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Original-Research: 123fahrschule SE - from NuWays AG
Classification of NuWays AG to 123fahrschule SE
Company Name: 123fahrschule SE
ISIN: DE000A2P4HL9
Reason for the research: Update
Recommendation: Kaufen
from: 17.05.2024
Target price: EUR 7.20
Target price on sight of: 12 months
Last rating change:
Analyst: Philipp Sennewald
Promising acquisition & strong start into the year
123fahrschule announced an agreement to acquire Foerst GmbH, a manufacturer
of driving simulators for cars, trucks, and buses, which are primarily used
for driver education. The acquisition price, a mid-six-figure amount (eNuW:
EUR 500k; c. 0.5x act. EV/sales), will be paid fully or partially in shares
at the discretion of 123fahrschule. The payment is to be made in several
tranches by the end of 2026. The shares will be issued at a price close to
the stock exchange price. The transaction is intended to be closed on July
1st.
The acquisition appears sensible, in our view, as the use of driving
simulators in driver training is expected to become increasingly important
in the future. In fact, the market is seen to triple in the coming years
especially as simulators are set to become part of the driving license
category B197 in the context of the current amendment of the learner driver
training regulations. According to the amendment, it should then be
permitted to complete the mandatory manual driving lessons (10) on a
simulator. This would be of particular importance, as the availability of
manual driving school cars is already very limited today, but novice
drivers often have to resort to manual vehicles initially due to limited
financial resources. Moreover this is set to at least partly eliminate
capacity constraints for 123f. In yesterday's CC, CEO Polenske stated that
the company intends to equip its driving schools with a total of 90
simulators once the amendment has been passed, which is seen to happen in
2025. While the acquisition looks set to significantly reduce CapEx for the
roll-out of driving simulators across its own branches, it also opens up a
further source of revenue. In fact, 123f intends to expand the product
portfolio of Foerst with its own software elements to offer an improved
product to other driving schools. However, as there is still limited
visibility while the amendment has not been passed, we do not yet include
this in our model.
Besides this, management also provided an update on current trading,
stating an EBITDA of > EUR 0.5m for the first four months of the year as well
as the expectation of positive cash flow thanks to an improved
cash-collection cycle. While this underpins continuous operational
improvements, boding well for managements outlook of positive EBITDA for FY
'24, we continue to conservatively estimate a neutral EBITDA due to the
seasonally weak Q4, where we observed a general reluctance of customers to
take driving lessons during Christmas season in the past.
The stock remains a BUY, unchanged PT of EUR 7.20 based on DCF.
You can download the research here:
http://www.more-ir.de/d/29795.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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