OCA - Oceania Group - retirement villages

[Beagle]

Really only 4 years seeing as we were in lockdown last April. Important to spot the nuances and trend though. This is what they has to say about volumes sold for March 2021 in their previous monthly report.
“The number of properties sold in March was the highest
we’ve seen for a March month in 14 years (March 2007),
with 2,313 more properties sold when compared to March
2020 –

[winner69]

Beagle - where’s Bindy gone

[BlackPeter]

Really only 4 years seeing as we were in lockdown last April. Important to spot the nuances and trend though. This is what they has to say about volumes sold for March 2021 in their previous monthly report.
“The number of properties sold in March was the highest
we’ve seen for a March month in 14 years (March 2007),
with 2,313 more properties sold when compared to March
2020 –

The problem with some beagles is that they tend to not let go of the trousers they sunk their teeth into ... which might obscure their view for the bigger picture :):

Anyway - if I look at the real estate market .. as long as NZ proves unable (we do) to produce enough houses to house our population, there is in my view only one direction for housing prices, and this is up. Obviously - if you trust the Kiwi build program and expect a huge deluge of high quality houses dropping out of some politicians fantasies right into the market, then yes, better be careful - one of the suddenly appearing houses might squash people :scared: ; I think however, the risk is low ...

The other thing is - while the real estate market clearly has a big impact on the value of retirement villages, it is not the only parameter. The number of old people in need for care is increasing - and so is the demand for high quality age care. This is a market as well controlled by supply and demand. Whether the better off clients pay at the end of the day with the increased value of their house or with the increased value of their share portfolio does not really matter, doesn't it?

From a personal view I think you might want to look for some other pair of trousers (but the real estate prayer mill) to sink your teeth into. These trousers look already pretty torn apart.

[Beagle]

Hey Beagle, are you clients giving you an indication of where the residential property money will go after they sell? Stocks or commercial property?

BTW- good to have you back. Your posts are of much value.

Thanks for your kind words, much appreciated. I act for a number of small investors, mostly Mum's and Dad's with one or two rental properties and a couple of professional investors with multiple rentals. Most have built their wealth using a fair chunk of borrowed funds and if they are not able to claim the mortgage interest as being tax deductible then they're paying tax on profit they didn't actually make. Typically this might add something like $6,000 per annum per property to their costs.

Over the long run many properties go through a cycle of what I call "deep cycle" maintenance that many investors without proper advice don't budget for. It can costs tens of thousands every 7-10 years to keep a property looking fresh with new paint inside and out and replacement carpets, drapes, lino and that's without budgeting for modernizing bathrooms and kitchens which can get dated fairly quickly. When you factor in deep cycle maintenance as well as other far more regular maintenance, ever increasing rates and insurance and assuming interest costs were deductible many properties are cash flow negative already...(and that assumes no untoward major disasters like methamphetamine contamination and leaky buildings of which I have seen countless examples).

From a property investors perspective what they're telling me is that this change to non deductibility of mortgage interest is an egregious breech of trust and breaks a fundamental principle of business costs tax deductibility that goes back over 100 years. Many people are extremely upset about this and the thrust of many discussions has been how do I got about getting my property(s) back to a cash flow positive situation. To be honest I haven't had a single conversation about where else to invest the money YET. There's a 4 year phased transition so many investors are sitting nervously on their hands at present and hoping the effect is minimal.

I am advising some investors with multiple properties to sell as many properties as needed to eliminate debt altogether. Others will simply give up in due course because its simply too hard...like many I have seen give up before when lumbered with a massive meth contamination clean-up or a major water ingress problem.

My role is to help my clients, not wait for many months of a confirmed downtrend and then call it. I'm telling clients I think this change is a game-changer and its likely the tide has turned. Very few people invest in residential property for the yield, most are chasing tax free capital gains.

Better sheet all this back to OCA which I estimate will have a NAV of about $1.30 as at balance date. The share price is well supported by hard assets and work in progress and the yield on OCA is probably better than your average rental property (after all expenses including deep cycle maintenance) and future gains will hopefully stay being tax free and not subject to a Brightline test so this is probably better than residential property. I prefer the lower care business model of SUM but their shares are a little expensive for me on a forward PE basis at present and certainly nowhere near NTA.

[Beagle]

Beagle - where’s Bindy gone

https://www.procare.co.nz/news/2021/procare-welcomes-new-ceo-bindi-norwell/

[Beagle]

The problem with some beagles is that they tend to not let go of the trousers they sunk their teeth into ... which might obscure their view for the bigger picture :):

Anyway - if I look at the real estate market .. as long as NZ proves unable (we do) to produce enough houses to house our population, there is in my view only one direction for housing prices, and this is up. Obviously - if you trust the Kiwi build program and expect a huge deluge of high quality houses dropping out of some politicians fantasies right into the market, then yes, better be careful - one of the suddenly appearing houses might squash people :scared: ; I think however, the risk is low ...

The other thing is - while the real estate market clearly has a big impact on the value of retirement villages, it is not the only parameter. The number of old people in need for care is increasing - and so is the demand for high quality age care. This is a market as well controlled by supply and demand. Whether the better off clients pay at the end of the day with the increased value of their house or with the increased value of their share portfolio does not really matter, doesn't it?

From a personal view I think you might want to look for some other pair of trousers (but the real estate prayer mill) to sink your teeth into. These trousers look already pretty torn apart.

I hear ya. Need to find something new to chew on https://www.bing.com/images/search?view=detailV2&ccid=7zkkXk9T&id=83BB9B75113292A46C4F2BDBF96EB96EF06D378F&thid=OIP.7zkkXk9TAIrCbXG9gFsgZwHaD5&mediaurl=https%3A%2F%2Fbeaglecare.com%2Fwp-content%2Fuploads%2F2020%2F09%2Fchew-toy-1024x540.jpg&exph=540&expw=1024&q=beagle+chewing+on+toy&simid=608022603042856266&ck=6B15AEDD06844D69DB49836C77321BEC&selectedindex=5&form=IRPRST&ajaxhist=0&ajaxserp=0&vt=0&sim=11&cdnurl=https%3A%2F%2Fth.bing.com%2Fth%2Fid%2FRef39 245e4f53008ac26d71bd805b2067%3Frik%3Djzdt8G65bvnbK w%26pid%3DImgRaw

Other non listed operators are expanding fast too. e.g. http://www.cht.co.nz/locations-v3/

[BlackPeter]

Thanks for your kind words, much appreciated. I act for a number of small investors, mostly Mum's and Dad's with one or two rental properties and a couple of professional investors with multiple rentals. Most have built their wealth using a fair chunk of borrowed funds and if they are not able to claim the mortgage interest as being tax deductible then they're paying tax on profit they didn't actually make. Typically this might add something like $6,000 per annum per property to their costs.

Over the long run many properties go through a cycle of what I call "deep cycle" maintenance that many investors without proper advice don't budget for. It can costs tens of thousands every 7-10 years to keep a property looking fresh with new paint inside and out and replacement carpets, drapes, lino and that's without budgeting for modernizing bathrooms and kitchens which can get dated fairly quickly. When you factor in deep cycle maintenance as well as other far more regular maintenance, ever increasing rates and insurance and assuming interest costs were deductible many properties are cash flow negative already...(and that assumes no untoward major disasters like methamphetamine contamination and leaky buildings of which I have seen countless examples).

From a property investors perspective what they're telling me is that this change to non deductibility of mortgage interest is an egregious breech of trust and breaks a fundamental principle of business costs tax deductibility that goes back over 100 years. Many people are extremely upset about this and the thrust of many discussions has been how do I got about getting my property(s) back to a cash flow positive situation. To be honest I haven't had a single conversation about where else to invest the money YET. There's a 4 year phased transition so many investors are sitting nervously on their hands at present and hoping the effect is minimal.

I am advising some investors with multiple properties to sell as many properties as needed to eliminate debt altogether. Others will simply give up in due course because its simply too hard...like many I have seen give up before when lumbered with a massive meth contamination clean-up or a major water ingress problem.

My role is to help my clients, not wait for many months of a confirmed downtrend and then call it. I'm telling clients I think this change is a game-changer and its likely the tide has turned. Very few people invest in residential property for the yield, most are chasing tax free capital gains.

Better sheet all this back to OCA which I estimate will have a NAV of about $1.30 as at balance date. The share price is well supported by hard assets and work in progress and the yield on OCA is probably better than your average rental property (after all expenses including deep cycle maintenance) and future gains will hopefully stay being tax free and not subject to a Brightline test so this is probably better than residential property. I prefer the lower care business model of SUM but their shares are a little expensive for me on a forward PE basis at present and certainly nowhere near NTA.

Good post - though not really OCA relevant ... but I do share your view on the unfairness of the tax change. A quite shocking and dishonest decision and clearly not good for the economy which needs investors being able to trust into government decisions.

Back to OCA - if rental property thanks to the cleverness of our current gummit not anymore delivers an appropriate return, then maybe all these landlords are going to move their money into the share market and buy OCA shares :) - hey, this might be good for the share price :t_up:

[winner69]

https://www.procare.co.nz/news/2021/procare-welcomes-new-ceo-bindi-norwell/

Thanks

Good on her ...much more rewarding role than looking after (description) real estate agents

[artemis]

Good post - though not really OCA relevant ... but I do share your view on the unfairness of the tax change. A quite shocking and dishonest decision and clearly not good for the economy which needs investors being able to trust into government decisions.

Back to OCA - if rental property thanks to the cleverness of our current gummit not anymore delivers an appropriate return, then maybe all these landlords are going to move their money into the share market and buy OCA shares :) - hey, this might be good for the share price :t_up:

Agree, most probably going to be a lot of dosh looking for a home. The costs, rules, fines, hassles and compliance around rentals were already serious discouragements, and the interest deduction will be the final straw for some. Doesn't take many rental owners selling a property or two to release a lot of money.

[Cyclical]

Some good discussion in the last page or two, with Beagle chucking a bone in the mix, like he does lol.

Personally I reckon the residential property market had about peaked out anyway...there has been a big uptick in the last year or so, which to my mind is primarily due to the increase in serviceability due to lower interest rates, plus the brakes came off after a period of nervousness around CGT, with Cindy saying "not happening under my watch", combined with the removal or reduction in the LVR requirements, and then maybe there has been some positive immigration with peeps flooding home (negligible?)...all these things created the perfect storm. And meanwhile everyone forgets that these things operate in cycles and that my parents bought their first place in the '70s for about $15k, and that on average, NZ property increases a few percent per annum blah blah.

Anyway, the powers that be decided that none of that stuff mattered, none of it was their fault, that it was different this time and the fault lay squarely at the foot of those blood sucking landlords. Yes, let's point the finger at them, whip up a storm in the press, and before this crazy market shows any sign of cooling, let's slap in a sweet little tax grab or two. What a master stroke.

Anyway, the odd landlord I've spoken to don't actually seem to understand the implications...let's hope they have a Beagle to spell it out. I guess the penny will drop over the next couple of years or so. Some will sink. Those that manage to get their places cash flow neutral/positive/not too negative, after tax, will be ok. Can't really see the outcome being favorable for renters. Anyway, the exodus of landlords is not going to be instantaneous.

As for the RV sector? My main concern is what the socialists will roll out next, probably without consultation.

Disc. Holding about 15% of what I had 2 months ago.

[allfromacell]

I'm happy with the property data released today but that's because I've always thrown way more weight behind the HPI than the median. The HPI was very strong and showed further growth around most of the country except for a small drop in Auckland compared to last month. A pretty resilient result considering the tax announcement and just how strongly the market has run in recent months.

Looking forward to the results, I expected if the wider markets bounce back next week we'll see a strong run in the SP in the days leading up to the announcement.

[Beagle]

Market going okay-ish today yet OCA who are about to report are down sharply. Leaky ship, ominous sign of a below market result or market disappointment that 30,000 nurses are striking next month indicating no end to the ever escalating cost of providing late stage care ?

[justakiwi]

The strike involves DHB hospital based nurses who are concerned about “horrific and unsafe staffing conditions” and the recently announced, no pay rises for three years. I suspect providers such as OCA are paying their nurses pretty well, compared to what DHBs are paying. I don’t see the strike having any real impact on the market but if it is, it is probably unwarranted. JMHO.


Market going okay-ish today yet OCA who are about to report are down sharply. Leaky ship, ominous sign of a below market result or market disappointment that 30,000 nurses are striking next month indicating no end to the ever escalating cost of providing late stage care ?

[Beagle]

Here's how its been reported in the media https://www.nzherald.co.nz/nz/nurses-strike-tens-of-thousands-to-walk-off-the-job-for-8-hours/E3P3XGNX6EDI6C5CZWPEDVB6YU/
Possibly worth noting that the "initial pay offer" was 1.38% for most nurses and this was "slightly below" the rate of inflation....but not noted in the article (but as we have previously discussed at length Nurses have received a large multi year pay adjustment over the last few years). I get it that they are frustrated with the Govt's attempted wage freeze though...that is ridiculous and hard working nurses and caregivers are absolutely entitled to cost of living increases, no question about that. The problem I see for OCA is that care costs will continue to outstrip ministry of health funding increases.

From a shareholders perspective the returns between the listed operator with the highest level of care, OCA, and the lowest SUM, could not be more stark since OCA listed. SUM up more than 170% since OCA listed which are up a far more modest 70%. OCA has more or less just matched the NZX50 index though and I am sure MAV will comofrt us that better times are ahead so if we hang in there maybe its all comes good in the due course of time ?
12514

[BlackPeter]

Market going okay-ish today yet OCA who are about to report are down sharply. Leaky ship, ominous sign of a below market result or market disappointment that 30,000 nurses are striking next month indicating no end to the ever escalating cost of providing late stage care ?

Hmm - 99 shares went up today and 95 down. Yep, pretty balanced market day. Top winner today was VGL with +5.7% up and top loser was TWR which lost 5.8%.

OCA went down by 4 cents (or 2.9%) - is this really "sharply down" or maybe just part of the normal jitter?

How do you call TWR's drop in comparison?

Just wondering whether confirmation bias might be part of it?

[Ggcc]

Here's how its been reported in the media https://www.nzherald.co.nz/nz/nurses-strike-tens-of-thousands-to-walk-off-the-job-for-8-hours/E3P3XGNX6EDI6C5CZWPEDVB6YU/
Possibly worth noting that the "initial pay offer" was 1.38% for most nurses and this was "slightly below" the rate of inflation....but not noted in the article (but as we have previously discussed at length Nurses have received a large multi year pay adjustment over the last few years). I get it that they are frustrated with the Govt's attempted wage freeze though...that is ridiculous and hard working nurses and caregivers are absolutely entitled to cost of living increases, no question about that. The problem I see for OCA is that care costs will continue to outstrip ministry of health funding increases.

From a shareholders perspective the returns between the listed operator with the highest level of care, OCA, and the lowest SUM, could not be more stark since OCA listed. SUM up more than 170% since OCA listed which are up a far more modest 70%. OCA has more or less just matched the NZX50 index though and I am sure MAV will comofrt us that better times are ahead so if we hang in there maybe its all comes good in the due course of time ?
12514

Crazy. Give the minimum wage a 5.8% wage increase, but nurses get 1.38………… Something wrong with that.

[HCR20]

Just wondering whether confirmation bias might be part of it?

My thoughts too.

[Beagle]

Hmm - 99 shares went up today and 95 down. Yep, pretty balanced market day. Top winner today was VGL with +5.7% up and top loser was TWR which lost 5.8%.

OCA went down by 4 cents (or 2.9%) - is this really "sharply down" or maybe just part of the normal jitter?

How do you call TWR's drop in comparison?

Just wondering whether confirmation bias might be part of it?
I don't own or follow TWR. Don't like insurance companies, never have,...almost always some 1 in 100 year event happening a least once a year, often twice.


Crazy. Give the minimum wage a 5.8% wage increase, but nurses get 1.38………… Something wrong with that.
Great, lets not worry about huge wage relativity claims in the past and give everyone a 5.8% pay increase. What could possibly go wrong...

[winner69]

Hmm - 99 shares went up today and 95 down. Yep, pretty balanced market day. Top winner today was VGL with +5.7% up and top loser was TWR which lost 5.8%.

OCA went down by 4 cents (or 2.9%) - is this really "sharply down" or maybe just part of the normal jitter?

How do you call TWR's drop in comparison?

Just wondering whether confirmation bias might be part of it?

TWR dreadful downgrade .....maybe a sign of things to come for OCA

One thing in common that’s a problem ..outrageous building / construction costs

[Bjauck]

... The problem I see for OCA is that care costs will continue to outstrip ministry of health funding increases.
... If that is the case, won't operators stop providing care beds for the DHBs leaving the government to handle a crisis? Is there an obligation on these companies, of which I am an unaware?

[Beagle]

If that is the case, won't operators stop providing care beds for the DHBs leaving the government to handle a crisis? Is there an obligation on these companies, of which I am an unaware?

From memory even at the end of OCA's 6-7 year business transformation program, about 3 years from being finished, they still have ~ 30% of their beds in basic level MOH partially funded care. Is that a handbrake on future growth...you be the judge.

[Snoopy]

Possibly worth noting that the "initial pay offer" was 1.38% for most nurses and this was "slightly below" the rate of inflation....but not noted in the article (but as we have previously discussed at length Nurses have received a large multi year pay adjustment over the last few years). I get it that they are frustrated with the Govt's attempted wage freeze though...that is ridiculous and hard working nurses and caregivers are absolutely entitled to cost of living increases, no question about that. The problem I see for OCA is that care costs will continue to outstrip ministry of health funding increases.


But but but....

OCA are the extra care specialists and are building premium suites for residents with high needs. And there are plenty of high net worth elderly willing to pay a premium price for a premium suite, and more per week as an ongoing service fee which will more than wipe out any funding gap between staff wages and lesser health funding increases. Did I not read that projected sequence of events regarding care funding on this very thread many moons ago?

SNOOPY

[Beagle]

But but but....

OCA are the extra care specialists and are building premium suites for residents with high needs. And there are plenty of high net worth elderly willing to pay a premium price for a premium suite, and more per week as an ongoing service fee which will more than wipe out any funding gap between staff wages and lesser health funding increases. Did I not read that projected sequence of events regarding care funding on this very thread many moons ago?

SNOOPY

Yeah and over the years their business transformation program has certainly begun to reap some rewards...ostensibly all of which have been gobbled up with higher costs. MAV assures us that will change in the future though. Clearly I am skeptical although I continue with a modest stake. The forward PE is not expensive and they are thankfully, at long last building more independent living apartments (which is where the real money is), in the next couple of years so provided one takes an extremely "dogged" approach to holding they should do okay. More than okay relative to other retirement village companies though ?...that I don't know...only time will tell.

[Ggcc]

Great, lets not worry about huge wage relativity claims in the past and give everyone a 5.8% pay increase. What could possibly go wrong...[/QUOTE]

Don’t want to fill this thread with what people feel they should get paid, but general consensus is nurses and teachers should get a higher pay increase than 1.38%. We need to show them their fair value in comparison to minimum wage, which will only continue to increase.

Maybe if minimum wage only went up rate of inflation, or a minimum wage freeze, nurses might understand. Until then, we can all expect many more strikes coming and not only nurses.

We can all thank Cindy for helping everyone, including those that don’t need it for wasted money that could go to nurses, doctors, teachers.

[justakiwi]

Yes. Plus, as I have talked about in the past:

1) The government currently doesn’t (as far as I’m aware) provide any residential aged care service
2) There is a dementia crisis looming - people are already having to be placed outside of their usual geographic location, for D3 and D6 level dementia placements as there is a huge shortage of beds
3) The need for residential hospital level care is increasing and will continue to do so - for the general elderly population not just for those with financial means to afford it
4) Yes, there may be a push towards more home based care/support to enable people to stay at home for longer but that will mean that people will be significantly older, with higher care/health needs when they need to move into residential care

The government of the day - whichever party that might be - will continue to subsidise this care, at whatever level is needed, and will have to pay whatever providers need to provide a standard care service. There is no alternative. So I don’t believe there is any need to be majorly concerned about “rising care costs.” Yes, costs will rise (and not just wages) but the government will meet this cost. Because they literally have no other way to provide this care. Rest homes like the one I work at will no longer exist in 10-15 years. The vast majority of residents will come into residential care in their late 80’s at the earliest - many not until they hit their nineties. Most will need hospital level care from Day 1.



But but but....

OCA are the extra care specialists and are building premium suites for residents with high needs. And there are plenty of high net worth elderly willing to pay a premium price for a premium suite, and more per week as an ongoing service fee which will more than wipe out any funding gap between staff wages and lesser health funding increases. Did I not read that projected sequence of events regarding care funding on this very thread many moons ago?

SNOOPY

[Baa_Baa]

From memory even at the end of OCA's 6-7 year business transformation program, about 3 years from being finished, they still have ~ 30% of their beds in basic level MOH partially funded care. Is that a handbrake on future growth...you be the judge.

Not really sure why you do this, like when you own it you love it to death here and never bring up any of your negatives, but when you don't own it you poo on it relentlessly with an endless litany of risks. Sometimes you do it even if you haven't owned it. It's not just this one, and it's not just here either.

What motivates you to behave like this, or do you just not consider how you come across on a forum like this?

[Snoopy]

1) The government currently doesn’t (as far as I’m aware) provide any residential aged care service
2) There is a dementia crisis looming - people are already having to be placed outside of their usual geographic location, for D3 and D6 level dementia placements as there is a huge shortage of beds
3) The need for residential hospital level care is increasing and will continue to do so - for the general elderly population not just for those with financial means to afford it
4) Yes, there may be a push towards more home based care/support to enable people to stay at home for longer but that will mean that people will be significantly older, with higher care/health needs when they need to move into residential care

The government of the day - whichever party that might be - will continue to subsidise this care, at whatever level is needed, and will have to pay whatever providers need to provide a standard care service. There is no alternative.


There is a least one other alternative. Pay the care workers more. But have less of them. So instead of doing the cares getting six people up each day, you do the same thing with eight.

SNOOPY

[justakiwi]

Just wrote a lengthy reply only to lose it all when my battery died. Too tired to start over. Maybe tomorrow.

[Beagle]

Not really sure why you do this, like when you own it you love it to death here and never bring up any of your negatives, but when you don't own it you poo on it relentlessly with an endless litany of risks. Sometimes you do it even if you haven't owned it. It's not just this one, and it's not just here either.

What motivates you to behave like this, or do you just not consider how you come across on a forum like this?

Thanks for your critique mate. I like to think that my analysis helps some people and I've certainly received a LOT of requests to come back when I was in Siberia without which I may not have come back. I call it as I see it and I certainly don't get it right all the time and we certainly get a bit more clarity with OCA every time they report. I think we've all been on a journey of discovery with this one especially with their opaque reporting. Its good to have a robust debate. I still own 50,000 shares, hardly an inconsequential stake but certainly well down on what I recently owned. You've totally mis-read the situation thinking I don't own any at this point. Without good debate this place can be like a morgue. Would you prefer a hollow echo chamber where all shareholders do is pump each others tires ? Who got their FY20 underlying profit estimate closest to the mark ?
Who got their 1H FY21 underlying profit estimate closest to the mark against some wildly optimistic other estimates by well known posters? Maybe I know the company a lot better than you think ? Not everyone likes my posting style...it is what it is...I simply try and add value by trying to as accurately as possible, predict the future. If you don't see any value in that mate feel free to ignore my posts. About 10 whole posts on Hot Copper about ATM...so what ? What special insights do you add to this thread ?

JustaKiwi - I have no issue with staff pay rates per se and in fact what i observed when my mother was in late stage care was how nice, professional and extremely hard working the nurses and caregivers were. Very impressive and they certainly earn their money ! If you go back through some of Earl's commentary you'll pick up the clear theme that MOH funding is consistently not keeping up with the rate of increases in the cost of late stage care and for example last year's 3% funding round increase was woefully inadequate to meet the previously agreed annual increases in caregiver and nurses settlements that the MOH already knew about. To be clear, the MOH are deliberately underfunding late stage care and this is a progressive problem that's been getting worse and worse for years and is why many small operators are literally going broke. This issue is what I euphemistically refer too as the handbrake on this company's growth and its an issue that's not going away anytime soon.

[Bjauck]

Yes. Plus, as I have talked about in the past:

1) The government currently doesn’t (as far as I’m aware) provide any residential aged care service
...

The Government/DHBs award contracts to Care Homes, set the Maximum Contributions (paid for by either the patients themselves or the Government itself) and fund additional hospital-level care. In effect Rest Homes are a government service operated by independent contractors. I imagine that if the Maximum Contributions and additional DHB support do not keep up with costs, the independent contractors will eventually not apply for or renew contracts to enable them to provide Rest Home service.

[Bjauck]

...MOH are deliberately underfunding late stage care and this is a progressive problem that's been getting worse and worse for years and is why many small operators are literally going broke. This issue is what I euphemistically refer too as the handbrake on this company's growth and its an issue that's not going away anytime soon. With operators going broke and big companies cross-subsidising their Rest Home operations, surely the government funding must become more realistic to avoid a potential crisis in the provision of care, for which no government would want to be responsible?

[justakiwi]

Yes, I realise that. What I meant was, the government doesn’t provide facilities and manage them - they contract out. The government contribution will keep up with costs, because who is going to provide the care if they don’t?


The Government/DHBs award contracts to Care Homes, set the Maximum Contributions (paid for by either the patients themselves or the Government itself) and fund additional hospital-level care. In effect Rest Homes are a government service operated by independent contractors. I imagine that if the Maximum Contributions and additional DHB support do not keep up with costs, the independent contractors will eventually not apply for or renew contracts to enable them to provide Rest Home service.

[Beagle]

With operators going broke and big companies cross-subsidising their Rest Home operations, surely the government funding must become more realistic to avoid a potential crisis in the provision of care, for which no government would want to be responsible?

I agree this is a looming problem of substantial magnitude (definitely a late stage healthcare crisis in the making), however at this point it would appear successive Governments think big business can suck it up with their property profits which they can to some extent but my sense is we will see other retirement operators adopt the care suite ORA model as the only way to make an acceptable return on capital employed and we'll steadily move towards a crisis where if you want quality late stage care you'll have to fund it yourself through the purchase of a care suite.

For example we were very fortunate to get high quality care for our Mum through CHT Halldene in their brand new Red Beach facility and got a sea view premium room for only $45 per day above MOH funding. She lived about 150 days there before going to be with God and was very well looked after and the net cost to us was just under $7,000. In time people will have no alternative but to stump up with a meaningful amount of capital (can be over half a million) and incur a 10% DMF hit on a care suite, as much as over $50,000 to achieve the same standard of care as there may not be any alternatives.

[Bjauck]

I agree this is a looming problem of substantial magnitude (definitely a late stage healthcare crisis in the making), however at this point it would appear successive Governments think big business can suck it up with their property profits which they can to some extent but my sense is we will see other retirement operators adopt the care suite ORA model as the only way to make an acceptable return on capital employed and we'll steadily move towards a crisis where if you want quality late stage care you'll have to fund it yourself through the purchase of a care suite.

For example we were very fortunate to get high quality care for our Mum through CHT Halldene in their brand new Red Beach facility and got a sea view premium room for only $45 per day above MOH funding. She lived about 150 days there before going to be with God and was very well looked after and the net cost to us was just under $7,000. In time people will have no alternative but to stump up with a meaningful amount of capital (can be over half a million) and incur a 10% DMF hit on a care suite, as much as over $50,000 to achieve the same standard of care as there may not be any alternatives. I agree with you 100%. The government will need to boost the Maximum Contributions to avoid a shortage of non-premium beds. That would of course be tough on those residents who are deemed wealthy enough to have to self-fund.

It sounds like you managed to find your Mother a great place for her last months, at a reasonable premium tariff too. In my experience, as long as provided care is good, it makes such a difference for both resident and visitors if the room is pleasant. In a cross-over to the Thread on How Much is Enough, being able to afford premium care and facilities is a factor to consider. I hope I will be able to give my mother this option when her time comes, which may be soon.

[porkandpuha]

Hmm - 99 shares went up today and 95 down. Yep, pretty balanced market day. Top winner today was VGL with +5.7% up and top loser was TWR which lost 5.8%.

OCA went down by 4 cents (or 2.9%) - is this really "sharply down" or maybe just part of the normal jitter?

How do you call TWR's drop in comparison?

Just wondering whether confirmation bias might be part of it?

I wonder what we call it when OCA leads the NZX in gainers for the day (excluding BIT and EVO with a combined turnover of $1200 so far)

[justakiwi]

Not doable. At least not if you want to provide quality care. I know it seems like all caregivers have to do is help residents shower then move on to the next person, but it’s far more than that, especially at hospital level. Morning cares might include - helping the resident mobilise out of bed, undressing them, helping them shower, dressing, brushing teeth/dentures, re-dressing leg ulcers or other wounds, changing urinary catheter bags or colostomy bags, applying prescribed ointments and moisturising creams, putting on pressure stockings (they are a bitch to get on!). For some residents there may also be a shave needed, hair done and makeup applied (yes, some female residents still need to do this for their self esteem). All of this takes much longer than you might realise.

There will be differences between homes/facilities of course. Caregivers in places like OCA, RYM, SUM etc may well be able to focus solely on caregiving. Smaller facilities like ours cannot. We also have laundry duties (washing, folding and ironing), serve all meals and afternoon/morning teas/supper. Day shift has cleaning duties such as emptying resident’s rubbish bins, cleaning hand basins and tray tables, ensuite cleans as needed, and bed making/bed changes. All of that needs to be done alongside and around personal cares, while answering call bells as needed.

If you expect caregivers to be responsible for morning cares for 6-8 residents there are only two ways to achieve it:

1/ You rush your residents, prioritise tasks not people and your residents do not receive the quality care they deserve
2/ You take more time but some residents will not be assisted with dressing/showering until after lunch as there is no way you can achieve that number in just 4 hours.

Neither of those options are acceptable to me. Our residents deserve better and caregivers are human beings, not machines. The job is physically demanding and there is a limit to how much one can do/achieve in any given time frame. Paying less staff more, doesn’t mean your staff can magically fit more work into a shift.They are already usually working to capacity.




There is a least one other alternative. Pay the care workers more. But have less of them. So instead of doing the cares getting six people up each day, you do the same thing with eight.

SNOOPY

[Snoopy]

Not doable. At least not if you want to provide quality care. I know it seems like all caregivers have to do is help residents shower then move on to the next person, but it’s far more than that, especially at hospital level. Morning cares might include - helping the resident mobilise out of bed, undressing them, helping them shower, dressing, brushing teeth/dentures, re-dressing leg ulcers or other wounds, changing urinary catheter bags or colostomy bags, applying prescribed ointments and moisturising creams, putting on pressure stockings (they are a bitch to get on!). For some residents there may also be a shave needed, hair done and makeup applied (yes, some female residents still need to do this for their self esteem). All of this takes much longer than you might realise.

There will be differences between homes/facilities of course. Caregivers in places like OCA, RYM, SUM etc may well be able to focus solely on caregiving. Smaller facilities like ours cannot. We also have laundry duties (washing, folding and ironing), serve all meals and afternoon/morning teas/supper. Day shift has cleaning duties such as emptying resident’s rubbish bins, cleaning hand basins and tray tables, ensuite cleans as needed, and bed making/bed changes. All of that needs to be done alongside and around personal cares, while answering call bells as needed.

If you expect caregivers to be responsible for morning cares for 6-8 residents there are only two ways to achieve it:

1/ You rush your residents, prioritise tasks not people and your residents do not receive the quality care they deserve
2/ You take more time but some residents will not be assisted with dressing/showering until after lunch as there is no way you can achieve that number in just 4 hours.

Neither of those options are acceptable to me. Our residents deserve better and caregivers are human beings, not machines. The job is physically demanding and there is a limit to how much one can do/achieve in any given time frame. Paying less staff more, doesn’t mean your staff can magically fit more work into a shift.They are already usually working to capacity.


Thank you for that eloquent and detailed reply. I have visited various care homes to see elderly relatives and funnily enough have never seen carers yakking amongst themselves and twiddling their thumbs. So I was fairly sure my suggestion of paying more to staff and having less staff ('the accounting office solution') was not a goer. However that becomes more clear when someone who works in the industry explains in detail why. I hope as a result of your post others know more about the problem. But we haven't solved the shortage of care time available.

I talked to the head of a 75 bed care unit, of which 25 of the residents required hospital level care. She said that even despite the more realistic wage adjustments, which I believe are well deserved, it still wasn't easy to get good staff. I think many care workers had come by emigrating from the Philippines, a worker source that was now cut off. They had even attracted the one or two male carers who were very good. Some of the male residents responded better to the male carers. The elderly female residents were generally happy to have a male doing their intimate cares. However, the male workers had not stayed as it was hard socially working in care unit where all of their work colleagues were female.

SNOOPY

[Cyclical]

Neither of those options are acceptable to me. Our residents deserve better and caregivers are human beings, not machines. The job is physically demanding and there is a limit to how much one can do/achieve in any given time frame. Paying less staff more, doesn’t mean your staff can magically fit more work into a shift.They are already usually working to capacity.

I've often thought there would be a killing to be had in making robots tailored to the RV sector...trouble is, I haven't figured out what parts of the care process you could hand off to a machine...probably bugger all to be frank. But the labour requirements for future aged care demands are going to be astronomical. I wonder what solutions China is going to come up with in the next few decades off the back of their one child policy...our future cheap labour certainly won't be coming from there...they'll likely be importing plenty of it themselves.

[dibble]

I've often thought there would be a killing to be had in making robots tailored to the RV sector...trouble is, I haven't figured out what parts of the care process you could hand off to a machine...probably bugger all to be frank. But the labour requirements for future aged care demands are going to be astronomical. I wonder what solutions China is going to come up with in the next few decades off the back of their one child policy...our future cheap labour certainly won't be coming from there...they'll likely be importing plenty of it themselves.

I suggest looking to Japan, they've started already, saw something somewhere on a foreign TV channel about bed turning robots, that sort of labour intensive task. Evidence suggests China might prefer to re-educate the elderly.

[justakiwi]

The day robots take over my job will be the day the human race can consider itself doomed. Even if robots could do the job, they shouldn’t. Our elderly need and deserve one-on-one human care and interaction. It is just as important as practical care tasks - more important actually. It is the personal interaction, the building of trusted and positive relationships, the time I willingly spend with my residents, that they value the most. A couple of examples …

A female resident who cannot mobilise without support and worries that her call bell/sensor mat may not work if she needs help. When I took the time to show her that I had correctly plugged in the bell and the mat, and demonstrated them both working so she could see first hand that they were working and my pager was going off - she said “Thank you SO much dear. I feel safe now.”

A female resident who is 91 years old - frail but young at heart. She has days where she is in a funk and just wants to mope in her room (her words). Some caregivers feel the need to encourage her to “come out of your room” but I know her well and understand that she just needs to take the time to work through her funk. When I pop in for a sit and a chat (and usually a good laugh) she tells me “Thank you dear for understanding and for checking in on me.”

A 92 year old gentleman who snuck my colleague and I a box of chocolates at Christmas when other staff weren’t looking and told us “I can’t do this for everyone but I wanted to do it for you two because you have always been very good to me.”

I guess what I’m trying to say is it’s not the tasks resident’s remember and value. It’s the human interactions and kindnesses. No robot can ever provide that.

Maybe one day I’ll write a book of all of these special moments.




I've often thought there would be a killing to be had in making robots tailored to the RV sector...trouble is, I haven't figured out what parts of the care process you could hand off to a machine...probably bugger all to be frank. But the labour requirements for future aged care demands are going to be astronomical. I wonder what solutions China is going to come up with in the next few decades off the back of their one child policy...our future cheap labour certainly won't be coming from there...they'll likely be importing plenty of it themselves.

[Beau]

Thank you for that eloquent and detailed reply. I have visited various care homes to see elderly relatives and funnily enough have never seen carers yakking amongst themselves and twiddling their thumbs. So I was fairly sure my suggestion of paying more to staff and having less staff ('the accounting office solution') was not a goer. However that becomes more clear when someone who works in the industry explains in detail why. I hope as a result of your post others know more about the problem. But we haven't solved the shortage of care time available.

I talked to the head of a 75 bed care unit, of which 25 of the residents required hospital level care. She said that even despite the more realistic wage adjustments, which I believe are well deserved, it still wasn't easy to get good staff. I think many care workers had come by emigrating from the Philippines, a worker source that was now cut off. They had even attracted the one or two male carers who were very good. Some of the male residents responded better to the male carers. The elderly female residents were generally happy to have a male doing their intimate cares. However, the male workers had not stayed as it was hard socially working in care unit where all of their work colleagues were female.

SNOOPY
In a special care unit my Mother is currently in there would be at least 3 male care givers witch all have been there for quite some time as you say male residents seem to respond well to male careers.
Mum was unsure with her care for a start being a male when rostered on but ok with now . All staff appear to hit it off well and feel they do a great job.

[Joh13]

Seems the SP has been hovering around fair value for a while.

$50M for 10 months/ 702m shares = EPS 7.1c x 19 =$1.35
$47.5M for 10 months/ 702m shares = EPS 6.77c x 19 $1.29
$45M 10 months / 702m Shares = EPS 6.4c x 19 = $1.22

Going off analyst forecasts of $64M UNPAT FY2022 / 702m shares = EPS 9.1c x 19 = $1.73
= EPS 9.1c x 20 = $1.82

Maybe looking at around $1.77 by May 2022?!

Current forward PE of 15 @ $1.37 represents good buying IMO

Looking forward to collecting more data on Friday.

GLTAH

[garfy]

To 'justakiwi' - if I was 'in care' I would be so pleased to have you as carer!! Your expose' on the life of a care person was brilliant. Do write your book!! Best wishes!!

[Greekwatchdog]

Market going up/down today and yet OCA closed up 3.79%. Market Gyrations Beagle..

[justakiwi]

Thank you so much :)


To 'justakiwi' - if I was 'in care' I would be so pleased to have you as carer!! Your expose' on the life of a care person was brilliant. Do write your book!! Best wishes!!

[RupertBear]

To 'justakiwi' - if I was 'in care' I would be so pleased to have you as carer!! Your expose' on the life of a care person was brilliant. Do write your book!! Best wishes!!

Well said and I agree :)

[Baa_Baa]

To 'justakiwi' - if I was 'in care' I would be so pleased to have you as carer!! Your expose' on the life of a care person was brilliant. Do write your book!! Best wishes!!

Likewise agree too.

[Greekwatchdog]

Agree as well. Without these Employees's OCA shareholders go nowhere. Sometimes us Shareholders need to remember without the hard work that goes on we get nothing. I for one am happy to see the Workers paid well.

[justakiwi]

That’s why we need them to stay - to balance things out and reduce the drama ;)

We often talk about how we need some men at work. We have had male cooks from time to time and temp male nurses, and they have been awesome. Breath of fresh air - to the residents and staff.


However, the male workers had not stayed as it was hard socially working in care unit where all of their work colleagues were female.
SNOOPY

[Beagle]

Seems the SP has been hovering around fair value for a while.

Going off analyst forecasts of $64M UNPAT FY2022 / 702m shares = EPS 9.1c x 19 = $1.73

Interesting you choose a forward PE of 19. Last report I read from Forbar had ARV and OCA level pegging around a PE of 14 and SUM with its much faster eps growth since it listed nearly a decade ago on a FY21 PE of 21.
The problem for OCA is the lack of eps growth on a weighted average number of shares on issue, (which is how all the professionals calculate it). Lets assume they can do $64m underlying for FY22 and ignoring new shares issued in the next 12 months from the DRIP that gives us 9.1 cps underlying profit for FY22. Sounds fair enough.

So how does that compare to FY17 when it would have been half a decade since they listed ? In FY17 they made $34m underlying profit but on a weighted average number of shares on issue of just 360.89m shares =9.4 cps. So in half a decade eps has gone backwards by 3%. Hmmm To harsh ? I hear the critics scream because shares issued just prior to the listing distorted the effect of weighted average number of shares on issue in FY17. Okay, lets be generous and look at their first full year of operations as a listed company and we see underlying profit of $52.1m on 610.354m shares on issue giving underlying eps of 8.54 cps in FY18.
If we accept that yardstick as the more appropriate starting point then underlying eps will have grown from 8.54 cps in FY18 to 9.1 cps in FY22 and average annual growth rate of just on ~ 1.5 %

Doesn't really matter whether one uses the first half decade or the 4 year growth rate, growth in underlying eps is ostensibly almost nothing and certainly nothing like the rate at which SUM and RYM grew their underlying earnings per share in the first 4-5 years of their listed existence.

Oh but that's not fair Beagle, you've focused on the period in which the business has transformed its business model and all the gains are going to come once the transformation process is complete, I can almost hear the rebuttal from Maverick sitting on my right shoulder now....but if my memory serves me correctly we were told at the time of listing this transformation process was a 6 year thing and by the conclusion of FY22 we'll be 5 years into this, surely some of the gains should be apparent by now and yet they're not with forecast FY22 underlying eps still being lower in FY22 than FY17 when it listed. Oh dear, surely not. How can I fix this ?, i am not allowed to be a sour Beagle the haters will be all over me telling me off...again.

It's a bit of a curse being a crusty old bean counting mutt that focusing on silly irrelevant things like the real underlying earnings per share. I know, lets look at the headline profit figure including all revaluations and pretend that's the real profit. Hopefully we'll get some super high headline profit on Friday that'll blow us all out of the water and silly things like what's the underlying earnings per share will be something for old fashioned bean counters to muse over and that won't matter because it'll be party time and $1.70 here we come...all the professional analysts say its worth $1.70 so it must be. I should pull my head in and pretend I believe the professional estimations about the future that goes into their DCF models and keep holding my modest parcel of shares and hope everything works out okay.
One good thing, dividend guidance is 50-60% of underlying profit which at the mid point suggests unimputed dividends of 5 cps for FY22 which is an unimputed yield of 3.65% on today's closing price of $1.37.


Agree as well. Without these Employees's OCA shareholders go nowhere. Sometimes us Shareholders need to remember without the hard work that goes on we get nothing. I for one am happy to see the Workers paid well.

Lovely sentiment but the corollary should not be ignored that without our capital the residents would have nowhere to stay and the workers wouldn't have a job. We're interdependent on each other and all valued stakeholders. Its good we've had strong PE expansion since OCA listed as otherwise we would have gone nowhere. Maybe we'll see further PE expansion if the directors spin us a really good story with Friday's annual result and we could get up to 17 times 9.1 cps = $1.55 again at some point in the next year ? That would be good.
https://www.bing.com/images/search?view=detailV2&ccid=tobW2SO6&id=8B84D4C02EC96B3A4C439F436AB6F66B24E7FFC1&thid=OIP.tobW2SO6U8CIKe221EGpLQHaDq&mediaurl=https%3a%2f%2flookaside.fbsbx.com%2flooka side%2fcrawler%2fmedia%2f%3fmedia_id%3d10160462469 185114&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fRb686 d6d923ba53c08829edb6d441a92d%3frik%3dwf%252fnJGv2t mpDnw%26pid%3dImgRaw&exph=297&expw=600&q=beagle+pictures+tuesday&simid=607997760951553038&ck=E4AB3458F9B8FB413AFAA0B1110E9FB0&selectedIndex=62&FORM=IRPRST&ajaxhist=0&ajaxserp=0 I should put my rusty old abacus away and think less and hope more. Why worry, be happy !!

[Habits]

Interesting you choose a forward PE of 19. Last report I read from Forbar had ARV and OCA level pegging around a PE of 14 and SUM with its much faster eps growth since it listed nearly a decade ago on a FY21 PE of 21.
The problem for OCA is the lack of eps growth on a weighted average number of shares on issue, (which is how all the professionals calculate it). Lets assume they can do $64m underlying for FY22 and ignoring new shares issued in the next 12 months from the DRIP that gives us 9.1 cps underlying profit for FY22. Sounds fair enough.

So how does that compare to FY17 when it would have been half a decade since they listed ? In FY17 they made $34m underlying profit but on a weighted average number of shares on issue of just 360.89m shares =9.4 cps. So in half a decade eps has gone backwards by 3%. Hmmm To harsh ? I hear the critics scream because shares issued just prior to the listing distorted the effect of weighted average number of shares on issue in FY17. Okay, lets be generous and look at their first full year of operations as a listed company and we see underlying profit of $52.1m on 610.354m shares on issue giving underlying eps of 8.54 cps in FY18.
If we accept that yardstick as the more appropriate starting point then underlying eps will have grown from 8.54 cps in FY18 to 9.1 cps in FY22 and average annual growth rate of just on ~ 1.5 %

Doesn't really matter whether one uses the first half decade or the 4 year growth rate, growth in underlying eps is ostensibly almost nothing and certainly nothing like the rate at which SUM and RYM grew their underlying earnings per share in the first 4-5 years of their listed existence.

Oh but that's not fair Beagle, you've focused on the period in which the business has transformed its business model and all the gains are going to come once the transformation process is complete, I can almost hear the rebuttal from Maverick sitting on my right shoulder now....but if my memory serves me correctly we were told at the time of listing this transformation process was a 6 year thing and by the conclusion of FY22 we'll be 5 years into this, surely some of the gains should be apparent by now and yet they're not with forecast FY22 underlying eps still being lower in FY22 than FY17 when it listed. Oh dear, surely not. How can I fix this ?, i am not allowed to be a sour Beagle the haters will be all over me telling me off...again.

It's a bit of a curse being a crusty old bean counting mutt that focusing on silly irrelevant things like the real underlying earnings per share. I know, lets look at the headline profit figure including all revaluations and pretend that's the real profit. Hopefully we'll get some super high headline profit on Friday that'll blow us all out of the water and silly things like what's the underlying earnings per share will be something for old fashioned bean counters to muse over and that won't matter because it'll be party time and $1.70 here we come...all the professional analysts say its worth $1.70 so it must be. I should pull my head in and pretend I believe the professional estimations about the future that goes into their DCF models and keep holding my modest parcel of shares and hope everything works out okay.
One good thing, dividend guidance is 50-60% of underlying profit which at the mid point suggests unimputed dividends of 5 cps for FY22 which is an unimputed yield of 3.65% on today's closing price of $1.37.



Lovely sentiment but the corollary should not be ignored that without our capital the residents would have nowhere to stay and the workers wouldn't have a job. We're interdependent on each other and all valued stakeholders. Its good we've had strong PE expansion since OCA listed as otherwise we would have gone nowhere. Maybe we'll see further PE expansion if the directors spin us a really good story with Friday's annual result and we could get up to 17 times 9.1 cps = $1.55 again at some point in the next year ? That would be good.
https://www.bing.com/images/search?view=detailV2&ccid=tobW2SO6&id=8B84D4C02EC96B3A4C439F436AB6F66B24E7FFC1&thid=OIP.tobW2SO6U8CIKe221EGpLQHaDq&mediaurl=https%3a%2f%2flookaside.fbsbx.com%2flooka side%2fcrawler%2fmedia%2f%3fmedia_id%3d10160462469 185114&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fRb686 d6d923ba53c08829edb6d441a92d%3frik%3dwf%252fnJGv2t mpDnw%26pid%3dImgRaw&exph=297&expw=600&q=beagle+pictures+tuesday&simid=607997760951553038&ck=E4AB3458F9B8FB413AFAA0B1110E9FB0&selectedIndex=62&FORM=IRPRST&ajaxhist=0&ajaxserp=0

Pathetic 3.65% pretax yield FY22. Seems there are better stocks to own elsewhere. Now that interest rates are miniscule, I dont get the retirement business model anymore, it is not the goldmine it used to be.

[justakiwi]

Beagle, I respectfully suggest that dissing Maverick is not going to win you any friends here. He is one of the most genuine, honest and humble people in this forum and is valued and respected by everyone. He has quietly but willingly shared his wisdom and knowledge and has never asked for or expected any credit for that. He is smart enough to stay silent when discussions get heated, which makes him a better person that you or I. Share your opinions by all means, but please don't make OCA a Beagle v Maverick competition. That is just not OK.


I can almost hear the rebuttal from Maverick sitting on my right shoulder

[Joh13]

Interesting you choose a forward PE of 19. Last report I read from Forbar had ARV and OCA level pegging around a PE of 14 and SUM with its much faster eps growth since it listed nearly a decade ago on a FY21 PE of 21.
The problem for OCA is the lack of eps growth on a weighted average number of shares on issue, (which is how all the professionals calculate it). Lets assume they can do $64m underlying for FY22 and ignoring new shares issued in the next 12 months from the DRIP that gives us 9.1 cps underlying profit for FY22. Sounds fair enough.

So how does that compare to FY17 when it would have been half a decade since they listed ? In FY17 they made $34m underlying profit but on a weighted average number of shares on issue of just 360.89m shares =9.4 cps. So in half a decade eps has gone backwards by 3%. Hmmm To harsh ? I hear the critics scream because shares issued just prior to the listing distorted the effect of weighted average number of shares on issue in FY17. Okay, lets be generous and look at their first full year of operations as a listed company and we see underlying profit of $52.1m on 610.354m shares on issue giving underlying eps of 8.54 cps in FY18.
If we accept that yardstick as the more appropriate starting point then underlying eps will have grown from 8.54 cps in FY18 to 9.1 cps in FY22 and average annual growth rate of just on ~ 1.5 %

Doesn't really matter whether one uses the first half decade or the 4 year growth rate, growth in underlying eps is ostensibly almost nothing and certainly nothing like the rate at which SUM and RYM grew their underlying earnings per share in the first 4-5 years of their listed existence.

Oh but that's not fair Beagle, you've focused on the period in which the business has transformed its business model and all the gains are going to come once the transformation process is complete, I can almost hear the rebuttal from Maverick sitting on my right shoulder now....but if my memory serves me correctly we were told at the time of listing this transformation process was a 6 year thing and by the conclusion of FY22 we'll be 5 years into this, surely some of the gains should be apparent by now and yet they're not with forecast FY22 underlying eps still being lower in FY22 than FY17 when it listed. Oh dear, surely not. How can I fix this ?, i am not allowed to be a sour Beagle the haters will be all over me telling me off...again.

It's a bit of a curse being a crusty old bean counting mutt that focusing on silly irrelevant things like the real underlying earnings per share. I know, lets look at the headline profit figure including all revaluations and pretend that's the real profit. Hopefully we'll get some super high headline profit on Friday that'll blow us all out of the water and silly things like what's the underlying earnings per share will be something for old fashioned bean counters to muse over and that won't matter because it'll be party time and $1.70 here we come...all the professional analysts say its worth $1.70 so it must be. I should pull my head in and pretend I believe the professional estimations about the future that goes into their DCF models and keep holding my modest parcel of shares and hope everything works out okay.
One good thing, dividend guidance is 50-60% of underlying profit which at the mid point suggests unimputed dividends of 5 cps for FY22 which is an unimputed yield of 3.65% on today's closing price of $1.37.



Lovely sentiment but the corollary should not be ignored that without our capital the residents would have nowhere to stay and the workers wouldn't have a job. We're interdependent on each other and all valued stakeholders. Its good we've had strong PE expansion since OCA listed as otherwise we would have gone nowhere. Maybe we'll see further PE expansion if the directors spin us a really good story with Friday's annual result and we could get up to 17 times 9.1 cps = $1.55 again at some point in the next year ? That would be good.
? (https://www.bing.com/images/search?view=detailV2&ccid=tobW2SO6&id=8B84D4C02EC96B3A4C439F436AB6F66B24E7FFC1&thid=OIP.tobW2SO6U8CIKe221EGpLQHaDq&mediaurl=https%3a%2f%2flookaside.fbsbx.com%2flooka side%2fcrawler%2fmedia%2f%3fmedia_id%3d10160462469 185114&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fRb686 d6d923ba53c08829edb6d441a92d%3frik%3dwf%252fnJGv2t mpDnw%26pid%3dImgRaw&exph=297&expw=600&q=beagle+pictures+tuesday&simid=607997760951553038&ck=E4AB3458F9B8FB413AFAA0B1110E9FB0&selectedIndex=62&FORM=IRPRST&ajaxhist=0&ajaxserp=0)I should put my rusty old abacus away and think less and hope more. Why worry, be happy !!

Thanks for that breakdown Beagle, I agree it doesn't look great for EPS growth since listing... Im glad that it seems OCA has built on other fundamental aspects of the business which may have allowed the PE to expand over the years as well as the story to allow the SP to appreciate.

Risk, growth and earnings seem to be what drives SP appreciation and in other cases Just the story will grow the SP.

OCA is not a story stock, although it does have a somewhat feel good story about it. This alone wont drive the SP unfortunately.

Risk - I think they have reduced this over the years with the conversion to a larger number of premium care suits and more intensive development of the land they own and the recent acquisitions they have made. Also by not chasing the rampaging property prices up they have created a nice buffer, if/when property prices decide to reduce.

Earnings - The earnings are there and they have shown us that they are profitable even with substantial wage increase and Covid. They are a profitable business.

Growth - This is 100% where they need to improve, as you have said it has been not great at all... this is the final piece to the puzzle and we are getting pretty damn close to it... As Earl had alluded, point on inflection. But we need proof and fairly soon.

I used a PE of 19 purely based off annualised UNPAT of 60m to 64m more like 7% so probably should have used a PE of 18 EPS 9.1c x 18 = $1.64 Target May 2022. But i can completely see how that may not make sense based on your explanation... but at the same time even though FB is using a PE of 14 I think the market is baking in a higher PE because of other factors.

We need to see growth thats what it comes down to. Thanks for the explanation Beagle :-)

[winner69]

I’m taking the upcoming 10 month profit number as a 12 month figure

That’s being generous as they probably lost money in April/May last year anyway. If that’s actually the case last 12 months < last 10 months)

At least gives a base number to compare F22 to

[Beagle]

Beagle, I respectfully suggest that dissing Maverick is not going to win you any friends here. He is one of the most genuine, honest and humble people in this forum and is valued and respected by everyone. He has quietly but willingly shared his wisdom and knowledge and has never asked for or expected any credit for that. He is smart enough to stay silent when discussions get heated, which makes him a better person that you or I. Share your opinions by all means, but please don't make OCA a Beagle v Maverick competition. That is just not OK.

Thanks for you input, appreciated. It was just meant as good natured tongue in cheek banter and I hope he views it as such, not criticism. Mav and I are good mates and we enjoy a robust exchange of viewpoints. I think we have a lot of respect for each other and enjoy the banter. That said I hear ya and all relationships needed to be treated like delicate flowers and need nurturing and watering, not too much robust banter otherwise they head down the very sad Couta1 and Beagle path...certainly wouldn't want things to go pear shaped that way, that's for sure ! I really like Maverick, met him a couple of times, chatted with him on the phone a couple of times, exchanged a lot of emails from time to time...I think we enjoy a good banter. I like and respect him a lot.

I am certain he's right that in the long run the transformation of OCA's business model will reap decent rewards in terms of meaningful eps growth which should enable OCA's share price to grow. Its just that Beagle's are impatient animals and its not in their nature to wait endlessly for a feed and I would have thought half a decade of business model transformation would have started to generate some eps growth. I guess that's what I find most perplexing of all.

Maybe if I can hang in there for another 4 years ?, (I am not sure if I have the patience ?) we will see some genuine solid growth in earnings per share.

I'm expecting $40-45m underlying profit on Friday for the ten months which translates on an annualized basis to $48m - $54m which on a weighted average number of shares on issue of about 615m during the year gives annualized underlying eps of 7.8 - 8.8 cps. I think a PE in the mid teens is about right all things considered.

My preliminary target price 12 months hence, (subject to adjustment for actual results on Friday) is 9 cps x 16 PE = $1.44 As you folks can clearly see that's not much more than the current share price and well below the average analyst view of $1.70 which is why I continue with only a very modest stake, (reviewable up or down on Friday)...(I hope the numbers are better than I expect and I have the confidence to take a much more meaningful stake again).

Lets see how I go with my estimate. Anyway...I am certain some would prefer a break from the barking on this one so over and out until Friday.

[artemis]

I've often thought there would be a killing to be had in making robots tailored to the RV sector...trouble is, I haven't figured out what parts of the care process you could hand off to a machine...probably bugger all to be frank. But the labour requirements for future aged care demands are going to be astronomical. I wonder what solutions China is going to come up with in the next few decades off the back of their one child policy...our future cheap labour certainly won't be coming from there...they'll likely be importing plenty of it themselves.

Japan has had elder care robots for years due to the size of the elderly population and shortage of care people. One is a robotic baby seal that has been highly effective in one-on-one contact including for dementia patients. In the US some hospital pharmacies are highly automated, including delivery to patients. Obviously with personal care some functions will always need humans, but where activities can be successfully automated by 24x7 workers that frees up humans.

Automation, self service and robotics has and will quietly change the face of many activities.

[Habits]

That is just not ok says mother duck to the daddy duck

[peat]

Beagle, I respectfully suggest that dissing Maverick is not going to win you any friends here. He is one of the most genuine, honest and humble people in this forum and is valued and respected by everyone. He has quietly but willingly shared his wisdom and knowledge and has never asked for or expected any credit for that. He is smart enough to stay silent when discussions get heated, which makes him a better person that you or I. Share your opinions by all means, but please don't make OCA a Beagle v Maverick competition. That is just not OK.

Thats not a diss tho!! . Its a dramatisation - its writing using imagery - dammed good for an accountant I reckon

C'mon - relax.

[Beagle]

That is just not ok says mother duck to the daddy duck

LOL https://www.yourpurebredpuppy.com/reviews/beagles.html
Excerpts The Beagle's vast stubbornness and distractability....Beagles are not easy to train. Truth be told, they are independent thinkers who don't particularly care about pleasing you. Food is a great motivator with Beagles, but too many cookies equals a fat Beagle LOL So true !!!

Thanks Peat, that's exactly how it was intended.

[justakiwi]

:laugh::laugh::laugh::laugh:

Pretty sure I know exactly what you meant by that. If you seriously believe it, be my guest.


That is just not ok says mother duck to the daddy duck

[Bjauck]

Beagle, I respectfully suggest that dissing Maverick is not going to win you any friends here. He is one of the most genuine, honest and humble people in this forum and is valued and respected by everyone. He has quietly but willingly shared his wisdom and knowledge and has never asked for or expected any credit for that. He is smart enough to stay silent when discussions get heated, which makes him a better person that you or I. Share your opinions by all means, but please don't make OCA a Beagle v Maverick competition. That is just not OK.
In my opinion, A rebuttal is not necessarily "a dissing". You can disagree with someone without it necessarily being disrespectful or unappreciative off their contribution. In fact, to hold back from expressing a disagreement may in some circumstances be less respectful of their contribution. The respectful discussion and swapping of points of views is what it is all about.

I am not sure how big Maverick is, but it sounds like that would be a squashed Beagle!
"I can almost hear the rebuttal from Maverick sitting on my right shoulder"

[Beagle]

LOL Lets move on, I've been pecked by the mother duck and that's okay :) https://www.youtube.com/watch?v=kZ48h2Q8y1k

[peat]

Deleted.


am i reading this right.... you state appreciation and then execute?

Share trading , which this website is all about is intrinsically Capitalistic and hence enmity towards capitalistswould appear to be an inappropriate stance to hold on this website (unless trolling) ??

Again thats my thoughts...

[Cyclical]

The day robots take over my job will be the day the human race can consider itself doomed. Even if robots could do the job, they shouldn’t. Our elderly need and deserve one-on-one human care and interaction. It is just as important as practical care tasks - more important actually. It is the personal interaction, the building of trusted and positive relationships, the time I willingly spend with my residents, that they value the most. A couple of examples …

A female resident who cannot mobilise without support and worries that her call bell/sensor mat may not work if she needs help. When I took the time to show her that I had correctly plugged in the bell and the mat, and demonstrated them both working so she could see first hand that they were working and my pager was going off - she said “Thank you SO much dear. I feel safe now.”

A female resident who is 91 years old - frail but young at heart. She has days where she is in a funk and just wants to mope in her room (her words). Some caregivers feel the need to encourage her to “come out of your room” but I know her well and understand that she just needs to take the time to work through her funk. When I pop in for a sit and a chat (and usually a good laugh) she tells me “Thank you dear for understanding and for checking in on me.”

A 92 year old gentleman who snuck my colleague and I a box of chocolates at Christmas when other staff weren’t looking and told us “I can’t do this for everyone but I wanted to do it for you two because you have always been very good to me.”

I guess what I’m trying to say is it’s not the tasks resident’s remember and value. It’s the human interactions and kindnesses. No robot can ever provide that.

Maybe one day I’ll write a book of all of these special moments.

Great examples there justakiwi of the value you and your colleagues add. Without a doubt, age care needs such peeps. I'm not suggesting at all that machines replace you, I would not be supportive of that. But if they could do a percentage of those menial tasks that allow you to focus more on those areas where you add real value to people's lives, then that's a win win for everyone. And in coming decades, I really don't think we'll have a choice, as we simply aren't going to have enough good people to look after us as we get to that stage

[Snoopy]

Great examples there justakiwi of the value you and your colleagues add. Without a doubt, age care needs such peeps. I'm not suggesting at all that machines replace you, I would not be supportive of that. But if they could do a percentage of those menial tasks that allow you to focus more on those areas where you add real value to people's lives, then that's a win win for everyone. And in coming decades, I really don't think we'll have a choice, as we simply aren't going to have enough good people to look after us as we get to that stage


In coming decades, as more and more jobs are automated, you will get more and more robots retiring, not just from wear and tear, but also by being usurped by the next model. I suspect that robotic 'care robots' would be ideal in this situation. Robots looking after their own kind would then free up more humans to look after other humans. A win win for the future care model?

SNOOPY

[Cyclical]

In coming decades, as more and more jobs are automated, you will get more and more robots retiring, not just from wear and tear, but also by being usurped by the next model. I suspect that robotic 'care robots' would be ideal in this situation. Robots looking after their own kind would then free up more humans to look after other humans. A win win for the future care model?

SNOOPY
LOL. Jolly good. Seem to have this old flight of the concords song going round in my head now...
https://youtu.be/0BcFHvEpP7A

[dibble]

In coming decades, as more and more jobs are automated, you will get more and more robots retiring, not just from wear and tear, but also by being usurped by the next model. I suspect that robotic 'care robots' would be ideal in this situation. Robots looking after their own kind would then free up more humans to look after other humans. A win win for the future care model?

SNOOPY

I suggest you look to Japan where this is already happening. I saw something on TV about a robot retirement home where robots get humans to do bed turning and all the menial stuff, this frees up higher intelligence robots to focus on higher end emotional robot care etc. That's smart although eventually something will need to be done with all the aging humans. Drive them up onto a Bangladesh beach to be disassembled perhaps.

[mike2020]

Ok, quick question before markets open. What has fundamentally changed since the last report? We hit 1.60 and it looked like it could easily be the bottom. I don't think we have even seen the gains in property values fully reflected on the OCA balance sheet yet. Is it the dividend verses interest rates or is it sentiment around the sector in general? Not an ounce of hype to be seen.

[Greekwatchdog]

Let the debate rage. https://www.nzx.com/announcements/372535

[winner69]

Let the debate rage. https://www.nzx.com/announcements/372535



$56.2m underlying better than most expected ($50m was talked about a lot)

[Curly]

Does that have enough WOW factor. Should do me thinks.

[Bjauck]

Ok, quick question before markets open. What has fundamentally changed since the last report? We hit 1.60 and it looked like it could easily be the bottom. I don't think we have even seen the gains in property values fully reflected on the OCA balance sheet yet. Is it the dividend verses interest rates or is it sentiment around the sector in general? Not an ounce of hype to be seen. IMO I think you may have answered your own question. Since February amongst other market developments, we have had the Residential Property Investment changes announcement and revised house price forecasts. So despite house prices not being fully reflected in Oceania's ORAs, sentiment is currently more moderated or subdued if you will.

[Ggcc]

$56.2m underlying better than most expected ($50m was talked about a lot)
OCA went up while with Ryman it went down. Go figure

[Baa_Baa]

Very happy with the results across all metrics.
:t_up:

[winner69]

Jeez it’s awfully complicated

We all seem to like Underlying Earnings (underlying NPAT they call it)

But Slide 15 of preso says

Underlying NPAT 12 months March 2021 $50.7 - in line with what many on here expected

But that’s down 17% from the $61.2m for 12 months to March 20


Better not look at that slide

[allfromacell]

$56.2m underlying better than most expected ($50m was talked about a lot)

Underlying NPAT 41.8

[Bjauck]

Underlying NPAT 41.8 That was for 10 months to March 2021 cf 40m for 10 months to March 2020. So an improvement. Not bad for a year of Covid.

A complicated set of accounts with the change in reporting Month...

[winner69]

Jeez it’s awfully complicated

We all seem to like Underlying Earnings (underlying NPAT they call it)

But Slide 15 of preso says

Underlying NPAT 12 months March 2021 $50.7 - in line with what many on here expected

But that’s down 17% from the $61.2m for 12 months to March 20


Better not look at that slide

Oceania Underlying NPAT down 17% on comparable 12 month periods

Ryman Underlying down 8% in same period

So Oceania not too bad

April/May last year with Covid stuffed things up

[bull....]

and these results dont include the recent big jump in building costs which will flow in the next report in reduced margins

[Greekwatchdog]

Everyone in every industry will go thru same thing Bull. Its up to each business whether they pass those costs on. My bet is they will be passed on.

[bull....]

Everyone in every industry will go thru same thing Bull. Its up to each business whether they pass those costs on. My bet is they will be passed on.

true most businesses will try to pass on the costs. treasury has assumed no growth in property in the budget yesterday so be interesting how this all plays out

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/372535/346452.pdf

Underlying profit for the ten months $41.8m as expected and close to the mid point of my forecast of $40-45m. Bingo, third time in a row I have got this really close. Translates to $50.16m underlying on an annualised basis and 8.07 cps based on weighted average shares on issue of 621.537m.
Development book for FY22 slightly below my expectations and there's a lot of (113) modest value care suites at Lady Allum in Milford in FY22's development numbers.
Embedded value up nicely. NAV up nicely to $1.28, slightly below my expectations of $1.30.

The directors extol us to "Believe in Better". Better care for residents, yes they win, better wages for staff, yes they win, better remuneration for management, yes they win.
Better earnings per share for shareholders...Hmmm...how many more years will we have to wait to see that ?

[Ggcc]

Everyone in every industry will go thru same thing Bull. Its up to each business whether they pass those costs on. My bet is they will be passed on.
I will be surprised if they will be passed on to customers with publicly held companies. They all want to look good and seem not greedy to the public, when it makes perfect business sense to pass the increased costs on to the end user.

[Greekwatchdog]

Just depends on contracts and how significant increases are on respective business. I am seeing increases of 5% on most building supplies. Also lets not forget another public holiday and more sick leave coming.

[mike2020]

5% on a sale price is barely noticed at the moment. I have seen 10% rises in a month on local housing.

[YoungBull]

Hey guys, another stupid question but just trying to learn how to digest reports still. When a dividend is not imputed due to available tax losses, what does the company mean by this? I have a background in law and not accounting unfortunately.

[BlackPeter]

Hey guys, another stupid question but just trying to learn how to digest reports still. When a dividend is not imputed due to available tax losses, what does the company mean by this? I have a background in law and not accounting unfortunately.

Dr. Google could have answered this question :): Anyway - here is a summary on imputation credits: https://craigsip.com/insights/overview/2020/09/jargon-buster-imputation-credits

"Imputation credits are essentially a tax credit that investors receive from companies when they pay a dividend."

If a company does not pay taxes, they obviously can't give imputation credits on taxes paid, which means that their investors don't get imputation credits which they other wise could use to reduce their own taxes.

Clear as mud?

[Mrbuyit]

Doesn't no imputation just mean that the government get some of your 2.1c per share before you see it...

It'll be interesting to see if there is much SP movement prior to the DRP, as the last round ended up being a tad expensive at ~$1.50 or thereabouts from memory.

[BlackPeter]

Doesn't no imputation just mean that the government get some of your 2.1c per share before you see it...

It'll be interesting to see if there is much SP movement prior to the DRP, as the last round ended up being a tad expensive at ~$1.50 or thereabouts from memory.

The government always get some of your dividend before you see it.

However - depending on your personal tax situation can imputation credits help you to get some of the taxman's take back at tax return time.

[winner69]

Just for Beagle

Updated chart showing EPS trend

Added the two 12 month periods to March points - as per OCA numbers for these periods


No comment from me (I wont show the one with the number of sales overlay)

[YoungBull]

Dr. Google could have answered this question :): Anyway - here is a summary on imputation credits: https://craigsip.com/insights/overview/2020/09/jargon-buster-imputation-credits

"Imputation credits are essentially a tax credit that investors receive from companies when they pay a dividend."

If a company does not pay taxes, they obviously can't give imputation credits on taxes paid, which means that their investors don't get imputation credits which they other wise could use to reduce their own taxes.

Clear as mud?

Clear as mud BP, the sarcasm helped my understanding! I understand what an imputed dividend is, I was referring specifically to the available tax loss part. Can a company opt to impute a dividend even if they themselves paid no tax? I understand imputations stop double taxing, but can a company decide to impute for you if they want?

I enjoy posting in the forum because sometimes information comes with opinions attached. Not so applicable here.

[bull....]

Just for Beagle

Updated chart showing EPS trend

Added the two 12 month periods to March points - as per OCA numbers for these periods


No comment from me (I wont show the one with the number of sales overlay)

yep both ryman and oca showing margin pressure , probably why both down today on results

[Beagle]

Just for Beagle

Updated chart showing EPS trend

Added the two 12 month periods to March points - as per OCA numbers for these periods


No comment from me (I wont show the one with the number of sales overlay)

Not "buying" it. You need to totally recalibrate the chart based on underlying eps calculated based on the weighted average number of shares on issue.
See post #9050
In 2017 they made underlying eps of 9.4 cps ($34m underlying profit but on a weighted average number of shares on issue of just 360.89m shares)
In 2018 they made underlying eps of 8.54 cps.
In 2021 they made annualised underlying eps of 8.07 cps.

The trend is down but its good that the directors assure us to believe in better....got to have faith that the business transformation program will generate real underlying eps growth some year in the future...but which year ? How many more years do shareholders have to wait for real underlying earnings per share growth ? Remember this result for FY21 is against the backdrop of an absolutely booming real estate market and the Govt have now taken steps to seriously clip its wings.

I think a vast amount of patience, (years more), is going to be required with this one.

[davflaws]

am i reading this right.... you state appreciation and then execute?

Share trading , which this website is all about is intrinsically Capitalistic and hence enmity towards capitalistswould appear to be an inappropriate stance to hold on this website (unless trolling) ??

Again thats my thoughts...

Oh Dear - I have clearly given offence. Aroha mai. That was certainly not my intention. I was sincerely complimenting Beagle on the tone of his post.

My subsequent remarks were firmly tongue in cheek. They were intended as a dry acknowledgement of the very definite difference in our political views.

Capitalists don't really "grind the faces of the poor" (except structurally)
Socialists don't really aspire to put the capitalists "up against the wall" (except symbolically)

And it is OK for old lefties to use the market like a savings bank.

[winner69]

OK Beagle - my bad not using weighted number shares in 2017

Updated it

[Beagle]

I picked up on the overall intention of your post davflaws. After a very ordinary FY21 result and average outlook we need to have a big group hug with much aroha because we're all just trying to figure out a way to build a brighter future for our families https://www.bing.com/images/search?view=detailV2&ccid=dWUFPbNM&id=CE0B281E6F34BC348059210E085E8B809D11BCD8&thid=OIP.dWUFPbNMm82S-QTjShWKIQHaE8&mediaurl=https%3a%2f%2fi.pinimg.com%2foriginals%2f 66%2f00%2fb6%2f6600b6569fbbd4adfbaf8304440b58aa.jp g&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR7565 053db34c9bcd92f904e34a158a21%3frik%3d2LwRnYCLXggOI Q%26pid%3dImgRaw&exph=945&expw=1417&q=pack+of+beagles&simid=608025974592386321&ck=73468269F70256FD44F1D1197F4790A2&selectedIndex=0&FORM=IRPRST&ajaxhist=0&ajaxserp=0

[BlackPeter]

Clear as mud BP, the sarcasm helped my understanding! I understand what an imputed dividend is, I was referring specifically to the available tax loss part. Can a company opt to impute a dividend even if they themselves paid no tax? I understand imputations stop double taxing, but can a company decide to impute for you if they want?

I enjoy posting in the forum because sometimes information comes with opinions attached. Not so applicable here.

Of course, they can't ... an imputation credit is a credit on the taxes the company paid. Pay no taxes and they don't get a credit. Easy as that.

[winner69]

I think I've sussed it - that is breaking down 12 month periods into something meaningful

So breakdown of Underlying Earnings for the last two 12 month periods ended March below

Going hunky dory until March 2020 but Covid stuffed up April/ May last year big time - profit down $12m on pcp

June/Nov things recovered but profit didn't increase

And last 4 months profits are up on last year (even though last year was affected to some extent by covid)

Anyway - quite interesting

[Beagle]

Herald reporting a HUGE increase in profit with thousands more care suites coming. Paywalled. https://www.nzherald.co.nz/business/oceania-healthcare-turns-last-years-loss-into-855m-profit/IKGGXAJWFSSSBZMTJAOX44IBZY/
In other breaking news Beagle takes happy pill and thinks, why worry its Friday afternoon and if all the professional analysts reckon its a great BUY and say its worth $1.70 it must be https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/ ....heck they can't all be wrong and I must be absolutely nuts thinking this will basically just track sideways for the rest of 2021. Why worry, be happy. http://mentalhealthandhappiness.com/why-worry-be-happy/

[oldtech]

In other breaking news Beagle takes happy pill and thinks, why worry its Friday afternoon and if all the professional analysts reckon its a great BUY and say its worth $1.70 it must be https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

Methinks the Beagle needs to use the /sarc tag :p

Or have you just admitted to a BBB (Beagle Busy Buying) rating?! Personally, I'm still firmly on an OO (Oldtech Observing) rating.

[Beagle]

Methinks the Beagle needs to use the /sarc tag :p

Or have you just admitted to a BBB (Beagle Busy Buying) rating?! Personally, I'm still firmly on an OO (Oldtech Observing) rating.

Is there an emoji for "possum staring into the headlights" :)...not sure what to do with this pup...probably nothing and stick with my very modest holding. OCA has performed in line with the NZX50 in terms of overall performance since listing so that's good but what's bad is that's all be predicated upon underlying earnings PE multiple expansion and nothing else.

Hope Mavericks right and some year soon we will get real underlying earnings per share growth.

[winner69]

Bit disappointed in that Herald article Oceania Healthcare turns last year's loss into $85.5m profit

They should have used Comprehensive Income and reported

Oceania Healthcare turns last year's poor result into $167m profit

After all in Other Comprehensive Income there is $78m of revaluation gains (Oceania treatment of care suites sees the revaluations show up here instead of with the other revaluations like others in the sector)

[Greekwatchdog]

Beagle sometimes being a Bean Counter can over complicate things too much. Throw your bone out and go buy a new one with some meat on it. I am happy with this and the transformation is now taking over. It will be an interesting year ahead with raising costs coming in everywhere + this Govt doing there thing to look into costs of the sector. Foundations are there and demographics for this type of business is there. Lets see how FY22 goes. Maybe you may need more than 1 bone??

[bottomfeeder]

Bit disappointed in that Herald article Oceania Healthcare turns last year's loss into $85.5m profit

They should have used Comprehensive Income and reported

Oceania Healthcare turns last year's poor result into $167m profit

After all in Other Comprehensive Income there is $78m of revaluation gains (Oceania treatment of care suites sees the revaluations show up here instead of with the other revaluations like others in the sector)

We know, and those traders and instos know, that's enough to get the price to $1.60 in a week or so. It takes instos that long to have review and approvals in place to buy.

[Beagle]

Bit disappointed in that Herald article Oceania Healthcare turns last year's loss into $85.5m profit

They should have used Comprehensive Income and reported

Oceania Healthcare turns last year's poor result into $167m profit

After all in Other Comprehensive Income there is $78m of revaluation gains (Oceania treatment of care suites sees the revaluations show up here instead of with the other revaluations like others in the sector)
Good point mate. Lets cut to the chase and forget all the 101 pages of absolute nonsense and use the shortcut method to measure value accretion.
NAV went from $1.03 to $1.28 so OCA (despite losing truckloads on care) really made 25 cents per share in just 10 months, that's an annualized 30 cents per share. Believe in better ;)
Can't bring myself to throw this bone away Greekwatchdog, remaining shares are free carry off previous profits.

[winner69]

Good point mate. Lets cut to the chase and forget all the 101 pages of absolute nonsense and use the shortcut method to measure value accretion.
NAV went from $1.03 to $1.28 so OCA (despite losing truckloads on care) really made 25 cents per share in just 10 months, that's an annualized 30 cents per share. Believe in better ;)
Can't bring myself to throw this bone away Greekwatchdog, remaining shares are free carry off previous profits.

Yes indeed - there were $160m of revaluation gains in total (after negative $50m last year)

All counts

Book value $1.21 so trading at 1.1 times that at the moment

Worth holding - gets to 170 and you 30% better of than today

Shortcut methods save a lot of grief

[Beagle]

Total Comprehensive income $167.8m v $9.9m last year. Total assets $1.9 Billion up from $1.5 Billion last year, up 21.6%. There are certainly different ways to look at this which are considerably more attractive than focusing on realised underlying profit. Might read the full annual report over the weekend and see if I can get a bit more excited...heck I might even get carried away and double down next week especially if our friend Maverick studies this and tells us its worth $2, we might make nearly 50% in the next year :)

[Maverick]

Total Comprehensive income $167.8m v $9.9m last year. Total assets $1.9 Billion up from $1.5 Billion last year, up 21.6%. There are certainly different ways to look at this which are considerably more attractive than focusing on realised underlying profit. Might read the full annual report over the weekend and see if I can get a bit more excited...heck I might even get carried away and double down next week especially if our friend Maverick studies this and tells us its worth $2, we might make nearly 50% in the next year :)
This is just a quick input to the chat on today's report just to be part of the team.
I will be spending days on this to a very minute detail but rather than holding back until then I thought some my be curious about my early opinion.

Let's measure my expectations of the key metrics that I posted here a month ago.
“My expectations” (2020 results) v`s “todays actual annualized result” (their 10 months /10x12)

Underlying profit ; est.$49-$52m. Actual $50.2

Care profit; $23.3m (2020 $19.2m). Actual 22.1m.

Care DMF; $12m (2020 $7.8m). Actual $11.4m (note there was also an extra $0.5m in PAC which one could argue is similar in this context to DMF)

Village DMF; 28.6m (2020 $21.4m). $26.5m

New Sales; $32m ( 2020 $34.3m). $28.6m

Resales; $20.4 m (2020 $11.5m). $21.5m.

I was also particularly interested in the apartment resale prices after last HY sales prices being surprisingly low. I see they are now back on track to be inline with their normal historical value. So no probs there after all.

For me these numbers are the vital ones that give the measurement on OCAs progress to the ultimate profit growth on pipeline completion.

As far as today's SP movement goes, Beagle's comment about possums in the headlights is spot on.
I think it was pretty obvious from this morning's trading that very few investors have any idea how to read this report or how to value this share.
I guess we have to wait for the analyst's modifications before there is any SP action. My opinion on that is they have already got their projections about right now so not much tinkering should happen.

Before my deep dive into the details (takes about 2-3 days) I am comfortable enough already to say OCA is travelling close enough to my expectations of 25%-30% profit growth FY2022 and same again 2023.

The only slight disappointment is the village DMF being lower than my workings. So at this point in time I'm downgrading my share price target of “just shy $2 in one years time'' to about $1.75-$1.85. Still way higher than you are thinking Beagle but these numbers are behaving in quite a predictable way now.

BTW I'm looking forward to any opposition you want to offer Beagle, bring it on , as I really do appreciate our disagreements in order to get a more balanced view.

[Beau]

[QUOTE=Maverick;886479]This is just a quick input to the chat on today's report just to be part of the team.
I will be spending days on this to a very minute detail but rather than holding back until then I thought some my be curious about my early opinion.

Let's measure my expectations of the key metrics that I posted here a month ago.
“My expectations” (2020 results) v`s “todays actual annualized result” (their 10 months /10x12)

Underlying profit ; est.$49-$52m. Actual $50.2

Care profit; $23.3m (2020 $19.2m). Actual 22.1m.

Care DMF; $12m (2020 $7.8m). Actual $11.4m (note there was also an extra $0.5m in PAC which one could argue is similar in this context to DMF)

Village DMF; 28.6m (2020 $21.4m). $26.5m

New Sales; $32m ( 2020 $34.3m). $28.6m

Resales; $20.4 m (2020 $11.5m). $21.5m.

I was also particularly interested in the apartment resale prices after last HY sales prices being surprisingly low. I see they are now back on track to be inline with their normal historical value. So no probs there after all.

For me these numbers are the vital ones that give the measurement on OCAs progress to the ultimate profit growth on pipeline completion.

As far as today's SP movement goes, Beagle's comment about possums in the headlights is spot on.
I think it was pretty obvious from this morning's trading that very few investors have any idea how to read this report or how to value this share.
I guess we have to wait for the analyst's modifications before there is any SP action. My opinion on that is they have already got their projections about right now so not much tinkering should happen.

Before my deep dive into the details (takes about 2-3 days) I am comfortable enough already to say OCA is travelling close enough to my expectations of 25%-30% profit growth FY2023.

The only slight disappointment is the village DMF being lower than my workings. So at this point in time I'm downgrading my share price target of “just shy $2 in one years time'' to about $1.75-$1.85. Still way higher than you are thinking Beagle but these numbers are behaving in quite a predictable way now.

BTW I'm looking forward to any opposition you want to offer Beagle, bring it on , as I really do appreciate our disagreements in order to get a more balanced view.

[/Great post Maverick my thanks to you and Beagle I appreciate both your views and effort put into this, helps to have another perspective at times. Looking good for future all progressing well.QUOTE]

[winner69]

Total Comprehensive income $167.8m v $9.9m last year. Total assets $1.9 Billion up from $1.5 Billion last year, up 21.6%. There are certainly different ways to look at this which are considerably more attractive than focusing on realised underlying profit. Might read the full annual report over the weekend and see if I can get a bit more excited...heck I might even get carried away and double down next week especially if our friend Maverick studies this and tells us its worth $2, we might make nearly 50% in the next year :)

You beginning to see the light of day ;)

Book Value increased at 16.3% pa since May 17

On per share value (allowing for recent cap raise) its 12.7% pa

Share price May 2017 84 cents -- today $1.34 .... increase 11.5% pa

All a bit spooky eh

Be patient- the big re-rating from a P/B of 1.1 coming soon ....should get to 1.5 times with share price $1.95 -- that's even more spooky

[Beagle]

Hey Mav,

Nice to see you back and well done on getting your forecast of various aspects of the operations so close. Funnily enough mate for the first time we were both very close with annualised underlying profit, although I wasn't quite as brave as you and had a wider range $40-45m for 10 months. Talk more next week when we've both mulled over everything for a while.
I like that our new CEO Brent was formerly a director of investment banking at Jarden...my goodness you have to be super intelligent to make it that far up the scale...probably heaps brighter than this aging old mutt.

[Beagle]

https://www.nzherald.co.nz/business/gordon-macleod-to-quit-ryman-healthcare-record-sales-yield-60-profit-rise/FPW5HV2V4P75F7EGYV7OCAUBQY/
Paywalled. The relevant bit to OCA and its very intense care focused business model is Ryman's CEO Gordon McLeod's view on the serious inadequacy of Govt's standard funding rate for beds.
This is what I have talking about at some length before, that the rate the Govt pays for care is substantially below the true cost of providing care and because of OCA's business model it is hit the hardest and its a handbrake on growth.

"The long-term residential care subsidy is not [enough]. There's an increasing gap between a fair rate of return and what's paid by the Government. The sector is working with the Ministry of Health and Government officials. It's not sustainable," MacLeod said.
Asked what that $1100/week should be lifted to, MacLeod refused to say "but it's a pretty significant uplift. The sector is working with a consultant and it's a pretty significant uplift. It will require a step-change," he said, referring to the need to pay staff working in that area more as well. Emphasis added

Will the Govt see it that way though ? (I think the Govt seriously underfunded rest homes on Covid costs too).

[Panda-NZ-]

Sigh, we're going to have to deal with the underlying biology eventually.

It may be more effective to encourage America into spending slightly more than $125b on medical research vs $4T per year on bloat.

[winner69]

Some like the segmental reporting stuff - like Care has Underlying ebitda of $34m and Village is $40m .....but combined these add up to heaps more than the headline underlying ebitda of $56m and its all too hard to try to reconcile everything

I like looking at from a different perspective - like how much do they make from running villages and looking after people and how much do generate from selling and building stuff - and look at it from a cash perspective. This is how see the last 10 months -


I reckon from a cash perspective running villages and looking after people cost them about $23m (negative cash flow)
They sold things and got $171m for them but had to pay back residents $52m - net cash positive $119m
They then spent $103m on building new things
SO at this level net cash out was about $6m
and they found $6m to give shareholders a divie (unimputed)
So cash outflow(including divies) was about $12m



That's how I see things from an economic point of view - where the cash comes from and where it goes

Suppose not too bad .....but reinforces my view the likes of Oceania are essentially building/property companies who run a marginal village/care operation

[winner69]

Hey Beagle,... just checking on the people cost in case you've got it wrong

People cost still going and maybe even at faster rate

H1 they wee up 8.4% on pcp

If you take last 4 months people cost and extrapolate to a pro-forma 6 months they are up 9.2% on pcp

Wzge/salary bill still a problem I suppose

[Bjauck]

…

Will the Govt see it that way though ? (I think the Govt seriously underfunded rest homes on Covid costs too). The maximum contribution will have to increase to cover costs and a return on capital for the providers. The extra cost burden will fall on the taxpayer (and the estates and family trusts of residents.)

[Maverick]

Hey Beagle,... just checking on the people cost in case you've got it wrong

People cost still going and maybe even at faster rate

H1 they wee up 8.4% on pcp

If you take last 4 months people cost and extrapolate to a pro-forma 6 months they are up 9.2% on pcp

Wzge/salary bill still a problem I suppose

Hi Winner,
I'm still slogging away on this result so got the numbers right in front of me.
The easiest way I think to answer your question is a simple ratio of full "care expenses" (excluding village and corporate things) and dividing it by all "care income."
That will tell if its getting more or less profitable looking after the clients.

So broken into half year periods from HY1 2018 , the ratio of care costs / care revenue (as there've been developing the new stuff from the old) have been rising until 1 yr ago where we can see them reverse . This half year ( 4 months adjusted) has stayed on the improving profitability track since the famous "point of inflection.

.79-.84-.84-.86-.90 -.88-.86

I know you could do a cool graph but I hope this morse code answers your question?

[Beagle]

From my previous analysis on this I extrapolated out the 6 months to 30/11/2020 Employees total costs and was expecting a total for the 10 months of $136.6m if the high rate of growth in wages costs was constant and the actual total was $138.8m which was worse than expected, so yes Winner, unfortunately the problem is not going away.

Herewith is a summary of how their biggest cost, wages has risen as a percentage of the operating revenue since they listed.

2017 Wages $103,3m operating revenue $171.9m = 60.1%
2018 Wages $113.3m operating revenue $180.0m = 62.9%
2019 Wages $119.8m operating revenue $186.9m = 64.1%
2020 Wages $128.1m operating revenue $193.6m = 66.2% (affected by extra Covid costs but includes a $1.8m subsidy from the Govt for same)
2021 Wages $138.8m operating revenue $210.5m = 65.9% (Annualised and affected by some ongoing Covid costs)

Note 2.4 in the accounts shows low termination costs for Fy21 so it looks like nothing material was paid to Earl when he quit.

To be fair...my understanding is they project manage their developments themselves (construction itself is outsourced under contracts), and project management is not an easy task and they have a very good track record of delivering projects on time so there must have been material extra staff costs in regard to their business transformation process and developments in recent years and material extra costs to manage Covid risks in the last two reported years. I think in that context maybe the increase in wages costs as a percentage of operating revenue in recent years is not too bad in the overall scheme of things ?

I was hoping for a work program of about 250 units for FY22 (based on a discussion with Earl late in 2020) so to see only 221 and 113 of those 221 are fairly modest value care suites at Lady Allum in Milford so I think the development profits for FY22 are going to be well down on FY21's annualised total. On the other hand resales profits should be up very nicely.

My very early thinking is FY22 is likely to be a fairly quiet year for eps growth, (if any) and depending on the timing of completion of the premier Waimarie development and the number of presales we could see some fairly modest eps growth in FY23.

Currently priced at $1.33 / 0.081 = 16.4 times FY21's underlying profit. Looks about right to me. I think as long as one buys as close as possible to the new NAV (now $1.28) and takes a long term approach one should do okay with these.

[winner69]

Maybe people cost ‘problem’ is a result of a bloated HQ ....and not down at the worker level

[Maverick]

Some like the segmental reporting stuff - like Care has Underlying ebitda of $34m and Village is $40m .....but combined these add up to heaps more than the headline underlying ebitda of $56m and its all too hard to try to reconcile everything


Couldn't agree more Winner, these accounts are really something else to work through.
There are so many balls in the air as they transition their multiple types of properties which have very different functions ( some are even leased with capital gain sharing!) all cobbled together under one amalgamous umbrella. This year alone they've bought 2 completed high end purchases, added $100m of new shares , changed the balance date and reworked how they do care suit depreciation. All causing a significant effect on the underlying profit , not EBITDA , nor Comprehensive Income, so one can choose whatever number they want to hear. Once you get on top of the previous year's of changes, new changes always come along.

This is not meant as a criticism of OCA, their poor accountants and graphic guy must have a tough job keeping up, it's just the complex nature of this beast. It sure makes SUM and RYM accounts a walk in the park .

Preamble out of the way, let's get down to business,
Simply, in one sentence …
“A very solid result, just where it should be, which underscores the imminent growth that is about to magically appear after 4 years of flat results”

Things I like ;
-Staff costs are starting to reduce per bed , not blowing out as Beagle has rightly considered. Staff efficiencies, increasing premium fees and increased occupancy have turned the tide as expected.
-Care suites resales are selling for an overall higher price point, no doubt as OCA starts dynamic pricing (ratcheting prices up) with increased occupancy. Also I presume the high end “new C/S sales” sold in Auckland a few years ago are starting to sell second time around now under “resales.”
-The most vital statistics of them all , village and care DMFs, are growing strongly however they are performing slightly under my personal expectations so my growth projections have reduced a little- mentioned below.
-Apartment sale prices are back on track.
-Rise in NTA to $1.28cps.
- Divi has increased to a 12 month yield to within normal company policy. I maintain my loopy conspiracy idea that they reduced it last HY to avoid media attention for a covid "payback", very astute of them.
-It's a report that has the right growth in the relevant areas that underscores that the programme is on track, there are no surprises.

Things I don't like.
-Deliveries for 2022 are only 219, quite a bit lower than the target of 250 but hopefully just a lull in a lumpy delivery programme.
-New care suite sales are a little below where they should be. Yes, the headline C/S sales growth is most impressive but this particular 4months growth rate is under performing when considering the new supply that has been delivered while also considering the many recent c/s previously delivered and are still available. Interestingly they have always over sold until this result. Most likely it's seasonal stuff and delivery timing( i.e. Christmas holiday period , summer, and 2 care suit building deliveries at the end of the FY period ). Probably fair enough but it's raised a small flag for now.

Things I'm not sure about.
-Dropping care suite depreciation from the underlying profit positively affects the result by $6m this year. It's a non- cash expense as we know so not really a biggie but it does window dress the bottom line to look better than it would have been in the past. (other RV companies also use this method) They clearly point it out and I get why they are doing it so no drama.
-I've no idea how, or have the will power either , to accurately integrate the new $100m of shares , their contribution or the EPS effect of the 2 new acquisitions into my existing model at this stage. Probably they will just wash in almost unnoticeably anyway. I figure they will slightly dilute the upcoming good profit growth that I, and the analysts , say is on its way over the next few years but I'm confident that these shares will ultimately earn their keep in the years further ahead. I have chosen to ignore them for now within my current spreadsheets.

So what's my updated projection for profit 2022….

This FY will be a year led by ever increasing resales of care suites and apartments which will rise to equal the new build margin profit, for the first time. Care profits and village DMFs will continue their juggernaut ascent . New build margin will stay flat for now.

That makes an underlying 2022 profit of around $ 61m with a PE of 18 = $1.70-$1.75 one year from now (up 30% from here+ divis)

Long term, which is my personal ( non taxable) investment style, I have slightly reduced my personal CAGR expectations to circa 20% (from 22%) ,plus the divi`s, over its 7 year pipeline.

While this company aint ever going to set the world on fire it will be a silent achiever. What really draws me to this company is that it's a rare combo of very solid growth and safety.
Its not going follow the path of ; PX1. ATM . AIR. MPG. ZEL . SML. NZR. FBL . TWR . NZO. STU. MOA..THL.SKT, NTL…... etc . etc . etc..

IMO, OCA is a classic get rich slowly company, all the while altruistically offering a fabulous product for our successful elders, Win-Win.

[Blue Skies]

Thanks so much Maverick, & Beagle for excellent analysis, untangling all the convoluted tricky bits & so generously sharing with us. Really appreciated.

[Beau]

Yes many thanks again for putting your time in and giving your views thanks to all.

[Bjauck]

Couldn't agree more Winner, these accounts are really something else to work through.....

While this company aint ever going to set the world on fire it will be a silent achiever. What really draws me to this company is that it's a rare combo of very solid growth and safety.
Its not going follow the path of ; PX1. ATM . AIR. MPG. ZEL . SML. NZR. FBL . TWR . NZO. STU. MOA..THL.SKT, NTL…... etc . etc . etc..

IMO, OCA is a classic get rich slowly company, all the while altruistically offering a fabulous product for our successful elders, Win-Win.

Thanks for your hard work going through and trying to make sense of the accounts. It seems to me that Beagle and yourself have more or less come to a similar long term conclusion.

That is a sad list of NZX company listings many of which had a SP built on "hot air" that went cold. OCA did have a bare-knuckle moment when Covid seemed to be starting its spread in NZ. I am not sure if OCA, and its shareholders, are altruistic inso far as they do expect a reward for offering what is shaping up to be great accommodation and care! The government may wish to save a bob by forcing a measure of altruism onto them though...

[Rawz]

Thanks so much Maverick, & Beagle for excellent analysis, untangling all the convoluted tricky bits & so generously sharing with us. Really appreciated.

Yes I concur and would add Winner69 to that list.

Gosh aren’t we lucky to have a few ST legends sharing their thinkings on OCA

[justakiwi]

Given my minuscule holding I really don’t count, but I’m more than happy to be an altruistic shareholder. Sure I hope to do well out of OCA long term, but I’m not greedy. I chose OCA over all the others because of their care focus. I would rather see lower care profits/shareholder returns, but quality, personal, meaningful care; rather than huge profits and mediocre/poor quality care.

Sometimes money isn’t everything.


I am not sure if OCA, and its shareholders, are altruistic inso far as they do expect a reward for offering what is shaping up to be great accommodation and care! The government may wish to save a bob by forcing a measure of altruism onto them though...

[Beagle]

Nice post Maverick. Even with 40 years professional experience OCA accounts make my brain hurt in a way no other listed company comes close so you do incredibly well to do your best to decipher them. On Friday I had an hour or two to think about it and I've come up with a preliminary estimate of $60 underlying for FY22 (8.55cps on the new 701.7m issued number of shares) so I do believe we're on the same page in that regard.

The question of what multiple the market will ascribe to them will be something of discovery during the year and will undoubtedly be affected by sentiment towards the sector and perceptions about where the real estate market is headed. My instincts tell me the current multiple is about right all things considered and we the shares will be in a range of 16-17 times 8.55 cps in a years time ($1.37-$1.45).

Based on long experience I believe for us to see PE multiple expansion beyond that we will need to see more than a story about the future prospects, we will need to see concrete evidence of earnings growth which I am hoping will show itself in FY23. Long term this is a sound hold but as mentioned before, (and something you've alluded too) this is a get rich slowly company and shareholders will need many more years of patience to see the full fruit of the business transformation program.

Julian Cook once told me you don't make any serious money out of a village until its ten years old, (average term of tenancy in a SUM village is 9 years). When I thought about it afterwards it was a real eureka moment for me. This is the golden nugget of information all investors in this sector need to understand that I am sure you already do. The serious money is not in care, its not in developing new villages and selling down units and realising development profits, its not in the deferred management fees earned each year under occupation right agreement models...where the real money is at, its in reselling those units to the next lot of residents with an input cost (repayment to the outgoing resident's estate) of just a mere fraction of the resale price. We will see this effect start to play itself out in the years ahead as the likes of the Sands and Meadowbank apartments and care suites come back up for resale, (average anticipated stay for residents at OCA is a lot less than SUM's business model), and that's where the magic really starts to happen. I will hold my very modest stake long term to see this magic play itself out and add to it, perhaps in a significant way if we get a bit closer to the new NAV of $1.28, (we're pretty close already).

My caution to investors is this is likely to be a fairly quiet year with the share price and it may essentially just track sideways for a while. Plenty of patience is required. Sometimes patience is the hardest investment skill of all to truly master, but nevertheless one must try their best to master it. (I wrote that last sentence mainly as a reminder to myself, hope its useful for others too).

[Bjauck]

Given my minuscule holding I really don’t count, but I’m more than happy to be an altruistic shareholder. Sure I hope to do well out of OCA long term, but I’m not greedy. I chose OCA over all the others because of their care focus. I would rather see lower care profits/shareholder returns, but quality, personal, meaningful care; rather than huge profits and mediocre/poor quality care.

Sometimes money isn’t everything.
Perhaps your understanding of the concept of altruism is different from mine. Would you continue to hold your investment if it lost money and the value of your investment reduced continually? If you would not, then your investment in a business with a focus on caring is conditional on your own reward. If you would, then your investment altruism could be short lived.

[Panda-NZ-]

After the IPO you're buying a peice of paper from someone else based on speculative expectations.

It's not an investment, perse, unless you were part of the original crew .

[justakiwi]

That’s not what I meant. I was referring to frequent comments that the care side of the business isn’t making enough money. As a shareholder that doesn’t bother me. As long as my investment is giving me a better return on my money, than the banks would be (and keeping up with inflation), I’m happy to hold for the foreseeable future. Yes, of course I need a return on my investment. Obviously if the day comes where I am not getting that I would reconsider my position. I’m not stupid. But as someone who has (as you say) an emotional connection to aged care, I am happy to be involved in a company that shares some of my personal philosophies on care.

I don’t see any reason why, in this particular holding, I can’t be both. An investor looking to make money on my investment, and an investor who actually cares about the business from a secondary social conscience perspective.

I don’t expect anyone here to “get it.” It’s not how investing generally works. But I’m giving it a whirl ;)


Perhaps your understanding of the concept of altruism is different from mine. Would you continue to hold your investment if it lost money and the value of your investment reduced continually? If you would not, then your investment in a business with a focus on caring is conditional on your own reward. If you would, then your investment altruism could be short lived.

[justakiwi]

Really? So you’re saying I’m not “investing” because none of my purchases were IPO purchases? When you “invest” in an IPO you are absolutely buying into that company based on your speculative expectations. So sorry, but your comment is ridiculous.


After the IPO you're buying a peice of paper from someone else based on speculative expectations.

It's not an investment perse, unless you were part of the original crew of investors.

[Panda-NZ-]

It doesn't go towards the company in any form.

It's important to realise what share investing is, ie your not really supporting them through buying on asb or sharesies.

[Blue Skies]

Nice post Maverick. Even with 40 years professional experience OCA accounts make my brain hurt in a way no other listed company comes close so you do incredibly well to do your best to decipher them. On Friday I had an hour or two to think about it and I've come up with a preliminary estimate of $60 underlying for FY22 (8.55cps on the new 701.7m issued number of shares) so I do believe we're on the same page in that regard.

The question of what multiple the market will ascribe to them will be something of discovery during the year and will undoubtedly be affected by sentiment towards the sector and perceptions about where the real estate market is headed. My instincts tell me the current multiple is about right all things considered and we the shares will be in a range of 16-17 times 8.55 cps in a years time ($1.37-$1.45).

Based on long experience I believe for us to see PE multiple expansion beyond that we will need to see more than a story about the future prospects, we will need to see concrete evidence of earnings growth which I am hoping will show itself in FY23. Long term this is a sound hold but as mentioned before, (and something you've alluded too) this is a get rich slowly company and shareholders will need many more years of patience to see the full fruit of the business transformation program.

Julian Cook once told me you don't make any serious money out of a village until its ten years old, (average term of tenancy in a SUM village is 9 years). When I thought about it afterwards it was a real eureka moment for me. This is the golden nugget of information all investors in this sector need to understand that I am sure you already do. The serious money is not in care, its not in developing new villages and selling down units and realising development profits, its not in the deferred management fees earned each year under occupation right agreement models...where the real money is at, its in reselling those units to the next lot of residents with an input cost (repayment to the outgoing resident's estate) of just a mere fraction of the resale price. We will see this effect start to play itself out in the years ahead as the likes of the Sands and Meadowbank apartments and care suites come back up for resale, (average anticipated stay for residents at OCA is a lot less than SUM's business model), and that's where the magic really starts to happen. I will hold my very modest stake long term to see this magic play itself out and add to it, perhaps in a significant way if we get a bit closer to the new NAV of $1.28, (we're pretty close already).

My caution to investors is this is likely to be a fairly quiet year with the share price and it may essentially just track sideways for a while. Plenty of patience is required. Sometimes patience is the hardest investment skill of all to truly master, but nevertheless one must try their best to master it. (I wrote that last sentence mainly as a reminder to myself, hope its useful for others too).




I remember many many years ago a strategic analysist told me the past belonged to companies which made money by making a widget & then selling it, i.e. manufacturing, but the future belonged to companies which were able to keep reselling the same widget over & over again. e.g. IT, App's, etc.

I always thought well run Retirement Villages also fitted this template.
Yes it will take time but when you look at all those OCA units at Meadowbank or Browns Bay or Taupo etc which will eventually be resold & resold & resold, you start to see a gradually accelerating rise in profits which should increase exponentially in years to come as initial development costs are paid off.

[winner69]

So Maverick and Beagle are 'on the same page' and forecasting Underlying Profit of $60m/$61m for FY22

They reported $61.2m Underlying Profit for the year to March 2020 (reference their comparative numbers in presentation)

So our guru's forecasts shows that earnings growth in FY22 (from $50.7m) will only get profit back to what was achieved 2 years prior

Patience and more patience required

[justakiwi]

Yes I realise that. There are occasions where one can financially “invest” outside of an IPO. Many of us did just that with the placement/retail offer.

I’m obviously doing a ****ty job of explaining myself. Bottom line - of course I want to make money, but money isn’t my whole focus.


It doesn't go towards the company in any form.

It's important to realise what share investing is, ie your not really supporting them through buying on asb or sharesies.

[Brain]

It doesn't go towards the company in any form.

It's important to realise what share investing is, ie your not really supporting them through buying on asb or sharesies.

Buying shares on market supports the share price allowing a company to raise capital if it wishes without much dilution to existing shareholders if the SP is high. I never buy @ IPO far too risky with all the hype. I wait for the dust to settle before I make a decision to buy. I consider my shareholding’s along with all the other shareholdings as supporting the company.

[Habits]

Given my minuscule holding I really don’t count, but I’m more than happy to be an altruistic shareholder. Sure I hope to do well out of OCA long term, but I’m not greedy. I chose OCA over all the others because of their care focus. I would rather see lower care profits/shareholder returns, but quality, personal, meaningful care; rather than huge profits and mediocre/poor quality care.

Sometimes money isn’t everything.

Do you also feel that way regarding village occupiers... would you rather see lower village profits and shareholder returns on that side from sales and resales so that new buyers can pay lower prices on units or apartments because it is the kind thing to do. Personally I would like to see much lower nz real estate prices, maybe oneday we can have a listed RV company do just that, making minimal profit or breakeven. Like the supermarket model, sell higher quantity at low margin. But we all know it will fail in short order

[Panda-NZ-]

Care fees are taxed with a quite punitive rate of 15% (gst) while revaluation gains aren't. The RV model doesn't work without it

[Maverick]

I can't believe we are all but singing from the same song sheet here Beagle! :t_up:
It seems we are in surprising agreement on most aspects of OCA but where our differences are now is mostly about the time frames for profit growth to show.

That was a really good post today by the way with some very salient points but I'd like to particularly respond to your eureka moment about Julian's (SUM) statement.

“where the real money is at, its in reselling those units to the next lot of residents with an input cost (repayment to the outgoing resident's estate) of just a mere fraction of the resale price.” Beagle

We will both remember that fun day at DR RUDIs a few years back (ST meeting + beer, oooh..... so much wisdom that followed;)). You were super keen to discuss this new “churn" thing and the fact OCA had it down to 3 years with their care suits. I do recall you hated the term “churn” though.

On the Q and A time on Friday's webinar, Brent made a comment that the c/s churn is even faster than that now.
I've already figured it out at 2.5 years and we are now already starting “reselling those units to the next lot of residents’ at the high end Sands and Meadow bank .
FY2022 will demonstrate a steep acceleration of care suite resales and profit that will just keep growing significantly.

What I'm probably making a hash of trying to say is that OCAs feature of fast churn dovetails beautifully into your "eureka" moment about the good profits arriving on the second sale . We are at the early stage now with the care suits.

Here are the resale volume for the last 5 years
62 79 94 107 136 ……2022 should be around 195

I have a pretty darm reliable formula for future modeling c/s sales with very accurate back testing. So my projection of 195 c/s sales 2022 sounds “pie in the sky” stuff but the math's are accurate.
OCA are also playing a similar game with Apartments which churn every 5.5 years so also quicker than a SUM villa.

In a nutshell , I think your time frame for growth to show up is too long and the growth is coming much sooner than you are expecting.

My thoughts are that there's no rush to jump back on Monday, this growth will be continual and ongoing. But why pay 20-25% more each year if you can buy them now virtually at asset price ( Actually the mkt price is currently slightly under asset backing if you add in another $.09cps on top of $1.28 when the unsold stock gets sold for the first time and the CBRE discount is removed).

Last thing….when are we going back to DR RUDI`s mate?

[Bjauck]

…
I don’t see any reason why, in this particular holding, I can’t be both. An investor looking to make money on my investment, and an investor who actually cares about the business from a secondary social conscience perspective.

I don’t expect anyone here to “get it.” It’s not how investing generally works. But I’m giving it a whirl ;) I think I understand, however I would not call that being altruistic. I apologise for getting lost in Translation:) Perhaps more people than you may think have a similar approach. I appreciate your passion in this field.

[Habits]

Care fees are taxed with a quite punitive rate of 15% (gst) while revaluation gains aren't. The RV model doesn't work without it

Revaluation gains could drop quite dramatically in the next year, along with lower development margins from higher labour and materials costs. My view is that the RV model is going to struggle

[Bjauck]

Care fees are taxed with a quite punitive rate of 15% (gst) while revaluation gains aren't…
A very good point.

[BlackPeter]

It doesn't go towards the company in any form.

It's important to realise what share investing is, ie your not really supporting them through buying on asb or sharesies.

Actually - you do. Every trading day is like a poll on the performance of a company. If people think it performs well (i.e. more interest in buying than selling at a certain price), SP will rise, if company isn't doing well, SP will drop.

How is this good for the company? Well, they find it much easier to get additional money when SP is up. Think about CR's, DRP's and similar.

Anybody buying into a company is supporting it - directly or indirectly ..

[Panda-NZ-]

We'll have to disagree there. It's the a similar problem to bidding higher prices on an existing property.

Though it has slightly more uses than the above example ill give you that.

[Greekwatchdog]

For Bars latest update this morning.

OUTPERFORM
Oceania Healthcare (OCA) reported a solid FY21 result with annuity EBITDA of NZ$33m, up +13% on FY20 despite only
reporting a 10 month period. We walk away with increased confidence that OCA has now reached an inflection point in
earnings as its premium care revenue continues to grow in-line or ahead of our expectations. We continue to foresee a
strong annuity earnings growth pathway as its investment into premium care sites matures, additional growth optionality
to accelerate its build rate or acquire additional sites is also present given its lowest gearing and highest cash recovery of
capex in the sector. Retain OUTPERFORM with an unchanged target price of NZ$1.80.
What's changed?
Increased confidence in annuity earnings growth
Our key takeaway from OCA's FY21 result was its continued strong growth in premium care earnings (care DMF and resale gains), a
key driver of annuity EBITDA. The care ORA model still remains relatively untested, particularly outside of Auckland, however, we are
growing increasingly confident in OCA's ability to grow annuity care ORA earnings as evident in FY21. Care DMF was up almost +50%
annualised and care resale gains up +100%, the latter was favourably impacted by strong resale margins at ~19%. Premium annuity
care revenue now makes up ~60% of care EBITDA, up from ~10% in FY16.
FY21 reaffirms our positive view
OCA's FY21 result delivered on our expectations and reaffirmed our positive view given; (1) valuation metrics remain undemanding.
Trading on 15x P/E and ~20x EV/Annuity EBITDA on our FY22 forecasts, OCA continues to be valued at a significant discount to its
larger peers despite, (2) us continuing to forecast it has the fastest annuity EBITDA growth in the sector over the next three years,
predominately driven by the frequent recycling of DMF (deferred management fees) and resales gains from the care suite product
and, (3) it has the lowest cash drag in the sector. Over the past few years the sector has been characterised by rising debt levels as
capital recycling has become harder, which has been most clear for OCA's larger peers. Following the equity raise in March, OCA's
gearing is now the lowest in the sector. With the highest cash recovery of capex, OCA's balance sheet and cash flow generation
provides ample headroom to accelerate its build rate or fund additional land or village acquisitions.

[Maverick]

Thanks for posting that GreekWD. I think they have summed it up perfectly, if anybody only reads that one post they will have a good idea on where OCA are currently at and it's value to its peers.

It is especially pleasing to see them only focusing on the numbers within the numbers and on the imminent growth just around the corner. It's worth pointing out that they mention nothing about overall 2021 profit in this whole write up.

[bull....]

congrats to mav and beagle for good analysis on this stock , but ill stick to my view of its a good trading stock but not a good long termer. my pick is more 1 dollar before 2 dollars

[justakiwi]

Absolutely. Not to mention non-financial support such as bringing awareness of a company to family, friends and acquaintances. One should never underestimate the impact “word of mouth” can have on a business. If every shareholder had a positive conversation about OCA with one prospective customer, imagine how many potential sign-ups that would be.



Actually - you do. Every trading day is like a poll on the performance of a company. If people think it performs well (i.e. more interest in buying than selling at a certain price), SP will rise, if company isn't doing well, SP will drop.

How is this good for the company? Well, they find it much easier to get additional money when SP is up. Think about CR's, DRP's and similar.

Anybody buying into a company is supporting it - directly or indirectly ..

[justakiwi]

It’s a miracle! :t_up:

It is refreshing to see you and Beagle on the same page for a change. Thank you both for your work behind the scenes and your contribution to helping the rest of us get a better handle on this report.




I can't believe we are all but singing from the same song sheet here Beagle! :t_up:

[Ferg]

congrats to mav and beagle for good analysis on this stock , but ill stick to my view of its a good trading stock but not a good long termer. my pick is more 1 dollar before 2 dollars
Based on what bull? I'm curious to hear SP predictions and opinions, especially where that is backed up with some sort of analysis. Is your pick based on rising building costs?

[bull....]

Based on what bull? I'm curious to hear SP predictions and opinions, especially where that is backed up with some sort of analysis. Is your pick based on rising building costs?

i have mentioned on here before i cannot go in depth fundamentally on any stock on this forum , my opinions are mainly bullish or bearish or price target based assumptions. i did say after it reached its highs 1.30 looked about right.

[Beagle]

I had another quick look through the investor presentation and annual report this morning and am feeling more comfortable with their medium term prospects.
Not really any major new insights to share other than embedded value is up very strongly (19%) which is a potender of solid growth in future profits to come, the new Waterford Village in Hobsonville is a fantastic site and nearby SUM's Hobsonville site (which I happen to know has been a huge money spinner for them) and that acquisition was noted by Brent as being eps accretive and I also think the Pukekohe site is in a good location. The Waterford acquisition tilts the property mix a little less towards care which is not a bad thing.

The other thing is maybe I have underestimated the extra costs and other impacts of Covid on OCA. If we can get Covid behind us with a really comprehensive vaccination program then then that's definitely going to help going forward.

Waimarie St in St Heliers will be a goldmine for them. I think an investment in OCA is a sound way to build wealth over time and then there's the feel good factor of knowing that residents are being well looked after.

I intend to accumulate on any untoward weakness and with the shares very close to NAV I started that process this morning.

Looking forward to a big party at Rudi's when this hits $2 in due course :)

[Rawz]

The Beagle seems to be well an truly back. Can never hold enough of OCA is the motto right?

[Joshuatree]

"In New Zealand, the average age of people entering retirement villages is 75. It puts this age right at the start of the baby boomer era – postwar 1946.'
From Johns Ryders excellent Global newsletter.

[Beagle]

The Beagle seems to be well an truly back. Can never hold enough of OCA is the motto right?

More like studying / following / watching and accumulating this cautiously...picture says a thousand words https://www.bing.com/images/search?view=detailV2&ccid=IQj%2fcL6x&id=5E8D1DBF13F76A663CD94D85CAA65D0DE3E6AE54&thid=OIP.IQj_cL6x_Z9L83fbu4z7tgHaFF&mediaurl=https%3a%2f%2fthumbs.dreamstime.com%2fb%2 fbeagle-works-laptop-dog-near-white-background-85020613.jpg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR2108 ff70beb1fd9f4bf377dbbb8cfbb6%3frik%3dVK7m4w1dpsqFT Q%26pid%3dImgRaw&exph=549&expw=800&q=beagle&simid=608047380710956564&ck=F27DCB4594FE8AC5AFDA5EA629BF177E&selectedIndex=64&FORM=IRPRST&ajaxhist=0&ajaxserp=0

[Bjauck]

More like studying / following / watching and accumulating this cautiously...picture says a thousand words https://www.bing.com/images/search?view=detailV2&ccid=IQj%2fcL6x&id=5E8D1DBF13F76A663CD94D85CAA65D0DE3E6AE54&thid=OIP.IQj_cL6x_Z9L83fbu4z7tgHaFF&mediaurl=https%3a%2f%2fthumbs.dreamstime.com%2fb%2 fbeagle-works-laptop-dog-near-white-background-85020613.jpg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR2108 ff70beb1fd9f4bf377dbbb8cfbb6%3frik%3dVK7m4w1dpsqFT Q%26pid%3dImgRaw&exph=549&expw=800&q=beagle&simid=608047380710956564&ck=F27DCB4594FE8AC5AFDA5EA629BF177E&selectedIndex=64&FORM=IRPRST&ajaxhist=0&ajaxserp=0
Singing Beagle
Singing and playing from the same hymn sheet or not?

https://www.youtube.com/watch?v=Qj_FCM7THDI

[Beagle]

LOL, classic. Check if the tail is wagging while he's singing ;)

Maverick's pretty good on the guitar eh ;) https://www.youtube.com/watch?v=5cY3Qf-roTM

[winner69]

Guru Mark from Craig’s has some comments on the sector

https://craigsip.com/insights/overview/magic%20Talk%20update

[RTM]

Caught a snippet on ZB about 12:50 today about the Government going to take a look at the contracts people sign when entering the villages.
Thrust of it seemed to be that the agreements are to complicated, to difficult to understand.

[Beagle]

Caught a snippet on ZB about 12:50 today about the Government going to take a look at the contracts people sign when entering the villages.
Thrust of it seemed to be that the agreements are to complicated, to difficult to understand.

Probably why ingoing residents are already required to take independent legal advice as per section 27 of the Retirement Village Act https://www.legislation.govt.nz/act/public/2003/0112/latest/DLM220365.html

There's also a 15 day cooling off period so people have time to reconsider, see section 28.

Not sure what the Govt are thinking here ?, seems to be adequate protections already in the Act.

[winner69]

Oceania EV/annuity ebitda is 20 times (forecast Fy22) acording to Forbar

Ryman is at 47 times


Jeez at Ryman multiples OCA would be at $3.65

Go Oceania - can never hold enough OCA they say

[Beagle]

Oceania EV/annuity ebitda is 20 times (forecast Fy22) acording to Forbar

Ryman is at 47 times


Jeez at Ryman multiples OCA would be at $3.65

Go Oceania - can never hold enough OCA they say

And they reckon OCA's annuity EBIIDA is going to grow faster than RYM's. RYM still trading at 2.4 times NTA and OCA below NAV if you add back unwarranted discount to NAV because of unsold units, (which will undoubtedly be sold in due course).

No more out of tune singing like in post #9156. I agree with Mav, these are a great way to build wealth steadily over the long run. The absolute key is patience and lots of it.

[Waltzing]

https://www.interest.co.nz/property/110531/sales-farms-and-lifestyle-blocks-are-running-well-ahead-last-year-prices-also-rise

some farmers will be able to afford the multi million dollar units it seems.

Sum other stock was the out performer in terms of SP.

This chart is still flat for at least 6 months?

Farmers have to retire to somewhere.

[justakiwi]

The farmers I know, and have known over the years, would be very unlikely to ever choose a retirement village situation for their retirement. They would hate it. Just saying ;)



Farmers have to retire to somewhere.

[Waltzing]

You might be right Just a Kiwi but dont some of these lovely new sites now come with nice views, nice gardens and good medical care.

The medical care factor must become a factor in the future as science now provides a level of care services never enjoyed by human kind before.

These types of facilities are surely reaching a level of sophisticated services that one cant ignore them when determining best places for the affluent to rest their bodies in hard won retirement.

[Panda-NZ-]

The medical care factor must become a factor in the future as science now provides a level of care services never enjoyed by human kind before.
.

Whether you die now or in two to four years is scarcely important, in my view anyway. It's certaintely not something worth paying millions for what amounts to an untreatable biological condition.

I think research into clear treatments for aging would have better outcomes for everyone. :)

[cymonger]

With regards to farmers and retirement, wanted to share an interesting thing I heard.

I work as a psychologist and for the last year I've covered the Otago region. Although I'm based in Queenstown, I do a lot of work in the rural areas as well. I was on an assignment in Te Anau., and a man shared an interesting observation with me.

He said back in the day, the farmers used to get together once a week after their sales/auction and engage in sort of a round table discussion. Not exactly a "men's group" as we might call it now, but more of a state of the union and place to share struggles, small victories, milestones, concerns, etc. Anyway, as time passed, he said the sales structure changed, and the farmers slowly stopped getting together like this.

He said there was a noticeable decline in the mental health of farmers following this change, which I completely believe. People need outlets. To be around other people. To experience belonging, empathy, and togetherness. Farmers often work in isolation, which contributes to some very serious problems with mental health. Sure there are other factors, but isolation is certainly a part of it.

I mention all this because I spent years working in nursing homes and retirement villages, and saw the difference between people who had this sense of belonging and those who didn't. People in isolation decline much more rapidly.

So what the heck does this have to do with OCA?

In my mind, OCA has gone out of their way to build villages that promote this sense of belonging. This has tremendous implications for mental health and overall longevity.

Years back, I doubt I would have gotten a big group of guys in rural Otago to open up like that.


The world is changing fast. Even for farmers.

[Waltzing]

Big advances in treatments for many health related problems coming in the next 20 years. Thank you for the comments from the mental health practitioner.

[winner69]

Arv reported this morning so we have three results to compare for the same period

Underlying profit per share 12 months March 2021

ARV down 6%
RYM down 7%
OCA down 18%


And SUM on December result was down 8%

[Beagle]

Not as simple as comparing underlying profit, (as I think you already know).

[bull....]

Arv reported this morning so we have three results to compare for the same period

Underlying profit per share 12 months March 2021

ARV down 6%
RYM down 7%
OCA down 18%


And SUM on December result was down 8%

bit of a trend happening

The Government’s move to dampen residential house prices and possible review of the sector’s regulatory framework are factors that could impact the sector and performance of Arvida.

so these govt moves might steepen the trend ?

[Beagle]

Too early to call it a trend. All were impacted by Covid shutdowns last year but all will have nicely improved embedded value (units that are worth a heck of a lot more now than they were last year) which will flow though into realized profits in the years ahead. Those in the sector on very demanding metrics (RYM) are vulnerable to an ongoing reality check, the rest look okay to me as part of a well diversified portfolio.
Disc: Modest stake in OCA, (added a few more yesterday) and a very modest stake in ARV.

[Waltzing]

looks flat; should hold here for next 6 to 24 months.

[Beagle]

I'm hoping for a good lift in their build rate in the years ahead.

[Mudfish]

Nothing useful to add, just a big thanks to Mav and Beagle for sharing your thoughts and workings. Obviously, you guys have put in a shiite load of work in the background that you have generously shared. I'm fairly deep in the mine with this one and feel very comfortable being so. I'm hoping SP will get a shot in the arm through the next couple of weeks as the result is fully digested but, either way, it's a long term hold for me. Cheers again.

[Waltzing]

"I'm hoping for a good lift in their build rate in the years ahead."

Would be a good thing Mr B.

That SUM other SP over the last 12 months just makes everything else in the sector look flat.

[Beagle]

"I'm hoping for a good lift in their build rate in the years ahead."

Would be a good thing Mr B.

That SUM other SP over the last 12 months just makes everything else in the sector look flat.




Depends when you bought. I backed the truck up on these at ~ 70 cents in May last year. after we emerged from the lengthy first major lockdown. Pretty happy with their 12 month performance :D

[Waltzing]

MR B.. yes 70 and 109.

[artemis]

.... The world is changing fast. Even for farmers.

Thank you for your insight, appreciated. Let's not forget farmers wives - they are farmers too of course. Quite a few farmers in my extended family, and noticed a few widows heading off to retirement villages, very happily. One cousin who inherited the family farm committed suicide in his 30s, with a young family. Massive shock. Brought up to be staunch, but expectations were huge ....

[Bjauck]

Thank you for your insight, appreciated. Let's not forget farmers wives - they are farmers too of course. Quite a few farmers in my extended family, and noticed a few widows heading off to retirement villages, very happily. One cousin who inherited the family farm committed suicide in his 30s, with a young family. Massive shock. Brought up to be staunch, but expectations were huge .... What a terrible situation. The rural suicide rate is worse than the urban rate. So often the vagaries of nature catch up. Expectations to be tough, resilient and resourceful can be a tall order.

0800 rural help
https://www.rural-support.org.nz/

[justakiwi]

As the mother of a dairy farmer I can also say this. it doesn’t help that the media and some members of the general public have taken upon themselves to abuse, criticise, judge and condemn dairy farmers. Farmers are not the evil, animal abusing, environment destroying people everyone seems to now believe they are. We are all contributing to the environmental/global warming solution. It is so unfair to lay the blame at the feet of dairy farmers. I have seen the abuse posted on various dairying related Facebook groups. It is disgusting and the people doing it need to have a good long look at themselves before they direct their abusive tirades at an industry this country needs, and farmers who are working their butts off and are already under serious pressures.

It breaks my freaking heart to hear how many dairy farmers have taken their lives. I am constantly worried for my son. Everyone has a breaking point.

<sorry, got a bit side tracked>

What a terrible situation. The rural suicide rate is worse than the urban rate. So often the vagaries of nature catch up. Expectations to be tough, resilient and resourceful can be a tall order.

0800 rural help
https://www.rural-support.org.nz/

[Habits]

As the mother of a dairy farmer I can also say this. it doesn’t help that the media and some members of the general public have taken upon themselves to abuse, criticise, judge and condemn dairy farmers. Farmers are not the evil, animal abusing, environment destroying people everyone seems to now believe they are. We are all contributing to the environmental/global warming solution. It is so unfair to lay the blame at the feet of dairy farmers. I have seen the abuse posted on various dairying related Facebook groups. It is disgusting and the people doing it need to have a good long look at themselves before they direct their abusive tirades at an industry this country needs, and farmers who are working their butts off and are already under serious pressures.

It breaks my freaking heart to hear how many dairy farmers have taken their lives. I am constantly worried for my son. Everyone has a breaking point.

<sorry, got a bit side tracked>

Congrats to you Just a Kiwi, You have raised your son well, with a strong work ethic and passion for what he does. I myself know several dairy farmers and they not only work hard, they know a lot of detail and facts about their businesses and the science around it etc.

Apologies for OT but I just could not, not comment

[Waltzing]

https://www.stuff.co.nz/national/politics/300317453/reserve-bank-suggests-govt-projection-house-price-increases-will-hit-nearly-zero-per-cent-are-right-on-track

[Habits]

Deleted....

[tzbang]

Victoria's second covid wave left 800+ people dead last year. 95% aged care deaths happened in Victoria. US residential care facilities has completely collapsed with 1/3rd of US covid deaths linked to nursing homes. I'm starting to get a bit nervous about this sector wide risk. Especially as our trans-tas bubble threatens our abilities to keep a lid on it. How's everybody feel about this? (Disc: fairly substantial stake in OCA)

[bottomfeeder]

Victoria's second covid wave left 800+ people dead last year. 95% aged care deaths happened in Victoria. US residential care facilities has completely collapsed with 1/3rd of US covid deaths linked to nursing homes. I'm starting to get a bit nervous about this sector wide risk. Especially as our trans-tas bubble threatens our abilities to keep a lid on it. How's everybody feel about this? (Disc: fairly substantial stake in OCA)

Been discussed before, more churn, more earn. Maybe distasteful, but a reality.

[justakiwi]

Not too concerned. From what I can tell the majority of rest home/village residents are happy to be vaccinated, as are most staff. We get our second dose tomorrow. Once the vaccinations roll out to the general population we will be in a pretty good place.


Victoria's second covid wave left 800+ people dead last year. 95% aged care deaths happened in Victoria. US residential care facilities has completely collapsed with 1/3rd of US covid deaths linked to nursing homes. I'm starting to get a bit nervous about this sector wide risk. Especially as our trans-tas bubble threatens our abilities to keep a lid on it. How's everybody feel about this? (Disc: fairly substantial stake in OCA)

[tzbang]

There will be a lot less elderly keen on the moving into retirement villages should these kind of statistics start showing up here.

[Playa]

Victoria's second covid wave left 800+ people dead last year. 95% aged care deaths happened in Victoria. US residential care facilities has completely collapsed with 1/3rd of US covid deaths linked to nursing homes. I'm starting to get a bit nervous about this sector wide risk. Especially as our trans-tas bubble threatens our abilities to keep a lid on it. How's everybody feel about this? (Disc: fairly substantial stake in OCA)
The Melbourne Rebels were talking a couple of days ago about flying from Melbourne to Sydney and then onto Queenstown for there next Super Rugby match against The Highlanders,just the fact that that could have been done is concerning.
In saying that, we so far have generally done a pretty good job of keeping it out of aged care facilities

[Beagle]

OCA did a stellar job last year managing the Covid risk and if necessary I expect they will repeat their safety protocols. If anything, the track record of OCA makes it a more attractive place than in the general community in the event of another outbreak. Further boost to demand to buy units in OCA ?

[davflaws]

OCA did a stellar job last year managing the Covid risk and if necessary I expect they will repeat their safety protocols. If anything, the track record of OCA makes it a more attractive place than in the general community in the event of another outbreak. Further boost to demand to buy units in OCA ?

When you are in -you are certainly all in. Are you sure there isn't some Lab somewhere in your pedigree?

[Beagle]

When you are in -you are certainly all in. Are you sure there isn't some Lab somewhere in your pedigree?

LOL...Hmmm https://www.bing.com/images/search?view=detailV2&ccid=JWuH8GbG&id=54C1BBA5C3CAF6AAB9A78F230168463389BE0845&thid=OIP.JWuH8GbG0OUyQk7uJW8GsgHaFj&mediaurl=https%3A%2F%2Fwww.somepets.com%2Fwp-content%2Fuploads%2F2015%2F04%2Fbeagle-lab-mix.jpg&exph=480&expw=640&q=beagle+as+fat+as+a+labrador&simid=608036484381955589&ck=61DFEE81C2DEF21D2EE4155D9A1285C3&selectedindex=10&form=IRPRST&ajaxhist=0&ajaxserp=0&vt=0&sim=11&cdnurl=https%3A%2F%2Fth.bing.com%2Fth%2Fid%2FR256b 87f066c6d0e532424eee256f06b2%3Frik%3DRQi%252biTNGa AEjjw%26pid%3DImgRaw Not sure that's a good mix.

I've still just got a very modest stake. Bought a few more this week, not many. Been buying more WHS, Tuners and KPG this week too.

[fish]

OCA did a stellar job last year managing the Covid risk and if necessary I expect they will repeat their safety protocols. If anything, the track record of OCA makes it a more attractive place than in the general community in the event of another outbreak. Further boost to demand to buy units in OCA ?

OCA have been proactive training a large number of nurses to be vaccinators-at least one for each Health Care Facility .
In theory they should not need to repeat last years stringent safety protocols for those vaccinated .

[winner69]

This chart shows how the market perceives Oceania v how they it perceives Summerset (relative market sentiment in other words)

Market was full of hope when Oceania listed but ever since that hope has steadily declined .....and even talk of inflection points haven't helped.

[Maverick]

This chart shows how the market perceives Oceania v how they it perceives Summerset (relative market sentiment in other words).
While that statement is true Winner, its more of a graph about how successful the " market perception " is of SUM.

SUM has gone from semi out of favour pre-covid with too many unsold units on its hands to the market darling because it had so many houses on its hands. It's weakness became its strength.
Just for fun , it would be interesting to see your graph of RYM vs SUM.

This is really a story about how fabulously successful the SUM "share price" has been which shouldn't be confused with its more recent "profitability".

[Beagle]

While that statement is true Winner, its more of a graph about how successful the " market perception " is of SUM.

SUM has gone from semi out of favour pre-covid with too many unsold units on its hands to the market darling because it had so many houses on its hands. It's weakness became its strength.
Just for fun , it would be interesting to see your graph of RYM vs SUM.

This is really a story about how fabulously successful the SUM "share price" has been which shouldn't be confused with its more recent "profitability".

Yeah, after checking I'd go along with that. I brought up comparative charts of OCA v ARV, (beaten ARV slightly) and OCA v RYM (beaten RYM well) and also OCA v NZX50 (matched) and its really a story of SUM outperformance. OCA has done okay.

[Baa_Baa]

Yeah, after checking I'd go along with that. I brought up comparative charts of OCA v ARV, (beaten ARV slightly) and OCA v RYM (beaten RYM well) and also OCA v NZX50 (matched) and its really a story of SUM outperformance. OCA has done okay.

Those comparison charts (SP price performance relativity, not including dividends) can be a bit confusing, as people know it depends a lot on when (the date) one starts the comparison.

RYM vs SUM vs ARV vs OCA comparison since 2013 (https://invst.ly/uz7xc) shows SUM smashing the others.

Let's zoom in to the Covid low, see how much is changed. Gosh, SUM and OCA smashing the others (https://invst.ly/uz7xx).

Useless really aren't they, SP comparison charts. Need to look at the whole picture, capital plus returns, and argue about when to start the comparison.

[Beagle]

Yeah....I was just comparing the 4 since OCA listed and the charts I looked at didn't include dividends so if you included them OCA has probably slightly outperformed the NZX50 since it listed, (which I think is a credible result considering they have been in the early stages of a business transformation program) and well and truly outperformed the benchmark (RYM) and I believe would have still just have outperformed ARV.

SUM has been the standout performer over the years no matter which way you slice and dice it ! Food for thought for the future. Is it a coincidence that their business model has the highest level of independent living units compared to the others and they have performed the best and with ongoing high increases in the cost of providing care does this suggest they will continue to outperform their peers going forward ? Perhaps the higher churn rate of OCA's business model, (once their business transformation program is complete) will even things out ?
Hmmm

[winner69]

Duration of that chart OCA share price up 13% pa and SUM up 26% pa

In same period OCA Book Value up about 14% pa and SUM up about 26% pa

Is that spooky

Says that neither has been re-rated up or down - both on same multiple as 4 years ago

So SUM have not really been rewarded (relative to OCA) over the last four years for their out performance (financially)

One could take the view that even 4 years ago both 'deserved' the multiple they were on back then and performance since then has maintained those multiples

Sort of says that multiples relative to another mean something - and says that just because one trades at a higher multiple than the other you cannot say the other should be on that multiple as well (or the market average)

Maybe the market does think rationally (and weighs things up appropriately)

[James108]

I think the fact that Sum has had the highest development of units/year in proportion to the amount of current units explains the majority of their outperformance. This may have been risky but obviously paid off when house prices increase 20% p.a.

[Joh13]

I found this interesting in the Forbar analysis about Arv...
“If successful a focus on greenfield is likely to be rewarded by the market in the form of
higher multiples, in-line with its larger peers Summerset (SUM) and Ryman (RYM)”

I’m not sure if others noticed or I misunderstood Brent when he said they were “pivoting” I think he meant towards more green fields acquisitions and developments?

Reading the analysis above maybe if that were to happen eventually there would be expansion of the PE multiple.

[Maverick]

I found this interesting in the Forbar analysis about Arv...
“If successful a focus on greenfield is likely to be rewarded by the market in the form of
higher multiples, in-line with its larger peers Summerset (SUM) and Ryman (RYM)”

I’m not sure if others noticed or I misunderstood Brent when he said they were “pivoting” I think he meant towards more green fields acquisitions and developments?

Reading the analysis above maybe if that were to happen eventually there would be expansion of the PE multiple.

Very astute there Joh and well pointed out. The gist of those quick comments Brent made that most may not have picked up, are significant.

Basically the building from here on does not involve the disruptive "smash `em down and rebuild new stuff in its place" along with all the ugly staff and occupancy inefficiencies that come with it.
Now the current and future developments are non village disruptive. As per the current example of the Lady Allum care suits being built along side the fully functioning existing village.
The future developments are far more "greenfield" in nature, OCA having finished building nearly all of the disruptive care suits , and are now out of the way. From here on associated financials are much easier to quantify. We are already seeing the staff cost / client ratio falling accordingly. Even OCA`s pipeline of small conversions involving a few care suits being built within older premises are almost complete (only about 40 more go where they used to do 50-60 per year)
The ratio of new cares suits to ILU building was 66/33 up until now, from here on its 50/50. (same as ARV going forward)

So from here OCA should be far easier to understand, staff costs ratio reducing and the high rewards from the apartments becoming more predominant.
While over the next 2 years the rocketing care suits resales will be the feature and drive profit growth, the real profit action gets cracking about 2023 when the new apartment sales , which are under construction now, start selling down....and then Beagles scenario about resales kicking in after that

......ohhhhhh, some one give me a beer to put these flames out !!!. (BTW, that's a top gun quote for you youngins)

[Joh13]

An analyst that I subscribe to initiated coverage of OCA (BUY) medium term target of $1.60

OCA is a New Zealand based retirement village operator. While much smaller than the likes of Summerset and Ryman, it still has 44 villages spread across New Zealand. Oceania is focussed on premium care which is helping it deliver more recurring revenue and the benefits associated with generating higher earnings per bed. Oceania shares have pulled back from a strong rebound since covid-19, but has provided meaningful upside for investors since its IPO in 2017. We maintain a positive view on the retirement village sector with the market paying a premium given strong fundamentals and growth prospects.

We initiate coverage on Oceania with a BUY rating as it provides attractive value within the highly valued retirement village sector, with a decade-long growth tailwind in demand as the population aged above 80+ is set to grow. Valuation metrics look favourable, paying a higher dividend and priced at a lower multiple to peers, with a premium to its asset valuation only 1.13x net tangible asset (NTA) per share (the book valuation of its property). This can be contrasted to major peers Summerset and Ryman trading on 2-2.5x NTA, due to their longer track record, larger size, and better-quality perception. Over time, we think OCA can trade at higher valuations if management can prove themselves to investors and execute on growth plans.

Looking ahead, OCA’s smaller scale and lower debt levels means it has funding capacity to ramp up development activity as needed, or to make more acquisitions. At the same time, Oceania’s strategy to focus on premium care will help deliver a higher level of recurring revenue which implies earnings will be less reliant on expanding development activity.

Seems the rest of the market is starting to realise OCAs potential.

[Beagle]

Hey Mav me old mate, it seems all the drunk monkey's have now sobered up and with all the professional analysts in alignment that this is a BUY I can't help wondering if we'll see a decisive break back up through the 100 day MA which is ~ $1.42 sometime soon and if not, why not ?

[winner69]

Hey Mav me old mate, it seems all the drunk monkey's have now sobered up and with all the professional analysts in alignment that this is a BUY I can't help wondering if we'll see a decisive break back up through the 100 day MA which is ~ $1.42 sometime soon and if not, why not ?

Hope so but I’m a bit confused

Seems OCA aren’t actually going down the care path after all .....latest talk all about the future being developing new villas and apartments

Must have missed something

OCA story telling a bit rat ****

[Beagle]

Some might even be so bold as to suggest that their story telling is a bit obtuse, perhaps not unlike their financial statements ;)

What we really need is a 3 year road map to $3 telling us how they're going to do it. That might get the punters excited again.

[justakiwi]

Not sure why you believe that. Certainly not the impression I got. Lots of talk about focusing on increasing numbers of premium care suites/units as they realise this is where they can make money on care, rather than standard care beds.


Hope so but I’m a bit confused

Seems OCA aren’t actually going down the care path after all .....latest talk all about the future being developing new villas and apartments

Must have missed something

OCA story telling a bit rat ****

[winner69]

Some might even be so bold as to suggest that their story telling is a bit obtuse, perhaps not unlike their financial statements ;)

What we really need is a 3 year road map to $3 telling us how they're going to do it. That might get the punters excited again.

The ‘roadmap’ that got everybody excited was this new road down the care path and we would all be rich .....but Mav tells us another story about villas and apartments based on what he heard this guy Brent said.

Maybe Oceania are themselves confused and really have no idea where they heading?

[justakiwi]

They are doing both. Quality care is still very much a focus.


The ‘roadmap’ that got everybody excited was this new road down the care path and we would all be rich .....but Mav tells us another story about villas and apartments based on what he heard this guy Brent said.

Maybe Oceania are themselves confused and really have no idea?p where they heading?

[winner69]

Hey Mav, a question

Have you ever worked out how much they have written off when they demolished the old units to build spanking new ones.

Would have hurt profits eh ,...and not a cost to be repeated to same degree in future so that’s good.

[Beagle]

Hey Mav, a question

Have you ever worked out how much they have written off when they demolished the old units to build spanking new ones.

Would have hurt profits eh ,...and not a cost to be repeated to same degree in future so that’s good.

I like where you are going with that line of question.
Us motley old mutts might be confused by their dog's breakfast accounts but the market has clearly spoken since their annual result and a clear break up through 30 day moving average at $1.36 on very good and (much higher than usual), volumes suggests others are buying their story even if it lacks definition.

[winner69]

I like where you are going with that line of question.
Us motley old mutts might be confused by their dog's breakfast accounts but the market has clearly spoken since their annual result and a clear break up through 30 day moving average at $1.36 on very good and (much higher than usual), volumes suggests others are buying their story even if it lacks definition.

OCA need to get a move on - one of the sector laggards this year

RYM down 14% and OCA down 3.4%

SUM about evens and ARV the star at +3.4%

NZX50 down about 6% so OCA could be called a star as well

[Waltzing]

"Dogs bowl of accounts", classic Mr B.

not really confidence building stuff but the retirement wave has to go somewhere...

who ever does the best care is surely where they are going to go.

It might be case of investing heavily in building a reputation pays off in the long run.

Not really a high growth high profit industry going forward for a while.

[Maverick]

Hey Mav, a question

Have you ever worked out how much they have written off when they demolished the old units to build spanking new ones.

Would have hurt profits eh ,...and not a cost to be repeated to same degree in future so that’s good.
Hey Beagle and Winner,
I'm not sure your gonna get what you are hoping for as it only effects the consolidated profit but not the underlying profit which I think we mostly agree is the standard yardstick the market uses.

2018 impairment 1.1m
2019 impairment 7.0m
2020 impairment 0.9m
2021 impairment 4.2m

I really don't put much effort into this balance sheet stuff as I find it unbearably confusing. ( I know Winner you've got their cashflow covered ;) )
Thankfully it all gets processed out from the comprehensive income before it gets to underlying profit.

From here forward what is important to the underlying profit is that OCA no longer need to turn away income as they empty buildings and pay staff inefficiently for retaining and while refilling the new care suits.

I know we've got more to chat about but gotta go.........Mike Pero`s Apprentice is coming up soon and cant miss that....apparently someone is going to get fired! :eek2:

[winner69]

Hey Beagle and Winner,
I'm not sure your gonna get what you are hoping for as it only effects the consolidated profit but not the underlying profit which I think we mostly agree is the standard yardstick the market uses.

2018 impairment 1.1m
2019 impairment 7.0m
2020 impairment 0.9m
2021 impairment 4.2m

I really don't put much effort into this balance sheet stuff as I find it unbearably confusing. ( I know Winner you've got their cashflow covered ;) )
Thankfully it all gets processed out from the comprehensive income before it gets to underlying profit.

From here forward what is important to the underlying profit is that OCA no longer need to turn away income as they empty buildings and pay staff inefficiently for retaining and while refilling the new care suits.

I know we've got more to chat about but gotta go.........Mike Pero`s Apprentice is coming up soon and cant miss that....apparently someone is going to get fired! :eek2:

Thanks Mav .....there’s probably been a decent chunk of accelerated depreciation as well.

[Maverick]

Maybe Oceania are themselves confused and really have no idea?p where they heading?
I think your stirring a bit there Winner, I know you're way too smart to actually mean that.

It appears Greg T and Elizabeth believe OCA knows exactly what it is doing.
Justa Kiwi didn't have to say much yesterday either to see she has "listened " to the latest result and understands the focus is a combo value care suite and apartments. (With by far the bulk of profits coming from the apartments - according to me at least).

Now for today's exciting fluff story stuff .....that so far today the stragetigally placed 'wall of selling' (I have a theory why that wall has been there and it's not to actually sell) has disappeared. If that player has actually buggered off for good then Beagle will get his 100 MA crossing thing hopefully breached today, perhaps handsomely by Friday...?

Lastly, Mike Pero fired the wrong apprentice last night. Definitely the guy with the hair bun should have gone...don't trust him.

OCA , the thread where you can talk about anything....

[winner69]

I think your stirring a bit there Winner, I know you're way too smart to actually mean that.

It appears Greg T and Elizabeth believe OCA knows exactly what it is doing.
Justa Kiwi didn't have say much yesterday either to see she has "listened " to the latest result and understands the focus is a combo value care suite and apartments. (With by far the bulk of profits coming from the apartments - according to me at least).

Now for today's exciting fluff story stuff .....that so far today the stragetigally placed 'wall of selling' (I have a theory why that wall has been there) has disappeared. If that player has actually buggered off for good then Beagle will get his 100 MA crossing thing hopefully breached today, perhaps handsomely by Friday...?

Lastly, Mike Pero fired the wrong apprentice last night. Definitely the guy with the hair bun should have gone...don't trust him.

OCA , the thread where you can talk about anything....

The untrustworthy / bad guy always one of the last to depart

Keep them on to keep you getting grumpy :t_up:

[Beagle]

"Dogs bowl of accounts", classic Mr B.

not really confidence building stuff but the retirement wave has to go somewhere...

who ever does the best care is surely where they are going to go.

It might be case of investing heavily in building a reputation pays off in the long run.

Not really a high growth high profit industry going forward for a while.

Thinking about putting my head inside the OCA dog's breakfast / meat grinder accounts and having another think about their multitude of ways to measure profit makes me feel like this
https://www.bing.com/images/search?view=detailV2&ccid=Fx%2bjYVd7&id=68702B9AE257187EDF53D6972475CAD3743AA4B3&thid=OIP.Fx-jYVd7Li2t1dE08p1XBAHaEK&mediaurl=https%3a%2f%2fi.ytimg.com%2fvi%2fSLBNnpvx 4mY%2fmaxresdefault.jpg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR171f a361577b2e2dadd5d134f29d5704%3frik%3ds6Q6dNPKdSSX1 g%26pid%3dImgRaw&exph=720&expw=1280&q=grumpy+beagle&simid=608013776891809898&ck=F0941DDA5A29DC5737EA183CFFF2A43D&selectedIndex=0&FORM=IRPRST&idpp=overlayview&ajaxhist=0&ajaxserp=0
Yeah...NAH....I'm making this too hard for myself. Lets think happy thoughts. They made $167.8m total comprehensive income, (lets be honest this is a property company) so lets be happy and on weighted average shares on issue of 623m that's eps of a whopping 27 cps and the shares are on a PE of only 5.2 !

Conclusion, it pays not to think too hard or you'll do your own head in...if you hold shares take the highest profit number, easy peasy happy Beagle https://www.bing.com/images/search?view=detailV2&ccid=UHWSk0eB&id=66A9288941CC75E72775CB3B2BDFDD8630F284C6&thid=OIP.UHWSk0eBGOrLiz5oRaQWHAD6D6&mediaurl=https%3a%2f%2fstatic.boredpanda.com%2fblo g%2fwp-content%2fuploads%2f2015%2f09%2fFile-Sep-27-12-10-33-AM__700.jpeg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR5075 9293478118eacb8b3e6845a4161c%3frik%3dxoTyMIbd3ys7y w%26pid%3dImgRaw&exph=700&expw=700&q=happy+beagle&simid=607998375138840441&ck=D0B4983D2C521369C141994B83029A26&selectedIndex=7&qpvt=happy+beagle&FORM=IRPRST&ajaxhist=0&ajaxserp=0

[winner69]

Thinking about putting my head inside the OCA dog's breakfast / meat grinder accounts and having another think about their multitude of ways to measure profit makes me feel like this
https://www.bing.com/images/search?view=detailV2&ccid=Fx%2bjYVd7&id=68702B9AE257187EDF53D6972475CAD3743AA4B3&thid=OIP.Fx-jYVd7Li2t1dE08p1XBAHaEK&mediaurl=https%3a%2f%2fi.ytimg.com%2fvi%2fSLBNnpvx 4mY%2fmaxresdefault.jpg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR171f a361577b2e2dadd5d134f29d5704%3frik%3ds6Q6dNPKdSSX1 g%26pid%3dImgRaw&exph=720&expw=1280&q=grumpy+beagle&simid=608013776891809898&ck=F0941DDA5A29DC5737EA183CFFF2A43D&selectedIndex=0&FORM=IRPRST&idpp=overlayview&ajaxhist=0&ajaxserp=0
Yeah...NAH....I'm making this too hard for myself. Lets think happy thoughts. They made $167.8m total comprehensive income, (lets be honest this is a property company) so lets be happy and on weighted average shares on issue of 623m that's eps of a whopping 27 cps and the shares are on a PE of only 5.2 !

Conclusion, it pays not to think too hard or you'll do your own head in...if you hold shares take the highest profit number, easy peasy happy Beagle https://www.bing.com/images/search?view=detailV2&ccid=UHWSk0eB&id=66A9288941CC75E72775CB3B2BDFDD8630F284C6&thid=OIP.UHWSk0eBGOrLiz5oRaQWHAD6D6&mediaurl=https%3a%2f%2fstatic.boredpanda.com%2fblo g%2fwp-content%2fuploads%2f2015%2f09%2fFile-Sep-27-12-10-33-AM__700.jpeg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR5075 9293478118eacb8b3e6845a4161c%3frik%3dxoTyMIbd3ys7y w%26pid%3dImgRaw&exph=700&expw=700&q=happy+beagle&simid=607998375138840441&ck=D0B4983D2C521369C141994B83029A26&selectedIndex=7&qpvt=happy+beagle&FORM=IRPRST&ajaxhist=0&ajaxserp=0

I once knew a well respected accountant who kept telling me that when revaluations are concerned a profit isn't a profit until its realised (sold)

[Beagle]

I once knew a well respected accountant who kept telling me that when revaluations are concerned a profit isn't a profit until its realised (sold)

Well....yes...no...maybe....I suppose if one concedes that over the long run the property market is generally tracking upwards and given that CBRE are incredibly conservative, (has to be so, Earl told me that), a valuation increase is ostensibly a type of profit increase, albeit unrealized but nonetheless value accretive so a form of earnings if you like. I guess one must concede the share price should broadly follow some appropriate multiple of NAV which went up strongly from $1.03 to $1.28 in 10 months, total comprehensive income of 25 cps plus dividends for 10 months, so around 28 cps total comprehensive income... not too shabby !. Maybe one of the new tricks we need to embrace is to look at the rise in embedded value ? (to be crystalized in future years) up very strongly to $258.8m, see page 30
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/372535/346452.pdf

Sometimes the expression "dog's breakfast" seems inadequate. I guess we have to root through the mess to find the answer that suits us best ;)

[justakiwi]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete. Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.
who ever does the best care is surely where they are going to go.

[Maverick]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.

This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete.

Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.
Brilliant post .....UBS have recently done a NZ study saying exactly this. Other providers are recognising this and also moving in this direct and also adopting the care suite model.
Luckily there is room for everyone, in fact as a country we need this.

[Maverick]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.

This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete.

Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.
Brilliant post .....UBS have recently done a NZ study saying exactly this. Other providers are recognizing this and also moving in this direction, also adopting the care suite model.
Luckily there is room for everyone, in fact as a country, we need this.

The way you are growing In the investment world Justakiwi, it wouldn't surprise me if you own your resthome one day. Well done!

[Beagle]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete. Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.

SUM are doing exceptionally well with a very high proportion of independent living units v care units. I think they attract a younger resident.

[justakiwi]

That may be the case now, but will it be in 10-20 years? If current predictions are correct, we will see people remaining in their homes longer, with more community based support. Unless they have major health related needs, which require hospital level residential care, most of them will not be looking to leave their homes until they are in their 80’s - possibly longer. Some will no doubt still choose a villa or serviced apartment maybe, but many will need standard care at the minimum by then. Even just looking at the last few residents to come into our rest home - 85 to 99 years of age. None of them wanted to leave their home and move to an independent living situation such as a villa/apartment. They just want to live out their days stress free, not have to be bothered with cooking, laundry, gardening any longer.

Maybe the villas will end up being occupied by early retirees - in their 50s and 60s? Providers may find they have to change their demographics in term of minimum age for a villa or apartment (assuming they currently have one). I have no idea, but it’s a real possibility down the track.

Either way, I still believe OCA has the edge in terms of their understanding of care and future care needs. So I’m more than happy to see where they take me.


SUM are doing exceptionally well with a very high proportion of independent living units v care units. I think they attract a younger resident.

[justakiwi]

Thank you :)

Sadly, I left my investment run way too late for that, but in the back of my head I do have a fantasy dream about owning my own little rest home. If you have Netflix, check out a series called “Derek” - a feel-good, funny, UK series about a family home type rest home. Ricky Gervais produced it and played the main character. I actually don’t particularly like him as a comedian, but he did brilliant job of this series. That’s my dream rest home ;)

https://www.youtube.com/watch?v=N3UvuoCFDcs



Brilliant post .....

The way you are growing In the investment world Justakiwi, it wouldn't surprise me if you own your resthome one day. Well done!

[Beagle]

SUM and OCA have very different business models, which in my opinion makes them quite good complimentary holdings.

[winner69]

Didn’t Mav mention something about the oca share price smashing through the 140 mark soon

Well it’s happened

Smashed through it good and proper

[Baa_Baa]

Didn’t Mav mention something about the oca share price smashing through the 140 mark soon

Well it’s happened

Smashed through it good and proper

Technically on the Daily chart (https://invst.ly/u-719) it's looking good as well, through the pivot nicely today (closed on it yesterday), run up through 100MA to the shallow down trend line today, closed on the 50% Fib retrace - perfectly. Still upside room on the indicators.

I shouldn't focus on the short term charts for this long hold, but it's hard not to when you have a lot at stake (relatively speaking).

:t_up:

[Beagle]

I "hounded" up a few more shares at $1.40 on the open this morning. Bit of a curse being an accountant sometimes dealing with accounting standards, conventions and generally accepted accounting principle's.

Managed to drag myself screaming and kicking into the 2020's and embraced this new fandangled total comprehensive income jargon, (I am pretty sure Winner would approve) and try and convince myself they really made $167.8m in total, and that its all really, real profit. Got to tell myself that silly old dog's can learn new tricks and that if something is value accretive to the balance sheet then one way or another, (no matter what accounting standard you choose), its appropriate the share price reflects the increase in balance sheet strength.
Creative accounting 101 will probably get me in trouble one day, but today is not that day :D

[justakiwi]

Who are you? And what have you done with Beagle? :laugh:;):laugh:


I "hounded" up a few more shares at $1.40 on the open this morning. Bit of a curse being an accountant sometimes. Managed to drag myself screaming and kicking into the 2020's and embraced this new fandangled total comprehensive income jargon and try and convince myself they made $167.8m in total, and that its all really profit. Got to tell myself that even silly old mutts can learn new tricks and that if something is value accretive to the balance sheet then one way or another, (no matter what accounting standard you choose) its appropriate the share price reflects the value accretion.

[Beagle]

Who are you? And what have you done with Beagle? :laugh:;):laugh:

I've been on a refresher dog training course called creative accounting 101 for old bean counting mutts :lol:

[Baa_Baa]

An analyst that I subscribe to initiated coverage of OCA (BUY) medium term target of $1.60

OCA is a New Zealand based retirement village operator. While much smaller than the likes of Summerset and Ryman, it still has 44 villages spread across New Zealand. Oceania is focussed on premium care which is helping it deliver more recurring revenue and the benefits associated with generating higher earnings per bed. Oceania shares have pulled back from a strong rebound since covid-19, but has provided meaningful upside for investors since its IPO in 2017. We maintain a positive view on the retirement village sector with the market paying a premium given strong fundamentals and growth prospects.

We initiate coverage on Oceania with a BUY rating as it provides attractive value within the highly valued retirement village sector, with a decade-long growth tailwind in demand as the population aged above 80+ is set to grow. Valuation metrics look favourable, paying a higher dividend and priced at a lower multiple to peers, with a premium to its asset valuation only 1.13x net tangible asset (NTA) per share (the book valuation of its property). This can be contrasted to major peers Summerset and Ryman trading on 2-2.5x NTA, due to their longer track record, larger size, and better-quality perception. Over time, we think OCA can trade at higher valuations if management can prove themselves to investors and execute on growth plans.

Looking ahead, OCA’s smaller scale and lower debt levels means it has funding capacity to ramp up development activity as needed, or to make more acquisitions. At the same time, Oceania’s strategy to focus on premium care will help deliver a higher level of recurring revenue which implies earnings will be less reliant on expanding development activity.

Seems the rest of the market is starting to realise OCAs potential.

Thanks for posting, can you say who the analyst is?

[justakiwi]

LOL! There’s hope for you yet …. welcome to the dark side :D


I've been on a refresher dog training course called creative accounting 101 for old bean counting mutts :lol:

[Rawz]

Hey OCA is a $1b company again! Cool stuff aye.

Don't think we will see low $1.30's ever again. NZX will always put good companies up for sale every now and then.

Guess we heading back to $1.60.

[winner69]

LOL! There’s hope for you yet …. welcome to the dark side :D

It’s what happens to accountants at the onset of winter :D

[Beagle]

It’s what happens to accountants at the onset of winter :D

Strange things happen to Beagles in winter...they start to think outside the box / kennell ? :)
https://www.bing.com/images/search?view=detailV2&ccid=1gn0lqbr&id=64B5F9C5A750573E2BC8758FB3582A92D326A122&thid=OIP.1gn0lqbr1Iy_0h7n1MSoXAHaE7&mediaurl=https%3a%2f%2fimages3.alphacoders.com%2f9 77%2f977029.jpg&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fRd609 f496a6ebd48cbfd21ee7d4c4a85c%3frik%3dIqEm05IqWLOPd Q%26pid%3dImgRaw&exph=1365&expw=2048&q=winter+beagle&simid=608024205073259179&ck=B12C26150499CB4838FD51238C244951&selectedIndex=4&qpvt=winter+beagle&FORM=IRPRST&ajaxhist=0&ajaxserp=012561 No worries, we have out breakout up through the 100 day moving average, onward and upward to $1.68 the average analyst price target.
https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

[YoungBull]

I must admit I was extremely pleased when the price was pulled down to 1.30. I managed to purchase a good amount more down there. Being so close to the NTA is a great floor for me, really bolstered my decision to buy more.

[Joh13]

Thanks for posting, can you say who the analyst is?

No worries, they call themselves ATM Strategy. https://atmstrategy.com.au (https://atmstrategy.com.au/)

Good day for OCAs SP :-)

Must be some potential if Beagle is topping up at $1.40 :)

[Bjauck]

No worries, they call themselves ATM Strategy. https://atmstrategy.com.au (https://atmstrategy.com.au/)

Good day for OCAs SP :-)

Must be some potential if Beagle is topping up at $1.40 :)

At least the SP is now higher than the $1.37 I paid in October last year.

[BlackPeter]

At least the SP is now higher than the $1.37 I paid in October last year.

My best buy for OCA was 55 cents in March 2020. One of these events though, where - with hindsight - I regret that I didn't buy more than I did :):

[Beagle]

https://www.nzherald.co.nz/business/barfoot-thompson-data-auckland-house-prices-set-new-record-107m-median-for-may/HHCIVKILXZFZ5NLRAE32JC7P54/

Surprising data that should give encouragement to all investors in this sector.

[Waltzing]

https://www.interest.co.nz/property/110674/barfoot-thompsons-average-selling-price-down-just-43-may


More to support as above from MR B; investors in this sector.

And more of these to come..

https://www.stuff.co.nz/business/property/300312456/plans-for-threestorey-150-apartment-complex-in-rural-horowhenua-stuns-neighbours

possible several years for the effects of investor changes to show up or more.

immigration back on the demand side to lift GDP

government may be forced into increasing numbers which may again keep demand for housing increasing.

Where are all those skilled machine operators going to come from?

The equation that is missing is the reinvestment of capital for housing to cater for the rental market and where that comes from.

[bohemian]

We've all been there, would of, could of, should of, the most used phrases used by share investors.

[Snoopy]

We've all been there, would of, could of, should of, the most used phrases used by share investors.


Only those share investors that did not pay attention in English classes though. Those that did pay attention 'would of' (sic) used the phrases 'would have', 'could have' or 'should have'. Or the contracted versions "would've", "could've" of "should've". When spoken those " 've" endings sound a bit like 'of'. And if you write down what you think you hear, that is how the "would of" grammar corruption got started.

SNOOPY (on behalf of the grammar police)

[Brain]

Only those share investors that did not pay attention in English classes though. Those that did pay attention 'would of' (sic) used the phrases 'would have', 'could have' or 'should have'.

SNOOPY (on behalf of the grammar police)

one of the great things about investing in the sharemarket is that a good knowledge of grandma is not necessary and if I was a religious cat I would thank god for that.

[Waltzing]

"good knowledge of grandma in investing"

but a knowledge of gamma?

[bottomfeeder]

In reply to "would 've could've, should've"

And it will continue forever. But sometimes we do get it right. OCA is an inflation proof investment. It has an aging population intent of getting into its villages. Or perhaps forced into its villages. There are always very few alternatives. Even competition does not take your business away as there is excess demand. I am so overweight in this company its not funny, but I am happy and have levels where I will continue to buy and times where I will sell.

[Brain]

In reply to "would 've could've, should've"

And it will continue forever. But sometimes we do get it right. OCA is an inflation proof investment. It has an aging population intent of getting into its villages. Or perhaps forced into its villages. There are always very few alternatives. Even competition does not take your business away as there is excess demand. I am so overweight in this company its not funny, but I am happy and have levels where I will continue to buy and times where I will sell.

There is a threat to OCA and others in that sector and that is government intervention. I have a meaningful ( to me that is) investment in OCA and Sum (20% of my portfolio) but I am very wary of what the political muppets can conjure up. Landlords cannot claim interest expenses/costs as a tax deduction is a very good example. I rest my case.
Be very careful out there.

[justakiwi]

Yes, the government may decide to take onboard the recommendations that have been made re the sharing of capital gains. What that might look like is anyone’s guess. What I do know however, is the government needs these providers, as there are literally no alternatives. Small NGO/non-profit aged care providers such as the one I work for, have limited capacity, limited (financial) resources, and simply cannot meet the need for care, hospital and dementia level services - current or future - alone. The government may ask for some cooperation from the big boy providers, but common sense tells us they can’t dictate to any major extent. If the likes of RYM, SUM, OCA decide to pull out of government contracted care, the government is screwed. They cannot provide standard care on the scale needed, any other way. This applies equally to whichever party is in power.

At the risk of being labelled “emotional” again, I personally have no objection to some kind of capital gains sharing. I’m not talking a 50/50 split or anything like that, but I think there is room for negotiation. But no, I don’t expect anyone to agree with me ;)


There is a threat to OCA and others in that sector and that is government intervention. I have a meaningful ( to me that is) investment in OCA and Sum (20% of my portfolio) but I am very wary of what the political muppets can conjure up. Landlords cannot claim interest expenses/costs as a tax deduction is a very good example. I rest my case.
Be very careful out there.

[Blue Skies]

There is a threat to OCA and others in that sector and that is government intervention. I have a meaningful ( to me that is) investment in OCA and Sum (20% of my portfolio) but I am very wary of what the political muppets can conjure up. Landlords cannot claim interest expenses/costs as a tax deduction is a very good example. I rest my case.
Be very careful out there.


In the last 12 months, banks lent just $9 billion towards investment in NZ businesses, compared to $30 billion towards loans for us buying houses off each other.
With rampant house inflation & some of the most unaffordable housing in the world risking crashing the economy & an epidemic of social problems, do you not think something had to be done?

I think the link with a harsh govt intervention threatening the whole retirement sector is tenuous at best.