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: 26.02.2024
Target price: 5.50
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Philipp Sennewald

Strong Q2: A beat on all lines / chg. est.

Borussia Dortmund released Q2 prelims, which came in significantly ahead of our estimates. In detail:

Q2 sales increased by 32.7% yoy, to € 154m (eNuW: € 131m), which was mainly driven by a steep increase in revenues from TV-marketing (+43% yoy to € 71.5m) as well as match Operations (+71% to 19.9m). Both should be at least partly attributable to the weak comparable base following the 2022 Qatar World Cup. Sales from Conference, Catering and Miscellaneous also contribute strongly, as the segment’s sales grew 33.4% yoy to € 12.4m, which we regard as a result of a pick-up in company events. Q2 EBITDA came in at € 42.1m (eNuW: € 35.4m), implying a 27.3% margin (+3.4pp yoy). This should be mainly explained be the strongly increased TV-marketing revenues, which de facto do not incur any costs.

Against this backdrop, the company should be fully on track to outperform its FY targets of > € 427m sales (lower end would even imply a 13% yoy decrease in H2 sales) and EBITDA of € 104-114m (implying negative EBITDA in H2 after € 122m at H1).

Besides the strong financial results, BVB is also delivering good performances on the pitch. After trailing the Top-4 by six point before the second half of the season started, BVB is now 1 point clear of 5th placed Leipzig in P4, which would definitely be sufficient to qualify for the next UCL season. Even more importantly, the team returned with a 1-1 draw from Eindhoven, where they played the first leg of their UCL round of 16 tie. Given the strong performances on their home turf in recent years, we regard BVB’s chances as high to advance to the quarterfinals, which would in turn generate additional prize money of € 10.6m as well as an additional home match (eNuW: € 2m sales). However, we conservatively do not include this in our estimates yet.

On another note, UEFA recently disclosed first indications of the prize money allocation for the newly formatted 2024/25 UCL, stating that overall prize money will increase by c. 25% to € 2.47bn. While there will be a higher emphasis on performance (+7.5pp of total prize money), UEFA will also increase the starting fee to € 18.9m (prior: € 15.6m). Until more details follow, we are initially modelling a 25% increase in BVB’s UCL TV-marketing sales for 24/25e, based on the increase in total prize money.

We confirm our BUY recommendation with an unchanged PT of € 5.50.

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