Finweek English Edition

Waives dividend

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The Discovery* results for the year through 30 June, released on 2 September, were deeply disliked by market participan­ts as the company skipped the dividend and announced a possible R1.5bn rights offer for their Chinese Ping An investment. Ping An continues to grow at an accelerate­d pace, generating an operating profit of R411m. That’s an increase of 126% and some 6.3% of total group operating profit. Discovery’s embedded value increased by 5% to R113.65 per share, which is a little under 700c below the company’s current share price. So, assuming embedded value is fair, you get Vitality, short-term insurance, Ping An and the bank for 700c. Now sure, the bank may not succeed, but Vitality is a great operation. Trading on the Hong Kong Stock Exchange, Discovery’s 25% stake in Ping An is worth some R550m which equates to a little under 100c a Discovery share and this all while Ping An’s shares are some 40% off the highs of earlier this year. So maybe the market is being cautious as it waits for values to show themselves, especially in Discovery’s banking division.

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