Original-Research: 029 Group SE - from NuWays AG

Classification of NuWays AG to 029 Group SE

Company Name: 029 Group SE
ISIN: DE000A2LQ2D0

Reason for the research: Update
Recommendation: Halten
from: 22.05.2024
Target price: EUR 14.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Christian Sandherr

FY23 as expected // key holding with favourable developments

Topic: 029 published FY23 figures. As 029 holds only minority stakes and
reports under German HGB (no mark-to-market valuation), it was a non-event.
Yet, its key assets continue to perform well. As 029 had no divestments
during FY23 (Emerald Stay was sold in Feb. 2024), the company generated no
sales. Operating expenses amounted to roughly EUR 0.6m, slightly less than
last year due to the absence of listing related costs. Going forward, we
expect the annual cost base to come in at similar levels.

Yet, this does not include one-off expenses related to potential
investments/divestments. While cash at hand stood at only EUR 10k at the end
of the year, the EUR 1.6m inflow from the Emerald divestment should provide
029 with sufficient liquidity.

The group's key assets, Limestone Capital and TRIP Drinks (eNuW: 95% of the
implied fair NAV) remain on a strong growth path. TRIP (10% of NAV, eNuW),
the CBD-infused drink is available at more than 25k stores across the UK,
France and the US. As a result, sales have grown at 390% p.a. during the
past two years to roughly GBP 20m. Despite the changed interest rate
environment, we would expect any potentially upcoming funding rounds to
value the company at more than EUR 140m (industry's transaction median stands
at - 10x sales). TRIP is well on the way to continuing its growth
trajectory. If TRIP keeps growth at a similar level, the valuation has a
lot of room for upside. They just launched a new nonCBD-based product
("Mindful Blend") and focus on further expansion (e.g., in the US).

Limestone Capital (85% of NAV, eNuW) seems well on track to expand its
hotel portfolio. In fact, the company has just purchased a hotel in Madrid.
Thanks to its ongoing funding round, Limestone should be able to grow to 20
hotels, operated by its own brand aethos, until the end of 2025e, in our
view.

First divestment completed. As a reminder, in February, 029 sold it's 5.2%
stake in Emerald Stay. The transaction is expected to generate roughly EUR
1.6m gross proceeds, reflecting a realized multiple on the FY23 book value
of around 2.3x and 2.7x on the invested capital. This was carried by the
recently strongly increasing number of vacation rentals on the platform
(FY23e: +71% yoy), in our view. The EUR 0.9m book gain should positively
impact 029's FY24 H1 figures due at the end of September.

We confirm our HOLD rating with an unchanged EUR 14 PT based on based on a
sum-of-the-parts valuation (see page 2) with a 5% holding discount.

You can download the research here:
http://www.more-ir.de/d/29845.pdf
For additional information visit our website
www.nuways-ag.com/research.

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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