NuWays AG Recommends BUY Rating for ASMALLWORLD AG Amidst Transitional Year

On August 26, 2024, NuWays AG classified ASMALLWORLD AG (ASW) with a BUY rating, maintaining a target price of CHF 4.30. Analyst Henry Wendisch attributed this recommendation to strategic investments set to bear fruit in FY’25.

ASW reported H1 results with a modest 2% sales growth to CHF 11.8m and muted profitability due to increased R&D expenses. The Services segment showed promise with a 34% increase in hotel bookings, compensating for a weaker demand in their First Class and More category.

EBITDA was recorded at CHF 0.9m, a 10% decrease year-on-year, primarily impacted by investments into rebranding and competition challenges. Despite this, the Service segment's EBITDA improved by 55%.

H2 is expected to show reduced profitability, but strategic changes, including a new free membership starting in November 2024, are anticipated to enhance future performance. ASW's debt level decreased substantially, with net debt remaining stable at CHF 1.2m as of H1.

The FY’24 is marked as a transitional year, but positive financial inflections are expected by FY’25, with a potential 13.5% FCF yield. Thus, NuWays reiterates its BUY recommendation for ASW shares.