EUR 900.00 For Business Accounts Only

Benefit Systems New Year’s resolutions

We believe Benefit Systems’ main challenge this year will be the further
optimization of its fitness club operations. Following the profit warning issued in
April 2019, we had expected problems in the fitness business to be permanent
with limited possibility of rapid improvement. However, contrary to our
expectations, the company managed to avoid losing most of its B2C clients, with
around 75% of its contracts re-signed after 9M19. In terms of its card sales in
4Q19, the company reported 21.7% growth y/y and 8.8% q/q driven mainly by
extraordinary sales in Poland. As a consequence, we raise our recommendation
to BUY (from HOLD) and increase our FV to PLN 1,100 per share from PLN 660
per share.
Polish card market still solid: In 4Q19, Benefit distributed 74k cards to its clients,
bringing the YTD tally to 147.6k. This was a consequence of reinforcing the sales
team and changing the remuneration policy for sales reps. We believe that there
is still room to increase the number of cards in the Polish market. The company
has expanded its portfolio by offering cards with a limited number of entries.
This has allowed to expand Benefits’ potential market and reach clients with
smaller budgets, an approach that we think is currently bearing fruit.