OCA - Oceania Group - retirement villages

[Harvey Specter]

Looks like there may be another retirement village operator listed.


Macquarie Bank is exploring sale options for its wholly owned local aged care provider Oceania Group including a possible initial public offering and sharemarket listing.
A trade sale is also a possibility for Oceania, which has around 4,600 residents in more than 50 retirement villages and rest homes nationwide. “We’re keeping an open mind and like anyone we’re looking at ways to accelerate growth,” Oceania chief financial officer Matthew Ward tells NBR business reporter Calida Smylie.

http://www.nbr.co.nz/article/oceania-considers-ipo-fishhooks-kotahi-deal-vistas-path-listing-and-what-make-director-share

[couta1]

This is the listing I alluded to a while back on the Sum thread they won't need to buy land as they can build onto many of their current 50 plus facilities.

[Harvey Specter]

... they won't need to buy land as they can build onto many of their current 50 plus facilities.Do they have low site coverage? Why is this?

They have twice as many villages as Rym but only 2/3 the residents. If they could expand on existing sites, that would be very cost efficent.

[couta1]

Do they have low site coverage? Why is this?

They have twice as many villages as Rym but only 2/3 the residents. If they could expand on existing sites, that would be very cost efficent.
A lot of their sites have low site coverage because up until now many of them only have care centers on them so yes plenty of free land to build on.

[Joshuatree]

We looked at Oceania for our Mother. A tired old building which still looked tired after a quick makeover; no sun and very few common areas. They excitedly opened a small cupboard and said "This will be the library". One good thing they had was a large garden area with an old boat and a bus stop. They will make good margins there but it wasn't good enough for us.

[couta1]

We looked at Oceania for our Mother. A tired old building which still looked tired after a quick makeover; no sun and very few common areas. They excitedly opened a small cupboard and said "This will be the library". One good thing they had was a large garden area with an old boat and a bus stop. They will make good margins there but it wasn't good enough for us.
I've worked in a couple of nicely revamped Oceania facilities remember none of their facilities were purpose built and they are in the process of nationwide refurbishment, they are also in the process of selling facilities which can't be built onto so as mentioned above they won't have to purchase land to expand, hopefully they list later in the year when the market might look better than it currently does.

[couta1]

Just some more thoughts re this possible listing. I think there's a good chance Oceania will be bought outright and that, that would be their preferred outcome rather than a NZX listing. With Bupa already having purchased several of their facilities I hear through the grapevine they have a deadline on whether they wish to purchase the company outright, its seems to me that with a debt level of around $600 mill that a takeover would be a better option than a listing, thoughts anyone?

[Beagle]

That's an ugly debt level considering residents pay all their occupation licence fees up front. How on earth did they end up with that level of debt mate ?

[couta1]

That's an ugly debt level considering residents pay all their occupation licence fees up front. How on earth did they end up with that level of debt mate ?
What do you make of these figures Roger you will be able to interpret them better than me.The company has Net liabilities of 132.9 million, 267.2 million in shareholders loans from Macquarie plus they are carrying 274 million in bank loans.

[Beagle]

What do you make of these figures Roger you will be able to interpret them better than me.The company has Net liabilities of 132.9 million, 267.2 million in shareholders loans from Macquarie plus they are carrying 274 million in bank loans. I'd prefer to see the full financials before commenting in detail mate but those sort of numbers don't normally go together unless the company has been trading at massive losses over many years. Those debt level's appear to be an extremely serious concern. If a company has net liabilities of $132.9m how are they still a going concern ? How debt and shareholders advances could have ever got that high is what I'm especially interested in and most especially what this says about managements ability.
I'd speculate a recapitalisation is desperately needed and Macquarie's could be in for quite a haircut on their shareholders advances.
Caveat Emptor on this one, definitely one to watch for some creative revaluation of assets. :eek2:

[Harvey Specter]

I'd prefer to see the full financials before commenting in detail mate but those sort of numbers don't normally go together unless the company has been trading at massive losses over many years.

The first rule of private equity is never use equity.
The second is to use debt to the maximum extent.

[Goldstein]

So are Hercules and Oceania supposed to be the big threat to RYM, SUM and MET's share price this year???

[dingoNZ]

The first rule of private equity is never use equity.
The second is to use debt to the maximum extent.


Basically this, take a look at literally every single listing done by a private equity firm. Aus has half a dozen in the pipeline coming up

[Beagle]

So are Hercules and Oceania supposed to be the big threat to RYM, SUM and MET's share price this year???

Supply and demand. There's only a certain pool of investors money prepared to chase these companies at their lofty PE multiples. Add considerably more supply and...

[couta1]

Supply and demand. There's only a certain pool of investors money prepared to chase these companies at their lofty PE multiples. Add considerably more supply and...
True mate but you don't want a lemon when you can already buy a juicy orange aye.

[Beagle]

True mate but you don't want a lemon when you can already buy a juicy orange aye.

Very true mate. Waiting for the oranges to go on special :)

[couta1]

Very true mate. Waiting for the oranges to go on special :)
I think the specials finished last week but you can still buy them at a discount if your quick:cool:

[skid]

Might be jumping the gun a bit --one up day is not a trend

[Beagle]

Might be jumping the gun a bit --one up day is not a trend

Well said. The story behind the saying One swallow does not make a summer
http://en.wikipedia.org/wiki/The_Young_Man_and_the_Swallow

[trader_jackson]

http://www.afr.com/street-talk/macquarie-sale-of-oceania-healthcare-take-three-20160503-gokwys

Out from aussie about what is happening with these.. doesn't look like an IPO (unfortunately)

[Hectorplains]

http://www.afr.com/street-talk/macquarie-sale-of-oceania-healthcare-take-three-20160503-gokwys

Out from aussie about what is happening with these.. doesn't look like an IPO (unfortunately)

Hey TJ is it unfortunate because you love the sector and want a second horse in the same race or that it would be a benchmark for better measuring Arvida against?

[trader_jackson]

Hey TJ is it unfortunate because you love the sector and want a second horse in the same race or that it would be a benchmark for better measuring Arvida against?

Bit of both to be honest...

[trader_jackson]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11801193

"Rumoured IPOs this year included... Oceania Healthcare..."

[trader_jackson]

http://www.afr.com/street-talk/macquarie-books-fundies-for-oceania-living-non-deal-roadshow-20170223-gujjuz

Key take aways
"It's expected to tell fund managers that the company's earnings were worth $NZ47 million in the 2016 financial year, which was up from $NZ29 million a year earlier."

"... company requiring capital to fund its brownfield development pipeline of about 1000 units."

Perhaps most interesting (and surprising?)
"Fund managers are expected to compare it to the already listed Summerset Group Holdings, which has a $1.04 billion market capitalisation and investors including Cooper Investors and Harbour Asset Management." must be expecting similar growth maybe?

[macduffy]

Those reports again!

From the Herald:

"Making waves again

Market sources say Kiwi aged-care operator Oceania Healthcare is being spruiked around the investment industry again as it tries to talk up interest in a sharemarket float.

This time last year Oceania chief executive Earl Gasparich downplayed chatter in the Australian Financial Review's Street Talk column that Oceania was expected to front potential buyers with its owner Macquarie Capital in tow.

Gasparich told BusinessDesk the AFR story was "just speculative - there's no substance to it at all".

But he did say a listing could be on the cards in the future in another year or so.

"We still need to recapitalise at some stage, but we need to get this year behind us then forecast forward for another year," Gasparich said.

"It would be potentially on the cards after that, but at the moment, we're focusing on the business itself."

The company is said to be targeting a dual New Zealand and Australian listing but so far interest from Australia appears to be muted.

According to the AFR at the one of the Sydney briefings by the company just two people were said to have turned up.

The AFR said there was a view in the market that the business is a New Zealand one and carries no relevance to Australian investors.

According to its website Oceania has 49 locations in New Zealand including 25 retirement villages with around 3000 care rooms and around 1000 independent living villas and apartments"

[couta1]

Getting listed is one thing,but for this company to succeed once listed will require a total restructure at the top end along with a severe pruning of dead wood, also at the top end.

[Joshuatree]

I seem to remember that you said something familiar/similar about ARV citing your knowledge of the industry working in it in some capacity and yet the runt has excelled in performance thrashing the incumbents.

[trader_jackson]

I seem to remember that you said something familiar/similar about ARV citing your knowledge of the industry working in it in some capacity and yet the runt has excelled in performance thrashing the incumbents.

Yes... couta1 I am not quite sure what you mean... are you talking about administration and integration issues that was often mentioned as a key reason not to invest in ARV? (which, to date, over 2 years after the IPO, seems to have been no issue)

It is funny reading back in along the first 10ish pages of the thread... the talk of 'taking the dividend carrot with a grain of salt', talk of All Blacks as a reason to invest (or not - I think they have all sold out now), questions about whether ARV management wanted good growth (although the prospectus would indicate so - and the chairman I believe has a large number of SUM shares), I also think Chris Lee hated (if I can use this word) ARV, yet loved Wynyard?

[couta1]

I seem to remember that you said something familiar/similar about ARV citing your knowledge of the industry working in it in some capacity and yet the runt has excelled in performance thrashing the incumbents. Your wrong, I never commented on the management structure at ARV, only that I preferred the Rym and Sum model. Trader Jackson I'm talking about the top heavy structure that needs new blood once it becomes a listed company, but Mum's the word on any further detail.

[Joshuatree]

You're not alone with ARV couta ; pretty well everyone got it wrong including Chris Lee , except trader jackson who has done very well out of it and shared his research and reasons why..Im not sure why its thrashed the big boys or if Oceana can repeat its success. Care to comment on where ARV outperformed the incumbents, on the ARV thread?

[trader_jackson]

Your wrong, I never commented on the management structure at ARV, only that I preferred the Rym and Sum model. Trader Jackson I'm talking about the top heavy structure that needs new blood once it becomes a listed company, but Mum's the word on any further detail.

It is hard, I think, to see details on the 'top heavy structure' you speak of, have I missed something, or do you know more information about Oceania's structure that makes it 'top heavy' than what I can seem to find? Would be great if you could share what makes it top heavy, and what new blood you think is required once it becomes a listed company etc

[couta1]

It is hard, I think, to see details on the 'top heavy structure' you speak of, have I missed something, or do you know more information about Oceania's structure that makes it 'top heavy' than what I can seem to find? Would be great if you could share what makes it top heavy, and what new blood you think is required once it becomes a listed company etc Basically under the former CEO, an oversupply of General managers and managers was set up and still remains as we speak, hopefully this will change going forward as the current CEO seems more tuned in and efficient. I know a former employee from their HQ that has given me more info about the above structure than is currently available to the general public. For obvious reasons that's all I can say on the matter.

[winner69]

t_j seeing you going to be in boots and all when ; if this IPOs hope you started doing your homework

Here is their last set of accounts
https://www.companiesoffice.govt.nz/companies/app/service/services/documents/ECD5A66C13388F1075CC7A88F831340D

Worth as much as Summerset as the AFR sort of suggested?

[trader_jackson]

t_j seeing you going to be in boots and all when ; if this IPOs hope you started doing your homework

Here is their last set of accounts
https://www.companiesoffice.govt.nz/companies/app/service/services/documents/ECD5A66C13388F1075CC7A88F831340D

Worth as much as Summerset as the AFR sort of suggested?

Thank you couta1 for your response, and yes winner69 I am interested... but possibly not 'boots and all'... the IPO documents will be of great interest, should the IPO go ahead.
I don't think it would be fit to compare it to SUM (this did surprise me when AFR mentioned this), at least when comparing on a build rate and land bank, but they do have a strong development ahead, in the short term. On a breif look, Operating cash flows are very strong, and ORA's have experienced good growth, with growth likely to increase in the coming years. Balance sheet heavy with debt, which is nothing new, although I am sure a significant proportion of this will disappear when listing.

[trader_jackson]

8762
It would seem Oceania is another step closer...

[Beagle]

t_j seeing you going to be in boots and all when ; if this IPOs hope you started doing your homework

Here is their last set of accounts
https://www.companiesoffice.govt.nz/companies/app/service/services/documents/ECD5A66C13388F1075CC7A88F831340D

Worth as much as Summerset as the AFR sort of suggested?

Interesting....Hmmmm, if it were not for gains on revaluation of properties (IFRS) they would have lost ($13m) in 2016, an improvement from losing ($23m) from operations in 2015. Talk of big growth by promotors does not impress me. Track record to date is well below par. You cannot list on fancy pants multiples because of tailwinds in the sector unless you have a decent track record wherein you've proved your development model. This is why MET who haven't proved their case yet are on an underlying PE of only ~ 16 whereas at the other end of the scale RYM are in the high 20's.
Promotors promises of future growth when prior growth has been very modest always worry me, Tegal the last example of a float choc-a-bloc full of corporate spin.

[trader_jackson]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11829235

Here we go :t_up:

[winner69]

You keen as mustard eh t_j

Hope you on your brokers favourites list

[couta1]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11829235

Here we go :t_up: With such a reliance on care beds to drive profit, it will all come down to them keeping their wages to revenue ratio below a certain level, a tough ask. Most of the money from the IPO will be used to pay down debt and until they get more development going, the previous mentioned ratio will determine how successful or not they will be.

[Beagle]

Must admit I thought something was imminent as institutions from what I have observed in the market seem to have been keeping their powder dry on any buy bids for SUM and RYM lately.
Key point of difference is care bed focus. Very little money to be made in that sector as I am sure Couta1 who works in that sector will tell you. (Edit I see you already have implied that mate)
The real money is in development and recycling of churned units. Very unlikely I will participate based on what I have heard of their top heavy management structure and after reviewing their previous year's financial performance already. Lets be honest, promotors can forecast anything they like, (Tegal anyone ?), but their historical financial performance speaks for itself and it isn't flash on an underlying basis !
https://www.companiesoffice.govt.nz/companies/app/service/services/documents/ECD5A66C13388F1075CC7A88F831340D

[couta1]

The trouble with having to rely on the wages to revenue ratio to drive profits is, you only need a few renegade facility managers to destroy a good portion of your profits. This happens when too many agency workers are called in to cover shifts, as well as an over allocation of hours to staff unecessarily. Added to that would be a failure by the manager to manage consumable supplies in a proper fashion, promoting huge wastage.

[trader_jackson]

It has been clear over the past few days investors in ARV are, not surprisingly, interested in Oceania, as evident by ARV's share price weakness... so fittingly I decided to reading over the PDS...

Will hopefully be able to find time to post a bit more, but there are a few things that did jump out at me...

1. I do like the dividend, and payout ratio, allowing for good growth, while rewarding shareholders with good dividends along the way.

2. The number of people being paid over 500k and the directors fees... when comparing to ARV, I can see partly where couta1 is coming from regarding seemingly top heavy management...
In 2016, 51 employees had remuneration over 100k, with the top guy earning earning between 660k - 669k.
Contrast this to ARV... they had just 10 employees with remuneration over 100k... the top being on 370 to 379k (and ARV are not 1/5th the size of Oceania!)
I note that Oceania expects the remuneration and benefits of employees of the Oceania Group exceeding $100,000 in respect of FY2017F to be lower from those in FY2016... and I also note that 27 (most) of these employees were between the 100k and 119k mark, so if most of these were cut out (and the rest, say, moved down a bracket or two) we could be looking at something more realistic.. and it sounds like it could be possible.

3. I also note that, at time of listing, ARV had 1800 residents, with approximately 1000 (including part time) staff... Oceania has 2800 staff with 2600 aged care residents... but I assume (hope) this excludes about a thousand people or so in units?

4. Operating expenses were forecast (FY15 prospective) at ARV to be 50.2m (about 77% of Total revenue), and for Oceania FY: 150.1m (about 71% of Total Revenue), so going by this metric, management of expenses (namely wages) doesn't look that bad

5. Not so sure on the directors fees... seem a tad exorbitant, in comparison to ARV at least:
Fees for directors of Oceania that apply from listing have been fixed as a total pool of $582,500 per annum... ARV recorded directors fees of $382k in FY2016 (which I believe can go up to $400k)... Are the directors of Oceania worth 52% more? ARV has a current market cap of $424.5m, Oceania has an implied market cap of up to 570.6m... 34% more (and that is assuming it goes for top dollar).

I may have raised more questions that answers with my post above... but then again, we all know ARV is the old dog that you wouldn't dare touch ;)

Disclosure: promising, but more research required
Note: some 'points' may be interrelated

[percy]

This one is not for me.Appears to be Mutton dressed up as Lamb.
Happy having a "free ride" with the two I consider best of breed,RYM and SUM.

[huxley]

Any similarities to Southern Cross in the U.K.? Wasn't one of their problems that they relied too heavily on revenue from a single customer (the govt).
https://www.google.co.nz/amp/s/amp.theguardian.com/business/2011/jul/16/southern-cross-incurable-sick-business-model

[trader_jackson]

Any similarities to Southern Cross in the U.K.? Wasn't one of their problems that they relied too heavily on revenue from a single customer (the govt).
https://www.google.co.nz/amp/s/amp.theguardian.com/business/2011/jul/16/southern-cross-incurable-sick-business-model

The downfall of Southern Cross appears to be very simple, and dramatically different to the 4 listed (soon to be 5) operators: they leased all their houses... so of course as soon as things got tricky, and the rents kept rising, it is not surprising to see them fall over... I believe the article discusses this. They also don't appear to have any ORA's or higher margin care suits, and were purely a care based.

[couta1]

Trader Jackson, the 27 employees receiving salaries between 100-119k are not where the cuts should occur, these people are the hard grafters of the company at ground level. The other 24 employees receiving over 119k is where the top heavy management structure lies, and is where the cuts should occur.

[huxley]

The downfall of Southern Cross appears to be very simple, and dramatically different to the 4 listed (soon to be 5) operators: they leased all their houses... so of course as soon as things got tricky, and the rents kept rising, it is not surprising to see them fall over... I believe the article discusses this. They also don't appear to have any ORA's or higher margin care suits, and were purely a care based.

That's certainly why I said one of the problems! But the reason SC couldn't pay their rent bill was due to only 20% of their residents self funding their services.

I haven't looked closely at this company, but I have seen it mentioned in the herald:
"Oceania Healthcare has more of a 'needs-based' product offering compared to other lifestyle retirement village developers. One of the main benefits of care is the stability of cashflow. It's largely government funded, with underlying growth in demand as the population ages."

Just posted as a talking point: Is there a potential for over-reliance on local government funding?

[couta1]

You have raised a genuine area of concern Huxley and this ties in with my earlier comments on why the wages to revenue ratio is the key determinant of whether a care based company is profitable or not, until an increase of revenue from development margins occurs, this is a risk factor, and is why many not for profits have gone to the wall over the last few years. However in Oceania's favour, they do have plenty of land to build on and have already forecasted their projected build rate increase as a percentage of total beds.

[trader_jackson]

Trader Jackson, the 27 employees receiving salaries between 100-119k are not where the cuts should occur, these people are the hard grafters of the company at ground level. The other 24 employees receiving over 119k is where the top heavy management structure lies, and is where the cuts should occur.

Yes, I suppose this is plausible, especially given ARV have just 7 over over 120k.

[trader_jackson]

That's certainly why I said one of the problems! But the reason SC couldn't pay their rent bill was due to only 20% of their residents self funding their services.

I haven't looked closely at this company, but I have seen it mentioned in the herald:
"Oceania Healthcare has more of a 'needs-based' product offering compared to other lifestyle retirement village developers. One of the main benefits of care is the stability of cashflow. It's largely government funded, with underlying growth in demand as the population ages."

Just posted as a talking point: Is there a potential for over-reliance on local government funding?

Yes good question... the same was (likely) raised when ARV went public.
In Recent Forsyth report on the retirement sector:
Needs Based (Being serviced apartments and care beds as a % of total portfolio) is a potential indicator as to how reliant on government funding a village is:
Arvida: 74%
Metlifecare: 18%
Oceania: 72%
Ryman: 56%
Summerset 32%

However, the percentages above cannot be directly correlated to government funding, Oceania and Arvida are less than Southern Cross and this is being further reduced as both villages focus on independent villa (the high margin stuff) development over the coming years. The percentages above also include premium offerings, that are still deemed 'care based' but may not be government funded, eg care suits and ORA's over these are other care beds... very different to straight government funding of Southern Cross in the UK. What government funding is very good for is keeping cash coming in 'at all times'.

Oceania, Arvida and Ryman (to an extent) have a very strong focus on continuum of care... something that will become more important as the population ages and would rather make a short and easy 'trip from one room to another' in the same village, than, for example, have to 'walk out' of a MET or SUM village and hope to find a Dementia bed at Arvida.

[bull....]

dont forget minimum wage goes up from yesterday by 50c/hr so 2800 employees x 50c is roughly an increase of just under 3 million per annum to operating costs.

Have they factored a potential minimum wage increase in for 2018-19 yr? in there forecasts I doubt it

[trader_jackson]

To give you an idea of how ARV and Oceania have (or likely to) change a few years after listing:

Arvida:
Prospectus (December 2014 - 17 villages):
Care Beds: 952
Retirement Units: 812 ('high margin' Independent living apartments: 46%)
54% / 46% split
1764 Total

March 2017 - 26 Villages
Care Beds: 1461
Retirement Units: 1285 ('high margin' Independent living apartments: 54%)
53% / 47% split
2746 Total

March 2019 Forsyth Forecast - 26 Villages
Care Beds: 1511
Retirement Units: 1517
50% / 50% split
3028 total

Oceania:
Prospectus (March 2017):
Care Beds: 2638
Care Suites/Care Studios: 241 ('high margin' care beds)
Retirement Units: 1071 ('high margin' Independent living apartments: 100% - I think)
67% / 6% / 27% split
3950 total

March 2019: (Total Consented or Under Construction)
Care Beds: 2284
Care Suites/Care Studios: 580 ('high margin' care beds)
Retirement Units: 1669 ('high margin' Independent living apartments: 100% - I think)
50% / 13% / 37% split
4533 total

March 2021?: (Total Consented, Under Construction and in Planning and Consenting phase)
Care Beds: 2284
Care Suites/Care Studios: 877 ('high margin' care beds)
Retirement Units: 2050 ('high margin' Independent living apartments: 100% - I think)
44% / 17% / 39% split
5211 total

Perhaps interestingly, Oceania has a higher, current, percent of independent 'high margin' units that Arvida, although note that Arvida are beginning to roll out/convert care beds into higher margin Care Suites/Care Studios like Oceania (ie putting an ORA over the care bed)

Conclusion: It is clear both Oceania and Arvida are moving away, in % terms, from a 'care heavy' model, while maintaining a great continuum of care, something that will become increasingly important. Greenfield development is only a matter of time for both Arvida and Oceania... both respective prospectus have mentioned this, yet was somehow missed when Arvida went public (and its share price proceeded to the low 80's, before becoming the best performer by a mile the following year).

If you aren't interested, please pass this information onto your brokers asap, preferably mentioning that the price is far to expensive... that way I might pick up a bargain ;) :t_up:

[trader_jackson]

dont forget minimum wage goes up from yesterday by 50c/hr so 2800 employees x 50c is roughly an increase of just under 3 million per annum to operating costs.

Have they factored a potential minimum wage increase in for 2018-19 yr? in there forecasts I doubt it

I'm not sure if you were posting that as a joke, but one would like to think they would have, although doubt all 2800 of their staff are on the absolute minimum, in fact I would be surprised if it would be more than a couple hundred max on absolute minimum... not sure if you have read much on the thread, but for a start we know 51 of them are on 100k+ ;)

[bull....]

I'm not sure if you were posting that as a joke, but one would like to think they would have, although doubt all 2800 of their staff are on the absolute minimum, in fact I would be surprised if it would be more than a couple hundred max on absolute minimum... not sure if you have read much on the thread, but for a start we know 51 of them are on 100k+ ;)

haha ok so the wage operating costs will increase more than 3mil per annum also the care bed subsidy from govt is not guaranteed to cover this increase in costs

[trader_jackson]

haha ok so the wage operating costs will increase more than 3mil per annum also the care bed subsidy from govt is not guaranteed to cover this increase in costs

They are not just care beds....... see post 52

[bull....]

weather its ethical or not the future of low margin care bed facilities could be the securitization of them and selling them of as single room investments to the public.

[bull....]

They are not just care beds....... see post 52

yes thats why they moving more into high margin property trading although that gig will end for all of them either when the market becomes saturated or when the govt regulates the sector over the unethical exit fee structure.

[trader_jackson]

yes thats why they moving more into high margin property trading although that gig will end for all of them either when the market becomes saturated or when the govt regulates the sector over the unethical exit fee structure.

If you believe that is the case, MET and SUM will be first to fail, followed by RYM, then Oceania, then ARV... you might want to post on each of the other threads warning others of the 'imminent risk' of government regulation over ORA's

[bull....]

If you believe that is the case, MET and SUM will be first to fail, followed by RYM, then Oceania, then ARV... you might want to post on each of the other threads warning others of the 'imminent risk' of government regulation over ORA's

hardly imminent probably more likely to happen after saturation of the market and thats no where evident at the moment.

[trader_jackson]

hardly imminent probably more likely to happen after saturation of the market and thats no where evident at the moment.

Well that is good! Regardless, Oceania is one of the least concerned with a strong continuum of care (and care itself) focus, and I'm sure the rest of the market (being the other operators) will adjust accordingly.

My own view is that the "high margin property trading gig" probably won't 'end' for a good decade or two, and Government Regulation over "the unethical exit fee structure" will likely never occur.

[bull....]

As well as wage costs, govt regulation change is highly relevant for care bed facilities only need to look at what happened in australia to the care bed companies listed on the ASX when the govt changed the rules.

Anyway all these are well highlighted in the risks set out in the ipo document.

[bull....]

I lived in a rest home for 2 yrs when i was in my 20s so have a good idea of how they are run.

[Joshuatree]

As well as wage costs, govt regulation change is highly relevant for care bed facilities only need to look at what happened in australia to the care bed companies listed on the ASX when the govt changed the rules.


Yes we got caught with Estia EHE.It more than halved and s/p is now crabbing sideways on a bumpy bottom, almost a mortal hit.

Thanks Bull for bringing up some very pertinent points and making it a good robust discussion.

[percy]

yes thats why they moving more into high margin property trading although that gig will end for all of them either when the market becomes saturated or when the govt regulates the sector over the unethical exit fee structure.

At present time the retirement sector are not building enough retirement villages to keep ahead of projected wall of retires coming on stream, over the next 20 to 30 years.
It is not in the govt's interest to regulate.

[bull....]

At present time the retirement sector are not building enough retirement villages to keep ahead of projected wall of retires coming on stream, over the next 20 to 30 years.
It is not in the govt's interest to regulate.

exactly thats why they are allowed to get away with extortionate fees as it suits the govt's objective of not having to provide the services themselves.
anyway when market is saturated and you have such a large block of voters living in them the public pressure over the fees will make the govt regulate i reckon and retirement villages will then be just like care bed facilities a low margin business i reckon.

[bull....]

Well that is good! Regardless, Oceania is one of the least concerned with a strong continuum of care (and care itself) focus, and I'm sure the rest of the market (being the other operators) will adjust accordingly.

My own view is that the "high margin property trading gig" probably won't 'end' for a good decade or two, and Government Regulation over "the unethical exit fee structure" will likely never occur.

I guess oceania have the benefit over the others in the sector of being the biggest care bed provider in the market and the lowest retirement village provider so if they are able to secure development sites quickly for development they could generate good increase in profits in the future as long as expenses of care bed facities dont eat away the gains made from property sales.

[couta1]

Good on you TJ for all your work and research, your doing yourself proud. There is plenty of room for all these current players in the sector due to the strong tailwinds. It's up to each investor to choose the player/s that they think will give them the best return. PS- Re post #50 and your comment on Sum and dementia beds, they are now incorporating them in their villages so it's likely that that 32% will creep up over time.

[janner]

[QUOTE=couta1;661412]Good on you TJ for all your work and research, your doing yourself proud. /QUOTE]

Agree. FWIW. Picking up ARV in the dips.

Disc. Hold ARV. No others in the industry.

[whatsup]

When you look at the recent chart of retirement sector they all have come off quite a bit over the last 3 months, is this because
1/ the sector is over priced.
2/ after a big run that they have enjoyed its time for profit taking.
3/ entry of a new player.
4/ their profit numbers are under stress.
5/ because of the higher prices oldies are staying in their homes longer with more to pass on to their spoilt kids.
6/ Possible Govt regulations coming

with all of the above is Oceania priced right and will it enter at the bottom level of its pricing guide in order for the float to be a "success " ?

[macduffy]

I've had a quick look at the Offer Document and decided it's not for me. A point in their favour though, they do have a couple of impressive independent directors, Chair Elizabeth Coutts and Alan Isaac. Neither hold shares but will have decent holdings after the IPO. I'll be sticking with RYM and SUM!

[trader_jackson]

As well as wage costs, govt regulation change is highly relevant for care bed facilities only need to look at what happened in australia to the care bed companies listed on the ASX when the govt changed the rules.

Anyway all these are well highlighted in the risks set out in the ipo document.

Re your point on ASX companies (and their recent downfall) as well as a few other interesting things
http://www.afr.com/business/banking-and-finance/investment-banking/oceania-healthcare-ceo-says-nz-aged-care-a-better-bet-20170331-gvay28

Good article, might be behind a paywall but just don't allow it to fully load on chrome and you should be able to see it

[bull....]

Re your point on ASX companies (and their recent downfall) as well as a few other interesting things
http://www.afr.com/business/banking-and-finance/investment-banking/oceania-healthcare-ceo-says-nz-aged-care-a-better-bet-20170331-gvay28

Good article, might be behind a paywall but just don't allow it to fully load on chrome and you should be able to see it


interesting but just someone sounding as positive as they can, no-one can guarantee the nz govt wouldn't do the same as in aus in the future it remains a highly relevant risk for all in the sector.

In aus the govt decided that aged care facilities must change the way
capital refurbishment fees' and 'asset replacement contributions'. are made

[bull....]

TJ here some ratios I look at (you probably use some im assuming)

Ocupancy Rate
Revenue/bed day
ebitda/bed day
staff costs as a % total expenses
staff costs as a % total revenue
depreciation expense/bed day
resident pay profile

just a few to look at you could even compare them to say the aged care providers in Australia eg EHE,JHC,REG
to get an idea how efficiently they are running things compared to others.

[kiora]

Re your point on ASX companies (and their recent downfall) as well as a few other interesting things
http://www.afr.com/business/banking-and-finance/investment-banking/oceania-healthcare-ceo-says-nz-aged-care-a-better-bet-20170331-gvay28

Good article, might be behind a paywall but just don't allow it to fully load on chrome and you should be able to see it
Good article, might be behind a paywall but just don't allow it to fully load on chrome and you should be able to see it
How do you do this again?

[Hectorplains]

Good article, might be behind a paywall but just don't allow it to fully load on chrome and you should be able to see it
How do you do this again?

Easiest way is to google the headline. Open the cached version- choose 'text only.'

Anyway have PM'ed it for you.

[Joshuatree]

Cant bring it up on my iMac other than quick headline "tarred with the same brush"

[Joshuatree]

Ive heard a whisper re Oceania set at 84c but no confirmation. How believeable is profits DOUBLING in 2018 year and has the 50c an hour increase for min wage been factored in??

Heres an excerpt

Oceania Healthcare says it won't be tarred with the same brush as Australian counterparts because the NZ funding model ... Oceania Healthcare says it won't be tarred with the same brush as Australian counterparts because the NZ funding model ... Oceania Healthcare says it won't be tarred with the same brush as Australian counterparts because the NZ funding model is different. Naphat Jorjee
The chief executive of aged care firm Oceania Healthcare, which is preparing to list on both the New Zealand and Australian stock exchanges, says the Kiwi company will be spared from the negativity surrounding Australian counterparts because funding models are totally different.
Earl Gasparich said he did not expect any backwash from the poor sentiment towards the Australian listed players, which have been hurt by government funding cuts and uncertainty.
"The regulatory environment is very much an opportunity on the upside, not on the downside," Mr Gasparich said, referring to the much better prospects in New Zealand.
"It's a different funding model."

Oceania, which is New Zealand's third largest residential aged care provider and the sixth biggest operator of retirement villages, is preparing to raise up to $NZ273 million ($250 million) in a public offering, with an indicative price range of between $NZ0.76 and $NZ1.04. It will undertake a dual listing on both sides of the Tasman.

"It offers a nice level of diversity for Australian investors," he said. Mr Gasparich is headed to Australia on Monday ahead of roadshows to fund managers in Sydney and Melbourne as the float plans step up a gear. A prospectus was lodged on March 31.
The main listed aged care operators in Australia have come under substantial pressure because of government funding cuts, with Estia Health one of the hardest hit. (http://www.afr.com/street-talk/kerry...0170111-gtpux1 (http://www.afr.com/street-talk/kerry-stokes-retail-investors-back-estia-healths-entitlement-offer-20170111-gtpux1)) It downgraded profits twice in 2016 and embarked on a highly dilutive capital raising. Estia shares were trading at $5.50 in late May 2016 and are now hovering just above $3.
Japara Healthcare shares have dropped from about $3 a year ago to just above $2, while Regis Healthcare (http://www.afr.com/real-estate/estia...206-gt5klj)has (http://www.afr.com/real-estate/estia-regis-japara-revised-again-after-government-changes-20161206-gt5klj)has) slipped from $5 to just below $4.50 in the past 12 months.
*'We've got sufficient land'*

Mr Gasparich said Oceania didn't have any medium-term plans to enter the Australian market, because it had a large pipeline of work as it expands its facilities at home.
"We've got sufficient land to keep us busy for eight years," he said. The long-term demographics in New Zealand are similar to those in Australia, with demand for beds climbing. Across the industry in New Zealand, an extra 1170 to 1340 extra beds will be needed each year until 2026.
"The pent-up demand is there," Mr Gasparich said.
Oceania's facilities are in six main locations in New Zealand – Auckland, Tauranga, Hawke's Bay and Wellington on the North Island and Nelson and Christchurch on the South Island. The company provides accommodation for about 4000 residents across 48 facilities.

Oceania forecasts in its prospectus that revenues for the 12 months ending May 31, 2017 will reach $NZ210.9 million, rising to $NZ215.7 million in the following year. Net profit after tax is expected to be $NZ25.3 million in 2016-17, climbing to $NZ53.1 million in the 12 months ended May 31, 2018.
The existing owner, funds run by Macquarie Infrastructure and Real Assets, has agreed not to sell any of its holdings under escrow arrangements which run until July 2018. Oceania aims to start trading on the Australian and New Zealand stock exchanges on May 5.
Mr Gasparich said the company was clearly explaining to potential investors that the chances of any regulatory changes happening in New Zealand that would be detrimental to Oceania was very slim. But he acknowledged that confidence in the investment community had been rocked in Australia after government funding cuts which had undermined share prices in the main listed players on the ASX.
"There's no doubt that a number of them have been hurt by the funding cuts," he said.

[couta1]

I wonder what will happen to the share price once Macquarie and Real Assets are able to sell their shares after July 2018, if forecasts are not going as expected.:eek2:

[Joshuatree]

Also is that doubling of NPAT feasible?

[couta1]

Also is that doubling of NPAT feasible? Sounds very bullish, however they did double their gross profit last year compared to the year before.

[trader_jackson]

Sounds very bullish, however they did double their gross profit last year compared to the year before.

They've done it before (2015 to 2016), and remember it is actually only about 9% above 2016, so I think it is potentially a bit conservative.
They have had to estimate the impact a result of lower occupancy levels due, in part, to the decommissioning of sites for redevelopment and a reduction in the stock of Units available for resale. If development or decomissioning was faster than expected, or demand higher than expected, there is a chance they could beat forecasts. The opposite is also true of course.

84 cents would make Oceania very attractive in my view, if this were to be the case.

[trader_jackson]

I wonder what will happen to the share price once Macquarie and Real Assets are able to sell their shares after July 2018, if forecasts are not going as expected.:eek2:

ARV faced alot of resistance, share price wise, and also at their AGM (a question regarding this was asked) about what would potentially happen when the operators of the villages shares came out of escrow, which was 60 ish % of the company (similar to Macquarie and Real Assets ownership % after IPO).
I myself had this question in my head, but reality was: nothing happened as the villages probably knew how well they were doing, vs the share price which was unresonably undervalued (in my view) and barely above listing price (being around the $1 mark)... and the aprox return subsequently went up 30% in a short period of time.

I think it will be different this time around and Macquarie will want to exit at least part of their big stake, however if the share price is like ARV's was, they may not sell to a few months/years after the escrow, and may sell down in small portions... who knows.

[peat]

From what I've seen ;) it will be at the top of the range.

Personally I dont think its the pick of the bunch, but its just different enough to be of some value for diversification re the care vs residential aspect.

[Joshuatree]

Thanks HectorP for making that article available:t_up:

[limmy]

Is this IPO limited to firm allocations or can the public apply through a public pool?

[peat]

Is this IPO limited to firm allocations or can the public apply through a public pool?
there is no public pool.
brokers only, its time to pull those strings with the brokers you have given any business .... we'll definitely be favoring those who work with us

[NZSilver]

Is this IPO worth a dabble?

[Lola]

Is this IPO worth a dabble?
Chris Lee has an excellent article on his blog today
Without so much as saying so he thinks yes it is

[trader_jackson]

Chris Lee has an excellent article on his blog today
Without so much as saying so he thinks yes it is

It seems Chris doesn't mind Oceania, which is a huge change of heart compare to Arvida, yet they are remarkably similar :confused:

To me, the only logical conclusion I can draw is that Chris didn't read Arvida's IPO Prospectus, but has read Oceania's (this time around)... he goes on about how a good feature of Oceania's is Brownfield Development quote: "It has many villages, some with under-utilised land and a few with such prime locations that complete rebuilding programmes would make sense. This type of expansion is described as Brown Field"... this was a key point referenced on multiple pages time and time again in Arvida's prospectus.

He also mentions quote: "key for those villages, like Arvida and Oceania, which rely largely on rest home margins, has been the Crown’s acceptance of the ‘’premium room’’ charge, as the incentive to build more care beds." as if this is some sort of brand new, never before thought of idea... this was also mentioned several times in Arvida's prospectus! such as on page 38 Primary Aged Care Revenue Drivers; Care Fees; "Arvida charges premium rates for its quality offerings at most of its existing villages".... Premium rooms are not new, but potentially, increasing in popularity.

He also mentions quote: "At that point Arvida looked to have bleak prospects, made the more difficult by the long-term problem it faced (and faces) of integrating dissimilar villages, each one previously owned independently, usually by a couple who were quite used to making their own decisions, and being bound by no corporate management." Integration has never been an issue, and, if anything, the Arvida brand name is now widely known for a good continuum of care, among other positive things, throughout the country... and the villages were probably only to happy to hold shares together rather than fight it alone (and the economices of scale etc that comes with a roll up).

I think in his origional article, dogging Arvida of course, not only did he miss, like most, the huge upside in a quality, carefully executed, acquisition strategy (a point that seperates Arvida and Oceania), he also mentioned how it was just an exit plan for all blacks (or something along these lines) and how this was, also, somehow a reason not to invest...

It seems, like a couple on sharetrader here, he was too quick to try point out all the flaws of Arvida, without actually reading (and thinking) deeper about what Arvida was offering.

Lastly, in the article that was apparently about Oceania, it seems it was also some sort of a justification aritcle on Arvida fantastic performance since listing ;)

[percy]

We live in interesting times.
I think tomorrow will be very interesting for retirement sector investors.
May be known as The IFT/MET ripple effect day?

[bull....]

We live in interesting times.
I think tomorrow will be very interesting for retirement sector investors.

yes considering infratil just sold out of metlife care i read so they must believe its the top of the cycle?

[percy]

yes considering infratil just sold out of metlife care i read so they must believe its the top of the cycle?

I can only guess,it is not the sector,but the company, as they are still very much involved in this sector in Aussie.
Maybe they want to takeover Oceania,or ARV???
$239.4mil to go shopping with...lol.
So if Oceania float goes ahead I would expect it will be at the lower end.

[trader_jackson]

I can only guess,it is not the sector,but the company, as they are still very much involved in this sector in Aussie.
Maybe they want to takeover Oceania,or ARV???
$239.4mil to go shopping with...lol.
So if Oceania float goes ahead I would expect it will be at the lower end.

Getting out before all the old villages and leaky building claims mount up maybe? or maybe they have concerns regarding MET's high exposure to Auckland, and Auckland's slowing prices?

"Brokers are pitching to sell down listed infrastructure manager Infratil's stake in New Zealand's Metlifecare. Sources told Street Talk at least three brokers were in the market seeking buyers for the 20 per cent stake, which is worth about $NZ250 million. A deal is expected at $NZ5.60 to $NZ5.64 a share. The stock finished trading at $NZ6.07 a share on Thursday. Read more: http://www.afr.com/street-talk/brokers-cirlcing-infratil-stake-in-metlifecare-20170406-gvf64i#ixzz4dSnLu0uF Follow us: @FinancialReview on Twitter | financialreview on Facebook"

[percy]

Getting out before all the old villages and leaky building claims mount up maybe? or maybe they have concerns regarding MET's high exposure to Auckland, and Auckland's slowing prices?

"Brokers are pitching to sell down listed infrastructure manager Infratil's stake in New Zealand's Metlifecare. Sources told Street Talk at least three brokers were in the market seeking buyers for the 20 per cent stake, which is worth about $NZ250 million. A deal is expected at $NZ5.60 to $NZ5.64 a share. The stock finished trading at $NZ6.07 a share on Thursday. Read more: http://www.afr.com/street-talk/brokers-cirlcing-infratil-stake-in-metlifecare-20170406-gvf64i#ixzz4dSnLu0uF Follow us: @FinancialReview on Twitter | financialreview on Facebook"

You are most probably right about the leaky buildings etc,however I am guessing they have not had the "influence" they wanted.

[bull....]

I can only guess,it is not the sector,but the company, as they are still very much involved in this sector in Aussie.
Maybe they want to takeover Oceania,or ARV???
$239.4mil to go shopping with...lol.
So if Oceania float goes ahead I would expect it will be at the lower end.

Maybe they think the property market has peaked? r
Retirement village profits are highly dependant on a rising property market.

[percy]

Maybe they think the property market has peaked? r
Retirement village profits are highly dependant on a rising property market.

Not so.
Read SUM's annual report.
They have been through three property cycles over the past twenty years,WITHOUT any effect on demand..
RYM say the same.

[Lewylewylewy]

Not so.
Read SUM's annual report.
They have been through three property cycles over the past twenty years,WITHOUT any effect on demand..
RYM say the same.

But what about effect on profit?

[percy]

but what about effect on profit?

none.!!!.........................

[bull....]

Not so.
Read SUM's annual report.
They have been through three property cycles over the past twenty years,WITHOUT any effect on demand..
RYM say the same.

I think the issue is if the property market has peaked ( if this is the reason ift sold met) then unit values may fall? brought in the last yr at 600k market falls to 500k who wears the loss?
Is it rym,sum etc or is it the resident.

[percy]

I think the issue is if the property market has peaked ( if this is the reason ift sold met) then unit values may fall? brought in the last yr at 600k market falls to 500k who wears the loss?
Is it rym,sum etc or is it the resident.

Rym and Sum make a development profit, and profit on resales, no matter what the property market does..

[bull....]

Rym and Sum make a development profit, and profit on resales, no matter what the property market does..

Yea I believe some do and some don't, guess though when the property market peaks those profits on resales wont be as good as has been.

[Beagle]

Yea I believe some do and some don't, guess though when the property market peaks those profits on resales wont be as good as has been.

Vaygor1 has had a lot of good stuff to say about this which explained why throughout the GFC RYM's profits increased every year.
Perhaps PM him and he might be so kind as to direct you to his post on RYM about the subject. I don't have any concerns. I view any pullback on SUM as a buying opportunity.
Forward PE of around 16.5 based on underlying EPS (my estimate of 32 cps for 2017) for a stock of this caliber is compelling value in my carefully considered view.
Based on SUM's fundamentals and growth the only reason I see to invest in any other stock in this sector is diversification but I am fine with a few MET and a 14.7% portfolio position in SUM, enough for me so won't be investing in this new float.

[NZSilver]

I have applied for Oceania, after what I admit was a little less research than I like i think there is upside potential in this one.

[winner69]

Vaygor1 has had a lot of good stuff to say about this which explained why throughout the GFC RYM's profits increased every year.
Perhaps PM him and he might be so kind as to direct you to his post on RYM about the subject. I don't have any concerns. I view any pullback on SUM as a buying opportunity.
Forward PE of around 16.5 based on underlying EPS (my estimate of 32 cps for 2017) for a stock of this caliber is compelling value in my carefully considered view.
Based on SUM's fundamentals and growth the only reason I see to invest in any other stock in this sector is diversification.

House prices fell 2008/09 ......RYM NPBT fell as well (and underlying profit hardly moved)

It was only a blip in the long term trend ....over time house prices always go up they say .... and for the foreseeable future RYM et all will continue to build new units and resell the ones of the dearly departed

Sometimes I think punters think too much and complicate things so much they don't see the big picture

[peat]

You are most probably right about the leaky buildings etc,however I am guessing they have not had the "influence" they wanted.
thats what I heard on the radio this morning....comments from Mark B

[Beagle]

House prices fell 2008/09 ......RYM NPBT fell as well (and underlying profit hardly moved)

It was only a blip in the long term trend ....over time house prices always go up they say .... and for the foreseeable future RYM et all will continue to build new units and resell the ones of the dearly departed

Sometimes I think punters think too much and complicate things so much they don't see the big picture

We agree 100% that the greatest global financial crisis since the great depression of 1929 -1934 only caused a temporary blip in the long term trend. SUM's the long term situation up very well I believe :)

Edit - I think the main point Vaygor1 (without wanting to put words in my friends mouth so please feel free to correct me if I'm wrong Vaygor1), was making was that on average old folks stay in their units 7-10 years so when resold the average unit has 7-10 years worth of capital gains built into it so any temporary dip in the property market is ironed out and eliminated through the average price gain over the average term. In addition, a dip in the market gives a good company like RYM or SUM an opportunity to acquire future development sites a lot cheaper than would otherwise be the case as you often find a disproportionate drop in bare land development site prices compared to the more moderate drop in individual houses. You could therefore legitimately make the case that the occasional correction is actually beneficial to highly skilled operators and developers because they can get new sites at much cheaper prices therefore boosting future development margins :)

[Joshuatree]

Any news anyone on the deal, pricing etc ? Was expecting an offer from my broker today

[peat]

we've closed our book, and our bid has been placed.

not expecting much else to happen today the offer document says

The Final Price is expected to beannounced and posted on www.shareoffer.co.nz/oceaniahealthcare on or about 12 April 2017

[Beagle]

I thought it was curious timing of Infratil to dump their MET stake in the middle of this IPO process. One would have thought they'd get more for it at a time when the market wasn't being asked for ~ $200m already by a capital raise in this sector.

[Joshuatree]

What do you make of these figures Roger you will be able to interpret them better than me.The company has Net liabilities of 132.9 million, 267.2 million in shareholders loans from Macquarie plus they are carrying 274 million in bank loans.

Has this changed much?. Couta you work in this industry in some capacity; do you have an opinion on Oceania as an investment.? Ive been pointed to chris lees latest newsletter where he is saying 82c or thereabouts is the price , at the lower end.

[trader_jackson]

Would have thought we would have heard something by now... Broker Firm offer opens first thing tomorrow...

[Joshuatree]

My Broker(craigs) said this arvo but no contact atp.

[trader_jackson]

My Broker(craigs) said this arvo but no contact atp.

Price to low? Oceania deciding to pull it at the last minute? Surely not...

I believe there was 'huge demand/interest', but at what price(s) this demand was at, I am not sure (huge demand for Tegel as well, but only at $1.55)

[percy]

I wonder if IFT brought it.??

[couta1]

Has this changed much?. Couta you work in this industry in some capacity; do you have an opinion on Oceania as an investment.? Ive been pointed to chris lees latest newsletter where he is saying 82c or thereabouts is the price , at the lower end. JT if you read back through this thread, you will see that I have a preference for the property development companies as an investment. Oceania has potential but not near as much as Sum and Rym IMO. A predominant care model is an expensive beast to run.

[RupertBear]

I wonder if IFT brought it.??

If they did would that make IFT a good share to hold to have access to Oceania? :confused:

[percy]

Most probably.
I don't think IFT selling their MET holding ,means they are finished with the retirement sector in NZ.In fact, I think they will end up being big investors in this sector.How they do that will be interesting.
Yet I think Couta1's post #115 is how I see the best way to invest in this sector,for the reason he gave.

[huxley]

I wonder if IFT brought it.??

From ift investor day sides:
".... this implies a high bar for investments that fall outside our current growth platforms, we will remain ready to act if markets disruptions provide highly attractive opportunities "

[Joshuatree]

JT if you read back through this thread, you will see that I have a preference for the property development companies as an investment. Oceania has potential but not near as much as Sum and Rym IMO. A predominant care model is an expensive beast to run.

Thanks. Thats why i asked you why ARV has outperformed all others with its high predominant care model?.
With all the land and a target reduction from 67 to 44% care and with Ryman currently 56% care there looks to be ample growth there for Oceania to perform well against the others. 82c would be a pretty int entry point imo but hey it might do an ARV and get even cheaper after listing before performing; good entry then eh?

Trader Jackson quote.
In Recent Forsyth report on the retirement sector:
Needs Based (Being serviced apartments and care beds as a % of total portfolio) is a potential indicator as to how reliant on government funding a village is:
Arvida: 74%
Metlifecare: 18%
Oceania: 72%
Ryman: 56%
Summerset 32%

Trader Jackson quote."To give you an idea of how ARV and Oceania have (or likely to) change a few years after listing:

Arvida:
Prospectus (December 2014 - 17 villages):
Care Beds: 952
Retirement Units: 812 ('high margin' Independent living apartments: 46%)
54% / 46% split
1764 Total

March 2017 - 26 Villages
Care Beds: 1461
Retirement Units: 1285 ('high margin' Independent living apartments: 54%)
53% / 47% split
2746 Total

March 2019 Forsyth Forecast - 26 Villages
Care Beds: 1511
Retirement Units: 1517
50% / 50% split
3028 total

Oceania:
Prospectus (March 2017):
Care Beds: 2638
Care Suites/Care Studios: 241 ('high margin' care beds)
Retirement Units: 1071 ('high margin' Independent living apartments: 100% - I think)
67% / 6% / 27% split
3950 total

March 2019: (Total Consented or Under Construction)
Care Beds: 2284
Care Suites/Care Studios: 580 ('high margin' care beds)
Retirement Units: 1669 ('high margin' Independent living apartments: 100% - I think)
50% / 13% / 37% split
4533 total

March 2021?: (Total Consented, Under Construction and in Planning and Consenting phase)
Care Beds: 2284
Care Suites/Care Studios: 877 ('high margin' care beds)
Retirement Units: 2050 ('high margin' Independent living apartments: 100% - I think)
44% / 17% / 39% split
5211 total"

[trader_jackson]

Thanks. Thats why i asked you why ARV has outperformed all others with its high predominant care model?.
With all the land and a target reduction from 67 to 44% care and with Ryman currently 56% care there looks to be ample growth there for Oceania to perform well against the others. 82c would be a pretty int entry point imo but hey it might do an ARV and get even cheaper after listing before performing; good entry then eh?

TJ.
In Recent Forsyth report on the retirement sector:
Needs Based (Being serviced apartments and care beds as a % of total portfolio) is a potential indicator as to how reliant on government funding a village is:
Arvida: 74%
Metlifecare: 18%
Oceania: 72%
Ryman: 56%
Summerset 32%

TJ .To give you an idea of how ARV and Oceania have (or likely to) change a few years after listing:

Arvida:
Prospectus (December 2014 - 17 villages):
Care Beds: 952
Retirement Units: 812 ('high margin' Independent living apartments: 46%)
54% / 46% split
1764 Total

March 2017 - 26 Villages
Care Beds: 1461
Retirement Units: 1285 ('high margin' Independent living apartments: 54%)
53% / 47% split
2746 Total

March 2019 Forsyth Forecast - 26 Villages
Care Beds: 1511
Retirement Units: 1517
50% / 50% split
3028 total

Oceania:
Prospectus (March 2017):
Care Beds: 2638
Care Suites/Care Studios: 241 ('high margin' care beds)
Retirement Units: 1071 ('high margin' Independent living apartments: 100% - I think)
67% / 6% / 27% split
3950 total

March 2019: (Total Consented or Under Construction)
Care Beds: 2284
Care Suites/Care Studios: 580 ('high margin' care beds)
Retirement Units: 1669 ('high margin' Independent living apartments: 100% - I think)
50% / 13% / 37% split
4533 total

March 2021?: (Total Consented, Under Construction and in Planning and Consenting phase)
Care Beds: 2284
Care Suites/Care Studios: 877 ('high margin' care beds)
Retirement Units: 2050 ('high margin' Independent living apartments: 100% - I think)
44% / 17% / 39% split
5211 total

This seems very similar to 2 of my earlier posts (numbers 50 and 52)...

[Joshuatree]

Yes I've quoted your great details in reply to coutas answer re care beds %. i will put your full name there instead of tj.

[trader_jackson]

Yes I've quoted your great details in reply to coutas answer re care beds %. i will put your full name there instead of tj.

Oh no problem, I thought you were pointing them out to me! :D

79 cents is what I hear, heavy scaling.
Price is too good so I don't think I will get an allocation.

[Joshuatree]

Confirm that and have my allocation.

[trader_jackson]

Underlying PE of just 14.6 and Gross Yield of 5.8%?
Even better than ARV when they listed.
Extremely cheap I think.

[bull....]

As with all PE deals it is a little down the track when things wash out and you get a true picture of the business. I didn't want any have fun.

[trader_jackson]

As with all PE deals it is a little down the track when things wash out and you get a true picture of the business. I didn't want any have fun.

Not the usual PE 'quick flip' deal... Macquarie have owned it for 12 years or so (I think?), alongside management and others.

I hope things wash out down the track like they did with Arvida!
Share price would be about $1.06 in a couple years (+ dividends 2x higher than cash in the bank)

[couta1]

Underlying PE of just 14.6 and Gross Yield of 5.8%?
Even better than ARV when they listed.
Extremely cheap I think. You must be happy trader jackson, now that you're got a brother from another mother to play with.

[Beagle]

Underlying PE of just 14.6 and Gross Yield of 5.8%?
Even better than ARV when they listed.
Extremely cheap I think.

I presume you are talking forecast PE for 2017.

By way of comparison I have SUM on a 2017 PE of 16.7 with a proven history of growing earnings at an average rate of 48% for the last five years.

[dabsman]

Just chatted to my broker and they got 20% of requested allocation... not sounding positive to get much :(

[underground]

Just chatted to my broker and they got 20% of requested allocation... not sounding positive to get much :(

ASB Securities said they got 20% also. They are also intending to screw over anyone who applied for less than 15k and give them nothing in favour of their larger clients.. Sigh looks like i wont be getting anything. I knew i should have asked for more than what i wanted..sgh..

[trader_jackson]

You must be happy trader jackson, now that you're got a brother from another mother to play with.

Unfortunately, it looks like I won't be able to get in on the fun this time around :(

[peat]

ASB Securities said they got 20% also. They are also intending to screw over anyone who applied for less than 15k and give them nothing in favour of their larger clients.. Sigh looks like i wont be getting anything. I knew i should have asked for more than what i wanted..sgh..
wow, that's harsh- both the scaling and the treatment of smaller investors. .
We got 80% and I'm going to do the opposite with my clientele and scale the whales so everyone get some action at least

[dabsman]

Yeah I'm with ASB and I applied for 20k so maybe I'll get a little? Everyone who applied should get something in reality but life isn't fair else Liverpool would win every year...

[Snow Leopard]

...and scale the whales...

Did you mean ?

https://images-na.ssl-images-amazon.com/images/I/5143ZGq3pDL._SX258_BO1,204,203,200_.jpg

Best Wishes
Paper Tiger

[dabsman]

Applied for $20,000 got $4,543... I'm happy to get some

[huxley]

Applied for $20,000 got $4,543... I'm happy to get some

Scaled the whales... I guess IFT got nothing.. maybe they should've applied through ASB lol

[Joshuatree]

It does pay to have an account and a relationship with one or more of the big brokers who get to be lead managers in these sorts of offers. You have a much better chance of getting a decent amount this way rather than a pittance or none from brokers not involved. I have a trading account with ASB and an investment acc with craigs. That transparency also keeps the IRD happy.

[Benny1]

So I suppose the $10,000 question is (seeing I missed out with ASB Securities) do you get in when they first list or wait a while and see what happens.....Hmm :confused:

[JeremyALD]

So I suppose the $10,000 question is (seeing I missed out with ASB Securities) do you get in when they first list or wait a while and see what happens.....Hmm :confused:

Given the demand I think you'll pay a premium if you buy off market straight away, but anyone's guess as to whether it's better to wait!

[tim23]

I'm guessing demand was high at a certain price so listing price may not be spectacular given pricing at lower end of range.

[trader_jackson]

I'm guessing demand was high at a certain price so listing price may not be spectacular given pricing at lower end of range.

Look how tegel performed on its first day... was rock bottom of the $1.55 range... $1.80 on the first day or something?
This time I don't think Oceania will drop like Tegel has afterwards, fundamentals are much, much better for starters... but who knows.

I am also considering what price to put an offer in on the first day... May 5 is it?

[Benny1]

Look how tegel performed on its first day... was rock bottom of the $1.55 range... $1.80 on the first day or something?
This time I don't think Oceania will drop like Tegel has afterwards, fundamentals are much, much better for starters... but who knows.

I am also considering what price to put an offer in on the first day... May 5 is it?

Yep May 5...so a couple of weeks more to ponder this one....

[tim23]

Sell in May go away might be good time to buy?!

[noodles]

Due the emphasis in care beds, I think Arvida is the correct retirement village operator to compare against. Now we know the final price, we can do a direct comparison. I've performed it for FY18 as it will include a full year of Arvida's recent acquisitions.




OCA
ARV
Discount


PE
9.4
16.1
71.38%


EV/EBITDA
9.9
17.8
80.64%


EV/EBIT
11.5
21.5
87.40%


DEBT/EBITDA
2.1
2.4
12.23%


price/NTA
0.94
1.27
35.11%



Unfortunately, there is not yet much visibility on development profit from FY19 onwards, so we don't really know if OCA's FY18 result will be abnormally high. With that in mind, perhaps the safer comparison is the 35% discount with price/NTA.

[winner69]

Due the emphasis in care beds, I think Arvida is the correct retirement village operator to compare against. Now we know the final price, we can do a direct comparison. I've performed it for FY18 as it will include a full year of Arvida's recent acquisitions.




OCA
ARV
Discount


PE
9.4
16.1
71.38%


EV/EBITDA
9.9
17.8
80.64%


EV/EBIT
11.5
21.5
87.40%


DEBT/EBITDA
2.1
2.4
12.23%


price/NTA
0.94
1.27
35.11%



Unfortunately, there is not yet much visibility on development profit from FY19 onwards, so we don't really know if OCA's FY18 result will be abnormally high. With that in mind, perhaps the safer comparison is the 35% discount with price/NTA.


Looks like the bargain of the century, even if one has to pay a 'premium' after listing

[Beagle]

Hi Noodles,

I presume you are assuming that OCA achieve their projected FY18 growth of what are they saying, 40% ?
Looking at their historical financials which hardly inspire, I'd take their projected growth for FY18 with the same pinch of salt as Tegal's.
Anyone can project anything they like, the key question is what credibility does one give to their projections especially in light of the recent dramatic change in caregivers pay rates ?
That said ARV is substantially overpriced relative to SUM in my opinion who have a vastly superior track record of growth.
I think this float gives the appearance of a bargain but only if you accept their FY18 forecast at face value and compare it to what appears to be an overpriced comparative company, yes still probably the best comparative but what this tells me more than anything else is ARV is a SELL.
In my opinion it is best to tread extremely conservatively with new IPO's when there is no track record of credibility upon which the directors can hang their forecasting hat.
Think about this, if they hadn't of projected 40% growth for FY18 they may not have even got the float done !
Remember these guys have been rattling cages on both sides of the Tasman trying to float this thing for years so they are HUGELY motivated to project an extremely positive forecast for FY18, just like Tegal's promotors were with their IPO.

Still...one imagines it will appeal to mum and dad investors, its less than $1 so it must be good value :)

[Lewylewylewy]

...Still...one imagines it will appeal to mum and dad investors, its less than $1 so it must be good value :)

Joking aside, I do actually factor this into things when I value :)

... To be filed under "feelings" or "market sentiment" ;)

Also, completely agree. I feel nervous buying an IPO. You have to remember a few things about shares IMO:

1. You have to trust the people managing your investment. You wouldn't go into a partnership in any other business this blind.
2. You are a small fish and can get out voted buy larger holders (which includes the current company owners) voting unabashedly in their sole interests. Look at what AUG attempted to do with NPT recently.
3. When selling a business, you spend the previous few years artificially inflating its value.
4. There are reasons you decide to sell a business. The person buying the business doesn't know these reasons, which are often industry knowledge, hidden issues or benign reasons.
5. Isn't it nice when lists go up to 3, 5 or 10 items? Makes them more snappy, don't you think?

... Oh I have a 5th point: You don't need to risk your money on this when there are other businesses on the NZX with a proven record covering all the above points.

[NZSilver]

Will be very interesting to see where this lists after the recent govt ann, according to brokers there was good demand, but will this result in increased SP post start of trading. I'm in with a small holding.

[Joshuatree]

Due the emphasis in care beds, I think Arvida is the correct retirement village operator to compare against. Now we know the final price, we can do a direct comparison. I've performed it for FY18 as it will include a full year of Arvida's recent acquisitions.




OCA
ARV
Discount


PE
9.4
16.1
71.38%


EV/EBITDA
9.9
17.8
80.64%


EV/EBIT
11.5
21.5
87.40%


DEBT/EBITDA
2.1
2.4
12.23%


price/NTA
0.94
1.27
35.11%



Unfortunately, there is not yet much visibility on development profit from FY19 onwards, so we don't really know if OCA's FY18 result will be abnormally high. With that in mind, perhaps the safer comparison is the 35% discount with price/NTA.

Thanks for sharing that noodles, looks very favourable to me and going on their track record 40% growth for 2018 looks conservative and we know how few rated ARV and how well it has performed since listing. OCA two times over subscribed is what I've heard; so good luck to all who took up some.

[hardt]

Getting ready to ramp it up tomorrow morning...

[trader_jackson]

Getting ready to ramp it up tomorrow morning...

I'll be putting in a bid for a few.
Not sure if my bid is higher enough, but will be interesting to watch.

SUM, MET and RYM will all rebound tomorrow onwards so no worries (although I would have thought it ended at least a day ago with the T+2 settlement rules... yet SUM dropped most today... must be missing something because it is only dropping because of OCA - some like to believe anyway)

[macduffy]

The T+2 Settlement is only relevant if the same funds are being deployed fom SUM to OCA. Most of the big players would be utilising cash reserves as bridging finance.

[777]

You can always use the funds from sales to buy into other stocks as soon as it is added to your account. There is no need to wait for the T+2.

[hardt]

You can always use the funds from sales to buy into other stocks as soon as it is added to your account. There is no need to wait for the T+2.

Higher brokerage fees though

[couta1]

Higher brokerage fees though Actually cheaper brokerage if you have an internet based account with the likes of ANZ Securities.

[hardt]

Actually cheaper brokerage if you have an internet based account with the likes of ANZ Securities.

I haven't ever seen funds entering my OMCA account prior to the T+2...

ANZ OMCA charge the flat $29, I just wish IB had NZX listings, Halifax only charge $15 a trade for the ASX without the need for a CHESS acc and you get a decent workstation with it.

[777]

Higher brokerage fees though

If you select "MY Account" from the menu on ANZ Securities and look at the right hand side of of the balances, you will see "Trading Balance". This is the sum of your cleared funds Plus any sales completed less any purchases still within the T+2. And this has always been the case with ANZ Securities

[Beagle]

Now trading. 81 cents, up a modest 2 cps on the issue price. Not much of a feed for the hungry stag's. Thoughts folks ?

[trader_jackson]

Now trading. 81 cents, up a modest 2 cps on the issue price. Not much of a feed for the hungry stag's. Thoughts folks ?

Unbelievably surprised is probably the two words that best summarise it for me... the best value retirement stock by a blue mile even if it does have lower underlying growth than the likes of SUM... quite possibly one of the cheapest stocks in all of the NZX.
Wouldn't be to surprised to see the stock track up over the coming days as people put a 'more realistic' value on it

[couta1]

Now trading. 81 cents, up a modest 2 cps on the issue price. Not much of a feed for the hungry stag's. Thoughts folks ? Underwhelming like the while sector currently(Except ARV) Thought I'd add that bit for you Trader Jackson.:)

[777]

75c and end of trading.

[Beagle]

Unbelievably surprised is probably the two words that best summarise it for me... the best value retirement stock by a blue mile even if it does have lower underlying growth than the likes of SUM... quite possibly one of the cheapest stocks in all of the NZX.
Wouldn't be to surprised to see the stock track up over the coming days as people put a 'more realistic' value on it

You actually believe their forecast ? Don't you think its a little odd they'd bring this to market so close to their end of year for 31 May 2017 ? Guess why ? So they can say, look, we got that forecast right. It's the 40% growth in underlying earnings for FY18 that I for one am taking with a grain of salt. Call me a hardened cynic if you like, I don't honestly care but they've been trying for years to float this thing and if they hadn't of forecast 40% growth nobody would have been interested.
Huge vested interest to make that FY18 growth forecast ! Tegal or Feltex Mk2 in my opinion.

[sb9]

75c and end of trading.

Yes, might be the blooper of the year. Never a good time to list in month of May, as per famous saying goes "Sell in May and Go Away" .

[bull....]

Unbelievably surprised is probably the two words that best summarise it for me... the best value retirement stock by a blue mile even if it does have lower underlying growth than the likes of SUM... quite possibly one of the cheapest stocks in all of the NZX.
Wouldn't be to surprised to see the stock track up over the coming days as people put a 'more realistic' value on it

I thought it was pretty expensive at 80c anyway it was a good result for maquarie selling as they had been trying for a while.

[sb9]

I thought it was pretty expensive at 80c anyway it was a good result for maquarie selling as they had been trying for a while.

Will be interesting to see what happens when it start to trade on ASX soon...

[hardt]

Flat growth for FY2017 and *forecast* growth of 40% for FY2018... sounds nice, hope they can pull that off.

Will wait for the IPO buzz to die down before putting any money down for the long run.

[couta1]

Flat growth for FY2017 and *forecast* growth of 40% for FY2018... sounds nice, hope they can pull that off.

Will wait for the IPO buzz to die down before putting any money down for the long run. Growth of 40% for FY2018, yeah right, it ain't going to happen.

[Joshuatree]

Sounds very bullish, however they did double their gross profit last year compared to the year before.

What have you heard since to change your opinion so strongly.Definitely not a fact as you make it sound.

[couta1]

What have you heard since to change your opinion so strongly.Definitely not a fact as you make it sound. Huge effort required to maintain wages to revenue ratio below the ideal percentile, especially since extra money to pay Nurses and other staff to line up with caregivers increase will squeeze their profits further. Developing their sites will help in the future but not over the next year.

[trader_jackson]

You actually believe their forecast ? Don't you think its a little odd they'd bring this to market so close to their end of year for 31 May 2017 ? Guess why ? So they can say, look, we got that forecast right. It's the 40% growth in underlying earnings for FY18 that I for one am taking with a grain of salt. Call me a hardened cynic if you like, I don't honestly care but they've been trying for years to float this thing and if they hadn't of forecast 40% growth nobody would have been interested.
Huge vested interest to make that FY18 growth forecast ! Tegal or Feltex Mk2 in my opinion.

When you look at Tegal or Feltex, they had a few problems, but mainly: the market they were in had 'questionable' dynamics, and their product was very much the same as other products they were directly competiting against. (I won't bother talking about debt levels, or the fact they were a quick flip PE)

OCA is different.

Their villages are high quality, they have great locations, and the market around them is favorable... yet like ARV, everybody is sceptical if they can make it work. I agree with part of this scepticism, there are somepoints I don't 'like' either.

I am not sure it is good to get harp on about how impossible this 40% growth forecast... because before this growth, they forecast negative growth, for good reasons as well. (I won't bother going into how ARV beat both IPO forecast profit, and had triple digit growth from FY15 to FY16)

OCA are currently trading at just 14.7 Underlying NPAT, with FY18 underlying NPAT of just 9.6... even if they had no growth and missed their forecasts by miles, they are still the cheapest in the sector today, and paying a dividend well above a bank term deposit rate.

[hardt]

Growth of 40% for FY2018, yeah right, it ain't going to happen.

Will be interesting to see how well they manage capital, they have more than enough facilities to invest in.

Doubt we will see 40% being hit.

[Beagle]

Huge effort required to maintain wages to revenue ratio below the ideal percentile, especially since extra money to pay Nurses and other staff to line up with caregivers increase will squeeze their profits further. Developing their sites will help in the future but not over the next year.

SUM directors under the pump at the annual meeting over wages costs and that's with their VERY modest care to independent living ratio. Doesn't look good for Oceania with their intensive care model. Further, anything they develop in Auckland will have the same cost pressures SUM others are facing.

TJ, I think the market is saying the above issue Couta1 has alluded too is a meaningful headwind for the company that's come about post IPO growth projections.
Shareholders discount this issue as being immaterial at their peril in my opinion. I don't know the company well enough to know where they're going to try and develop new facilities in due course but they're an inexperienced team swimming in choppy waters. Little to no growth in the past. My standard PE for no growth companies is 10 so it would appear to me the stock is about fairly priced, something the market agrees with.

I prefer to back companies with a solid and credible track record of performance. You always pay more for quality but it seldom disappoints.

[hardt]

When you look at Tegal or Feltex, they had a few problems, but mainly: the market they were in had 'questionable' dynamics, and their product was very much the same as other products they were directly competiting against. (I won't bother talking about debt levels, or the fact they were a quick flip PE)

OCA is different.

Their villages are high quality, they have great locations, and the market around them is favorable... yet like ARV, everybody is sceptical if they can make it work. I agree with part of this scepticism, there are somepoints I don't 'like' either.

I am not sure it is good to get harp on about how impossible this 40% growth forecast... because before this growth, they forecast negative growth, for good reasons as well. (I won't bother going into how ARV beat both IPO forecast profit, and had triple digit growth from FY15 to FY16)

OCA are currently trading at just 14.7 Underlying NPAT, with FY18 underlying NPAT of just 9.6... even if they had no growth and missed their forecasts by miles, they are still the cheapest in the sector today, and paying a dividend well above a bank term deposit rate.

F2018 P/E of 8.9-10.7 is purely a forecast - take it with 100 grains of salt.

Trailing P/E of 18.7-22.6 is anything but cheap, it will take a couple of projects to be interrupted or delayed into 2019 to see a guidances change for FY2018.

[trader_jackson]

Further, anything they develop in Auckland will have the same cost pressures SUM others are facing.

The difference is they aren't developing anywhere near as much, nor have anywhere near as much debt to service, nor have anywhere near as much exposure to Auckland.

I suppose at ARV's meeting on 10:30am on Friday 7 July 2017 we will also hear about how bad wage costs will be... will be interesting to see/hear.

[trader_jackson]

I don't know the company well enough to know where they're going to try and develop new facilities in due course but they're an inexperienced team swimming in choppy waters. Little to no growth in the past. My standard PE for no growth companies is 10 so it would appear to me the stock is about fairly priced, something the market agrees with.

I prefer to back companies with a solid and credible track record of performance. You always pay more for quality but it seldom disappoints.

You have a good point there.
What did surprise me, and probably some others, is how this was not a good stag at all... reminds me a bit of ARV (in which case we could see the price dip below IPO for a short period... before a huge rebound)
Hard to say really, but what I do believe is that OCA, along with the rest of the sector, will be interesting to watch.
What is now happening is those who were hoping for a nice stag now want out 'no matter what the price is', so not a huge surprise to see some weakness, which could happen over the next few trading days.

[Beagle]

You have a good point there.
What did surprise me, and probably some others, is how this was not a good stag at all... reminds me a bit of ARV (in which case we could see the price dip below IPO for a short period... before a huge rebound)
Hard to say really, but what I do believe is that OCA, along with the rest of the sector, will be interesting to watch.
What is now happening is those who were hoping for a nice stag now want out 'no matter what the price is', so not a huge surprise to see some weakness, which could happen over the next few trading days.

Agreed, stags taking what they can get and hot money wanting out ASAP. The analogy is possibly a little unfair but this reminds me very much of how Feltex struggled to hold its IPO price on its first day of trading.

[trader_jackson]

Agreed, stags taking what they can get and hot money wanting out ASAP. The analogy is possibly a little unfair but this reminds me very much of how Feltex struggled to hold its IPO price on its first day of trading.

I would say it is, but then again remember ARV finished at the same price as what it listed at, in fact may have dipped to 94, but I can't remember exactly.

At least the hot money will go straight back in SUM now?

[Beagle]

I would say it is, but then again remember ARV finished at the same price as what it listed at, in fact may have dipped to 94, but I can't remember exactly.

At least the hot money will go straight back in SUM now?

It'll find a home somewhere. What did the IPO documents have to say under the risks section about wage costs ? Was this even identified as a material risk ?

[couta1]

A mere 50c increase in wages across the board costs the company around 2million, so think of the extra wage costs when you give all your nurses a $3 -$5 per hour increase, then all your activities staff an extra $3 an hour etc etc. It's quite conceivable that your could be talking an extra 10 million in wage costs.

[peat]

It'll find a home somewhere. What did the IPO documents have to say under the risks section about wage costs ? Was this even identified as a material risk ?
Yes there was a whole section on INCREASES IN COST OF LABOUR RISK
Oceania is of the viewthat there is a reasonable likelihood that wage rates for Healthcare Assistants will increase duringthe Prospective Period.

[Ggcc]

At the end of the day management is not stupid. Increase in wages will only incur extra costs onto the elderly. No business will just suck up the cost of increased wages. They will pass it on and it will be business as usual.

[couta1]

At the end of the day management is not stupid. Increase in wages will only incur extra costs onto the elderly. No business will just suck up the cost of increased wages. They will pass it on and it will be business as usual. You can only pass it onto private paying residents not those receiving the residential care subsidy.

[Ggcc]

someone will have to foot the bill and it would be ridiculous to think the shareholders should pay for it. I am all for everyone's wages increasing,but it always comes at a cost to either the customer or the government (The government is us as a nation). You would know where they would get the money from more than I would couta. I appreciate your input on this 😊

[peat]

You can only pass it onto private paying residents not those receiving the residential care subsidy.

Further to the previous quote from the prospectus .....

Oceania’s current intention is to seek to recover the cost of any potential wage increases for staffthat may not be covered by DHB funding by applying for a variation to its funding contracts withthe DHBs

[couta1]

Further to the previous quote from the prospectus .....

Oceania’s current intention is to seek to recover the cost of any potential wage increases for staffthat may not be covered by DHB funding by applying for a variation to its funding contracts withthe DHBs Good luck trying to get any extra funding out of cash strapped DHB's. Aged care is low on their priority list, they don't want to pass on an extra cent above the Govt allocation. Remember this industry is still grossly underfunded by the Govt.

[couta1]

someone will have to foot the bill and it would be ridiculous to think the shareholders should pay for it. I am all for everyone's wages increasing,but it always comes at a cost to either the customer or the government (The government is us as a nation). You would know where they would get the money from more than I would couta. I appreciate your input on this  Until you get your property portfolio steaming along, extra money required can only be obtained by passing on some cost to private paying residents and charging extra for premium rooms, but the main factor is keeping the wages to revenue percentage down and focussing on consumable wastage.

[Bjauck]

Until you get your property portfolio steaming along, extra money required can only be obtained by passing on some cost to private paying residents and charging extra for premium rooms, but the main factor is keeping the wages to revenue percentage down and focussing on consumable wastage. I am not certain but isn't there a "maximum contribution" set by Director General of Health for those whose assets/income exceed the thresh-hold allowed for the residential care subsidy. So it would be up to the government to decide to pass on the extra costs to those who are not eligible for a care subsidy?

[Joshuatree]

Growth of 40% for FY2018, yeah right, it ain't going to happen.
Wages aside


from the prospectus

"approximately 30.4% of Oceania’s Pro forma Underlying EBITDA (pre corporate / other costs)is derived from the sale and re-sale of Units in FY2017F, increasing to approximately 43.8% inFY2018F "

[Joshuatree]

".....the DHBs, as well as by achieving higher productivity levels and lower temporary staf fing costs inits aged care business. "
Pretty sure this happens where my mother is but def haven't confirmed it, like moving nurses backwards and forwards between the various "homes' in the hospital care section.
Disappointing debut for OCA but that happened to ARV as well as TJ pointed out and the whole sector has come off the boil atp with most under the M/A's. Still way more sellers than buyers showing so will watch for a while and see if it all flushes out and we have an ARV like rerate hopefully.

[Joshuatree]

And as just pointed out to me, the Auckland property mkt is going backwards atm so that along with the wage increase as an unfortunate timing for an IPO is an understatement indeed.:scared:

[sb9]

And as just pointed out to me, the Auckland property mkt is going backwards atm so that along with the wage increase as an unfortunate timing for an IPO is an understatement indeed.:scared:

Yes, I think the whole retirement has just been shaken around firstly by the wage agreement and supposed impact of property price slowdown (more so in Akl).

Think it'll take a while for the market to digest this all and rerate the sector.

[percy]

And in the meantime Nana needs to go into care.
Have not been able to stop her growing older.
She is not alone.
Luckily the sale of her property means she could buy two or three units.She will only require one.

[couta1]

And in the meantime Nana needs to go into care.
Have not been able to stop her growing older.
She is not alone.
Luckily the sale of her property means she could buy two or three units.She will only require one. Nice one Percy, even after an abysmal week for the retirement sector stocks, which is most annoying and inconvenient, buyers will still be lining up at an ever increasing rate. Once the market stops throwing it's toys out of the cot, it will realise, it's just business as usual.

[Yoda]

A mere 50c increase in wages across the board costs the company around 2million, so think of the extra wage costs when you give all your nurses a $3 -$5 per hour increase, then all your activities staff an extra $3 an hour etc etc. It's quite conceivable that your could be talking an extra 10 million in wage costs.
That would be an awesome pay rise ...Most nurses would be on 50-60k a year so that way over 10% pay rise . My last pay rise was about 2.5 % over 3 years

[winner69]

someone will have to foot the bill and it would be ridiculous to think the shareholders should pay for it. I am all for everyone's wages increasing,but it always comes at a cost to either the customer or the government (The government is us as a nation). You would know where they would get the money from more than I would couta. I appreciate your input on this ��

Selfish view - some might say profits are already excessive and shareholders should pay be reduced margins

[sb9]

Not a flash debut, wasn't it.

Closed flat, stags out of luck on listing, will be interesting to see what coming weeks have in offer.

[Ggcc]

Selfish view - some might say profits are already excessive and shareholders should pay be reduced margins

If you have ever been self employed you would understand this comment. It is not meant to be a "selfish" view. A business model is simple. Your cost go up, pass it on.

[Baa_Baa]

Not a flash debut, wasn't it.

Closed flat, stags out of luck on listing, will be interesting to see what coming weeks have in offer.

I think they did very well not to be caught immediately in the current sector down draught that would be top of mind for the promoters.

Stags would be few imo if they had considered that. In an up trending sector, sure, the stags would be all over this. I'm not sure many were though, it was too risky with the sector backdrop to stag an IPO profit.

The market today verified its listing price as fair and reasonable, and the promoters will earn their commission regardless.

On Monday the company is listed alongside the others. From here on the market determines the company value.

My view is that in the short term at least, they will suffer the downdraft associated with the sector, the SP will move with it and the investors who have done their homework will flick out on a slightest move southwards and buy back in later.

Personally I think it's at fair value on the information provided but as some suggest that information may be overly optimistic. Seems a risky play until it settles in to a rhythm.

[couta1]

For those interested, 73% of Oceania's total product is in care beds currently, however they have a 7-8 years worth of land bank, so plenty of scope for unit expansion.

[Joshuatree]

from the prospectus

"approximately 30.4% of Oceania’s Pro forma Underlying EBITDA (pre corporate / other costs)is derived from the sale and re-sale of Units in FY2017F, increasing to approximately 43.8% inFY2018F "

Worth repeating

[Beagle]

I think they did very well not to be caught immediately in the current sector down draught that would be top of mind for the promoters.

Stags would be few imo if they had considered that. In an up trending sector, sure, the stags would be all over this. I'm not sure many were though, it was too risky with the sector backdrop to stag an IPO profit.

The market today verified its listing price as fair and reasonable, and the promoters will earn their commission regardless.

On Monday the company is listed alongside the others. From here on the market determines the company value.

My view is that in the short term at least, they will suffer the downdraft associated with the sector, the SP will move with it and the investors who have done their homework will flick out on a slightest move southwards and buy back in later.

Personally I think it's at fair value on the information provided but as some suggest that information may be overly optimistic. Seems a risky play until it settles in to a rhythm.

Agree 100% with that.

[trader_jackson]

I think they did very well not to be caught immediately in the current sector down draught that would be top of mind for the promoters.

Stags would be few imo if they had considered that. In an up trending sector, sure, the stags would be all over this. I'm not sure many were though, it was too risky with the sector backdrop to stag an IPO profit.

The market today verified its listing price as fair and reasonable, and the promoters will earn their commission regardless.

On Monday the company is listed alongside the others. From here on the market determines the company value.

My view is that in the short term at least, they will suffer the downdraft associated with the sector, the SP will move with it and the investors who have done their homework will flick out on a slightest move southwards and buy back in later.

Personally I think it's at fair value on the information provided but as some suggest that information may be overly optimistic. Seems a risky play until it settles in to a rhythm.

I am quite shocked OCA didn't do better on the first day, apparent huge demand, only listing this year, attractive long term sector tailwinds... how could it not finish up at least on the first day?! But I do agree with the above... I think the general concerns around the entire sector were realized for OCA on Friday... almost reminds me of exactly what happened when ARV listed in December 2014... similar company (although OCA is much bigger, and has a much bigger development pipeline) and went up a fraction, before finishing at listing price... then trended downward as the market struggled to price it (believe the story), before a huge re-rating caused it to be the best performer on the stock exchange by a blue mile (last year)

I believe it is trading a fair bit below 'fair value' , however the market has clearly decided OCA's forecasts are overly optimistic, and skeptical why it took nearly 3 years to bring it to market ... time will tell if these concerns are warranted. Oceania’s has been owned for the past 12 years through Macquarie Infrastructure and Real Assets’ managed funds, not exactly a PE Feltex, DSE or TGH quick pump and dump (no articles before, during and after the offer closed saying how great demand has been, and how easy the shares have been to sell were also not present as per typical PE listing). Perhaps some have forgotten SUM was also PE?
Maybe the market also has concerns on this (like they did with all the supposed accounting issues ARV would have?). Perhaps, ironically, even if it missed it by a mile and had no growth from 2017 to 2018, it would still be the cheapest retirement play on an underlying basis!
(would it be bold for me to say I thin they will exceed FY18 guidance?)

Early next week we could see a hangover from the stags who thought they could make a tidy double digit percentage gain on the first day, now not interested in holding any longer and will sell at (nearly) any price, but once thing settle down (and broker reports come out?) we could see an uplift in price, the price moving no where, or perhaps it even trending down due to negative sector tail winds... so who really knows... again, time will tell.

Disclosure: Brought some at 82 cents, under 10 PE if they hit FY18 targets

[macduffy]

What is your thinking in buying at 82c if you expect a hangover from the stags next week, tj?

:confused:

[trader_jackson]

What is your thinking in buying at 82c if you expect a hangover from the stags next week, tj?

:confused:

I put in a bid at 82 cents before it opened (as soon as the ticker was on ASB)... I believe I would be lucky to get it this low, but clearly I picked it wrong

[peat]

yeh I'm a bit surprised by how flat the listing was considering the demand I saw, and the relative solidity of the stock. Most IPO's have a bit of a spurt on their first day. But no, not this one.

[couta1]

yeh I'm a bit surprised by how flat the listing was considering the demand I saw, and the relative solidity of the stock. Most IPO's have a bit of a spurt on their first day. But no, not this one. I'm surprised it didn't finish below 79c considering the current negative sentiment in the sector, it will go sub 79c next week unless things stabilize.

[macduffy]

I'm surprised it didn't finish below 79c considering the current negative sentiment in the sector, it will go sub 79c next week unless things stabilize.

Yes, things will get worse - unless they get better!

;)

[percy]

Yes, things will get worse - unless they get better!

;)

I totally agree.
In all likelihood the share price will most probably go up,down, or stay the same.

[Curly]

I think they are to announce profit result later this month. That will give an indication if their forecasts are on track.

[Beagle]

I totally agree.
In all likelihood the share price will most probably go up,down, or stay the same.

I concur with that LOL. Stags will likely be very disappointed indeed and keen to exit and chase the next big thing, (whatever that is I have no idea), so some selling pressure this week would appear to be on the cards. I think its unfortunate for those of us with a meaningful holding in this sector that Infratil chose the same month as this listing to exit their stake in Metlifecare. Close to half a billion dollars of capital combined has been sucked from investors wallets in this sector in the last month.
As any good sailor knows, its hard to make progress when that amount of wind is sucked out of your sails !

[trader_jackson]

Over 3.5m shares changed hands and we haven't even opened yet... interesting times.

[Joshuatree]

Buyers outweighing sellers for change and some chunky buys there.

[Jantar]

Buyers outweighing sellers for change and some chunky buys there.
I had been waiting for it to drop a bit further, but bought a small number this morning at $0.79. Very pleased to see it is already at $0.81. That means I have recovered the brokerage fees plus a bit. :)

[carrom74]

A sell order has a "u" letter in it.Can anyone please explain what is means?

[Beagle]

"u" = undisclosed seller. To be an undisclosed seller you have to ask for your order to be lodged as that and as I understand it have a minimum order quantity of $100,000 value. Could just be ~ 125,000 shares or 12,500,000 shares or more or any number in between.

[carrom74]

"u" = undisclosed seller. To be an undisclosed seller you have to ask for your order to be lodged as that and as I understand it have a minimum order quantity of $100,000 value. Could just be ~ 125,000 shares or 12,500,000 shares or more or any number in between.

Thanks Roger...If that is the case then can a director/CEO sell his/her shares and be an undisclosed seller?

[Beagle]

Thanks Roger...If that is the case then can a director/CEO sell his/her shares and be an undisclosed seller?

Yes absolutely but they must subsequently disclose this sale in the normal way by announcing it to the market within five ? (I think it is), working days.

[trader_jackson]

I am quite shocked OCA didn't do better on the first day, apparent huge demand, only listing this year, attractive long term sector tailwinds... how could it not finish up at least on the first day?! But I do agree with the above... I think the general concerns around the entire sector were realized for OCA on Friday... almost reminds me of exactly what happened when ARV listed in December 2014... similar company (although OCA is much bigger, and has a much bigger development pipeline) and went up a fraction, before finishing at listing price... then trended downward as the market struggled to price it (believe the story), before a huge re-rating caused it to be the best performer on the stock exchange by a blue mile (last year)

I believe it is trading a fair bit below 'fair value' , however the market has clearly decided OCA's forecasts are overly optimistic, and skeptical why it took nearly 3 years to bring it to market ... time will tell if these concerns are warranted. Oceania’s has been owned for the past 12 years through Macquarie Infrastructure and Real Assets’ managed funds, not exactly a PE Feltex, DSE or TGH quick pump and dump (no articles before, during and after the offer closed saying how great demand has been, and how easy the shares have been to sell were also not present as per typical PE listing). Perhaps some have forgotten SUM was also PE?
Maybe the market also has concerns on this (like they did with all the supposed accounting issues ARV would have?). Perhaps, ironically, even if it missed it by a mile and had no growth from 2017 to 2018, it would still be the cheapest retirement play on an underlying basis!
(would it be bold for me to say I thin they will exceed FY18 guidance?)

Early next week we could see a hangover from the stags who thought they could make a tidy double digit percentage gain on the first day, now not interested in holding any longer and will sell at (nearly) any price, but once thing settle down (and broker reports come out?) we could see an uplift in price, the price moving no where, or perhaps it even trending down due to negative sector tail winds... so who really knows... again, time will tell.

Disclosure: Brought some at 82 cents, under 10 PE if they hit FY18 targets

Well, back to breaking even (for me)... seems the tables have turned, the stags have dumped, and this has taken a couple of days for the market to 'digest', with most likely profiting alot less than expected (or maybe even losing a cent).

Under strong volume (5.6m) and (for what its worth) buys now outweighing sells by 4 to 1... we could be at the start of where the market decides to rate OCA a bit more realistically (even if we all know it is like arvida and no more than a dog at heart ;))

[Joshuatree]

Up 4c to 84c today( 2.4% same % as SUM) ,buys 2 to 1 of sells , 2.7 mill shares through.Happy with that.

[Beagle]

Up 4c to 84c today( 2.4% same % as SUM) ,buys 2 to 1 of sells , 2.7 mill shares through.Happy with that.

Not too late to switch...you know you want that proven thoroughbred rather than some filly that struggled through the trials with only just enough form to make it to the starting gate and might even fall at the first hurdle :D

[trader_jackson]

Not too late to switch...you know you want that proven thoroughbred rather than some filly that struggled through the trials with only just enough form to make it to the starting gate and might even fall at the first hurdle :D

Old Mark and Jill, some of the bigwig insiders at Oceania with millions of shares already between them (General Manager Property and General Manager, Sales, Marketing & Villages respectively) must be taking some big risks dishing out a couple hundred thousand between them... given OCA's apparent dreadful lack of growth and 'dog like' structure eh?

Reminds me of when 2 or 3 Arvida directors were buying in the mid 80 cents... which was largely ignored by the wider market.

They fact they brought on day 1 shows you either that they wanted more shares (exposure) to the company than the company gave them and/or how confident they must be in OCA's prospects to go out now and buy asap... results after all aren't that far away.

[Baa_Baa]

Old Mark and Jill, some of the bigwig insiders at Oceania with millions of shares already between them (General Manager Property and General Manager, Sales, Marketing & Villages respectively) must be taking some big risks dishing out a couple hundred thousand between them... given OCA's apparent dreadful lack of growth and 'dog like' structure eh?

Reminds me of when 2 or 3 Arvida directors were buying in the mid 80 cents... which was largely ignored by the wider market.

They fact they brought on day 1 shows you either that they wanted more shares (exposure) to the company than the company gave them and/or how confident they must be in OCA's prospects to go out now and buy asap... results after all aren't that far away.

Keep it up TJ, while there's little value in constantly reminding people of what was overlooked or belittled in the past, as many here will brush it off because they only invest in established proven entities, it is valuable to have advocacy and insights that point to a bright future for newly listed entrants. Some are prepared to take greater risks earlier, while others will wait until proof of compelling sustainable value and not hesitate to point out the risks of doing otherwise. Each to their own, I think your contributions are refreshing and I look forward to reading more from you.

[trader_jackson]

Keep it up TJ, while there's little value in constantly reminding people of what was overlooked or belittled in the past, as many here will brush it off because they only invest in established proven entities, it is valuable to have advocacy and insights that point to a bright future for newly listed entrants. Some are prepared to take greater risks earlier, while others will wait until proof of compelling sustainable value and not hesitate to point out the risks of doing otherwise. Each to their own, I think your contributions are refreshing and I look forward to reading more from you.

Thanks Baa_Baa (I probably do harp on too much about arvida... but then again alot of people harped on about how bad Arvida was...)

I do will be watching OCA with interest, and look forward to (hopefully) a few broker reports coming out about them.

Only time will tell what will outcome will really be... what is certain is that OCA shares could go up, down or stay the same;)

[King1212]

Thanks Baa_Baa (I probably do harp on too much about arvida... but then again alot of people harped on about how bad Arvida was...)

I do will be watching OCA with interest, and look forward to (hopefully) a few broker reports coming out about them.

Only time will tell what will outcome will really be... what is certain is that OCA shares could go up, down or stay the same;)

Arvida's result in 2 weeks TJ!

[percy]

I have been on Yahoo charts comparing ARV and SUM over the past two years.
SUM was a fast starter, while ARV has been a fast finisher.
So after two years SUM is up 49.13% while ARV is up 46.77%.Surprised me how close together they are.
Now we have the next two years to look forward to,seeing whether OCA can keep up,or get ahead of SUM and ARV .
In the meantime I expect RYM to keep them all honest.!
I don't follow MET,and hold both RYM and SUM

[Beagle]

I have been on Yahoo charts comparing ARV and SUM over the past two years.
SUM was a fast starter, while ARV has been a fast finisher.
So after two years SUM is up 49.13% while ARV is up 46.77%.Surprised me how close together they are.
Now we have the next two years to look forward to,seeing whether OCA can keep up,or get ahead of SUM and ARV .
In the meantime I expect RYM to keep them all honest.!
I don't follow MET,and hold both RYM and SUM

You "inadvertently" overlooked mentioning how RYM have performed over the last two years. Let me help you out. They have ostensibly tracked sideways for three years now within a fairly tight trading range. A couple of people on here, (pretty sure I don't need to name them :D) predicted this three years ago and have been bang on the money. I have certainly enjoyed some of Couta1's industry insights shared on here about Oceania.

[Joshuatree]

Can you please confirm that by showing the posts that predicted this 3 years ago, thanks.

[percy]

You "inadvertently" overlooked mentioning how RYM have performed over the last two years. Let me help you out. They have ostensibly tracked sideways for three years now within a fairly tight trading range. A couple of people on here, (pretty sure I don't need to name them :D) predicted this three years ago and have been bang on the money. I have certainly enjoyed some of Couta1's industry insights shared on here about Oceania.

No "inadvertently" at all.RYM are nicely tucked in my "free" hold and forget portfolio.
SUM was also there,but recently having decided I did not hold enough in this sector, I added more SUM,as I like their model, which offcourse is based on RYM's.
I have never bothered with MET,as I think they have management issues, as well as being too concentrated in Auckland and Tauranga.
So I looked again at ARV and OCA ,and decided my original conculsions, that they were on the main part a hotchpotch of mainly small second rate villages were still valid.
Bit like buying a group of Pak'nSave supermarkets,rather than a whole lot of 4 square stores.

[Beagle]

Can you please confirm that by showing the posts that predicted this 3 years ago, thanks.

Sorry JT it would take me too long. There are numerous posts in early - mid 2014 wherein Winner 69 and I shared this viewpoint at significant length. The nub of it was that the SP in the three years leading up to early 2014 had risen approx. 300% whereas the underlying EPS was vastly lower than that. It ran FAR ahead of fair value when trading around the current SP level's in early 2014 and Winner 69 and I predicted numerous times the SP was likely to stay flat for several years. Its all there in black and white. You are most welcome to go back and invest the time yourself if you doubt my word on it.
BUT wait there is more...I did find a couple of spare minutes to dig out a small sample of my posts from May 2014 which I copied and posted in the RYM thread.
There's plenty more there for anyone interested and plenty more in the SUM thread wherein I concluded that SUM offered a significantly better opportunity going forward than RYM. Comparing their relative performance over the last three years that indeed proved to be the case. I still see SUM as better value than RYM but if RYM achieve their 15% underlying growth target for the year to 31 March 2017 to be announced later this month and indicate they think they're capable of replicating that going forward my calculations show they'll be on a 2018 underlying PE of ~ 21. If everything is confirmed to be on track my preliminary thinking is RYM would finally now be fair value at around the current price.

[couta1]

I can confirm what Roger is saying is true regarding himself and winner's predictions, I know because I had a parcel at $8.60 that didn't go anywhere for a couple of years until a temporal spike occured, and remember reading their annoying but true posts.:mad ;:

[Joshuatree]

Cheers guys; can't remember what i said back then and not going to waste time looking either but i sold out of RYM too. OCA is the first retirement sector stock I've bought back into atp.

[Beagle]

Cheers guys; can't remember what i said back then and not going to waste time looking either but i sold out of RYM too. OCA is the first retirement sector stock I've bought back into atp.
Noticed when I dug that small sample of my posts out that I shared on the RYM thread that you also observed it had run too hard. At one point there is was on a historical underlying PE of 37 which was clearly too high.

[trader_jackson]

No "inadvertently" at all.RYM are nicely tucked in my "free" hold and forget portfolio.
SUM was also there,but recently having decided I did not hold enough in this sector, I added more SUM,as I like their model, which offcourse is based on RYM's.
I have never bothered with MET,as I think they have management issues, as well as being too concentrated in Auckland and Tauranga.
So I looked again at ARV and OCA ,and decided my original conculsions, that they were on the main part a hotchpotch of mainly small second rate villages were still valid.
Bit like buying a group of Pak'nSave supermarkets,rather than a whole lot of 4 square stores.

Not quit esure I agree with you comparing Pak'nSave supermarkets to ARV and OCA... My thinking:
MET is like the Pak'nSave, they are large, cram people in, may have some products needing fix ups, and not a great deal of all round offering - but it does the job.
RYM is like Foodtown... they are big, sort of sell everything and do everything (high and low quality), with average customer service.
Not really sure what SUM is like... they are sort of the pretty large, high growth, but also highest risk kind of outfit...
ARV and sort of OCA are like New Worlds... you may not think of them when you first think of groceries... they aren't the biggest, they aren't the newest, but often cater to an older generation, but have a high quality offering, and have great customer service.

[King1212]

Not quit esure I agree with you comparing Pak'nSave supermarkets to ARV and OCA... My thinking:
MET is like the Pak'nSave, they are large, cram people in, may have some products needing fix ups, and not a great deal of all round offering - but it does the job.
RYM is like Foodtown... they are big, sort of sell everything and do everything (high and low quality), with average customer service.
Not really sure what SUM is like... they are sort of the pretty large, high growth, but also highest risk kind of outfit...
ARV and sort of OCA are like New Worlds... you may not think of them when you first think of groceries... they aren't the biggest, they aren't the newest, but often cater to an older generation, but have a high quality offering, and have great customer service.


yes..can confirmed that..i visited Arvida village...the staffs are really friendly and happy staffs. Happy staffs offer good service to the residents.

[Beagle]

Must say this is an interesting one though. Without contradicting any of my earlier posts IF they can make their 40% EPS growth forecast for FY18 and get their development program underway and garner some genuine momentum with their outlook into FY19 then the forward PE going into FY19 will be very cheap and we should see a rerating over $1.00, which won't be too shabby a return for IPO investors. Time will tell. Does one believe their forecast or not ?

[King1212]

Must say this is an interesting one though. Without contradicting any of my earlier posts IF they can make their 40% EPS growth forecast for FY18 and get their development program underway and garner some genuine momentum with their outlook into FY19 then the forward PE going into FY19 will be very cheap and we should see a rerating over $1.00, which won't be too shabby a return for IPO investors. Time will tell. Does one believe their forecast or not ?

it is hard to believe the forecast Roger..Until the numbers out then the investors will convince..back then Arvida and Evolve are the same.......numbers out then the SP is stable rising...otherwise you would see the SP is a kind of speculation....

[Joshuatree]

from the prospectus

"approximately 30.4% of Oceania’s Pro forma Underlying EBITDA (pre corporate / other costs)is derived from the sale and re-sale of Units in FY2017F, increasing to approximately 43.8% inFY2018F "

Unless they are misinforming us why not?

[King1212]

Unless they are misinforming us why not?

the question is...can the achieve the sale and re-sale of the units???

[stoploss]

the question is...can the achieve the sale and re-sale of the units???
Must be hard to to be exact on re sales , sure they would know a rough % but generally hard to know when someone is going to die .....

[trader_jackson]

I think what we should be thinking about is, what if they move nowhere (0 growth) and nothing is done in the next year due to cost set backs of what ever you want to dream up... I think it is currently trading at a 15 pe... ie not expensive, possibly the cheapest in the sector... now this is a pretty unrealistic assumption of 0 growth, worst case instead of their being 40% growth (which I am confident they can achieve anyway), might 'only' be 20% growth... still trading very cheaply on a forward basis.

Conclusion: there is likely very limited downside, and alot of upside... all the other listed companies have a far worse 'ratio' of downside to upside than OCA, in my view.

OCA have some great villages, that are well positioned, so I am confident they can achieve their 40% growth.

[Joshuatree]

Reading that post(tj's) is like drinking a couple of fingers of whiskey when a cold front is passing through:D

[trader_jackson]

I think what we should be thinking about is, what if they move nowhere (0 growth) and nothing is done in the next year due to cost set backs of what ever you want to dream up... I think it is currently trading at a 15 pe... ie not expensive, possibly the cheapest in the sector... now this is a pretty unrealistic assumption of 0 growth, worst case instead of their being 40% growth (which I am confident they can achieve anyway), might 'only' be 20% growth... still trading very cheaply on a forward basis.

Conclusion: there is likely very limited downside, and alot of upside... all the other listed companies have a far worse 'ratio' of downside to upside than OCA, in my view.

OCA have some great villages, that are well positioned, so I am confident they can achieve their 40% growth.

(I should clarify that when I say 'companies', I mean listed retirement companies)

[Joshuatree]

Yeayeah we get that TJ. Did you know you can go back at any time and edit your posts unlike on H/C where you only have a 3 min window.

[couta1]

Achieving 40% growth with 73% of your total beds as care beds is like trying to run a marathon on a 5k training schedule. It's possible ,whilst enduring immense pain.:D

[Joshuatree]

Must be other synergies, efficiencies profits they are relying on as well to get the 40%. I can't remember what though. Any ideas TJ andfrom your friend in the business couta?

[trader_jackson]

Must be other synergies, efficiencies profits they are relying on as well to get the 40%. I can't remember what though. Any ideas TJ andfrom your friend in the business couta?

Given his links, I am sure couta can advise much better than me (just like he did with ARV right ;)?)

[Joshuatree]

Yes have asked him where he went wrong on that and explain what happened on the ARV thread and offer still there so we can all learn.

[couta1]

Given his links, I am sure couta can advise much better than me (just like he did with ARV right ;)?) If you read back through my earlier posts on this thread, I have already outlined where the savings need to be made to increase profit for OCA, not going to go over the same things, over and over. PS-Off to an Oceania facility soon to put in a few hours.

[percy]

If you read back through my earlier posts on this thread, I have already outlined where the savings need to be made to increase profit for OCA, not going to go over the same things, over and over. PS-Off to an Oceania facility soon to put in a few hours.

Don't forget your "hard hat".......Just incase!!!

[Joshuatree]

Basically under the former CEO, an oversupply of General managers and managers was set up and still remains as we speak, hopefully this will change going forward as the current CEO seems more tuned in and efficient. I know a former employee from their HQ that has given me more info about the above structure than is currently available to the general public. For obvious reasons that's all I can say on the matter.

Cheers couta . Don't see a prob here re pruning old wood out. If you have any info to share how its going; appreciate it.