OCA - Oceania Group - retirement villages

[BlackPeter]

Our current political parties in power do not care about the aged, no enough votes to be bought there. Platitudes only, no substance.

Fact is - more than 15% of the population are 65 plus. Fact is the number of elderlies is growing and fact is that a higher proportion of them goes to the polls compared to the younger people. Actually - the elderlies might be (if united and infuriated) the biggest block of voters.

While some politicians might lie to them (as some do), only a very dumb politician would ignore them.

[Beagle]

Several years too early to make a call on Brent Pattison's expertise in my opinion.
I was impressed he made a good lot of noise in the media during the lockdown in Auckland about residents being harshly isolated unnecessarily when it was clear that RAT tests in combination with infection prevention measures were sufficient assurance....(this was long before our "rocket scientist" elected officials got on board with the idea of Rat tests).
Its desperately hard on old and isolated vulnerable people not being able to see their loved ones...what else do some of them have to live for ?...and he made his viewpoint very forthrightly clear, well done I reckon !

The key questions however as I see them are :-
Can he bring some desperately needed cost control discipline to this company ?
Can he tweak the business model so they're not throwing so much money down the Alice in Wonderland rat hole of basic care services ?
Can he pivot the business model more towards independent living units which are the proven formula for success in the retirement village community ?
Can he and his team find some more good greenfield sites for developments at reasonable prices ?
Can he and his team maintain development margins at a reasonable level given 18% construction cost inflation last year and an outlook for a similar sized increase this year ?
We will see...

This morning over a coffee I couldn't help reflect on the Sharetrader gettogether I organised, was it 4 summers ago ? at the Viaduct where we all sat around drinking far too much and ended up in this unified Chorus together as we toasted our pending success with cheers, Oceania, "You can't have too many" ! All these years later the share price is less now than it was then and the main reason I can see from the accounts that earnings haven't grown is the core issue I've been talking a lot about and that's the rampant, systemic rate of wage growth, year on year that never let's up.

I don't think any of us saw that coming...frankly...its been a very disappointing experience...and if something isn't done about rampant wage inflation in the years ahead..."any will be too many". Time will tell...Its over to Brent to provide the leadership to prove he can make this work for shareholders and grow earnings. Growing NTA will not work for the share price if you cannot grow realised earnings per share.
Other companies in this sector can grow earnings per share...the most notable being SUM even during Covid. Why not OCA ?

If they can't grow earnings then one is better off in SUM other company that can or in another type of property company like ARG that can pay you twice the yield at 8%. For me, even with a fairly modest allocation, the most I can give OCA in terms of patience is 2 more years to prove to me they can grow earnings per share because if they can't do it after 7 years of being a listed company then I think its clear the business model is a complete failure by comparison to others in the sector and one's capital is better off employed somewhere else.

[RTM]

I don't think any of us saw that coming...

And I think this is the most interesting phrase in the Beagles post. Over and over again I see this on share-trader...the collective "we" just can't know everything. We analyse, cogitate over companies without a fraction of the information we in fact need (compare Beagles financial analysis work to what officers in the companies actually know about their businesses), we look a trends in our country, the world etc and make our investment decision accordingly. But, as Beagle highlights above, so many times...sh*t happens, government policies change, wars, etc etc. Wait until Jacinda gets in for a third term and without the immediate pressures of COVID starts to implement some really big social changes. Or National with some Balance the books efforts.

In my opinion it reinforces the need for well diversified portfolios, and if you have enough cash, not just within New Zealand and perhaps Australia, more widely as well. USA, UK..Europe.

[Waltzing]

"We analyse, cogitate over companies without a fraction of the information we in fact need (compare Beagles financial analysis work to what officers in the companies actually know about their businesses)"



They do publish a comprehensive WIP sub section in there accounts thats for Cost Accountants to analyse.

It was pretty much a sell once it broke below 1.30 as there was no support underneath that.

It was bye bye pop deck...and jump ship.

[couta1]

"We analyse, cogitate over companies without a fraction of the information we in fact need (compare Beagles financial analysis work to what officers in the companies actually know about their businesses)"



They do publish a comprehensive WIP sub section in there accounts thats for Cost Accountants to analyse.

It was pretty much a sell once it broke below 1.30 as there was no support underneath that.

It was bye bye pop deck...and jump ship.

Hmm I wonder how many bigger holders are selling including insiders? nope im guessing its all skittish reef fish in the main and the volume would back that up.

[Waltzing]

"bigger holders are selling "

They wont while it backed by NTA and SUM and others have made a killing. "Look ma SUM is killing it OCA is a BARGAIN!"

But do you want millions tied up for 5 years? that what its been.

If it dont perform the selling will continue as they swap and off load OFF market.

The smart money went to the cloud in 2020 and made a killing in the land of Bits and Bytes.

Maybe its the residents that got the BARGAIN!

[Beagle]

But do you want millions tied up for 5 years? that what its been.
Maybe its the residents that got the BARGAIN!

Yes, I suspect that's very true that the residents are the real winners here.
I can't help feeling a bit sorry for those that have locked up millions for years in terms of what they could have made elsewhere.
I guess being realistic about it there was always an element of experimentation with this one which still, at least to me, feels like a relatively new listing.

They pioneered the care suite model and the promise with the float and the presentations in the early years was that the SIX YEAR business transformation would prove to be the panacea that changed the returns they were getting on basic care rooms. I remember Earl at an Auckland shareholders association presentation proudly telling us that their model was different to the others and they're not providing a land based cruise ship experience but high quality care in boutique villages. He also inferred they were targeting the older demographic (85+ years)

Today I looked on Trade me and they're advertising 2 bedroom units at their premier village "The Sands" with expressions of interest from $780K...the same price they were when this village was built some years ago.

I can't help wondering why the price has never changed ? Lack of demand ? Maybe the baby boomer population bulge is currently at a point where the vast majority want the full land based cruise ship experience that RYM and SUM generally provide ? Is this why SUM have waiting lists at many of their resorts, opps sorry, villages, and can afford to be price makers not price takers with three price increases just in 2021 alone ?

A business model either works for shareholders relative to others in the sector or it doesn't. I think I'm being very generous giving them 7 years to prove it works for me when I was promised this was a 6 year transformational process. Its uncharacteristic of me to allow that extra degree of latitude to be honest about it. Prove it works for me in the next 2 years, (7 years since they listed) or I'm out. There's only so long you can hang around and be told "stories" before one demands results. The FY24 result in May 2024 has to show me real earnings per share growth, that's my final deadline for proof their business model works for me and not just for the residents, staff and management.

It feels like a pretty brave "gamble" (so to be frank it is a brave gamble...if something looks like a duck, quacks' like a duck, waddles like a duck its probably a duck), to suggest that even for a short amount of time in the future this can outperform the mighty juggernaut that is Summerset and their well proven business model with its massively impressive 33% compound annual growth rate in earnings since they listed in late 2011.

From experience, when one is taking brave gamble's its best to do it with free money, (from previous strategic re-positioning in this company), or keep the size of the bet down to a very modest level, (preferably both).

[SailorRob]

And I think this is the most interesting phrase in the Beagles post. Over and over again I see this on share-trader...the collective "we" just can't know everything. We analyse, cogitate over companies without a fraction of the information we in fact need (compare Beagles financial analysis work to what officers in the companies actually know about their businesses), we look a trends in our country, the world etc and make our investment decision accordingly. But, as Beagle highlights above, so many times...sh*t happens, government policies change, wars, etc etc. Wait until Jacinda gets in for a third term and without the immediate pressures of COVID starts to implement some really big social changes. Or National with some Balance the books efforts.

In my opinion it reinforces the need for well diversified portfolios, and if you have enough cash, not just within New Zealand and perhaps Australia, more widely as well. USA, UK..Europe.

Or the very opposite. Concentrated portfolios in companies which none of this matters. Diversification will guarantee only mediocrity at best.

Nobody living outside NZ would consider it as a destination for their capital. They might invest in one company perhaps, so I don't know why it's different for us.

[SailorRob]

Beagle said it all.

NTA that cannot produce earnings are not assets at all and thus the market will price them below book.

Maybe this company should just be development and hock off the product to the other ones that can actually operate the assets?

[couta1]

Or the very opposite. Concentrated portfolios in companies which none of this matters. Diversification will guarantee only mediocrity at best.

Nobody living outside NZ would consider it as a destination for their capital. They might invest in one company perhaps, so I don't know why it's different for us.

Most people that go into business only have 1 business and put their all into it, a falling tide causes all boats to drop toward the bottom no matter how many you have.