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Original-Research: SynBiotic SE - from NuWays AG

17.09.2024 / 09:01 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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The issuer is solely responsible for the content of this research. The

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Classification of NuWays AG to SynBiotic SE

Company Name: SynBiotic SE

ISIN: DE000A3E5A59

Reason for the research: Update

Recommendation: BUY

from: 17.09.2024

Target price: EUR 12.40

Last rating change:

Analyst: Henry Wendisch

SynBiotic transformation: Reaching new operational high(t)s

Topic: The new CEO Daniel Kruse has been in charge for roughly one year now.

The implemented structural changes to the company coupled with regulatory

changes in Germany, especially the loss of the narcotic drug status of

medical cannabis, should become visible in strong improved financials.

Today, SynBiotic is a Buy-and-Build operator in the European hemp, cannabis

and cannabinoid market with an objective to establish a fully integrated

platform-company with activities across the entire value chain from

cultivation to production and retail, essentially from the field to the

shelf.

Dynamic market growth. SynBiotic is active across three end markets,

recreational cannabis, industrial hemp and medical cannabis. All three

markets should benefit from favourable trends. Demand for industrial hemp is

seen to 4x until 2030, carried by regulatory changes and novel food

classification of CBDbased products. At the same time, demand for medical

cannabis should 10x vs 2023, thanks to the Cannabis Act, which took effect

in April. While recreational cannabis (regulated commercial market for

cannabis sales) has so far not been approved, the market for i. a. cannabis

seeds and gardening equipment is now a legally growing.

SynBiotic looks set to strongly benefit from those favorable market

dynamics. Until the end of FY27e, we expect group sales to reach EUR 40.8m

(vs. EUR 3.9m in FY23), implying a roughly 80% CAGR. Above all, this is seen

to be carried by the medical cannabis segment, which should contribute some

EUR 29m.

Additional pockets of growth could come from further acquisitions as per its

Buy and Build strategy. In fact, we would expect another add-on until the

end of the year.

More importantly, with strongly growing sales, SynBiotic should be on track

to reach break-even by FY25e. This should also be possible thanks to the new

CEO's implemented cost-saving measures such as significantly reduced

personnel expenses (FY23 -55% yoy; FY24e -19% vs FY22). During the

subsequent years, the company looks set to reach double-digit EBIT margins

(eNuW: by 2027e).

With only a few listed players in the German cannabis space, SynBiotic

offers a unique opportunity to invest into a vertically integrated company

that is also active in a variety of different end markets. We reinitiate the

coverage with a BUY rating and a EUR 12.40 PT (old: EUR 9) based on DCF.

You can download the research here: http://www.more-ir.de/d/30801.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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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss

bestimmter Börsengeschäfte.

Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

analysierten Unternehmen befinden sich in der vollständigen Analyse.

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1989245 17.09.2024 CET/CEST

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