OCA - Oceania Group - retirement villages

[ValueNZ]

Dude, your argument is "Mr Market is discounting OCA shares, therefore this is bad for shareholders as if they sell their shares they only recieve x% back."

But dude, that's exactly why I am a shareholder, I only bought in because of the discount to intrinsic value...

The answer to your question is because it generates float, "free money" and a sh1t ton of it. OCA could make zero EPS for a decade and continue their float growth at 15-20% and shareholders will still do very well out of it by earning say 5% ROA from that point on.

Snoopy imagine this is a private business - No market quotation. What would you pay for the whole company?

[ValueNZ]

Rubbish I already have proved your float is only worth < 66c. but i do agree if they dont muck it up it will be worth more over time.

Show us the math bull.

[bull....]

Show us the math bull.

the correct way to price it is embedded value which is the PV OF THE FUTURE PROFITS and the directors say it is worth 66c ( they say cashflows from DMF and re-sale gains ) , i being the market say its worth less based on my DCF

embedded value right up your alley being an insurance term for float

some of the things snoopy says are correct , just like maverick and winner and sailor rob but i dis-agree with some of what they all say as well

[winner69]

the correct way to price it is embedded value which is the PV OF THE FUTURE PROFITS and the directors say it is worth 66c ( they say cashflows from DMF and re-sale gains ) , i being the market say its worth less based on my DCF

embedded value right up your alley being an insurance term for float

some of the things snoopy says are correct , just like maverick and winner and sailor rob but i dis-agree with some of what they all say as well

You’re right about that embedded value …66 cents it is

[bull....]

You’re right about that embedded value …66 cents it is

yep and thats where the market can dis-agree on the value. esp when you adjust the discount rate or the escalation factor and the lumpyness of re-sale forecasts into the FV of cashflows

[winner69]

yep and thats where the market can dis-agree on the value. esp when you adjust the discount rate or the escalation factor and the lumpyness of re-sale forecasts into the FV of cashflows

Wonder why this embedded value not discussed more often

[bull....]

Wonder why this embedded value not discussed more often

you all have to a degree just not the DCF value. except sailor's made up figure in 2040 lol

[Baa_Baa]

Wonder why this embedded value not discussed more often

Maybe just didn't join up the dots ... "sales sales sales", there is a very large amount of unsold stock that as it sells down goes directly into embedded value. Who reads those reports anyway, lol, you lot have made a meal of how difficult the financials are to understand. Personally I think they lay it all out in easily understood terms, with the exception of recognising the whole float minus DMF as a liability.

[ValueNZ]

the correct way to price it is embedded value which is the PV OF THE FUTURE PROFITS and the directors say it is worth 66c ( they say cashflows from DMF and re-sale gains ) , i being the market say its worth less based on my DCF

embedded value right up your alley being an insurance term for float

some of the things snoopy says are correct , just like maverick and winner and sailor rob but i dis-agree with some of what they all say as well

I asked you to prove that the float was worth <66c, not bring up an embedded value calculation...

Do you know the difference?

[Snoopy]

Snoopy imagine this is a private business - No market quotation. What would you pay for the whole company?

If I owned a private retirement village business I would pay a lot more than the current share price, closer to something approaching net asset backing. That way I could buy the villa assets for a small discount to cost, sack the existing management and bring all those new assets under the umbrella of my own management team. Operate the now combined entity under my existing lean management structure and watch those profits roll in.

I think this was what the Suedes did when the took over Metlife. They are using Metlife as a vehicle to mop up smaller church and privately owned RVs and rest homes. BUT and this is a big BUT......

This story only plays out this way if there is a private overlord involved. It is precisely because OCA is a listed entity that this cannot happen. The projected return for a sharemarket investor does not add up when you take into account today's building costs. So OCA will always trade at a hefty discount to asset backing. The higher the building costs go, the heftier the discount will become. Because OCA has to trade at a level that reflects an acceptable market yield for investors regardless of the underlying cost base.

So sure, if someone decides to launch a takeover offer and take OCA private, then that is when things change. But I can imagine all of those well heeled RV barons looking at the government subsidies available for the inmates, looking at the issues of securing and retaining staff, and thinking: "Hmmm this might be a bit hard" and leaving OCA on the NZX table.

So by all means ValueNZ hold this. And if you paid anywhere near 70c for your shares I don't think you have overpaid. But I think the share price trajectory for OCA will be a slow grind up from here, in line with rising asset values and the increase in government payments to the inmates. Not a sudden "Aha why did we overlook this." leap. Of course you are allowed to hope for better. While we are on the subject of 'accretive vegetables' I can see you lying in wait with Linus in the pumpkin patch waiting for the 'Great Pumpkin' to rise up in all his grandeur and make you an irresistible offer. But I believe such dreams my be end up being 'squashed' if you will pardon the pun. You may find yourself lying in that pumpkin patch for a very long time.

SNOOPY