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Original-Research: Borussia Dortmund GmbH & Co KGaA - from NuWays AG
Classification of NuWays AG to Borussia Dortmund GmbH & Co KGaA
No Kovac effect so far but UCL quarterfinal spot secured; chg. Thanks to a 2-1 away victory in the second leg of the UCL round of 16 against Lille, BVB secured a spot in the 2024/25 UCL quarterfinals. Here, the team will face Hansi Flick’s FC Barcelona, a matchup which should see BVB as the clear underdog. Yet, BVB has shown in the past, especially during last season’s knock-out stage, that the team is able to compete with and even eliminate seemingly stronger opponents as well. By reaching the quarterfinals, BVB also secured another € 12.5m in UEFA prize money as well as an additional home game. Especially the prize money should not just push FY24/25 top- but also significantly the bottom-line, as despite bonus payments to players, de facto no incremental costs are incurred. Should the team be able to eliminate Barcelona and reach the semifinals, the company would generate another € 15m prize money as well as a further home game. Here, the team would face either Bayern Munich or Inter Milan. Rough Bundesliga performance. Following two consecutive Bundesliga victories (1st time this season), BVB lost its home game against Augsburg the week before and now lost their away game at Leipzig, leaving the team in 11th place, 10 points behind the top 4. Mind you, a top 4 finish is needed to qualify for the upcoming UCL season, while positions 5-6 allow for UEFA Europa League (UEL) qualification and position 7 results in participation in the UEFA Europa Conference League (UECL). Currently BVB is 4 points behind 6th and 3 points behind 7th. The only other option to qualify for the UCL is to win the current competition. Should BVB not qualify for an international competition or qualify for either UEL or UECL, this would imply significantly lower UEFA prize money payments. While the overall prize money in the UCL is € 2.44bn, it is only € 565m in the UEL and € 285m in the UECL. According to our calculations, BVB would generate € 78m in a UCL season (round of 16), while the amount would be only € 23m in the UEL (quarterfinals) and only € 14m in the UECL (semifinals). As it is becoming increasingly unlikely for the club to reach the top 4, we have adjusted our estimates by taking into account the probabilities of reaching the UCL, UEL, UECL, or no international competition at all, using the corresponding expected value. On the other hand, FIFA finally put out a prize money figure for the FIFA CWC this summer, while still not providing distribution details. Overall prize money will amount to $ 1bn, implying an average sum of $ 31.3m per participant. Thus, we conservatively estimate BVB to receive this average value. As the tournament crosses FY24/25 and FY25/26, we attributed half the amount towards this year’s P&L estimate and the other half into the next year. Mind you, this is still leaving upside, as BVB is seen as the clear favorite in their group (details here) and could potentially be set for a deep knock-out stage run. While the short-term outlook might be rather muted, the club remains one of the top-teams in Europe based on the strategic fundamentals built over the last 15 years. Even if the team would miss out on 2025/26 UCL qualification, we are certain that it will jump back the next season based on a highly talented squad. Also, the new coach might need the summer break to adjust the squad according to his wishes. We reiterate our BUY recommendation with a new PT of € 5.20 (old: € 5.50) based on DCF. You can download the research here: http://www.more-ir.de/d/31994.pdf For additional information visit our website: https://www.nuways-ag.com/research-feed 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 ++++++++++ Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte. Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse. ++++++++++
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