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Original-Research: ZEAL Network SE - from NuWays AG

15.10.2024 / 09:00 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.

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Classification of NuWays AG to ZEAL Network SE

Company Name: ZEAL Network SE
ISIN: DE000ZEAL241

Reason for the research: Update
Recommendation: Kaufen
from: 15.10.2024
Target price: EUR 54.00
Target price on sight of: 12 months
Last rating change:
Analyst: Henry Wendisch

Google bans ads from illegal lottery providers

Last month, Google update its advertisement policies regarding gambling and
games, which only allows whitelisted operators to advertise on Google,
helping the regulator to battle the illegal lottery market. While impacts
for ZEAL are hard to quantify, we nevertheless regard it as positive news.

Effective 25th September 2024, Google only allows companies whitelisted by
the GGL (Gemeinsame Glückspielbehörde der Länder, German Gambling authority)
to run ads for their offerings. Consequently, companies without a GGL
license had their advertisement certification revoked on that day. This also
includes gambling aggregation services (such as landing pages), thus also
preventing a bypass of the ban.

This not only follows Meta's gambling advertisement policy, which is in
place since 2014 and also requires companies to be whitelisted by the GGL,
but also closes a gap for illegal competition in ZEAL's most important
advertisement channels.

The ad-bans should help the GGL to fight the illegal lottery market in
Germany. While existing measures such as IP- and payment blocking against
illegal offerings in Germany not only take time, but also need a court
decision, are thus not as effective as intended. Therefore, the decision by
Google to stop the advertisement does not stop illegal operations, but could
prevent further growth of the black market.

The latter is key for the legal market, as uninformed consumers, especially
those that switch from offline lottery to online, cannot differentiate at
first sight whether a provider is legal or not. This implies, that now the
legal online lottery providers (ZEAL and the federal state's lottery
operators landing page lotto.de) are competing against each other at online
marketing channels, such as Google. A potential positive impact for ZEAL
and/or the legal lottery market is hard to quantify as neither the black
market nor their marketing budgets are known, however the expected absence
of illegal competition on Google could lead to falling customer acquisitions
costs, as the pay-per-click advertising auction for certain buzzwords should
have less bidders, in our view.

This bodes especially well for ZEAL, which recorded new records in marketing
efficiency earlier this year. Against this backdrop, we reiterate our BUY
recommendation with an unchanged PT of EUR 54.00, based on DCF.

You can download the research here: http://www.more-ir.de/d/31051.pdf
For additional information visit our website: www.nuways-ag.com/research

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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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss
bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben
analysierten Unternehmen befinden sich in der vollständigen Analyse.
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2008237 15.10.2024 CET/CEST

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