VTG (ASX) Ann: Vita Group Market Update

Originally posted by SteveSage: ↑

well was expecting a 20% rise next week on positive 1H results and getting almost double that in the opposite direction

Going to hold until results and see what updates they provide - looks like Telstra will take over other stores in the next 12-18 mths, but Vita was singled out as a party to start discussions with. As others have pointed out, the MSA goes to June25 so still 4 years to run, and perhaps Maxine can negotiate an appropriate break clause that will be beneficial to VTG shareholders

VTG has been generating ~23m in NPAT post the changed commission structure (FY2018-20) , so they would have been looking at ~90m in NPAT over that period. Over and above that, they had 36m in cash in June20 (likely to be 45-50m by Dec given the EBITDA forecast) so perhaps the current MC (180m*.7=126m) to me seems cheap, but hard to know until we have an indication what will happen with Telstra.

I think Telstra made this move because decoupling the sale of the hardware & data meant simpler plans, but perhaps let to people churning between providers; in addition it would have incentive the franchinsed & vita stores into selling/upselling hardware rather than telstra services and now telstra have realised the issue......the old structure albeit slightly more costly to telstra, probably helped them grow market share.

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stevesage, you have made quality and respectful contributions in the past here. what do you think the TLS stores are worth?

From their annual reports I see they paid on average $1.5m each for the last 10 stores bought during FY19 and FY20.

extrapolate that for 104 stores you get around 150m. do you then take a 20% discount and call it a 120m deal? (i know not all stores are equal, but at lease it would be good to get a rough feel so would appreciate your opinion or any other contributors with an opinion)

Looks like they have spent ~24m on the footprint of SHAW clinics which should become accretive this half so that will be interesting to see how quickly it can then be scaled further.