Medibank Private Limited

Medibank Private Limited (ASX: MPL) is an integrated healthcare company. The company is engaged in delivering private health insurance and health solutions to 3.7 million Australians. MPL provides health insurance through its Medibank and ahm brands. Apart from this, it also offers numerous health services across Australia.

Financial and Operational Update: The company recently updated that it has deferred the following year’s premium rise for five months to 1 September 2022. The company will return around $135 million of the COVID-19 permanent net claims savings to customers. Medibank and ahm health insurance premiums are scheduled to increase by ~3.10% from 1 April 2022, the lowest rise in average premium in 21 years. Besides, on 20 December 2021, the company mentioned that it will release its results for the six months ending 31 December 2021 on 25 February 2022.

On the financial front, operating profit from continuing operations increased by 14.6% YoY to $528.3 million in FY21 primarily due to a solid performance in its Health Insurance business. Further, coupled with a rise in investment income, net profit after tax increased to $441.2 million, up by 39.8%.

Technical Analysis:

Daily Price Chart

Note:  The purple color line in the chart depicts RSI (14-period). The sky-blue and yellow-color lines show 21-Period SMA and 50-Period SMA, respectively. The green-color histogram at the bottom of the charts represents daily volumes.

On the daily chart, MPL prices are sustaining below the falling trend line resistance level and facing the resistance of the same. Moreover, the prices are trading below the trend-following indicator 21-period and 50-period SMA, which may act as a resistance level for the stock. Further, the momentum oscillator RSI (14-period) is trading at (~41.14 level), indicating negative momentum in the stock. An important support level for the stock is placed at AUD 3.10 while the key resistance level is placed at AUD 3.55. If the stock price sustains around AUD 3.10 level, there could be momentum in the stock for further evaluation, followed by entry into the stock.

Stock Recommendation

Although the group expects the overall participation growth to slow compared to FY21, MPL intends to continue strengthening its dual-brand strategy. This will be achieved by providing differentiated and compelling products and services, catering to the growing areas of customer demand.

Considering the facts above and the current trading levels, we give a “Watch” recommendation on the stock at the closing market price of A$3.33, down 1.187% as of 24^th December 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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