MPL 1.43% $2.75 medibank private limited

Fully priced?

  1. 2,000 Posts.
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    MPL is a difficult company to value, as its not solely an insurance company, but a health provider as well. Its current PE of about 41 is way over the industry average of 17 (insurance), way over its peers (NHF sits on about 21), and even over a true health provider like Ramsay (on 34). On a PE metric, MPL is over priced right now.

    There is some expectation, however, that MPL will morph from a public service company to a lean private sector company, so I expect that there is some speculative value reflected in the SP. Problem with this, though, is that senior management has not changed for the float. It beggars belief that CEO that didn't introduce cost cutting before the float will do so now. On the flip side, many government companies that have floated in the past have become successful, eventually (QAN, TLS, CBA, AZJ, etc, though, to be fair, some were priced to sell (eg, CBA), some were way over priced (eg, TLS), whilst others had a new CEO for the pre-float and float).

    MPL isnt due to pay a divvy till Sept, 2015. Thats a log wait between drinks. I suspect the SP will waver around quite a bit till that divvy. If its high, or even "OK", the super funds will pile in (some doing so well before the divvy in speculation). If i disappoints, I cannot see the SP sustaining above the issue price.
 
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