The Gym Share Discussion Threads

[sphere25] 30/8/2019 15:40

Look at the cashflow here, it's cheap as chips this stock.

The stock wants to go higher, but there is a fund mangler absolutely intent on smashing the bid every time it looks set for a rally. That is pretty much always indicative of a shorter.

We just need a few of the smart long fund managers to add to their positions and clear out the sellers at these depressed levels, allowing the stock to push higher. Once enough momentum builds, these shorts will panic and close out near highs.

There is no reason for the stock to have fallen from even the most recent highs of 270 based on those results.

We have buyers in very big size at 247 currently clearing out any sellers. Should move higher shortly.

EDIT: 250 close so hopefully cleared out the sellers at 247. Bodes well for next week.

[dtaliadoros] 29/8/2019 23:39

Yet another Stellar set of results. Am surprised this stock still isn't trading anywhere over 300 yet.

[masurenguy] 29/8/2019 23:17

Growing membership numbers boost The Gym Group in first half
Thu 29 Aug 2019

(Sharecast News) - The Gym Group posted a surge in interim profit on Thursday and hiked its dividend amid growing membership numbers. In the six months to the end of June, adjusted pre-tax profit increased 53.3% to £7.1m on revenue of £74m, up 27% on the same period a year ago. Membership numbers pushed up 10.6% to 796,000 and it opened eight new gyms during the half, taking its total estate to 165.

Average revenue per member per month was up 5.6% from the first half of last year to £15.47. Around half of the growth in this spend per head came as expected from LIVE IT, the group's premium pricing proposition, which reached 135,000 members by 30 June. Adjusted earnings per share rose 42.9% to 4p and the interim dividend was lifted 28.6% to 0.45p a share.

The Gym Group said it has continued to trade "well" and in line with its expectations in the first two months of the second half and is on track to achieve its financial and operational plans for the full year.

Chief executive officer Richard Darwin said: "Our rapid and profitable growth has been achieved through operating high quality great value gyms that offer affordable fitness for all. Our growing membership visited a record 24 million times in the first half of the year demonstrating the wide and diverse appeal of The Gym. Continued investment in systems, infrastructure and people to scale the business is enabling us to take advantage of the huge growth potential that exists in the low cost gym market. We are on track to open between 15 and 20 standard catchment gyms this year whilst our new 'small box' format further increases the number of towns that we can go to. We are confident that we can deliver further profitable growth both this year and in the years to come."

[rathean] 29/8/2019 12:11

The market is a few years off from saturation, failing smaller players will reduce market penetration for the big two to consume. Consolidation will only accelerate as the market matures as per every other market ever imo dyor ofc.

[masurenguy] 29/8/2019 09:10

Two broker notes out this morning. Peel Hunt reiterates Buy with a price target of 350p while Liberum issues a Buy Note with a target price of 330p.

[thomshrike] 29/8/2019 09:05

I think those are very solid numbers, but maybe slightly uninspiring in terms of operating leverage. I also listened to Pure Gym’s conference call last week and both reports are consistent: the big 2 continue to increase market share and the smaller players are struggling. There is still plenty of opportunity for growth in the UK, but some of that will start coming from smaller formats for smaller catchments (with similar ROCE).
If GYM would stop investing in new units, it would trade at 12% FCF yield (actually more than that if you would wait for the maturing of their currently immature gyms).
I think the stock is fundamentally cheap, in absolute and relative terms. The wait for Brexit contributed for the multiple deflation, but recent deals like Greene King will again underpin the attractiveness of UK domestic hard assets, especially in non-cyclical growth businesses such as GYM.

[simba_] 29/8/2019 08:55

On quick look seems like excellent results. Market seems uninspired. Already priced in?

[mount teide] 29/8/2019 07:59

Very strong results - with an excellent outlook.

[masurenguy] 29/8/2019 07:55

Great interims: Sales up 27%, eps up 43% and FCF up 18%.

(1) Gyms: 165 as of 30 June 2019 (vs 158 at 31 December 2018) with eight new sites opened in H1 2019 and one site recently closed (Birmingham Corporation Street). 166 sites as at 29 August 2019. All gyms open 24/7 excluding nine gyms as at 30 June 2019 due to licensing restrictions.

(2) Average number of members grew 20.0% to 797,000 (H1 2018: 664,000). Average members excludes new sites not open at the period end. Proforma members of 720,000 as at 30 June 2018 (including easyGym members acquired on 4 July 2018)

The Gym Group is a very cash generative business with £16.0m of free cash flow(2) generated in the half year (H1 2018: £13.6m). The scale of our mature estate is now such that the cash generated from operations is sufficient to fund the investment in new sites and the development of our platform. Net Debt increased only marginally to £47.2mn (December 2018: £46.0m) at the half year demonstrating we are reaching the inflexion point where growth and dividends can be self-funded. The result of this is that we can continue our progressive dividend policy with the Board declaring an interim dividend of 0.45 pence per share, up 28.6% versus the first half of 2018 (H1 2018: 0.35 pence).

After a good first half we look forward to further progress in the coming months and remain on track to meet our operating and financial plans for the full year. There remain significant opportunities for us go after and with a strong team and the tailwinds of a growing low cost gym market, I am confident about our growth prospects. Richard Darwin, Chief Executive Officer

[masurenguy] 21/8/2019 08:27

Peel Hunt's brokers note today has a Buy recommendation and a reiteration of the 350p target price

[thomshrike] 26/7/2019 13:22

Hi, I would point out that last year I remember GYM management saying that weather had generally little impact on their membership numbers (in fact one can argue people will prefer running on the treadmill in a large air-conditioned space than on the streets under 40 degrees).

[turbocharge] 26/7/2019 12:54

Maybe they took the shorts in light of the the extremely hot weather forecasts...

Yes, "a short is a short", albeit its now short of half a percent, and will probably reduce further in a short time. By then the share price will have breached 300p, and it will be time to celebrate with shortbread biscuits and tea.

[brileyloucan] 26/7/2019 10:14

I agree it probably is good news but it is less clear than it may seem. JP Morgan is not entering into a short position because they are taking a position that GYM will decline (and now feel this less strongly). They do not (and are not allowed to) take outright proprietary positions.

The short will arise from a client transaction. I would guess that a client has come to them and wants to take a short position on GYM (and possibly other shares) this will be done by a Total Return Swap (TRS) where JPM is effectively going long the equity, they will then hedge by entering into a physical short. An alternative is that the client trade is an equity option which gives them a synthetic long (e.g written call). They will then delta hedge this position which they will need to manage regularly which would explain the decline in their short.

So overall a positive as JPM's position represents a position takenby one of their clients but we don't have any visiibility on what that might be.

BL

[turbocharge] 25/7/2019 16:45

This is what my chart website shows:

Moving Averages
16 BUY signals
1 NEUTRAL signal
0 SELL signal

Oscillators
1 BUY signal
1 SELL signal
9 NEUTRAL signals

Overall
BUY: 17
NEUTRAL: 10
SELL: 1

[thomshrike] 25/7/2019 15:27

And for the chartists out there: GYM is about to complete a golden cross (50-day moving average crossing the 200-day moving average to the upside).

[thomshrike] 25/7/2019 15:12

Morgan Stanley downgraded Basic-Fit this morning (stock down another c. 5%) and I believe that GYM briefly traded in sympathy with it in the morning.
(Also there is an erroneous table on the MS note: while comparing FCF yield, it uses FCF yield pre-expansion-capex for BFIT and post-expansion-capex for GYM)
I find it extremely encouraging that GYM is back up on the day, regardless of: BFIT's performance, the market now moving down, Brexit uncertainty, etc.

[earwacks] 25/7/2019 14:40

Nice one QC. I have found the share price movements wierder than most shares and that might explain it. Just happened to be on the computer at the moment they dropped to 2.50 this a.m so managed to bag another 2,000. Insignificant in the grand scheme of things but always nice to get a gift!

[masurenguy] 23/7/2019 19:04

Thanks thomstrike - interesting observation !

[turbocharge] 23/7/2019 12:50

Some juicy buys of 200,000, 150,000, and 50,000 just gone through

[earwacks] 18/7/2019 21:04

Not going to be derailed by Trump shenanigans. share price has moved quite mysteriously in the last few months, but hopefully the penny has finally dropped and should see steady recovery to previous highs. I Have traded a few times but not one to be out of now I think.

[rathean] 18/7/2019 16:45

Good to see a close above 260. Fwiw the last up trend lasted the better part of 18 months here imo dyor ofc.