OCA - Oceania Group - retirement villages

[Ggcc]

I'm not sure about NZ property being mortgaged to the hilt - total housing lending approx 250 Billion and total housing value approx 1 Trillion so an LVR of 25% give or take

https://www.oneroof.co.nz/news/revealed-how-much-kiwis-are-borrowing-from-the-bank-of-mum-and-dad-35761

I think those figures exclude how much people borrow from parents.

[pierre]

https://www.oneroof.co.nz/news/revealed-how-much-kiwis-are-borrowing-from-the-bank-of-mum-and-dad-35761

I think those figures exclude how much people borrow from parents.

I would imagine the parents of those wanting to purchase a retirement unit of any kind will be long past worrying about the return of any funds they may have advanced to their (now aged) children.

[Ggcc]

I would imagine the parents of those wanting to purchase a retirement unit of any kind will be long past worrying about the return of any funds they may have advanced to their (now aged) children.
Yes I agree and most likely seen as an investment by a parent rather than a debt, but it is scary how much some people want to borrow and how much debt they carry

[winner69]

I'm not sure about NZ property being mortgaged to the hilt - total housing lending approx 250 Billion and total housing value approx 1 Trillion so an LVR of 25% give or take

In total yes only 25%

I wonder how much of the total housing value is mortgage free?

[kiwico]

I would have thought that one would have the heaviest weighting.

Those that regularly enjoy RBD's "delights" certainly will...

[bull....]

looks like the results will determine if we are still on track for 1.15 resistance. heading in the right direction at the moment

[dabsman]

https://www.oneroof.co.nz/news/revealed-how-much-kiwis-are-borrowing-from-the-bank-of-mum-and-dad-35761

I think those figures exclude how much people borrow from parents.

Well the parents either get their money from cash (therefore does not change figures), borrow of their own property (already included in the figures), or provide secured guarantee (which is also included in these figures). Doesn't change a thing. I also remember seeing somewhere a huge amount of housing stock is unencumbered but I cant remember the number

[silverblizzard888]

Not normally the stocks I go for, but I do like the pipeline and the growth of this one, so im in for the ride, should be a good performer for this year considering developed units will nearly equal last years total new and resale unit numbers, going to be expecting a big growth in revenue if resale units are similar to last years.

[trader_jackson]

OCA gonna be $1.15 by frday 5pm they say
Makes the $1.10 it is now look cheap

[Ggcc]

OCA gonna be $1.15 by frday 5pm they say
Makes the $1.10 it is now look cheap
Who are they?

[777]

They who try to ramp.

[Maverick]

Today is an interesting day as its Wellington anniversary, so half the country is watching Netflix's right now. So all NZSX turnover is pretty insipid. So I was interested to watch OCA turnover past 12.00 pm today when the Aussys start up. Then Boom, right on queue the OCA turnover goes through the roof while the other NZ stocks idle along.
So it's clear to me that Aussies are driving the selling, but what this means and how to benefit from it is beyond me. (apart from waiting them out )
Anyway , a good friend has recommended "call of duty" on Netflix so Im of to watch that.
Can't wait till Friday.

[Beagle]

Today is an interesting day as its Wellington anniversary, so half the country is watching Netflix's right now. So all NZSX turnover is pretty insipid. So I was interested to watch OCA turnover past 12.00 pm today when the Aussys start up. Then Boom, right on queue the OCA turnover goes through the roof while the other NZ stocks idle along.
So it's clear to me that Aussies are driving the selling, but what this means and how to benefit from it is beyond me. (apart from waiting them out )
Anyway , a good friend has recommended "call of duty" on Netflix so Im of to watch that.
Can't wait till Friday.

May I presume you've watched all of the Homeland series already ? If not, my goodness you're in for a treat and some serious binge watching.

[minimoke]

Today is an interesting day as its Wellington anniversary, so half the country is watching Netflix's right now. So all NZSX turnover is pretty insipid. So I was interested to watch OCA turnover past 12.00 pm today when the Aussys start up. Then Boom, right on queue the OCA turnover goes through the roof while the other NZ stocks idle along.
So it's clear to me that Aussies are driving the selling, but what this means and how to benefit from it is beyond me.
Anyway , a good friend has recommended "call of duty" on Netflix so Im of to watch that.
Can't wait till Friday.
First sale at 12:18 for 300 shares at $1.10
Next at 13:13 for 15,000 at $1.10
Then a big slab of 250,000 at 13:25 for $1.10.

I'm not sure you can attribute that to the Ozzies. The important part of NZ isnt lolling about! And we still have internet access on our public holidays.)

[trader_jackson]

Maybe won't be $1.15 come friday, in fact might only be $1.13 in 12 months some say... Fake-News-Forsyth reckon underlying profit is only gonna be up 3% on 1H18 (1.8% on an EPS basis)... jeez I hope they are wrong, they are going to have to have an
unbelievable 2nd half to live up to Beagle telling the 2 or 3 people that read the ARV thread annually that OCA are having 17% underlying EPS growth


(ARV had underlying EPS growth of 17% at half year - about 10x higher than Fake-News-Forsyth are forecasting for OCA, yet, in fact, ARV trades on VERY similar valuation metrics)

[Ggcc]

I don’t expect the dividend to increase as you will see that analysts expect the dividend to be the same as last year. They also expect income (net profit) to drop slightly, maybe due to property revaluations. It is 2020 onward that is exciting

[minimoke]

An alternative view for the Stuff article the other week.

https://www.stuff.co.nz/business/opinion-analysis/110049317/many-kiwis-satisfied-with-retirement-village-life

[Beagle]

Last year they paid out 55% of underlying profit as dividends and I am expecting a very similar payout percentage this year which in my opinion will take total dividends for the year to 6-7 cps mostly weighted towards the second half. I think this has great potential as a dividend yield share with strong growth in underlying earnings in the years ahead which makes this a unique proposition in this sector, (highest dividend yield by quite some margin over ARV).

[silverblizzard888]

Generally quite a healthy area to be in since its constant growth for this sector.

On a dividend basis Oceania is definitely by far the highest.
Ryman 21.7 cents per share up (2018) from 18.8 cents per share (2017) Share price $11.11 = dividend return 1.95% , dividend growth 15.4%
Summerset 13.1 cents per share up (2018) from 9 cents per share (2017) Share price $6.43 = dividend return 2.03% , dividend growth 45.5%
Metlifecare 10 cents per share up (2018) from 8.05 cents per share (2017) Share price $5.37 = dividend return 1.86%, dividend growth 24.2%
Arvida 5.31 cents per share up (2018) from 4.55 cents per share (2017) Share price $1.33 = dividend return 3.99%, dividend growth 16.7%
Oceania 4.7 cents per share up (2018) from n/a cents per share (2017) Share price $1.10 = dividend return 4.27%

Arvida and Oceania are definitely leading as the dividend payers for sure, but the dividend growth on prior year matters too especially if you consider it an income generating investment for the long term.

12 month share price performance:
Ryman : 2.87%
Summerset : 18.01%
Metlifecare : -12.11%
Arvida : 3.1%
Oceania : 5.77%

Combined 12 month dividend and capital return:
Ryman : 2.87% + 1.95% = 4.82%
Summerset : 18.01% +2.03% = 20.04%
Metlifecare : -12.11% + 1.86% = -10.25%
Arvida : 3.1% + 3.99% = 7.09%
Oceania : 5.77% + 4.27 % = 10.04%

Most balanced return goes to Oceania on dividends and capital growth.
Best return goes to Summerset

Interesting way to look at everything. Summerset definitely benefits from the upsize dividend growth, and Oceania from a high dividend payout. If Oceania can show a consistent growth track record then the share price is significantly undervalued compared to the rest. Lets see how this plays out on friday.

[bull....]

as per last report expecting plenty of re valuation gains and very good cash flow from there care suite conversions

[silverblizzard888]

Further to todays post, wanted to looked over a longer term than the past 12 months as 36 months would show a more consistent return.

36 months cumulative dividend return 2016-2018
Ryman : 57.5 cents / $9.63 = 5.97% , average yearly return 1.99%
Summerset :28.1 cents / $5.20 = 5.4% , average yearly return 1.80%
Metlifecare :23.8 cents / $4.90 = 4.86% , average yearly return 1.62%
Arvida : 14.21 cents / $1.10 = 12.91% , average yearly return 4.30%

*average share price used to average out dividend returns over 36 months

36 month capital return over 24/1/16 – 22/1/19
Ryman $8.04 (2016) - $11.22 (2019) = 39.55%
Summerset $3.97 (2016) - $$6.43(2019) = 61.96%
Metlifecare $4.42 (2016) - $5.37 (2019) = 21.49%
Arvida $0.87 (2016) - $1.33 (2019) = 52.87 %

Total 36 month return
Ryman : 39.55% + 5.97% = cumulative return 45.52% , average yearly return 15.17%
Summerset : 61.96% + 5.4% = cumulative return 67.36% , average yearly return 22.45%
Metlifecare : 21.49% + 4.86% = cumulative return 26.35% , average yearly return 8.78%
Arvida : 52.87% + 12.91% = cumulative return 65.78% , average yearly return 21.93%

*This is more an indicative return over 36 months, while timing of the dates chosen could have some affect.

-Since Oceania doesn’t have such data available due to its short listed time, it has not been included -

Considering capital gains appears to be the dominant return, it makes more sense to choose stocks that focus more on growth than a good dividend policy.

Most balanced return Arvida
Best return Summerset

[couta1]

Further to todays post, wanted to looked over a longer term than the past 12 months as 36 months would show a more consistent return.

36 months cumulative dividend return 2016-2018
Ryman : 57.5 cents / $9.63 = 5.97% , average yearly return 1.99%
Summerset :28.1 cents / $5.20 = 5.4% , average yearly return 1.80%
Metlifecare :23.8 cents / $4.90 = 4.86% , average yearly return 1.62%
Arvida : 14.21 cents / $1.10 = 12.91% , average yearly return 4.30%

*average share price used to average out dividend returns over 36 months

36 month capital return over 24/1/16 – 22/1/19
Ryman $8.04 (2016) - $11.22 (2019) = 39.55%
Summerset $3.97 (2016) - $$6.43(2019) = 61.96%
Metlifecare $4.42 (2016) - $5.37 (2019) = 21.49%
Arvida $0.87 (2016) - $1.33 (2019) = 52.87 %

Total 36 month return
Ryman : 39.55% + 5.97% = cumulative return 45.52% , average yearly return 15.17%
Summerset : 61.96% + 5.4% = cumulative return 67.36% , average yearly return 22.45%
Metlifecare : 21.49% + 4.86% = cumulative return 26.35% , average yearly return 8.78%
Arvida : 52.87% + 12.91% = cumulative return 65.78% , average yearly return 21.93%

*This is more an indicative return over 36 months, while timing of the dates chosen could have some affect.

-Since Oceania doesn’t have such data available due to its short listed time, it has not been included -

Considering capital gains appears to be the dominant return, it makes more sense to choose stocks that focus more on growth than a good dividend policy.

Most balanced return Arvida
Best return Summerset Good work however that is historic and I reckon SUMs days of best return are well and truly over, in 3 yrs time I reckon you'll find OCA in the top spot for both divvy and capital growth.

[trader_jackson]

Good work however that is historic and I reckon SUMs days of best return are well and truly over, in 3 yrs time I reckon you'll find OCA in the top spot for both divvy and capital growth.

That is a big change of heart from you couta! I remember the days you could only have an xxxxxl position in SUM!
But yes, I agree with you 100% with your change of heart... maybe I called it a year or two early, but the right call none the less it would sound like

[silverblizzard888]

Good work however that is historic and I reckon SUMs days of best return are well and truly over, in 3 yrs time I reckon you'll find OCA in the top spot for both divvy and capital growth.

I do agree SUM is starting to slow down their development growth, still keeping consistency, but growing proportionally is much harder for them given their size now, so capital return as a percentage will be much lower than prior years. I'll probably do some more digging and see going forward what would be more expected.

[couta1]

That is a big change of heart from you couta! I remember the days you could only have an xxxxxl position in SUM!
But yes, I agree with you 100% with your change of heart... maybe I called it a year or two early, but the right call none the less it would sound like Yes and I sold my original SUM and RYM holdings far too early, not wanting to make the same mistake this time. PS-ARV will do well also but I prefer more eggs in one basket.

[dr_]

I prefer more eggs in one basket.

Same here...5yrs ago put lot of eggs in A2 and got grate return..actually made me semi retired at age of 45 :), this time around put all my eggs (going big) in OCA, in 5yrs will be fully retired and collecting nice divi along the way

[couta1]

Same here...5yrs ago put lot of eggs in A2 and got grate return..actually made me semi retired at age of 45 :), this time around put all my eggs (going big) in OCA, in 5yrs will be fully retired and collecting nice divi along the way Excellent.:t_up:

[Beagle]

"Oceania Healthcare has established a dividend policy with a targeted pay out ratio of 50% to 60% of annual underlying NPAT". Extract from 2017 annual report.
Might compare the share prices of the listed retirement companies since OCA listed in early May 2017 now.
OCA was $0.79 now $1.09, up 38% plus highest dividend yield of the sector
RYM was $8.48, now $11.23 up 32.4%
SUM was $4.98, now $6.48 up 30.1%
MET was $5.65, now $5.37 down 5%
ARV was $1.29, now $1.33 up 3.1%

Conclusion: Despite the recent SP correction OCA shareholders can take comfort from the fact that theirs's is the best performing company in the sector since it listed by quite a comfortable margin.

Looking forward - We can clearly expect dividends to grow in line with underlying profit growth
RYM is struggling to make its 15% long term underlying profit growth and SUM are struggling to sell their units.
OCA clearly has a business model that involves a much higher level of churn than all other industry players.
I expect the clear advantage OCA has in terms of yield to expand further and I see no reason why OCA won't be the top performing sector participant in terms of capital growth in the years ahead.

[Turtle2]

"Oceania Healthcare has established a dividend policy with a targeted pay out ratio of 50% to 60% of annual underlying NPAT". Extract from 2017 annual report.
Might compare the share prices of the listed retirement companies since OCA listed in early May 2017 now.
OCA was $0.79 now $1.09, up 38% plus highest dividend yield of the sector
RYM was $8.48, now $11.23 up 32.4%
SUM was $4.98, now $6.48 up 30.1%
MET was $5.65, now $5.37 down 5%
ARV was $1.29, now $1.33 up 3.1%

Conclusion: Despite the recent SP correction OCA shareholders can take comfort from the fact that theirs's is the best performing company in the sector since it listed by quite a comfortable margin.

Looking forward - We can clearly expect dividends to grow in line with underlying profit growth
RYM is struggling to make its 15% long term underlying profit growth and SUM are struggling to sell their units.
OCA clearly has a business model that involves a much higher level of churn than all other industry players.
I expect the clear advantage OCA has in terms of yield to expand further and I see no reason why OCA won't be the top performing sector participant in terms of capital growth in the years ahead.

I don't see any reason why Oceania would not meet their long term incentive plan requirement of 35% growth in underlying earnings per year:

"Generally, the shares under the 2017 LTIP Scheme will be eligible to vest if, at the vesting date (which is the businessday after release of the financial statements for the year ended 31 May 2020), the participant remains employed by Oceania and the performance hurdles are achieved. The performance hurdles require Oceania’s performance tomeet, or exceed, an underlying Earnings per Share Compound Annual Growth Rate ("EPS CAGR") of 35% per annumor greater, over the three year period to 31 May 2020."

[forest]

I don't see any reason why Oceania would not meet their long term incentive plan requirement of 35% growth in underlying earnings per year:

"Generally, the shares under the 2017 LTIP Scheme will be eligible to vest if, at the vesting date (which is the businessday after release of the financial statements for the year ended 31 May 2020), the participant remains employed by Oceania and the performance hurdles are achieved. The performance hurdles require Oceania’s performance tomeet, or exceed, an underlying Earnings per Share Compound Annual Growth Rate ("EPS CAGR") of 35% per annumor greater, over the three year period to 31 May 2020."

I think you are right Turtle2, the target of 35% per annum has likely been set to be easily achievable. So 40% plus is quite possible.

[winner69]

Does that ‘3 year period ending May 2020’ mean growth in F18, F19 and F20 (ie period from F17 to F20)?

If so wonder what underlying eps they using for F17 - Underlying earnings up 53% in $ terms but eps down 9% if one uses the weighted average number of shares they used to calculate real eps.

[Onion]

Oceania Healthcare Limited will announce its half year result for the period to 30 November 2018 on the morning of Friday 25 January 2019.

1 more sleep! They'll presumably announce the interim dividend amount and date - last years (unimputed 2.100c) went Ex on 12 Feb.

[Maverick]

1 more sleep! They'll presumably announce the interim dividend amount and date - last years (unimputed 2.100c) went Ex on 12 Feb.
Here here.... we`re almost there. Who needs Christmas!(is that sad?)

[Beagle]

Here here.... we`re almost there. Who needs Christmas!(is that sad?)

Not sad at all. Kids get Christmas presents at Christmas, shareholders of OCA get there present with the result tomorrow and divvy next month :)

[minimoke]

1 more sleep! They'll presumably announce the interim dividend amount and date - last years (unimputed 2.100c) went Ex on 12 Feb.And still the SP languishes around $1.09 - $1.10. Hopefully by COB tomorrow I'll be in positive territory.

[bull....]

its in mc quaries interest to have a good result

[winner69]

Only minutes to go until half year

One thing that’s good about Oceania is that no matter what the numbers are (ptoday (good or bad) we’ll all be excited as about the future prospects.

In two to three years we will all be so so much richer

Today’s report is more like Mum giving us a cuddle and saying ‘son, it’s all OK and on track. No worries’ ......comforting eh






Hope Underlying npat close to or over $30m though

[winner69]

Must be something good in all this

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294057.pdf


Haven’t improved the ‘obtusenes’ of thevreporting

[trader_jackson]

Hey winner, what is happening to the real profit? the actual NPAT? Isn't that the 'one that counts' at the end of the day?
ARV had growth in NPAT was up 111%, OCA down 97%
Some people on here saying 17% growth and stuff...
OCA and ARV basically the same size (asset value wise anyway) yet OCA has a 20% higher market cap

Operating revenue minus operating expenses down big time... but flash presentation so no worries

[bull....]

Must be something good in all this

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294057.pdf


Haven’t improved the ‘obtusenes’ of thevreporting

cash flows are very good and i like how they addressed my concerns around revaluations which i ranted on about before xmas

Due to the classification of our care facilities in the financial statements as property, plant and equipment rather than investment property, these increases in valuation are not recorded in our statutory reported profit.

thx

[winner69]

Slide 26 is important

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294060.pdf

[winner69]

Hey winner, what is happening to the real profit? the actual NPAT? Isn't that the 'one that counts' at the end of the day?
ARV had growth in NPAT was up 111%, OCA down 97%
Some people on here saying 17% growth and stuff...
OCA and ARV basically the same size (asset value wise anyway) yet OCA has a 20% higher market cap

Flash presentation so no worries

You have to go down to Comprehensive Income and Continuing Operations mate.

One key metric though is Shareholder Equity (Book Value) ...hey that’s hardly moved

I need another cuddle

[trader_jackson]

Despite results being out for half an hour now, the silence on here is truly deafening

Makes my other holding ARV look pretty good at least

[bull....]

You have to go down to Comprehensive Income and Continuing Operations mate.

One key metric though is Shareholder Equity (Book Value) ...hey that’s even lower than a year ago

I need another cuddle

because speeding up more care bed conversion in next period has caused the decline this would be benifit as more cashflow again next time

Development programme across other key sites continuing to accelerate with 587 units and care suites now under construction across nine projects.

[bull....]

Slide 26 is important

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294060.pdf

i havnt looked for the notes but need to see the notes to know which assets categories have been revalued

[winner69]

Despite results being out for half an hour now, the silence on here is truly deafening

Makes my other holding ARV look pretty good at least

Everybody still reading all the good bits tj

Numbers this time round don’t mean much ...it’s believing the future

Development sales of 65 v 23 same period last year is pretty good ...and margins around 30% even better

And completing 81 units v 46 pcp is pretty good too.

[minimoke]

Hope Underlying npat close to or over $30m though$20.9. Along way short

[Beagle]

81 care suites completed this half. 191 apartments and care suites to be completed second half so this is really a second half story.
Good that all developments are on track and on budget, no easy feat in this market. I will continue reading before posting more.
Posted in an other forum on 14 January

Poor result is anything less than last year's underlying profit of $19.9m (subject to narrative and outlook).
Okay is $20-$24m but if towards bottom end the outlook and narrative needs to be encouraging.
Good result $24-$28m
Really Outstanding $28m+
Remember that the development program is heavily weighted towards delivered units in the second half by about 180:90

All figures are based on underlying profit.
Result is in the okay range...good that all future developments are on track and well over 70% of future developments now consented.
I think the outlook and narrative is encouraging.

[bull....]

as was saying before xmas care bed conversions are the growth area so as they are accelerating this that is good for cashflows , need to get more villages for longer term cashflows after the conversion is finished

[couta1]

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.PS-Think Defensive/Think Value/Think long term.

[winner69]

NAV (Net Adjusted Value) per share is now $1.06 ....up from $1.04 six months ago.

That’s good

[winner69]

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.PS-Think Defensive/Think Value/Think long term.

Thanks for the comforting cuddle couts

[bull....]

i think looking at net profit for a development company is missing the point , they are spending heaps money ( costs) to do the care bed conversions more costs less profit . cashflow is more important as they are recycling it into more development.

[hardt]

Hopefully people had higher expectations and a buying opportunity presents itself closer to £1.

I still prefer ARV, but OCA looks very solid and is setting itself up for growth (not here yet)

[winner69]

Hopefully people had higher expectations and a buying opportunity presents itself closer to £1.

I still prefer ARV, but OCA looks very solid and is setting itself up for growth (not here yet)

Prefer $1 though

Be good if we can get heaps more at bargain prices

[hardt]

Prefer $1 though

Be good if we can get heaps more at bargain prices

Everything priced in pounds seems to be dirt cheap and great value at the moment, maybe that's all it takes

[Blendy]

I live near the Meadowbank development, which looks very fancy like a retirement resort and I've been trying to convince my mother all year that when she's ready, this is the place for her. It's right by the train station with only minutes to Britomart, and even the bus route has been altered recently so it can better service this area.

The giant crane that has dominated the view from my deck over the last year or two has gone now - it was so big and impressive that is was named Cedric the Crane by the local school children :)

And that is my non financial assessment input for the morning!

[trader_jackson]

NAV (Net Adjusted Value) per share is now $1.06 ....up from $1.04 six months ago.

That’s good

Sure is - but what did that other listed dog go up by at their half year out of curiosity?

I thought OCA was the cheapest in the sector but on an increasing number of metrics indicate it is not
(price to asset value, price to NAV/implied value, dividend yield and the list seems to be getting bigger)


Need a great conference call to make us all feel it is going to be bigly and better over the coming months

Should not have paid $1.04 at christmas, that may gonna look expensive by the end of today...
Should have topped up on ARV instead

[couta1]

Earl says, We continue to deliver ALL of the development projects in our pipeline on time and on budget, what more can you ask for in a tough environment.

[couta1]

Sure is - but what did that other listed dog go up by at their half year out of curiosity?

I thought OCA was the cheapest in the sector but on an increasing number of metrics indicate it is not
(price to asset value, price to NAV/implied value, dividend yield and the list seems to be getting bigger)


Need a great conference call to make us all feel it is going to be bigly and better over the coming months

Should not have paid $1.04 at christmas, that may gonna look expensive by the end of today...
Should have topped up on ARV instead

OCA will equal or overtake the ARV SP within 2 yrs, you read it here first

[trader_jackson]

I was far to worried it seems, share price basically not even down (only $1.08)
Still waiting for ARV to go up 10-20% ish now so that ARV and OCA are trading more 'fairly'

[percy]

Earl says, We continue to deliver ALL of the development projects in our pipeline on time and on budget, what more can you ask for in a tough environment.

Exactly what I looked for, and as you pointed out I can't ask for more.

[minimoke]

I was far to worried it seems, share price basically not even down (only $1.08)
Still waiting for ARV to go up 10-20% ish now so that ARV and OCA are trading more 'fairly' Now down to $1.06. My divvy wont cover that loss.

[Beagle]

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.PS-Think Defensive/Think Value/Think long term.


Thanks for the comforting cuddle couts

I enjoyed that cuddle too, thanks Couta1 and here's my cuddle back. Every good bean counter worth his salt will tell you that "cash flow is the lifeblood of business"
Cash flow up a whopping 176% compared to the same half last year.

[Bjauck]

Hopefully people had higher expectations and a buying opportunity presents itself closer to £1.

I still prefer ARV, but OCA looks very solid and is setting itself up for growth (not here yet) If NZ has its own Brexit and says we are going to withdraw from CER with Australia, then our currency would cheapen too...

I am unphased by OCA price gyrations. Some investors may have fallen madly in love with OCA only to realise that it is not perfect.

What is the risk to OCA and others that in a tax reform encompassing broadening the taxation base, the existing ruling over capital profits may be changed? Do tax rulings have a time limit?

[Joshuatree]

Ahh well, good to have a hubris(rinse and repeat) reality check every few months and get back to ones authentic self, think of the longterm fellas.

" We have also recently obtained new resource consents for the development of a new 142 care suite home at Elmwood Village (The Gardens, Auckland), and the expansion of Eversley (Hastings) and Eden Villages (Auckland). Of the 2,065 beds and units in our total development pipeline, 73.4% already has resource consents in place, considerably reducing the risk associated with delivery of this new product over the next six years."

[couta1]

I enjoyed that cuddle too, thanks Couta1 and here's my cuddle back. Every good bean counter worth his salt will tell you that "cash flow is the lifeblood of business"
Cash flow up a whopping 176% compared to the same half last year. Nothing like a good Bear hug.PS-Nice that Total Assetts increased by 209 mill to 1.2 bill.

[Leftfield]

Sheeesh.... bit of a slow burner this one (I'm used to ATM sized volatility :p)

Bits I liked best in the report:

"Operating cashflow improved from $17.1m to $47.1m (175.9%) with $43.5m of sales proceeds from our developments completed earlier in 2018, an increase of 287.8%.
· Total assets increased by $209.7m over the prior corresponding period to $1.2bn due to significant development capital expenditure, acquisition of land adjoining existing sites and revaluations"

Ssssooo the OCA SP was around $1.03 this time last year and sank a tab lower before soaring up to $1.20 or so in Aug/Sept 2018. In the meantime steady progress has been made and it is only a matter of time before the SP climbs back to the $1.20 levels. Slow steady stuff, and no need to panic IMHO.

[Beagle]

^^^^^ Sums it up "purrfectly".

[Mudfish]

Sheeesh.... bit of a slow burner this one (I'm used to ATM sized volatility :p)

Bits I liked best in the report:

"Operating cashflow improved from $17.1m to $47.1m (175.9%) with $43.5m of sales proceeds from our developments completed earlier in 2018, an increase of 287.8%.
· Total assets increased by $209.7m over the prior corresponding period to $1.2bn due to significant development capital expenditure, acquisition of land adjoining existing sites and revaluations"

Ssssooo the OCA SP was around $1.03 this time last year and sank a tab lower before soaring up to $1.20 or so in Aug/Sept 2018. In the meantime steady progress has been made and it is only a matter of time before the SP climbs back to the $1.20 levels. Slow steady stuff, and no need to panic IMHO.

Hey, I like the positivity. To me in simple terms, the company is worth more today, its building work remains on time and on budget, it has 6 years of growth ahead, it has good and growing cash flow, and it flicks out a divi along the way. Of course there are plenty of customers too. I don't know what the market expects but I see this as a steady and almost boring report so it's good.

[Beagle]

"Of the 2,065 beds and units in our total development pipeline, 73.4% already has resource consents in place, considerably reducing the risk associated with delivery of this new product over the next six years."

Consenting percentage is up significantly over the last year. Almost the exact opposite of SUM other Boulcott fiasco's.

[couta1]

"Of the 2,065 beds and units in our total development pipeline, 73.4% already has resource consents in place, considerably reducing the risk associated with delivery of this new product over the next six years."

Consenting percentage is up significantly over the last year. Almost the exact opposite of SUM other Boulcott fiasco's. SUM others care quality is also lacking by comparison.

[Beagle]

SUM others care quality is also lacking by comparison.

Yes...so the old vulnerable folks are extremely well looked after and very happy and with the huge wage bill increase nurses and other caregivers are also very happy....just have to be patient and then us shareholders will also be very happy. Beagle's not known as a breed for their patience when it comes to waiting for a feed and hard for an old dog to learn new tricks but I will try and learn to be super patient. Might need some more cuddling and pats along the way though lol

Wonder where maverick is today...maybe still digesting the full presentation...maybe he could give me / us an encouraging pat ?

Suppose 2.1 cps divvy is sort of okay (same as last year), but a bit mean they didn't put it up by the 8% increase in underlying normalised profit they claim they've made, should have been 2.3 cps rounded up to the nearest decimal place. Suppose it won't hurt this old dog to eat less than expected next month...could do with losing some weight anyway lol

Accounts are not an easy read by any stretch of the imagination...some might even call them an obfuscation. Maybe I need to go back to Uni and learn all these new accounting tricks they're using these days...or I suppose we could just accept them at their word that underlying profit is up about 5% and accept the same dividend on the basis that we're investing for more capital growth going forward....who knows, my head hurts trying to understand the accounts...is it too early for a drink ?

[dr_]

Wealth is built over time and not in day or year (Incase won lotto). OCA is great long term hold stock with growth and decent divi return.

[Beagle]

Wealth is built over time and not in day or year.

I think I might get a brass plaque made up with that on it followed by "Rome wasn't built in a day" inscribed underneath and put that on my desk then I will be happy.

[Onion]

P29 of the presso...

Given the emphasis on care, I was interested to see that 'Aged Care EBITDA' is down.

1HY2019 vs. 1HY2018
Underlying: $14.1m vs $16.4m
Per bed/suite: $11,564 vs. $13,236

I would have thought that this would be a fairly stable measure -- unlike many of the other parts of the result that can vary greatly depending on the development cycle and valuations.

Costs climbing faster than revenue?

Is this going to be a challenge for future years? I had a quick look at the ARV HY results but could find no comparative metric.

[peat]

The problem with earning money in the future is that it’s not worth as much as earning money now. All good though, just not overexposed

[bull....]

as was saying before xmas resales were down was an explanation for the price decline end last yr. this will flucuate so no cause for concern even underlying npat of 1m was ahead of 2018 so thats positive. big increase in costs put the big dent in npat for care facities so not can do there at the moment. probably why the price is not down 10% today as resale decline etc was already built into the price. div didnt go up because only pay 50 - 60% so it was similar to last yr

[winner69]

I think I might get a brass plaque made up with that on it followed by "Rome wasn't built in a day" inscribed underneath and put that on my desk then I will be happy.

One guy said “Rome Wasn't Built in a Day, But They Were Laying Bricks Every Hour.” .....hope Oceania are doing that

But we shouldn’t forget

Rome wasn’t built in a day, but it burned in one.

[LAC]

I think I might get a brass plaque made up with that on it followed by "Rome wasn't built in a day" inscribed underneath and put that on my desk then I will be happy.

Realllllly really hope you do so:)
Last year this time you said SUMing like....
"LOL that's a good one but I am happy to hold long term with SUM. They have a track record of very strong underlying EPS growth and its EPS growth that counts."

But alas it was a long term of uuum not a very long term, so I think a plaque should be a good reminder:)

[Beagle]

Realllllly really hope you do so:)
Last year this time you said SUMing like....
"LOL that's a good one but I am happy to hold long term with SUM. They have a track record of very strong underlying EPS growth and its EPS growth that counts."

But alas it was a long term of uuum not a very long term, so I think a plaque should be a good reminder:)



SUM thing went very wrong with SUM's sales last year so $8 was too hard to ignore when it hit that SUM time last year. When the SUM's no longer add up I think its always a good thing to have SUM other plan :)

Onion - EBITDA is down on aged care because of the wages going up so much, only some of which was funded with the annual DHB funding round adjustment. Basically the nurses settlement with DHB's happened after the annual funding round adjustment had been agreed for care facilities so shareholders have had to foot the bill for increased payments to nurses to stop them jumping ship.
Hopefully the requirement for us to generously give of what should have been our increased dividend to keep the nurses happy will stop when the next annual funding round is agreed with DHB's mid 2019....well that's the story I am going to tell myself when crying myself to sleep in my kennel tonight.

[bull....]

pretty well looked thru it all now , like said last yr pretty garbage

[winner69]

pretty well looked thru it all now , like said last yr pretty garbage

.....garbage meaning rubbish meaning no good result

You were really bullish earlier today

[bull....]

.....garbage meaning rubbish meaning no government d result

You were really bullish earlier today

tongue and cheek , i made my posts in dec which summed up my opinion proved correct today

[couta1]

.....garbage meaning rubbish meaning no good result

You were really bullish earlier today Just his Jekyl&Hyde personality playing out or is it Schizophrenia(Hard to diagnose from a distance) PS-You won't find many safer ways of doubling your money within 3 years than OCA.

[Food4Thought]

Came here to reflect. Dividend is manageable. OCA aren't over extending themselves. IMO, Great buy-in opportunity. Happy long term outlook (in my case 5+ years)... each time I visit Sharetrader lately there seems to be a lot of combined negative sentiment. Now I visit less frequently. Same excellent outcomes. Have a great weekend people. Globally populations are growing. Demand increases for things in need... stay healthy 🤓🌈🚀

[trader_jackson]

cash flows are very good and i like how they addressed my concerns around revaluations which i ranted on about before xmas

Due to the classification of our care facilities in the financial statements as property, plant and equipment rather than investment property, these increases in valuation are not recorded in our statutory reported profit.

thx

Doesn't sound like tongue-in-cheek to me, sounds like a u-turn as certainly doesnt scream a "this is rubbish" post.

Anyhow, one thing is for sure, OCA's "track record" has been tarnished by this result (and arguably 1H18 as well)... I had to laugh off today's rather not great drop, ARV going up helped I suppose, but yes, I recall some members not wanting to touch that other listed dog because of lack of track record, no matter what the outlook or fundamentals of the sector was... which I accepted, however those same posters are now happy to go virtually solely by outlook, not by OCA's actual record/results... ironic

[winner69]

The love for Oceania is just as good as the love for Turners

[Joshuatree]

I hear you tj, there was a real love fest going on there for a while led by the usual suspects , full of Hubris. Sadly some will have been burnt by that but this should be good longterm unless the govt changes things.

[Beagle]

"Oceania Healthcare has established a dividend policy with a targeted pay out ratio of 50% to 60% of annual underlying NPAT". Extract from 2017 annual report.
Might compare the share prices of the listed retirement companies since OCA listed in early May 2017 now.
OCA was $0.79 now $1.09, up 38% plus highest dividend yield of the sector
RYM was $8.48, now $11.23 up 32.4%
SUM was $4.98, now $6.48 up 30.1%
MET was $5.65, now $5.37 down 5%
ARV was $1.29, now $1.33 up 3.1%

Conclusion: Despite the recent SP correction OCA shareholders can take comfort from the fact that theirs's is the best performing company in the sector since it listed by quite a comfortable margin.

Looking forward - We can clearly expect dividends to grow in line with underlying profit growth
RYM is struggling to make its 15% long term underlying profit growth and SUM are struggling to sell their units.
OCA clearly has a business model that involves a much higher level of churn than all other industry players.
I expect the clear advantage OCA has in terms of yield to expand further and I see no reason why OCA won't be the top performing sector participant in terms of capital growth in the years ahead.

OCA still has the best track record compared to all its peers and has substantially outperformed ARV and MET since it listed in May 2017.
Yes the wages increase was a little disappointing today, (nurses will be pleased) but the long term story remains intact.
Also unchanged despite my revised full year underlying profit target of $55 - $60m is that OCA trades on the most compelling metrics with a forward PE of about 11.5 and a gross yield of ~ 5% (based on my full year underlying profit forecast of 9.5 cps and a 55% payout ratio. (Estimated final divvy 3 cps).
Further, their long term business model involves much more churn than others which gives the company a systemic advantage over other retirement company's.

[percy]

The love for Oceania is just as good as the love for Turners

I have invested in Oceania,Turners and Heartland Group, as I like their business models,their directors and management,and the sectors they are in.
All three have directors and management with a great deal of "skin in the game".
Each of them are delivering on their strategy.
It is not love for me.It is more "lusting" for dividends,as all three have the capacity to pay increasing dividends.

[Timesurfer]

It is not love for me.It is more "lusting" for dividends,as all three have the capacity to pay increasing dividends.

I hope you are right, as it looks like I am now a long term investor while I wait for their SP to return to former glory!

[Ggcc]

I did mention earlier the fun starts in 2020 for this share's SP. The results were what I expected for the 6 months and i am remaining a happy holder. I think that euphoria got the better of us all at some stage when the share was $.20 and people mentioned backing up the truck to get more shares. I was hesitant and decided to wait as the price slowly went down. I don't think we will see a $1.20 SP till late this year or early next year. I am happy to wait and as Percy said, they have the capacity to pay increasing dividends. Good things take time.

[DarkHorse]

I'm happy with the cashflows and 'on-time on budget' results.
The big question for me is: what kind of return for each dollar of capital invested can we expect going forward?
Would love to hear the thoughts of those with more in depth understanding of both the company and accounting statements.

[bull....]

I'm happy with the cashflows and 'on-time on budget' results.
The big question for me is: what kind of return for each dollar of capital invested can we expect going forward?
Would love to hear the thoughts of those with more in depth understanding of both the company and accounting statements.


hardly much money in care and the majority of cashflows is from peoperty development. once the pipeline of care bed conversions run out cashflow will fall by some degree. other factors that could affect the development margins are property prices and competition and the ever rising construction costs as evident in there less development margin.

[value_investor]

Finally got the chance to have a look and this one will be a much slower burner than first initially thought, its still years away from unlocking the potential, and luckily I'm a long term buyer so I'll keep accumulating on top my small holdings.

Its good to see that what they've said in their last two reports in terms of build time is what they've delivered. I find it interesting that they can deliver so well on their targets in terms of build rates. Nothings slipped back months or been cancelled.

I think its undeniable that the increased costs deriving from the pay equity deal has been a contributing factor on underlying profit when you look at note 2.1 of the interim report. A 3% increase in revenue on the care side vs an 8% increase on the operating expenses.

Another item of interest is the increased borrowing cost, while it is sustainable it will be interesting going forward if they can build out their recurring revenue faster. Especially if the reverse bank starts to raise rates and the finance costs start becoming an issue. Although its all honky dory right now, we have seen changes very quickly like just lately in the US markets.

[Maverick]

I did mention earlier the fun starts in 2020 for this share's SP. The results were what I expected for the 6 months and i am remaining a happy holder. I think that euphoria got the better of us all at some stage when the share was $.20 and people mentioned backing up the truck to get more shares. I was hesitant and decided to wait as the price slowly went down. I don't think we will see a $1.20 SP till late this year or early next year. I am happy to wait and as Percy said, they have the capacity to pay increasing dividends. Good things take time.
Good post Ggcc(what does that stand for by the way)
The fundamental 2 things I wanted from this report was to hear about the building progress and if oca can fill them.
A. Top marks for the project management team. On track and on budget.
B. The occupancy rates increasing to 92% is significant. Looks like they are having no problem renting them.
Obviously the small profit increase appears disappointing and consequently no dividend increase but with the two questions above answered so solidly , in my mind, all that's is required now is patience. Like 5 years patience.
With no rush for any one to buy in and Macquarie poised to sell loads at some stage, I can't see the share price moving much. I still remain convinced that you "can't have too many ".(provided they are held)

[winner69]

I don't see any reason why Oceania would not meet their long term incentive plan requirement of 35% growth in underlying earnings per year:

"Generally, the shares under the 2017 LTIP Scheme will be eligible to vest if, at the vesting date (which is the businessday after release of the financial statements for the year ended 31 May 2020), the participant remains employed by Oceania and the performance hurdles are achieved. The performance hurdles require Oceania’s performance tomeet, or exceed, an underlying Earnings per Share Compound Annual Growth Rate ("EPS CAGR") of 35% per annumor greater, over the three year period to 31 May 2020."

Checked with company and Base Year is F17 and Base EPS is 5.6 cents

So to get goodies in LTIP F20 Underlying EPS needs to be 13.8 cents (the 35% pa CAGR growth)

Decent start with F18 EPS of 8.6 cents

So only need to do 27% pa over F19 and F20 to get goodies

That 13.8 cents is $83m underlying npat in F20

(PS ..on Beagles forecasts that’s more than a given ...like hardly a stretched target)

[Maverick]

Interim dividend per share announced of 2.1 cents per share (not imputed) payable on 18 February 2019.
I presume this means "ex date" , not actual "pay date" - I know its too much to wish for that ex divi date was yesterday?:sleep:

[winner69]

Interim dividend per share announced of 2.1 cents per share (not imputed) payable on 18 February 2019.
I presume this means "ex date" , not actual "pay date" - I know its too much to wish for that ex divi date was yesterday?:sleep:

Wishful thing ...ex-div Feb 8th with record date 11th Feb

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294059.pdf

[Beagle]

Have to do a "Snoopy' next week and get my head deep into the accounts seeing as the other Beagle is not interested in this one.
I'll have a pack of Panadol and a bottle of whisky to ease the pain on standby...

[Maverick]

Have to do a "Snoopy' next week and get my head deep into the accounts seeing as the other Beagle is not interested in this one.
I'll have a pack of Panadol and a bottle of whisky to ease the pain on standby...
Had a good few hours to look over the report at last. As for me , I think this report is just where it should be. The minimal increase in profit from pcp is a distraction to anyone disappointed.
The revenue is 83% from "care". They have 26 mature operations, good old rest home stuff. So that side of the business is plodding along as well as one would expect. Can't see that ever changing much.
What I'm in it for is the ORAs on the new builds and the referbs. Of the 81 units delivered, most of these were taken up by relocating existing OCA dislodged tenants .(there are 21 empty ones ready to sign up though) So can't see any ,if any, realised margins being made there.
They did sign up previous units delivered, 41 new units and 32 resales. A similar ratio to SUM last year. So we can hardly make much margin there either. The volumes are just too small.
So it would be dreaming to expect a meaniful profit jump for this period.

There will be truckloads of units delivered on time and on budget over the next few years and more again after that.(all paid for from a healthy cashflow).There seems plenty of healthy interest in them from clients lining up.But it still will take more time to lease them after completion at proper prices.

I am MORE than satisfied after reading the extensive report that this company is right now a jagurnaut But the cash rewards /evidence will need time to shine through so even a blind man can see it. In the meantime It will just be a slowly increasing trickle for a few more years yet before it really starts to flow (then flood) from the builders to the shareholders.
I was wrong to childishly "wish" for something more than we got last week. I'm now well pleased it was an excellent report, 10 out of 10.
All that said I personally do not expect the share price to run ahead any time soon.(but that stuff is guessing)

[Beagle]

Yes, thanks Maverick... I just had another good read though the results presentation, (no whisky or panadol were required) and I am satisfied that they're on track. Underlying profit fell within my okay range and the most important thing at this stage is developments underway at present are tracking on time and on budget. The future development risk has been lowered further with over 73% of the next 6 years of developments already consented, well up on last year.

I am happy with the steady progress they are making and think this is a good long term hold....must get on to getting that brass paperweight plaque made up for my desk..."Rome wasn't built in a day"

[couta1]

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.PS-Think Defensive/Think Value/Think long term. Reckon I will just keep repeating this post every few pages as the doubters start forming a doom and gloom reunion.Lol

[winner69]

This quote from Couts better than ‘Rome wasn’t built in a day, but it burned in one’

Couts said -

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.

PS- Think Defensive / Think Value / Think long term.

[percy]

This quote from Couts better than ‘Rome wasn’t built in a day, but it burned in one’

Couts said -

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.

PS- Think Defensive / Think Value / Think long term.

May pay to get a couple of Couta1's quotes printed off.
One for yourself, and the other for the wall of the bowling club.....lol.

[Joshuatree]

Lol ,and hey maverick Jagurnaut? Not even a juggernaut , thats just spin. Slow and steady wins the race maybe.

Have a Jager Bomb

Jägermeister is a very potent liqueur with a slight anise taste and the "depressant" effects of the alcohol are offset by the energy drink Red Bull that it is dropped into. Because of this (and despite common practice), I advise you to take it easy on the Jager Bombs. If you want imaginary friends this is the drink for you.;)

[Beagle]

This quote from Couts better than ‘Rome wasn’t built in a day, but it burned in one’

Couts said -

All good, remember at least 5 years for this one to hit full revs, expect after full year result market will start to wake up.

PS- Think Defensive / Think Value / Think long term.

Yes agreed. Should pay close to a 5% gross divvy yield for FY19 so we're being paid reasonably well while we wait for the growth.

[RupertBear]

No surprises that the impulsive Bear has sold some. While it may be a good long term hold I can see the sp dribbling down slowly from here. If it goes below $1 I will probably buy them back. But ATM I am waiting for a dip in other shares that I think have more potential for growth in the short term at least. But who would know! Eitherway I am happy to hold onto some cash for a while. ;)

[RupertBear]

No surprises that the impulsive Bear has sold some. While it may be a good long term hold I can see the sp dribbling down slowly from here. If it goes below $1 I will probably buy them back. But ATM I am waiting for a dip in other shares that I think have more potential for growth in the short term at least. But who would know! Eitherway I am happy to hold onto some cash for a while. ;)

PS Although my holding was small in comparison to what others hold I had too many :mellow:

[couta1]

PS Although my holding was small in comparison to what others hold I had too many :mellow: Can you have too many? Very unlikely to go below $1 yet the market is chaotic and often has no clue what it is doing in the short term.

[RupertBear]

Can you have too many? Very unlikely to go below $1 yet the market is chaotic and often has no clue what it is doing in the short term.

The wee Bear was feeling unbalanced Couta :D

[couta1]

The wee Bear was feeling unbalanced Couta :D That's a normal feeling for me.Lol

[bull....]

No surprises that the impulsive Bear has sold some. While it may be a good long term hold I can see the sp dribbling down slowly from here. If it goes below $1 I will probably buy them back. But ATM I am waiting for a dip in other shares that I think have more potential for growth in the short term at least. But who would know! Eitherway I am happy to hold onto some cash for a while. ;)

totally below 1 coming needs to take out that 1.04 low of before xmas first. looks like they are pinning there hopes on the 2 villages to be completed this year to provide the margins for the full yr. thats what earl told nbr but what about next yr then if margins are already under pressure? margin pressure is evident in the other stocks as well.

[Maverick]

totally below 1 coming needs to take out that 1.04 low of before xmas first. looks like they are pinning there hopes on the 2 villages to be completed this year to provide the margins for the full yr. that's what earl told nbr but what about next yr then if margins are already under pressure? margin pressure is evident in the other stocks as well.

Not sure where you get the idea OCA "margins are already under pressure" Bull.

Earl commented....
"Sales at our Meadow bank Village have been particularly strong, with all 62 apartments in stage 3 now either sold or under application. less than a year since this stage was completed."

"We have already received presale applications for 13 apartments at the Sands with strong pricing that reflects the high quality of the product."

Page 9- "Bayview" ....Demand for the remaining (21) care suites is expected to be strong.

So now it just comes down to whether Earl is putting a "spin" on things. From every source, including a friend who was very involved with the Macquarie float, I`m hearing that he is first class. So I have no issue trusting his comments.

[winner69]

May pay to get a couple of Couta1's quotes printed off.
One for yourself, and the other for the wall of the bowling club.....lol.

...but it’s painful having the blood slowly being squeezed out of you with no sign of the promised transfusion coming

[Food4Thought]

What I like about this business is... the more I own... the more money stays in New Zealand.

I believe with long term outlook many others hopefully see and feel the importance of being part owner of businesses in New Zealand. Not complaining once the milk has been spilt.

Be the fence at the top of the cliff. Not the ambulance at the bottom

[Beagle]

Oh dear $1.04 again....never mind...Chinese year of the dog ends on 4 February 2019 so all those that bought a pup off Macca's when they sold down at $1.10 in September 2018 should be all good later next month...or maybe not. 2019 for the Chinese is the year of the brown earth pig :eek2:
Anyway enough silliness for me on Auckland anniversary day.

[winner69]

Oh dear $1.04 again....never mind...Chinese year of the dog ends on 4 February 2019 so all those that bought a pup off Macca's when they sold down at $1.10 in September 2018 should be all good later next month.

Could have been worse and closed at 103

Macquarie sucked in many eh ....wonder what they do next?

[DarkHorse]

Just been looking at your interesting post on value creation v destruction. How do you (or others) rate Oceania for return on capital prospects?

[percy]

Oh dear $1.04 again....never mind...Chinese year of the dog ends on 4 February 2019 so all those that bought a pup off Macca's when they sold down at $1.10 in September 2018 should be all good later next month...or maybe not. 2019 for the Chinese is the year of the brown earth pig :eek2:
Anyway enough silliness for me on Auckland anniversary day.

Yesterday you were going to get a plaque made "Rome was not built in a day".
Today it is "we brought a pup of Macca's".
Wonder what it will be tomorrow.?..................lol.

ps.You may like to give your old plaque to W69's bowling mates.

[couta1]

Could have been worse and closed at 103

Macquarie sucked in many eh ....wonder what they do next? Nothing at all.

[Beagle]

Yesterday you were going to get a plaque made "Rome was not built in a day".
Today it is "we brought a pup of Macca's".
Wonder what it will be tomorrow.?..................lol.

ps.You may like to give your old plaque to W69's bowling mates.

Was a bit of tongue in cheek silliness Percy. Day off up here...

[percy]

Yes well...................???????????????.Yes...lol.

[Baa_Baa]

If it's as good as the promoters repeatedly say it is, which took it to over $1.20, and you believe it, then as reality has taken hold, it's time to average down and maybe even hope for some calamity as well, like a housing price bust and/or a global finance/equities bust and sentiment acceleration into value investing territory where your average hold ends up being the cumulative buy of a lifetime. Well, one of them anyway.

I love Vagors stories about buying RYM during the GFC where he just smashed it (cudos), OCA could be a repeat, we can only hope. Either which way, I reckon we should all decide on our personal price point which represents fair value and accumulate whatever we can afford and justify around and below that, then do what Couta says and wait it out for a few years, enjoying the dividends along the way and any capital gains that emerge after the bad times pass. It may be short lived, or it may get caught in a recession, who knows. That shouldn't weigh on ones long term conviction. It should present opportunity where others might see despair.

The only real concern I have is unquantifiable, being what the government morons might do when they finally decide everyone should prosper from the retirement sector largess rather than a few greedy selfish shareholders, like what's happening in the West Island at present. But even then, I reckon someone has to own these companies and it's too big already for the government to burden general taxpayers, so whether it gets a bit diluted by the socialists wanting retirement living and care to be a social service, the owners will still look after themselves and us shareholders' precious earner.

A fascinating opportunity in troublesome times, my holding just keeps getting steadily larger, it may be smaller or larger than yours, but that's irrelevant, my sentiment should be clear.

GLTAH
BAA

[kiora]

I don't hold but well said Baa. GLTAH

[Beagle]

I am presently doing a Snoopy, (no apparent interest in this one from the other Beagle) so I have to dig around myself.... and endeavouring to obtain more background information on what is behind the ~ $7m increase in other expenses in the financial statements that is not explained with a note to the accounts. Are these one-off expenses or does this represent a fundamental ongoing shift in their cost structure ?
Important to note these are not wages cost increases which are disclosed elsewhere and explained.

I have emailed Earl as I feel an apparent ~ $14m per annum increase in undisclosed "other expenses", (I have to assume they are ongoing at this stage in the absence of a satisfactory other explanation) without any explanation in the accounts is both material and requires further explanation. I'll let you guys know what I find out, (if anything) in due course.

If anyone wants to opine on what might be behind this increase I am all ears.

[Joshuatree]

I have bought more for our Estate ,waiting to add for more myself. Too many helicopter parents here micro managing their children and we know what they turn out like:eek2:

Over 3 months
OCA down re 9%
SUM,RYM,MET re 12-12.5% down
ARV re 2% up

[winner69]

Just been looking at your interesting post on value creation v destruction. How do you (or others) rate Oceania for return on capital prospects?

In this sector ROICs are - about 4% for MET, about 7% for OCA, ARV and RYM, and SUM has highest at about 10%. (Based on last full year financials for each)

Depending on what cost of equity punters want to use the 7% is probably enough to cover their cost of capital which means ARV, RYM and OCA not ‘destroying value’ like MET is. SUM is a ‘value creator’ on this ‘profit’ measure.

As to OCA prospects ....if all goes to plan it will no doubt improve. Sounds a bit like Kiwibuild doesn’t it - build a lot of units and hope for the best.

[trader_jackson]

In this sector ROICs are - about 4% for MET, about 7% for OCA, ARV and RYM, and SUM has highest at about 10%. (Based on last full year financials for each)

Depending on what cost of equity punters want to use the 7% is probably enough to cover their cost of capital which means ARV, RYM and OCA not ‘destroying value’ like MET is. SUM is a ‘value creator’ on this ‘profit’ measure.

As to OCA prospects ....if all goes to plan it will no doubt improve. Sounds a bit like Kiwibuild doesn’t it - build a lot of units and hope for the best.

Not really like KiwiBuild at all, for starters, projects are on time and on budget (and actually getting built... aka not exactly a Twitford "sounds good, doesn't work" policy)
And OCA tearing down hundreds of beds/units and replacing them with new care suites... KiwiBuild isn't tearing down any units I thought but could be wrong here (and all the disruption that causes for those residents being in the middle of a construction site). I am slightly worried OCA are getting a bit to aggressive with rolling out these care suites, as they aren't a silver bullet "one size fits all" that is for sure...
(maybe there is a reason none of the other 4 listed operators, with at least 1, RYM, having extensive experience in the care side of things, aren't too keen on 'pushing' care suites to anyone and everyone?)

I like how OCA 'introduced' a new headline number for how they report occupancy (by ignoring those villages with construction going in/around them)
(and then when you compare actual occupancy it isn't even in the 90's yet)... imagine if ARV did that, would probably be 99% or higher.

Anyhow, I look forward to walking around The Sands (which I drive past nearly daily) once it opens in May (possibly a bit hopeful with the May deadline, but we'll see)... it replaced a 50ish bed facility with 60 or so apartments and 40 or so care suites... no care beds there... then I can walk down the road to see Aria Bay, where a brand new state of the art hospital is being developed, along with more apartments - the real McCoy that one, with everything: Dementia, Hospital Care, Serviced Apartments, Independent Apartments and probably a few more options I don't know about. Great flexibility, shame the views aren't quite the same as The Sands, right opposite the Bowling club at least.

[Beagle]

https://www.arvida.co.nz/Arvida-Villages/Aria-Bay
Look at the pathetic size of the swimming pool...not even big enough for a small dog to get some decent exercise...just as well the bowling club is handy so people can recover from claustrophobia at the pool lol

[Food4Thought]

https://www.arvida.co.nz/Arvida-Villages/Aria-Bay
Look at the pathetic size of the swimming pool...not even big enough for a small dog to get some decent exercise...just as well the bowling club is handy so people can recover from claustrophobia at the pool lol

... swimming pools are a expense many people get tired of. Average running cost of a home pool with electricity with a 1kW pump is around $800 a year... on 6-8hr run time. Given a few days they run 12hrs + for maintenance purposes. Plus chemicals... Plus maintenance... for a small pool it is much more affordable than a large one (say you had a pool built 20+years ago the build cost and operating cost has since at least doubled). It is manageable... and very nice.

Most older people would also want it heated to 28 degrees plus (31-36 if wanting to do some therapy). Add another approx... $1000 year for heat via gas or electricity... pool looks to be approx 25-35000l. Avg WxDxL... Plus build cost... then they are next to the beautiful ocean :)...

Maybe some reasons for a small pool...

[trader_jackson]

... swimming pools are a expense many people get tired of. Average running cost of a home pool with electricity with a 1kW pump is around $800 a year... on 6-8hr run time. Given a few days they run 12hrs + for maintenance purposes. Plus chemicals... Plus maintenance... for a small pool it is much more affordable than a large one (say you had a pool built 20+years ago the build cost and operating cost has since at least doubled). It is manageable... and very nice.

Most older people would also want it heated to 28 degrees plus (31-36 if wanting to do some therapy). Add another approx... $1000 year for heat via gas or electricity... pool looks to be approx 25-35000l. Avg WxDxL... Plus build cost... then they are next to the beautiful ocean :)...

Maybe some reasons for a small pool...

On the times I have visited, it seemed to be just the right size, and never seemed to be filled to capacity (one time had 1 person it it, the other nobody)... nice view actually of browns bay as well.
ARV is not about having the biggest pool, or the biggest villages, size is not everything after all... it is about having the right offering at the right size - which is often far from being the biggest... and in return, yes, ARV do charge for the niche-ness of it all.

[Beagle]

https://www.rymanhealthcare.co.nz/villages/auckland/edmund-hillary
I've seen the size of the pool at Edmund Hillary resort, (opps retirement village) and its very nice...one you'd actually want to use and can swing a cat and your neighbour's dog in too.
OCA Sands looks good to me and the size of their pool at the front door is the most impressive of all :)
There's waterfront and then there's second class, it really is that simple.

[Leftfield]

I am presently doing a Snoopy, (no apparent interest in this one from the other Beagle) so I have to dig around myself.... and endeavouring to obtain more background information on what is behind the ~ $7m increase in other expenses in the financial statements that is not explained with a note to the accounts. Are these one-off expenses or does this represent a fundamental ongoing shift in their cost structure ?
Important to note these are not wages cost increases which are disclosed elsewhere and explained.

I have emailed Earl as I feel an apparent ~ $14m per annum increase in undisclosed "other expenses", (I have to assume they are ongoing at this stage in the absence of a satisfactory other explanation) without any explanation in the accounts is both material and requires further explanation. I'll let you guys know what I find out, (if anything) in due course.

If anyone wants to opine on what might be behind this increase I am all ears.

Just to say I for one, appreciate your efforts and willingness to share the info'.

[Snow Leopard]

...If anyone wants to opine on what might be behind this increase I am all ears.

Beagle ears (http://www.beaglepro.com/beagle-ears)

[Beagle]

Beagle ears (http://www.beaglepro.com/beagle-ears)
LOL Cleaning a Bassets ears is even worse https://www.youtube.com/watch?v=QrQpT6rpvUM Takes floppy to a whole different level !

[warren]

[ ~ $7m increase in other expenses in the financial statements that is not explained with a note to the accounts. Are these one-off expenses or does this represent a fundamental ongoing shift in their cost structure ?
Important to note these are not wages cost increases which are disclosed elsewhere and explained.

I have emailed Earl as I feel an apparent ~ $14m per annum increase in undisclosed "other expenses", (I have to assume they are ongoing at this stage in the absence of a satisfactory other explanation) without any explanation in the accounts is both material and requires further explanation. I'll let you guys know what I find out, (if anything) in due course.

If anyone wants to opine on what might be behind this increase I am all ears.[/QUOTE]

Ummm this type of research and use of this forum is quite outstanding Mr Beagle. Geeeez 14 Million on Undisclosed ' Other Expenses". Why has no other shareholder spotted this large spend? Why hasn't there been a rush to explain? It was a total lack of intelligent questioning that let the Hanovers of this world lend 70 million etc etc to themselves. Mr Barracuta whats your take on these Other Expenses?
I'm very surprised indeed at our Liz allowing what appears as a real lack of explanation on her watch.

[Beagle]

The phone has been silent and inbox remains empty in terms of any response thus far. Winner just PM'd me and thinks it could be to do with the lease on some property, probably Everil Orr, $4.8m that I note is subject to some contrary credit of $4.5m, treated differently in the accounts but its fair to say it would be good to hear from the horses mouth as these accounts are not an easy read by ANY stretch of the imagination. Page 46 of the 2018 accounts gives some further details of the treatment of income and lease expense pertaining to Everil Orr.

I suspect the accounting treatment of this may be the bulk of the ~ $7m difference in other expenses as lease payments are lumpy and contingent upon ORA sales being achieved at that facility.

[trader_jackson]

https://www.rymanhealthcare.co.nz/villages/auckland/edmund-hillary
I've seen the size of the pool at Edmund Hillary resort, (opps retirement village) and its very nice...one you'd actually want to use and can swing a cat and your neighbour's dog in too.
OCA Sands looks good to me and the size of their pool at the front door is the most impressive of all :)
There's waterfront and then there's second class, it really is that simple.

Do you think old folk would venture across a busy road to get to a busy beach vs having a nice small well heated pool just metres away with views of the ocean and wider browns bay, a sauna and a near by fire to warm up next to after having a dip? I know which one I'd rather choose! It is no wonder Aria bay had an average purchase price of $1m despite not being anywhere near as close to the beach as The Sands... I do look forward to hearing about the missing cashie!

[bull....]

Fund manager Milford cuts exposure to housing stocks as market darkens
We are investing a lot less in housing-related stocks in New Zealand (including the retirement village operators)," Sweetman said.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12197920

yep pretty much sums up the sector

[Maverick]

Fund manager Milford cuts exposure to housing stocks as market darkens


We are investing a lot less in housing-related stocks in New Zealand (including the retirement village operators)," Sweetman said.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12197920

yep pretty much sums up the sector
I do agree Bull.. that is the sentiment out there. That's just how it is ...

What I like about OCA is it`s basic model (run by very respectable directors) -stripped right down, here it goes;
"I have an apartment i've built for you, you pay me up front for the whole price, then after 3.5 years (average) you give it back to me.... you pay for any repairs and upkeep.. I`ll give you 70 % of your money back....plus i'll look after you while you`re there- for an extra fee where I will make a few bucks as well."

All the time the apartment is naturally inflation adjusted. Enter the next resident, of which we know there will be an insatiable amount queuing up to move in.

Its that simple. I even feel a little dirty for typing this publicly but it's just how it is....

Some might get alittle bit turbulence queasy mean time but there are blue skies no later than 2 or 3 yrs ahead.

[couta1]

Fund manager Milford cuts exposure to housing stocks as market darkens


We are investing a lot less in housing-related stocks in New Zealand (including the retirement village operators)," Sweetman said.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12197920

yep pretty much sums up the sector Would that be the same Milford that were bullish on Wynyard and a few other dogs. Lol

[winner69]

I do agree Bull.. that is the sentiment out there. That's just how it is ...

What I like about OCA is it`s basic model (run by very respectable directors) -stripped right down, here it goes;
"I have an apartment i've built for you, you pay me up front for the whole price, then after 3.5 years (average) you give it back to me.... you pay for any repairs and upkeep.. I`ll give you 70 % of your money back....plus i'll look after you while you`re there- for an extra fee where I will make a few bucks as well."

All the time the apartment is naturally inflation adjusted. Enter the next resident, of which we know there will be an insatiable amount queuing up to move in.

Its that simple. I even feel a little dirty for typing this publicly but it's just how it is....

Some might get alittle bit turbulence queasy mean time but there are blue skies no later than 2 or 3 yrs ahead.

Pretty complicated and many just won’t get it .....do you have a simpler more straightforward version?

[percy]

Build a retirement village.
Recoupe your capital by selling "right to occupy"units
Recouped capital then used to build another village,
Recoupe your capital by selling "right to occupy"units.
Recouped capital then used to build another village.
Recoupe your capital by seling "right to occupy" units.
Etc,etc etc etc etc etc.
At the end of the day with no addtional capital you own a great number of retirement villages.
Now each village generates not only on going fees,but huge unit resale profits.
I think it is the only legal ponzi scheme avaliable.
Like all great ponzi schemes the people who build the greatest number of units end up generating the most fess and resales.
"Big is good,bigger is better."[Another plaque for Beagle to get made.]...lol.
Ryman's market cap is now over $5 billion.NB.They have never been back to shareholders for more capital.!

[Beagle]

Hi Roger,

Good to hear from you and thanks for your inquiry.

Page 28 of the Interim report breaks out the operating expenses and for the RV segment shows a $5.9m increase period-on-period. Of this, footnote 5 discloses that $4.8m relates to the Everil Orr “right to use asset” which is a simple “in and out” in terms of $4.8m also being recognised in revenue in relation to Everil Orr.

The balance of the increase relates to higher advertising and sales commissions relative to the higher sales volumes in the period.
Response received from Earl after market close today. Dig some digging, looks okay. Everil Orr is leasehold facility wherein they split the ORA gains with the lessor and this split is accounted for as a lease payment or something to that effect, this makes my head hurt a bit. Some accounting rules are just designed to make life hard for financial statement readers....(sigh) If only all financial statements could be so easy to read and comprehend as HLG's (big sigh).

[janner]

I think it is the only legal ponzi scheme avaliable.!

Hmmmm. A Ponzi scheme... Legal or not.. All Ponzi schemes end in tears for some one Perc.

Disc. Hold OCA. ARV.

[Beagle]

Pretty complicated and many just won’t get it .....do you have a simpler more straightforward version?

LOL I think that is the simplest version mate.

[Yoda]

LOL I think that is the simplest version mate.
I think Winner was joking....... i think.......

[Ggcc]

Build a retirement village.
Recoupe your capital by selling "right to occupy"units
Recouped capital then used to build another village,
Recoupe your capital by selling "right to occupy"units.
Recouped capital then used to build another village.
Recoupe your capital by seling "right to occupy" units.
Etc,etc etc etc etc etc.
At the end of the day with no addtional capital you own a great number of retirement villages.
Now each village generates not only on going fees,but huge unit resale profits.
I think it is the only legal ponzi scheme avaliable.
Like all great ponzi schemes the people who build the greatest number of units end up generating the most fess and resales.
"Big is good,bigger is better."[Another plaque for Beagle to get made.]...lol.
Ryman's market cap is now over $5 billion.NB.They have never been back to shareholders for more capital.!

Banks must be happy to keep lending to Ryman as their debt seems to show up at over one Billion dollars.

https://www.marketscreener.com/RYMAN-HEALTHCARE-LTD-6492072/financials/

[percy]

Banks must be happy to keep lending to Ryman as their debt seems to show up at over one Billion dollars.

https://www.marketscreener.com/RYMAN-HEALTHCARE-LTD-6492072/financials/

Secure lending on growing legal ponzi scheme assets.

[percy]

Hmmmm. A Ponzi scheme... Legal or not.. All Ponzi schemes end in tears for some one Perc.

Disc. Hold OCA. ARV.

Certainly not for shareholders.
To keep the schemes going, the promoters need to offer excellent security,and care for their residents.Failure to offer superior value will see these schemes end.With the massive tsunami of retirees growing over the next 20 to 30 years, these schemes have huge tail winds.

[bull....]

Not sure where you get the idea OCA "margins are already under pressure" Bull.

Earl commented....
"Sales at our Meadow bank Village have been particularly strong, with all 62 apartments in stage 3 now either sold or under application. less than a year since this stage was completed."

"We have already received presale applications for 13 apartments at the Sands with strong pricing that reflects the high quality of the product."

Page 9- "Bayview" ....Demand for the remaining (21) care suites is expected to be strong.

So now it just comes down to whether Earl is putting a "spin" on things. From every source, including a friend who was very involved with the Macquarie float, I`m hearing that he is first class. So I have no issue trusting his comments.

mav pg 36 in the presentation shows development margins they peaked in 1st half 2018 even though they are still high compared to previous yrs a trend maybe under way.
have to remember oca make a lot of there profit from there development margin.

heres a good news article by a property developer on how costs can easliy blow out your property development

https://www.interest.co.nz/property/72319/john-bolton-shows-what-property-developer-against-when-constructing-houses-costs

In property development the main thing is - They make money through OPM (other people's money) lol your the partner with them and you get a dividend for your share of the company they get all the development margins, gains on property etc

[BlackPeter]

Banks must be happy to keep lending to Ryman as their debt seems to show up at over one Billion dollars.

https://www.marketscreener.com/RYMAN-HEALTHCARE-LTD-6492072/financials/

Don't forget - most of the liabilty is the "interest free" loan Ryman (and other retirement village operators) get from their clientele. This is the payment of which they return 70% (or whatever) after their customers depart. Has nothing to do with banks - no risk for them.

[winner69]

Don't forget - most of the liabilty is the "interest free" loan Ryman (and other retirement village operators) get from their clientele. This is the payment of which they return 70% (or whatever) after their customers depart. Has nothing to do with banks - no risk for them.

For Ryman

Bank loans $1.2 billion
Residents loans $2.6 billion

Cool eh

[Maverick]

For Ryman

Bank loans $1.2 billion
Residents loans $2.6 billion

Cool eh
Pretty complicated and many just won’t get it .....do you have a simpler more straightforward version?;)

[Beagle]

Pretty complicated and many just won’t get it .....do you have a simpler more straightforward version?;)

:lol: :lol: Some good humor on the thread last couple of days that is much needed what with the SP where it is and all.

[Onion]

An item on the RNZ Business News this morning...

https://www.radionz.co.nz/national/programmes/businessnews/audio/2018680308/business-news-for-30-march-2019

Listen at 2:12 and more specifically at 3:30.

According to analyst Frances Sweetman Milford Private Wealth is investing less in the retirement sector as a reflection of caution about the housing market -- retirement village operators being dependent on houses selling in order for people to buy in their villages.

[couta1]

An item on the RNZ Business News this morning...

https://www.radionz.co.nz/national/programmes/businessnews/audio/2018680308/business-news-for-30-march-2019

Listen at 2:12 and more specifically at 3:30.

According to analyst Frances Sweetman Milford Private Wealth is investing less in the retirement sector as a reflection of caution about the housing market -- retirement village operators being dependent on houses selling in order for people to buy in their villages. Anyone selling their house can afford a care suite or basic OCA appartment.

[Beagle]

Anyone selling their house can afford a care suite or basic OCA appartment.

Yes that's the point of difference, OCA's smaller much more affordable care suites that people need. SUM other retirement companies are not so well positioned with predominantly larger units being built on a lifestyle basis if people make the discretionary choice to choose them and only if they can get what they want for their house. RYM even worse off as being massively exposed to the rapidly declining Melbourne market and on a forward PE of more than double OCA. Either of those two would make a good short (in my opinion) for anyone looking to hedge their OCA sector exposure.

[percy]

Yes that's the point of difference, OCA's smaller much more affordable care suites that people need. SUM other retirement companies are not so well positioned with predominantly larger units being made on a lifestyle basis if people want them and only if they can get what they want for their house. RYM even worse off massively exposed to the rapidly declining Melbourne market and on a forward PE of more than double OCA. Either of those two would make a good short (in my opinion) for anyone looking to hedge their OCA sector exposure.

Anyone selling their house in Melbourne should be able to buy TWO [or more] Ryman units.

PS Craigs research today have upgraded OCA to BUY with a target price of $1.24.

[Beagle]

Anyone selling their house in Melbourne should be able to buy TWO [or more] Ryman units.

Sorry Percy I find that very difficult to accept at face value. Perhaps you could provide some evidence to support your contention such as the average price of a RYM unit in the suburb in question and the average price of a house in said suburb. The normal ratio is about 75% unit to house and if the value of the house has declined 10% the margin is getting thin for said discretionary choice.

This was certainly not the case for my parents nine years ago with the RYM facility at Orewa. The price of a nice 2 bedroom unit was almost exactly the same as their stand alone two bedroom home. To suggest that RYM's units are dirt cheap as a blanket statement compared to the surrounding suburbs is not something I have seen as being a realistic claim.

Good that Craigs can see the wood for the trees. What's their rating on RYM and SUM if you don't mind sharing ?

[macduffy]

Yes that's the point of difference, OCA's smaller much more affordable care suites that people need. SUM other retirement companies are not so well positioned with predominantly larger units being built on a lifestyle basis if people make the discretionary choice to choose them and only if they can get what they want for their house. RYM even worse off as being massively exposed to the rapidly declining Melbourne market and on a forward PE of more than double OCA. Either of those two would make a good short (in my opinion) for anyone looking to hedge their OCA sector exposure.

What!

Surely there's no need to hedge one's exposure to OCA?

;)

I hold - from the IPO.

[percy]

Good that Craigs can see the wood for the trees. What's their rating on RYM and SUM if you don't mind sharing ?

RYM,"Core" "Neutral" target price $10.55
SUM."Supplementary" "Neutral" target price $8.10.


PS.I do not remember any broker "being right" in this sector.

[couta1]

RYM,"Core" "Neutral" target price $10.55
SUM."Supplementary" "Neutral" target price $8.10.


PS.I do not remember any broker "being right" in this sector. Lol your right there, that SUM target must be a 3 yr one.

[winner69]

Lol your right there, that SUM target must be a 3 yr one.


......like the OCA one

[couta1]

......like the OCA one No mate the Couta ratio says OCA already worth $1.24 relative to the SUM closing price, SUM really only worth around $5.20 currently in that case.

[bull....]

is this the end of oca , sum rym arv and met profit grab , probably half there stock prices if it gain traction i reckon


A new retirement village operator is promising residents capital gain on their units

https://www.stuff.co.nz/business/110208298/a-new-retirement-village-operator-is-promising-residents-capital-gain-on-their-units

[Beagle]

is this the end of oca , sum rym arv and met profit grab , probably half there stock prices if it gain traction i reckon


A new retirement village operator is promising residents capital gain on their units

https://www.stuff.co.nz/business/110208298/a-new-retirement-village-operator-is-promising-residents-capital-gain-on-their-units

LOL Halve their value...more Bull from the bear.
The devil will be in the detail. You can't get something for nothing. I would expect their weekly fees will be a lot higher...people have to pay for the services one way or the other. I bet the directors of OCA, RYM, SUM ARV and MET are quaking in their boots lol

[percy]

Another VHP Vital Healthcare Property Trust type "management control" fiasco in the making.

[Lewylewylewy]

Good business angle when we're entering era of static or dropping prices

[couta1]

is this the end of oca , sum rym arv and met profit grab , probably half there stock prices if it gain traction i reckon


A new retirement village operator is promising residents capital gain on their units

https://www.stuff.co.nz/business/110208298/a-new-retirement-village-operator-is-promising-residents-capital-gain-on-their-units
Yeah right, just a small fish trying to swim in a large tank, continuum of care is almost non existent to boot.

[Beagle]

Yeap...I suspect some people who have a short attention span and didn't even make it through the whole article to read the last bit
"But 90 per cent of older people choosing a retirement village - about 40,000 people - did so for the bundle of services provided, especially access to health care which provided peace of mind. For a certain section of older people the capital gain would be a drawcard".

They will be a small niche player and I predict they will charge like wounded bulls for very limited services and activities because if they're not getting their profit through capital gains they're getting it though milking oldies for all they're worth with weekly management fees.

[couta1]

Not to mention that capital gain is of no use to the purchaser when they are pushing up daisies, might as well enjoy the full package with their hard earned dosh rather than leaving it to some entitled cupcake.

[bull....]

Not to mention that capital gain is of no use to the purchaser when they are pushing up daisies, might as well enjoy the full package with their hard earned dosh rather than leaving it to some entitled cupcake.

enjoy the full package before they enter the vege state brought on by being surrounded by other veges.

[minimoke]

enjoy the full package before they enter the vege state brought on by being surrounded by other veges.
The humor in this post has gone right over my head

[warren]

Not to mention that capital gain is of no use to the purchaser when they are pushing up daisies, might as well enjoy the full package with their hard earned dosh rather than leaving it to some entitled cupcake.



Hello readers.

I will outline my situation again and the classy family experience indirectly led to a significant investment into OCA.

A much loved family member was in real/desperate need of aged hospital care eg. toileting, bathing, bedding, cooking, medical supervision etc . This situation comes on when one is 80 or 90 etc very quickly indeed. So the Rymans type very nice apartment we owned was suddenly useless for our loved Mother.
Yes there are public geriatric wards available and they welcome visitors to look around and visit!
We were not penniless, and while Mother was very infirm her intellect and personality remained unaffected as did a normal human desire for a little privacy and a little home of her/your own.
We couldn't sign up for a OCA care Unit offering exactly the above PLUS full hospital care quickly enough (again I point out how sudden and desperate and non reversible these aged health demands occur)
There was a cost---reasonable in our opinion----- BUT it was Single best thing we EVER did.

[bull....]

dont forget a capital gains tax will make returns for retirement village operators even less if implemented

https://www.stuff.co.nz/business/110264655/what-would-capital-gains-tax-mean-in-reality

[BlackPeter]

dont forget a capital gains tax will make returns for retirement village operators even less if implemented

https://www.stuff.co.nz/business/110264655/what-would-capital-gains-tax-mean-in-reality

Repeating this nonsense again and again doesn't make it true. As long as retirement villages don't sell their assets, no captital gains tax would be payable. So - how ecactly would an CGT reduce the returns of retirement villages?

[bull....]

Repeating this nonsense again and again doesn't make it true. As long as retirement villages don't sell their assets, no captital gains tax would be payable. So - how ecactly would an CGT reduce the returns of retirement villages?

they sell individual units therefore based on assumptions in the tax paper ... would mean valuation method each yr or once the person dies the unit is then sold to another person so a gain or loss may be made on sale for benefit of village operator.

[percy]

They do not sell individual units.
They sell "the right to occupy" individual units.

[bull....]

They do not sell individual units.
They sell "the right to occupy" individual units.

probably classified as a financial arrangement which is a taxable transaction

[BlackPeter]

they sell individual units therefore based on assumptions in the tax paper ... would mean valuation method each yr or once the person dies the unit is then sold to another person so a gain or loss may be made on sale for benefit of village operator.

I don't think you understand the retirement village model. No operator I am aware of is selling their units. If they would they could not control whats happening with the unit after the departure of the current occupants. As percy rightly stated - the only thing they are selling is a "right to occupy". Basically a lease for life. If this lease expires, they obviously are allowed to lease out the unit again they always owned ... no capital gains realised.

[couta1]

dont forget a capital gains tax will make returns for retirement village operators even less if implemented

https://www.stuff.co.nz/business/110264655/what-would-capital-gains-tax-mean-in-reality You really need to start doing your homework on all things about this sector bull, your just fearmongering with every half truth tabloid article you can find.PS-Unit title equals CGT, Licence to occupy does not.

[bull....]

You really need to start doing your homework on all things about this sector bull, your just fearmongering with every half truth tabloid article you can find.PS-Unit title equals CGT, Licence to occupy does not.

your missing the point licence to occupy will be covered by a cgt which is proposed to be comprehensive. only the family home is except.

given it is not in law yet but another risk for the sector to be aware off

[BlackPeter]

your missing the point licence to occupy will be covered by a cgt which is proposed to be comprehensive. only the family home is except

Do you have a reference or did you just make this up yourself? As indicated earlier - licence to occupy is basically a one off lease or rent payment for life. Are you saying Labour intends as well to put a CGT on rent payments?

Makes no sense at all ...

[bull....]

Do you have a reference or did you just make this up yourself? As indicated earlier - licence to occupy is basically a one off lease or rent payment for life. Are you saying Labour intends as well to put a CGT on rent payments?

Makes no sense at all ...

i know someone who is accountant they recently did a webinar on tax treatment of leases during the webinar it was advised that ird are currntly looking into the treatment of leases in regard to tax

this may be included in the cgt or be a seperate tax change

[Beagle]

You really need to start doing your homework on all things about this sector bull, your just fearmongering with every half truth tabloid article you can find.PS-Unit title equals CGT, Licence to occupy does not.

Correct. Licence to occupy is covered under the financial arrangements section of the income tax act.
Some of the B.S. being spieled out by the resident bear is seriously misinformed and grossly inaccurate.

[bull....]

Correct. Licence to occupy is covered under the financial arrangements section of the income tax act.
Some of the B.S. being spieled out by the resident bear is seriously misinformed and grossly inaccurate.

guess none of you understand how things get reclassified or redetermind in regard to tax. as i said ird is looking into this

[BlackPeter]

i know someone who is accountant they recently did a webinar on tax treatment of leases during the webinar it was advised that ird are currntly looking into the treatment of leases in regard to tax

this may be included in the cgt or be a seperate tax change

Yeah right ... you started with claiming CGT will bite the retirement sector and now it is a mysterious new tax somebody you claim to know might have heard about in a webinar provided by whom?

If you stand in a hole, you better stop digging.

[Beagle]

guess none of you understand how things get reclassified or redetermind in regard to tax. as i said ird is looking into this

Been an accountant for 37 years mate....What would I know eh... Maybe you should hibernate like all good bears do for 6 months...its getting very tiresome believe me.

[bull....]

Yeah right ... you started with claiming CGT will bite the retirement sector and now it is a mysterious new tax somebody you claim to know might have heard about in a webinar provided by whom?

If you stand in a hole, you better stop digging.

cgt or new determination by ird its all the same. they didnt might have heard it was stated they are looking into the tax treatment of leases

[bull....]

Been an accountant for 37 years mate....What would I know eh... Maybe you should hibernate like all good bears do for 6 months...its getting very tiresome believe me.

then you would know about the ird looking into the tax treatment of leases? wouldnt you

[Beagle]

then you would know about the ird looking into the tax treatment of leases? wouldnt you

Have you ever heard of binding rulings ? RYM got a binding ruling that the ORA's are subject to the provisions of the financial arrangements within the Income Tax Act.
I think you're just being a fearmonger and not just on this thread. Take a break mate...my sense is things are getting you down and you're getting more and more myopic vision. "To a hammer, everything is a nail"...think about it.

Cindy's Kindy won't have the numbers to run with a CGT and even if they do they'll be thrown out at the next election before its implemented...mark my words.

[bull....]

Have you ever heard of binding rulings ? RYM got a binding ruling that the ORA's are subject to the provisions of the financial arrangements within the Income Tax Act.
I think you're just being a fearmonger and not just on this thread. Take a break mate...my sense is things are getting you down and you're getting more and more myopic vision. "To a hammer, everything is a nail"...think about it.

Cindy's Kindy won't have the numbers to run with a CGT and even if they do they'll be thrown out at the next election before its implemented...mark my words.

you know beagle its only binding until legislation changes it. so under labour it is a risk going forward

[BlackPeter]

cgt or new determination by ird its all the same. they didnt might have heard it was stated they are looking into the tax treatment of leases

Hmm - your statements do not instil confidence you know what you are talking about ... but no doubt that our current government is working on an endless number of new ideas how to milk all of us still more ... I guess that's all Labour is about, isn't it?

However - you failed to explain how any changes in the tax treatment for leases would be bad for retirement villages. Lets assume for a moment they introduce a CGT as well as a tax on rents and leases - how would this be a problem for the retirement sector? I guess everybody needs to live somewhere and if the government decides to make this less affordable be it by inventing a CGT (must be also on the family home, otherwise why would they tax a lease on your family home) or by taxing leases or rents than this is clearly bad for each of us, but not for a specific accommodation sector.

It just would mean that people have less money to do other things - or they need to move under the next bridge. Lets hope for everybodys sake that your friend didn't hear as well in this secret webinar from an anonymous provider about this new bridge tax applicable for anybody who wants to sleep under them. Did he?

[Beagle]

Hmm - your statements do not instil confidence you know what you are talking about ... but no doubt that our current government is working on an endless number of new ideas how to milk all of us still more ... I guess that's all Labour is about, isn't it?

However - you failed to explain how any changes in the tax treatment for leases would be bad for retirement villages. Lets assume for a moment they introduce a CGT as well as a tax on rents and leases - how would this be a problem for the retirement sector? I guess everybody needs to live somewhere and if the government decides to make this less affordable be it by inventing a CGT (must be also on the family home, otherwise why would they tax a lease on your family home) or by taxing leases or rents than this is clearly bad for each of us, but not for a specific accommodation sector.

It just would mean that people have less money to do other things - or they need to move under the next bridge. Lets hope for everybodys sake that your friend didn't hear as well in this secret webinar from an anonymous provider about this new bridge tax applicable for anybody who wants to sleep under them. Did he?

:lol: :lol: Classic

[bull....]

Hmm - your statements do not instil confidence you know what you are talking about ... but no doubt that our current government is working on an endless number of new ideas how to milk all of us still more ... I guess that's all Labour is about, isn't it?

However - you failed to explain how any changes in the tax treatment for leases would be bad for retirement villages. Lets assume for a moment they introduce a CGT as well as a tax on rents and leases - how would this be a problem for the retirement sector? I guess everybody needs to live somewhere and if the government decides to make this less affordable be it by inventing a CGT (must be also on the family home, otherwise why would they tax a lease on your family home) or by taxing leases or rents than this is clearly bad for each of us, but not for a specific accommodation sector.

It just would mean that people have less money to do other things - or they need to move under the next bridge. Lets hope for everybodys sake that your friend didn't hear as well in this secret webinar from an anonymous provider about this new bridge tax applicable for anybody who wants to sleep under them. Did he?

price waterhouse anyway ive out of time on the matter yourve a heads up

[minimoke]

you know beagle its only binding until legislation changes it. so under labour it is a risk going forwardYou do know how long it takes to pass legislation? And the first thing you need is numbers. Anyone who think Labour / nz First and the Greens could agree on a CGT is bonkers. And when I do see that pig fly past my window I know it will be a sign that Labour is about to be voted out.

Worry about what we know and what can be changed. Its a joyless life worrying about the unknown.

[see weed]

I am not too worried about Justinfa Oneterm CGT Labour policy;).

[couta1]

You do know how long it takes to pass legislation? And the first thing you need is numbers. Anyone who think Labour / nz First and the Greens could agree on a CGT is bonkers. And when I do see that pig fly past my window I know it will be a sign that Labour is about to be voted out.

Worry about what we know and what can be changed. Its a joyless life worrying about the unknown. Exactly, bottom line is ANY Govt that interferes with this sector in any meaningful way from how it currently operates is toast.

[Maverick]

Really appreciate the heads up Bull... Just sold all my OCA.

[couta1]

Really appreciate the heads up Bull... Just sold all my OCA. Lol is that your 500k off market sale.:D PS-I know a good Psychiatrist who specializes in the deprogramming of the mind from listening to too much bull_ _ _ _.

[see weed]

Really appreciate the heads up Bull... Just sold all my OCA.
You are joking, and here I am trying to join your 500 club:).

[Maverick]

Relax Seaweed - You would have to pry them out of my dead , clenched fist....and as you can see I ain't dead yet.

[winner69]

Relax Seaweed - You would have to pry them out of my dead , clenched fist....and as you can see I ain't dead yet.

Hope you’ve made a will and made your intentions clear that the estate is NOT to sell these but hold them forever ....and allow the beneficiaries to make zillions

Would be a shame if you got run over by a bus today and they were all sold next month.

[Beagle]

Really appreciate the heads up Bull... Just sold all my OCA.


Lol is that your 500k off market sale.:D PS-I know a good Psychiatrist who specializes in the deprogramming of the mind from listening to too much bull_ _ _ _.

:lol: :lol: Too funny...please keep the comedy coming its great entertainment :)

[dr_]

Well, 95% of the bull's posts on ST forum are all gloom and doom :cool:.... Keep coming...this will help me to accumulate my holding for long term.

[Ggcc]

Did one of the directors buy more shares I see

[dr_]

Mark Stockton (General manager property) brought another 100k worth of on market yesterday, he is holding now 1.6mil

[Traderwannabe]

Mark Stockton (General manager property) brought another 100k worth of on market yesterday, he is holding now 1.6mil

Where did you find that information? Great to know, thanks for sharing.

[Traderwannabe]

Where did you find that information? Great to know, thanks for sharing.

Just saw the announcement!

[couta1]

Mark Stockton (General manager property) brought another 100k worth of on market yesterday, he is holding now 1.6mil That's a huge vote of confidence in the company from someone in charge of property, who are you going to believe people him or the bull?

[Beagle]

That's a huge vote of confidence in the company from someone in charge of property, who are you going to believe people him or the bull?

Uuuummmm...let me see...oh my goodness... that's a REALLY tough question lol

[bull....]

you die hard oca lovers are funny , unprepared to accept any kind of comment , if it paints a negative light on your beloved sector. probably still being saying its a long term play in 5 yrs even when its 80c?. anyway i be buscuiting tomorrow so you can enjoy your calm till i return next week lol

[Beagle]

Well, 95% of the bull's posts on ST forum are all gloom and doom :cool:.... Keep coming...this will help me to accumulate my holding for long term.

99.9% in my opinion and they're highly repetitive. He'll be "sorely missed" tomorrow.
If they're 80 cents in five years time bull it will be after the 3:1 share split.

[Joshuatree]

Contrary opinions are needed for balance and to temper the uprampers and love fest that had people buying at higher prices not so long ago. A few apologies needed on here.

[Baa_Baa]

Contrary opinions are needed for balance and to temper the uprampers and love fest that had people buying at higher prices not so long ago. A few apologies needed on here.

Would be nice to see some tolerance for differing views and reasonable debate, all should be welcome, however it quickly degrades into playing the man not the ball. Surprised STMOD hasn't shown up.

[couta1]

Would be nice to see some tolerance for differing views and reasonable debate, all should be welcome, however it quickly degrades into playing the man not the ball. Surprised STMOD hasn't shown up. I think what you actually meant to say was playing the man not the bull.PS-I hear bulls are not only incredibly stubborn but very thick skinned also.

[Scrunch]

guess none of you understand how things get reclassified or redetermind in regard to tax. as i said ird is looking into this

While there's a few posters that won't like to hear it, the Bull's got an exceptionally good point, but possibly not the one he intended to make. One of the interesting facts about the sector is that the ratio Income tax / Net Profit before tax is very low and sometimes its even negative. For example OCA had an effective tax rate over the last two years of 5.3% and -1.4%. Last year they reported a $76m pre-tax profit and taxation increased the profit by $1m!! The very low effective tax rates in the sector will not be lost on the IRD, but I believe is the correct result from the current tax legislation. IRD would not be doing their job correctly if they did not put forward recommendations to get tax free capital gains reclassified as income but it requires policy changes.

If the tax legislation is changed, the effective tax rate could return to circa 28%. That's a big hit to EPS for all the retirement village companies including OCA but some of this hit is likely to be factored into the current prices and is a cause of recent share price weakness.

Could the legislation be changed in the next 1 to 5 years - yes
Could Labour win an election campaining for a comprehensive capital gains tax? - Its unlikely but not quite an impossibility (Brexit and Trump winning both also looked unlikely but happened)
Would it be political suicide to make tax changes so that retirement villages paid capital gains taxes but size thresholds exemptions mean most households were outside the net - no

The banks got done for several billion dollars when the tax rules changed and the structured finance deals they were doing were suddendly deemed not to generate tax free income. Tax rules/interpretations can, and do change. The similarity with the retirement village sector is that these deals were resulting in effective tax rates well below the nz company tax rate. Different causes exist for OCA and the others, but the same outcome exists of a low effective marginal tax rate.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10617445

Disc - Hold one of the retirement companies and the wife has OCA shares.

[Beagle]

Contrary opinions are needed for balance and to temper the uprampers and love fest that had people buying at higher prices not so long ago. A few apologies needed on here.

I think you are getting yourself confused here about OCA's performance. Its mostly a sector rerating downwards that has caused the SP correction and in fact if we look at the range movements in recent months we see declines from the high water point to today's price as follows which clearly show OCA as THE RELATIVE OUTPERFORMER:-
RYM $14.09 now $10.48 down 26% (Only one dog had the courage to bark that it was clearly overpriced at $14 and anyone who acted on that should be very thankful)
SUM $8.00 now $6.11 down 24%
MET $6.51 now $5.17 down 21%
OCA $1.23 now $1.04 down just 15%.
Sure ARV hasn't gone down as much but its woeful SP appreciation since OCA listed of just 3% speaks for itself in terms of its bottom of the pack ranking.

Further, looking before the recent SP correction and over the full period since OCA listed, OCA has outperformed all its peers in terms of SP appreciation and gross dividend yield.

I think the people who have clearly called this the best sector investment have been bang on the money and anyone that listened to their well researched posts should be most appreciative because this company has significantly outperformed ALL its peers since listing.
Further, the market overall has been quite weak these past few months. Anyone thinking investing is always a nice straight line upwards in the SP has had a reality check but that's no big deal for anyone holding for a decent length of time.

There's lots of grumpy people feeling bad about how their various shareholdings have gone in recent months but lets not get carried away with the blame game and finger pointing !

[janner]

While there's a few posters that won't like to hear it, the Bull's got an exceptionally good point, but possibly not the one he intended to make. One of the interesting facts about the sector is that the ratio Income tax / Net Profit before tax is very low and sometimes its even negative. For example OCA had an effective tax rate over the last two years of 5.3% and -1.4%. Last year they reported a $76m pre-tax profit and taxation increased the profit by $1m!! The very low effective tax rates in the sector will not be lost on the IRD, but I believe is the correct result from the current tax legislation. IRD would not be doing their job correctly if they did not put forward recommendations to get tax free capital gains reclassified as income but it requires policy changes.

If the tax legislation is changed, the effective tax rate could return to circa 28%. That's a big hit to EPS for all the retirement village companies including OCA but some of this hit is likely to be factored into the current prices and is a cause of recent share price weakness.

Could the legislation be changed in the next 1 to 5 years - yes
Could Labour win an election campaining for a comprehensive capital gains tax? - Its unlikely but not quite an impossibility (Brexit and Trump winning both also looked unlikely but happened)
Would it be political suicide to make tax changes so that retirement villages paid capital gains taxes but size thresholds exemptions mean most households were outside the net - no

The banks got done for several billion dollars when the tax rules changed and the structured finance deals they were doing were suddendly deemed not to generate tax free income. Tax rules/interpretations can, and do change. The similarity with the retirement village sector is that these deals were resulting in effective tax rates well below the nz company tax rate. Different causes exist for OCA and the others, but the same outcome exists of a low effective marginal tax rate.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10617445

Disc - Hold one of the retirement companies and the wife has OCA shares.


Thank you. Food for thought..

[peat]

thanks for calculating those Roger.

this chart would appear to show things are a bit closer than that.

10289

I guess the difference is explained by taking the highest share price as the beginning point vs taking relative performance from an arbitrary time in the past eg 2 years in this case. I'm am thinking 2 years covers all of OCA's listed time.



Heres one for RYM

10290

Quite similar really. Ryman is increasingly volatile these days so relative performance could jump around as well. Whereas I would think OCA has a low beta

[winner69]

Relax Seaweed - You would have to pry them out of my dead , clenched fist....and as you can see I ain't dead yet.


Yep , sounds pretty right to me Beagle.
My ball park expectations of FY 2019 are as follows
FY2018 profit 52.1 mill
Plus 2% inflation increase on the care side of business +1 mill
Plus margin on new builds +16.1 mill
Plus increased DMF of new stock (most of this won`t be fully realised for several years though- but i figure there will be some increase in DMF fees is warranted from increasing ORA`s done in recent years) +4.3 mill
Total annual profit = $73.6 million =11.7 cps

So a bit more than yours Beagle , but you're probably closer by not including so much unrealised DMF that I`have. :) (+ 4.3 mil equates to 0.7 cps)
At a forward PE of 13 makes the share price then worth $1.52 ( it's no surprise this is 25% higher than the $1.20 it was when I did these workings)
That has been historically about what most retirement stocks have increased by YOY.

Still hoping for $73.6m this year?

[Beagle]

thanks for calculating those Roger.

this chart would appear to show things are a bit closer than that.

10289

I guess the difference is explained by taking the highest share price as the beginning point vs taking relative performance from an arbitrary time in the past eg 2 years in this case. I'm am thinking 2 years covers all of OCA's listed time.



Heres one for RYM

10290

Quite similar really. Ryman is increasingly volatile these days so relative performance could jump around as well. Whereas I would think OCA has a low beta

Thanks Peat. Isn't it interesting how close the share prices trend over time. Pretty strong correlation there !

[Timesurfer]

If the tax legislation is changed, the effective tax rate could return to circa 28%. That's a big hit to EPS for all the retirement village companies including OCA but some of this hit is likely to be factored into the current prices and is a cause of recent share price weakness.

They could do that, and for a lot of reasons that sounds like a good economic choice. However, lets say they do take a big chunk of profits out of the retirement sector. Then lets suppose private enterprise no longer sees it as an attractive proposition. With the big baby boomer bubble heading for health care who is going to pick up the slack if private enterprise doesn’t?

I am assuming there are a few bean counters in Government with enough smarts to know the ramifications of wringing the profits out of this sector. It’s not just numbers it is a bunch of people we are talking about - people who generally vote as well, which adds another knife to twist.

[hardt]

ANALYST E

OCA
MKT CAP 640m @1.03
Underlying NPAT FY19E 45-50m
Payout 64% - unfranked
Debt 230-250m

ARV
MKT CAP 540m @1.30
Underlying NPAT FY19E 43-48m
Payout 55% - 80% franked
Debt 110-120m

Posted without my opinion.

[trader_jackson]

ANALYST E

OCA
MKT CAP 640m @1.03
Underlying NPAT FY19E 45-50m
Payout 64%
Debt 230-250m

ARV
MKT CAP 540m @1.30
Underlying NPAT FY19E 43-48m
Payout 55%
Debt 110-120m

Posted without my opinion.

"its a matter of common sense really"
But Roger says OCA is waay cheaper than ARV?

[forest]

They could do that, and for a lot of reasons that sounds like a good economic choice. However, lets say they do take a big chunk of profits out of the retirement sector. Then lets suppose private enterprise no longer sees it as an attractive proposition. With the big baby boomer bubble heading for health care who is going to pick up the slack if private enterprise doesn’t?

I am assuming there are a few bean counters in Government with enough smarts to know the ramifications of wringing the profits out of this sector. It’s not just numbers it is a bunch of people we are talking about - people who generally vote as well, which adds another knife to twist.

If that would happen share holders would get imputation credits with their dividends, this would to some degree lessen the severity of the impact of tax changes. More so for companies which may a higher percentage of dividends compared to there profits.

[winner69]

Still trying to ‘reconcile’ in my mind the words ( ie hype) with the numbers so had another look through the latest presentation
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294060.pdf

Presentation reminded me of a saying often said in financial circles "A great deal more fiction is written in Powerpoint than in Word”

[BlackPeter]

Still trying to ‘reconcile’ in my mind the words ( ie hype) with the numbers so had another look through the latest presentation
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/329805/294060.pdf

Presentation reminded me of a saying often said in financial circles "A great deal more fiction is written in Powerpoint than in Word”

Which part of this report in particular do you consider to be "fiction"?

Anybody knows how the sales in the The BayView are going? Bit far away for me to pop around and check ...

[winner69]

Which part of this report in particular do you consider to be "fiction"?

Anybody knows how the sales in the The BayView are going? Bit far away for me to pop around and check ...

I didn’t say any particular part was fiction .....I was just recalling an old saying because the ‘words’ and the numbers don’t seem to match up to me .....all a bit obtuse.

Mind you I didn’t understand the last presentation CBL put out ....that appeared to be a pretty cool production....maybe not understanding it was a blessing

[Joshuatree]

29/1/2019


I have bought more for our Estate ,waiting to add for more myself. Too many helicopter parents here micro managing their children and we know what they turn out like:eek2:

Over 3 months
OCA down re 9%
SUM,RYM,MET re 12-12.5% down
ARV re 2% up

Sector thing alright atm.

[Joshuatree]

While there's a few posters that won't like to hear it, the Bull's got an exceptionally good point, but possibly not the one he intended to make. One of the interesting facts about the sector is that the ratio Income tax / Net Profit before tax is very low and sometimes its even negative. For example OCA had an effective tax rate over the last two years of 5.3% and -1.4%. Last year they reported a $76m pre-tax profit and taxation increased the profit by $1m!! The very low effective tax rates in the sector will not be lost on the IRD, but I believe is the correct result from the current tax legislation. IRD would not be doing their job correctly if they did not put forward recommendations to get tax free capital gains reclassified as income but it requires policy changes.

If the tax legislation is changed, the effective tax rate could return to circa 28%. That's a big hit to EPS for all the retirement village companies including OCA but some of this hit is likely to be factored into the current prices and is a cause of recent share price weakness.

Could the legislation be changed in the next 1 to 5 years - yes
Could Labour win an election campaining for a comprehensive capital gains tax? - Its unlikely but not quite an impossibility (Brexit and Trump winning both also looked unlikely but happened)
Would it be political suicide to make tax changes so that retirement villages paid capital gains taxes but size thresholds exemptions mean most households were outside the net - no

The banks got done for several billion dollars when the tax rules changed and the structured finance deals they were doing were suddendly deemed not to generate tax free income. Tax rules/interpretations can, and do change. The similarity with the retirement village sector is that these deals were resulting in effective tax rates well below the nz company tax rate. Different causes exist for OCA and the others, but the same outcome exists of a low effective marginal tax rate.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10617445

Disc - Hold one of the retirement companies and the wife has OCA shares.

Yes outstanding post and possibilities there, thank you scrunch.

[winner69]

Which part of this report in particular do you consider to be "fiction"?

Anybody knows how the sales in the The BayView are going? Bit far away for me to pop around and check ...

What I struggle with is this story (my translation) -

Everything’s going great and to plan (they used robust a few times). They sold an extra 42 new units (23 last year to 65 this year is an awesome effort) and the development margins remained very high. In addition resales were up by 10 (69 to 79 pretty good). They seemed pretty pleased at the prices they were getting (up on last year). All fantastic stuff, especially the extra 52 sales, but underlying earnings were only up $1m odd

All the lines and columns on the pretty charts show numbers much higher than last year .....except the profit ones.

[BlackPeter]

What I struggle with is this story (my translation) -

Everything’s going great and to plan (they used robust a few times). They sold 42 new units (23 last year to 65 this year is an awesome effort) and the development margins remained very high. In addition resales were up by 10 (69 to 79 pretty good). They seemed pretty pleased at the prices they were getting (up on last year). All fantastic stuff, especially the extra 52 sales, but underlying earnings were only up $1m odd

All the lines and columns on the pretty charts show numbers much higher than last year .....except the profit ones.

Isn't that what they try to explain on slides 26 to 28?

[winner69]

Isn't that what they try to explain on slides 26 to 28?

Not really .....funny enough I fully understand Slide 26

Somebody as suggested that OCA produce a Profit Bridge like Air NZ do. A diagram showing the main components (plus and minuses) of how underlying earnings increased from $19.9m to $20.9m

The market per se maybe don’t get it (understand) and that is why the share price is where it is. A bridge might help more understand what’s going on.....if you, Maverick and Couts are the only people who ‘get it’ the share price is always going to be lower than what most think it should be.

[trader_jackson]

"its a matter of common sense really"
But Roger says OCA is waay cheaper than ARV?


My goodness OCA heading lower to $1.02 while ARV up today at $1.32...



OCA was listed so dam cheap (as I mentioned at the time - to a very skeptical reception might I add...) it was always going to go up... ARV wasn't listed at such a bargain basement discount... Imagine if OCA had listed near the top of its range - say 95c like ARV was (still a whopping 10c lower than the highest indicated point), the share price would hardly be up... (95c to $1.03 with less dividends than ARV paid in 20 months)... for comparative sake, ARV 20 months after it was listed was at $1.15 and basically only went higher from there... so the argument "Sure ARV hasn't gone down as much but its woeful SP appreciation since OCA listed of just 3% speaks for itself in terms of its bottom of the pack ranking." is not great, in my view.

[Beagle]

Not really .....funny enough I fully understand Slide 26

Somebody as suggested that OCA produce a Profit Bridge like Air NZ do. A diagram showing the main components (plus and minuses) of how underlying earnings increased from $19.9m to $20.9m

The market per se maybe don’t get it (understand) and that is why the share price is where it is. A bridge might help more understand what’s going on.....if you, Maverick and Couts are the only people who ‘get it’ the share price is always going to be lower than what most think it should be.

You are a mind reader mate. That's exactly what I have been thinking although AIR's profit bridge won't be looking so fancy this year but at least it will be crystal clear.
I might suggest exactly that to Earl and why I think its a good idea. He's a well qualified bean counter so I am sure he'll know where I'm coming from.

My sense is the grind is coming for some people and a test of $1 is imminent. Some weak hands are going to get shaken out.

[Beagle]

While there's a few posters that won't like to hear it, the Bull's got an exceptionally good point, but possibly not the one he intended to make. One of the interesting facts about the sector is that the ratio Income tax / Net Profit before tax is very low and sometimes its even negative. For example OCA had an effective tax rate over the last two years of 5.3% and -1.4%. Last year they reported a $76m pre-tax profit and taxation increased the profit by $1m!! The very low effective tax rates in the sector will not be lost on the IRD, but I believe is the correct result from the current tax legislation. IRD would not be doing their job correctly if they did not put forward recommendations to get tax free capital gains reclassified as income but it requires policy changes.

If the tax legislation is changed, the effective tax rate could return to circa 28%. That's a big hit to EPS for all the retirement village companies including OCA but some of this hit is likely to be factored into the current prices and is a cause of recent share price weakness.

Could the legislation be changed in the next 1 to 5 years - yes
Could Labour win an election campaining for a comprehensive capital gains tax? - Its unlikely but not quite an impossibility (Brexit and Trump winning both also looked unlikely but happened)
Would it be political suicide to make tax changes so that retirement villages paid capital gains taxes but size thresholds exemptions mean most households were outside the net - no

The banks got done for several billion dollars when the tax rules changed and the structured finance deals they were doing were suddendly deemed not to generate tax free income. Tax rules/interpretations can, and do change. The similarity with the retirement village sector is that these deals were resulting in effective tax rates well below the nz company tax rate. Different causes exist for OCA and the others, but the same outcome exists of a low effective marginal tax rate.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10617445

Disc - Hold one of the retirement companies and the wife has OCA shares.

This sort of fearmongering is not new and has been canvassed on here at length before.
I hope Cindy's Kindy try and get a comprehensive CGT through in the next election because this presents as the best chance to get rid of the present Government.
IRD's job is to interpret legislation and enforce it.
Sure, anything is possible including nuclear war in the next 1-5 years but I think one is best to concentrate on clear and present risks not on vague possibilities don't you ?
If you really thought this was a material risk to the sector you and your wife wouldn't be holding would you...

[Baa_Baa]

IRD's job is to interpret legislation and enforce it.

That's not all they do, their Policy Advice Division (PAD) draft legislation (Bills) which proceed through process to become law. An insight into their extensive work programme would shed light on the topic and whether the risk exists clearly, presently or at all.

I thinks it's good discussion and don't agree that it should be summarily dismissed just because it doesn't fit someone else's narrative. Then again I dont think it's worth dwelling on too much until something emerges that indicates the risk likelihood is increasing.

[Joshuatree]

This sort of fearmongering is not new and has been canvassed on here at length before.
I hope Cindy's Kindy try and get a comprehensive CGT through in the next election because this presents as the best chance to get rid of the present Government.
IRD's job is to interpret legislation and enforce it.
Sure, anything is possible including nuclear war in the next 1-5 years but I think one is best to concentrate on clear and present risks not on vague possibilities don't you ?
If you really thought this was a material risk to the sector you and your wife wouldn't be holding would you...

No need to be ridiculously defensive here Beagle , you of all people pump the stock you are in and Dump on a stock you are not yet in or have sold on multiple times over the years.Fearmongering LOL look no further.

I really appreciate some of your analytical posts, keep up the good work on those.

Contrarian /opposing views are essential and important for a bit of balance and to neutralise love festivals and attempted influencers. i applaud Scrunch and other opinions for and against especially if they don't have an agenda;).

BTW a comprehensive CGT looks to have many merits fairer to all without increasing the tax take, might even close the gaps little, nothing to fear. Time for a Bubbly have a great weekend.:)

[couta1]

Lol a CGT on shares will turn the already struggling NZX into a tumbleweed town.

[winner69]

Earlier post could be further summarised as - they sold 52 units more than last year and underlying earnings went up a mere $1m

[Baa_Baa]

Earlier post could be further summarised as - they sold 52 units more than last year and underlying earnings went up a mere $1m

It's a concern when the FA gurus think the numbers are 'obfuscated'. What murdered the profit? Homework for the weekend.

[stoploss]

Lol a CGT on shares will turn the already struggling NZX into a tumbleweed town.
Correct me if I’m wrong . But I already pay tax as a trader . So with a CGT depending on the rate I might be better off .

[couta1]

Correct me if I’m wrong . But I already pay tax as a trader . So with a CGT depending on the rate I might be better off . Trading profit will always be taxed at your marginal tax rate whatever that happens to be, the rate an investor pays on capital gain should be around 15-20% going on overseas rates unless Cullen gets his way and applies the top marginal tax rate of 33% which would be draconian by any measure.

[winner69]

It's a concern when the FA gurus think the numbers are 'obfuscated'. What murdered the profit? Homework for the weekend.

Probably something very obvious and simple ....like clear as mud

[Snow Leopard]

Probably something very obvious and simple ....like clear as mud

I will admit to being somewhat baffled by the OCA accounts. I was also baffled by the last FY version and was hoping for a little clarity this time.
Well that did not happen did it!

Somehow the little bits and pieces, a tax adjustment here, a PP&E revaluation (or 2) there, they appear to add up to nothing much at all.

Though to be honest, what most baffles me more is the depth of emotional attachment to this stock being exhibited on this thread.

[winner69]

So OCA could be a buck when it goes ex divie

Hard to believe share price down nearly 20% in a few months

Depreciating about as fast as a Holden Calais