Marley Spoon Group SE
Original-Research: Marley Spoon Group SE (von NuWays AG): BUY

Original-Research: Marley Spoon Group SE – from NuWays AG

Classification of NuWays AG to Marley Spoon Group SE

Company Name: Marley Spoon Group SE
ISIN: LU2380748603

Reason for the research: Update
Recommendation: BUY
from: 12.03.2024
Target price: 8.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Mark Schüssler

HelloFresh’s weak outlook reflected MSG’s market est.

Topic: Last Friday, Marley Spoon’s (MSG) close peer HelloFresh (HFG)
released a weaker-than-expected outlook for FY24 and withdrew its FY25
(mid-term) targets on the back of particularly challenging end markets,
triggering a 40-50% sell-off of the stock. Importantly, the weak end market
sentiment should be fully reflected in our and market expectations for MSG.

What happened in detail: HFG had issued its midterm (FY25) targets of €
10bn in revenue and € 1bn in operating earnings during a time in which
consumer sentiment generally and the meal kit market particularly were
still upbeat with strong growth, apparently failing to temper consensus’
expectations regarding the Group’s ability to deliver on these goals in the
presently challenging macroeconomic environment. As a result, withdrawing
the midterm targets altogether along with a muted FY24 guidance of €
7.75-8.20bn in revenue (2-8% yoy) and adj. EBITDA of € 350-400m (between
-11% and -22% yoy) caught investors flat-footed. Investing heavily in
performance marketing and brand maintenance, the company cited higher
customer acquisition costs as the main driver for lower prospective adj.
EBITDA along with increased expenses for production capacity and ramp-up of
two newly added fulfilment centres.

What this means for MSG and our estimates: In our view, this is no
incremental negative news for Marley Spoon as our current top and bottom
line estimates already reflect a challenging end market environment. To a
considerable extent, the negative expectations regarding the meal kit
market in FY24 have already been priced in MSG’s stock after the company
posted a revenue decline of -18% in FY23, leading investors to adjust their
forward expectations accordingly.

We currently expect MSG’s organic sales to grow by 5.2% – and thus at the
midpoint of HFG’s guided FY24 revenue growth – to reach € 346m, aided by a
lower revenue base and a rectified voucher strategy which has already
improved marketing efficiency and early cohort retention rates since Q4’23
and should likely help to lift subscriber quality, order frequency as well
as basket size, going forward. In line with HFG’s statement regarding the
beginning recovery of the meal kit market, active subscribers are seen to
grow by 3% yoy to 195k after having dropped by 24% from 249k in FY22 to
189k in FY23.

Marley Spoon Group remains attractively priced trading at only 0.32x
EV/Sales 2024e, leading us to reiterate our BUY rating with an unchanged PT
of € 8.00 based on DCF.

You can download the research here:
http://www.more-ir.de/d/29111.pdf
For additional information visit our website
www.nuways-ag.com/research.

Contact for questions
Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden: www.nuways-ag.com/research.
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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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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