OCA - Oceania Group - retirement villages

[value_investor]

And yet OCA is still trading at only half the PE and twice the dividend of MET. #cheapaschips

Depends on the lens you're looking at. MET is under market speculation at a ridiculous price imo. RYM and SUM have proven track records, while ARV is showing itself as being capable of being there.

The last OCA FY result showed stagnant underlying earnings which includes falling earnings from the care segment. Is it still a bargain if OCA again bring to the table another year of the same earnings?

I do think that the care segment will again see a fall given the rise in wages on the sector, I'm sure the more aged care needs there are the more staff are required. The question is whether the gains in the new units can offset and bring it higher earnings. I'm optimistic it can, but I need to see it in action before I double down on my position.

[LAC]

Depends on the lens you're looking at. MET is under market speculation at a ridiculous price imo. RYM and SUM have proven track records, while ARV is showing itself as being capable of being there.

The last OCA FY result showed stagnant underlying earnings which includes falling earnings from the care segment. Is it still a bargain if OCA again bring to the table another year of the same earnings?

I do think that the care segment will again see a fall given the rise in wages on the sector, I'm sure the more aged care needs there are the more staff are required. The question is whether the gains in the new units can offset and bring it higher earnings. I'm optimistic it can, but I need to see it in action before I double down on my position.

Give this man a beer!

[Beagle]

Give this man a beer!

I second that. If OCA was such a tremendous opportunity then why aren't they the company being chased by three parties for takeover...

As the most recent newcomer to this sector based on last year's results OCA have a LOT to prove to the market before they earn investors trust and I think value investors comment hits the nail directly on the head.

The talk I hear indicates to me OCA have a LOT of work ahead of them refining the internal controls around costs with their systems and while its true to a certain extent a rising tide lifts all boats, not so much the ones with lots of leaks in them.

[BlackPeter]

I second that. If OCA was such a tremendous opportunity then why aren't they the company being chased by three parties for takeover...

As the most recent newcomer to this sector based on last year's results OCA have a LOT to prove to the market before they earn investors trust and I think value investors comment hits the nail directly on the head.

The talk I hear indicates to me OCA have a LOT of work ahead of them refining the internal controls around costs with their systems and while its true to a certain extent a rising tide lifts all boats, not so much the ones with lots of leaks in them.

Don't forget that nobody chased MET three months ago either. Have they been at that stage a much lesser company? I doubt it.

Market interest in any share is fickle and typically no indication for a companies performance or future share price hype. Just look at the last two years of MET or SUM SP fluctuations. I am sure OCA's time will come as well. If not in 2020, than in 2021.

Discl: hold all three (OCA, SUM, MET) - and at the moment quite happy with all of them ;

[Beagle]

Fair enough BP but MET was a deep value play trading at around a 40% discount to NTA as little as 3 months ago whereas OCA is now trading at more than a 25% premium to last recorded NTA.

Does their track record justify the current premium ?...that's the $64,000 question. SUM have earned the respect of the market with a CAGR of 37% over the last 5 years and deserve a significant premium to NTA, (were trading at just a 10% premium to my estimated 31/12/19 NTA six months ago at $5.50), which was ridiculously low and why I topped up.

My view is OCA's management hasn't earned their current premium to NTA. I base my assessment on past performance, my knowledge of the culture of the company and industry talk of the lack of discipline with their internal control's. Yes the evolvement of the new part of their business model is promising, its just a shame that the dominant part of their current business model faces quite lacklustre and likely deteriorating prospects for profitability for the foreseeable future.

I am happy to follow my own nose for feeds in this sector, I'm very happy indeed with how its working

SUM a better buy than OCA at current prices in my opinion.

[Blue Skies]

Don't forget that nobody chased MET three months ago either. Have they been at that stage a much lesser company? I doubt it.

Market interest in any share is fickle and typically no indication for a companies performance or future share price hype. Just look at the last two years of MET or SUM SP fluctuations. I am sure OCA's time will come as well. If not in 2020, than in 2021.

Discl: hold all three (OCA, SUM, MET) - and at the moment quite happy with all of them ;

So true.
I remember feeling v disappointed with my unloved SUM holding from about Aug/Sept 2018 for about a year, but look at it now.
I think it was Balance who said ' I'ld rather be a an hour early than a few minutes too late' - good advice, & am sure OCA will do well for anyone who's plays the long game (& hopefully not too long ha).

Disc hold both SUM & OCA

[Blue Skies]

[QUOTE=Beagle;783563]Fair enough BP but MET was a deep value play trading at around a 40% discount to NTA as little as 3 months ago whereas OCA is now trading at more than a 25% premium to last recorded NTA.

Does their track record justify the current premium ?...that's the $64,000 question. SUM have earned the respect of the market with a CAGR of 37% over the last 5 years and deserve a significant premium to NTA, (were trading at just a 10% premium to my estimated 31/12/19 NTA six months ago at $5.50), which was ridiculously low and why I topped up.





Hi Beagle could you just clarify as at first glance it seems you're comparing a historical OCA NTA with an estimated current SUM NTA?
SUM at $8.50 is trading at just over 80% of the last reported (not estimated current) 4.70 NTA, whereas OCA at $1.23 is trading at just over 24% of last reported .989 NTA.
So is SUM still a better but than OCA?

[Beagle]

SUM is a growth story, compound average growth rate in underlying earnings for the last 5 years = 37% per annum, easily the fastest growing of the retirement stocks on an earnings per shares basis over the last 5 years. My primary valuation methodology of SUM is its growth because its so high and so well proven over 8 years since they've been listed. NTA is very much secondary in my valuation considerations with SUM.

My Bull case for SUM is that really it deserves to be trading at a substantial PE premium to the median NZX50 median of about 20 as its actually N.Z. preeminent growth stock. I believe SUM should and more importantly has earned the trust of the market over a long period of time to be trading on 23-24 times estimated FY20 earnings which I have provisionally estimated at 62 cps. Value in my opinion by mid - late 2020 could be as high as $14. Upside potential is as much as 65% in 2020. (I know this seems overtly bullish but I am happy to follow my own nose of this one). I don't see anything like that potential with OCA in the short run.

OCA has some pretty serious issues and is really struggling to maintain the profitability of its care services, (the vast bulk of their current business model) against rampant human resource cost inflation. In my view its too early in the lifecycle of OCA to reliably predict its average growth rate so one is better to reference value using NTA. Macquarie's ~ 250m shares is a real overhang on OCA and SUM has no such overhang.

I estimate OCA's NTA and about $1.07 as at 31 December 2019. I wouldn't invest at anything more than a 10% premium to this but understand that others are taking a longer perspective and eventually the superior earnings capability of the occupation right agreement model will help overcome the care side of their business model which is well and truly dragging the chain.

[winner69]

SUM is a growth story, compound average growth rate in underlying earnings for the last 5 years = 37% per annum, easily the fastest growing of the retirement stocks on an earnings per shares basis over the last 5 years. My primary valuation methodology of SUM is its growth because its so high and so well proven over 8 years since they've been listed. NTA is very much secondary in my valuation considerations with SUM.

My Bull case for SUM is that really it deserves to be trading at a substantial PE premium to the median NZX50 median of about 20 as its actually N.Z. preeminent growth stock. I believe SUM should and more importantly has earned the trust of the market over a long period of time to be trading on 23-24 times estimated FY20 earnings which I have provisionally estimated at 62 cps. Value in my opinion by mid - late 2020 could be as high as $14. Upside potential is as much as 65% in 2020. (I know this seems overtly bullish but I am happy to follow my own nose of this one). I don't see anything like that potential with OCA in the short run.

OCA has some pretty serious issues and is really struggling to maintain the profitability of its care services, (the vast bulk of their current business model) against rampant human resource cost inflation. In my view its too early in the lifecycle of OCA to reliably predict its average growth rate so one is better to reference value using NTA. Macquarie's ~ 250m shares is a real overhang on OCA and SUM has no such overhang.

I estimate OCA's NTA and about $1.07 as at 31 December 2019. I wouldn't invest at anything more than a 10% premium to this but understand that others are taking a longer perspective and eventually the superior earnings capability of the occupation right agreement model will help overcome the care side of their business model which is well and truly dragging the chain.

Shareclarity has a value of $4.97 for SUM ...maybe current price a bit stretched

[Beagle]

Shareclarity has a value of $4.97 for SUM ...maybe current price a bit stretched

LOL - you know what I think of them. Their so called valuation of RYM is $9.61, (most recent share price $16.80) and OCA itself 92 cents ($1.23).
MET is $5.75 which is about to be taken over for more than $7 tomorrow.
Their so called research is worse than moaningstar and that's really saying something !

Very happy to back my own nose for finding a feed, it really works and I'm getting very overweight lol