Original-Research: q.beyond AG - from NuWays AG
08.05.2025 / 09:00 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS Group.
The issuer is solely responsible for the content of this research. The result of this research does not constitute investment advice or an invitation to conclude certain stock exchange transactions.
Classification of NuWays AG to q.beyond AG
Company Name: q.beyond AG
ISIN: DE0005137004
Reason for the research: Update
Recommendation: BUY
from: 08.05.2025
Target price: EUR 1.30
Target price on sight of: 12 months
Last rating change:
Analyst: Philipp Sennewald
Q1'25e set for further profitability improvements
Topic: Next Tuesday, q.beyond is going to release its Q1 report, which is seen to show further improvements on the bottom-line and provide confidence regarding the company's FY25 outlook. In detail:
Q1 sales are seen to slightly decline by 1.4% to EUR 46.5m (eNuW). Yet, the expected decline is solely due to accounting in accordance with IFRS 15. As a result, a total of EUR 12.6m of FY24 sales, which are mainly related to SAP and Microsoft contracts, will no longer be accounted as revenues, as only the profits from the respective customer relationshops will be accounted for. Eliminating this effect, sales growth should be in the low to mid single-digit % range (eNuW). This should again be driven by Managed Services, but also a recovery of Consulting. Here we expect a significant improvement on the gross margin side to 12% (+3.6pp yoy). Overall gross margin is seen to come in at 19.3%, implying EUR 9.0m gross profit.
Q1 EBITDA is expected to improve strongly by 27.6% to EUR 2.5m (eNuW), implying a 5.5% margin. Main drivers behind this should be again an improved near- and off-shoring ratio, which management aims to lift to 20% by YE'25 (14% as of FY24). This alone should explain a good part of the gross margin improvement. Moreover, the anticipated recovery of Consulting is seen to be a further driver. Given an improved utilization, margins in the region of 20% should be absolutely achievable going forward.
With this, the company should be well on track to achieve the FY25 guidance. While the sales outlook looks conservative, implying 2.2-5.6% growth (excluding the aforementioned accounting effect; eNuW: +5.5%), the q.beyond should be able to achieve the upper end of the communicated EBITDA target of EUR 12-15m (eNuW: EUR 14.7m), as we expect gradual improvements as well as a seasonally strong Q4.
Putting all this aside, inorganic growth is likely to become a factor as well, as implied by CEO Rixen during the latest conference calls. In fact, with EUR 30m net cash (incl. leases) management has a well equipped war chest on hand to tap the M&A market. Here, we regard targets with a high public sector exposure (health-care, energy, defense) as likely, given the recent infrastructure special funds and the debt break suspension in Germany.
Reiterate BUY with an EUR 1.30 PT based on DCF.
You can download the research here: http://www.more-ir.de/d/32508.pdf For additional information visit our website:
https://www.nuways-ag.com/research-feed
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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2132716 08.05.2025 CET/CEST
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