Yesterday, BVB held an analyst conference, presenting the preliminary FY 23/24 results.

FY sales increased by 21.7% to € 509m, thus exceeding our estimate of € 483m. While we were largely in line regarding sales from TV marketing of € 206m (eNuW: € 203m) and advertising of € 147m (eNuW: € 147m), the other segments performed significantly better than expected. Sales from match operations increased by 20.9% yoy to € 52.6m (eNuW: € 47.4m), mainly due to the increased number of games in the UCL, while merchandising sales were up 43.6% yoy to € 47.9m (eNuW: € 40m), driven by the success in the UCL but also a better Christmas business (’22 Qatar WC harmed Christmas business last year). Sales from conference and catering also increased significantly by 34.7% yoy to € 56.0m (eNuW: € 45.7m) thanks to as well more home games in the UCL but also UEFA payments for the usage of the Signal Iduna Park during the 2024 European Championship.

EBITDA increased proportionately with sales to € 150m (+22% yoy; eNuW: € 165m) implying a yoy stable margin of 29.5%. The gap to our estimates is mainly explained by increased personnel expenses in Q4 (+18% vs TTM avg.) due to success premiums, lower than expected net transfer income and higher other OpEx, which was among others caused by higher energy costs, higher player loan expenses as well as higher logistics and travelling expenses. Thanks to slightly lower D&A (-2% yoy) however, the company was able to significantly improve its operating margin by 5pp to 9%.

Despite this, FCF came in negative at € -4.4m, which is explained by infrastructure investments of c. € 20m (new catering facilities + property acquired for women training ground), as well as UEFA and DFL related payments, which have been postponed to the current business year (eNuW: € 15m).

Dividend return. For the first time since 2019, the management will propose to the AGM to pay out a dividend. It is intended to pay out € 0.06 per share, implying a yield of 1.5% given yesterday’s close price.

Besides the release, BVB on the weekend reached the second round of the national cup by defeating 4^th league side Lübeck (4-1). Moreover, BVB announced another signing with promising German international Maximilian Beyer. The young forward had his breakthrough last season at Hoffenheim, where he contributed 16 goals and three assists, which earned him a spot in Germany’s squad for the -continued- 2024 European Championship. With him and Guirassy, BVB now has two of last season’s Top-5 goalscorers under contract.

With this, the team should be well equipped to earn a Top-4 spot at the end of the season. Moreover, another deep run in the UCL is clearly in the cards, yet we conservatively estimate them to reach the round of 16.

Valuation remains undemanding, as shares are trading on a mere 0.9x EV/Sales. We hence reitereate BUY with an unchanged PT of € 5.50 based on DCF.