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Original-Research: SynBiotic SE - from NuWays AG

17.09.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.

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Classification of NuWays AG to SynBiotic SE

Company Name: SynBiotic SE
ISIN: DE000A3E5A59

Reason for the research: Update
Recommendation: BUY
from: 17.09.2024
Target price: EUR 12.40
Last rating change:
Analyst: Henry Wendisch

SynBiotic transformation: Reaching new operational high(t)s

Topic: The new CEO Daniel Kruse has been in charge for roughly one year now.
The implemented structural changes to the company coupled with regulatory
changes in Germany, especially the loss of the narcotic drug status of
medical cannabis, should become visible in strong improved financials.

Today, SynBiotic is a Buy-and-Build operator in the European hemp, cannabis
and cannabinoid market with an objective to establish a fully integrated
platform-company with activities across the entire value chain from
cultivation to production and retail, essentially from the field to the
shelf.

Dynamic market growth. SynBiotic is active across three end markets,
recreational cannabis, industrial hemp and medical cannabis. All three
markets should benefit from favourable trends. Demand for industrial hemp is
seen to 4x until 2030, carried by regulatory changes and novel food
classification of CBDbased products. At the same time, demand for medical
cannabis should 10x vs 2023, thanks to the Cannabis Act, which took effect
in April. While recreational cannabis (regulated commercial market for
cannabis sales) has so far not been approved, the market for i. a. cannabis
seeds and gardening equipment is now a legally growing.

SynBiotic looks set to strongly benefit from those favorable market
dynamics. Until the end of FY27e, we expect group sales to reach EUR 40.8m
(vs. EUR 3.9m in FY23), implying a roughly 80% CAGR. Above all, this is seen
to be carried by the medical cannabis segment, which should contribute some
EUR 29m.

Additional pockets of growth could come from further acquisitions as per its
Buy and Build strategy. In fact, we would expect another add-on until the
end of the year.

More importantly, with strongly growing sales, SynBiotic should be on track
to reach break-even by FY25e. This should also be possible thanks to the new
CEO's implemented cost-saving measures such as significantly reduced
personnel expenses (FY23 -55% yoy; FY24e -19% vs FY22). During the
subsequent years, the company looks set to reach double-digit EBIT margins
(eNuW: by 2027e).

With only a few listed players in the German cannabis space, SynBiotic
offers a unique opportunity to invest into a vertically integrated company
that is also active in a variety of different end markets. We reinitiate the
coverage with a BUY rating and a EUR 12.40 PT (old: EUR 9) based on DCF.

You can download the research here: http://www.more-ir.de/d/30801.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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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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1989245 17.09.2024 CET/CEST

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