Original-Research: 123fahrschule SE (von NuWays AG): Buy 
Do, 07.11.24 09:01· Quelle: dpa-AFX

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Original-Research: 123fahrschule SE - from NuWays AG

07.11.2024 / 09:00 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
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Classification of NuWays AG to 123fahrschule SE

     Company Name:                123fahrschule SE
     ISIN:                        DE000A2P4HL9

     Reason for the research:     Update
     Recommendation:              Buy
     from:                        07.11.2024
     Target price:                EUR 7.20
     Target price on sight of:    12 months
     Last rating change:
     Analyst:                     Philipp Sennewald

Improved profitability and strong CFO in Q3

123f published a strong set of preliminary Q3 results, showing continuous
top-line growth as well as improved profitability. Q3 preliminary sales
increased by 11% to EUR 5.7m (eNuW: EUR 5.6m), which should have been
predominantly driven by the Private Customer segment (eNuW: EUR 4.5m).
Moreover, the Driving Instructor Training segment should have continued to
grow strongly to EUR 0.7m (eNuW: +50% yoy). On the other hand, the
Professional Driver Education segment is seen to have declined again in Q3
(eNuW: EUR 0.5m; -18% yoy).

Against this backdrop, Q3 adj. EBITDA significantly increased yoy to EUR 0.2m
(flat in Q3 '23), clearly demonstrating efficiency gains as well as
operating leverage. Mind you, 123f imposed some accounting changes in the
beginning of the year concerning build up of provisions, which is now made
throughout the year instead of only once in December. Unadjusted EBITDA came
in at EUR 0.1m.

The clear highlight of the release, however, was the improved operating cash
flow, which came in at EUR 0.6m, showing a further sequential improvement
compared to the first two quarters (H1 CFO: EUR 0.9m). With a CFO in 9M '24 of
EUR 1.5m, 123f already achieved 4x the amount of the entire FY '23 (EUR 0.4m).
Yet, FCF should still have been slightly negative following the ongoing
investments into the company's proprietary software solutions.

Strategy 2027. In early November, management passed the new Strategy 2027 in
reaction to the announced legislative changes, which are likely coming into
effect in Q1 2026. Next to the obvious scale advantages of the return of
online theory, 123f is going to focus on the practical training, which is
going to receive a "digitalization boost" going forward driven by the
comprehensive roll-out and further software development of the "digital
driving instructor" in the simulator. According to CEO Polenske, this will
enable 123f to reduce the price of a driver's license by up to EUR 1,000,
which should translate into massive market share gains in the company's
target regions. Thanks to the higher margin digital solutions and an
expected reduction in vehicles and instructors, this should further allow
for improving profitability.

Regarding the necessary financing of these projects as well as the roll-out
of simulators, management is currently considering raising further capital,
i.e. in the way of a convertible with a volume of EUR 4-5m.

Reiterate BUY with an unchanged PT of EUR 7.20 based on DCF.

You can download the research here: http://www.more-ir.de/d/31213.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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2024421 07.11.2024 CET/CEST

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