Shareunderten.com Portfolio Update, Current Outlook

We’re seeing more and more investors embrace our investment strategy: buying undervalued stocks under 10 euros with serious upside potential. The stock Rolls-Royce, on which we’ve achieved nearly 1,000% gains, is clear proof that you can turn a nickel into a dime.

In this update, we provide a clear overview of the positions we currently hold in the Sharesunderten.com portfolio. For each stock, we explain:

Why we originally bought the stock
What developments have occurred since then – in terms of company performance or market news
And why we currently see no reason to sell these positions

We remain committed to our approach: selective, disciplined, and focused on medium- to long-term returns. Time is our ally. Stocks under ten euros often have the most room for recovery or revaluation – if you know where to look.

If certain stocks have already risen significantly, you’re still welcome to follow our updates, and of course, invest alongside us in those positions that are still active buys for new subscribers.

Let’s start with our first position…

BP
Deceuninck
Rolls Royce
Grab Holding
Hello Fresh
Brunel
Centrica
Playtech

BP

On May 19, 2021, we took our first position in BP when the share price stood at 310 pence. We bought 1,250 shares for the Sharesunderten portfolio, convinced of the recovery potential of this British energy giant. At the time, oil prices had begun to rise again after the pandemic-induced low in 2020, but BP’s share price had barely followed suit. Nonetheless, we saw clear signs of recovery: management announced debt reduction, a share buyback program, and a total cash return to shareholders of 8 to 11% starting in 2022—significantly more than sector peers.

In addition to strong shareholder returns, BP also began taking a leading role in the energy transition. The new CEO, Bernard Looney, announced a structural reduction in oil and gas production and a transformation into an integrated energy company. BP committed to investing $5 billion annually in sustainable initiatives, including solar and wind energy, hydrogen, and biofuels. BP became the first oil major to publicly acknowledge that peak oil demand was behind us.

We held the position for three years. In May and June 2024, we sold our shares in two tranches, realizing a total return of about 70% including dividends. The timing proved excellent: shortly after our sale, the share price corrected slightly. This also gave us an opportunity to re-enter at lower levels. In January 2025, we re-initiated a position at 434 pence, using 60% of the original investment volume. We had already expressed our intent to buy more on a correction and followed through in early May at 360 pence.

Our renewed confidence in BP is based on two factors. First, the valuation remains attractive, with a P/E ratio just above 7 and a dividend yield of 6.4%, potentially rising to 7.4% by 2027. Second, BP is making significant progress in its transition to a low-carbon energy company, with a strong focus on hydrogen. Projects like Lingen Green Hydrogen aim to put BP at the forefront of a market estimated to grow to $259 billion by 2033.

BP’s financial foundation is solid. In Q3 2024, it generated $6.8 billion in cash flow and even raised its dividend despite pressure on refining margins. With free cash flow expected to rise toward 20% in the coming years, there is room for both investments and shareholder rewards.

We expect BP to rise in the short term toward 550 pence, a price target aligned with profit and cash flow growth forecasts. Over the longer term, we believe BP is well positioned in both fossil and renewable energy markets. BP combines operational strength with a clear long-term strategy, and as long as that remains the case, we want to remain invested.

BP share price performance over the past five years.

Deceuninck

On May 31, 2021, we initiated a position in Deceuninck at €2.94. The timing proved excellent. The Belgian manufacturer of PVC window and door profiles benefited greatly from the European renovation wave, driven by sustainability subsidies and higher home investments during lockdowns. Deceuninck returned to profitability, reduced debt, and made substantial investments in product development and a recycling plant. The share price rose quickly, and when majority shareholders Willy and Arnold Deceuninck announced a private placement of their stake, we decided to exit completely on September 14, 2021, realizing a nearly 30% profit. Large placements often signal a pause in upward momentum, which proved correct.

However, we re-entered the stock on August 18, 2023, at €2.27, buying 1,250 shares for our portfolio. What caught our attention: despite a 10% price drop over the past year, the share price of Ege Profil—Deceuninck’s Turkish subsidiary in which it holds an 88% stake—had more than tripled. That stake alone was worth around €340 million, while Deceuninck’s total market cap stood at €321 million. In other words, investors were attributing a negative value to all other activities of the Belgian parent company.

At the same time, management reiterated its 2023 guidance: EBITDA growth and improved free cash flow. No profit warning was issued, and the results released in late August confirmed the company’s resilience in a challenging market.

We continue to hold Deceuninck firmly in our portfolio. The company benefits from a strong competitive position due to its franchise-like sales model, which ensures customer loyalty, pricing power, and margin protection. The balance sheet is also healthy, with net debt of just €88.3 million on nearly €1 billion in revenue by the end of 2022. Investments in recycling and circularity align perfectly with long-term trends in the construction and renovation sectors. And last but not least: the hidden value of Ege Profil is still not fully reflected in the share price.

We believe management has several strategic options to unlock this value—such as selling the Turkish stake or initiating a share buyback program. As long as this option remains open and cash flows remain intact, Deceuninck remains a buy for us. We are staying on board, awaiting the next catalyst.

Deceuninck share price performance over the past five years.

Rolls-Royce

On April 6, 2022, we added Rolls-Royce to our Sharesunderten portfolio at a price of just 97 pence. We bought 2,000 shares and saw in this British industrial giant a classic recovery story despite market concerns. At that time, Rolls-Royce was the epitome of a neglected value stock—well-known by name, but struggling with the aftermath of the pandemic, disappointing cash flows, and rumors of a £2.5 billion rights issue. The aerospace division was running at minimal capacity, and the stock had hit a 16-year low. Still, we noticed something the market seemed to overlook.

On May 13, 2022, we increased our position by purchasing an additional 1,000 shares at 83 pence. With the current share price at 930 pence, our initial investment has risen by over 850%, and the secondary purchase by more than 1,000%. That kind of recovery is no coincidence.

Despite negative sentiment, nearly one-third of revenue came from the defense sector—a more stable and profitable business. Additionally, Rolls-Royce possessed valuable technologies, such as for nuclear submarines, and its engineering expertise paved the way for innovations like small modular reactors (SMRs). These SMRs produce about 470 megawatts per unit—much less than large nuclear plants, but at a fraction of the cost. The UK government considers this technology strategically important and holds a “golden share” in Rolls-Royce, allowing it to block hostile takeovers. This makes Rolls-Royce a unique defensive growth opportunity in a world where energy security and military readiness are increasingly prioritized.

Global defense budgets have soared, and the UK Ministry of Defence continues to invest in naval nuclear technology. The energy transition has also gained momentum: nuclear energy is once again seen as indispensable, and Rolls-Royce is one of the few companies with a scalable, realistic SMR solution. Meanwhile, new management sharpened the company’s focus and sold off non-core assets. These strategic choices are now paying off.

We’re holding onto this stock tightly. Rolls-Royce benefits from multiple long-term trends—energy independence, defense spending, and the revaluation of nuclear energy—that are likely to persist for years. We consider it a success story whose full potential has yet to be realized.

Rolls Royce share price performance over the past five years.

Grab Holdings

On January 18, 2024, we took our first position in Grab Holdings at a price of $2.92. The stock had been under heavy pressure after a nearly 80% decline since its IPO in 2021. Yet we saw opportunity: Grab had significantly reduced its operational losses, adjusted EBITDA turned positive for the first time, and the company held a strong cash position. While the market remained skeptical, we identified a classic recovery story with a strong base in growth markets.

In July 2024, we exited the position after the company abandoned its acquisition of Trans-cab Holdings, Singapore’s largest private taxi company. The deal was blocked by the competition authority, raising concerns about Grab’s domestic growth potential. Not wanting to take unnecessary risks, we locked in a solid 14% gain.

We kept a close watch. Grab’s strategic positioning in Southeast Asia, combined with a strong brand, solid balance sheet, and ongoing operational improvements, remained attractive. When the company raised its EBITDA forecast and posted strong quarterly results on May 19, 2025, we re-entered with 300 shares at $5.07.

Grab has since evolved into Southeast Asia’s super app. With services in Mobility, Deliveries, and Financial Services, the company serves over 500 cities across eight countries. These segments represent 37%, 54%, and 9% of revenue, respectively. Mobility is profitable with an EBITDA margin of 54%, while Financial Services is the fastest-growing division (+44% in 2024), albeit still unprofitable.

The balance sheet is extremely strong: Grab holds $5.9 billion in cash against only $0.4 billion in debt—resulting in a net cash position of $5.5 billion, unusually robust for a young growth company. Tangible book value stands at $1.32 per share, offering a strong floor for the share price.

Estimates for 2027 paint a mixed picture: a P/E ratio of 32x seems high, but an EV/FCF multiple of about 15x is attractive for a growth company like Grab—especially given expectations of rapid free cash flow growth and potential earnings within a few years.

We’re holding Grab tightly once again. It’s a familiar name—we’ve profited before—but its current positioning is stronger than ever. With profitability in sight, a fast-growing user base, and a balance sheet that supports investments and possible dividends, Grab remains a compelling long-term position for us. Our price target is $12.50, in line with its SPAC-merger valuation from late 2021.

Grab Holding share price performance over the past five years.

HelloFresh

On June 7, 2024, we took our first position in HelloFresh at a price of €5.66. We bought 250 shares, seeing in the company a promising turnaround with strong leverage on operational improvements. At that point, HelloFresh had been punished by the market due to disappointing growth figures, but we focused on the improved cost base and the rapidly expanding Ready-to-Eat segment as key recovery catalysts.

Our thesis played out quickly: in September 2024, we sold part of the position with a 54% gain, and in December 2024 we exited the remainder with an impressive 114% gain. Our €13 price target was achieved in less than six months.

Following this spectacular rally, the share price dropped below €8 in the first half of 2025. This correction offered another opportunity. Despite weaker revenue forecasts—the company even expected a slight decline—margins had clearly improved. We saw HelloFresh setting the right priorities: cost savings, cash flow maximization, and selective growth. Profitability exceeded expectations, and the company continued to focus on its fast-growing Ready-to-Eat division, now representing over a quarter of total revenue.

In June 2025, we added another 150 HelloFresh shares to our portfolio at around €7.78. Not a big bet, but a promising move in an uncertain market climate.

HelloFresh’s financial foundation is solid: net debt stands at just €0.4 billion, equating to a conservative net debt/EBITDA ratio of 1.1x. In addition, the share buyback program was extended with another €75 million—enough to repurchase over 5% of outstanding shares at current prices, signaling confidence and capital efficiency.

Also noteworthy: in September 2024, CEO Dominik Richter made a strong statement by purchasing €10 million worth of shares, raising his stake to 5%. We view this kind of founder-CEO commitment very positively.

Though the revenue outlook has weakened, the stock remains attractively valued, with a projected P/E of 8.0x in 2027 and an EV/FCF multiple of 7.8x. For a company with dominant market positions, a proven brand, and improving margins, that is low in our view.

We maintain our buy rating on HelloFresh, with a renewed price target of €13. This is based not only on past price movements, but also on fundamental improvements in cash flow, balance sheet, and strategy. HelloFresh fits perfectly into our philosophy: undervalued growth stocks with upside potential that the market has yet to fully price in.

Hello Fresh share price performance over the past five years.

Brunel

On September 25, 2024, we initiated a full position of 400 Brunel shares at €8.70. We saw an overlooked opportunity in this Dutch staffing firm: despite strong revenue growth, the share price was at a level hardly justified even under recessionary conditions. And yet Brunel operates in growth markets like sustainable energy, engineering, and IT, with global diversification and a niche in highly skilled placements.

The share price has since moved sideways and remains near €8.70. However, we’re not seeing any fatigue: with a dividend yield of 6.4%—expected to rise to 7.1% in 2025—we are generously compensated for our patience. Waiting is supported by fundamental trends: the energy transition creates opportunities, gross margin is protected through cost savings, and large renewable energy projects provide a strong pipeline for 2025 and beyond.

Challenges remain: the German automotive sector remains weak, and some projects in Asia have been delayed. But with a €20 million cost-saving plan and digitalization initiatives improving operational efficiency, Brunel is working on structural profit improvements. Analysts expect double-digit EBIT growth in 2025, even if Germany stays weak.

We expect a price recovery toward our €14 target in the medium term, offering about 70% upside. Add to that a solid dividend, and you have an ideal position for patient investors. The stock is undervalued with a 2025 P/E of 8.3x—well below its historical average of 19x.

Moreover, with founder Jan Brand (age 75) still at the helm holding 60.05% of shares, a takeover or strategic restructuring cannot be ruled out. Until then, we enjoy the generous dividend while awaiting revaluation or consolidation in the sector.

Brunel share price performance over the past five years.

Centrica

On January 8, 2025, we took a modest position of 400 Centrica shares at £1.38. The stock had a difficult 2024, marked by volatility due to uncertainty around energy transition investments. Still, we saw enough reason for a cautious entry: the balance sheet was strong, the interim dividend was raised, and a £200 million buyback was underway. Centrica’s capital position allows for both growth and shareholder returns—a rare combination in a transitioning sector.

The share price now stands at £1.64, with our initial target of £1.75 nearly reached. That’s a 19% gain in under six months. This rise is not accidental: investors are gradually gaining confidence in Centrica’s role in the UK energy transition. A free cash flow of £0.8 billion in H1 2024 and a net cash position of £3.2 billion underscore the company’s financial strength.

The energy transition requires significant investment—Centrica plans up to £800 million per year through 2028—but the company has the means. As the only fully vertically integrated player in the UK energy sector, Centrica is uniquely positioned to add value across the chain: from production and storage to delivery and consumption.

That said, we remain cautious: Centrica Energy, the unit involved in production and trading, remains relatively opaque, limiting confidence in valuation. Also, the 2028 targets are ambitious and need to be met.

As long as the story holds and the numbers point in the right direction, we remain invested. We are monitoring the situation closely. If the £1.75 target is reached without a convincing improvement in outlook or results, we may take profits. But if Centrica proves its investments are paying off and free cash flow continues to grow, a revised price target is certainly on the table.

Centrica share price performance over the past five years.

Playtech

On April 17, 2025, we took our first position in Playtech at around 740 pence. The trigger was exceptional: the company announced the sale of its entire stake in its B2C division Snaitech to Flutter Entertainment for £2.0 billion in cash. Of that amount, at least £1.45 billion would be returned to shareholders via a special dividend of around 550 pence per share—with no dilution.

For us, this was a rare and attractive opportunity: a significant portion of our investment would be returned almost immediately, while we retained a stake in the profitable and well-capitalized core business—its B2B division. This segment acts as a tech partner for online casinos and sports betting platforms and continues to grow robustly in regulated markets worldwide.

The dividend has since been paid out. As expected, the share price dropped on the ex-dividend date, but has since recovered and is now 24% higher, adjusted for the dividend. This recovery is no coincidence: the remaining B2B division performed strongly in 2024, with 10% revenue growth and a 22% increase in EBITDA—yielding a nearly 30% margin. Reliance on major clients has also decreased, making the business model more stable.

Strategically, Playtech is on track. It is investing in high-growth markets such as Canada, South Africa, France, Chile, and the UAE. Through the restructuring of its partnership with Caliente in Mexico, it gained a 30.8% stake in Cali Interactive—a new platform targeting the regulated U.S. online gaming market.

After the dividend payout, the remaining market value is about £800 million for a core business expected to generate £85 million in net profit in 2025. That implies a P/E ratio of under 10x, which is low for a high-margin, growth-oriented, globally diversified tech company. The fact that the dividend was paid entirely in cash and involved no new share issuance underscores management’s shareholder-friendly approach.

To us, Playtech is a textbook example of how a well-timed strategic reshuffle can create both immediate and future value. The stock remains one of our favorites within the Sharesunderten portfolio.

Playtech share price performance over the past five years.

Conclusion

The past years have shown that patience, strategic insight, and a sharp eye for valuation can lead to impressive results—even in volatile markets. Whether it’s the structural transformation of BP, the hidden value in Deceuninck, or the technological revival of Rolls-Royce, each position in our Sharesunderten portfolio tells a unique story of recovery, resilience, or reinvention.

We continue to focus on undervalued growth stocks with strong balance sheets, improving cash flows, and a clear strategic direction. Our approach remains disciplined: we take profits when targets are reached, we stay alert for new entry points, and we hold on tightly when the long-term outlook remains intact.

As always, we are prepared to act swiftly when opportunities arise—but never without a solid fundamental basis. We believe that the current mix of companies in the portfolio offers a robust foundation for future returns.

Our conviction remains strong. The market often underestimates the power of steady improvement. We don’t. From this point forward, you’re part of the journey — and we’re actively searching for our next promising shareunderten

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Analyse

The recovery of this stock on the London Stock Exchange has been sluggish.

Let’s be honest — it does look good when you’re trading “shares under ten” and you’ve got Rolls-Royce in your portfolio. Despite the prestigious name, this stock fully qualifies as a true penny stock. Shares Under Ten is adding 2,000 shares to the portfolio at the current price of around 97 pence. 5-Year Share Price Performance – Rolls-Royce Holdings plc. Company Profile The Rolls-Royce brand is, of course, best known for its luxury cars — but many may not realise that the automotive business has long been owned by BMW. Rolls-Royce Holdings plc, founded in 1884 and headquartered in London, operates independently and focuses on engineering and power systems. The company is structured into four divisions: Civil Aerospace, Power Systems, Defence, and New Markets. The Civil Aerospace division designs, manufactures, and services engines for large commercial aircraft, regional jets, and business aviation. The Power Systems division develops and sells integrated power and propulsion solutions for marine, defence, and selected industrial sectors. The Defence division supplies engines for military transport aircraft, patrol aircraft, and naval propulsion. The New Markets division focuses on small modular reactors (SMRs) and new electric energy solutions, as well as maintenance, repair, and overhaul (MRO) services. The New Markets division is expected to play a key role in the global energy transition. Rolls-Royce is working to accelerate the launch of a new generation of mini nuclear reactors, a development fast-tracked by the ongoing energy crisis. While these SMRs aren’t expected to be operational before the early 2030s, management is eager to speed up the process, especially as Western nations seek to reduce dependence on Russian fossil fuels following the invasion of Ukraine. However, engineers within the company have expressed frustration with the slow pace of regulatory approval in the UK, arguing that the government’s process for reviewing reactor safety is unnecessarily burdensome. Rolls-Royce aims to build SMRs that generate around 470 megawatts of power — just one-seventh the output of a large-scale nuclear plant, but at roughly one-twelfth the cost. The UK government has stated that the company’s technology is entirely new and must therefore undergo thorough scrutiny. Rolls-Royce engineers, however, point out that the technology is based on decades of experience in nuclear-powered submarines, a proven and extensively tested field. Rolls-Royce cannot be acquired without government approval. The UK government holds a so-called “golden share,” which grants it special veto rights. This share does not offer profit participation or capital rights, but allows government representatives to attend general meetings and block specific strategic moves — such as takeover bids — that could affect national interests. Financials The UK’s most well-known engineering firm was hit hard by the COVID-19 pandemic, as airlines pay Rolls-Royce based on the number of flight hours logged by its engines. Given these extraordinary circumstances, FY2020 and FY2021 are not considered reliable indicators of the company’s underlying performance. In 2021, Rolls-Royce reported £414 million in underlying operating profit, a sharp turnaround from a loss the previous year. Growth in the Power Systems and Defence divisions contributed significantly to this financial improvement. However, the company also reported a free cash outflow of £1.5 billion from continuing operations in the same year. CEO Warren East commented on the results: “We have improved our financial performance, met our short-term commitments, secured new business, and made important strategic progress during the year. While challenges remain, we are increasingly confident about the future and the significant commercial opportunities presented by the energy transition.” Rolls-Royce’s credit profile has improved since the onset of the pandemic, and its exposure to the Russia-Ukraine conflict remains limited. As a result, Moody’s upgraded the company’s outlook from negative to stable. Pros Strong visibility and predictability of earnings Stable margins in the Defence division New CEO Warren East is aiming to bring fresh momentum to the company Cons Loss of market share in the business jet segment Disappointing cash flow development High R&D costs for new engine programmes Conclusion We are not particularly enthusiastic about this stock. While management certainly shows no lack of ambition, those good intentions have yet to translate into improved results. The company appears to be spread too thin across too many markets — and it’s simply not possible to be best-in-class everywhere. A more focused approach would likely serve Rolls-Royce well. Divesting non-core activities and doubling down on key strengths could strengthen both performance and investor confidence. The business jet division, for example, already faced structural challenges before the energy crisis, and its outlook remains weak. A sale of this unit might be a sensible move — especially if a solid price can still be secured. Back in August 2021, management announced it was open to selling assets such as ITP Aero, the turbine blade manufacturer, in an effort to raise at least £2 billion. Strategic asset sales like these may be necessary to unlock value and refocus the company. Third-Party Analyst Ratings for Rolls-Royce. Globally, twenty analysts currently cover Rolls-Royce Holdings, and the consensus view is that the stock could gain around 28% over the next 12 to 18 months. At Shares Under Ten, we believe the share price has likely found a bottom, and we’re taking this opportunity to add the stock to our portfolio. Naturally, we’ll be monitoring developments closely. A takeover seems highly unlikely under current circumstances. Rolls-Royce plays a vital role in the UK defence sector, and the government holds a golden share that gives it veto power over any unwanted acquisition. In addition, ceding control over Rolls-Royce’s expertise in modular nuclear reactors would run counter to the UK’s long-term energy policy. Former Prime Minister Boris Johnson has been a strong advocate for nuclear energy and clearly sees the company’s know-how as a strategic national asset — especially amid the current energy crisis.Takeover rumours have surfaced before. Rolls-Royce was the subject of M&A speculation both in 2015 and again in 2020. However, following a series of profit warnings in 2015, the stock price fell by around 75%, and its recovery

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07/01/2025

Analyse

This time, it’s not the house that wins, it’s the investor

This is a chance we simply can’t ignore. We’re looking at a company with a market cap of around €2.5 billion, while one of its divisions is about to be sold for a stunning €2.3 billion in cash. That means investors are set to receive a substantial portion of their investment back through a special dividend. And the best part? The company’s profitable growth engine – its B2B division – remains entirely under Playtech’s control. What’s left is a healthy, cash-rich tech company with a strong foothold in regulated gambling markets and plenty of room for further growth. Figure 1. Playtech share price performance over the past five years. Source: Google. Founding Playtech was founded in 1999 in Estonia by Israeli entrepreneur Teddy Sagi. Together with a team of software developers, multimedia experts, and professionals from the casino industry, he developed a comprehensive software platform for online gambling. From the outset, the company focused on B2B services, providing technology to online casinos, poker rooms, bingo sites, and sports betting platforms. Although Playtech was established in Estonia, it had an international outlook from the beginning and quickly expanded throughout Europe. The decision to go public in the UK was strategic: London offered an attractive platform for high-growth tech companies, including international ones. In 2006, Playtech went public, raising approximately £312 million with a valuation of around £550 million. The proceeds were used to fund international expansion, acquisitions, and continued product development. In 2007, Mor Weizer was appointed CEO—a role he continues to hold to this day. Under his leadership, Playtech has grown into one of the world’s leading gambling software providers. Business Activities Today, Playtech is a major global technology supplier to the gambling industry, offering a wide range of products and services. The company provides software solutions for both online and land-based casinos, sports betting, poker, bingo, lotteries, and live casino games. A key component of its offering is the IMS platform (Information Management Solution), which allows clients to manage all player data, payments, marketing, and game content from a single system. Playtech also operates dedicated live casino studios and develops its own slot machines and table games. Sports betting technology is offered through its subsidiary, Playtech BGT Sports. In addition to its B2B services, Playtech also operates B2C activities. Through its subsidiary Snaitech, the company offers gambling services directly to consumers in Italy, both online and in physical outlets. Sale of Snaitech In September 2024, Playtech announced the sale of its entire stake in Snaitech to Flutter Entertainment for €2.3 billion in cash. Snaitech is Playtech’s B2C arm, active in Italy in both online gambling and retail sports betting. The deal is expected to close in the second quarter of 2025. The sale aligns with Playtech’s strategy to fully focus on its fast-growing and highly profitable B2B operations. By divesting Snaitech—which is more capital-intensive and less scalable—the company sharpens its focus on technology and platform services for regulated gambling markets worldwide. Caliplay Agreement Also in September 2024, Playtech announced a new strategic agreement with Caliplay, its joint venture with Caliente in Mexico. The collaboration is being restructured, giving Playtech a 30.8% stake in a new U.S.-based holding company called Cali Interactive, which will focus on the rapidly growing regulated gambling market in the United States. The agreement ends a years-long legal dispute over contract terms and outstanding payments. For Playtech, the deal means direct revenues from Caliplay service fees will cease, but it gains the prospect of dividend income from Cali Interactive and a strategic position to participate in U.S. market growth. 2024 Results On March 27 (pre-market), Playtech reported its full-year 2024 results. The B2C division—mainly consisting of Snaitech—saw only 2% revenue growth. Margins were around 24.5%, lower than in B2B, and future growth is limited due to market saturation and increased regulation. The B2C model is also capital-intensive, requiring investment in retail outlets, marketing, and absorbing the risk of sports results. While Snaitech remains profitable, it offers limited scalability and few international expansion opportunities. In contrast, the B2B division performed strongly. In 2024, B2B revenue rose by 10%, and EBITDA grew by 22%, with the margin increasing to 29.4%. Growth was driven primarily by North and South America, including a doubling of revenue in the U.S. Client concentration also improved: the top five customers accounted for 42% of revenue in 2024, down from 51% a year earlier—making the revenue base more stable and less reliant on a handful of large clients. Looking ahead, management expects adjusted EBITDA of €250 to €300 million from 2025 onwards, with annual free cash flow of €70 to €100 million. These figures reflect only the remaining B2B operations, as Snaitech is being sold and Caliplay is now a minority holding. Growth in Online Casinos Both Europe and the United States are experiencing strong growth in the online gambling market, creating attractive opportunities for Playtech. According to a recent report by the EGBA and H2 Gambling Capital, Europe’s gambling market reached a gross gaming revenue of €123.4 billion in 2024, up 5% from 2023. Online gambling was the main driver, increasing by roughly 12% to €47.9 billion. Online now represents 39% of the total gambling revenue in Europe. This growth has been fueled in part by the legalization and regulation of online gambling in countries such as Germany and the Netherlands, where online casinos are gaining popularity and taking market share from land-based venues. The U.S. online gambling market also continues to expand rapidly, according to the State of the States 2024 report by the American Gaming Association. In 2023, the U.S. gambling market posted record revenue of $66.6 billion, a 10% year-on-year increase. While traditional casinos still account for the largest share—around $49.4 billion—it is the new formats like online sports betting and online casinos that are growing fastest. Online casino games generated $6.17 billion in revenue, a 28% increase from the previous year, driven by continued legalization and regulation at the state level. Strategy Figure 2. Playtech’s global B2B strategy.

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06/28/2025

Analyse

This Stock Is Back on the Shopping List

Last year, SharesUnderTen scored big with this stock. We issued a Buy recommendation when the price was between €5 and €6. The stock rallied almost immediately, hitting our price target of €13 before the year was out. We exited a bit earlier, but investors who held on locked in gains of over 135% in just six months. Since then, the price has pulled back to below €8. But despite the drop, the recently released annual results were anything but disappointing. While revenue came in slightly below expectations, profitability beat estimates. More importantly, management shared a positive outlook for 2025. Cautiously optimistic in a choppy market, we’re adding 150 shares back into our SharesUnderTen portfolio. Not a bold bet—just a smart, calculated move with solid upside potential. HelloFresh share price performance over the past twelve months. Company Profile Founded in 2011, HelloFresh is one of the standout success stories to emerge from startup incubator Rocket Internet. The company went public in 2017 at €10.25 per share. Rocket Internet gradually reduced its stake after the IPO and fully exited in 2019, selling its remaining shares at around €8 each. In hindsight, not the best timing—since the stock went on a massive rally, peaking near €100 in 2021. Since then, however, the share price has dropped sharply as revenue growth has stalled (see Table 1). That’s not entirely surprising: with an estimated 50% market share, HelloFresh is running up against the natural limits of its core business. That’s not necessarily a bad thing—as long as profitability can be improved. And that’s exactly where management is now focused, launching several cost-cutting initiatives to boost margins. HelloFresh operates two divisions: Meal Kits and Ready-to-Eat. The Meal Kits division includes the original business: the well-known boxes with fresh ingredients that customers cook themselves. The Ready-to-Eat division is a newer and rapidly growing segment: pre-prepared meal solutions that require no cooking. Ready-to-Eat is currently growing at a rapid pace and already accounts for more than a quarter of total revenue. The expectation now is that the decline in the Meal Kits segment will stabilize, while the Ready-to-Eat segment continues to expand. In short: HelloFresh still has plenty of room for growth—just from a different direction than before. Table 1: Results over the past 4 years. *Adjusted for one-off items Outlook At the release of its annual results on 11 March, management announced that, thanks to ongoing cost-saving measures, normalized operating profit is expected to rise by over 65% in 2025, reaching €225 million. Normalized EBITDA is projected to come in at €475 million. However, the company also noted that a number of one-off expenses will be incurred due to restructuring efforts and investments aimed at improving operational efficiency. Table 2: Balance Sheet as of December 2024. *Including goodwill. **Including lease liabilities. Table 2 shows that intangible assets are valued at €0.4 billion. This implies that roughly €0.5 billion of tangible book value remains within equity, or €2.96 per share. Total debt amounts to €0.9 billion, while cash and cash equivalents stand at €0.5 billion. This results in a net debt position of €0.4 billion. Based on normalized 2024 EBITDA, the net debt/EBITDA ratio is just 1.1x. This means HelloFresh is far from its maximum borrowing capacity and can easily raise additional liquidity if needed. CEO Increases His Stake In September, it was announced that co-founder and CEO Dominik Richter privately purchased 1.5 million shares for a total of approximately €10 million. As a result, his ownership stake increased from 4.2% to 5.0%. We view this as a very strong signal—the ultimate insider showing confidence by making a personal, high-conviction investment of this scale. Share Buyback Program Throughout 2024, HelloFresh repurchased approximately 10.3 million shares under its share buyback program, at an average price of €8.00. Although the program was originally set to expire in December, it has been extended, with an additional €75 million allocated for further repurchases in 2025. At the current share price, this allows for the repurchase of 9 to 10 million shares, representing more than 5% of total shares outstanding. Given the depressed share price, we believe this is a highly effective use of capital. Valuation Forecast As shown in Table 3, based on 2027 estimates, HelloFresh is trading at a price/earnings ratio of 8.0x and an EV/FCF multiple of 7.8x. Table 3: Estimates through 2027 Conclusion: Worth Buying The valuation metrics just mentioned are suspiciously low for a market leader. That said, we’re confident there are no skeletons in the closet—after all, the CEO personally bought €10 million worth of shares last September. The only plausible explanation for the current discount is modest profitability. However, HelloFresh is in a unique position to benefit from economies of scale, and it seems only a matter of time before it outcompetes its rivals and significantly boosts its bottom line. We’re issuing a Buy recommendation. As a preliminary price target, we once again set €13 per share—and even at that level, we believe the stock remains undervalued. The author holds a long position in HelloFresh. Auteur heeft op moment van schrijven een positie in HelloFresh. Major Shareholders Active Ownership Corp SARL: 7.7% Dominik Richter (CEO): 5.0% Key Data Name: HelloFresh Ticker: HFG Sector: Food – Retail Exchange: IBIS (Germany) ISIN: DE000A161408 52-week low: €4.42 52-week high: €13.92 Share price: €7.78 Shares outstanding: 162 million Market capitalization: €1.3 billion Cash position: €0.5 billion Total debt: €0.9 billion Net debt: €0.4 billion Enterprise value (EV): €1.7 billion EV/revenue: 0.23x Tangible book value per share: €2.96 Price/tangible book: 2.7x Dividend per share: €0.00 Website: ir.hellofreshgroup.com

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06/26/2025