Brait (BAT) is an investment holding company which owns 78% of Virgin Active, 93.7% of Premier, and 18.5% of New Look (a clothing retailer in the UK). It sold its stake in Iceland Foods for R2.4bn in June 2020 and used the proceeds to pay down debt. It is itself 46% owned by Christo Wiese's company Titan. The company's most important performance measure is its net asset value (NAV). The NAV was impacted by a change in the valuation multiple for Premier, which was reduced from 12.4 times to 11.4 times.
The turnaround at New Look is very important to the group. In January 2019, Brait announced that it had come to an agreement which would see its holding of New Look reduced to just 18.5%. This was done through a debt-swap which takes New Look's debt down from GBP 1.35bn to GBP 0.35bn. The news of this capitulation saw Brait's share price drop by over 20%. Virgin Active is 65% of the Brait portfolio and has been battling with the impact of COVID-19. Business Day (14/11/22) reported that Brait will have a cash pile of R2.1bn after the Premier listing.
Technically, Brait had a series of falling tops at around R170 in 2015 and 2016 that would have scared any private investor. This was followed by a collapse of the share price down to 231c in March 2020. Since then, the share has been moving sideways but spiked up on its latest results. The announcement of the R3bn rights offer in its latest results did not please the market, and the share fell over 10%.
In its results for the year to 31st March 2024, the company reported that its net asset value (NAV) had fallen from 706c per share a year ago to 652c. The company said, "Virgin Active’s strong performance and operational turnaround has continued with all territories now EBITDA positive. Robust operating performance across key territories with active membership increasing to 1.021 million over the past twelve months combined with 10% average yield enhancements across the portfolio." The company's headline loss for the year was 13c per share, following a 70c loss in the previous year.
We feel that Brait has lost some of the appeal that it once had, and Christo Wiese is under a cloud since the collapse of Steinhoff. In our opinion, this share is not a buy at the moment. The share has become a penny stock trading for less than 100c and has been trending down since 2021. Technically, it needs to break above resistance at 500c before it becomes interesting - and that is a long way away.
The turnaround at New Look is very important to the group. In January 2019, Brait announced that it had come to an agreement which would see its holding of New Look reduced to just 18.5%. This was done through a debt-swap which takes New Look's debt down from GBP 1.35bn to GBP 0.35bn. The news of this capitulation saw Brait's share price drop by over 20%. Virgin Active is 65% of the Brait portfolio and has been battling with the impact of COVID-19. Business Day (14/11/22) reported that Brait will have a cash pile of R2.1bn after the Premier listing.
Technically, Brait had a series of falling tops at around R170 in 2015 and 2016 that would have scared any private investor. This was followed by a collapse of the share price down to 231c in March 2020. Since then, the share has been moving sideways but spiked up on its latest results. The announcement of the R3bn rights offer in its latest results did not please the market, and the share fell over 10%.
In its results for the year to 31st March 2024, the company reported that its net asset value (NAV) had fallen from 706c per share a year ago to 652c. The company said, "Virgin Active’s strong performance and operational turnaround has continued with all territories now EBITDA positive. Robust operating performance across key territories with active membership increasing to 1.021 million over the past twelve months combined with 10% average yield enhancements across the portfolio." The company's headline loss for the year was 13c per share, following a 70c loss in the previous year.
We feel that Brait has lost some of the appeal that it once had, and Christo Wiese is under a cloud since the collapse of Steinhoff. In our opinion, this share is not a buy at the moment. The share has become a penny stock trading for less than 100c and has been trending down since 2021. Technically, it needs to break above resistance at 500c before it becomes interesting - and that is a long way away.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.