow
						Analyst
	Price:	EUR 3.78	Next result:	FY 20 tbd.
	Bloomberg:	N4G GR	Market cap:	EUR 124.5 m		[e-mail]
	Reuters:	N4G.DE	Enterprise Value:	EUR 125.7 m		Tel.: [phone]

Growth to continue after record 2020; chg est. & PT

NAGA posted strong FY20 figures with € 25.9m in sales (315% yoy) and an EBITDA

• 6.0m (FY19: -9.2m). Both figures are broadly in-line with our expectations (eH&A: 25.9m in sales and 6.5m in EBITDA).

In addition, NAGA announced a guidance of € 50m - 52m in sales for FY 21, which is above market expectations on sales (€ 47m) and in-line on EBITDA at mid-point (€ 14m). The upper end of the guidance even implies a 6% beat on sales and a 9% beat on EBITDA vs street estimates.

After a strong Q4 20 in terms of volume (€ 40bn, 33% qoq) and transaction (1.9m, 20% qoq), we expect the strong growth momentum to continue on the back of:

1. Forceful expansion in new countries such as the 2nd biggest CFD market Australia, the exponentially growing online brokerage market China as well as South Africa and Nigeria.
2. Introduction of new products such as real stocks, NAGA PAY and cryptocurrencies attracting new target groups that can potentially be converted into high marginal CFD-traders.
3. Improved marketing strategy with increasing conversion rates
4. Reduced churn-rates, thanks to the autocopy function that enables unexperienced clients to copy trades of best rated traders.

The ongoing lock-downacross Europe should additionally boost this growth: Ultimately, the first week in 2021 was the strongest week of all time with € 4bn transaction volume and 0.2m transactions.

Overall, the stock still looks mispriced trading at <13x PER ´21E, not adequately accounting for the unique social trading platform and the strong growth momentum driven by global expansion and high volatility.

Action: Estimates are lifted on the back of strong execution in 2020 and the promising start into 2021.

BUY with a PT of € 7.00 based on DCF (peer group valuation: € 9.50 based on avg PER ´21E of flatexDEGIRO and wallstreet:online).

Y/E 31.12 (EUR m)	2016	2017	2018	2019	2020E	2021E	2022E
Sales	2.0	12.8	16.1	6.2	25.9	50.7	75.3
Sales growth	n/a	552 %	26 %	-61 %	315 %	96 %	49 %
EBITDA	-1.4	2.9	0.3	-9.2	6.0	14.1	26.0
EBIT	-3.7	-1.9	-4.8	-12.2	2.7	10.4	21.9
Net income	-3.9	-2.2	-4.0	-12.0	2.5	9.9	15.9
Net debt	-1.2	-8.7	-3.7	-3.2	-4.2	-11.3	-23.7
Net gearing	-8.3 % -43.0 %	-3.0 %	-2.8 %	-3.7 %	-9.0 % -16.9 %
Net Debt/EBITDA	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EPS pro forma	-77.82	-0.10	-0.10	-0.30	0.06	0.24	0.38
CPS	-30.36	-0.43	-0.20	-0.13	0.12	0.06	0.29
DPS	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Dividend yield	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Gross profit margin	64.9 %	73.3 %	93.5 %	78.5 %	83.5 %	84.0 %	84.5 %
EBITDA margin	-70.8 %	22.4 %	1.7 %	-147.3 %	23.4 %	27.8 %	34.6 %
EBIT margin	-189.5 %	-14.8 %	-29.9 %	-195.8 %	10.5 %	20.5 %	29.1 %
ROCE	-20.8 %	-8.3 %	-6.5 % -10.6 %	2.3 %	8.9 %	17.3 %
EV/sales	-0.5	4.2	7.2	19.2	4.9	2.3	1.4
EV/EBITDA	0.8	18.6	425.5	-13.0	20.8	8.4	4.1
EV/EBIT	0.3	-28.1	-23.9	-9.8	46.2	11.4	4.8
PER	0.0	-28.3	-29.4	-9.9	50.0	12.5	7.8
Adjusted FCF yield	321.9 %	-3.6 %	-4.5 %	-9.2 %	2.2 %	8.8 %	15.7 %

Source: Company data, Hauck & Aufhäuser Close price as of: 11.01.2021

Source: Company data, Hauck & Aufhäuser

High/low 52 weeks:	4.40 / 0.58
Price/Book Ratio:	1.4
Relative performance (SDAX):
3 months			10.4 %
6 months			29.2 %
12 months		489.0 %
Changes in estimates
		Sales	EBIT	EPS
2020	old:	25.9		3.2	0.07
∆	-	-14.0%	-15.1%
2021	old:	48.5	10.0	0.23
∆	4.5%	4.5%	4.5%
2022	old:	74.0	21.9	0.38
∆	1.8%	-0.1%	-0.1%
Key share data:
Number of shares: (in m pcs)	42.0
Authorised capital: (in € m)	15.5
Book value per share: (in €)	2.7
Ø trading volume: (12 months)	119

Please refer to important disclosures at the end of the report

NAGA Group AG

Financials

Profit and loss (EUR m)	2016	2017	2018	2019	2020E	2021E	2022E
Net sales	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Sales growth	n/a	551.6 %	25.5 %	-61.4 %	315.4 %	96.1 %	48.5 %
Increase/decrease in finished goods and work-in-process	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Total sales	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Other operating income	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Material expenses	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Personnel expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Other operating expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Total operating expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
EBITDA	-1.4	2.9	0.3	-9.2	6.0	14.1	26.0
Depreciation	2.3	4.8	5.1	2.7	3.0	3.4	3.7
EBITA	-3.7	-1.9	-4.8	-11.9	3.0	10.7	22.3
Amortisation of goodwill	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Amortisation of intangible assets	0.0	0.0	0.0	0.3	0.3	0.3	0.4
Impairment charges	0.0	0.0	0.0	0.0	0.0	0.0	0.0
EBIT (inc revaluation net)	-3.7	-1.9	-4.8	-12.2	2.7	10.4	21.9
Interest income	0.0	0.0	0.0	0.0	0.0	0.1	0.1
Interest expenses	0.1	0.2	0.2	0.1	0.3	0.5	0.8
Other financial result	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Financial result	-0.1	-0.2	-0.1	-0.1	-0.2	-0.5	-0.7
Recurring pretax income from continuing operations	-3.8	-2.1	-5.0	-12.3	2.5	9.9	21.2
Extraordinary income/loss	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Earnings before taxes	-3.8	-2.1	-5.0	-12.3	2.5	9.9	21.2
Taxes	0.1	0.1	-0.9	1.1	0.0	0.0	5.3
Net income from continuing operations	-3.9	-2.2	-4.1	-13.4	2.5	9.9	15.9
Result from discontinued operations (net of tax)	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Net income	-3.9	-2.2	-4.1	-13.4	2.5	9.9	15.9
Minority interest	0.0	0.0	-0.1	-1.4	0.0	0.0	0.0
Net profit (reported)	-3.9	-2.2	-4.0	-12.0	2.5	9.9	15.9
Average number of shares	0.1	10.5	36.8	40.2	42.0	42.0	42.0
EPS reported	-77.82	-0.21	-0.11	-0.30	0.06	0.24	0.38
Profit and loss (common size)	2016	2017	2018	2019	2020E	2021E	2022E
Net sales	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Increase/decrease in finished goods and work-in-process	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Total sales	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Other operating income	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Material expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Personnel expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Other operating expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Total operating expenses	n/a	n/a	n/a	n/a	n/a	n/a	n/a
EBITDA	neg.	22.4 %	1.7 %	neg.	23.4 %	27.8 %	34.6 %
Depreciation	118.7 %	37.2 %	31.6 %	44.1 %	11.7 %	6.7 %	5.0 %
EBITA	neg.	neg.	neg.	neg.	11.7 %	21.2 %	29.6 %
Amortisation of goodwill	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Amortisation of intangible assets	0.0 %	0.0 %	0.0 %	4.3 %	1.1 %	0.6 %	0.5 %
Impairment charges	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
EBIT (inc revaluation net)	neg.	neg.	neg.	neg.	10.5 %	20.5 %	29.1 %
Interest income	0.3 %	0.0 %	0.1 %	0.1 %	0.1 %	0.1 %	0.1 %
Interest expenses	3.9 %	1.6 %	1.0 %	2.1 %	1.0 %	1.0 %	1.0 %
Other financial result	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Financial result	neg.	neg.	neg.	neg.	neg.	neg.	neg.
Recurring pretax income from continuing operations	neg.	neg.	neg.	neg.	9.6 %	19.6 %	28.2 %
Extraordinary income/loss	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Earnings before taxes	neg.	neg.	neg.	neg.	9.6 %	19.6 %	28.2 %
Tax rate	n/a	-6.7 %	17.3 %	-8.7 %	0.0 %	0.0 %	25.0 %
Net income from continuing operations	neg.	neg.	neg.	neg.	9.6 %	19.6 %	21.2 %
Income from discontinued operations (net of tax)	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Net income	neg.	neg.	neg.	neg.	9.6 %	19.6 %	21.2 %
Minority interest	0.1 %	neg.	neg.	neg.	0.0 %	0.0 %	0.0 %
Net profit (reported)	neg.	neg.	neg.	neg.	9.6 %	19.6 %	21.2 %

Source: Company data, Hauck & Aufhäuser

2	Hauck & Aufhäuser Privatbankiers AG

NAGA Group AG

Balance sheet (EUR m)	2016	2017	2018	2019	2020E	2021E	2022E
Intangible assets	19.2	15.7	110.5	108.8	108.0	107.7	107.4
Property, plant and equipment	0.1	0.1	0.2	0.4	0.4	0.4	0.4
Financial assets	0.1	0.2	0.3	0.2	0.2	0.2	0.2
FIXED ASSETS	19.4	16.0	111.0	109.4	108.6	108.3	108.0
Inventories	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Accounts receivable	0.2	4.6	3.1	1.5	1.8	12.1	18.0
Other current assets	1.8	5.4	5.8	4.8	6.5	4.1	4.9
Liquid assets	4.6	8.7	3.7	3.2	4.2	11.3	23.7
Deferred taxes	0.0	0.0	0.4	0.1	0.1	0.1	0.1
Deferred charges and prepaid expenses	0.0	0.0	0.1	0.0	0.5	0.5	0.5
CURRENT ASSETS	6.7	18.7	13.0	9.6	13.1	28.0	47.1
TOTAL ASSETS	26.1	34.7	124.0	119.0	121.7	136.3	155.1
SHAREHOLDERS EQUITY	14.6	20.3	123.8	112.0	114.8	124.8	140.7
MINORITY INTEREST	0.0	7.4	-5.1	-6.7	-6.9	-6.9	-6.9
Long-term debt	3.4	0.0	0.0	0.0	0.0	0.0	0.0
Provisions for pensions and similar obligations	0.0	0.0	0.0	3.6	5.5	5.5	5.5
Other provisions	0.0	0.0	0.7	0.6	0.5	0.5	0.5
Non-current liabilities	3.4	0.0	0.7	4.2	6.0	6.0	6.0
short-term liabilities to banks	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Accounts payable	2.9	5.2	1.3	0.9	1.8	4.6	6.7
Advance payments received on orders	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Other liabilities (incl. from lease and rental contracts)	4.5	1.2	1.7	7.5	5.2	5.2	4.7
Deferred taxes	0.0	0.1	0.6	0.7	0.5	0.5	0.5
Deferred income	0.7	0.5	0.9	0.4	0.3	0.3	0.3
Current liabilities	8.1	7.0	4.6	9.5	7.9	10.7	12.2
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	26.1	34.7	124.0	119.0	121.8	134.6	152.0
Balance sheet (common size)	2016	2017	2018	2019	2020E	2021E	2022E
Intangible assets	73.5 %	45.3 %	89.1 %	91.5 %	88.7 %	80.0 %	70.6 %
Property, plant and equipment	0.4 %	0.3 %	0.2 %	0.3 %	0.4 %	0.3 %	0.3 %
Financial assets	0.5 %	0.4 %	0.2 %	0.2 %	0.1 %	0.1 %	0.1 %
FIXED ASSETS	74.4 %	46.1 %	89.5 %	92.0 %	89.2 %	80.5 %	71.0 %
Inventories	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Accounts receivable	0.7 %	13.1 %	2.5 %	1.2 %	1.5 %	9.0 %	11.8 %
Other current assets	7.1 %	15.6 %	4.6 %	4.0 %	5.3 %	3.0 %	3.2 %
Liquid assets	17.7 %	25.1 %	3.0 %	2.6 %	3.5 %	8.4 %	15.6 %
Deferred taxes	0.0 %	0.0 %	0.3 %	0.1 %	0.1 %	0.1 %	0.1 %
Deferred charges and prepaid expenses	0.0 %	0.0 %	0.1 %	0.0 %	0.4 %	0.3 %	0.3 %
CURRENT ASSETS	25.6 %	53.9 %	10.5 %	8.0 %	10.7 %	20.8 %	31.0 %
TOTAL ASSETS	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	101.3 %	102.0 %
SHAREHOLDERS EQUITY	55.9 %	58.5 %	99.8 %	94.1 %	94.3 %	92.7 %	92.6 %
MINORITY INTEREST	0.0 %	21.3 %	neg.	neg.	neg.	neg.	neg.
Long-term debt	13.1 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Provisions for pensions and similar obligations	0.0 %	0.0 %	0.0 %	3.1 %	4.5 %	4.1 %	3.6 %
Other provisions	0.0 %	0.0 %	0.6 %	0.5 %	0.4 %	0.4 %	0.3 %
Non-current liabilities	13.1 %	0.0 %	0.6 %	3.5 %	4.9 %	4.4 %	3.9 %
short-term liabilities to banks	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Accounts payable	11.2 %	15.0 %	1.1 %	0.7 %	1.5 %	3.5 %	4.4 %
Advance payments received on orders	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %	0.0 %
Other liabilities (incl. from lease and rental contracts)	17.1 %	3.5 %	1.4 %	6.3 %	4.3 %	3.9 %	3.1 %
Deferred taxes	0.0 %	0.2 %	0.5 %	0.6 %	0.4 %	0.4 %	0.3 %
Deferred income	2.6 %	1.6 %	0.8 %	0.4 %	0.3 %	0.2 %	0.2 %
Current liabilities	31.0 %	20.3 %	3.7 %	8.0 %	6.5 %	8.0 %	8.0 %
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %

Source: Company data, Hauck & Aufhäuser

3	Hauck & Aufhäuser Privatbankiers AG

NAGA Group AG

Cash flow statement (EUR m)	2016	2017	2018	2019	2020E	2021E	2022E
Net profit/loss	-3.9	-2.2	-4.1	-13.4	2.5	9.9	15.9
Depreciation of fixed assets (incl. leases)	2.3	4.8	5.1	2.7	3.0	3.4	3.7
Amortisation of goodwill	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Amortisation of intangible assets	0.0	0.0	0.0	0.3	0.3	0.3	0.4
Others	0.0	0.0	0.0	0.0	1.9	0.0	0.0
Cash flow from operations before changes in w/c	-1.6	2.5	1.0	-10.4	7.7	13.7	20.0
Increase/decrease in inventory	-0.7	-3.7	0.0	0.0	0.0	0.0	0.0
Increase/decrease in accounts receivable	1.0	-4.4	-4.6	6.8	-0.3	-10.3	-5.9
Increase/decrease in accounts payable	1.6	1.3	-0.8	0.2	0.9	2.8	2.0
Increase/decrease in other working capital positions	0.5	0.0	1.6	1.0	0.0	0.0	0.0
Increase/decrease in working capital	2.4	-6.8	-3.9	8.0	0.6	-7.4	-3.8
Cash flow from operating activities	0.8	-4.2	-2.9	-2.4	8.3	6.2	16.2
CAPEX	0.7	1.6	2.3	1.1	3.0	3.4	3.7
Payments for acquisitions	0.0	0.0	-0.2	0.0	0.0	0.0	0.0
Financial investments	0.0	0.0	0.0	-0.1	0.0	0.0	0.0
Income from asset disposals	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Cash flow from investing activities	-0.7	-1.6	-2.2	-1.0	-3.0	-3.4	-3.7
Cash flow before financing	0.1	-5.8	-5.0	-3.4	5.3	2.8	12.5
Increase/decrease in debt position	3.9	-1.5	0.0	3.0	0.0	0.0	0.0
Purchase of own shares	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Capital measures	0.0	11.4	0.0	0.0	0.0	0.0	0.0
Dividends paid	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Others	-0.1	0.0	0.0	-0.1	0.0	0.0	0.0
Effects of exchange rate changes on cash	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Cash flow from financing activities	3.8	9.9	0.0	2.9	0.0	0.0	0.0
Increase/decrease in liquid assets	4.0	4.0	-5.0	-0.5	5.3	2.8	12.5
Liquid assets at end of period	4.6	8.7	3.7	3.2	8.4	11.3	23.7

Source: Company data, Hauck & Aufhäuser

Regional split (EUR m)	2016	2017	2018	2019	2020E	2021E	2022E
Domestic	0.0	0.0	0.0	0.0	0.0	0.0	0.0
yoy change	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Rest of Europe	0.0	0.0	0.0	0.0	0.0	0.0	0.0
yoy change	n/a	n/a	n/a	n/a	n/a	n/a	n/a
NAFTA	0.0	0.0	0.0	0.0	0.0	0.0	0.0
yoy change	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Asia Pacific	0.0	0.0	0.0	0.0	0.0	0.0	0.0
yoy change	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Rest of world	0.0	0.0	0.0	0.0	0.0	0.0	0.0
yoy change	n/a	n/a	n/a	n/a	n/a	n/a	n/a
TTL	0.0	0.0	0.0	0.0	0.0	0.0	0.0
yoy change	n/a	n/a	n/a	n/a	n/a	n/a	n/a

Source: Company data, Hauck & Aufhäuser

4	Hauck & Aufhäuser Privatbankiers AG