ASMALLWORLD AG: A NuWays AG Buy Recommendation Amid Financial Performance and Growth Investments

ASMALLWORLD AG revealed their FY'23 results, complying with previous top-line expectations but slightly missing the mark on the EBITDA front. NuWays AG, analyzing the performance, highlights the company's sales increase to CHF 21.2m, propelled by significant growth in subscriptions and services, benefiting from a 6.4% member increase to 70.2k. Despite stiff competition, a change in product mix led to a minor dip in EBITDA to CHF 2.1m, a consequence of veering the membership benefits towards the Emirates Skywards program, resulting in higher associated costs.

The company announced an 'investment year' to bolster short-term growth despite an expected impact on FY'24e profitability. This strategic move includes acquisitions like JetBeds.com and plans to attract more members through expanded marketing efforts and a potential 'freemium' model. These investments aim to solidify ASMALLWORLD AG's future growth trajectory, forecasting a stronger profitability rebound in FY'25e.

With an updated guidance anticipating sales between CHF 23-25m and a member base projection of 73-74k, the EBITDA is expected to slightly decline due to the growth investments. However, NuWays AG maintains a BUY recommendation for ASMALLWORLD AG, albeit with a revised target price of CHF 4.30, suggesting the stock's current price does not fully reflect the company's medium-term growth potential.