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Gym Group set to flex its muscles again with strong trading update

Analysts at Liberum expect Gym Group to benefit from the rising popularity of low-cost gyms as more consumers tighten the purse strings and make healthier choices
Gym Group
Gym Group plans to open up to 20 gyms this year

The Gym Group PLC (LON:GYM) has been building strength as a growing number of customers sign up to the company’s no-frills gyms.

Last year adjusted pre-tax profit rose 19% to £14.4mln and revenue increased 36% to £123.9mln as the group opened 30 new gyms.

At the end of the year, the low cost gym operator had 724,000 members, up 19.3% on the previous year.  

READ: Gym Group’s revenues and profits surge as gymgoers flock to its no-frills fitness clubs

Gym Group releases a trading update for the six months to June 30 on Friday and analysts at Liberum expect another positive set of numbers.

Liberum said it expects the company to have opened six gyms in the first half, bringing the total estate to 164, and to reiterate its target for 15-20 gym openings in 2019.

“The company started the year with 724k members, which had grown 9.5% to 793,000 by the end of February 2019,” the broker said.

“May-June are usually slower months with outflows of members in many mature clubs.

Liberum anticipates that the proportion of members signed up to its premium Live It membership to have increased from 13.5% last reported to more than15.0%.

For the 2019 financial year, the broker estimate revenue of £155mln and adjusted pre-tax profit of £18.9mln.

“We believe the on-going momentum in a weaker consumer environment illustrates the structural growth as the confluence of the three global mega trends of lifestyle changes, low-cost acceptance and digital enabling continue to increase penetration of low-cost gyms,” Liberum said.

Ashmore to post solid fourth quarter

Emerging markets asset manager Ashmore group PLC (LON:ASHM) is expected to solid growth in assets under management (AUM) in the fourth quarter when it also provides a trading update on Friday.

UBS analysts expect the FTSE 250-listed firm to post AUMs of US$92.1bn, up 8.0% quarter-on-quarter and 24.7%year-on-year, with during the quarter of US$4.6bn, down slightly from the US$5.0bn of inflows seen in the previous quarter, which was Ashmore’s strongest quarterly inflow since 2013.

The analysts added: “We expect market performance to add another US$2.3bn to AUMs during the quarter, equal to 2.7% of AUMs.

“Going forward, we expect inflows to average US$3.0bn per quarter over Ashmore's FY 2020-21.”

Acquisition path eyed at DCC

A first-quarter trading update from DCC PLC(LON:DCC) will be assessed for future acquisitions and the outlook for the rest of the year, according to UBS.

The Swiss bank’s analysts see significant opportunities for acquisitions by the Irish group in the US – in LPG, Technology, and Healthcare - and in Europe – in LPG, retail, and Technology - with around £350mln of annual spend at circa 7x EV/EBITA, driving about 10% consensus upgrades per annum.

“Without any further M&A spend, we estimate DCC would finish y/e Mar-20e with a net cash position and it currently has more than £1.6bn in gross cash on its balance sheet,” the analysts added.

 

Significant announcements due:

Trading updates: DCC PLC (LON:DCC), Gym Group PLC (LON:GYM), Ashmore group PLC (LON:ASHM), B&M European Retail Value SA (LON:BME)    

Economic data: US PPI


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