Spent much of yesterday morning watching Discovery’s CEO Adrian Gore deliver his group’s interim results to a room packed with investment analysts. The subsequent decline in the share price, suggests those number crunchers weren’t impressed. Because, judging by the questions, they are obsessing over the marked-to-market loss in Vitality Life UK.
Mr Market did the same. Discovery’s share price fell another percent yesterday to close at R105 a share, taking the past year’s fall to 27%. The shares are now back at 2014 prices. In those six years annual operating profit has risen from R5bn to R7.75bn and the group’s actuarially calculated net worth (embedded value) has jumped two thirds from R43bn to R71bn.
But Mr Market lives in the moment. Were he able to look ahead, he’d have noticed Discovery’s 25% stake in China’s leading health insurer Ping An has grown like topsy. Back in 2014, Ping An Health celebrated a doubling to R339m in new business premium income. In yesterday’s presentation Gore disclosed in the latest half year’s alone, its new business figure was R5.5bn.
During the early years of Naspers’s Chinese investment in TenCent, JSE investors battled to get their heads around the impact of its exponential growth. Judging by the way they’re treating Discovery, they seem not to have learnt much. In our post presentation interview, Gore told me Ping An’s management now have a ten-fold growth target. As they do in China. Ask TenCent’s Pony Ma.
