EUR 160.00 For Business Accounts Only

Initial Coverage englisch - The Naga Group AG - 11.12.2018

A platform for fintech and crypto; Strong growing FinTech specialist for the mobile Financial trading and the trading of virtual goods

 

The NAGA Group AG is a public listed German Fintech company that aims to build an ecosystem of user-friendly interconnected trading services. Within a social network interface, the platforms make the trading easy-to-use. Simply, the system enables users to copy and share trades, learning from others, exchanging ideas and, more generally, investing in financial markets, crypto-currencies and virtual goods. On these bases, customer accounts have reached about 500,000 users in the NAGA-ecosystem at the date of this writing.

 

Under the brand NAGA Trader the company currently performs the most significant part of its trading services. This mobile-oriented application seems to be more appealing to younger users even without financial knowledge (the platform is available for iOS, Android and Web). For this reason, NAGA is committed to introduce the platform (e.g. with a demo) to new target users from unrelated environments such as the games industry. Compared to the competitors (e.g. Ayondo or eToro), NAGA Trade offers more flexible tools, such as the opportunity to partially or completely copy the trades of an expert trader. The offer is integrated with a personalized robo-advisor (CYBO) that combines the crowd-trading behavior of humans with artificial intelligence. The proprietary technology has, from an early stage, represented one of the main assets on the consolidated balance sheet.

 

Worth mentioning is the consolidation of the acquired Hanseatic Brokerhouse Securities AG in the H1/18. The new subsidiary owns a license as a financial services provider under the Cyprus security and exchange commission. A further strategic acquisition has been the 25% of easyfolio GmbH with the option to increase to the stake to up to 49%. The Frankfurt investment company is an ETF-platform active in Germany, with assets under management of more than €50m at the time of writing. Moreover a strategic partnership with the listed company MyBucks has been concluded in 2018 to extend NAGA cryptocurrency products (NAGA Wallet) to MyBucks´s clients. NAGA’s corporate strategy is oriented to integrate all the services, currently in different website and apps, in one unique platform.

 

In addition, an expansion of business activities in Europe and worldwide is planned. A core point for the implementation is the starting of strategic alliances or M&A (e.g. in Asia boosted by the Hong Kong based shareholder). Given a steady increase in the volume of users for both finance and crypto divisions, we anticipate an increase in revenues of up to €38.45m in FY 2020. This is the basis for our valuation approach, which uses a DCF model. However, we have to underline that the company acts as a new founded venture and is active in a highly competitive environment.

 

Based on the DCF model, we calculate a fair value per NAGA share of €5.15 Based on the current share price of €2.10, resulting in a share price potential of over 140% and, therefore, we are including NAGA as a new entry in the research coverage with a Buy rating.