Discovery Ltd., South Africa’s largest medical-insurance provider, slid the most in more than 11 years after saying full-year profit will be as much as 10 percent lower than the previous period.
The stock slumped 9.1 percent, the most since December 2001, by the close in Johannesburg. About 4.3 million shares traded, or over three times the three-month daily average. Discovery is the second-worst performer today on the 165-member FTSE/JSE Africa All-Share Index after Coal of Africa Ltd.
Earnings per share at Discovery, 25 percent owned by investment holding company RMI Holdings Ltd., will probably be between the same and 10 percent lower for the year through June than the prior period, the Johannesburg-based company said in a statement. The share traded at 21 times profit and 18 times forecast earnings.
“Given where the price-earnings rating of the share was, around 20 times earnings, there wasn’t any room for disappointment in terms of the earnings report,” Simon Fillmore, chief executive officer of Independent Securities (Pty) Ltd., said by phone from Johannesburg. “It was priced for perfection and looking very expensive in the short term.”
The company started its wellness-based life-insurance model Vitality in Singapore through a joint venture with AIA Group Ltd. in July. The stock rallied 44 percent this year compared with an 8 percent gain in the benchmark all-share gauge. Cape Town-based RMI fell 3.9 percent today to 25.89 rand.
“The share price just moved exceptionally strongly over the last couple of months,” Fillmore said. “The trading update was below what the market was expecting.”