FIT for strong growth; INITIATE with BUY

The trend of a healthy lifestyle enjoys a sustainably growing attraction across all age groups. Currently, the LOHAS consumer type (Lifesytle of Health and Sustainability) represents 27% of the German population, but is expected to expand to 40% by FY33e. In order to facilitate a healthy lifestyle, many consumers not only do sports and shift towards a healthy diet, they also make use of the benefits of health related products such as massage pistols & food supplements, with 3 out of 4 Germans using food supplements regularly.

FIT GROUP (FG), founded in 2020, is an emerging player in this field, whose mission is to serve a growing number of customers with the aforementioned products. The key USP does not lie in the products, but in the marketing and distribution power. FG has unique sense of detecting product trends early, procuring the subsequent products quickly and distributing them by leveraging the power of social media (B2C; > 700k followers on TikTok) and its elaborate network of retailers (B2B; e.g. Reformhaus & MediaMarktSaturn). Having started with their “Fitgun”, which brand has become a synonym for the product itself (like “Kärcher” for pressure washers), FG has moved into the high growth field of food supplements with products such as Shilajit, beetroot powder, vitamin gummis and caffeine pouches.

FG procures the relevant products at favorable prices and resells them with a superb gross margin of 73.5% (FY24), which is the result of two effects : (1) due to the product type (mainly food supplements) and their newness to the domestic market, customers do not have an anchor price and are willing to pay the asking price. This is supported by a strong and appealing marketing positioning and unique product design and is further enhanced by FG’s innovativeness, e.g. the combination of “Shilajit” and “Manuka” honey to “Manukajit”, which allows for un-copyable, unique products, only available from FG. Secondly, FG tightly works together with a diversified supplier network from Asia, allowing for low procurement costs.

Going forward, we expect FG to grow sales at a 37% CAGR 24-28e, thanks to surging demand for Nutrition, making up c. 75% of sales already in FY25e (eNuW; vs. 3.5% in FY24), new distribution agreements and a rising brand awareness. Coupled with a more efficient fulfilment and increasing fixed cost coverage, EBITDA is seen to expand by 42% CAGR during the same period.

All together, FG is well positioned to capitalize from two trends (social media usage and healthy lifestyle) at once. With gross IPO proceeds of € 1.6m as well as plenty of recently launched nutrition products, short- to mid-term growth looks set to be strong thanks to better pre-financing of working capital (currently the #1 bottleneck for growth) and increasing marketing power.

We initiate coverage with a BUY rating and a € 13.50 PT based on DCF.