Medibank Private (MPL) - Sustainable earnings growth

Bell Potter


With high earnings visibility and growth, a strong balance sheet and dividend yield of 3.7% fully franked, we continue to recommend Medibank a Buy. Medibanks core business delivers revenue and earnings from the core Health Insurance Business (HIB), it both increased strongly and drove an operating profit result of $329m which was 7% ahead of prospectus forecast. In the HIB gross profit margin improved by 70bps to 14.2% (1H15:13.9%). This sustained margin improvement which was not expected and is the key driver of earnings upgrades in FY16 and beyond. This sustainable margin improvement follows years of investment and research into claims management processes and would not have been possible without the millions of dollars spent on systems improvements leading into last year’s IPO. Net claims expense inclusive of risk equalisation grew by just 4.3% which is an outstanding result relative to recent industry data that has shown claims inflation well in advance of 7%. Healthcare analyst John Hester provides a video summary of Medibank Private (MPL) following their FY15 result announcement. Watch it here:

1 stock mentioned

Bell Potter Securities is a leading Australian stockbroking, investment and financial advisory firm that provides a comprehensive offering of financial services to a diversified client base that includes individuals, institutions and corporations.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Please sign in to comment on this wire.