Original-Research: NFON AG - von NuWays AG

Einstufung von NuWays AG zu NFON AG

Unternehmen: NFON AG
ISIN: DE000A0N4N52

Anlass der Studie: 5-Pager
Empfehlung: BUY
seit: 24.01.2024
Kursziel: 11.70
Kursziel auf Sicht von: 12 Monaten
Letzte Ratingänderung: 
Analyst: Philipp Sennewald

Operational turnaround in full swing - Added to Alpha List; chg.
While the company has not been on the radar of most investors due to rather
underwhelming operating performances in recent years, efficiency measures,
which have been imposed lately as well as the reorganization of the top-
and C-level management are starting to bear fruit, thus making NFON a clear
BUY with 92% upside.
Between 2018 and 2022, the German market leader of integrated business
communication was not able to translate its strong technological edge into
a profitable business. While in the first years after the IPO,
profitability was subordinated to market share gains and sales growth (24%
CAGR '17' 20), operational inefficiencies paired with supply bottlenecks
(hardware) as well as an inflated cost base on the marketing and personnel
level prevented expanding margins since.
However, not only since the arrival of Patrik Heider as new CEO in May '23
things have changed and NFON is on track to become profitable on the EBIT
line and deliver positive FCF for the first time in 2024e on a FY basis.
This is mainly due to: (1) A structurally growing and historically
underpenetrated market: NFON finds itself amid a dynamic European market
cloud-PBX, which is set for double-digit growth rates in the mid-term (13%
CAGR '22' 26e). Especially the final fading out of ISDN by telecom carriers
(end of '22) should be seen as an inflection point as businesses are forced
to switch to VoIP based solutions such as multi-tenant cloud-PBX. Hence,
the generell market penetration is seen to sharply increase, especially in
historically underpenetrated markets like Germany (H1 '23: 14% penetration;
2027e: 43%). (2) Efficiency measures bearing fruit: Since H2 '22, NFON
implemented strict cost saving/efficiency measures, which are already
visible in the personnel expense ratio (-4.6pp yoy at 9M'23) as well as
with other OpEx (-9.2pp yoy, especially related to marketing).
Against this backdrop, NFON should be on track to further improve EBIT
margins (>8%), ROICs (>11%) and FCF generation (>EUR 3m) going forward.
Despite operational and structural tailwinds which are set to support
mid-term sales and margin expansion, valuation continues to look
attractive. After shares declined 11% YTD, NFON is now trading on a mere
1.1x EV/Sales, marking a significant discount compared to the historical
average of 2.3x. We thus confirm our BUY recommendation with an increased
PT of EUR 11.70 based on DCF.

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Kontakt für Rückfragen
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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-------------------übermittelt durch die EQS Group AG.-------------------

Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw. 
Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung
oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.