Our opinion on the current state of DISCOVERY(DSY)Discovery (DSY), developed and built by Adrian Gore over the past 25 years, offers the A/B income group a matrix of inter-linked financial services, enabling significant cross-selling opportunities. Customers can start with medical aid and then add a variety of insurance products and, most recently, personal banking services.
Discovery's "Vitality" concept, which rewards clients for maintaining their health, has been extended to include their driving record and a rewards system that provides attractive benefits for those who opt for the full range of Discovery’s debit-order products. The Vitality platform tracks over 1000 customer activities and 50 biometrics a minute using the Apple watch in South Africa, the UK, China, Europe, and the US to support healthy aging and retirement planning.
Discovery's Chinese venture, Ping An Health, in which it holds a 25% stake, experienced a 60% membership growth over the year, with written premiums increasing by 87% to $753 million. Ping An is quickly becoming Discovery's "Tencent," reflecting its rapid development and potential. Discovery’s foray into banking, approved in November 2017, offers clients a range of banking and credit card facilities and is expected to significantly enhance group profits over time. This disruptive move is set to attract A/B income group consumers away from traditional banks. Discovery Bank's initial goal was to secure 1,000 new accounts daily from August 2019.
Despite challenges during the pandemic, including a slowdown in progress, Discovery Bank now boasts 700,000 active clients, most of whom are considered high-quality. Discovery has also benefited from fewer car accident and medical insurance claims during lockdown periods. While Discovery shares remain expensive, the company is highly regarded, particularly for long-term growth, making it one of the best shares for private investors.
CEO Adrian Gore emphasizes that "opportunities are not in good times," demonstrating his belief in investing during tough periods like the current economic challenges in South Africa. Gore has also voiced concerns over the National Health Insurance (NHI) proposal, stating that it is unaffordable for the country and that there are insufficient medical resources to implement it. Discovery was the first large, listed company to require all staff to be vaccinated.
On 20th June 2022, the bank announced it had surpassed 1 million accounts and was onboarding approximately 750 new accounts daily. In its results for the year to 30th June 2024, Discovery reported a 14% increase in headline earnings per share (HEPS) and a 16% rise in net asset value (NAV). The company stated, "Discovery Group achieved strong growth in the year ended 30 June 2024, with normalised operating profit up 17% to R11.6 billion, headline earnings up 7% to R7.2 billion, normalised headline earnings up 15% to R7.3 billion, and core new business annualised premium income (API) up 18% to R26.7 billion."
Technically, Discovery's share has been in an upward trend since June 2024. Given its strong management and innovative business model, Discovery is seen as a "must-have" share for any private investor's portfolio.
