Yesterday, 123f published a solid set of preliminary H1'25 figures showing the positive impact of the simulator business and new branch openings. In detail:
H1'25p sales increased by 17% yoy to € 12.9m (eNuW: € 13.4m). A main contributor was again the driver training for cars and motorcycles, which should have already been supported by the opening of new branches, which started in H2'24. A further positive impact came from the new simulator business (via acquisition of Foerst GmbH in FY24), where the company was able to win a major contract in the first quarter (€ 1m sales).
This also provided a strong foundation for significant bottom-line improvements. H1'25p EBITDA almost doubled to € 1.0m (compared to adj. EBITDA in H1'24), which is in line with our estimates. This implies a 7.6% EBITDA margin - a 3.1pp yoy improvement. In our view, this shows that the efficiency measures that were imposed by management over the past two years are bearing fruit and that scalability finally starts to kick in.
Against this backdrop, management confirmed the positive outlook for the FY25. Mind you, that the initial guidance put out in January is targeting sales of € 28-30m (eNuW: € 28.7m) and EBITDA of € 1.5-2.5m (eNuW: € 2.5m). While the bottom-line target should be easily achieved, the top-line guidance appears ambitious (32% implied H2 sales growth at low end) but achievable in our view. Mind you, that the newly opened branches were still largely in the ramp-up stage during H1, which is why we regard a further acceleration of growth in H2 as feasible.
Despite the positive development, management also stated that domestic driving simulator business is developing not to the extent that was expected at the beginning of the year, which is likely due to a wait-and-see approach by customers as draft legislation concerning the digitilisation of driver training has not been published yet - contrary to industry expectations. It can thus be assumed that once the draft is out, there will be a catch-up effect.
Yet, the case remains fully intact, which is visible in the preliminary results but especially in light of the upcoming legislation changes in early 2026 (online theory & driving simulators). In fact, we regard 123f as the main beneficiary based on its strategic positioning.
Reiterate BUY with an unchanged € 7.90 PT based on DCF.
