OCA - Oceania Group - retirement villages

[jagger]

What is for sure is that the share price is beaten down just now for whatever reasons, and trading at a lot below NTA too. So is the time right?

Good time to do it before they get sales (and therefore valuation uplift) on The Helier.

[BlackPeter]

What is for sure is that the share price is beaten down just now for whatever reasons, and trading at a lot below NTA too. So is the time right?

If your question is whether OCA is good value at the current price, then I think the answer needs to be yes.

If your question is whether this is the cheapest price for all times to come to buy the share, then the answer needs to be "it depends". While I would not expect the value to drop, SP can do all sorts of thinks. Just remember that it was just 2 and a half years ago when one could buy these shares for 38 cents (well, for a very short time). Hype and fear can do amazing things to share prices ... and some of the resident fearmongers work hard (I assume) to get a repeat of this situation.

Still - might be a high risk strategy to wait for a double bottom at 38 cents ;

[ronaldson]

MET could offer a 30% premium to the closing price this afternoon and look to get OCA's stock of land and buildings for less than the most recent valuation, and as well the entire operating business as a going concern for less than nothing! Sure beats incrementally buying up owner operators on the verge of going bust and bulking up that way.

In fact, some of our larger listed property entities might be better following that strategy in the current marketplace rather than paying inflated prices on market for individual acquisitions!

[SailorRob]

MET could offer a 30% premium to the closing price this afternoon and look to get OCA's stock of land and buildings for less than the most recent valuation, and as well the entire operating business as a going concern for less than nothing! Sure beats incrementally buying up owner operators on the verge of going bust and bulking up that way.

In fact, some of our larger listed property entities might be better following that strategy in the current marketplace rather than paying inflated prices on market for individual acquisitions!

Excellent point. Leads one to wonder why this isn't happening.

[Brain]

Excellent point. Leads one to wonder why this isn't happening.

Because OCA shareholders understand that it is worth way more than the current market price and it would take a substantially higher offer for a takeover to succeed.

[SailorRob]

Because OCA shareholders understand that it is worth way more than the current market price and it would take a substantially higher offer for a takeover to succeed.

Yes agreed, but doesn't stop a cheeky offer, even at 40% higher than here. I guess they know they wouldn't stand a chance so why bother?

[Baa_Baa]

The Helier launch event (on LinkedIn)

Attachment 14145

https://thehelier.co.nz

https://peddlethorp.co.nz/projects/the-helier/

[Maverick]

Recently I laid out the new apartment sales rates that are imminent and the strong statement that that is the main driver for the upcoming profit growth. (post 13407). This is turbo charged by the "Hell yeah!" about to be delivered as per Baa Baa`s posts.

So , because it s raining cats and dogs outside, here's reason No2 the upcoming profits are going up…

Essentially OCA have put their prices up. Check out this sequence of numbers. They are annual “embedded values for resales” for the last 4 years. What that is is the expected value gains of the combined villas, apartments and care suits next time they get sold as measured by current market pricing. Also I have adjusted the numbers to strip out all acquisitions.

$115.6m…$90.5m…$106.5m…$169.4

Yep, last year's price increases means each unit's profit has gone up 45% from $66k to $94k per aggregated unit.

Next bit of info is that historically turnover of the amalgamated residents averages out very smoothly to just over 16% per year.

So at a very basic level all you have to do is multiply last year's “total resale embedded value” by 16.2% ( back tested historical annual feed-out portion of that total) and wallah!... there you have this year's resale profit. Or you can multiply $94k per unit by the expected resale volume - My calcs have that around 285 ( excluding acquisitions) . Either way you get a similar number.
While I have a very convoluted system for working this out in detail, the first basic formula above is all one needs to do these days with so much historical data to back test and work from. Also as OCA grows larger its numbers start to smooth out and this simple rule of thumb is plenty sufficient these days. ( I still do my complex way as it's all set up and necessary for long term projections rather than just next year).

How important is this? …Well if one looks at the recent Summerset result and how it too has ramped up its pricing, it's clear to see the staggering effect it has on the bottom line.

But to make it too easy for you ( which risks devaluing the importance of the short and longs term effects of this information) I've done more maths.

This full year we will see about an extra $4m profit for resales, that's up 17% on PCP.

Points to remember ;
-This jump up in profit continues for another 5 years afterwards too.
- I have stripped out all the acquisitions for the above calculation so this is an apples for apples comparison. Therefore actual resales will be higher than my workings as the results will include these extra acquired units .
- This profit increase is additional to the imminent increase of “apartment new sales” profit as per my previous post.
- the only way this cannot happen is that selling prices go lower, demand dries up, or people don't move on.
- Resale increases proportionately increase DMFs thereafter.

So there's yet another one contributor ( of many) as to why this year's profit is going to rise nicely ( and stay risen ). That's when we really see OCA start to prove to the market that its plan is all coming together. You will note so far I have not mentioned anything about the "care profit", I've always said that arm of the business ( and the misplaced focus on how much nurses get paid etc) is a red herring at this point.

I do worry though that a takeover could actually happen. I know that seems an outlier but this gem is getting easier and easier to see the value coming.

[Poolboy]

Thanks for doing the maths on our behalf Maverick.

Much appreciated as I'm not really one for maths, being only 8 I have more pools to clean, but do admire those who can do maths.

[clips]

thanks Maverick, appreciate you sharing your views/knowledge, cheers