Discovery Trading Update - Suspending The Dividend


Discovery is a widely held stock in our local, Rand-denominated JSE portfolios. As everyone knows, this technology-driven healthcare and insurance group was founded by Adrian Gore in 1992 and has a fancy new headquarters in Sandton.


Discovery's Chinese JV is an Opportunity


JSE-listed Discovery is a stock that has lagged the market quite badly in recent times. Its all-time high stock price was R190 in March 2018. Now it is trading at just over R100 a share. Urgh!


Discovery 6M - Hurt by UK Operations


Discovery released its interim earnings yesterday that came short of expectations, including our own. This explains the recent sharp drop in the share price from R127 to R105.60 at market close yesterday. The Achilles heel was the VitalityLife business in the UK. It reversed its fortunes by 145%, due to high client churn by brokers and a hedge that went against the company.


Discovery - Get Healthy To Boost the Economy


Vestact recommends that local investors in JSE portfolios own Discovery shares. The Sandton-based group has a loyal customer base in health insurance, life insurance and financial services, in South Africa, the UK and China. Its deep technology skills are reflected in the overarching global Vitality database, which is also sold to other global insurers.


Discovery's Quality Clients


Discovery is a company which attracts a lot of attention. It started out as just medical aid business, and then it morphed into life insurance, investments and short-term insurance and most lately, banking. Of course, it's gone global too.


Discovery FY - Other Divisions Starting to Make Money


Yesterday I went to the Discovery full year results. Despite the gloomy environment there was a lot of energy and optimism amongst the management. I guess that is the culture Adrian has created.


Discovery 6M numbers - Investing in Growth


Yesterday morning before the market opened, Discovery released their six-month numbers which showed an 18% drop in profits. Due to their trading statement on the 15 February, we already knew that there wasn't going to be the regular growth in the bottom line. Below you can see how each group did.


Discovery gets a Softbank Investment


In Discovery's results yesterday they announced a deal with SoftBank which fell under the radar. If you have used Discovery Insure you would have received a little device that goes into your vehicle. This device tracks your driving. It tells your car insurer how fast you accelerate, how hard you break, whether you are breaking the speed limit. All sorts of things that your insurer would love to know. And why would the driver want this kind of information shared? Because Discovery rewards them with smoothies and large fuel discounts. In the end you will become a better driver which is actually a huge benefit too. Better drivers means fewer accidents, lower payouts from the medical and less death benefit claims.


Discovery Banger Of A Year 2018


Yesterday Discovery released a good set of full-year numbers for the year ended in June 2018. The shares closed down 4% on worries about global geopolitics and how the company was going to navigate the regulatory landscape in all its markets going forward. The other factor contributing to the share price was the inevitable share dilution as the company seeks to raise R1.8 billion to buy back the 25% stake in DiscoveryCard from FirstRand to pave the way for Discovery Bank.


Proposed NHI


The Health Minister Aaron Motsoaledi released two bills on Thursday that could lead to big changes to the South African healthcare system. Both are likely to lead to heated debates in industry and civil society, and could directly affect our investments in Discovery and Mediclinic.


Discovery 6M numbers - going from strength to strength


Yesterday Discovery released their interim results for the six months ending 31 December 2017. As expected from the trading update, the numbers looked good. Operating profit increased by 19% while normalised headline earnings per share increased by 31% to R4.11. The big drivers behind the growth in earnings was a solid showing from the UK business as well as profits coming through for the first time from the short-term insurance business as well as the Ping An joint venture.


Discovery FY numbers - Changing lives


On Monday there were Full Year numbers from Discovery, which didn't disappoint. The results are broadcast on TV, making it easy to watch and pause if need be. Adrian Gore's passion for the business sure is inspiring. Recent books that I have read all talk about the importance of the vision from a founder. Founders generally have more credibility and business-wide support, meaning they can push companies in directions that professional managers would struggle. Adrian Gore and Stephen Saad are the first two South African leaders that come to mind when I think of inspirational leaders. But we are blessed with many.


Discovery 6 month numbers - Investing in technology


Discovery released interim results for the half year to end December yesterday morning. This is a great business. A business that was conceptualised by an incredible individual who has seen in large part his vision realised. Adrian Gore is not finished. He seems passionate about the business, he walks the walk and he talks the talk. And talk he can. At the results presentation he made it known that Brexit, the weaker Pound to the Rand and the weakness in the investments (statutory capital) in the UK (yields in Gilts powering to an all-time low) has had a negative impact on the UK operations.


Discovery FY numbers - Strong growth & investing for the future


The first read through of the Discovery annual results revealed that the business is very definitely a growth oriented one. Different businesses in the core market, South Africa, continue to take market share and reinvent short term (and life) insurance, investments and bed down their core business, health insurance. There is a big gap between those that are lucky enough to afford private healthcare in South Africa and those who have to use the public health system, most will agree that the spend to outcomes ratio is not the best, to put it mildly. The Vitality program has undoubtably been a success and I think that we are only starting to scratch the surface. The potential of the existing partnerships in countries like China, with Ping An Insurance and more recently in Canada and the US (John Hancock), as well as some of the bigger economies of Europe represent exciting white labelling of the Vitality product.


Discovery goes into Japan


Discovery made an announcement yesterday that needed closer and further inspection. The headline reads Discovery to introduce Vitality to Japan. Japan of course is a country with over 125 million people, where the average age is around 45 and is possibly one of (if not the) most sophisticated societies on the planet. Organisational skills and attention to detail is not lacking.


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