Original-Research: Borussia Dortmund GmbH & Co KGaA - from NuWays AG

Classification of NuWays AG to Borussia Dortmund GmbH & Co KGaA

Company Name: Borussia Dortmund GmbH & Co KGaA ISIN: DE0005493092

Reason for the research: Update
Recommendation: BUY
from: 18.03.2024
Target price: 5.50
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Philipp Sennewald

RS feedback: New formats offering upside / chg.

Last week, we hosted a digital roadshow with BVB CFO Thomas Treß, which underpinned our view that the club is set to benefit from several structural changes going forward. The main takeaways:

Bundesliga broadcasting rights: In Q2, the German Football League (DFL) is starting to market the media rights for the 4-year period starting with the season 2025/26. While the current 4-year deal has a total value of € 4.4bn, fears were arising that the next deal could decrease in volume after the Italian and French Leagues had to cut back recently. However, the recent abortion of the “No-Single-Buyer-Rule” is set to intensify the bidding contest. Hence, we do not expect a decrease and conservatively forecast the deal volume to remain on the same level as in the current period.

New UCL. Although UEFA did not disclose final details on the prize money distribution for the new UCL format, earnings should increase by at least 20% compared to the current format given success in the competition. Yet, as the share of performance-based premiums will increase by 7.5pp to 37.5%, the delta is seen to increase, depending on a teams progresses in the tournament. Moreover, the CWC (click here for more detail) is seen to provide a liquidity boost in 2025, which is not yet reflected in our model as no detailed information were released yet by FIFA.

Sponsorship upside. While TV marketing or transfer sales are subject to a certain volatility based on sporting success and talent development, sales in the sponsoring segment are seen to deliver stable growth going forward. Both, the expiry of the Evonik and 1&1 contracts next year as well as the CWC and the associated new sponsorship opportunities in the US are seen to provide upside in the coming years, in our view.

Besides that, BVB reached the quarterfinals of the UCL after beating Eindhoven last week. As this resulted in € 10.6m additional premium payments, BVB consequently lifted its net profit guidance range by € 10m, which we continue to consider as conservative, given the strong H1. BVB will now face Atletico Madrid in the quarterfinals. While we rate this as a 50/50 fixture, we conservatively do not model the € 12.5m in premiums BVB would receive if advancing to the semifinals.

BVB shares continue to trade on attractive levels of 0.9x EV/Sales, significantly below the peer average of 3.9x. The stock hence remains a BUY with an unchanged PT of € 5.50 based on DCF.

You can download the research here:
http://www.more-ir.de/d/29175.pdf
For additional information visit our website www.nuways-ag.com/research.

Contact for questions
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