OCA - Oceania Group - retirement villages

[Beagle]

Yes indeed some of us did indeed agree that SUM was fabulous value back then and that RYM was heavily overpriced.

Share prices follow earnings per share. SUM have done a splendid job of growing earnings and the others haven't.
My hint for the next 5 years in terms of which company will have the best growth is the past is the best guide to the future.

[couta1]

The question is now which share will double in value first from here, SUM $23 or OCA $2.08, my pick is OCA.

[Entrep]

Mr Beagle sir what is your order of preference for retirement village operators on a 10+ year timeframe?

Or do you tend to jump in and out of investments (I think I've seen you buy & sell some stocks within a year)?

Just keen to know how you operate your portfolio (and also the answer to the first question).

Thanks

[Beagle]

In the very short term OCA is so beaten up I think it will outperform the others in this sector.

In the medium to long term there is no question in my mind that SUM is highly likely to outperform the others.

[Ggcc]

The question is now which share will double in value first from here, SUM $23 or OCA $2.08, my pick is OCA.

I think you might find Summerset will do it first if they continue to grow the way they are. Although with shortages of stuff, staff and tradies that could trip up that idea.

[winner69]

Was chatting a director of one of these not for profit age care outfits yesterday.

Thing that struck me (even though blindingly obvious) was that outfits like his can't live on property revaluations alone. They need positive cash flows.

Just as well Oceania has accommodating shareholders and bankers - as I noted the other day Oceania have burnt through $252m of cash since May 2017 and in spite of these negative cash flows handed out $79m in dividends. Total cash out of $331m - funded by $98m from shareholders and $230m of additional borrowing.

[bull....]

i was chatting to a real estate agent the other day , they were saying i have lots of listings now compared to 6 mths ago but the problem now is not many people are buying houses at the moment.

wonder how that effect those people wanting to sell up to move to retirement villages ? accept lower house price and hope have enough to afford retirement unit as those companies want to keep raising prices for these units as they cant drop the price as winner says they live on property revaluations

[couta1]

i was chatting to a real estate agent the other day , they were saying i have lots of listings now compared to 6 mths ago but the problem now is not many people are buying houses at the moment.

wonder how that effect those people wanting to sell up to move to retirement villages ? accept lower house price and hope have enough to afford retirement unit as those companies want to keep raising prices for these units as they cant drop the price as winner says they live on property revaluations

Most houses are worth more than a retirement unit and those buying the most expensive units would also have an expensive house to sell or other assets available to sell as well, remember its a needs based business, if you need to sell you sell. OCA units are on the whole moderately priced compared to their competitors to boot.

[Ferg]

s I noted the other day Oceania have burnt through $252m of cash since May 2017 and in spite of these negative cash flows handed out $79m in dividends. Total cash out of $331m - funded by $98m from shareholders and $230m of additional borrowing.

I have been looking at the exact same thing. This is what I am seeing from FY16-H1FY22. Percentages to the right show how the nett capex of $770m to date was funded. ILU capacity built & acquired since the beginning of FY16 is 602 excluding decommissions and conversions. Plus nett care suite capacity has increased by a similar figure since the end of FY17. Combine that with future pipeline activity and I see this as a growth business. The question for me is whether future ORA receipts are enough to cover expansion plans.

OCA-CF - Copy.JPG

[Beagle]

Depends how you define "growth business". Agree they're growing in terms of size and facilities.
My definition of a growth stock is a company that grows realised eps consistently. No point growing in size if you're not growing eps.