Topic: NAGA recently entered into a sponsoring partnership with Borussia Dortmund for the current and upcoming Bundesliga season. In detail:

Having entered into this cooperation, NAGA is now one of the official partner of BVB. With that, NAGA received exclusive rights to use the team’s BVB partner logo on multiple markets, and the rights to use club players’ image in branding materials. Additionally, NAGA’s brand will be present on the LED advertising boards at home matches on Borussia’s stadium Signal Iduna Park. With that, NAGA intends to power-up its brand awareness in Germany, which is it most important core market and attract new target groups. As BVB is also playing Champions League, the cooperation should additionally increase brand awareness in other important global regions.

In our view, this is a sensible sponsoring partnership as BVB has not only a huge global fan community but is also enjoying high sympathy ratings from fans of other clubs. The price per year is expected to be rather moderate with below € 1m (eNuW) and should be already considered in the marketing budget for this and next year.

In a bigger picture, the cooperation with BVB is just another piece that is paving the way towards the vision for 2026 of USD 250m in sales and 40% EBITDA. While we consider this vision as rather optimistic, the past has already shown that an incremental positive change in the sentiment could have an enormous effect on the P&L of NAGA. The leverage of the joint Group could even scale this effect. Still, in our base case scenario we conservatively only anticipating € 90m in sales and an EBITDA of € 19m (22% EBITDA margin), leaving room for positive surprises. Looking into 2024, estimated 15.9m transactions on the back of a slowly revitalizing retail brokerage space should lift sales to € 71.8m, assuming an avg revenue per trade of € 5.0. Synergy effects and ongoing disciplined spending are expected to additionally drive EBITDA that we see at € 11.5m.

Overall, the revitalization of customer activity in the brokerage space, paired with cross-selling and synergy effects arising from the merger should fuel NAGA´s growth. Details on the growth plan will be presented during our roundtable, today at 10am CEST.

BUY with an unchanged PT of € 1.20 based on DCF.