Yesterday, 123fahrschule released preliminary H1 sales and EBITDA figures, which were in line with our expectations (click

here

for preview).

According to the release, H1 sales came in at € 11.0m (eNuW: € 11.1m), implying a yoy growth of 5%. As anticipated, H1 EBITDA arrived slightly softer compared to last year at € 0.1m (H1 ’23: € 0.2m; eNuW: € 0.1m). Yet, this was due to several accounting changes during the first half of the year, making the yoy comparison less meaningful. The changes relate to (1) optimizations in the accounting system, which improved accruals during the year rather than once in December as well as (2) the write-off of customer receivables at an accelerated rate following the streamlining of the collection process. To allow for a better comparison, the company thus provided an adjusted EBITDA figure of € 0.5m, implying a margin of 4.5%. Thanks to the mentioned changes, the seasonally weaker December should show efficiency improvements compared to previous years. Hence, we adjusted our bottom-line estimates accordingly.

Besides the preliminary figures, the company also provided a target for FY ‘24e, as management aims to achieve an EBITDA of € 0.5m (adjusted: € 1m), which looks ambitious but achievable in our view (eNuW: € 0.4m EBITDA).

On top of this, management also provided a strategy update, stating the intention to introduce additional locations to the cities of Berlin, Cologne and Hamburg. According to the company, opening new stores in cities with existing locations has proven to be the most efficient way to accelerate growth and increase market share. In order to finance the expansion, management is currently considering several options, including a further cash capital increase of up to 10% of the existing share capital. Along with the reintroduction of online theory lectures starting 2025 and the scaling up of the driving simulator business, this should poise 123f for dynamic top-line growth from 2025e onwards thanks to a significant increase of driving instructor capacities.

Moreover, 123f’s in-house driving instructor education centers should allow for further organic growth, whereas the vast majority of competitor will face succession problems in the coming years given the age structure of the industry (avg. age around 55 years).

The stock remains a BUY with an unchanged PT of € 7.20 based on DCF.