Forward multiple and Medibank

Thanks for your comments on the Switzer program on Monday evening regarding the Medibank IPO. You mentioned the term “forward multiple” a couple of times in arriving at your estimate that the $2 top range price is a bit on the high side.

Can you elaborate please?

A: It is the Price/earnings multiple.


I use the word "forward", because it applies to FY 15.


Take Medicare as an example:


Share Price: $2.00

Number of shares: 2,754m

Forecast NPAT for FY 15: $258.2m

Earnings Per Share (258.2/2,754) = 9.38c


Multiple (PE ratio) = 200/9.38 = 21.3


At $1.55: 155/9.38 = 16.5



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