Classification of NuWays AG to bet-at-home AG

Company Name:	bet-at-home AG
ISIN:	DE000A0DNAY5
Reason for the research:	Update
Recommendation:	BUY
from:	26.07.2024
Target price:	EUR 5.50
Last rating change:
Analyst:	Frederik Jarchow

All eyes on the European Court of Justice; chg

Topic: Yesterday, the Federal Court of Justice in Germany announced to have appealed the European Court of Justice in the legal dispute of a Tipico client against Tipico over the reimbursement of losses between 2013-18 from unauthorized sports betting, a positive x-read for bet-at-home.

The expected ruling of the ECJ should point the way for thousands of similar cases against online betting providers in Germany, including customer claims against bet-at-home with the latest publicly available value in dispute of € 1.9m. As the ECJ had already ruled in criminal proceedings that the lack of a German license due to a non-transparent license procedure can not be held against providers authorized in the EU, we see a significantly higher likelihood of a ruling in favor of bet-at-home and other online betting providers. Still, we do not expect the ECJ to rule in the case before Q2/Q3´25. Until that, the current status of customer claims is seen to remain rather unchanged, while new customer claims should not appear.

With a likely ruling of the ECJ in favor of the betting providers, the current customer claims against bet-at-home and – even more importantly – the looming risks of new customer claims would be off the table, together with related lifted legal costs. As a result, risks and legal costs would normalize again, and provisions would be released. All that would bode well for EBITDA. Further, tailwinds from the UEFA EURO championship should have fuelled betting volumes topline in Q2/Q3 (assuming stable betting margins). Due to high expected marketing spending also throughout Q2, scale effects – also carried by taken efficiency measures, such as outsourcing and streamlining of processes – should not materialize before Q3. Taking all into account, FY24 sales should still end up at € 49.8m and (reported) EBITDA at € 1.4m, both in line with the guidance range of € 45-53m in sales and -1m to € 2.5m in EBITDA before special items. Mind you that we have not yet modeled in potential positive effects from the expected ruling of the ECJ, as there is still a minor likelihood, of a ECJ ruling not in favor of the betting providers.

Still, as of now, all sources of risk, that burdened the case for a long time, including risks associated with the liquidation process of the Entertainment Ldt. and provisions for current and potential new customer claims in Austria and Germany are seen to vanish. betat-home hence turns into a (speculative) BUY (old: HOLD) with an unchanged (but conservative) PT of € 5.50 based on FCFY´24e.

You can download the research here: http://www.more-ir.de/d/30293.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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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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