SynBiotic SE (from NuWays AG): BUY

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Original Research: SynBiotic SE – from NuWays AG

17.09.2024 / 09:01 Central European Time/Central European Time

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Classification of NuWays AG to SynBiotic SE

Company Name: SynBiotic SE

ISIN code: DE000A3E5A59

Reason for the investigation: Update

Recommendation: BUY

from: 17.09.2024

Target price: EUR 12.40

Last review change:

Analyst: Henry Wendisch

SynBiotic Transformation: Reaching New Operational Highs

Subject: The new CEO Daniel Kruse has been in power for about a year now.

The structural changes implemented in the company, in combination with the regulations

changes in Germany, in particular the loss of drug status

medicinal cannabis, should be reflected in much improved financial results.

Today, SynBiotic is a Buy-and-Build operator in the European hemp, cannabis and

and cannabinoid market with the aim of a fully integrated

platform company with activities across the entire value chain of

from cultivation to production and sales, essentially from the field to the

plank.

Dynamic market growth. SynBiotic is active in three end markets,

recreational cannabis, industrial hemp and medicinal cannabis. All three

markets should benefit from favorable trends. Demand for industrial hemp is

expected to be 4x higher by 2030, driven by legislative changes and new foods

classification of CBD-based products. At the same time, there is a demand for medical

cannabis should be 10x higher than in 2023, thanks to the Cannabis Act, which came into effect

in April. While recreational cannabis (regulated commercial market for

(sale of cannabis) has not been approved so far, the market for ia cannabis

Seeds and garden tools are now grown legally.

SynBiotic appears to be benefiting strongly from these favorable market conditions.

dynamics. By the end of FY27e, we expect group revenue to be EUR 40.8 million

(vs. EUR 3.9 million in FY23), implying a CAGR of around 80%. This is particularly evident

be supported by the medicinal cannabis segment, which should contribute

EUR 29 million.

According to the company’s results, further growth opportunities could come from further acquisitions.

Buy and build strategy. We actually expect another add-on until the

end of the year.

More importantly, SynBiotic, with its strong revenue growth, should be on track

to achieve breakeven by FY25e. This should also be possible thanks to the new

CEOs have implemented cost-cutting measures, such as a significant reduction in

Personnel costs (FY23 -55% yoy; FY24e -19% vs FY22). During the

The company looks set to achieve double-digit EBIT margin growth in the coming years

(eNuW: by 2027e).

With only a few listed players in the German cannabis sector, SynBiotic

offers a unique opportunity to invest in a vertically integrated company

which is also active in various end markets. We are re-initiating the

coverage with a BUY rating and a EUR 12.40 PT (old: EUR 9) based on DCF.

You can download the study here: http://www.more-ir.de/d/30801.pdf

For more information, please visit our website: www.nuways-ag.com/research

Contact us for questions:

NuWays AG – Equity Research

Website: www.nuways-ag.com

Email address: [email protected]

LinkedIn: https://www.linkedin.com/company/nuwaysag

Address: Mittelweg 16-17, 20148 Hamburg, Germany

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This notification is not an anlageberatung or aufforderung zum Abschluss

best listed companies.

Possible consequences for conflict of interest according to § 85 WpHG in the case of above

Analyze analyses that occur in the full analysis.

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1989245 17.09.2024 Central European Time/Central European Time

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