Medibank: Still too expensive

Medibank Private Limited is Australia’s largest health insurer with 3.8 million members giving it 29% of the market. The company operates under: 1) Medibank, the premier product & 2) AHM, a budget-friendly option. Last year, the government outlined several risks to the sector, including an ageing population, growth in chronic diseases, increasing patient expectations about access to services and the number and range of health services provided. Despite the negatives, 13.3m Australian's have general treatment cover (55.8% of the population) with the government spending $5.8b on rebates last year. MPL seems good value vs. its key competitor, NIB. MPL currently trades on 16x earnings paying a 4.6% dividend, whilst NIB trades on 21x earnings and pays a 3.3% dividend. Due to brand deterioration and the disillusionment of many customers, we still believe that the current price of Medibank is too expensive. Subscribe here: (VIEW LINK)