OCA - Oceania Group - retirement villages

[Maverick]

Jeez Mav, you are getting bullish now hinting at $3 share price

Ok, “let’s try to manage expectations “ a bit here Winner, let’s say upper SP range on a good day after 2024 FY could hit $2.99. But to be safe let’s think $2 for now.

There’s some nice shifts in OCAs drivers that have already happened to get us there,
the main ones are,
-The highly disruptive and profit reducing care suite building phase has now bowed and finally made way to the apartment phase ( on the freed up land). OCA now have a ton of the “money making apartments” delivered and are currently selling down as we speak with plenty more being built.
-more Auckland / Hamilton / Tauranga centric deliveries ( as opposed to Chch and Nelson) with their higher pricing and margins.
- the constant juggernaut rise of village and care DMF ( and PAC ).

Then there’s the lessor drivers;
-High corporate cost increases of front footing the increase in build rate from 200 to 300 should likely stabilize.
- $2.5m of covid costs last year are non reoccurring, stated publicly twice by Brent.
- just maybe some accretive acquisition growth chucked in.( but who knows for sure on that one , I haven’t factored any).

notice I have no allowance for improved Govt care funding, that’s just a bonus if it was to magically happen.

Then there are several other tweaks to the positive.
On the potential negative , even if the HPI was to fall 20% peak to trough, that still gives OCA head room to maintain pricing. Whereas SUM has already booked a lot of those rises considering their own massive jump in embedded value last report, OCA has not. Just saying that a decent fall in HPI wont hurt OCA profit nearly ( if at all ) as much as the market seems to be factoring.

So throwing a SP around with a 3 in front would, while possible, mean everything has gone right, which we know from experience seldom does. I realistically expect $1.80-$2.40 based on PE 13-17 by mid 2024

Despite these calculatable “ facts”, the share price could well remain subdued for some time yet as we know the market really isn't interested in looking that far ahead.
This puppy will all but certainly have its day with handsome EPS gains and the SP has to follow.

[percy]

Ok, “let’s try to manage expectations “ a bit here Winner, let’s say upper SP range on a good day after 2024 FY could hit $2.99. But to be safe let’s think $2 for now.

There’s some nice shifts in OCAs drivers that have already happened to get us there,
the main ones are,
-The highly disruptive and profit reducing care suite building phase has now bowed and finally made way to the apartment phase ( on the freed up land). OCA now have a ton of the “money making apartments” delivered and are currently selling down as we speak with plenty more being built.
-more Auckland / Hamilton / Tauranga centric deliveries ( as opposed to Chch and Nelson) with their higher pricing and margins.
- the constant juggernaut rise of village and care DMF ( and PAC ).

Then there’s the lessor drivers;
-High corporate cost increases of front footing the increase in build rate from 200 to 300 should likely stabilize.
- $2.5m of covid costs last year are non reoccurring, stated publicly twice by Brent.
- just maybe some accretive acquisition growth chucked in.( but who knows for sure on that one , I haven’t factored any).

notice I have no allowance for improved Govt care funding, that’s just a bonus if it was to magically happen.

Then there are several other tweaks to the positive.
On the potential negative , even if the HPI was to fall 20% peak to trough, that still gives OCA head room to maintain pricing. Whereas SUM has already booked a lot of those rises considering their own massive jump in embedded value last report, OCA has not. Just saying that a decent fall in HPI wont hurt OCA profit nearly ( if at all ) as much as the market seems to be factoring.

So throwing a SP around with a 3 in front would, while possible, mean everything has gone right, which we know from experience seldom does. I realistically expect $1.80-$2.40 based on PE 13-17 by mid 2024

Despite these calculatable “ facts”, the share price could well remain subdued for some time yet as we know the market really isn't interested in looking that far ahead.
This puppy will all but certainly have its day with handsome EPS gains and the SP has to follow.

Thanks for sharing your superior analysis.
I am pleased you continue to post here.

[justakiwi]

Mav, the time and effort you have put into your analysis of OCA is outstanding. I for one, appreciate everything you have offered to date, more than you can imagine. It is a breath of fresh air to have such a worthy contributor in these forums, who is willing to share, without preaching, and without any need for ego-stroking.

When we hit $2.40, we need to catch up for a celebratory drink or two

(or maybe even $2)

Ok, “let’s try to manage expectations “ a bit here Winner, let’s say upper SP range on a good day after 2024 FY could hit $2.99. But to be safe let’s think $2 for now.

There’s some nice shifts in OCAs drivers that have already happened to get us there,
the main ones are,
-The highly disruptive and profit reducing care suite building phase has now bowed and finally made way to the apartment phase ( on the freed up land). OCA now have a ton of the “money making apartments” delivered and are currently selling down as we speak with plenty more being built.
-more Auckland / Hamilton / Tauranga centric deliveries ( as opposed to Chch and Nelson) with their higher pricing and margins.
- the constant juggernaut rise of village and care DMF ( and PAC ).

Then there’s the lessor drivers;
-High corporate cost increases of front footing the increase in build rate from 200 to 300 should likely stabilize.
- $2.5m of covid costs last year are non reoccurring, stated publicly twice by Brent.
- just maybe some accretive acquisition growth chucked in.( but who knows for sure on that one , I haven’t factored any).

notice I have no allowance for improved Govt care funding, that’s just a bonus if it was to magically happen.

Then there are several other tweaks to the positive.
On the potential negative , even if the HPI was to fall 20% peak to trough, that still gives OCA head room to maintain pricing. Whereas SUM has already booked a lot of those rises considering their own massive jump in embedded value last report, OCA has not. Just saying that a decent fall in HPI wont hurt OCA profit nearly ( if at all ) as much as the market seems to be factoring.

So throwing a SP around with a 3 in front would, while possible, mean everything has gone right, which we know from experience seldom does. I realistically expect $1.80-$2.40 based on PE 13-17 by mid 2024

Despite these calculatable “ facts”, the share price could well remain subdued for some time yet as we know the market really isn't interested in looking that far ahead.
This puppy will all but certainly have its day with handsome EPS gains and the SP has to follow.

[Maverick]

Thanks for your kind response Percy and JAK.
Its only fair to offer some of my work and opinions when you’ve got some really good posters out doing great contributions, such as Winner, Fiordland M, FERG( especially), BP and Baabaa. (Just to name a few on the threads I am personally interested in)

Thanks to all of the contributors ST can be of great value.
Lets hope others too will feel comfortable enough to add to the chat.

….and most defiantly yes to that beer(s)JAK, it’s date!

[RupertBear]

I would like to add my thanks to you as well Maverick. I really appreciate you sharing your work and opinions with us. You are a legend

[Beau]

Thanks Maverick always good to read your posts and many others on this thread nothing has changed long term with Oceania a bright future in safe hands with good Management and Board. Good things take time, it has had a lot going against it as have all retirement villages in recent times.

[winner69]

Ok, “let’s try to manage expectations “ a bit here Winner, let’s say upper SP range on a good day after 2024 FY could hit $2.99. But to be safe let’s think $2 for now.

There’s some nice shifts in OCAs drivers that have already happened to get us there,
the main ones are,
-The highly disruptive and profit reducing care suite building phase has now bowed and finally made way to the apartment phase ( on the freed up land). OCA now have a ton of the “money making apartments” delivered and are currently selling down as we speak with plenty more being built.
-more Auckland / Hamilton / Tauranga centric deliveries ( as opposed to Chch and Nelson) with their higher pricing and margins.
- the constant juggernaut rise of village and care DMF ( and PAC ).

Then there’s the lessor drivers;
-High corporate cost increases of front footing the increase in build rate from 200 to 300 should likely stabilize.
- $2.5m of covid costs last year are non reoccurring, stated publicly twice by Brent.
- just maybe some accretive acquisition growth chucked in.( but who knows for sure on that one , I haven’t factored any).

notice I have no allowance for improved Govt care funding, that’s just a bonus if it was to magically happen.

Then there are several other tweaks to the positive.
On the potential negative , even if the HPI was to fall 20% peak to trough, that still gives OCA head room to maintain pricing. Whereas SUM has already booked a lot of those rises considering their own massive jump in embedded value last report, OCA has not. Just saying that a decent fall in HPI wont hurt OCA profit nearly ( if at all ) as much as the market seems to be factoring.

So throwing a SP around with a 3 in front would, while possible, mean everything has gone right, which we know from experience seldom does. I realistically expect $1.80-$2.40 based on PE 13-17 by mid 2024

Despite these calculatable “ facts”, the share price could well remain subdued for some time yet as we know the market really isn't interested in looking that far ahead.
This puppy will all but certainly have its day with handsome EPS gains and the SP has to follow.

Hey Mav - not many downsides

Some commentators are saying the sector will need to face up to pay parity for aged care sector workers.

I've no idea what that might mean - have you thought about the (financial) impact

[Maverick]

Hey Mav - not many downsides

Some commentators are saying the sector will need to face up to pay parity for aged care sector workers.

I've no idea what that might mean - have you thought about the (financial) impact

Hey Winner,
Couple of things there,
First a bit of background, as much as the govt has throttled back the care funding to now be waffer thin, they have not reduced it further than 3 years ago on a ratio basis of just above break even. So this should be as bad as it gets.
I do believe the people in white coats behind the scene who set these rates know they cant reduce it any further.
Brent has stated care profit will still rise from here with no increase in DHB funding solely due to extra private charging ,( ie ever increasing DMF, pac fees). My maths agree.
So I see this is as bad as govt underfunding will get and despite this care profit will still rise. Watch next HY care numbers for confirmation.

Now onto something more specific to your post....RV nurses get paid about $20k p/a less than DHB nurses. Although they are officially told not to, DHBs have pilfered the rest homes to bolster their own ranks. ( my own sourced info, not from OCA ) Thus creating staffing issues at RVs. Only solution is to address the pay gap with increased funding of which the govt refuse to date.

This parity issue is not a threat to OCA as they already pay their nurses at the higher DHB rates.

Hope that answers what you were asking?

[winner69]

REINZ report HPI down 1.4% in July from June - last 3 months down 4.9% and an an annual basis now negative at 2.9%

At this rate some banks saying 20% decline in property prices is on track

This ialk of Oceania having a 'buffer' against falling property prices is a load of the proverbial - believe it if it makes feel easier though


https://www.reinz.co.nz/Media/Defaul...uly%202022.pdf

[justakiwi]

You have to be the most puzzling poster here

This ialk of Oceania having a 'buffer' against falling property prices is a load of the proverbial - believe it if it makes feel easier though