We’re currently working on a school assignment and came across your valuation of Basic-Fit. We found it really interesting and were wondering if it would be possible for you to share your underlying calculations with us.
Specifically, we’re curious about how you processed certain figures from the annual report and how you worked them out in detail — such as the assumptions you made, which metrics or multiples you used, and any specific steps in your valuation model.
And to further answer your question about the assumptions I made:
- For club growth, Basic-Fit had plans to reach over 3,000 clubs by 2030, but they seem to have been scrapped as a result of their strategic shift. In the model of my recent post, I assume 3,000 clubs by 2032, reflecting slower club growth in 2025 and 2026. Basic-Fit has communicated many times that they see the potential for 3,500 clubs, which is why I project the company to reach 3,500 clubs.
- For mature clubs, CEO Rene Moos said in the latest earnings call that he expects 90% of clubs to be mature by 2026. My projection assumes 85% of total clubs to be mature for the sake of conservatism.
- Profitability per club is assumed to grow 2% annually, reflecting the ability to raise prices in line with inflation. Overhead grows in line with club growth, and capex in line with inflation.
this is super helpful for our assignment! We’ll definitely check out the Excel sheet and your recent post for the updated projections. And thanks as well for pointing us to the relevant sections of the annual report — that really helps to tie everything together.
As part of our school assignment, we’re required to calculate historical cash flows using the indirect method, with January 1, 2024 as the starting point. For this, we’re using data from the 2023 annual report, and we’ve chosen to analyze the years 2018–2023, since the COVID period has had a noticeable impact and we want to take that into account.
In the second part of the assignment, we’re moving into valuation using the DCF method to make projections for the future. Your explanation of Basic-Fit’s business and club-level modeling approach, as well as your other article on DCF and the downloadable template, are incredibly helpful for us — even though it’s a pretty challenging topic.
We really appreciate you taking the time to share your approach and insights. If we have any follow-up questions, we might take you up on that offer!
Hi, thanks for the kind words, and cool that you're working on a school assignment about Basic-Fit.
So the valuation I applied here is a fairly unconventional approach, because I calculated future free cash flows using a unit economic basis. Starting with mature/immature club EBITDA less rent per club (which aren't official IFRS figures but are provided by Basic-Fit's management) and then multiplying by the number of projected clubs and subtracting relevant costs.
Club EBITDA less rent figures can be found in the 2023 annual report at page 26. Number of clubs and club outlook are communicated very often and can be found in numerous places (Basic-Fit's 2024 annual report included some strategic shifts, I recommend checking out my recent post about Basic-Fit: https://summitstocks.substack.com/p/basic-fit-full-year-results-im-buying).
There's a downloadable excel sheet attached in that post. The model is very similar to scenario 2 in this post, except for some updated projections based on the 2024 report.
Hope that helps and good luck. You know where to find me if you need anything else!
I was curios on how many years you used for growth. I suppose 5 years in the first scenario and 20 years in the second scenario? And for the terminal value, I suppose you used perpetual growth with 0% growth for both?
Yes, you're exactly right. I'm assuming no terminal growth in both scenarios, which is obviously really conservative, and the forecast period in scenario 1 is 5 years and in scenario 2 it's 20 years.
Hey, I was wondering what do you think of the recent drop after earnings. I think the stock market overreacted. They missed earnings, yes, and they have been missing them since 2019, but it is trading at least at a 50% discount. I think that their new strategy might be even better for investors. With a slower expansion, buybacks and deleveraging, their true value will be reflected and as their debt ratio goes down, it will look healthier. Also, given that their mature clubs have room to improve in earnings and they have been doing so consistently since COVID, the upside potential is still high. And in HY2025 they will announce details about the franchise model. I see the possibility of franchising highly assymetrical. In fact, their American counterpart Planet Fitness is mostly franchise, which proves it can work.
I am a bit lost on your calculations of FCF and expected returns though. Basic fit includes in their reports FCF before new club expansion and does not coincide with your numbers.
Hi SummitStocks,
We’re currently working on a school assignment and came across your valuation of Basic-Fit. We found it really interesting and were wondering if it would be possible for you to share your underlying calculations with us.
Specifically, we’re curious about how you processed certain figures from the annual report and how you worked them out in detail — such as the assumptions you made, which metrics or multiples you used, and any specific steps in your valuation model.
Thanks in advance, and keep up the great work!
And to further answer your question about the assumptions I made:
- For club growth, Basic-Fit had plans to reach over 3,000 clubs by 2030, but they seem to have been scrapped as a result of their strategic shift. In the model of my recent post, I assume 3,000 clubs by 2032, reflecting slower club growth in 2025 and 2026. Basic-Fit has communicated many times that they see the potential for 3,500 clubs, which is why I project the company to reach 3,500 clubs.
- For mature clubs, CEO Rene Moos said in the latest earnings call that he expects 90% of clubs to be mature by 2026. My projection assumes 85% of total clubs to be mature for the sake of conservatism.
- Profitability per club is assumed to grow 2% annually, reflecting the ability to raise prices in line with inflation. Overhead grows in line with club growth, and capex in line with inflation.
Thanks a lot for you detailed reply😊
this is super helpful for our assignment! We’ll definitely check out the Excel sheet and your recent post for the updated projections. And thanks as well for pointing us to the relevant sections of the annual report — that really helps to tie everything together.
As part of our school assignment, we’re required to calculate historical cash flows using the indirect method, with January 1, 2024 as the starting point. For this, we’re using data from the 2023 annual report, and we’ve chosen to analyze the years 2018–2023, since the COVID period has had a noticeable impact and we want to take that into account.
In the second part of the assignment, we’re moving into valuation using the DCF method to make projections for the future. Your explanation of Basic-Fit’s business and club-level modeling approach, as well as your other article on DCF and the downloadable template, are incredibly helpful for us — even though it’s a pretty challenging topic.
We really appreciate you taking the time to share your approach and insights. If we have any follow-up questions, we might take you up on that offer!
Thanks again!
Best regards,
Rick
Hi, thanks for the kind words, and cool that you're working on a school assignment about Basic-Fit.
So the valuation I applied here is a fairly unconventional approach, because I calculated future free cash flows using a unit economic basis. Starting with mature/immature club EBITDA less rent per club (which aren't official IFRS figures but are provided by Basic-Fit's management) and then multiplying by the number of projected clubs and subtracting relevant costs.
Club EBITDA less rent figures can be found in the 2023 annual report at page 26. Number of clubs and club outlook are communicated very often and can be found in numerous places (Basic-Fit's 2024 annual report included some strategic shifts, I recommend checking out my recent post about Basic-Fit: https://summitstocks.substack.com/p/basic-fit-full-year-results-im-buying).
There's a downloadable excel sheet attached in that post. The model is very similar to scenario 2 in this post, except for some updated projections based on the 2024 report.
Hope that helps and good luck. You know where to find me if you need anything else!
Nice article, how do you calculate expected return rates?
Hi, thanks! I use a reverse DCF to calculate expected returns. I recommend checking out my article: https://summitstocks.substack.com/p/reverse-engineering-the-discounted
I was curios on how many years you used for growth. I suppose 5 years in the first scenario and 20 years in the second scenario? And for the terminal value, I suppose you used perpetual growth with 0% growth for both?
Yes, you're exactly right. I'm assuming no terminal growth in both scenarios, which is obviously really conservative, and the forecast period in scenario 1 is 5 years and in scenario 2 it's 20 years.
Damn, you were a bit quicker than me :) I shared my deep dive earlier today.
I'll make sure to give it a read!
Thanks for the idea! Forward P/S is only 1.1.
Yep, pretty crazy, especially considering that this is a clear market leader!
Interesting, thanks for highlighting this one.
Thanks and you're welcome! 🙌
Hey, I was wondering what do you think of the recent drop after earnings. I think the stock market overreacted. They missed earnings, yes, and they have been missing them since 2019, but it is trading at least at a 50% discount. I think that their new strategy might be even better for investors. With a slower expansion, buybacks and deleveraging, their true value will be reflected and as their debt ratio goes down, it will look healthier. Also, given that their mature clubs have room to improve in earnings and they have been doing so consistently since COVID, the upside potential is still high. And in HY2025 they will announce details about the franchise model. I see the possibility of franchising highly assymetrical. In fact, their American counterpart Planet Fitness is mostly franchise, which proves it can work.
I am a bit lost on your calculations of FCF and expected returns though. Basic fit includes in their reports FCF before new club expansion and does not coincide with your numbers.
Wasn’t aware of the fact that they are so big in France, Jezus.