Originally Posted by
Beagle
Hi mate,
I hold both with a bias in terms of capital allocation to the proven performer. The market is always a forward looking animal so tailing PE's are of little relevance.
I'm happy to take them at their word that OCA is on track to meet IPO forecasts and believe a forward PE of 12 is very sound value for a stock in this sector with their stellar reputation for care.
Look at it this way. If you're moving into a retirement village in the mid 80's you're going to probably pick one with the stellar care reputation, kind of like if you want really good inflight service you'll fly Singapore Airlines or Emirates business class. A PE of this level is possible still appropriate until they prove themselves further but there is definitely potential for a rerating over time.
SUM's strengths are their independent living units which are very spacious on average for the sector. Too early to make the call on their underlying profit for 31/12/18 but my best guess at this stage is $90-95m, about 40 cps. Dec 18 forward PE is about 13.8 times.