nfashionette scheduled an extraordinary AGM on September 6, which should pave the way for a business combination between fashionette as well as online platform and major shareholder The Platform Group by ways of a capital increase of € 11.07m against a contribution in kind. The resulting entity is set to be renamed into “The Platform Group AG”. CEO Benner who currently owns 43% in fashionette will hold c. 80% of the combined group.

Neither an exclusion of minority shareholders nor a withdrawal from the stock exchange are planned

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The volume of the proposed capital increase corresponds to the value ratio of fashionette and TPG of 1:1.79. The ratio has been derived from an external auditor opinion, which values fashionette at € 87.1m and TPG at € 155.6m.

In FY 22, TPG generated c. € 173m revenue and € 15m adj. EBITDA. Hence, the combined entity generated pro-forma revenues of € 338m and € 15.4m adj. EBITDA in FY22. Given fashionette’s MCap of € 32.5m, TPG should be valued at c. € 59m and c. € 80m EV, which would translate into an attractive c. 5x EV/EBITDA '22, representing more than 50% discount to online peers.

In our view, a business combination would be highly beneficial. With fashionette’s exposure to the structurally growing and highly profitable luxury fashion vertical, the company should be poised for profitable growth in the coming years. fashionette looks set to capitalise on TPG’s know-how with regards to tech, data, marketing and logistics. The business combination should also offer cross-selling opportunities. CEO Benner aims to transform fashionette into a true luxury eCommerce platform in the mid-term. In August 2023, first B2B partners will be connected to the ecosystem and the number should rise to 150 until year-end.

Considering TPG‘s sound profitability, the platform transition should also improve FSNT‘s margins and efficiency measures have already started to gain traction. In FY 23e, adj. EBITDA is expected in the range of € 2-3m (eNuW: € 2.8m, eCons: € 3.0m), implying a margin of 1.4% at mid-point. This represents an improvement of c. 1.2pp yoy even though one-off restructuring expenses to the tune of € 1.8-2.8m should weigh on the bottom-line in FY 23e. To this end, management started to review internal processes and identified cost savings in marketing and admin functions (i.e. personnel). Cost saving measures are being implemented in FY23e and should yield first positive results from H2 onwards. BUY with an unchanged PT of € 21.00, based on DCF.