How To Buy Nib Shares

At their highest, nib shares have risen to almost $9 per share and, as of April 5, 2024, are trading at around $7.67 per share, with a price-to-earnings (P/E) ratio of 18.3 (Essentially, this means investors paid around $18.30 for every dollar earned from owning nib shares in the past year).

Does that make nib shares good value? Generally, P/E ratios for the Australian market sit around 15—but that doesn’t necessarily make nib expensive.

It depends entirely on whether you believe the company’s future earning potential means it is likely to deliver a return on your investment as the company’s profits increase over time—and within your investing timeframe.

For those new to trading, it pays to take a big picture view of a company’s track record, fundamentals and broader market forces at play, in order to form an opinion on its growth trajectory and attractiveness as an investment. To do your own research, the nib investor centre is worth exploring. Beginners can also read more in our guide to the best share trading platforms for beginners.

What’s NIB’s History?

Nib began life as the Newcastle Industrial Benefits Hospital Fund in 1952, established by workers employed by the BHP Steelworks to provide for their healthcare needs. BHP’s steel facility operated near the Port of Newcastle from 1913 to 1999, giving rise to a huge industrial complex with the surrounding area becoming a dormitory suburb for factory workers.

Membership of nib health fund grew significantly during the 1960s and 1970s, through amalgamations and on the back of momentum created by the Australian Government’s launch of the then-non-profit insurer, Medibank.

Nib expanded its operations across the country in the early ’90s and in 2007 its members voted to demutualise and list on the Australian Securities Exchange (ASX). Since then it has continued to grow in scope and membership and generally has a good reputation, although it has faced regulatory scrutiny over its treatment of consumers.

How Is nib Performing in 2024?

In February, nib posted its financials for financial year 2024 half-year results, and revealed that:

• Total revenue increased 12.4% to $1.7 billion
• Underlying operating profit rose 21.7% to $144.4 million
• The Board declared a fully franked dividend of 15 cents per share

Following the release of the company’s full-year results during the August reporting season last year, nib shares lifted by more than 4%. Positive results from its 2023 annual report included:

• Total revenue increase of 10.9% year-on-year to $3.1 billion.
• A significant 43% rise in net profit after tax to $191.1 million.
• Final dividend increase of over 27%, up to 15 cents per share (28c per share fully franked)

Around half of all Australians have some form of private health cover, for either hospital care, extras or both. Nib is now the fourth-largest private health insurance (PHI) provider nationally by market share, selling policies under the nib brand as well as underpinning PHI offers marketed by Suncorp, Qantas Assure, GU Corporate Health, APIA, and AAMI. Nib is the second-largest PHI provider in New Zealand, with growth of 3.2% in that market in FY23.

The company’s growth strategy includes capturing more private health cover members as well as expanding its operations into adjacent healthcare markets.

For instance, in 2021 nib acquired a 50% stake of tele-health and e-prescriptions provider Midnight Health. In 2022, the company raised equity through a share purchase plan (SPP), with funds used to acquire National Disability Insurance Scheme (NDIS) plan manager business Maple Plan—followed by three more NDIS-related acquisitions in financial year 2023.

Most analyst ratings place NHF as a stock to hold, with some suggesting it’s a buy. The average 12-month price target for nib shares is over $8, with a predicted rise to $8.75 at the upper end.

Analysts from financial services firm Macquarie say they’ll hold NIB, but remain neutral on the stock’s outlook. They forecast that the private health insurance industry’s net margins will rise over the next fiscal quarter before falling in the second half of financial year 2024 amid an environment where the number of GP visits and hospitalisations (and therefore, insurance claims) are rising after a decline during the pandemic.

Some analysts have been more positive about the prospects of insurance brokers like AUB Group (ASX: AUB), Steadfast Group (ASX: SDF) and PSC Insurance (ASX: PSC). Insurers like nib have to balance claims and returns against increasing risk—such as extreme weather and climate change impacts—making large brokers who simply on-sell and take a cut of premiums more attractive to some investors.

The regulatory environment is also critical for the health insurance industry. Current policies like the Medicare surcharge and Lifetime Health Cover rule incentivises holding health cover, and the government also oversees changes in the premiums that insurers charge. In 2019, Nib’s share price jumped by over 15% following the re-election of a Coalition government, due to the fact that one of Labor’s election promises had been capping annual price rises in insurance premiums.

ASX-listed securities such as nib shares can be purchased through any broker registered with the exchange (known as participant brokers). That could mean engaging a full service stockbroker or financial advisory firm to receive recommendations and support to execute trades, or independently managing your own share purchases by using an online share trading platform.

Share broking apps vary in their fees, functionality, available markets/products, and user-friendliness, so shop around and compare different products based on your needs and preferences. Once you’ve found a platform you trust, follow these steps:

1. Solidify your investing plan: Have you carefully considered how nib shares would fit into your broader investment portfolio—does it align with your risk tolerance or help you achieve greater diversification within your stock asset allocation? How much will you invest and how often? Does it make more sense to buy shares outright, or gain exposure via a pooled investment vehicle like an ETF or managed fund?
2. Open a trading account: You’ll need to follow the app’s set-up process, verify your identity and then add funds to your account. When buying ASX-listed shares for the first time you need to invest at least $500. Sage advice for investors has always been to get your core financial obligations under control before investing (as all investments come with the risk of losses). Similarly, it’s wise to only add the amount of funds you can afford to spend into your trading account, to avoid the temptation to spend more.
3. Place your order: Whether you want individual nib shares or units of a fund that holds nib shares, search for the relevant ticker symbol, choose the amount/value and then hit ‘buy’. If you’re not happy to pay current market prices, you could use a limit order to execute your purchase only if and when the share price dips to a specific value.
4. Keep track of nib’s performance: Perhaps you plan to hold nib shares for the long-term, in which case you won’t be too concerned by short-term volatility in share price. However, it pays to stay abreast of the company’s operational decisions and balance sheet to reaffirm your belief in its growth prospects. You can sell your nib shares by placing a sell order within your share trading platform. Selling during price spikes offers the opportunity to take profits—but beware of the brokerage costs of transactions as well as the need to declare capital gains at tax time.