Later this month, Medibank Private Ltd (ASX:MPL) will celebrate its one year anniversary since its $5.5 billion initial public offering (IPO) on the ASX.
For shareholders who received stock in the IPO at $2 per share, the investment has so far proved a profitable one with the stock currently trading at $2.37; implying a capital gain of 18.5%. With shareholders having also received an inaugural final dividend of 5.3 cents per share, tallied up shareholders are sitting on profits of 21%.
That's a decent return in an absolute sense compared against the negative 3% one year return of the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO). However, on a relative basis, Medibank's returns are roughly in line with peer NIB Holdings Limited (ASX: NHF) which has achieved a gain in share price of 19% over the last 12 months.
So what has happen in the past year?
- For the financial year (FY) 2015, Medibank reported a pro forma net profit after tax result of $292 million this was 13% above the prospectus forecast of $258 million and also ahead of the mid-year guidance provided of $268 million
- Premium revenue grew a credible 5.1% to $5.9 billion, although this was below the prospectus number for growth of 6.2%
- The net operating margin improved to 5.5%, compared with 4.4% in FY 2014
- Medibank remained the largest private health insurer in Australia with a market share of 29.1%
…and what should investors expect going forward?
Management has provided guidance for:
- Premium revenue growth above 5.5% in FY 2016
- A decline in the management expense ratio over the next two years to below 8% (8.6% in FY 2015)
- A Health insurance operating profit target above $370 million in FY 2016
- The implied full year dividend for FY 2015 was 7.4 cents per share which equates to an implied trailing yield of 3.1%; shareholders could reasonably expect to receive at least this yield in the current year.
