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NIB share price falls 6.8% following 2019 full-year results

Here are some of the most vital things we learnt from nib's 2019 full-year results.

NIB (ASX: NHF) share price down after full-year results Source: Bloomberg

Bearish investors bid nib’s share price down as much as 6.82% today – after the company released FY19 results that seemed good – but evidently were not up to investor expectations.

Given that nib holdings Limited has already seen its share price surge 48% since January, it’s not fully surprising that we are now witnessing a slight pull-back.

FY19 financials at a glance

As we reported previously, and continuing the trend of conservative forecasting, nib's management spoke modestly of the 2019 results and focused on the impact of challenging market conditions.

Here, nib holdings Limited’s Managing Director, Mark Fitzgibbon pointed out that:

'There's a broad weakness in consumer discretionary spending, fierce competition for that spending and private health insurance has some issues around cost and affordability.'

Even with this weakness, nib saw policyholder growth of 2.1% in the 2019 fiscal year. Such a figure, according to the company at least, positively contrasts with what was generally dour outlook for hospital coverage in the 2019 fiscal year.

On the top-line, underlying revenue came in at A$2.4 billion – an increase of 8.3% from the year prior.

Profits (NPAT) rose by an even higher percentage – reaching A$149.3 million in FY19 – up 11.8% on the corresponding period.

nib’s dividend grows

Beyond these front-line financials, nib declared a final, fully-franked dividend of 13.0 cents. All up, this takes nib's full year dividend to 23.0 cents.

A dividend reinvestment plan is currently available for nib shareholders.

Alternative growth in focus

Other business areas that are likely to interest potential and current investors include nib’s coverage of people from international backgrounds. In FY19 this business segment saw impressive growth of 20%.

Here, nib holdings Limited pointed out that:

'We now cover almost 190,000 students and workers from over 180 countries and have a physical presence in China and India.'

nib share price: 2020 outlook

Regarding the current and future market conditions that could impact nib, the company pointed out that:

'Relatively low levels of claims inflation in recent years have results in arhi insurance margins (7.3% in FY19) being well ahead of nib's long run target range.’

In saying that, nib maintains that it does not expect such high margins to persist indefinitely; rather, noting that it anticipates them to come in closer to 6% moving forward.

Finally, regarding bottom-line estimates, nib's Managing Director, Mark Fitzgibbon has said that the company:

'Anticipates for FY20 a UOP of at least $200 million (statutory operating profit of at least $180 million).'

Citibank’s take on the results

Speaking to the outlook nib provided today, Citibank analysts have suggested that nib’s share price – at these current levels at least – is expensive.

Ultimately, the financial services firm maintains that it looks as if nib would have had to beat expectations for its share price to rise today.

Year-to-date, nib holdings Limited’s share price has still risen 39% – even after factoring in today’s share price sell-off.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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