Morningstar

Morningstar, Inc.

Equity Bottom-Up

Narrow-moat Medibank Private’s strong underlying performance for first-half fiscal 2019 was offset by a sharp drop in investment income, with NPAT of AUD 208 million down 15% on first half fiscal 2018 but up 4% on secondhalf fiscal 2018. Core businesses continue to deliver sound results with a small net increase in policyholder numbers, improved health insurance operating profit of AUD 282 million, and a strong uplift in Medibank Health operating profit to AUD 29 million. Despite lower…

Narrow-moat private health insurer, Medibank Private surprised with disappointing news its lucrative contract providing health services to the Australian Department of Defence will not be renewed when the current contract expires June 30, 2019. Medibank provided the service to the Government via its Medibank Health division. The Defence Department contract contributed approximately AUD 30 million in pretax operating profit in fiscal 2018, representing 5% of group operating profit. We have…

Our positive view on narrow-moat Medibank Private is unchanged following the recent confirmation of the private health insurer’s strategy and outlook. Medibank remains well positioned to deliver meaningful business improvements, which will underpin future earnings growth. However, we acknowledge private health insurance affordability is a major threat and continues to constrain policyholder growth. Medibank is trading around 17.2 times forecast fiscal 2018 earnings, cheaper than the listed peer…

Narrow-moat Medibank Private continues to benefit from strong competitive advantages with another impressive allround performance despite challenging operating conditions. Interim NPAT of AUD 245.6 million increased 6% on first-half fiscal 2017 with fully franked interim dividends of AUD 5.5 cents per share, or cps, up 5% on a year ago. Underlying earnings of AUD 234.4 million, excluding higher than planned investment returns of AUD 11.2 million, increased 11% on the previous corresponding…

Despite the relatively low industrywide increase, private health insurance premiums continue to grow faster than wage growth of around 1.9% and the consumer price index growth of 1.8%. From an industry perspective, we expect private health insurance market growth to continue to slow in response to ongoing affordability concerns, but strong population growth around 2% per year will partially offset. The industry average increase is in line with our expectations and continues to underpin the…

Australia

Medibank Private Limited offers private health care coverage for hospital and ancillary services. The Company offers a range of health insurance products such as health, travel, pet, and life coverage to overseas students and visitors. Medibank serves customers throughout Australia.

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