Revenue growth in 3Q25 comes in line with our expectations
Leejam’s revenue rose 9% YoY in 3Q25, meeting our estimate. This was driven by a 9% YoY growth in both PT segment and subscriptions & membership segment revenue, led by an increase in the number of fitness centers and members.
Net profit declines sharply as costs rise at a faster pace
A 17% YoY rise in the cost of revenue, resulting from the net addition of 23 fitness centers in the last 12 months, and a 19% YoY increase in the G&A and S&M expenses caused by spendings on National Day campaign, human capital acquisition, and organizational development, dragged down operating profit. An absence of one-off gain in 3Q25 and a decrease in profit from short term Murabaha further weighed, leading to a 57% YoY decline in the net profit.
U Capital View
We expect Leejam’s profitability to improve gradually next year onwards as the pace of new centers’ addition reduces, and their utilization improves. Hence, we maintain our SAR 152.0 target price on the stock and an Accumulate rating, considering upside from current levels.