OCA - Oceania Group - retirement villages

[bull....]

Thanks bull so are you looking to get back in when you think a bottom has been set?

evrything moves in cycles so the answer is yes. as for oca i guess you have to decide when the cycle is in there favour to make the probabilities worth the risk. ( oca is a property development company first and foremost , care is just cream )

[Ferg]

Maverick and Ferg are probably conferring privately, redoing all their spreadsheets and a few days from now will have worked out its now worth at least $1.70

Haha, I can confirm we have not been conferring and I can confirm I have not redone or reworked anything. I was busy selling a car today plus I was {busy recovering}* from weekend exertions. I'm genuinely waiting for confirmation of the annual result, hence why there is no news or update from me. OCA has the opinion this is EPS accretive - so I see no reason to re-visit anything for the moment. I will look at this again after the annual result. It is good news nonetheless and James108 posted earlier the average value acquired was circa $400k/unit. That appears like good value given Newmarket resale prices will be over $1m - but $400k will be a "nett" figure after deducting ORA liabilities. With a high average value per unit in Newmarket, that means relatively more DMF income per sale for less work/inputs, which is ultimately good. And units to be completed in the winterless North should provide more development margins. Extra margins and DMF divided into the same number of shares is naturally EPS accretive. The part I like most is the statement of adding 300+ units and care suites per year, whereas previously I believe this was ~200 per year.

*aka napping

[Muse]

Haha, I can confirm we have not been conferring and I can confirm I have not redone or reworked anything. I was busy selling a car today plus I was busy* recovering from weekend exertions. I'm genuinely waiting for confirmation of the annual result, hence why there is no news or update from me. OCA has the opinion this is EPS accretive - so I see no reason to re-visit anything for the moment. I will look at this again after the annual result. It is good news nonetheless and James108 posted earlier the average value acquired was circa $400k/unit. That appears like good value given Newmarket resale prices will be over $1m - but $400k will be a "nett" figure after deducting ORA liabilities. With a high average value per unit in Newmarket, that means relatively more DMF income per sale for less work/inputs, which is ultimately good. And units to be completed in the winterless North should provide more development margins. Extra margins and DMF divided into the same number of shares is naturally EPS accretive. The part I like most is the statement of adding 300+ units and care suites per year, whereas previously I believe this was ~200 per year.

*aka napping

is weekend exertions codeword for today's hangover?

one of life's great pleasures is when other people are hungover and you are not.

[Beagle]

Haha, I can confirm we have not been conferring and I can confirm I have not redone or reworked anything. I was busy selling a car today plus I was {busy recovering}* from weekend exertions. I'm genuinely waiting for confirmation of the annual result, hence why there is no news or update from me. OCA has the opinion this is EPS accretive - so I see no reason to re-visit anything for the moment. I will look at this again after the annual result. It is good news nonetheless and James108 posted earlier the average value acquired was circa $400k/unit. That appears like good value given Newmarket resale prices will be over $1m - but $400k will be a "nett" figure after deducting ORA liabilities. With a high average value per unit in Newmarket, that means relatively more DMF income per sale for less work/inputs, which is ultimately good. And units to be completed in the winterless North should provide more development margins. Extra margins and DMF divided into the same number of shares is naturally EPS accretive. The part I like most is the statement of adding 300+ units and care suites per year, whereas previously I believe this was ~200 per year.

*aka napping

One of life's great luxuries is to be able to be napping on a Monday. I was doing a lot of dog napping yesterday until someone poked me so I thought I'd poke someone else and wake them up...Maverick must be having a really deep nap LOL
Good to see we're on the same page.

SP today did okay in the context of the market down 2%, SUM down 33 cents and RYM, oh my goodness, down 51 cents, or nearly 6% ! Its never been the same since Simon Challis left, all the proof you need of the value a good leader brings to the business. Speaking of good leadership...I am encouraged by what I see today from our man Brent.

[Baa_Baa]

One of life's great luxuries is to be able to be napping on a Monday. I was doing a lot of dog napping yesterday until someone poked me so I thought I'd poke someone else and wake them up...Maverick must be having a really deep nap LOL
Good to see we're on the same page.

SP today did okay in the context of the market down 2%, SUM down 33 cents and RYM, oh my goodness, down 51 cents, or nearly 6% ! Its never been the same since Simon Challis left, all the proof you need of the value a good leader brings to the business. Speaking of good leadership...I am encouraged by what I see today from our man Brent.

I'm liking the value emerging in OCA even at current SP, but have to say, SUM and RYM have been gutted and are back on the close-watch list for a re-entry. Might be a while until the TA says buy, but whenever that is it will be quite the contrast from being premium priced.

[Maverick]

I'm genuinely waiting for confirmation of the annual result, hence why there is no news or update from me. OCA has the opinion this is EPS accretive - so I see no reason to re-visit anything for the moment. The part I like most is the statement of adding 300+ units and care suites per year, whereas previously I believe this was ~200 per year.

Excellent summery Ferg. Your points are well laid out and I agree with your entire post. Like you , the biggest takeaway from this update for me is the new official build rate . Build rate has averaged 215 and going to 300 next year is VERY significant.

We all pretty well know that any analysis and discussing of it right now is pointless, firstly as new numbers are only 11 days away but even more importantly with SP falls like this, for most people the base of the brain stem is firmly in charge for now.

While a welcome announcement , nothing is unexpected. Joining the dots from the over size of last years capital raise and AGM director comments of further acquisitions were inevitable. Plus Brent already said , just one time only though, the build rate would accelerate to 300-350. Other clues where hiring of 2 more top brass and greatly expanded capex last HY.
It is very nice though to see it all being formalized and being executed, as they always have.

TBH The flat, uninteresting and isolated landscape of Bream Bay ( that's 30 minutes south of Whangarei) had me a bit surprised as its not OCAs style. But then I was even more surprised to see the average price of houses there is $1m!
Buggered if I know how they can fill 80 odd villas with no care offering from a population of 2500 people but everything is presold so maybe there's just no competition. OCA does have to kind of reinvent its style somehow if its to expand in 5-7 years as it runs out of ultra high end areas to build in. So I cant see why it isn't worth a crack as its harmless enough to just add more villas as demand suits. The other Newmarket purchase , at a sensible price, is a no brainer, a classic OCA offering. It will be making money from day one. I especially like how they are all new builds and it was all done with no new shares issued as Ferg pointed out, eps accreditive. A very pleasing announcement for sure.

Anyway, the overall fear out there is palpable and its possible this announced might only have brought us 1 day of relief before the carnage continues tomorrow. RYM the gold standard is being absolutely pummeled and SUM now looking shaky too. I like to think ARV and OCA cant fall much further ,if at all, due to their asset backing.

I expect that the upcoming FY result of OCA will be at least $58m and hope that is enough to halt the share price semi-crash. With RYM and ARV also reporting I also expect them to both have solid results so just maybe that will be enough to show the international markets/sellers that our NZ RV stocks with our magical ORA contracts are not just "domestic homebuilder companies" that they are accustomed too in their own countries.

Its also very pleasing to see all of us OCA posters who have followed OCA for years now ( and merely at breakeven after 3 years of SP disappointment) that we are all agreeing there has become unmistakable value here now, even Beagle buying some of this flea infested mutt this morning....say whaaaaat!

[Beagle]

Good to see you weren't napping all day Mav. We'll be okay, Brent has started applying liberal amounts of flea powder to this mutt
One more thing about yesterday's acquisitions.

Couldn't help noticing that he's talking high percentage of single digit underlying eps accretive or words to that effect which I interpret to mean adding 0.8 cps or thereabouts to underlying eps in FY23, (which is about a 10% boost to earnings but its interesting to note the villages are not settling until about July according to this article
https://www.nzherald.co.nz/business/...19b12a0d7d7338 (Paywalled sorry) so if they can earn say 0.8 cps in 8 months of FY23, maybe these acquisitions are 1.2 cps eps accretive in FY24 and even more on a per annum basis in the future as they roll out further development of the Ruakaka village ?

Like you Maverick I was pleased to see the (not unexpected) confirmation of increased build rate and the $290m war chest should come in really handy in an environment where some smaller operators are struggling to maintain their care services and may sell cheaply.

Who knows, Brent has the background (former director of investment banking at Jarden) to know all about share buy-backs and how they can also be earnings accretive so maybe we'll see some announcement about this in due course ?

My very rough guess of NAV including all developments in progress and all units at retail price (not the discounted values on unsold units the valuers use) is about $1.50 so there must be good value here in the late 90 cent range.

One things for sure, there's been a LOT more news on the acquisition front since Brent took over as CEO and I find that quite heartening, hence seeing yesterday's announcement taking everything in it into account as very encouraging. Wonder what's next on their $290 million shopping list ? I am sure there will be many more eps accretive acquisitions to come. Better stop yapping now...might get too waggley tailed and excited and end up barking myself into buying too many lol

[Maverick]

Great post Beagle.
Funny you point out today about EPS being 0.8% accreditive. It stood out for me too rereading things this morning.

They know the cost of their borrowing and the incomes likely and I also find that OCA don't exaggerate. So I think it will actually happen.
Ironically , That would mean after 4 years of no EPS growth during that time these 2 acquisitions alone will create more growth than the total sum achieved for all of the toil of the last 4 years.
Of course that's a bit tongue and cheek because you know I'm a fervent believer that the foundation work of the last 4 years and it will finally start bearing ongoing fruit as of the 20th of this month.

You're other point is prescient about OCA s war chest putting it in a strong position to benefit from industry consolidation as we head into troubled times.

Finally, the discounted asset backing of this company to share price blows my mind. New buildings DO NOT go down in value. Their existing older stuff has not been over inflated over the last 2 years as per the mum and dad residential market so seems robustly priced to me to endure any domestic house pricing fall.
How on earth can we buy this stuff today at c.30% discount to cost price???

[winner69]

Hey Mav -- had to laugh at this what you said 'I also find that OCA don't exaggerate'

Remember the days they had an exec LTI scheme in 2018 - the hurdle for them to get rich was Underlying Earnings to grow at 35% pa from 2017 (eps 5.6 cents) through to May 2020. Implied target for May 2020 therefore was eps of 13.8 cents --- like about $85m they were going to achieve .... got $43m

BIG FAIL eh

They have a new LTI scheme (from last year) but won't tell me what the hurdle underlying growth rate is .... wonder why? Hope they get the bit where there share price doesn't do as badly as their peer group.

Whatever we will have to see if they have exaggerated this time around won't we. I don't have the faith you have

[Maverick]

Fair enough Winner , nothing gets past you.,
Yes, massive fail there for sure (maybe the private equity guys back then had something to do with that unbridled ambition)
so OK apart from that small oooops, I have found their over detailed reporting and any accompanying statements to be always very accurate and Ill even say that the much jeered "point of inflection" has also been accurate, ( now remember that was only said for the "care division" and it did inflect half way through 2020 just as they predicted 6 months earlier).

Are far as faith in this company goes, I don't run on any faith whatsoever, that implies believing or hoping in the unknown.
As my tree felling guys says ..." its all physics and math's".