Topic: ASMALLWORLD's recently announced 23% capital increase has been completed successfully and led to improved balance sheet ratios.

Out of the 2.7m new shares issued, 92.4% have been subscribed by the main shareholder Pellegrino Capital (i.e. Patrick Liotard-Vogt), whereas only 7.6% of the remaining shareholders used their subscription right. Pellegrino Capital swapped its loan to equity in the amount of CHF 3.8m and cash proceeds of CHF 0.3m from the remaining shareholders led to an overall CHF 4.1m capital increase.

As a result, ASW's equity should turn positive to CHF 3.3m (previously: CHF -0.8m for FY 23e, see p. 2) while net debt should decrease to CHF 0m (previously: CHF 4.1m for FY 23e) thanks to CHF 3.8m of reduced debt and CHF 0.3m of additional cash. Furthermore, the reduced debt should lead to decrease interest payments by CHF 0.1m annually, starting its effect in FY24e. In sum, the capital increase served the purpose of improved balance sheet ratios. This should turn out to be helpful in the future for potential M&A opportunities that arise in the luxury travel market.

On the operative side, ASW looks set to reach its guidance of CHF 20-22m in sales (eNuW: CHF 21.1m), EBITDA of CHF 2.2 - 2.4m (eNuW: CHF 2.3m) and 70-72k members (eNuW: 70.3k). While during the first half of the year profitability was burdened by a less favorable product mix and the absence of highly profitable consulting fees, we expect both effects to reverse and expect an EBITDA of CHF 1.3m in H2 (vs. CHF 1m in H1). ASW's recent business expansion (i.e. the hotel booking engine “AsmallWorld Collection” and the partnership program “AsmallWorld Discovery”) seem very promising, however only have minor contributions so far. Nevertheless, with newly added hotels and increased value of stays (+26& yoy in H1), we expect them to drive a gradual margin expansions from FY24e onwards.

In our view, the stock seems attractively valued at current levels and the market seems to underestimate ASW's

potential, trading at 14% FCFY '23e and historically cheap EV/EBITDA multiple of only 8.3x (vs. 15x average EV/EBITDA during FY '20-'22).

Therefore, we reiterate our BUY recommendation with unchanged DCF equity value of CHF 71m, but with reduced PT of CHF 4.90 (old: CHF 6.00) due to increased number of shares.