Last week, NAGA reported preliminary FY23 figures that came stronger than expected. Further, the company has announced (at the end of 2023) a planned business combination with Capex.com. In detail:

• Sales came in at € 45.5m (-21% yoy), significantly above our estimates of € 38.1m. As Q4 trading activity of 95 trades per active customer (-14% qoq vs eNuW: 109), number of trades of 2.0m (-14% qoq vs eNuW: 2.4m) and number of active customers of 21k (1% qoq vs eNuW: 22k) are below our expectations, we assume that revenue per trade was rather stable at c. € 4.0 (eNuW), resulting in brokerage revenues of some € 8m. We assume that the remaining € 9m in Q4 were stemming from crypto trading revenues that we consider as one-off.
• EBITDA stood at € 7.0m (vs -13.7m in FY22 vs eNuW: € 4.3m), thanks to the strong topline as well as operational and marketing efficiency: Personnel and other operating expenses should have declined by 26% and 25% yoy to € 7.9m and € 4.6m (eNuW), while marketing expenses are down by 79% to € 5.9m resulting in the best ever gross customer acquisition cost of € 447 (-57% yoy).

Apart from that, NAGA announced the intention to join forces with capex.com – a fast growing multi-asset broker with licenses in Europe and Abu Dhabi – through the contribution of all shares in the parent company of the Key Way Group into NAGA Group AG for c. 170m new NAGA shares that have to be newly issued. The joint Group plans to generate USD 250m in sales and generate 40% EBITDA margin by FY26e (vs USD 90m sales and USD 6m in FY23e). Management is expecting direct cost synergies of c. USD 10m, which seems reasonable. In order to finance the growth, the Capex.com CEO and future NAGA CEO Octavian Patrascu is expected to personally inject € 8.2m into the company via a convertible bond (zero coupon).

On the back of declining trading activity in Q4, we remain cautious looking into 2024, still expecting sales of € 41.8m and EBITDA of € 8.0m, not considering any one-offs. Synergy effects from the business combination as well as one-offs could provide further upside.

Reiterate HOLD with an unchanged PT of € 1.30 based on DCF. Please notice that we do not consider the business combination in our estimates until the deal is closed.