In this equity research report, analyst Simon Malmgren dives into one of the leading fitness clubs in northern Europe, Actic Group (ATIC). The analyst estimates that this turnaround company will grow its EBIT margin from 8% in 2020E to 26% in 2023A. Based on a discounted cash-flow model and peer valuation, a target price of 39.4 and a potential upside of 109.4% is motivated.
Investment highlights:
- Increased cost control through a reduced workforce results in better margins and stronger EBITDA-margin.
- Due to miscalculated goodwill and other intangible assets, the company presented a negative result of 234 MSEK in 2019, due to asset impairment losses of 290 MSEK.
- Current market price hasn’t considered the future margin improvement and recovered sales, resulting in a motivated 109.4% potential upside..
