Fund Manager Summary
The fund managers believe that the outlook for Viva Energy Group Ltd remains positive, particularly given its current trading at a forward Price-to-Earnings ratio of approximately 11x. In their opinion, the company's healthy balance sheet positions it well for future growth. Despite facing challenges from a compressor issue during planned maintenance, they anticipate a return to refining capacity in the latter part of calendar year 2023. This development could serve as a significant milestone for the company, potentially leading to a re-rating that would enhance investor confidence and valuation.
Source: Trading View
Commentary From The Managers
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L1 Capital
20 Oct 2025
$1.76
Summary
- L1 Capital notes that Viva Energy is down approximately 25% year-to-date.
- The decline is attributed to well-refined margins, challenges in integrating multiple retail businesses, and the impact of illegal tobacco sales.
- Despite current challenges, L1 Capital believes these issues will improve over the next year.
- There has already been a substantial improvement in refined margins.
- The integration of retail businesses is gaining traction.
- Government actions to control illegal tobacco sales are beginning to take effect.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
L1 Capital
20 Oct 2025
$1.76
- L1 Capital notes that Viva Energy is down approximately 25% year-to-date.
- The decline is attributed to well-refined margins, challenges in integrating multiple retail businesses, and the impact of illegal tobacco sales.
- Despite current challenges, L1 Capital believes these issues will improve over the next year.
- There has already been a substantial improvement in refined margins.
- The integration of retail businesses is gaining traction.
- Government actions to control illegal tobacco sales are beginning to take effect.
Summary
Monash Investors
31 Aug 2025
$2.17
- Viva Energy Group Ltd reported solid results.
- Monash Investors sees Viva as highly prospective for the years ahead.
- The position in Viva has increased in size.
- Viva is currently a top-5 holding in the portfolio.
Summary
L1 Capital
31 July 2025
$2.10
- Viva Energy Group (Long +27%) shares have shown strong performance due to improved Australian retail fuel margins and global refining margins.
- Retail fuel margins have recovered from the low levels seen at the start of 2025, consistently exceeding 2024 averages during Q2 25.
- Refining margins experienced volatility, initially declining due to macroeconomic concerns but recovering due to geopolitical tensions, particularly in Iran.
- Despite disappointing recent performance and H1 25 guidance, L1 Capital anticipates significant improvement in H2 25.
- Improvement expected from acquiring the remaining interest in the Liberty Convenience business.
- Substantial synergies anticipated from combining Coles Express and OTR businesses.
- The company is implementing a $50m cost-out program to enhance profitability.
- OTR is recognized as a high-quality fuel and convenience retail offering with significant earnings upside potential.
- Initial conversions of Coles Express sites to OTR have performed well, indicating strong market potential.
- Management has maintained a $500m EBITDA target for the Convenience & Mobility business, compared to $231m EBITDA in 2024.
Summary
L1 Capital
30 June 2025
$2.16
- Viva Energy Group (Long +16%) shares have shown strong performance due to improved Australian retail fuel margins and global refining margins.
- Retail fuel margins have recovered from a prolonged trough at the start of 2025, exceeding 2024 levels on average during Q2 2025.
- Refining margins have been volatile, declining sharply due to global macroeconomic fears, but recovering due to the escalating conflict in Iran.
- Despite recent performance and H1 2025 guidance being disappointing, L1 Capital continues to expect significant improvement in H2 2025.
- Improvements are anticipated from acquiring the remaining interest in the Liberty Convenience business and substantial synergies from combining Coles Express and OTR businesses.
- The $50m cost-out program is expected to contribute positively to performance.
- OTR is recognized as a high-quality fuel and convenience retail offering with significant earnings upside potential.
- Initial conversions of Coles Express sites to OTR have performed well, indicating strong potential for further rollouts.
- Management has retained their $500m EBITDA target for the Convenience & Mobility business, compared to $231m EBITDA in 2024.
Summary
Milford Asset Management
28 Feb 2025
$1.73
- Milford Asset Management notes a significant decline in Viva Energy's performance, with a drop of -33.7%.
- The market was disappointed by weaker results in Viva Energy's convenience business.
- Reduced revenue from tobacco sales, attributed to increased illicit tobacco activity, has negatively impacted profitability.
- Viva Energy has lost its gains from 2021 to 2024.
- Despite these challenges, Milford Asset Management maintains a modest holding in Viva Energy.
- This decision reflects ongoing uncertainty in the convenience business.
- There is also recognition of the strategic value in Viva's refining and commercial operations.
Summary
L1 Capital
28 Feb 2025
$1.73
- Viva Energy Group shares declined -34% following 2024 results.
- Results were in line with guidance and market expectations.
- First half 2025 guidance for Convenience & Mobility was below market expectations.
- Declines attributed to slow ex-tobacco convenience sales growth and sharp declines in tobacco sales.
- Declining retail fuel margins were also a concern.
- Second half 2025 expected to improve significantly due to acquisitions and synergies.
- Acquisition of remaining interest in Liberty Convenience anticipated to boost performance.
- Synergies from combining Coles Express and OTR businesses expected to drive growth.
- $50m cost-out program underway to improve margins.
- Potential for recovery to more normal fuel retail margins exists.
- OTR is recognized as a high-quality retail offering.
- Significant earnings upside from rolling out OTR to Coles Express sites.
- Management retains $500m EBITDA target for Convenience & Mobility business.
- Viva's Commercial business performing well with $470m EBITDA in 2024.
- Refining margins trending higher after a low in 2024.
- Viva trades at a substantial discount to global peers despite medium-term earnings upside potential.
Summary
Endeavor Asset Management
30 Sept 2024
$2.93
- Endeavor Asset Management bought Viva Energy (VEA) in September after thorough research and management discussions.
- VEA operates three divisions: 1) Convenience & Mobility, 2) Commercial & Industrial, and 3) Energy & Infrastructure.
- The focus is on the first two divisions.
- VEA owns and operates the Reddy Express (formerly Coles Express) network in Australia, generating revenue from fuel margins and convenience sales.
- The acquisition of On The Run (OTR) introduces a proven model to maximize in-store returns.
- Reddy Express stores average $1.6M in revenue with $200K operating margin.
- OTR stores earn $2.5M–$3.5M with $300K–$700K margins.
- There is an expectation that 80% of Reddy Express stores will convert to the OTR model over the next five years, effectively doubling margins.
- Management is slightly behind schedule but remains prudent.
- A 20%+ return on capital is anticipated.
- VEA offers a 5%+ fully franked dividend yield during the wait.
Summary
L1 Capital
31 Dec 2023
$3.51
- Viva Energy Group shares increased by +16% following the investor day in November.
- The ACCC's decision not to oppose Viva’s acquisition of OTR Group contributed to the rise.
- Viva operates a leading fuel distribution network including the Geelong Refinery and over 700 retail stores in Australia.
- During the investor day, Viva outlined a growth strategy aiming to double EBITDA to >$1,250m over five years.
- The acquisition of OTR is deemed transformational, expanding Viva’s network to >1,000 sites.
- This acquisition will increase the proportion of non-fuel earnings from ~30% to ~50% of the business mix.
- Expected run-rate synergies from the acquisition are estimated at US$60m p.a..
- The acquisition is also anticipated to deliver significant EPS accretion.
- L1 Capital continues to hold its position in Viva Energy due to these favourable developments.
Summary
Cerutty Macro Fund
30 Sept 2023
$3.00
- Cerutty Macro Fund continues to monitor Viva Energy Group Ltd (VEA).
- VEA is currently trading on a forward Price-to-Earnings ratio of approximately 11x.
- The company maintains a healthy balance sheet.
- VEA has faced recent challenges due to a compressor issue during planned maintenance.
- Anticipation of refining capacity returning in the latter part of calendar year 2023 is significant.
- This return could lead to a potential re-rating for the company.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"With a forward P/E of around 11x and a healthy balance sheet, the situation seems ripe for a potential re-rating. If refining capacity rebounds as expected later this year, Viva Energy Group Ltd could surprise the market in a big way."
Last Updated: 20 Oct 2025
Query The Data
Frequently Asked Questions
Who is investing in Viva Energy Group Ltd (ASX:VEA)?
Fund managers including Cerutty Macro Fund, L1 Capital, Endeavor Asset Management, Milford Asset Management and Monash Investors have invested in Viva Energy Group Ltd (ASX:VEA).
Why do fund managers invest in Viva Energy Group Ltd?
Fund managers are investing in Viva Energy Group Ltd due to its attractive forward Price-to-Earnings ratio of approximately 11x and a strong balance sheet. Despite recent operational challenges, the expected return of refining capacity later in 2023 is seen as a key factor that could enhance the company's valuation.
What happened to Viva Energy Group Ltd (ASX:VEA)?
Fund managers are investing in Viva Energy Group Ltd due to its strong recovery in Australian retail fuel margins and global refining margins, which have shown improvement after a challenging start to 2025. The potential for significant earnings growth is driven by strategic initiatives, including the integration of Liberty Convenience and the Coles Express businesses, alongside a $50 million cost-cutting program. Despite recent volatility and integration challenges, fund managers believe that the company's prospects will improve, supported by a solid management target for the Convenience & Mobility segment and ongoing market adjustments.