Last week, NAGA announced to have reorganized its management board: Ben Bilski, the former CEO of the group stepped down and became the new chief information officer focussing on the future technological development of NAGA. The former board member Michael Milonas was promoted to CEO. Furthermore, Sam Chaney (former INFINOX executive) was hired as new chief commercial officer.

While the departure of Ben Bilski as CEO might look worrying at first glance, we regard it as strategically sensible move, as it allows the company to not only distribute responsibilities across several shoulders but also re-align the group's priorities. Since Michael Milonas was responsible for the strategic development, as well as managing and expanding distribution partnerships in his former role, the reorganization of the management board additionally appears to be a refocus of priorities away from product development towards distribution.

Apart from that, the company also announced last week the successful placement of the USD 8.2 million convertible bond, with one of NAGA’s current investors. The proceeds should be used to execute NAGA´s ambitious growth plans and fuel its top-line.

In our view, the conditions of the convertible look unpleasant (USD 8.2m; 11% coupon for six month; conversion price: USD 1.97; conversion is possible at any time), even against the backdrop of the current depressed market environment with rising interest rates. Positively, NAGA seems to expect to grow the top-line sustainably with the proceeds and generate a ROIC of >11% in only six months, which would be remarkable.

On the back of the weak sentiment in the retail brokerage space, we remain cautious for the FY23e. Sales is expected to come in at only € 40m (eNuW: -20% yoy) with € -1.6m EBIT (FY22e: € -29.8m), despite the promising start into the year. With NAGA's pending re-entering of the UK market (€ 17m sales in FY21, before forced to leave the market) and the launch several new products (i.e. NAGA Capital and NAGA Institutional), the company should be able to return to sales growth by 2024e.

However, due to uncertainties on the back of the continued negative sentiment in the brokerage space, we reiterate HOLD with an unchanged PT of € 1.80, based on DCF.