OCA - Oceania Group - retirement villages

[Baa_Baa]

I think you’ll be right (again) Winner.

Having thought about it more it was way oversold. Management and major shareholders were happy to buy big around $1.40.

I posted a week or so ago to back the truck up but Beagle said no. Instead I only increased my holding a measly 15% at $1.04. Wasted opportunity?

Worrying about a few cents here or there isn’t worth the angst.

[Waltzing]

"No Discounting"

since the 1 to 1.05 range goes back to late 2017 you have to think they have increased value since then.

It EPS that matter most as housing Values continue to decline.

[Rawz]

Difference between then and now is that its broken up through the 30 day MA so we have some real TA support for not just the bottom being in but also the prospect of a new uptrend. From memory, last week I did comment it was getting very close.

That's true


Worrying about a few cents here or there isn’t worth the angst.

That's also true

$1.30 probably a fair next stop. That's a 21.5% increase from today

[ralph]

I think you’ll be right (again) Winner.

Having thought about it more it was way oversold. Management and major shareholders were happy to buy big around $1.40.

I posted a week or so ago to back the truck up but Beagle said no. Instead I only increased my holding a measly 15% at $1.04. Wasted opportunity?

Yes good on winner for making a call this time next week up 10 % we will all be happy with that, I think when someone puts it out there like that it shows Honesty not fearing rebuke & I respect that .
But I am happy still awaiting the sub One dollar as well not getting fomo on this one yet a lot can happen in a week

[Rawz]

Yes good on winner for making a call this time next week up 10 % we will all be happy with that, I think when someone puts it out there like that it shows Honesty not fearing rebuke & I respect that .
But I am happy still awaiting the sub One dollar as well not getting fomo on this one yet a lot can happen in a week

The $1 dream is over my friend. It was a special thought and we got close.. but it’s clear nobody was willing to sell at those levels.

If SP was going to capitulate below $1 it would have happened during the first breaking news of house price slump and Ukraine war + omicron running amuck. Those 3 events couldn’t give us the magical sub $1 so sorry for us all but we will never ever ever see it again.

We should steadily trend to $1.30 now. A nice 20% gain. I’ve got a buy order in for this morning at $1.07

[winner69]

The $1 dream is over my friend. It was a special thought and we got close.. but it’s clear nobody was willing to sell at those levels.

If SP was going to capitulate below $1 it would have happened during the first breaking news of house price slump and Ukraine war + omicron running amuck. Those 3 events couldn’t give us the magical sub $1 so sorry for us all but we will never ever ever see it again.

We should steadily trend to $1.30 now. A nice 20% gain. I’ve got a buy order in for this morning at $1.07

Methinks you be amending that order to market ……else always be chasiing the price up

Just my opinion ;)

[Rawz]

Methinks you be amending that order to market ……else always be chasiing the price up

Just my opinion ;)

Yes, good call.

Saw a headline this morning: "There's a 90% probability that the stock market has already bottomed in 2022"

It certainly feels that way. The wind is blowing in a different direction these days

[Poolboy]

Darn. I take what you guys say quite seriously - I'm now sad. I have saved up quite a lot of pocket money and wanted to buy a swag more at 76 cents.

[Brain]

Jeez how things change. I had to double check that this is still the OCA thread. Winner - well done - you changed the sentiment - held back the tide and you did it with only a couple of posts.

[Poolboy]

Good. I'm pleased to have made your day.

I hope to be just like you when I grow up.

[Brain]

Good. I'm pleased to have made your day.

I hope to be just like you when I grow up.

My comment was not aimed at you Poolboy. It was simply a comment on how sentiments will change quickly and sometimes very easily. OCA’s prospects have not changed in the last 6 months probably but market sentiment can be all over the place

[Curly]

OCA back in favour? Up .04 on the back of rise on Friday. SUM. RYM and ARV all down. Pleased I topped up at $1.05.
Should have got more.

[Ggcc]

OCA back in favour? Up .04 on the back of rise on Friday. SUM. RYM and ARV all down. Pleased I topped up at $1.05.
Should have got more.
Too early to say, but either way I am happy.
I still have not bought anymore but would have if they would have hit 90 cents. Have enough already over 20% of my portfolio.

[Rawz]

When the share market gods offer up a gift one must take it...

Ever look at a long chart of a stock and look back at all the dips and say, wish i bought there or there or there.. this is one of those dips

Not advice. GLHs

[Old mate]

Top of the board. Unreal.

[Baa_Baa]

When the share market gods offer up a gift one must take it...

Ever look at a long chart of a stock and look back at all the dips and say, wish i bought there or there or there.. this is one of those dips

Not advice. GLHs

Picked up a boot load (not a truck, or a trailer) at open for $1.07, so today has been pretty satisfying, up through the 50EMA solid close at $1.12. Indicators are undemanding.

[Beagle]

Top of the board. Unreal.

This mutt seems to be able to run alright when the fat Beagle gets off its back :lol:

[Rawz]

This mutt seems to be able to run alright when the fat Beagle gets off its back :lol:

Beagle, you need to pick up the scent again.. there is a feed to be had here.

Get that dead mangy rabbit (WHS) out of your jaws and come feast on this buffalo lol. Plenty to go around until $1.30

[winner69]

Top of the board. Unreal.

Was that the leaders board?

[Old mate]

Yeah top percentage gain 4.67%. Unreal:t_up:

[couta1]

Deleted, bit cheeky.

[winner69]

ARV bit cheeky putting this in their newsletter ….ARV best in sector

But the grey line will go ahead of the orange line soon …won’t it?

[trader_jackson]

ARV bit cheeky putting this in their newsletter ….ARV best in sector

But the grey line will go ahead of the orange line soon …won’t it?

ARV doing great I agree! - wait, is this the OCA thread or the ARV thread winner?

[winner69]

ARV doing great I agree! - wait, is this the OCA thread or the ARV thread winner?

Just shows the size of the opportunity in buying OCA shares at these prices …surely has to outperform from current beaten down low price.

Like 20% gain just to get to where ARV is ….plus how much extra ARV goes up in next month or two.

[Beagle]

ARV bit cheeky putting this in their newsletter ….ARV best in sector

But the grey line will go ahead of the orange line soon …won’t it?

OCA is not the runt of the litter, RYM is !!!!!!!

[Baa_Baa]

ARV bit cheeky putting this in their newsletter ….ARV best in sector

But the grey line will go ahead of the orange line soon …won’t it?

Cheeky is right, these comparison charts are fickle simply by when you choose the starting point, as this chart illustrates (https://invst.ly/xu6an) by choosing the March 2020 Covid lows as a starting point.

Key: RYM - blue, ARV - red, OCA - purple, SUM - green

The only takeout that I can see is the green-shoots emerging of a beaten down sector, with SUM, OCA and ARV suggesting a bottom reversal. RYM still pretty sad though.

[Rawz]

I got some more this morning at $1.10.
Don't think ill regret it

[Poolboy]

Sorry. Sorry in advance. But I didn't know who to ask...

But why is RYM doing so very badly. Sure they are all bad. But why is RYM the badlyest?

[Old mate]

Fomo party over today so far.

[BlackPeter]

Sorry. Sorry in advance. But I didn't know who to ask...

But why is RYM doing so very badly. Sure they are all bad. But why is RYM the badlyest?

I guess it just depends on your perspective and time horizon. Ryman used to be the gold standard for retirement villages, they promised to grow by 15% every year and they used to keep this promise (well, this was the good old days). Market loved them for it and pushed its price basically beyond any reasonable valuation.

Took market some time to realise that it pushed Ryman too high, and stopped loving it when growth rates dropped slightly below the magic number. Ryman still recovering from the hights an unbalanced market pushed them to. This does not mean its a bad company, it just means that market used to overprice them and is now correcting this mistake.

In my view they are still a good and solid company, just still a bit dear.

Ah yes, and even if retirement villages are currently not the markets darling ... this does not mean they are bad. It just means that you currently could buy quality at good prices ... but hey - some people just prefer to pay high and sell low. Each for themselves.

[Poolboy]

Thanks Peter.

[winner69]

Bugger - share price heading back to $1

Hope it stays in that 100/110 band

[couta1]

Bugger - share price heading back to $1

Hope it stays in that 100/110 band I think you meant to say, hope it stays in the 110/120 band, forget about a dollar and think bigger.

[Beagle]

Back into the 100-110 dog box.

[Rawz]

The buffalo has soured?

[couta1]

The buffalo has soured? Think zig zag trajectory not straight up.

[Beagle]

The buffalo has soured?

Rabbit meat is much more tender ;)

[Rawz]

Think zig zag trajectory not straight up.

I know. As long as each week is higher than the last.

A small pull back and one can sense the fear in here..

Fear is a disease. Hope is its only cure.

[Beagle]

For you Rawz https://www.youtube.com/watch?v=YrJ2uCi-l18

[Rawz]

I see. Eventually the bull always wins :t_up:

[bull....]

i said $1 was the level it was going too ( 1.01 in fact the low so close enough ) so the bounce from here was not surprising as it had too work off the oversold levels.
probably go back to plodding around like it does now as the trade has completed. we await the next move lol

[Rawz]

bull you have called it fairly well.. do post what you think the next move will be...

[couta1]

bull you have called it fairly well.. do post what you think the next move will be... You shouldn't be seeking advise from a fickle trader but rather ask yourself where you see the company and sp 3 yrs from now.

[Rawz]

You shouldn't be seeking advise from a fickle trader but rather ask yourself where you see the company and sp 3 yrs from now.

End of the day bull said it was going to tumble and it did... its all on record

I like to hear bull and bear cases, always.
I have been buying $1.04-$1.10. So my thinking is there is value here. But keen to hear all thoughts.

[couta1]

End of the day bull said it was going to tumble and it did... its all on record

I like to hear bull and bear cases, always.
I have been buying $1.04-$1.10. So my thinking is there is value here. But keen to hear all thoughts. My broken clock will also call it right twice today, thing is traders and longs have completely different modus operandi and the rationale for each is completely different, does it really matter if the sp went to 99c when it will very likely be a $3 plus share eventually?

[Entrep]

My broken clock will also call it right twice today, thing is traders and longs have completely different modus operandi and the rationale for each is completely different, does it really matter if the sp went to 99c when it will very likely be a $3 plus share eventually?

Everyone has different data, info and knowledge to provide. The job is for each person in these forums to digest and apply it how they want according to their circumstances. Trying to shoot down a successful trader like this is not helpful for anyone.

[couta1]

Everyone has different data, info and knowledge to provide. The job is for each person in these forums to digest and apply it how they want according to their circumstances. Trying to shoot down a successful trader like this is not helpful for anyone. Whos shooting down a trader? I'm just pointing out that trading has a more fickle modus operandi than going long with different goals and thats the problem when you try and mix salt and fresh water together. I've already acknowledged on the FPH thread that Bull and JTH are good at what they do and all power to them.

[winner69]

Housing market: 'Rapid decline' in annual price growth - QV

https://www.rnz.co.nz/news/business/464860/housing-market-rapid-decline-in-annual-price-growth-qv

[Old mate]

Come on winner bring back the it's all good talk that got it going at start of the week.:t_up::t_up:

[winner69]

Come on winner bring back the it's all good talk that got it going at start of the week.:t_up::t_up:

Eagerly awaiting the next inflection point on the price chart

[percy]

Eagerly awaiting the next inflection point on the price chart

In the meantime go to www.chrislee.co.nz and this week's Taking Stock, and read the excellent write up on major shareholder/director Gregg Tomlinson.
A great NZder.

[Goose]

Cheers for the link Percy, much appreciated. Greg Tomlinson is indeed a fine individual and I am very happy having him involved with both OCA and HGH.

[Beau]

Thanks for the link Percy, Agree 100 percent with Gooses statement or should that be Geese :)

[Greekwatchdog]

So result day is 20th May. Oh what a contentious day on sharetrader that will be between the believers and non believers.

[winner69]

So result day is 20th May. Oh what a contentious day on sharetrader that will be between the believers and non believers.

greekwatchog - Seems you expecting a ho hum not so good result then

Not going to be really bad as they probably would have said so today

[Greekwatchdog]

greekwatchog - Seems you expecting a ho hum not so good result then

Hey Winner, Sales will be good as per SUM and ARV's update and expect demand for sector going forward to be strong. I suspect Covid costs and wage pressures will still be a concern and have a impact on result which some will see as negative.

Just being patient until 2023 FY then we will start to see improvements to bottom line.

[winner69]

Hey Winner, Sales will be good as per SUM and ARV's update and expect demand for sector going forward to be strong. I suspect Covid costs and wage pressures will still be a concern and have a impact on result which some will see as negative.

Just being patient until 2023 FY then we will start to see improvements to bottom line.

I’m still ‘projecting’ $60m and a bit Underlying Earnings

That be pretty good.

[Greekwatchdog]

I’m still ‘projecting’ $60m and a bit Underlying Earnings

That be pretty good.

I'll take that Winner thou I am sure the Non Believers/traders will scoff at it like they did with ARV sales update.

[Sideshow Bob]

I’m still ‘projecting’ $60m and a bit Underlying Earnings

That be pretty good.

That would be 8.5cps.....

[Waltzing]

Dont forget to whatch the Australian movie, Never To Late.

Group of Aussie's break out of a retirement village.

Any breakouts coming here soon?

[winner69]

That would be 8.5cps.....

Meaning ‘fair value’ of about $1.02

That’s scary

[BlackPeter]

Meaning ‘fair value’ of about $1.02

That’s scary

That's assuming you don't see any future growth?

Forward earnings CAGR (based on analysts forecasts ... yes, I know ... :) ) is 7. If they are right, then a PE of 20 could easily be justified, which would come out roughly as $1.60.

Actually - $1.60 is the current "consensus". Spooky, isn't it?

[winner69]

That's assuming you don't see any future growth?

Forward earnings CAGR (based on analysts forecasts ... yes, I know ... :) ) is 7. If they are right, then a PE of 20 could easily be justified, which would come out roughly as $1.60.

Actually - $1.60 is the current "consensus". Spooky, isn't it?

Your mate Ben would come up with $1.87 with that 7 CAGR

Even better …and even scarier

[peat]

Any breakouts coming here soon?

There has been a baby one already and now the correction has been supported by the 30 day MA


13723

yes I know its all a bit marginal....

[winner69]

That's assuming you don't see any future growth?

Forward earnings CAGR (based on analysts forecasts ... yes, I know ... :) ) is 7. If they are right, then a PE of 20 could easily be justified, which would come out roughly as $1.60.

Actually - $1.60 is the current "consensus". Spooky, isn't it?

This post of yours BP makes me think you are grasping at straws to justify current position in OCA and are close to capitulation

Hope not as the future is bright ....so hang in there .....but this is not financial advice

[BlackPeter]

This post of yours BP makes me think you are grasping at straws to justify current position in OCA and are close to capitulation

Hope not as the future is bright ....so hang in there .....but this is not financial advice

Interesting conclusion ... you are clearly better than me in reading things between the lines which are not there :) .

Anyway - no, I do not have any intention of selling my OCA shares over the foreseeable future.

[winner69]

House prices on way down ….2.1% in March v February

Housing market could be heading for a long cold winter with March sales at a 10-year low for the month and prices falling in most parts of the country
https://www.interest.co.nz/property/115357/housing-market-could-be-heading-long-cold-winter-march-sales-their-lowest-month-10

Wonder if Forbar et al will pull that chart that shows retirement stock share prices tend to follow the ups and downs in the HPI. Maybe falling house prices not baked into sector prices yet …OCA at 90 cents in a month or two?

[Greekwatchdog]

I totally disagree on this winner. Takes ages for these increases/decreases to go through. After all OCA has plenty of head room as they haven't raised their prices by too much. But then the market is irrational.

[850man]

Will the drop in sales price change the minds of older folk who are looking at moving into a retirement village? They have other motivation s in general for wanting to make that move and although some will be deterred, not all by any means.

Be interesting if housing demand increases now borders are open again to immigrants. Unfortunately the whole situation is not helped by the high inflation and huge cost of living here vs other countries

[winner69]

OCA share price still going nowhere

Maybe too big ..... as market is loving the real small guys .... Radius UP 10% last few days .... wow

[Greekwatchdog]

They are down from $1.75. Just let be until Result time then pick and complain. No point saying anything until then

[couta1]

They are down from $1.75. Just let be until Result time then pick and complain. No point saying anything until then I think you mean $1.59 but yeah your other point stands.

[Greekwatchdog]

I thought it floated Dec 20 at $1.75. Doesn't really matter about them. Back to sleep.

[couta1]

I thought it floated Dec 20 at $1.75. Doesn't really matter about them. Back to sleep. May 5th 2017 at 79c, have a good sleep but wake up before May 20th.

[ralph]

I thought it floated Dec 20 at $1.75. Doesn't really matter about them. Back to sleep.
I think winner is just looking to start a debate & 1.04 could be a good entry point if not wait till it goes lower

[couta1]

I think winner is just looking to start a debate & 1.04 could be a good entry point if not wait till it goes lower No one is going to care about a few cents here or there when its $3. Lol

[ralph]

May 5th 2017 at 79c, have a good sleep but wake up before May 20th.
I think Greek watch dog is referring to Radius as winner mentioned that company also

[ralph]

No one is going to care about a few cents here or there when its $3. Lol
Very true but whom wants to hang about that long !! lol

[Greekwatchdog]

No one is going to care about a few cents here or there when its $3. Lol

Was pricing RAD not OCA. The dog is awake trust me.

[couta1]

Very true but whom wants to hang about that long !! lol How long do you think you'll have to hang around for?

[couta1]

I think winner is just looking to start a debate & 1.04 could be a good entry point if not wait till it goes lower Ah yes I see that now, winner bored and having a Friday pot stir.

[Beagle]

Deleted...

[Maverick]

Ferg and I have been comparing notes lately and since I've got tons of time waiting for the interislander why not share a bit of it during this pre report void.
It is admirable the large effort Ferg has also put in to build his own model, plus he's a top bloke too! I share this with his permission.

Winner has previously suggested NPAT could be $60m, Beagle about the same (but he is more focused on comprehensive income???) then Ferg and I have separately arrived at $58m , both of us agreeing there is ' risk ' to the upside.

So between all 4 estimates we are agreeing on a healthy NPAT rise of 16%-20% after the last 4 flat years of flat c.$50m. Winnner and Beagle , if you are willing, I would love to know what has caused you to deduce the leap in NPAT this year after 4 flat years of profit?


Despite this forecasted jump, touch wood, the market may still not be too impressed as there are now 12.5% more shares issued which soak up most of this EPS growth leaving only 5% visible EPS growth.

Brent tells us there Will be accretive growth from the FY22 2X acquisitions but Im not so sure, maybe he means it's just for future years. Of the 2 acquisitions that these new shares bought Im struggling to see how the purchase of a rest home on a large paddock will be accretive (unless there's oil underneath). Therefore I haven't allowed for any earnings from either of these so any, and surely there will be some at least, will be additional to my $58m estimate.

Next thing from discussions with Ferg is our differing expectations of costs. His are pleasantly lower than mine. Logically he is likely right ,at some point costs should not increase at the recent fast pace relative to growth as they have as there has to be future efficiencies by maturing villages. ( a tiny example is the recent Green Gables-Nelson delivery no longer employs their sales lady as all units are now sold) This especially applies to the high growth of corporate overheads costs as things level off to satisfy the new , higher delivery rates. We are probably already there. Again , I have not guessed when this moment might happen so any slowdown of cost growth will be a bonus on top of my own expectations if and when it occurs.

What is very clear from the last 4 years is the significant growth happening with “ annuity like income”- care DMF,village DMF, and PAC fees. Here's what I'm talking about...

Village DMFs 3 yr CAGR are 29%. Forecast result c. $33m
Care DMFs 4 yr CAGR are 42% Forcast result c.$14.8m
PAC fees 3 yr CAGR are 11% Forcast result c.$11m

Consider this growth , which has been linear to date, is now happening on quite large numbers now as opposed to 3 years ago, the 2 main drivers, care and village DMFs, are now double from only 3 years ago.
The constant focus here on ST of burgeoning care costs / wages that will forever be killing any profits IMO are now being dwarfed now that the handsome revenue figures above are beginning to overwhelm them. Even if the “care” side, nurses looking after clients ,made absolutely nothing for FY23 (ie all DHB income were fully paid out in costs) the growth rates above still give us 20% NPAT growth. Rising house prices of course assists this growth but is only a part of it so even a downturn in HPI isn't the disaster most seem to think it will be.

I do acknowledge ,Beagle , as you have correctly loudly barked untill this point, that costs have risen sharply for years and that has indeed swallowed the growing DMF profits to date.
From here though I wil argue that these annuity revenues are strongly increasing on a much larger base now ,as above. While potentially at some point surely corporate cost rises should plateau. Well at least not grow at such pace as the built rate apex’s to its new increased level. The upcoming result will shed some light on that.

Every time I really dig into the spreadsheets ,I get enthused like really enthused. It's as clear as day when you look at this with well laid out figures but that takes a lot of work to do. Unfortunately reading too much ST which has a much shorter time horizon than this puppy needs to shine or just looking at the daily share price that enthusiasm evaporates pretty quickly.

The math is all there with plenty of data now for anybody who puts in substantial effort and it will be interesting how a nice result next month will be met by the market given how negative market sentiment currently is.
I do think, due to so many personal site visits, it's easy for me to view this as a real business that I own a piece of and can touch rather than just a disappointing NZSX share chart.

One last unrelated thing, a quick shout out to "Artemis "and " Sonny o Share" whom I thoroughly enjoyed meeting at their monthly water cooler meeting in Wellies. Very nice to meet you both.

[Goose]

Thanks Maverick and Ferg for your hard work and your willingness to share some of your thoughts and analysis - it is these kinds of posts that really add value to the forum. I am looking forward to 20 May and some more information to be revealed.

[couta1]

Re Nursing costs over the last couple of yrs, in order to retain nurses costs have risen significantly. Just over a year ago $30/hr was the starting rate for a junior, it is now $38, senior nurses are now commanding $43/hr. Competition is fierce between the players in the sector due to the huge shortage as well as with the DHB and as an example SUM are offering 50c/hr above the DHB plus a 5k sign up bonus, this is all due to the Govt's border policies but thankfully they are starting to open up.
All this is of course separate from the ongoing funding shortfall in the sector from the Govt via the DHB's but as unit sales increase this will become less of a problem as it has with SUM others, just a bit more patience required here to obtain the reward but it will happen.

[Beagle]

Thanks for your thoughts Maverick and Couta1.

Sorry Maverick, I have tempered my expectations and see no underlying eps growth this year. Headline underlying profit may grow a little but as you say there's a lot more shares on issue. I don't want to be too prescriptive on the numbers because as you allude too, there's many different ways to look at the "dog's breakfast" that is, OCA financial reporting.

There's a number of new indicators that have emerged recently that concern me.
House sale prices have declined about 8% from the peak in November.
More importantly volumes are very weak and most notably we just had the weakest sales volumes in March in many, many years.
Plenty of evidence from other companies in the sector that they are incurring many millions per annum extra in healthcare costs due to Covid
Huge pressure on staff resources and demands from staff and huge competition in the sector to get staff, as Couta1 has alluded too. Pay rates can only go one way and at real speed and Government underfunding is likely to remain a real issue for basic care services. Doctors for example were reported this week to have only received a bulk funding adjustment of just under 3%, this against a backdrop of inflation at 6.9% and huge pressure on doctors to find staff ands deal with Covid pressure. Andrew Little should be ashamed of himself signing off on such a pathetic adjustment and the signs for chronic ongoing Govt healthcare under funding for this sector appear ominous.

We are going to be five years into this with no underlying eps growth is how I see it as a snapshot at this point which is a pretty sobering situation to be in. Half a decade is certainly not an inconsiderable amount of time for a company to be able to show it can grow its earnings so my belief it hasn't yet makes me very cautious about the future. There is the unimputed ~ 4% yield though so I suppose that's something, although it should be noted these days that many good quality corporate bonds are yielding ~ 5% (ironically, including OCA bonds themselves, OCA 020 traded and closed at 5% yesterday with substantial volume on offer at 4.9%). With bonds generally having the toughest start to the year in decades with yields rising at an incredible rate, I can't help but feel that good corporates bonds are now starting to provide real competition for shares. TINA or TRINA as its sometimes referred too (There really is no alternative) to shares appears a mantra that's no longer applicable.

An alternative - Most rental properties struggle to net you 4% return after all the work involved, maintenance and deep cycle maintenance, the risks (meth contamination, malicious damage and water ingress damage to name just 3 risks are far more common than many people realise) and the prospect for capital losses with rental properties in the short to medium term appear very, very real indeed. Against that backdrop, by comparison with OCA trading at a significant discount to NTA and especially NAV, investment in OCA, which is ostensibly an investment in property makes a lot more sense however I expect the systemic problem they have with serious wage cost increases will prove to be a problem that's both enduring and exceptionally difficult to tame.

The fact is this problem has proved exceptionally enduring for all of the five year life of OCA and right at the minute the healthcare workforce is highly stressed and facing a cost of living crisis with 6.9% inflation so why shouldn't they ask for even more money ? The plain fact of the matter as I see it is Nurses are the most "in demand" professional group in the world at present and it matters not if you're opening up the borders, in fact its probably going to exacerbate the problem if Nurses can get say $60 an hour working in say Perth where housing is less than half the cost of Auckland. I think skilled Nurses and staff are more likely to leave the country than come here and the problem will prove to be really enduring.

The big unknown as I see it in the medium term is what direction will our new CEO take the company in and will he try and change the culture of the company ? Are new developments like the Pukekohe one that's probably currently in the planning and design phase still going down the high care focus route or are they going to try and change the focus a bit more towards independent living that's been so successful for SUM ?

On the culture front, are they going to try and initiate tighter cost disciplines the likes of which have been so successful for SUM or do they run with the cultural roots of this company which stem way back to when many of the healthcare facilities were run as charities by Presbyterian support services ? A culture of care is all that matters regardless of cost seems prevalent within the company to me.

What we know for sure is that at this point the company still has about 50% of its rooms mired in the old basic care model which make ostensibly nothing and the promised 6 year transformational program they promoted at the time of listing seems to be dragging out and looking like another 5 years (10 in total), until they get down to 30% basic care facilities. That's "Glacial pace" in anyone's language.

30% is still quite a handbrake on future growth so again it comes back to the culture and direction that management take this company in the future and frankly it worries me that the early signs of some new joint venture with a district health board suggest their focus is still very much on low profit, (if any), care. Sometimes the culture of a company never changes, in fact in my experience, this happens more often than not.

Sure I concede that the steadily rising DMF fees and resale profits, (which is where the real money is) do give some scope for encouragement but the headwinds I've alluded too at considerable length remain and in my opinion will be enduring and very serious.

My main other reservation is on the demand side. I think most people want the full feature "cruise ship" experience with their retirement village lifestyle. The bowling green, swimming pool etc and the "boutique" type facilities that OCA provide are somethign I foresee as being less attractive and remaining so.

For at least the next decade due to population demographics as the baby boomers thrive in the earlier stages of their retirement I think the full feature villages that RYM, SUM and to some extent ARV provide will be in much higher demand. SUM in particular have the lowest level of care and are the least affected by the human resource cost challenges, have a well proven business model with strong cost disciplines and appear well placed to really thrive in a high demand for full feature retirement villages type environment. In addition they are already rolling out their model in Australia and have an experienced and highly competent development team and their CEO is a very bright man with a long proven track record in this sector. (Many will not know this so I will share, (Scott was responsible for price setting of units for many years while Julian was CEO and he's still doing a splendid job of that with three price increases last year...they can do this because their villages are in such high demand).

Looking further out, about a decade from now as the baby boomer population bulge moves in their late 80;s and early 90's I think OCA's care suites will really be an area of rich reward for OCA.

That's my long term view of it. I am not expecting much from OCA in 2022 other than a 4% unimputed dividend yield, about the same you'd get on rental property investment but with OCA, with less downside risk.

Lets hope the base its built at around $1.05 holds until there's better times ahead.

Disc: Remaining with a modest 3.6% portfolio allocation and not inclined to change that up or down any time soon.
If you want growth I'd go with SUM...they are unencumbered with the handbrake OCA have.
Disc: I am waiting for the TA on SUM to look attractive and intend to take a larger position in SUM than I have in OCA when the time is right).
If OCA bonds get to 6% I think that will be a very attractive and lower risk alternative investment than OCA shares, for those looking for a stable low risk return on some of their portfolio allocation.

Finally, the problem with building models to try and foresee the future is they're only as good as all the assumptions that go into them. Not intended to disrespect Maverick or Ferg who are both fine, likeable and astute chaps but if I was to build up a DCF model for OCA I would be making the assumption that human resource costs increase at the same 7.5% per annum they have for the last 5 years, for at least the next 5 years, probably ten years. I suspect including that assumption into their model's would make their future outcomes look a lot less attractive. Why continue to use such a high rate of human resource growth ? Because the past proves the company are completely incompetent with their attempts, (if any), to control this, their biggest cost. Sorry, but from a shareholders perspective that's the ugly truth of it right there !
I'll believe that this rate of increase can subside, only when I see it and not before because at this point it would appear its simply not within their corporate culture that discipline regarding costs is important.

All that matters is care standards and costs are completely irrelevant appears to be the culture at present. Will that culture ever change ?

[BlackPeter]

Wow! Looks like sharetrader is maturing ... great discussion on this thread - and not just Maverick and Beagle raised some real important points. This is a discussion forum at its finest ... I hope its not just the Easter spririt - long may it last!

As usual - any thing has a front and a rear side ... and it is good to be able to see both sides of the coin.

How one weighs these observations is then up to the individual - nobody can look into the future.

Just looking into two of the main issues raised ...

Property price development - yes, it is right, currently property prices go down. Having said that ... Real estate sells currently for roughly the same price it sold 6 months ago (with a wee peak between these points) ... does this really mean house owners are today that much poorer than they used to be? If your house did raise by some 20% in 2021 and dropped in the last handful of months by 5% - are you really a poor bugger now and can't afford anymore to buy into a retirement home?

Given that properties are normally hold for many years I'd say - it does not matter at all to most of the owners and they will happily go into a retirement home if and when they need to. Sure - alarmist messages about property prices might impact on the day to day hype of share trading, but I don't see them being material for the long term price of any retirement village.

We bought our last home in 1995 - and the GV roughly five folded since then. To be honest - it does not make any difference to us, whether it will fall back to just quadrupling our purchase price or whether it will go up further - so, maybe we can stop worrying about a (light) pull back in property prices. Last time I checked they didn't produced more land - i.e. I don't expect a drastic fall.

Staff costs Sure - they did increase and might get another top up this year, but I see what we have now pretty much as the peak. Borders are opening and most of the care roles in any retirement home don't need fully qualified nurses (sure, some do). Given that NZ belongs to the 10% of richest countries in the world (on a per head income basis), there are logically 90% of the world population pretty happy if they are allowed to come here and work here ... and not just the Philippinos and Indonesians but as well the Ukrainians (to mention just one other group of poor buggers) have plenty of fine and well trained nurses who would love to work here for our salaries if we allow them to do that. I am sure we will get rid in the next election of our anti immigration government - and then it will be no problem to hire outstanding care staff for a reasonable (nota bene - I didn't say cheap) price. So - I don't see the rise in staffing costs as a long term problem for this or any other retirement village.

Now - I have no clue how the short term income development of OCA will look like, but for what it is worth, analysts forecast for the coming years in average 10 cents per share (for this year even a tad more). I think this is a good income for a share costing just above one dollar - and it clearly gives us all the future growth for free.

Happy holder.

[Habits]

With all the factors that Beagle has pointed out above for the sector, wow I am glad to be running my agri business. Started a year ago and its been a big learning curve. There are decisions around operational needs and I make decisions on whether to invest back into the business with more equipment repairs and upgrades. Ultimately that impacts the profit number for this financial year to 31 May. It is still a whole sight simpler than trying to understand OCA

[Beagle]

P.S. Two more key unknowns.
1. How long is the Covid "tail" (really long like a Kangaroo's tail or worse), or is there a tail at all and we go from one variant to another ? https://www.msn.com/en-nz/news/national/first-case-of-the-xe-variant-found-in-nz-but-do-kiwis-need-to-be-concerned/ar-AAWv5RM?ocid=msedgntp&cvid=c89e9efa00284955acc7cf273b620c41
2. How does construction cost inflation in the last year of a whopping 18%, (some developers are foreseeing an increase of a similar magnitude over the next year too !) affect their development profits in the medium term ? (acknowledge a lot of their current construction contracts are fixed price but the next time they ask for a fixed price construction contract on a new village it could be a real shocker !).

[Greekwatchdog]

1. As far as I am concerned the Covid tail is here forever. Sooner we realise that the better. Move on.

2. No one will give you a fixed contract unless there are pricing clauses in contract. Prices will only increase from here. As of 01/11 this year all new homes will require Thermally Broken Windows and Low E Glass. This effect All S.I and Central Plateau. It falls on councils at consenting when they direct this. Nov 1, 2023 remainder of N.I. This is MBIE over speaking a house. So on windows alone from start of this year to when this example takes effect will result in 50% increase in windows. The answer to #2 is if companies don't adjust there pricing model they get what they deserve.

[winner69]

Mav --- My guess is 510 sales with realised gains $64m less $4m as what they've lost on day to day stuff = $60m underlying NPAT

But then again they've changed how they account for care depreciation so I don't really have any idea how this affects things this year .... or when it comes down to it what F21 Underlying Earnings (Comparative) were when they restate things with this change.

Change in balance date, several changes in accounting methodology, restating past numbers etc etc ..... all seems a big plan to confuse us so we have no idea what profit is .....as long as the trend of selling heaps more thjngs and making about the same doesn't continue.

You can see why Beagle and me prefer the Total Comprehensive Income line ... or at least the change in Total Comprehensive Income .... that's the number that essentially drives Book Value / NTA .... and lots more transparent

[dobby41]

As of 01/11 this year all new homes will require Thermally Broken Windows and Low E Glass. This effect All S.I and Central Plateau. It falls on councils at consenting when they direct this. Nov 1, 2023 remainder of N.I. This is MBIE over speaking a house. So on windows alone from start of this year to when this example takes effect will result in 50% increase in windows. The answer to #2 is if companies don't adjust there pricing model they get what they deserve.

Do you have a link to this requirement - I haven't heard of this before.

[Greekwatchdog]

Sorry Dobby no. My understanding it hasn't been formally announced to my knowledge. I am in the industry and this is a huge change. PVC Windows could be used more often but the supply challenge (Europe and US supply base) in getting good supplies is difficult especially with todays Supply Chain constraints. Builders were stunned by it...

[Baa_Baa]

Sorry Dobby no. My understanding it hasn't been formally announced to my knowledge. I am in the industry and this is a huge change. PVC Windows could be used more often but the supply challenge (Europe and US supply base) in getting good supplies is difficult especially with todays Supply Chain constraints. Builders were stunned by it...

https://www.building.govt.nz/building-code-compliance/annual-building-code-updates/2021-building-code-update/

[Beagle]

Mav --- My guess is 510 sales with realised gains $64m less $4m as what they've lost on day to day stuff = $60m underlying NPAT

But then again they've changed how they account for care depreciation so I don't really have any idea how this affects things this year .... or when it comes down to it what F21 Underlying Earnings (Comparative) were when they restate things with this change.

Change in balance date, several changes in accounting methodology, restating past numbers etc etc ..... all seems a big plan to confuse us so we have no idea what profit is .....as long as the trend of selling heaps more thjngs and making about the same doesn't continue.

You can see why Beagle and me prefer the Total Comprehensive Income line ... or at least the change in Total Comprehensive Income .... that's the number that essentially drives Book Value / NTA .... and lots more transparent

Deciphering OCA's accounts is ridiculously hard even for experienced investors and professionals like me, all the more so when they keep changing the basis upon which they're prepared. Sometimes in a quieter moment I also wonder if this is deliberate obfuscation.

NTA this year less NTA last year = earnings for the year, saves days of forensic accounting analysis.

NTA less 20%, (discount for the parts of their business that are ostensibly run as a charity and always will be) = fair value, saves weeks of endless DCF model building and refining which seems like a waste of time because predicting the future is riddled with so many infinite variables especially with Covid in the mix.

Sounds like creative accounting eh...but sometimes shortcut ways to measure earnings and fair value give the quickest and most reliable answers.

[blackie]

1. As far as I am concerned the Covid tail is here forever. Sooner we realise that the better. Move on.

2. No one will give you a fixed contract unless there are pricing clauses in contract. Prices will only increase from here. As of 01/11 this year all new homes will require Thermally Broken Windows and Low E Glass. This effect All S.I and Central Plateau. It falls on councils at consenting when they direct this. Nov 1, 2023 remainder of N.I. This is MBIE over speaking a house. So on windows alone from start of this year to when this example takes effect will result in 50% increase in windows. The answer to #2 is if companies don't adjust there pricing model they get what they deserve.

should we be backing up the truck to MPG?

(edit) just read the MPG thread and answered my own question

[Maverick]

Mav --- My guess is 510 sales with realised gains $64m less $4m as what they've lost on day to day stuff = $60m underlying NPAT

But then again they've changed how they account for care depreciation so I don't really have any idea how this affects things this year .... or when it comes down to it what F21 Underlying Earnings (Comparative) were when they restate things with this change.

Change in balance date, several changes in accounting methodology, restating past numbers etc etc ..... all seems a big plan to confuse us so we have no idea what profit is .....as long as the trend of selling heaps more thjngs and making about the same doesn't continue.

You can see why Beagle and me prefer the Total Comprehensive Income line ... or at least the change in Total Comprehensive Income .... that's the number that essentially drives Book Value / NTA .... and lots more transparent
Thanks for your reply Winner. I've got total sales quite a lot less than you , but no worries:) , this year they have a lot of apartments for sale. There's really good Eden ones with high prices and margins in the mix too - even more expensive than Browns bay, consider their margin on a $1.5m apartment at 34% , then DMF that at 10% p/a . I know they are selling well. ( then compare that to selling of a regular villa for $700 at a margin of 12-15%) another reason we MUST have the continuum care component to get the sales at these prices.

The depreciation you mention was a weird thing, they put it up by 50% for 2020 but brought it back to normal after that. The official line was that it was more inline with competitors, who knows why they shot it up in the first place.

The 10 month period did indeed create a dogs breakfast and their reason was to change annual reporting times to be a more favorable time of year off shore when investors are not on holiday.

Then of course, as you point out, the extra layers of covid disruption and wage subsidy payback...yes...a total dogs breakfast.

So...on one hand I'm saying the financials must be fully broken down and quite finely too ,to do any accurate forecasting and the other hand the changes / disruptions make this extremely hard work and hugely time consuming to do so.
BUT...it can be done although I don't recommend to anyone to bother at this point as it should all get a lot easier from here. In the meantime RYM and SUM offer a superb alternative to OCA where no real work is required. However , IMO this confusion and difficulty is why OCA trades as low as it does to its peers, an opportunity that will close as the accounts get easier to follow from here and of course underscored by a rising NPAT.

I sometimes wonder how OCA could make it easier for us but have no better ideas. Its just difficult with a lot of moving parts and unfortunately complicating layers for now. Once the underlying profit starts rising and share price , no one will care then anyway.

I understand yours and Beagles frustration with these accounts but I would NEVER buy into a company just because it claims its buildings are worth more at the end of the year ( thinking of good ol` Rob Jones Investments from the 80s). For me it has to be about the underlying business not the accidental profit/loss of the building its in.

Been a great read on this thread today with the contributions from all. Thanks for everyone's inputs and points of view.

[Greekwatchdog]

should we be backing up the truck to MPG?

(edit) just read the MPG thread and answered my own question

No. Thats a dog and needs a full makeover. Management were/are arrogant bums

[winner69]

Oceania have burnt through $252m of cash since May 2017 and in spite of these negative cash flows handed out $79m in dividends. Total cash out of $331m

Been funded by extra $240m in debt and shareholders have pumped in $98m additional cash

Suppose that's all OK and it isn't really a ponzi scheme as some say

Never mind the 'value' of the company as measured by its Book Value has grown at 12% pa since May 17 - bearing mind the value esssentially what the valuers say their assets are worth (values and future cash flows)

So that increase pretty good - wonder what it is at March 2022

[winner69]

Price/Bv a good measure of market sentiment

One day soon the blue line will go back above the red line ....just like it did a couple of years ago

[Beagle]

If we have got another 12% NTA growth, (consistent with the historical average), in the year to 31 March 2022, NTA will be about $1.42.
Maybe the Swiss EQT people might pounce with such a large discount to asset backing and make a takeover offer and merge this with MET ?
Maybe a takeover offer is the wild card to unlock value for shareholders ?

[Greekwatchdog]

Golly I hope not. Another cheap NZ asset sold. This has always been a long term play. Patience will be rewarded...

[winner69]

If we have got another 12% NTA growth, (consistent with the historical average), in the year to 31 March 2022, NTA will be about $1.42.
Maybe the Swiss EQT people might pounce with such a large discount to asset backing and make a takeover offer and merge this with MET ?
Maybe a takeover offer is the wild card to unlock value for shareholders ?

Zillions in synergies if that happened …, PE loves synergies

Get at about NTA + synergies = contented acquirer …and very happy and excited Oceania shareholders with their $1.40 windfall.

Maybe others than EQT

[Ferg]

Interesting discussion.

On the topic of modelling, I like to understand businesses in which I invest. That often entails undertaking analysis and in some cases modelling, especially if one is taking a position contrary to current sentiment. The purpose of such work is to understand the trends and what drives the financials results. In other words, what impact do observable actions on the ground, such as the early completion and pre-sales of Eden and the slow sales rate in Chch for example, have on the financial results? And what is the impact of macro-economic factors such as wage rate inflation, long term property valuations and an ageing population etc.? And what are the accounts NOT telling us etc.?

Without undertaking analysis or modelling such factors remain a mystery to the average punter, or one risks placing too much reliance on a single variable. That said, such work is unnecessary for momentum traders or passive/broad spectrum investors.

Whilst a model may produce a forecast result, we need to keep in mind:

a forecast will always be wrong - it comes down to by how much and why
a forecast can be prepared either from the top down, from the bottom up or a combination of the two
an isolated number is meaningless, it is the relationship of that number to other numbers and trends which are important
a good model identifies the relevant business drivers, and
a multi-year model looks at efficiencies of scale and the impact of compounding/new capacity etc.


There are numerous observable relationships between reported values in the OCA accounts; they are there to see for those with the time and energy. One thing that makes the OCA accounts confusing is the sheer number of numbers provided. Such transparency can be confusing initially.

Also, slavish application of reporting rules can muddy the waters. Take for example, the realised gains and development margins on care suites - when these are added to underlying care profit, it results in quite a different picture. Such gains and margins cannot be achieved in the absence of providing care services. In the 10 months for fiscal 21 there was ~$6m of resale gains on care suites plus development margins of ~$5-7m. To understand the contribution from "care" as whole, those gains need to be added to reported underlying NPAT. This is not obvious until you pick the accounts apart. However, given the tightrope the Board and Management must negotiate, maybe it is better to keep those gains under "village" rather than put at risk the % of care revenues that are DHB funded. That said, there are still challenges for OCA care that must be addressed.

Something else to consider - is this a growth stock or a yield stock?

[Teatree]

I'm an engineer and I think u have to be a forensic accountant to understand this one

[winner69]

I'm an engineer and I think u have to be a forensic accountant to understand this one

Very complicated accounts - and even the reporting has 11 different profit measures.

Their segment (Care and Village) reporting is pretty meaningless - partly due to what Ferg alluded to.

I've found it best just to break down Underlying Earnings as Gains on Resales plus Development Margin (new ales) plus/minus 'profit' from caring for people and running villages (1 number). The last bit is usually negative

For those who look at NPAT its Fair Value Adjustments plus/minus a few million (being the left overs of caring for people and running villages)

i wonder what fancy change to reporting methodology they'll come up with this time

[Maverick]

Very complicated accounts - and even the reporting has 11 different profit measures.

Their segment (Care and Village) reporting is pretty meaningless - partly due to what Ferg alluded to.

I've found it best just to break down Underlying Earnings as Gains on Resales plus Development Margin (new ales) plus/minus 'profit' from caring for people and running villages (1 number). The last bit is usually negative

For those who look at NPAT its Fair Value Adjustments plus/minus a few million (being the left overs of caring for people and running villages)

i wonder what fancy change to reporting methodology they'll come up with this time
Awesome post Ferg, but no surprises Id like that. Ha.

For fun I had a crack at doing just what you said there Winner.

I can see how it just might work for SUM and RYM with their extensive history, the smoothing effect of their scale and repetitive green field development models so I honestly gave it a good go with OCA trying some other variables too but I cant get anything that looks remotely like a pattern.

The care + village DMF , PAC fees revenues I itemized a few pages back are now growing strongly from 3 years ago so need including somewhere in your formula too. Even playing around with this I still got no pattern. I suspect because OCA deliver such an array of cheaper care suits and expensive apartments in lumpy volumes ( at hugely varying $margins ) they just cant all be amalgamated together as one number fits all.

In other words we are back to doing tons of work by striping the whole thing down to loads of very specific subset numbers, I have never found anyway around that to get anything accurate enough to rely on. So no easy shortcut on OCA that I can see.

I've always privately said with this company you have to really do it right with intense work to get any accuracy. I think a half arse job is futile.
Otherwise may as well just do TA , or, just follow Greg T.

[Beagle]

Additional thought for today. The average resident stays a much shorter tenure with Oceania than other retirement village companies due to the nature of their business model therefore the use of the profit measure "total comprehensive income" is arguably more relevant for OCA than the other companies because any part of the income that's not realised will be soon enough.

[Beagle]

Something else to consider - is this a growth stock or a yield stock?
SUM has grown earnings from $56.6m five years ago to $141.1m last year and is clearly a growth stock.
WHS has a forecast average gross yield of 10.8% over the next two years and is clearly a yield stock, also a value stock on a foreword PE of about 11.
OCA does not fit neatly into either of those categories and due to its low yield and very low growth, but high beta is probably best viewed at as a trading stock. Those who follow momentum are the only ones who have done well out of this so far.


Very complicated accounts - and even the reporting has 11 different profit measures.

Their segment (Care and Village) reporting is pretty meaningless - partly due to what Ferg alluded to.

I've found it best just to break down Underlying Earnings as Gains on Resales plus Development Margin (new ales) plus/minus 'profit' from caring for people and running villages (1 number). The last bit is usually negative

For those who look at NPAT its Fair Value Adjustments plus/minus a few million (being the left overs of caring for people and running villages)

i wonder what fancy change to reporting methodology they'll come up with this time

They manage to give me a really bad headache every time they report. They have a huge task ahead of them to get their reporting and messaging clear to the market as their current pitiful return since listing clearly shows the market simply doesn't "get their story" possibly in part because their reporting is such a diabolical mess compared to the reports from others in this sector. Up just 33% since listing nearly 5 years ago plus very modest dividends compares to SUM up 150% plus modest dividends over the same timeframe. MZX mid cap index is up 70% over the same period and NZX50 up 65%.

My suggestion regarding reporting is to standardise reporting along the lines of SUM and RYM. All gains on care suites should be reported in the same way as other units. Unless they do that the market will probably never really "get" the messaging OCA is trying to deliver.

[BlackPeter]

SUM has grown earnings from $56.6m five years ago to $141.1m last year and is clearly a growth stock.
WHS has a forecast average gross yield of 10.8% over the next two years and is clearly a yield stock, also a value stock on a foreword PE of about 11.
OCA does not fit neatly into either of those categories and due to its low yield and very low growth, but high beta is probably best viewed at as a trading stock. Those who follow momentum are the only ones who have done well out of this so far.



They manage to give me a really bad headache every time they report. They have a huge task ahead of them to get their reporting and messaging clear to the market as their current pitiful return since listing clearly shows the market simply doesn't "get their story" possibly in part because their reporting is such a diabolical mess compared to the reports from others in this sector. Up just 33% since listing nearly 5 years ago plus very modest dividends compares to SUM up 150% plus modest dividends over the same timeframe. MZX mid cap index is up 70% over the same period and NZX50 up 65%.

My suggestion regarding reporting is to standardise reporting along the lines of SUM and RYM. All gains on care suites should be reported in the same way as other units. Unless they do that the market will probably never really "get" the messaging OCA is trying to deliver.

I agree, their reporting is terrible ... but not sure I am convinced that this is the main reason holding them back. Here is the 5 year performance (just SP, no dividends and accuracy based on my reading of some tiny graphs) of the major competitors in comparison:

RYM: + 4%
OCA + 33%
ARV + 35%
SUM + 120%

Given that some of us agreed 5 years ago (check the thread :) that SUM was hopelessly undervalued at that time compared eg to RYM ... maybe SUM just found now their real price and OCA is not doing too bad compared to its other industry peers?

[Beagle]

Yes indeed some of us did indeed agree that SUM was fabulous value back then :) and that RYM was heavily overpriced.

Share prices follow earnings per share. SUM have done a splendid job of growing earnings and the others haven't.
My hint for the next 5 years in terms of which company will have the best growth is the past is the best guide to the future.

[couta1]

The question is now which share will double in value first from here, SUM $23 or OCA $2.08, my pick is OCA.

[Entrep]

Mr Beagle sir what is your order of preference for retirement village operators on a 10+ year timeframe?

Or do you tend to jump in and out of investments (I think I've seen you buy & sell some stocks within a year)?

Just keen to know how you operate your portfolio (and also the answer to the first question).

Thanks

[Beagle]

In the very short term OCA is so beaten up I think it will outperform the others in this sector.

In the medium to long term there is no question in my mind that SUM is highly likely to outperform the others.

[Ggcc]

The question is now which share will double in value first from here, SUM $23 or OCA $2.08, my pick is OCA.
I think you might find Summerset will do it first if they continue to grow the way they are. Although with shortages of stuff, staff and tradies that could trip up that idea.

[winner69]

Was chatting a director of one of these not for profit age care outfits yesterday.

Thing that struck me (even though blindingly obvious) was that outfits like his can't live on property revaluations alone. They need positive cash flows.

Just as well Oceania has accommodating shareholders and bankers - as I noted the other day Oceania have burnt through $252m of cash since May 2017 and in spite of these negative cash flows handed out $79m in dividends. Total cash out of $331m - funded by $98m from shareholders and $230m of additional borrowing.

[bull....]

i was chatting to a real estate agent the other day , they were saying i have lots of listings now compared to 6 mths ago but the problem now is not many people are buying houses at the moment.

wonder how that effect those people wanting to sell up to move to retirement villages ? accept lower house price and hope have enough to afford retirement unit as those companies want to keep raising prices for these units as they cant drop the price as winner says they live on property revaluations

[couta1]

i was chatting to a real estate agent the other day , they were saying i have lots of listings now compared to 6 mths ago but the problem now is not many people are buying houses at the moment.

wonder how that effect those people wanting to sell up to move to retirement villages ? accept lower house price and hope have enough to afford retirement unit as those companies want to keep raising prices for these units as they cant drop the price as winner says they live on property revaluations Most houses are worth more than a retirement unit and those buying the most expensive units would also have an expensive house to sell or other assets available to sell as well, remember its a needs based business, if you need to sell you sell. OCA units are on the whole moderately priced compared to their competitors to boot.

[Ferg]

s I noted the other day Oceania have burnt through $252m of cash since May 2017 and in spite of these negative cash flows handed out $79m in dividends. Total cash out of $331m - funded by $98m from shareholders and $230m of additional borrowing.
I have been looking at the exact same thing. This is what I am seeing from FY16-H1FY22. Percentages to the right show how the nett capex of $770m to date was funded. ILU capacity built & acquired since the beginning of FY16 is 602 excluding decommissions and conversions. Plus nett care suite capacity has increased by a similar figure since the end of FY17. Combine that with future pipeline activity and I see this as a growth business. The question for me is whether future ORA receipts are enough to cover expansion plans.

13741

[Beagle]

Depends how you define "growth business". Agree they're growing in terms of size and facilities.
My definition of a growth stock is a company that grows realised eps consistently. No point growing in size if you're not growing eps.

[Waltzing]

By the time you get through all the notes of revaluations the income and gains are a nightmare to bother with unless this is the only stock your following.

Its a cost accounting exercise when you get to note 3.2. You need to be a professional ACA with experience in Cost Accounting.

[Ferg]

My definition of a growth stock is a company that grows realised eps consistently. No point growing in size if you're not growing eps.
I suppose that is one way of looking at it. Although such a definition excludes businesses the general market would consider growth businesses who do not yet make a profit. We could list plenty of examples. You would know that as businesses grow they have growing pains in terms of getting the funding right - I don't see OCA being exempt from that. Keep in mind OCA has increased ILU capacity 43% in 4.5 years and care suites 251% in the same time period. That is what has provided the growth in NTA. When disclosed planned increases in ILU capacity of 71% and care suite capacity of 90% above current capacity is combined with historic growth in capacity and NTA, I'm not surprised some people view this as a growth stock.

[limmy]

Sorry, what does ILU stand for ?

[Rawz]

Independent living units ?

[Beagle]

I suppose that is one way of looking at it. Although such a definition excludes businesses the general market would consider growth businesses who do not yet make a profit. We could list plenty of examples. You would know that as businesses grow they have growing pains in terms of getting the funding right - I don't see OCA being exempt from that. Keep in mind OCA has increased ILU capacity 43% in 4.5 years and care suites 251% in the same time period. That is what has provided the growth in NTA. When disclosed planned increases in ILU capacity of 71% and care suite capacity of 90% above current capacity is combined with historic growth in capacity and NTA, I'm not surprised some people view this as a growth stock.

How much of their NTA growth has simply been because of house price growth in the last 5 years ?
https://www.interest.co.nz/charts/real-estate/median-price-reinz $535k to $890k = 66%.
Share price only up 30%. Maybe the share price is simply front running a ~ 20% decline in house prices in the next 12-24 months ?

[Ferg]

Independent living units ?
Correct. That includes villas and apartments.

[limmy]

Thanks Rawz and Ferg. As of this month, I'm now invested in OCA. I've been wanting to own some OCA after cashing up from the privatisation of MET a couple of years ago. I'm now back to owning 3 companies within the RV sector. (the other two being RYM and SUM) Good long term hold. I'll continue to buy some more OCA as I can see its potential. Their current NTA is 1.27, and at around a dollar, the share price represents good value. Likewise, with a PE ratio of only 7, and Div Yield around 4% we can't really go wrong in the medium to long term, can we ?

Correct. That includes villas and apartments.

[winner69]

I have been looking at the exact same thing. This is what I am seeing from FY16-H1FY22. Percentages to the right show how the nett capex of $770m to date was funded. ILU capacity built & acquired since the beginning of FY16 is 602 excluding decommissions and conversions. Plus nett care suite capacity has increased by a similar figure since the end of FY17. Combine that with future pipeline activity and I see this as a growth business. The question for me is whether future ORA receipts are enough to cover expansion plans.

13741

That Operating Cash Flow line on the spreadsheet looks a bit sick the last few years

[Rawz]

Thanks Rawz and Ferg. As of this month, I'm now invested in OCA. I've been wanting to own some OCA after cashing up from the privatisation of MET a couple of years ago. I'm now back to owning 3 companies within the RV sector. (the other two being RYM and SUM) Good long term hold. I'll continue to buy some more OCA as I can see its potential. Their current NTA is 1.27, and at around a dollar, the share price represents good value. Likewise, with a PE ratio of only 7, and Div Yield around 4% we can't really go wrong in the medium to long term, can we ?

Agree.... cant really go wrong in the long term.

Fairly solid base around $1-$1.09 right now..

[Ferg]

How much of their NTA growth has simply been because of house price growth in the last 5 years ?
Very little given NTA is driven primarily by the valuation of facilities which is based on forecast ORA receipts subjected to discount factors less unsold stock. That value is ultimately driven by supply and demand. Admittedly supply and demand for the various OCA facilities is a subset of the wider property market but as you know the "property market" is not a single market. I think you previously posted that OCA were too cheap relative to the market - so would that give them some insulation from a wider correction?

[Beagle]

Yes its a needs based business and the average unit price is significantly lower than the average house price which gives them a degree of insulation to falling house prices but most people still have to sell their homes first and the recent huge decline in real estate sales volumes is notable.

Just as an aside the discount rate the valuers use is something I know Earl found to be very interesting and he thought it was very conservative. Between 12 and 20% per annum depending upon unit type is exactly that and builds in a natural increase in valuation each year simply through the passage of time.

But as you know Ferg, growth in ILU units and growth in facilities is one thing, eps growth is quite another.
The business transformation process was originally promoted as being a six year process but is now looking like ten years
Earl in his January 2021 earnings call said he believed staff costs would rise from there in line with MOH funding.
Promises and outlook comments made have not turned out to be anywhere near accurate and undermines their credibility.

Analysts still see it as $1.60 but I'd wager we'll see some significant downward revisions after the result on 20 May. Analysts never ever follow the market do they ;)
https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

[Poolboy]

Thanks for doing the research Beagle and others. I personally wouldn't have a clue in hell how they are doing, other than listening to you guys.

BUT, I happened to be chatting with a guy who worked for OCA at head office. He said there was an excellent culture about the place. He said they were genuinely kindly people. Plus they weren't prone to going out for expensive lunches or the bosses driving expensive cars to impress the neighbours.

[winner69]

Another down month for OCA share price .... mind you SUM was down as well but not as bad as OCA

Result sees OCA % SUM the lowest it's ever been

You'd think the trend would change one day but its petty well entrenched

Of course you can buy more than 11 times OCA shares for what it costs to buy a SuM share .... three years ago you could only buy 6 for every 1 of SUM ........... sort of says OCA is so so so so cheap

[bull....]

oca looks like it wants to go lower under 1 ?

[couta1]

oca looks like it wants to go lower under 1 ? Why have you asked it? Looks like we are on the normal Monday doom and gloom run all over the place from the bull.

[Beagle]

Another down month for OCA share price .... mind you SUM was down as well but not as bad as OCA

Result sees OCA % SUM the lowest it's ever been

You'd think the trend would change one day but its petty well entrenched

Of course you can buy more than 11 times OCA shares for what it costs to buy a SuM share .... three years ago you could only buy 6 for every 1 of SUM ........... sort of says OCA is so so so so cheap

That's a really confronting image but unfortunately it very sadly reflects the brutal reality that OCA has really struggled to get any earnings traction ever since it listed and all the while SUM has been growing at a fantastic rate both before and during Covid.
Long established trends like that are very difficult things to break and generally occur for very solid underlying reasons.

[bull....]

Why have you asked it? Looks like we are on the normal Monday doom and gloom run all over the place from the bull.

instead of posting crap why dont you give your thoughts where it is headed.

my from a chart point of view - on the monthly it posted a new low in the current down swing
, also on the weekly it did as well. i have the weekly bollinger trending down with a low line of 91c. all in all $1 looks like a support line underneath looks like quicksand

[couta1]

instead of posting crap why dont you give your thoughts where it is headed.

my from a chart point of view - on the monthly it posted a new low in the current down swing
, also on the weekly it did as well. i have the weekly bollinger trending down with a low line of 91c. all in all $1 looks like a support line underneath looks like quicksand Listen bull I've already made it clear I'm long on the stock, I don't care where its headed in the current crap market, im looking at least 3 yrs ahead and I see it doubling in value by then, you have proven over time to have very little understanding of how the retirement sector actually works. Several very savvy directors have big skin in the game, they are not fools.

[bull....]

Listen bull I've already made it clear I'm long on the stock, I don't care where its headed in the current crap market, im looking at least 3 yrs ahead and I see it doubling in value by then, you have proven over time to have very little understanding of how the retirement sector actually works. Several very savvy directors have big skin in the game, they are not fools.

the only thing i really need to know is am i going to make money from this

[couta1]

the only thing i really need to know is am i going to make money from this Well I thought it was pretty obvious that barring Armageddon anyone buying at current prices is going to make money.

[Beagle]

Big test of the previous support at $1.01 coming up. If it breaks below $1 from a technical analysis point of view that's pretty ominous.

I'd love to see it back in the $1.50 - $1.60 price range but in a rapidly falling real estate market and with OCA having millions per annum in ongoing Covid costs and the Government looking like it might even more poorly underfund basic care (Doctors got less than a 3% funding increase for their bulk funding annual increase round just recently which is chronic underfunding considering their extra Covid and staff costs and the rate of inflation at 6.9%), its really hard to envisage what is the catalyst for a decent share price recovery anytime soon ?
It earnings don't really surprise to the upside later this month, the only other thing I can see that could break this out of the doldrums is a takeover.

[Poolboy]

the only other thing I can see that could break this out of the doldrums is a takeover.

Or enough nurses to run the show properly.

[BlackPeter]

Or enough nurses to run the show properly.

Obviously, neither staff shortages nor Covid costs nor property prices are in any way OCA specific headwinds.

Sure - they are issues, but they impact any other actor in the health care sector (COVID and staffing) as well as in the REIT industry (property prices).

Maybe we should stop to always beat up OCA, which - btw - performs relativ similar to e.g. ARV and much better than the ex-gold standard RYM. Only SUM SP looks friendlier given that markets used to undervalue them for a long time.

[bull....]

The aged care sector is starting to collapse due to a near-catastrophic staffing crisis, a North Island provider says

https://www.newshub.co.nz/home/new-zealand/2022/05/aged-care-sector-collapsing-as-near-catastrophic-staffing-crisis-bites-provider-says.html

:scared:

since we all talking about here and of course its relevant to all in the space

[couta1]

The aged care sector is starting to collapse due to a near-catastrophic staffing crisis, a North Island provider says

https://www.newshub.co.nz/home/new-zealand/2022/05/aged-care-sector-collapsing-as-near-catastrophic-staffing-crisis-bites-provider-says.html

:scared:

since we all talking about here and of course its relevant to all in the space


Clutching at straws again bull (Your trying hard to pick up cheap shares from scared holders for trading aye) Enliven is a not for profit so of course its struggling big time, many have gone under over the last few yrs. The Radius comment is not true for the main players, they are matching the DHB rates plus a sign on bonus in many instances, of course it comes out of unit sales profit due to Govt underfunding of the sector.

[bull....]

Clutching at straws again bull (Your trying hard to pick up cheap shares from scared holders for trading aye) Enliven is a not for profit so of course its struggling big time, many have gone under over the last few yrs. The Radius comment is not true for the main players, they are matching the DHB rates plus a sign on bonus in many instances, of course it comes out of unit sales profit due to Govt underfunding of the sector.

if there having to pay up as you say to the levels your suggesting then it will be interesting to see there cost base in the reports soon ... blow out comes to mind. better raise those unit prices lol

[ralph]

Ohhh & its there one dollar:ohmy:

[Old mate]

Unreal. Who's getting truck out:t_up:

[couta1]

Ohhh & its there one dollar:ohmy: And bull will be on the buy side at 99c along with myself.:cool:

[winner69]

Just sent our man Brett an email telling him they better come out and say every thing is fine at Oceania - told him the market is thinking the worst

Don't think I'll get a reply

[couta1]

Just sent our man Brett an email telling him they better come out and say every thing is fine at Oceania - told him the market is thinking the worst

Don't think I'll get a reply Currently priced for a real nasty bad to the bone report, panic merchants be banging their heads on a brick wall come report day.

[Greekwatchdog]

Just sent our man Brett an email telling him they better come out and say every thing is fine at Oceania - told him the market is thinking the worst

Don't think I'll get a reply

The 2 week window opens Friday before they report should anything be ugly..I am sure its 2 weeks prior to reporting result..Roll on 20th May

[bull....]

And bull will be on the buy side at 99c along with myself.:cool:

one day maybe but
not yet as ive highlighted on the thread for ages to many headwinds at the moment not just in the sector but the market overall. so good luck if your buying at 99c.

[limmy]

It has just touched 0.99.
I got 49 shares (only) about an hour ago. It has since bounced back. I'm waiting for the balance of my 20,000 shares to come through.
Perhaps upon closing today ?

[Ggcc]

I think I was one of the first that mentioned this share would go below $1. I own plenty and have looked to add, but will only add at a bargain. I am happy with my current holding longterm.

I just wish the government would understand that these sorts of businesses need enough financial support, or else they will need to change their business model. Which will cost the government a lot more than now. We can increase minimum wages by 6%, but can’t increase costs that retirement villages are facing by anywhere close to that percentage.

[Waltzing]

think many saw under a dollar in the charts.

[Bjauck]

Clutching at straws again bull (Your trying hard to pick up cheap shares from scared holders for trading aye) Enliven is a not for profit so of course its struggling big time, many have gone under over the last few yrs. The Radius comment is not true for the main players, they are matching the DHB rates plus a sign on bonus in many instances, of course it comes out of unit sales profit due to Govt underfunding of the sector. Medicine and healthcare is also underfunded in NZ. NZ barely has socialised healthcare with the charges that most people have to cover for hearing, optometry, dentistry and other medical costs. A chunk of extra tax is needed yet both major parties are unlikely to introduce major tax reform or raise taxation for fear of an electoral backlash. Yet compared to other OECD countries NZ has leeway to introduce new taxes and to raise rates. So it looks like we are heading for an American social care and medical system.

[Curly]

WTF, haven’t got a truck.....

[Beagle]

The naked truth is the whole sector is in a bear market and those most exposed to care bear the most impact. Just have to bear with it, drink more beer and hope the bear doesn't leave our portfolio's looking too bare. I do feel that for those more inclined to bear down into this further with an even bigger share, bear more risk of the bear leaving them, bare. Barely worth the risk, but if you really love care, stare the bear in the eyes and dare to buy a bigger share.

I'm doing a possum stuck in the headlights, (sorry couldn't find a way to bring bear into that).

[Waltzing]

Off Topic:

"NZ has leeway to introduce new taxes"

oh dear, more fat ladies in accounting offices pushing paper.... great.

the solution to everything... more taxes.

[davflaws]

Off Topic:

"NZ has leeway to introduce new taxes"

oh dear, more fat ladies in accounting offices pushing paper.... great.

the solution to everything... more taxes.

How is the size and gender of the paperpushers relevant?

[percy]

How is the size and gender of the paperpushers relevant?

They are "mates".Large "mates"...lol

[thegreatestben]

They are "mates".Large "mates"...lol

Woah woah woah...
https://www.newshub.co.nz/home/politics/2022/05/new-south-wales-ministers-told-not-to-use-the-word-mate-in-office.html

[Bjauck]

Off Topic:

"NZ has leeway to introduce new taxes"

oh dear, more fat ladies in accounting offices pushing paper.... great.

the solution to everything... more taxes.
LOL. Taxes are very relevant to OCA. OCA rest homes get how much their income from the government (i.e. taxpayers)? If a government is facing electoral pressure to minimise taxes, then the government will be seeking to constrict department budgets - so the government (MoH) will try to keep the maximum contribution rate down. That also affects what "private" patients or residents pay too..

[Waltzing]

"constrict department budgets "

yup ... scrap those pesky departments.

private sector should be growing at 3 times the rate of the government.

better yet private grows and public sector reduces in size and Tax less but collect more as business increases in size and number.

US private enterprise saved the world in WW2.

Get those fatties in the office on tread mills...

You cant use the word MATE anymore, its not PC.

Now get those Fat ass's on to the tread mills and save the government a lot of money...:eek2:

https://www.youtube.com/watch?v=l_wTuBx584U

[winner69]

OCA share price up up and away today

We'll never see $1.00 again


bad luck bull....

[Beagle]

OCA share price up up and away today

We'll never see $1.00 again


bad luck bull....

:eek2: You've put the kiss of death on it.

[850man]

OCA share price up up and away today

We'll never see $1.00 again


bad luck bull....

I recall "we'll never see $1.30 again"... who said that?

[bottomfeeder]

I recall "we'll never see $1.30 again"... who said that?

Could still be true. Depends whether your a half glass empty or full kind of person.

[Rawz]

Hope we see $1.30 again..

[couta1]

Hope we see $1.30 again.. You will next year hopefully, just had a look at the 5 yr chart and this stock hit $1.10 in Sept 2017, quite sobering.

[Balance]

https://www.interest.co.nz/property/115627/barfoot-thompsons-median-price-down-99000-its-december-peak

[limmy]

It has touched $1.00 again numerous times today already. :)

OCA share price up up and away today

We'll never see $1.00 again


bad luck bull....

[winner69]

https://www.interest.co.nz/property/115627/barfoot-thompsons-median-price-down-99000-its-december-peak

That’s some drop in house prices eh balance

But don’t forget OCA a needs based business and the average unit price is significantly lower than the average house price which gives them a degree of insulation to falling house prices

[couta1]

That’s some drop in house prices eh balance

But don’t forget OCA a needs based business and the average unit price is significantly lower than the average house price which gives them a degree of insulation to falling house prices OCA new units down the road from me sold for around 250k less than the avg house price around here.

[percy]

OCA new units down the road from me sold for around 200k less than the avg house price around here.

How does the new unit price compare with the used unit resale price.?
Are resales still strong.?

[winner69]

OCA is so so cheap .... much cheaper than others in the sector

Analyst targets ex marketscreener -- OCA target 60% higher than current price

So many gurus cannot be so so wrong .... BUY


SUM Target 15.01 Now 11.63 Tgt/Now 29%
ARV Target 2.27 Now 1.63 Tgt/Now 39%
RYM Target 12.67 Now 9.06 Tgt/Now 40%
OCA Target 1.60 Now 1.00 Tgt/Now 60%

[couta1]

How does the new unit price compare with the used unit resale price.?
Are resales still strong.? Resales and prices have been good for the few that have sold (They were only finished 2 yrs ago so not too many changing hands to date)

[percy]

Resales and prices have been good for the few that have sold (They were only finished 2 yrs ago so not too many changing hands to date)

Thanks for your reply.

[clearasmud]

Resales and prices have been good for the few that have sold (They were only finished 2 yrs ago so not too many changing hands to date)
What sort of ball park price is a 1 brm or 2 brm unit?Thanks. And the minimum age.
I just bought one in Brisbane for $175k.

[Beagle]

https://www.interest.co.nz/property/115627/barfoot-thompsons-median-price-down-99000-its-december-peak

That's the fastest decline in 4 months I can ever recall and huge level's of stock and very low volumes of sales, (lowest since the GFC) gives a very strong lead indicator that the future direction is down, potentially quite a lot more. Cash is king at the moment in the property market that's for sure !

If this gets back to the IPO price of 79 cents the yield will be sort of okay at about 5.5%. Might sign up for a few more at that price but otherwise I'm not bothered and will ride this out with the very modest holding I have. I think its now crystal clear the real estate tide is going out at a serious pace and as mentioned already there's enormous challenges with provision of care services.

I think the whole retirement village sector is not a good one to have too much invested in for at least the rest of 2022 and maybe 2023 as well.

[clearasmud]

That's the fastest decline in 4 months I can ever recall and huge level's of stock and very low volumes of sales, (lowest since the GFC) gives a very strong lead indicator that the future direction is down, potentially quite a lot more. Cash is king at the moment in the property market that's for sure !
Nice to hear!

[Ggcc]

That's the fastest decline in 4 months I can ever recall and huge level's of stock and very low volumes of sales, (lowest since the GFC) gives a very strong lead indicator that the future direction is down, potentially quite a lot more. Cash is king at the moment in the property market that's for sure !

If this gets back to the IPO price of 79 cents the yield will be sort of okay at about 5.5%. Might sign up for a few more at that price but otherwise I'm not bothered and will ride this out with the very modest holding I have. I think its now crystal clear the real estate tide is going out at a serious pace and as mentioned already there's enormous challenges with provision of care services.

I think the whole retirement village sector is not a good one to have too much invested in for at least the rest of 2022 and maybe 2023 as well.
You have the right idea. Ride it out and add if at a complete bargain

[couta1]

You have the right idea. Ride it out and add if at a complete bargain Go big or go home has always been my motto and always will be while I'm still breathing air, live it, feel it and just do it. PS-Bought a good number more at 99c.

[couta1]

What sort of ball park price is a 1 brm or 2 brm unit?Thanks. And the minimum age.
I just bought one in Brisbane for $175k. These particular ones are all 2 beds at around 590k, 70 minimum age.

[clearasmud]

These particular ones are all 2 beds at around 590k, 70 minimum age.
Thanks Couta. Half the price here and 55 min age. But 42%dmf over 7 years.
99c should be great long term surely.
I dumped 1/4 at 104 after having purchased some at 140 as I want cash for a NZ house.
Still in the green.

[couta1]

Thanks Couta. Half the price here and 55 min age. But 42%dmf over 7 years.
99c should be great long term surely.
I dumped 1/4 at 104 after having purchased some at 140 as I want cash for a NZ house.
Still in the green. A few players in the sector here sat at the 55 min age prior to about 15yrs ago but they have all cranked it up to 70-75 nowadays to increase turnover.

[Joh13]

I’ve bought a few more OCA shares at current prices. Sitting at over 900k shares now. Can’t believe the SP has come down so much. Makes it attractive for a takeover. What’s the difference between when MET was taken over and how OCA currently sits?

[850man]

OCA share price up up and away today

We'll never see $1.00 again


bad luck bull....

99c with a load of weight on it and not much propping it up.... hmmm

[Entrep]

$1 has always been a key level for OCA, so I guess if you are gonna buy, here is the place to do it. Easy invalidation.

[couta1]

99c with a load of weight on it and not much propping it up.... hmmm Mind you the whole NZX looking pretty sick right now, punters overcome with fear, can't think why.:cool:

[bottomfeeder]

$1 has always been a key level for OCA, so I guess if you are gonna buy, here is the place to do it. Easy invalidation.

Something doesn't seem right. It's like the price is being artificially held low. It's a steal at these prices. But why. Cunning takeover prospect or accumater coming in soon. After all it just takes brokerage to sell lots and buy back at a lower price. Ahh the days of $1.70 seems just a distant memory.

[Baa_Baa]

Price/Bv a good measure of market sentiment

One day soon the blue line will go back above the red line ....just like it did a couple of years ago

Blue line currently at $0.99 is exactly 50% retrace of the Covid low -> ATH. And 50% isn't even a real Fib number. Sentiment very sucky at the moment. About $0.84 is the 61.8% Fib retrace level, surely not. Don't let bad sentiment go to waste.

[Bjauck]

Something doesn't seem right. It's like the price is being artificially held low. It's a steal at these prices. But why. Cunning takeover prospect or accumater coming in soon. After all it just takes brokerage to sell lots and buy back at a lower price. Ahh the days of $1.70 seems just a distant memory. The residential property market was allowed to get into a bubble and low interest rates were the new normal so many thought. So sentiment has changed and OCA is the stock that gets dumped on both from the point of view government funding that chronically never covers or at best lags coverage of full costs, and from the point of view of being exposed to residential housing market sentiment.

[Beagle]

The residential property market was allowed to get into a bubble and low interest rates were the new normal so many thought. So sentiment has changed and OCA is the stock that gets dumped on both from the point of view government funding that chronically never covers or at best lags coverage of full costs, and from the point of view of being exposed to residential housing market sentiment. Agreed. We could see the real estate market fall another 20-40% over the next few years.
I think the share price is merely front running that and not the screaming cheap one way bet some seem to think it is. As always, a well diversified portfolio with only a modest allocation to any one sector or company is the most prudent approach to risk management.

[couta1]

Diworsification yeah-nah (4 stocks are ample) live like there's no tomorrow is what my sisters told me at my 60th b-day last year, after all there may not be for you as an individual, did a stint in hospital not too long ago and wasn't far off leaving the planet so my outlooks changed even more since then.

[Panda-NZ-]

Has anyone done the calcs on what employing a nurse directly will cost for one person vs what these private companies take in per year (after a massive govt subsidy no less).

[Beagle]

Has anyone done the calcs on what employing a nurse directly will cost for one person vs what these private companies take in per year (after a massive govt subsidy no less).

To get good around the clock care if you can get the staff means employing a full time nurse for 8 hours a day x 3 shifts per day x 7 days per week which at about $40 an hour x 168 hours per week = $6,720 per week. Might be a "little bit" cheaper at Oceania lol

[Entrep]

Blue line currently at $0.99 is exactly 50% retrace of the Covid low -> ATH. And 50% isn't even a real Fib number. Sentiment very sucky at the moment. About $0.84 is the 61.8% Fib retrace level, surely not. Don't let bad sentiment go to waste.

Great point, would love to see it personally!

[Bjauck]

Agreed. We could see the real estate market fall another 20-40% over the next few years.
I think the share price is merely front running that and not the screaming cheap one way bet some seem to think it is. As always, a well diversified portfolio with only a modest allocation to any one sector or company is the most prudent approach to risk management.
The latest Corelogic figures still have the NZ housing market up a ridiculous 18.8% over the past year. It could drop another 20% and still remain expensive on International comparisons. Also as mentioned OCA pricing of ORAs is low enough to have a cushion for a reasonable drop in surrounding property prices.

https://www.stuff.co.nz/life-style/homed/real-estate/300579009/house-price-falls-biggest-since-the-gfc-corelogic-says

[Rawz]

If property prices go back to what they were last year hopefully the OCA share price does the same thing..

[aquaman]

:t_up:..........
If property prices go back to what they were last year hopefully the OCA share price does the same thing..

[Entrep]

If property prices go back to what they were last year hopefully the OCA share price does the same thing..

Undoubtedly they will, just give it a few years.

[BlackPeter]

The residential property market was allowed to get into a bubble and low interest rates were the new normal so many thought. So sentiment has changed and OCA is the stock that gets dumped on both from the point of view government funding that chronically never covers or at best lags coverage of full costs, and from the point of view of being exposed to residential housing market sentiment.

Well, yes - house prices took a quite minor dip (25% up last year, 5 % down so far over last 6 months - end of the world must be nigh ...).

Personally still grappling with the concept to turn this into a market crash story. Just looked at the latest data from the monthly property report (homes.co.nz). Does the trendchart of the median residential house prices really look like sky falling as some people around here (no,not you ...) try to make us believe? Really?

I think there is a good case to be made that SP of retirement villages (including but not limited to OCA) overreacted (no surprise if some holders took some of the hype around here at face value) and should be due for a nice swing back :):

13766

Discl: happy holder ...

[fish]

Undoubtedly they will, just give it a few years.

But do not be surprised if it is lot sooner .
A factor that may be underestimated is new house price inflation.
A builder I know was earning $50 hr two years ago-now 80 and has been offered 100 to work in Auckland
We all know materials,fuel etc big price rises
Then building regulations and specifications additional costs

[bull....]

well i was away most of yesterday and geez looked last night and wow 98c :scared: no way they say.
how can this so undervalued stock be so undervalued lol
maybe the market is smarter than most on here ... well obviously the market is always right

anyway maybe my 91c lower bolly is in play on the weekly ? heaven forbid they say its even more undervalued now better get a bigger truck or should it be dig a bigger hole

[Balance]

well i was away most of yesterday and geez looked last night and wow 98c :scared: no way they say.
how can this so undervalued stock be so undervalued lol
maybe the market is smarter than most on here ... well obviously the market is always right

anyway maybe my 91c lower bolly is in play on the weekly ? heaven forbid they say its even more undervalued now better get a bigger truck or should it be dig a bigger hole

Macquarie sold out completely for a reason?

[couta1]

Macquarie sold out completely for a reason? Yeah to take their profit like any private equity firm, same with the current lot that bought MET, they want their money out in around 3 yrs from now.

[fish]

Macquarie sold out completely for a reason?

Have they got a crystal ball?
Got 120 and moved on to where they thought could make more
Courses for horses
Pension funds are more likely to come and stay
IMHO downside probabilities sp no more than 5 cents upside 50 cents within the next 2 years

[Rawz]

Have they got a crystal ball?
Got 120 and moved on to where they thought could make more
Courses for horses
Pension funds are more likely to come and stay
IMHO downside probabilities sp no more than 5 cents upside 50 cents within the next 2 years

thats the way i see it fish. we must be close to the bottom of the barrel now..

[couta1]

well i was away most of yesterday and geez looked last night and wow 98c :scared: no way they say.
how can this so undervalued stock be so undervalued lol
maybe the market is smarter than most on here ... well obviously the market is always right

anyway maybe my 91c lower bolly is in play on the weekly ? heaven forbid they say its even more undervalued now better get a bigger truck or should it be dig a bigger hole Its all about fear, nothing to do with the market being smarter, is it smart to sell for a loss when you don't have to in a stock with 10 yr tailwinds? Are any of the insiders with large holdings selling?

[bull....]

Its all about fear, nothing to do with the market being smarter, is it smart to sell for a loss when you don't have to in a stock with 10 yr tailwinds? Are any of the insiders with large holdings selling?

this wont help just released by rbnz

A sharp correction in house prices remains a "plausible outcome" that would have broad economic implications, the Reserve Bank says.

https://www.interest.co.nz/banking/115634/latest-reserve-bank-financial-stability-report-says-house-prices-have-been-declining

[couta1]

this wont help just released by rbnz

A sharp correction in house prices remains a "plausible outcome" that would have broad economic implications, the Reserve Bank says.

https://www.interest.co.nz/banking/115634/latest-reserve-bank-financial-stability-report-says-house-prices-have-been-declining

10% correction max my call, wont affect the ability to purchase a retirement unit.

[Ggcc]

10% correction max my call, wont affect the ability to purchase a retirement unit.
I believe it’s too soon for that sort of call. If interest rates keep rising you will see house prices drop, as people can’t afford their mortgages, increased insurances, increased power bills, rates and increasing food prices in the future. I’m thinking more likely at 15-25% drop for the future for homes. No time frame, as I feel that will be as a result of costs to households and how fast they climb indirectly through inflation.

On Trademe one house in Napier for sale dropped their asking price by $100,000 (from memory it was a house priced over 1.4 million) and I feel that is only the tip of what is going to happen.

[couta1]

I believe it’s too soon for that sort of call. If interest rates keep rising you will see house prices drop, as people can’t afford their mortgages, increased insurances, increased power bills, rates and increasing food prices in the future. I’m thinking more likely at 15-25% drop for the future for homes. No time frame, as I feel that will be as a result of costs to households and how fast they climb indirectly through inflation.

On Trademe one house in Napier for sale dropped their asking price by $100,000 (from memory it was a house priced over 1.4 million) and I feel that is only the tip of what is going to happen. Depends on the individual area, house prices in mine are still up 1% from a yr ago yet some parts of WGTN are down 3% plus.

[mike2020]

https://www.newshub.co.nz/home/money/2022/05/new-zealand-house-values-drop-for-first-time-since-2020-corelogic-says.html

I'm not saying your all wrong but your probably all wrong. 5000 drop in the national average? Someone overpriced a house in Napier? Locally I see strong demand EXCEPT in areas that got well ahead of themselves. OCA? Not really and the houses that are hard to sell are the upper end of first homes and investment properties from what I have seen.

[Waltzing]

Wait till they add a land tax in the next term.

The home owners will face double taxation and of course if the asset loses money you be triple taxed as ex onomists dont do P&L accounting for tax , they do capital value taxation.

Could see land values drop farther putting more negative sentiment on this sector in the long term. Although you could argue it hasnt effected other markets with land taxes.

https://www.stuff.co.nz/business/128519952/wealth-inequality-debate-is-really-an-argument-over-land

[Ggcc]

Depends on the individual area, house prices in mine are still up 1% from a yr ago yet some parts of WGTN are down 3% plus.

Totally agree that location means everything. Coastal properties continue to increase over the long term and if they drop in the short term it won’t be by much as demand is too great.

Current prices are not the concerns and people who don’t need to sell are not the concern. Those forced to sell will be and many will be forced to sell if interest rates quickly rise, which are predicted to happen.

When it comes to OCA it will not really affect their business model too much in care as it’s essential and elderly will just leave less to their children when buying an ORA, so I am still optimistic long term holder and will buy more over time if their share price keeps dropping.

[Waltzing]

Recent report on coastal seas levels looks pretty dire even for NZ.

want them there locations to be up on a nice hill top away from erosion.

Some nice safe locations being built in boring central north island towns from ARV and OCA.

Hamilton to Cambridge area both have new villages under construction.

[winner69]

Recent report on coastal seas levels looks pretty dire even for NZ.

want them there locations to be up on a nice hill top away from erosion.

Some nice safe locations being built in boring central north island towns from ARV and OCA.

Hamilton to Cambridge area both have new villages under construction.


Those places not fat from Ruapehu if it decides to blow ;)

[Waltzing]

" far from Ruapehu"

pictures on a wall.....

Flooding also a problem at Rangimoana Ave down the eastern bays lake taupo.

Those WHS stores in some towns look far to small for the up tick in down market shoppers.

[mike2020]

That leaves us with the high country, no problems there...

[JohnnyTheHorse]

10% correction max my call, wont affect the ability to purchase a retirement unit.

AKL and WLG were down ~7.8% based on HPI data last month. Likely already 10% by now.

[BlackPeter]

AKL and WLG were down ~7.8% based on HPI data last most. Likely already 10% by now.

Which still would be up 15% from one year ago, wouldn't it? Terrible how these house owners suffer - just imagine, only 15% gain in one year if it could have been 25!!!! Poor bastards, now they need to tighten the belt and eat from the neighbours trash can.

But hey - if there is no reason to complain then we just make one up, isn't it?

[JohnnyTheHorse]

RBNZ know significant falls are coming with increasing rates. They would not dare use the wording they used today if they weren't confident and didn't want to be in a position of being able to say 'we warned you'.

[couta1]

AKL and WLG were down ~7.8% based on HPI data last month. Likely already 10% by now. Like I was saying it depends on the area, quite a few parts of WGTN still up for the year, don't know about Auckland.

[thegreatestben]

We are just a few weeks away from completing our subdivision, built 2x 130m2 stand alone homes with garages. Have no intention to sell but still think the values will remain high as supply of new homes in the area is quite limited and you're lucky to get a townhouse with a carpark if new builds are available. Just looking forward to them being done and get some tenants in so I can spend my spare cash on OCA shares on discount :)

[Waltzing]

"high country, no problems there.."

imagine the VIEWS!!!! locations!!!

prices on those could be through the ranges!!

Nelson going to be the new retirement capital of NZ...

Golden Bay!!

[mike2020]

RBNZ know significant falls are coming with increasing rates. They would not dare use the wording they used today if they weren't confident and didn't want to be in a position of being able to say 'we warned you'.

Just like when Bill English said don't be in a hurry to buy? I'm of the opinion no one has a clue. Get a National govt next year and all bets are off. Before the GFC I had locked in 9.5% along with my broker at the time and it went to 5% rapidly but we all expected a return to the 80s. Sure debt has changed but so has everything else. Aside from cars and clothes. I really don't see much change there.

[JohnnyTheHorse]

Just like when Bill English said don't be in a hurry to buy? I'm of the opinion no one has a clue. Get a National govt next year and all bets are off. Before the GFC I had locked in 9.5% along with my broker at the time and it went to 5% rapidly but we all expected a return to the 80s. Sure debt has changed but so has everything else. Aside from cars and clothes. I really don't see much change there.

When you understand the relationship between prices and interest rates a 30% fall is easily justified. The big unknown is what happens to rates when the economy almost certainly hits the wall within the next 12 months. NZ rate hiking is 12 months ahead of the rest the world and we are arguably in one of the worst positions to handle rate increase. What if we enter recession 12 months before the rest of the world, but we have to maintain high rates to protect the currency?

Pain is ahead.

[couta1]

When you understand the relationship between prices and interest rates a 30% fall is easily justified. The big unknown is what happens to rates when the economy almost certainly hits the wall within the next 12 months. NZ rate hiking is 12 months ahead of the rest the world and we are arguably in one of the worst positions to handle rate increase. What if we enter recession 12 months before the rest of the world, but we have to maintain high rates to protect the currency?

Pain is ahead. Pain is ahead but when you need to move into a retirement village you move even if your house sells for less, its just the size of family inheritances will decrease at the end of the day.

[mike2020]

When you understand the relationship between prices and interest rates a 30% fall is easily justified. The big unknown is what happens to rates when the economy almost certainly hits the wall within the next 12 months. NZ rate hiking is 12 months ahead of the rest the world and we are arguably in one of the worst positions to handle rate increase. What if we enter recession 12 months before the rest of the world, but we have to maintain high rates to protect the currency?

Pain is ahead.

How many times I have heard that. You are reminding me of a friend of mine now, when Y2K was approaching and the sky was about to fall in he used to say to people "sell your house and spend the money while you can". You will find a parable to match the look on peoples faces and reaction. A couple of people I know were tempted to sell their houses at the start of the pandemic and we all here had a pretty good idea of what was about to happen. You think I don't know how interest rates work and I think you need to broaden your horizon.

[mike2020]

How about the people who are BEGGING for higher interest rates? I bet things can't move fast enough.

[mike2020]

When you understand the relationship between prices and interest rates a 30% fall is easily justified. The big unknown is what happens to rates when the economy almost certainly hits the wall within the next 12 months. NZ rate hiking is 12 months ahead of the rest the world and we are arguably in one of the worst positions to handle rate increase. What if we enter recession 12 months before the rest of the world, but we have to maintain high rates to protect the currency?

Pain is ahead.

I bought a huge gas guzzling towing vehicle back in November for half the cost of a similar diesel because no one wanted to pay for the petrol. Having owned a few diesels I can say it's now cheaper to run if you add on the road user. Bet you saw that coming too. Nicer to drive as well. Almost certainly...almost.

[JohnnyTheHorse]

How many times I have heard that. You are reminding me of a friend of mine now, when Y2K was approaching and the sky was about to fall in he used to say to people "sell your house and spend the money while you can". You will find a parable to match the look on peoples faces and reaction. A couple of people I know were tempted to sell their houses at the start of the pandemic and we all here had a pretty good idea of what was about to happen. You think I don't know how interest rates work and I think you need to broaden your horizon.

Selling a house at the start of a pandemic made perfect sense, unless you realised the response would be dropping rates to zero. Auckland was actually undervalued based on my analysis when we had 2.3% mortgage rates. Now rates have doubled and a 30-40% pullback is a very real possibility. What will actually happen (i.e. the magnitude of the fall) is impossible to know, as the timing of things and how factors influence each other cannot be reliably modelled. One thing for certain though is that house prices will be under sustained pressure until such time as rates decrease.

I have no need to broaden my horizon past the key influencing factors, the rest is just noise to feed whatever bias one may have.

[mike2020]

I don't live in Auckland but I know what I see here. And it made no sense so I have no idea what you mean. I looked at buying a house at the start of the pandemic that they were selling for that exact same reason, to buy cheaper later. I was beaten to it and the proud owner of that place must feel very cleaver.

[Entrep]

There's also a ton of cash sitting on the sidelines ready to jump on any substantial decrease in prices.

NZ is one bright spot in the world, while the rest of it turns to custard imo. Terrorism, pandemics (isolation), extremism, etc, etc. Very bullish NZ long term.

[mike2020]

Im inclined to agree. I watched a house here sell a good 20% over market expectations last week and its not uncommon for better houses in good areas right now. To many vague figures thrown around.

[JohnnyTheHorse]

Im inclined to agree. I watched a house here sell a good 20% over market expectations last week and its not uncommon for better houses in good areas right now. To many vague figures thrown around.

Like your anecdotal evidence vs REINZ HPI data? Cool story bro :cool:

[mike2020]

I think mule not pony. There will be plenty of customers for every product OCA offers. No story. Have you sold out? Buying your own story?

[JohnnyTheHorse]

I think mule not pony. There will be plenty of customers for every product OCA offers. No story. Have you sold out? Buying your own story?

I have made not comment as to how property prices will impact occupancy of OCA.

I have been short retirement and commercial property since towards the end of last year. So yes, buying (well, technically selling) my own story and have profited very handsomely from it.

[couta1]

I have made not comment as to how property prices will impact occupancy of OCA.

I have been short retirement and commercial property since towards the end of last year. So yes, buying (well, technically selling) my own story and have profited very handsomely from it. I know you like skiing so I suggest you do a lot more of it this coming winter rather than just racking up profits, you can't take it with you. PS-Increasing my ski time to 6 wks this year.

[Antipodean]

If property prices have no impact on occupancy of OCA then what is the property market's relevance to this thread?

[mike2020]

I can't argue with that then but it does explain your position.

[JohnnyTheHorse]

I know you like skiing so I suggest you do a lot more of it this coming winter rather than just racking up profits, you can't take it with you. PS-Increasing my ski time to 6 wks this year.

You've got the right idea and outlook on life mate. Got the trip booked, but can't manage 6 weeks you bas****! :)


If property prices have no impact on occupancy of OCA then what is the property market's relevance to this thread?

I never said property prices will have no impact on occupancy, because I don't know what the impact will be (although I suspect very minimal). Property prices and interest rates have an impact on NTA, which lets be honest is critical for these retirement villages. Underlying profit is generally doesn't produce much eps.

Not predicting doom and gloom, however there are serious headwinds over the next year or two. OCA will have its day again.

[mike2020]

I still think "a lot of pain to come" is overly dramatic. I know a few 30 somethings who have home loans, still getting a coffee on the way to work and a couple of crafties after. A lot of fat to trim if needed. The new debt ceiling must have a use. The average wage hit $38 an hour today. That house I mentioned from 2 years ago, if it dropped 30% they would still be up 20%. I know people who bought their first house under 5 years ago who already have an investment property. If there is pain to come I believe even now its going to be for a select masochistic few and even then it's probably avoidable.

And lets not forget we are about to get lax with the banks again :)

[bull....]

hammer time

nz 10yr bonds hitting new highs

[Beagle]

hammer time

nz 10yr bonds hitting new highs

Yeap 10 year Govt stock will be 4.0% shortly which brings me to Ben Graham's way of valuing stocks. He reckoned an 8.5 PE for a company not growing earnings per share when the risk free rate was 4.0% so that's 8.5 x 7 cents per share underlying realised profit = 59.5 cps. :ohmy:

Just as well his way of valuing things doesn't apply there days....or does it ?

Hopefully they can actually grow their underlying realised earnings in the years ahead...

[bull....]

Yeap 10 year Govt stock will be 4.0% shortly which brings me to Ben Graham's way of valuing stocks. He reckoned an 8.5 PE for a company not growing earnings per share when the risk free rate was 4.0% so that's 8.5 x 7 cents per share underlying realised profit = 59.5 cps. :ohmy:

Just as well his way of valuing things doesn't apply there days....or does it ?

looks like these sorts of valuation methods are coming back if you look at tech stocks , maybe it will spread to everything in time

[winner69]

Yeap 10 year Govt stock will be 4.0% shortly which brings me to Ben Graham's way of valuing stocks. He reckoned an 8.5 PE for a company not growing earnings per share when the risk free rate was 4.0% so that's 8.5 x 7 cents per share underlying realised profit = 59.5 cps. :ohmy:

Just as well his way of valuing things doesn't apply there days....or does it ?

Hopefully they can actually grow their underlying realised earnings in the years ahead after five years of no growth otherwise we'll be mired in the doldrums forever and a day and "any will be too many"

What about the 2g in Ben's formula

If g is 0 then suppose your 59.5 cents is on

If g is negative does Ben say the multiplier is less than 8.5 (by 2 times negative growth rate)

Just as well Ben actually said in the fime print end notes in his book that his formula was a load of crap