Discovery shares bounce back 9%
The lower tax rate was a surprise but growth in operating profit was in line with market expectations
Discovery’s share price leapt more than 9% on Thursday, reversing earlier weakness after a strong trading update from the insurance group, which is due to launch a bank later this year. A lower effective tax rate helped drive an expected increase in interim normalised headline earnings per share of 28%-33% to R4,51, Discovery said in a statement. Normalised operating profit for the six months to December 2017 was expected to be between 15% and 20% ahead of the previous matching period’s at R3.9bn-R4.1bn. While the lower tax rate was a surprise, growth in operating profit was in line with market expectations, said Warwick Bam, an analyst at Avior Capital Markets. The trading update had provided "reassurance" to the market, reaffirming that Discovery was "still a growth story". Rising interest rates in the UK bode well for Discovery’s life insurance business in that market, VitalityLife. Its emerging businesses such as Vitality Group and Discovery Insure, which have previously weighed...
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