Basic-Fit Crashed 14%. I Still Think It's Cheap
Basic-Fit: H1 results and updated valuation
Basic-Fit shares dropped 14% yesterday.
At first glance, the selloff seems a result of profitability—or lack thereof—in the first half. Growth was solid and in line with expectations, but profit didn’t follow.
That worried me at first. But after closely listening to the earnings call, this looks more and more like a classic case of the market reacting to headlines.
Let me take you through the numbers and my updated valuation.
Basic-Fit First-Half Results
Revenue grew 16% to €677 million. Memberships reached 4.51 million, up 10% year-over-year, and yield per member rose 4% to €24.73.
Club count grew 6% to 1,628. That’s slower than usual but expected. With 53 clubs opened in the first half, Basic-Fit is more than halfway to its full-year target of 100 club openings.
All in all: strong top-line performance.
Management saw strong momentum in France and Spain in particular. Both countries—along with Germany—are transitioning to 24/7 formats, which are boosting both membership and yield. France also benefited from a new regional management structure that’s starting to show results.
Club ingrowth continues to improve, now three years in a row. The post-Covid normalization looks complete.
The issue, however, was profit.
Personnel costs jumped 43% to €131 million. That’s mostly due to the switch to staffed 24/7 clubs in France, where regulation still block unstaffed formats. There were also wage indexations, more staff for new clubs, and a legal change in Spain (same salary, now for a 36-hour workweek instead of 40).
Operating profit came in at €57.5 million, up just 4% YoY.
That said, management claims the 24/7 investments are paying off. Higher membership and yield will offset the cost increases on an annualized basis. And they still expect French legislation to change, which would allow for unstaffed clubs and bring down personnel costs significantly.
Some of the other expenses were also temporary. Maintenance operating expenses and energy costs were front-loaded in the first half and should ease in the second.
Despite the weak first-half profit, management reiterated its full-year EBITDA less rent guidance of €330-370 million. H1 came in at €149.6 million, so they’re clearly expecting a stronger H2.
And positively, overhead (including marketing) stayed flat at €74.5 million. That now accounts for 11% of revenue, down from 12.7% last year.
Club-level numbers were mixed. Club EBITDA less rent for all mature clubs rose 13% to €213 million. The network now includes 1,219 mature clubs and 409 immature clubs. But club EBITDA less rent per mature club fell to €175,000 from €189,000 last year—the total figure increased 13% simply because of the large increase in mature clubs.
Management still expects club EBITDA less rent per mature club to come in around €400,000 for the full year, roughly in line with 2024. Long-term, the target remains €460,000.
Now, if you’re wondering what “club EBITDA less rent” actually means, you’re probably not alone. And you’d be right to think the reporting can feel needlessly complicated. But in this case, it’s a useful proxy for free cash flow.
Here’s the rough logic:
Start with total club EBITDA less rent
Subtract overhead to get total EBITDA less rent
Then deduct capex and taxes
What you’re left with approximates free cash flow
It won’t match the cash flow statement exactly, because of timing and accounting differences, but it’s close.
To reach the long-term target of €460,000 club EBITDA less rent per mature club, Basic-Fit needs ~200 more members per club, a number they believe is “very feasible”.
Free cash flow in the first half was negative €57.4 million, but positive free cash flow for the full year is still expected. The driver: a combination of stronger profitability in H2 and lower capital expenditures.
Average capex per new club was €1.38 million in the first half, but that’s expected to drop to €1.3 million for the full year. The H1 average was inflated by larger clubs and unusually high noise reduction costs—think apartments above gyms. Apparently, keeping deadlifts quiet can get expensive.
Second-half openings will be smaller in size on average, and fewer will require those costly soundproofing measures. Maintenance capex was also front-loaded and is expected to come down meaningfully in H2.
Despite the negative free cash flow so far, the €40 million share buyback program is well underway—42% completed as of June 28.
Meanwhile, management still plans to launch its franchise platform before year-end. If executed well, this should serve as a strong, capital-light complement to the core business.
And finally, though not mentioned on the call, rumors are ongoing about Planet Fitness eyeing a takeover of Basic-Fit. Planet Fitness is the largest gym operators in the U.S., known for some… eccentric rules. A deal would likely come with a premium, but also limit Basic-Fit’s long-term upside. I’d rather see Basic-Fit stay independent.
All said, this was a solid first half. Profitability is set to normalize in H2, and positive free cash flow is still expected.
My valuation remains largely unchanged.
What’s Basic-Fit Worth Today?
Over the past few months, I’ve been experimenting with Monte Carlo simulation as a valuation tool. It’s useful in many cases, but Basic-Fit remains an exception.
This business required a more specific approach. Monte Carlo doesn’t add much value here.
In my 2024 update, I shared a DCF model that I still think holds up well. I’ve made a few minor adjustments:
I originally projected 1,100 mature clubs by 2025. We’re halfway through 2025 and already over 1,200. Hitting 1,300 by year-end now looks reasonable.
During the 2024 earnings call, CEO René Moos said ~90% of clubs would be mature by 2026. I had used 85% for the sake of conservatism, but at this point, 90% is simply realistic.
I added an “other capex” line to reflect non-expansion, non-maintenance investments. Small amounts, but they impact the final output.
Debt, cash, and shares outstanding have been updated with the most recent figures.
The model is still conservative in key ways. I assume zero club openings beyond 3,500 clubs, a number that won’t be hit (in my model) until 2034. And franchising is ignored entirely, meaning it’s pure optionality.
At a 10% discount rate, this gives me a fair value of around €53.92 per share.
If you’ve followed my work for a while, you’ll know I don’t cling to point estimates. This isn’t about saying Basic-Fit is worth exactly €54. But when the current share price is sitting at ~€24, the gap is too wide to ignore.
If you’re interested, you can download the model below:
Thanks for reading.
Lucas
Author & Founder, Summit Stocks
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Disclaimer: the information provided is for informational purposes only and should not be considered as financial advice. I am not a financial advisor, and nothing on this platform should be construed as personalized financial advice. All investment decisions should be made based on your own research.
Very nice post