MPL medibank private limited

Medibank Private Strategic Value

  1. 8,130 Posts.
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    Appropriate timing maybe to create a thread on Medibank Private shares.

    In my view MPL can only be viewed through a prism of a bond proxy investment.

    MPL business model provides for sustainable dividends, and as can be seen through their stable shares on issue, the business does not need additional capital, but neither can it grow given that it is already the largest provider of health insurance in Australia.

    A quick review of the last 8 odd years of financials shows:
    a) a range bound EPS and DPS, but no growth.
    b) stable shares on issue.
    c) slow increase in bv and NTA.

    So there is good and bad in this.

    The good news: investors with decent market timing can enter/exit to achieve 'bond like' returns on their portfolio.
    The bad news: the company doesnt grow its earnings base, which means that your dividends and future returns are essentially captured when you buy.

    A quick evaluation of intrinsic value shows MPL to be still significantly over valued from an 'owner business' point of view. Even with the recent decrease in share price because of the hack.

    But as I have said above, the key to this stock is not to view it through the prism of intrinsic value or 'owner business' value.
    Instead its to view MPL through the prism as a bond proxy with some equity risk premium.

    So my view is given interest rates are rising, bond yields are rising and equity risk premium is rising, what is a decent 'bond type' yield to give me a margin of safety.

    This is a relatively easy excercise that each can do.
    Its simple: what bond type yield do you require on this stock??


    For me I use 14-15c dividends, which seems reasonable within the range of history.
    Now good news those dividends are fully franked which means I can pay a bit more.

    In these type of situations I generally want at least 8% gross return.
    8x0.7 = 5.6% fully franked.

    Therefore rough back of the envelope value to me:
    14c/5.6% = $2.50 share price
    15c/5.6% = $2.67 share price

    Given neither of these are occurring yet and most importantly MPL doesn't stack on my intrinsic value, I am happily sitting on the side and waiting.

    Interested in others commentary.

    Last edited by noomxx: 26/10/22
 
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Last
$5.00
Change
-0.040(0.79%)
Mkt cap ! $13.77B
Open High Low Value Volume
$5.01 $5.03 $4.98 $22.86M 4.579M

Buyers (Bids)

No. Vol. Price($)
1 3900 $4.99
 

Sellers (Offers)

Price($) Vol. No.
$5.01 4612 2
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Last trade - 16.10pm 11/08/2025 (20 minute delay) ?
MPL (ASX) Chart
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