Original-Research: Global Fashion Group S.A. (von NuWays AG): BUY

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Original-Research: Global Fashion Group S.A. - from NuWays AG

08.05.2025 / 09:00 CET/CEST

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Classification of NuWays AG to Global Fashion Group S.A.

Company Name: Global Fashion Group S.A.

ISIN: LU2010095458

Reason for the research: Initiation

Recommendation: BUY

from: 08.05.2025

Target price: EUR 0.80

Target price on sight of: 12 months

Last rating change:

Analyst: Henry Wendisch

Turnaround play in global fashion, Initiate GFG with BUY

Emerging markets are poised for growth in online fashion, driven by a young,

tech-savvy population that is growing at a rate faster than the global

average. With GDP growth expected to outpace that of developed economies, an

emerging middle class is gaining purchasing power, while online penetration,

though still relatively low, is rapidly increasing. These dynamic trends set

the stage for significant, midterm growth opportunities in the online

fashion sector.

Here, Global Fashion Group (GFG), a global fashion marketplace and retailer,

connects global and local partner brands to more than 800m consumers. In

doing so, GFG is the only pure online fashion-focussed platform of scale in

its respective markets, combining the advantages of a global scale with deep

local expertise and data-driven operations. It operates under its three well

recognized local brands: "Dafiti" in LATAM, "ZALORA" in SEA and "THE ICONIC"

in ANZ. The assortment reflects a combination of retail (61% of NMV) and the

asset-light and growing marketplace business (39% of NMV), which serves as a

flexible business model for partner brands and incurs no inventory risk and

higher margins for GFG.

Having been burdened by a lacklustre consumer sentiment over the past years,

a turnaround is soon to materialize. The comfortable gross margin of 45%

(FY'24) looks set to improve further thanks to an ongoing shift towards the

asset-light Marketplace business model. Additionally, GFG continues to face

underutilization of its fulfilment capacity (c. 57% in FY'24, eNuW).

However, based on an optimistic consumer sentiment outlook in GFG's key

regions, we anticipate growth to return as early as FY'26e. Thanks to

operating leverage (due to high fixed costs in fulfilment and G&A), the

adjusted EBITDA should improve significantly. As GFG's solid working capital

management (neg. EUR 56m NWC in FY'24) comes with a negative 70 days cash

conversion cycle, a return to growth should also lead to disproportionately

improving cash generation.

With EUR 156m of net cash (Y/E'24), the market currently values GFG with a

negative EV of EUR 95m. In light of a materialising turnaround and positive

cash generation visible on the horizon, we regard the stock as mispriced.

Hence, we recommend to BUY and initiate GFG with a PT of EUR 0.80, based on

DCF.

You can download the research here: http://www.more-ir.de/d/32510.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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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben

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2132720 08.05.2025 CET/CEST

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