Discovery 6M - Emerging Businesses Shining

Last week Discovery released their 6 month results for the period ending 31 December 2020. Despite a few frustrating currency hedges gone wrong and the UK's low interest rates, the operational numbers seemed good.

Operating profit for the group increased 19% to R4.5bn. The core businesses of Discovery Health and Discovery Life showed decent growth of 6% and 3% respectively, despite the tough environment. The UK business had a brilliant period. Health insurance grew 24%, while life insurance grew 206%. The UK businesses are becoming established contributors to the bottom line.

Short term insurance in SA also had a good period growing by 43%. The Chinese business showed growth of 65%, nice to see. The Vitality Group, partnering their Vitality programme with global insurance companies, grew by 116%. This is a very exciting part of their business.

The bank is still sucking cash, that cost them R1bn in the period.

There is a good trend in these numbers, the emerging businesses within the group are showing traction. Hopefully this bodes well for their latest project, the bank.

In March 2018 the share price reached a peak of R180. It now sits at R145. We still see Discovery as the best stock to own if you want to participate in a potential SA recovery story.