Duplicate of BASIC-FIT - KBC Securities Company Note 28.06.2018: Look at those abs!

We initiate coverage on Basic-Fit with a Buy recommendation and € 35 target price.

• Basic-Fit is the fastest growing fitness chain in Europe with the largest club network. In 2017, the company was able to convince 310,000 members to sign up for a membership, resulting in a membership base of 1.52m members. Basic-Fit operated 521 clubs across the Netherlands, Belgium, Luxembourg, France and Spain in 2017.

• The European fitness industry has grown with a CAGR of 3.7% from 2014 to 2017 resulting in a market value of € 26.6bn with 60m members in 2017. The industry growth was mainly driven by the low-cost segment as the CAGR of membership in traditional clubs was only 4%, while this figure was 19% for low-cost clubs. The membership base is expected to grow by 4% annually up to 81.9m members by 2025.

• We expect Basic-Fit to roll-out 105 clubs annually from 2019 to 2025 and expect a terminal growth rate of 2%, since we do not expect a slowdown in club openings any time soon. Its membership base could grow with a CAGR of 14% and revenues with a CAGR of 15% between 2017 and 2025. By 2025, the membership base could go up to 4.26m members and total revenues to € 1,013m by 2025.

• Basic-Fit is able to generate high margins which are still improving due to the growing popularity of add-on revenues and the increasing share of mature clubs in the overall network which are generally more profitable. EBITDA margin is estimated to increase from 29.7% in 2017 to 38.4% by 2025.

• With this unique growth profile, a clear expansion strategy and high optionality due to the solid cash flow generation and decreasing leverage ratio, we initiate the coverage of Basic-Fit with a target price of €35 (DCF based) per share and a Buy rating.