Fund Manager Summary on Viva Energy Group Ltd (ASX:VEA)
In February 2026, Pendal Group commented that Viva Energy Group Ltd (ASX:VEA) saw a poorly received Q4 update due to no FY25 guidance, with refining margins lagging despite better throughput, convenience sales flat ex‑tobacco while OTR traded modestly positive, gross margin gains driven by tobacco mix, strong wholesale (aviation) volumes and market downgrades of around 10% to normalise refining assumptions. Across fund managers the consensus is cautiously constructive: recent commentary weighs near‑term weakness in the Convenience & Mobility segment — driven by illicit tobacco sales, weak legacy Coles Express trading and integration execution risk — against meaningful medium‑term upside from completing the Liberty Convenience acquisition, rolling out the higher‑margin OTR format across under‑invested Coles Express sites, expected synergies and a $50m cost‑out program with management maintaining a $500m EBITDA target for Convenience & Mobility (vs $231m in 2024); simultaneously Viva’s Commercial/refining operations (noted at $470m EBITDA in 2024) and a recovery in refining and retail fuel margins are cited as stabilisers that could materially lift earnings if sustained. Actionable considerations are to monitor H2 execution of conversions and synergies, the trajectory of retail fuel and refining margins, regulatory response to illegal tobacco and leverage reduction; principal risks remain continued weak convenience trading, volatile global refining margins and integration setbacks, while primary opportunities are OTR rollout, cost savings and a recovery in refining and wholesale volumes.
Commentary From The Managers
There are 11 insights from 6 fund managers regarding their investment in Viva Energy Group Ltd (ASX:VEA) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Pendal Group
2 Feb 2026
$1.79
Summary
- Pendal Group believes the Q4 sell-off was overdone and continues to hold because the absence of FY25 guidance created short‑term market uncertainty despite improving underlying operations.
- Pendal Group notes the market reaction (VEA -13.5%) largely reflected the absence of forward guidance rather than a clear deterioration in operating trends.
- Pendal Group observed refining throughput was better than consensus, but reported refining performance was below consensus as margins didn’t fully capture the favourable external environment on return from a planned shutdown.
- Pendal Group saw convenience retail trends mildly improved: overall sales growth was flat ex tobacco, with On The Run +1.3% while legacy Express sites continue to trade negatively.
- Pendal Group highlights gross margin rose materially, driven primarily by a mix effect from lower tobacco exposure rather than broad margin expansion.
- Pendal Group is encouraged by wholesale volume momentum, noting much of the growth is concentrated in aviation, a lower‑margin segment.
- Pendal Group observed consensus earnings downgrades of roughly 10% as the market normalised refining margins to reflect the current weak external environment.
- Pendal Group remains focused on monitoring the trajectory of refining margins and the return of forward guidance while retaining the position given visible operational recovery.
L1 Capital
30 Nov 2025
$2.12
Summary
- Investment update: L1 Capital updates its investment thesis on Viva Energy Group following a November recovery (+16% for the long position).
- Driver — refining margins: Shares recovered as global refining margins rose due to Russian trade sanctions and refinery closures after a period of relatively weak margins over the prior 12 months.
- Earnings upside potential: If current refining conditions persist, L1 Capital believes the Refining business has substantial earnings upside that could offset integration and market challenges in the Convenience business and reduce company leverage.
- Convenience business performance: Convenience performance has been disappointing, but L1 Capital expects material acquisition synergies and new/converted stores from H2 2025 to improve results.
- Timing for earnings growth: Synergies and store rollouts are expected to contribute to further earnings growth in 2026.
- Risk/offsets: The thesis balances short-term Refining-driven upside against ongoing M&A integration risks and Convenience market challenges; leverage reduction is a key positive outcome.
- Positioning statement: L1 Capital continues to hold because the prospective Refining upside and upcoming Convenience synergies materially improve the company’s earnings and balance sheet profile, while risks remain under active review.
L1 Capital
20 Nov 2025
$1.98
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.
Monash Investors
31 Aug 2025
$2.17
Summary
- 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.
L1 Capital
31 July 2025
$2.10
Summary
- 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.
L1 Capital
30 June 2025
$2.16
Summary
- 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.
Milford Asset Management
28 Feb 2025
$1.73
Summary
- 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.
L1 Capital
28 Feb 2025
$1.73
Summary
- 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.
Endeavor Asset Management
30 Sept 2024
$2.93
Summary
- 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.
L1 Capital
31 Dec 2023
$3.51
Summary
- 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.
Cerutty Macro Fund
30 Sept 2023
$3.00
Summary
- 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.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
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, Monash Investors and Pendal Group have invested in Viva Energy Group Ltd (ASX:VEA).
Why do fund managers invest in Viva Energy Group Ltd?
Fund managers are drawn to Viva Energy Group Ltd due to its strategic position in the refining and convenience sectors. Despite recent underperformance, the company has strong growth prospects from synergies in integrating its retail businesses and improving refining margins. The management's target of $500 million EBITDA for the Convenience & Mobility unit suggests potential for profitability. Additionally, Viva's share price trades at a discount compared to global peers, indicating a favorable risk/reward profile for investors.
What happened to Viva Energy Group Ltd (ASX:VEA)?
Fund managers have invested in Viva Energy Group Ltd due to anticipated improvements in its refining business, driven by rising global refining margins from geopolitical factors like trade sanctions. Despite recent challenges in its Convenience segment, including integration issues and competition from illegal tobacco sales, managers expect better performance in the coming year. Optimism surrounds potential earnings growth from acquisition synergies and new store openings, which are expected to enhance profitability beyond 2025.
What is the short interest in Viva Energy Group Ltd (ASX:VEA)?
The short interest in Viva Energy Group Ltd (ASX:VEA) is 2.81% which makes it the 87th most shorted stock on the ASX. Of the 1.6B shares that Viva Energy Group Ltd has on issue, 45.7M have been sold short.
What does Viva Energy Group Ltd (ASX:VEA) do?
Viva Energy Group Ltd. engages in the manufacture, distribution, and sale of petroleum products. It operates through the following segments: Retail, Fuels, and Marketing, Refining, and Supply, Corporate, and Overheads. The Retail, Fuels, and Marketing segment involves the merchandise and commercial operation of fuel products. The Refining segment converts imported and locally sourced crude oil into petroleum products including gasoline, diesel, jet fuel, aviation gasoline, gas, solvents, bitumen, and other specialty products. The Supply, Corporate, and Overheads segment relates to contracting access to a national infrastructure network consisting of import terminals, storage tanks, depots, and pipelines. The firm specializes in the aviation, marine, mining, transport, and commercial fleet industries. The company was founded on June 7, 2018 and is headquartered in Docklands, Australia.