{"id":840239,"date":"2025-10-20T07:00:00","date_gmt":"2025-10-20T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=840239"},"modified":"2025-10-22T16:40:11","modified_gmt":"2025-10-22T14:40:11","slug":"investors-like-what-they-see-from-discovery","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/840239\/investors-like-what-they-see-from-discovery\/","title":{"rendered":"Investors like what they see from Discovery"},"content":{"rendered":"\n

Discovery’s recent financial results have been strong, with PSG Wealth putting a buy recommendation on its stock. <\/p>\n\n\n\n

In its financial results for the year ended 30 June 2025, Discovery saw massive profits, with Discovery Bank becoming profitable for the first time.\u00a0<\/p>\n\n\n\n

Discovery said that its headline and normalised headline earnings increased by 30% to R9,625 million and R9,781 million, respectively.<\/p>\n\n\n\n

The group\u2019s normalised return on equity increased to 15.4%, from 13.5% in the prior year. <\/p>\n\n\n\n

Despite the strong rise in earnings, the company noted that economic growth was below potential in many regions that it operates. <\/p>\n\n\n\n

The group declared a final dividend of 152 cents per share, adding to the 87 cents per share in the year’s first half. <\/p>\n\n\n\n

However, it noted that the interest rate cut provided a better backdrop for investment markets.<\/p>\n\n\n\n

\u201cDiscovery has emerged strongly from its significant investment cycle, which focused on creating new avenues for long-term growth,\u201d it said. <\/p>\n\n\n\n

\u201cThis has positioned the Group for a new distinct phase of scaled organic growth, with focused execution through its recently formed global composite, Vitality, and its domestic business, Discovery South Africa.\u201d <\/p>\n\n\n\n

Discovery South Africa saw 22% growth in normalised profit from operations to over R12 billion.<\/p>\n\n\n\n

This included a stronger performance from Discovery Bank, which saw its total number of clients increase by 30%. Its advances rose by 39%, while deposits rose by 26%. <\/p>\n\n\n\n

The group\u2019s performance resulted in strong revenue growth, and the bank saw its first profitable period during the second half of the financial year, which was ahead of plan. <\/p>\n\n\n\n

The bank still declared a R68 million loss for the full financial year, but this was an 85% improvement from the previous financial year. <\/p>\n\n\n\n

Discovery Health (7%), Discovery Life (14%), Discovery Invest (29%) and Discovery Insure (229%) saw mild to extreme normalised profit growth. <\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

A buy recommendation<\/h2>\n\n\n\n

Amid the strong performance, PSG Wealth Equity Analyst Marnus Piekaar<\/a> has placed a buy recommendation on Discovery. <\/p>\n\n\n\n

 PSG Wealth noted that Discovery\u2019s brand serves affluent, health-conscious consumers who value rewards, which allows for higher pricing while maintaining strong customer loyalty and brand strength. <\/p>\n\n\n\n

It added that the data-driven Vitality platform drives deeper engagement and cross-selling opportunities. <\/p>\n\n\n\n

As the latest results showed, earnings are well spread across health, life, banking and other fee-based services, which creates predictable cash flows. <\/p>\n\n\n\n

The broad product suite also enables Discovery to increase value per client by cross-selling health, life, banking and investment products. This then increases revenue without incurring heavy new customer acquisition costs. <\/p>\n\n\n\n

Regarding growth, there is long-term upside from further International Vitality partnerships, new product extensions, and Discovery Bank\u2019s continued expansion. <\/p>\n\n\n\n

However, Piekaar said that there are still potential risks facing the financial services provider, including a low-growth environment, which reduces discretionary spending. <\/p>\n\n\n\n

Although insurance is seen as a need, it is often one of the first things cut by consumers in challenging financial situations. <\/p>\n\n\n\n

Another risk facing Discovery is the National Health Insurance (NHI) risk. As per the current legislation, it remains unclear what items medical aids can cover.<\/p>\n\n\n\n

Although the NHI is still 10 to 15 years away, it may be an issue for Discovery and other healthcare insurers if it comes into effect sooner. <\/p>\n\n\n\n

Competition also remains a concern for Discovery, with Sanlam and TymeBank teaming up to offer personal loans. <\/p>\n\n\n\n

Old Mutual has launched its own bank, which, like Discovery Bank, will operate digitally and not feature any branches. <\/p>\n\n\n

\n
\"\"<\/a>
Discovery Share Price<\/figcaption><\/figure><\/div>\n\n\n
\n","protected":false},"excerpt":{"rendered":"

PSG Wealth has placed a buy recommendation on Discovery’s share price <\/p>\n","protected":false},"author":95,"featured_media":812773,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[4883,11232],"class_list":["post-840239","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-discovery","tag-psg-wealth"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840239","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=840239"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840239\/revisions"}],"predecessor-version":[{"id":840724,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840239\/revisions\/840724"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812773"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=840239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=840239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=840239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}