SUM - Summerset Group

[winner69]

Different business model's mate. Very different.

But the market doesn’t understand that ....Oceania seen just another sector player and share price goes with the ebb and flow of the whole sector,

A bit like Heartland share price being tainted by Aussie banks.

[Beagle]

But the market doesn’t understand that ....Oceania seen just another sector player and share price goes with the ebb and flow of the whole sector,

A bit like Heartland share price being tainted by Aussie banks.

Yes...Its an interesting situation. On one hand the market appears fully cognisant of the fact that ARV's care based model is very different (SP barely affected by the recent sector weakness) but at this stage despite OCA's model being most closely aligned with ARV the market doesn't appear to in any way want to acknowledge OCA's defensive healthcare business model as being materially different to MET, RYM or SUM.

I find this more than a little curious ?...any thoughts anyone ?

[peat]

Yes...Its an interesting situation. On one hand the market appears fully cognisant of the fact that ARV's care based model is very different (SP barely affected by the recent sector weakness) but at this stage despite OCA's model being most closely aligned with ARV the market doesn't appear to in any way want to acknowledge OCA's defensive healthcare business model as being materially different to MET, RYM or SUM.

I find this more than a little curious ?...any thoughts anyone ?

Is it because their pipeline for growth is actually coming from property development same as MET RYM or SUM and not the care beds side of the business.
in the attached pic the total existing care is 2604 . The number post development is 2917 - a mere 12% increase.
Whereas the independent village units total goes from 1089 to 2225 - more than doubling.

Attachment 10237

Discl - holding at 4.2% of equity portfolio.

[winner69]

Is it because their pipeline for growth is actually coming from property development same as MET RYM or SUM and not the care beds side of the business.
in the attached pic the total existing care is 2604 . The number post development is 2917 - a mere 12% increase.
Whereas the independent village units total goes from 1089 to 2225 - more than doubling.

Attachment 10237

Discl - holding at 4.2% of equity portfolio.

As I understand converting care beds to care suites is a good move .....and what will make the Oceania model special.

[Maverick]

Good point Peat.
You have amalgamated the care suites and care bads as if they are the same. As you have correctly said the net total of them now is 2604 and the post development total is 2917.
Breaking down the figures within they are shifting and decommissioning from the less profitable care beds to the very profitable care suites. That's where residents stay for c3.5 years while contributing 30% of the value in fees. (compared to villas contributing 30% of the capital value over c7.5 years) Also the care beds are being overhauled to "premium " beds. again, adding value.

As far as adding 1086 (doubling) villas at the same time , I would expect OCA have worked out the correct ratios that offer the desirable continuum care. Looking at the guys running OCA I have trust they have it worked out well. (but I am only assuming this)oca.jpg

Here is a nice graphic from their latest presentation to show the difference between the main players

[winner69]

This continuum of care thing ....does any operator extend their services to the retirement village in the sky?

[percy]

This continuum of care thing ....does any operator extend their services to the retirement village in the sky?

Most probably receiving [undisclosed] referral fees.
Things could change should IVC take a 20% holding.

[Beagle]

Is it because their pipeline for growth is actually coming from property development same as MET RYM or SUM and not the care beds side of the business.
in the attached pic the total existing care is 2604 . The number post development is 2917 - a mere 12% increase.
Whereas the independent village units total goes from 1089 to 2225 - more than doubling.

Attachment 10237

Discl - holding at 4.2% of equity portfolio.

Business model transformation is a 6 year process (about 5 years to go). Currently fairly defensive but not really recognised by the market which seems a little anomalous so I guess I have to conclude its the Macquarie factor holding them back. Holding 16% portfolio position and looking forward to seeing the back of Macquarie eventually.

[Maverick]

OCA is becoming a virus. Taking over the stock picking competition , now overrunning the SUM thread. You know if we all don't quadruple our dough this year Beagle it will all be your fault.

[Baa_Baa]

@Maverick, surprised that chart hasn't been referenced before it's a good one eh. Notwithstanding no qualifier on the chart of when the 'future' is, it shows OCA's divergent business strategy from other providers and confidence in at least maintaining profits from aged care while actually decreasing combined care beds/suites by 14% (and changing the ratio markedly) and ploughing differential into growing independent units.

So that's a big reduction in aged care beds for a big growth in aged care suites and independent units. Remember these are %'s of growing numbers of beds/units. It is quite a contrast from the proven ratios of other very successful listed aged care providers except ARV who seem to have seen the care suites opportunity as well. Assuming their data is correct, its from the public investor information, it will be interesting to see how the OCA strategy plays out and whether or not the other listed companies identify the care suites niche and shift their ratios as well.