OCA - Oceania Group - retirement villages

[Beagle]

Too old to find fitness …..like they said in the old days one more chance before being sent to Newtown (like the zoo as meat for the lions)

Hope Brent gets the whip out on it next year and it finds some form or as far as I am concerned its off to the glue factory.
Suppose we better leave the horse analogies there otherwise some animal lover will get upset.
Moving on... Harbour are just out with their roundup of the earrings season and OCA gets a mention
https://www.harbourasset.co.nz/resea...d-by-covid-19/ concludes with "But for those companies with pricing power and structural growth drivers, there is potential to keep beating conservative earnings forecasts, supporting equity returns".

Brent, please show me that OCA does have pricing power because if you can't I'm off SUM where else.

[Waltzing]

Sum other horse has bolted long ago ? so far ahead its lapped this old nag 2.5 times already...it's really starting to look long odds...

[justakiwi]

For anyone who is interested and missed the live NZX Investor Relations webinar today, you can watch it here...

https://www.youtube.com/watch?v=KdNE3kEb6UY

I found it very interesting. Brent made it very clear that Oceania is primarily a care business and that is where their focus will always be. This is what sets them apart from the rest. Some of what he mentioned was in the results presentation, but there is some good stuff here that clarified a few things for me.

Worth a look.

[Bjauck]

For anyone who is interested and missed the live NZX Investor Relations webinar today, you can watch it here...

https://www.youtube.com/watch?v=KdNE3kEb6UY

I found it very interesting. Brent made it very clear that Oceania is primarily a care business and that is where their focus will always be. This is what sets them apart from the rest. Some of what he mentioned was in the results presentation, but there is some good stuff here that clarified a few things for me.

Worth a look.

Thanks for the link. A very good and interesting summary of the business direction. He did also stress their emphasis on their Care Suite development (sold under an ORA) including the conversion of some standard beds to care suites. This is a way for Oceania to continue to earn profits as government funding for care has fallen behind cost increases.

If this is reflected throughout the sector, as mentioned by other posters previously, this could make it more difficult for older folk without many assets to find a rest home bed (and there will be increasingly greater percentages of older people who have become priced out of home ownership.)

Brent's presentation also demonstrated Oceania's political lobbying. Hopefully he can impress upon politicians that concerns over government Covid policies and realistic funding for care costs are genuine. Otherwise companies, whose investors naturally expect them to have maximisation of profit as an important aim, will increasingly withdraw from the provision of standard rest home beds.

[Beagle]

Thanks for the link JAK.

Finally something to be positive about. First of all some guidance on the future build rate that to the best of my knowledge hasn't been shared before...keep in mind their previous build rate has been a lot lower than this.
"We have 545 units under construction...we are going to continue to build sort of 300-350 units every year"
If I remember correctly the target was previously 200-250 units per annum under Earl's leadership and if I recall correctly they never got close to 250 ? (I may be mistaken here and am simply going off memory).

The second thing that gives me some much needed reason to be more positive is "we've started to increasingly move into Greenfield development" Over the next 5 years they have 821 care suites and 1140 independent living units planned for development and this will somewhat shift the unit mix. This isn't new info but is certainly worth taking note of.

I think with the rapid growth in development over the years ahead the opportunity is there to bring some economies of scale with head office costs and high level management salaries in particular being amortized over a much bigger business. This might being some relief to the rate at which human resource costs are increasing. They run their own training school for Nurses so they get first dibs on the best graduates.

I think when you compare the current development workload (545 units) and the future plan to build about 300-350 units per annum which is well up on previous build rates, the increasing focus on independent living units and greenfield development there are some grounds for optimism so with them closing on Friday at about 12 cents below the fair value adjusted NAV they are "Probably a pretty good Hold", (I am not upgrading to accumulate yet until they get more momentum in the business).

Lots and lots and lots of patience will be required here. Beagle is not very good at waiting a long, long time for a feed so I hope I can keep hanging in there.

[justakiwi]

Glad you're happy. Do I get my rep vote back?

Thanks for the link JAK.

[THEONE]

Thanks for the link JAK.

Finally something to be positive about. First of all some guidance on the future build rate that to the best of my knowledge hasn't been shared before...keep in mind their previous build rate has been a lot lower than this.
"We have 545 units under construction...we are going to continue to build sort of 300-350 units every year"
If I remember correctly the target was previously 200-250 units per annum under Earl's leadership and if I recall correctly they never got close to 250 ? (I may be mistaken here and am simply going off memory).

The second thing that gives me some much needed reason to be more positive is "we've started to increasingly move into Greenfield development" Over the next 5 years they have 821 care suites and 1140 independent living units planned for development and this will somewhat shift the unit mix. This isn't new info but is certainly worth taking note of.

I think with the rapid growth in development over the years ahead the opportunity is there to bring some economies of scale with head office costs and high level management salaries in particular being amortized over a much bigger business. This might being some relief to the rate at which human resource costs are increasing. They run their own training school for Nurses so they get first dibs on the best graduates.

I think when you compare the current development workload (545 units) and the future plan to build about 300-350 units per annum which is well up on previous build rates, the increasing focus on independent living units and greenfield development there are some grounds for optimism so with them closing on Friday at about 12 cents below the fair value adjusted NAV they are "Probably a pretty good Hold", (I am not upgrading to accumulate yet until they get more momentum in the business).

Lots and lots and lots of patience will be required here. Beagle is not very good at waiting a long, long time for a feed so I hope I can keep hanging in there.

There surely isn't many greenfield sites around. Must be reasonably likely is the Sky site. It would explain why is taking so long and all the secrecy.

[Beagle]

Glad you're happy. Do I get my rep vote back?

Yes, okay

[Beagle]

There surely isn't many greenfield sites around. Must be reasonably likely is the Sky site. It would explain why is taking so long and all the secrecy.

There is plenty of land around.. Getting consent from Council is by far the biggest issue but I see about 75% of OCA's future pipeline is already consented. Perhaps that little fact that's easy to forget and/or gloss over adds a bit more to the fair value adjusted NAV of $1.42 ?

[justakiwi]

Changed your mind huh?
(Not quite fast enough with the edit)

Thank you for the rep vote though

Yes, okay