Fund Manager Summary on Viva Leisure Ltd (ASX:VVA)
Viva Leisure Ltd (ASX:VVA), Australia's second largest gym network with around 500 locations and potential growth to 660, is transitioning from an acquisition-focused strategy to enhancing financial returns. Fund managers highlight the company’s unique position not just as a gym operator but as a technology innovator, employing software developers and leveraging a substantial captured network for high-margin products and services such as payment processing and gym supplements. This strategic shift is expected to significantly bolster free cash flow generation in the near term. However, with a historical EBITDA CAGR of 45%, the company remains undervalued, presenting attractive valuation multiples. While there are promising prospects for dividends within 1-2 years, investors should remain cognizant of the operational challenges that come with scaling and maintaining quality across a rapidly expanding network.
Commentary From The Managers
There are 2 insights from 2 fund managers regarding their investment in Viva Leisure Ltd (ASX:VVA) available on Thesis Tracker.
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Commentary From The Managers
Prime Value Asset Management
31 Aug 2025
$1.49
Summary
- Viva Leisure (VVA) is Australia’s second largest gym network with approximately 500 locations and plans to expand to 660 in the coming years.
- VVA is not just a gym company; it also employs a team of software developers.
- After a capital-intensive phase focused on network acquisitions and organic growth, the emphasis is now on generating improved financial returns.
- VVA has a significant ‘captured network’ that allows it to offer a variety of high-margin products and services.
- These offerings include payments processing, access hardware and software, screen advertising, vending machines, and gym supplements, all of which are expected to enhance free cash flow generation.
- Despite being a high-growth company with a 5-year historical EBITDA CAGR of 45%, VVA's valuation multiples remain attractive.
- Dividends are likely to be on the horizon within 1-2 years.
Forager Funds
31 Dec 2023
$1.48
Summary
- Forager Funds notes significant growth in Viva Leisure since 2020.
- Memberships increased from just over 100k to more than 186k.
- Monthly revenue rebounded from $6.7 million post-COVID lockdowns to $13.6 million.
- Profit margins improved from 15% to 21%.
- Despite growth, Viva trades at half its 2020 share price.
- Upcoming projects include club upgrades, technology rollouts, and vending machines.
- Access to larger and more flexible bank funding enhances growth opportunities.
- Current valuation multiple is eight times the estimated next year's net profit.
- Forager Funds continues to hold due to these positive dynamics.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in Viva Leisure Ltd (ASX:VVA)?
Fund managers including Forager Funds and Prime Value Asset Management have invested in Viva Leisure Ltd (ASX:VVA).
Why do fund managers invest in Viva Leisure Ltd?
Fund managers invest in Viva Leisure Ltd due to its strong position as Australia’s second largest gym network, with growth potential from 500 to 660 locations. The company not only focuses on gym operations but also leverages its in-house software team to enhance profit margins through value-added services. This strategic initiative is expected to significantly boost free cash flow. Additionally, attractive valuation multiples and forthcoming dividends further bolster its appeal, offering a favorable risk/reward profile for investors.
What happened to Viva Leisure Ltd (ASX:VVA)?
There have been no recent updates from fund managers regarding Viva Leisure Ltd although fund managers including Forager Funds and Prime Value Asset Management have previously commented.
What is the short interest in Viva Leisure Ltd (ASX:VVA)?
According to ASIC filings, there is negligible or no short interest in Viva Leisure Ltd (ASX:VVA).
What does Viva Leisure Ltd (ASX:VVA) do?
Viva Leisure Ltd. engages in the health clubs in the health and leisure industries. It offers customers membership options and a range of facilities from big boxes to boutique fitness. The firm's brands include Club Lime, Ladies Only, Psyclelife, Aquatics, Hiit Republic, Swim School, Gymmy, and Studio. The company was founded by Harry Konstantinou and Angelo Konstantinou on January 12, 2004 and is headquartered in Mitchell, Australia.