I found it again rather odd,Craigs very positive commentary,led to a lower recommendation and target price.?
If OCA goes up,yes we thought so.
If OCA goes down,yes we thought so.
"No surprises there.!"...lol
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I found it again rather odd,Craigs very positive commentary,led to a lower recommendation and target price.?
If OCA goes up,yes we thought so.
If OCA goes down,yes we thought so.
"No surprises there.!"...lol
Encouraging to see another director chipping in for another 50,000 shares at $1.02
Naturally--- Its the bargain of the decade and, as Liz is one of our finest directors, she knows value when she sees it!!
Beagle, a question fro you. Re the enormous expansion program and care suite conversion program of OCA, can you explain exactly where the Capital is /has come from? M Thanks if you would for all of us keen forum folks.
$1.25 what a bargain.
Hi Warren,
If you go right back to the start of this thread you'll see when this company was originally rumoured to float it was riddled with enormous debt.
The balance sheet needed to be well and truly cleansed and strengthened as part of the IPO process and it was. If I remember correctly most of the float proceeds were used to retire bank debt. When floated the company had very low debt so essentially the development program is being run through bank debt which is still fairly modest, the gradual change to an occupation right agreement model as new developments are sold down and retailed earnings.
Capital will be recycled over and over again as units are sold down under the new business model which will fund future developments.
Ah yes, net debt... that is one area where OCA has experienced rapid growth. From $84.4m in FY17 to an expected $203.6m in FY19, and $283m in FY20... up 235% in 3 years, that is more rapid than any other listed operator.
That FY20 number would be nearly as much as the 'bad old days' (the days when Roger wouldn't touch OCA with a bargepole - those days were a mere 2 years ago) when OCA was riddled with debt... that was before the IPO where $173m of the $200m IPO proceeds were dedicated to paying off the $259.1m in debt OCA had as at FY16 - OCA did a good job however, and reduced debt all the way down to $84.4m.
With the housing market now slowing down, it will be come down to how good OCA's continuum of care really is to attract people to their villages - otherwise we'll find sum things won't be selling so fast and capital recycling won't be occurring as swiftly... and that 'enormous debt' OCA is forecast to soon be riddled with again, just might turn into dangerous debt.
I believe OCA can do it, especially if it is as good as their flashy preso's and tour days, but it has silently and certainly elevated the risk profile of OCA above that of a particular other listed operator with strong continuum of care offering who are nearly as cheap with similar yield.
Debt is relative to assets but I think you know that already.
http://nzx-prod-s7fsd7f98s.s3-websit...429/298502.pdf
In the interim financial statements released in January 2019 total external borrowings, (excluding residents advances under occupation right agreements) stood at $206.9m against total assets of $1,208.8m a bank debt ratio of just 17.1%.
Cash flow increased by 175.9% on the previous comparable period.
I have no concerns whatsoever over the gearing level and note interest rates are at around close to 50 year lows and considerably lower than a few years ago.
The original debt level including loan from Macquarie relative to assets was from memory vastly higher but the original pre IPO financials are no longer available on the Companies office website to review again.
Wow, many thanks Beagle. As I see it, while the large bank debts etc of the pre float times were paid off, it must be some business now as it paid us shareholders 4.5% approx right off the float. The old bank debt cant have been costing them too much more than say 5%?
Any-rate debt murders us all including businesses.
Could you tell us a normal debt ratio and what OCA's ratio is?
Mac's might be very happy to sit and see their 39% (?) grow into a mighty valuable nest egg?
You're most welcome Warren, anytime. SUM have leverage of 32% as at 31 December 2018 which is nearly double that of OCA. I am not concerned by their leverage either as that's another company on a very strong growth path for the years ahead.
The housing market may be slowing. but one thing isn't. And thats the rate of our aging population needing care.
In terms of current numbers over 30% of people aged over 65 - 74 will suffer from obesity, chronic pain or arthritis. All conditions that will require some degree of care. By the time people hit 75 obesity will have killed a few off. But the chronic pain and arthritis lingers as you get older.
From a 2014 research paper: “Dementia is a disease of ageing with the prevalence of 1-2% in those 65-74 years of age and increasing to 40% in people over 90 years of age (Treves & Korczyn, 2012). Over 41,000 New Zealanders are currently living with dementia pre and this will almost double to 75,000 people by 2026.”
Then from local aging population research by 2036 1.26m NZ’ers are expected to be aged over 65. 392,000 of these people will be aged over 80. And 14,500 will be aged over 95.