Classification of NuWays AG to Cantourage Group SE

Company Name:	Cantourage Group SE
ISIN:	DE000A3DSV01
Reason for the research:	Update
Recommendation:	BUY
from:	06.12.2024
Target price:	11.50
Target price on sight of:	12 months
Last rating change:
Analyst:	Christian Sandherr

Full steam ahead, FY24 guidance raised; PT up

Topic: Cantourage raised its FY24e guidance following continued sequential growth throughout Q4 with November sales reaching € 7.2m, exceeding the previously strongest quarter by 31%.

Cantourage announced a particularly strong November sales figure of € 7.2m, a 31% increase compared to October (previous annual high). With this, Jan. to Nov. sales stand at € 42.9m, a roughly 80% increase compared to the full year 2023 figure. The driver behind this strong growth is the reclassification of medical cannabis (no longer qualified as a narcotic) in Germany, which took effect at the end of April and hence made obtaining a prescription notably easier. This is also visible in the estimated number of cannabis patients, which is seen to have doubled to 0.5-0.6m. Further, Cantourage is also experiencing a sharp increase in demand at its treatment facility in UK.

Taking into account continued strong demand throughout the remainder of the year as stated in yesterday’s press release, the company should be on track to reach Q4 sales of some € 19m (eNuW), a significant acceleration compared to before the legislative changes (Q1 sales of € 6.2m). The strong sales development is seen to increasingly feed down to the bottom line with a Q4 EBITDA margin expectation of 8.1% (eNuW) compared to a slightly negative figure last year.

More importantly, we also expect Cantourage to begin generating positive free cash flows. For FY24e, the company is seen to report € 1.5m, a notable improvement compared to FY23’s € -3.1m.

As a result of the strong operational ytd. performance management increased its FY24e guidance, now expecting € 46-50m sales (eNuW € 49.2m) and € 3-4m EBITDA (eNuW € 3.6m); old guidance: at least € 40m sales and € 2m EBITDA. While EBIT should still be slightly negative, it is important to note that is only due to the planned amortization of the operating GmbH value that was transferred into the SE as part of the listing in 2022.

Business to further scale during FY25e and beyond. Thanks to unbroken demand on the back of growing patient numbers and further de-bottlenecking at its processing sites, Cantourage should be well positioned to remain at the forefront of the dynamic market, reflected by our sales growth estimates. BUY with a new € 11.50 PT (old: € 10.00) based on DCF.

You can download the research here: http://www.more-ir.de/d/31501.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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