In early trade the Kogan.com Ltd (ASX: KGN) share price has edged higher after announcing the further diversification of its business.
At the time of writing its shares are up 3.5% to $4.88.
What's happening?
This morning Kogan announced that it has entered into an agreement with private health giant Medibank Private Ltd (ASX: MPL) to offer budget health insurance policies under a new brand – Kogan Health.
According to the release, the agreement is for an initial period of three years and will be administered via Medibank's wholly owned subsidiary Australian Health Management (ahm).
Kogan Health will focus on offering budget health insurance policies and be responsible for branding, marketing, and customer acquisition. Underwriting will be provided by Medibank, with Kogan set to earn commissions on sales of all insurance policies.
Kogan Health is expecting to launch its health insurance offering in the second half of this financial year. This will be yet another business in the Kogan portfolio alongside the likes of Kogan Retail, Kogan Marketplace, Kogan Insurance, Kogan Mobile, and Kogan Travel.
Medibank's shares are, however, lower on the news. Shareholders may be concerned that another low budget offering will cannibalise its own sales.
Should you invest?
I have been very impressed with Kogan's progress since it landed on the ASX. However, this impressive performance has led to its shares going gangbusters, meaning they trade on sky high multiples now.
If its shares were trading on a more reasonable valuation I would snap them up, but until that happens I'll be watching on from the sidelines.
In the meantime, I prefer retailers such as Super Retail Group Ltd (ASX: SUL) and Accent Group Ltd (ASX: AX1) which I think are both cheap and offer generous dividends.
