Basic-Fit Model update and what to expect from 1H24

Basic-Fit will report 1H24 results on 26/07/2024. We expect the membership growth to be similar to 2Q23, +10.5K net members. Due to seasonal effects the second quarter always has lower membership growth vs Q1 and Q3. We don't expect a massive turn around in the impacted immature members/club trend. In line with last year 1H24 will have more startup losses versus 2H24, especially driven by the RSG acquisition. The 5 Holmes Places clubs were sold over 1H24 but the cash in might be only included in 2H24, impacting FCF. Furthermore, we decrease our estimates to reflect the lower guidance of 175 clubs instead of an earlier estimated 200 clubs. This lower our sales estimates by -2.5% and EBITDA estimates -4% given the high operational leverage of BFIT. In line with our negative earnings revision we lower our TP from EUR 33.0 to EUR 30.0 and repeat our accumulate rating. We remain positive over the long run but don't expect a large reversal given continued negative earnings momentum and difficulties in balancing the trade-off between gearing and growth.