Original-Research: Borussia Dortmund GmbH & Co KGaA (von NuWays AG): Buy

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

31.01.2025 / 09:00 CET/CEST

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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: 31.01.2025

Target price: EUR 5.50

Target price on sight of: 12 months

Last rating change:

Analyst: Philipp Sennewald

Final TV marketing distribution released; New HC incoming

Topic: Following the award of the domestic TV rights in December, where the

DFL achieved a 2% increase compared to the previous cycle (click here for

update), the Executive Committee of the DFL now unanimously adopted the

mechanism for distributing the revenues from the 25/26-28/29 cycle. In

detail:

Strengthened central marketing. EUR 50m of the total additional proceeds of EUR

80m will be used to finance growth projects that will benefit all clubs by

strengthening the centrally marketed rights. Clubs will contribute to this

in accordance with their respective share of the distribution key.

Fan and media relevance. Going forward, within the "interest" pillar,

national TV ratings and the number of club members will be taken into

account. This should ultimately benefit BVB, as the club is 2nd in both club

members and TV ratings.

Solidarity. The annual solidarity payments to Bundesliga 2 clubs will

increase from EUR 8.5m to EUR 10m. In addition, an amount of five million euros

per season will be distributed to the Bundesliga clubs that do not play

internationally, which will be financed from the DFL's international media

revenue. This on the other hand will be slightly negative for BVB, as the

club is likely going to play internationally in all seasons of the upcoming

cycle.

Talent. The "young talent" pillar will be adjusted to give greater weighting

to match appearances of young players trained in Germany. This should

benefit BVB, as the club as renowned across Europe for its ability to

develop talented, young players.

Overall, the changes to the distribution are only minor, which is why we

continue to estimate an average increase in domestic media revenues for BVB

of 2% going for the upcoming cycle.

UCL. Last Wednesday, BVB beat Shakhtar Donetsk in the last game of the

league phase, which BVB finished in 10th position, meaning the club will

play in the play-offs in February. Here, BVB will play against either

Sporting Lisbon or Club Brugge (draw today at 12am). Both opponents should

be seen as clear underdogs against Dortmund, which is why we continue to

expect the club to reach the round of 16, where BVB would play against

either Lille or Aston Villa. In our view, either of both teams should be

beatable as well, thus providing a certain upside to our current estimate

(round of 16).

New head coach. Following Wednesday's match, CSO Lars Ricken confirmed, that

Niko Kovac will become new head coach starting on Sunday. Kovac is not a

blank slate in the Bundesliga, having coached Eintracht Frankfurt, Bayern

Munich and Wolfsburg in the past. During his stints at Franfkurt and Munich,

he was able to win two national cups as well as the one championship. In our

view, clearly display his potential as a coach during his time in Frankfurt,

while his jobs in Croatia, Munich, Monaco and Wolfsburg ended in him being

sacked based on lack of success. Yet, especially in his first season with

Monaco he had a point average of 2.05 and qualified for the UCL, which also

has to be seen as a success. Overall, while Kovac might not seem as a

perfect fit at first glance, he had successful periods in the past and has

proven his ability to win titles. That being said, he certainly has the

tools to exploit the high potential of the squad, which he can already prove

in February, when BVB will play a total of six games (4x Bundesliga, 2x

UCL).

Reiterate BUY with an unchanged PT of EUR 5.50 based on DCF.

You can download the research here: http://www.more-ir.de/d/31695.pdf

For additional information visit our website:

https://www.nuways-ag.com/research-feed

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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2078495 31.01.2025 CET/CEST

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