OCA - Oceania Group - retirement villages

[Beagle]

Hi Maverick,

Thanks. Looking further into this I think you make a good point.

As context, the concept of Embedded Value is not relevant to IFRS Reported profit or to Comprehensive Income where the Management Fee is booked as profit on a straight line basis over the relevant or expected term of the ORA. I am pretty sure I have this part right, but welcome any feedback if you see it differently. The balance sheet also has assets at market valuation which feeds directly into quoted NTA's.

However, Embedded Value is relevant to the calculation of "Underlying profit" where capital gains and also DMF fees it seems, do not get booked as profit until the ORA terminates and a new ORA is sold for the unit. As per the chart you shared, the Embedded Value represents the difference between the carrying value of the assets at market value (as per balance sheet) and the amount owed to residents under the terms of the ORA. Part of this is estimated capital gain and part of it is DMF as you say. Thanks for pointing this out.

Very good discussion guys. My view is the conceptual framework of EV has always been tied to the unrealised difference between the current valuation of units and the obligation to the holders of the licence to occupy. I haven't done the books of a retirement company but I would imagine as the ORA progresses the obligation to the residents gradually diminishes in accordance with the ORA terms, e.g. in OCA's case 10% per annum and as the capital value (hopefully) increases every year the embedded value per unit rises quite quickly.

Its quite probable that we are all right, (dare I suggest at this time of year the three wise men) as the bulk of OCA's model is still care for residents outside of the standard retirement village ORA agreement model. Given this, there is an argument that as the cost of provision of care services increases each year, the contractually agreed increased portion represents a form of embedded value, whereas the straight line component of care services does not.

Confession time - My sense is I probably haven't tried hard enough to wrap my head around the nuances of OCA's accounts in the past, in terms of the old / new model and there probably is some argument that capital gains on old model care service buildings and the capital gains thereon should be encapsulated into the traditional model of retirement villages, or at least considered in the context of same in terms of future possible profitability to the extent that the company plans to convert them over to ORA care suites, (at least from the perspective of trying to make some attempt to compare underlying earnings between the various sector players). Perhaps between us we should give this a very fulsome analysis and thorough examination with the forthcoming report.

[Beagle]

Now we all know about Underlying Earnings, Comprehensive Income, NTA and Embedded Value we must be a lot wiser

So us OCA a good investment

I like the thing NAV (NEt ADJUSTED VALUE) that Oceania use .....was $1.14 per share las

Yes, we can use there latest musings on this as a starting point to try and understand the nuances of their forthcoming accounts. I might leave it till then, don't want another headache yet...

[Beagle]

Beagle is a Accountonomist so entitled to use what any measure that he deems appropriate

I did a web search on that term and it only comes up as a word you made up on share trader lol.
Just like a Beagle mate, I just like foraging and hunting for food. Forage a lovely word (Can't forage any more on SUM, right up to my 10% self imposed limit so with pending release of MET funds I am highly motivated to seek food elsewhere), even motivated enough to forage right through OCA's forthcoming financials to the nth degree How's that for a motivated dog !

forage
[ˈfɒrɪdʒ]

VERB
foraging (present participle)
(of a person or animal) search widely for food or provisions.
"the birds forage for aquatic invertebrates, insects, and seeds"
synonyms:
search · hunt · rummage (around) · scrabble · grub · root about · root around · scavenge · fish about · fish around · rake around · feel around · grope around · [more]
obtain (food or provisions) by searching.
"a girl foraging grass for oxen"
search (a place) so as to obtain food.
"units that were foraging a particular area"
synonyms:
hunt · hunt around · search · look about · look round · look around · cast about · cast round · cast around · rummage (about) · rummage (round) · [more]
archaic
supply with food.

[winner69]

Oceania need to get more non-English names for their villages

But maybe the current name reflects their target demographics

[winner69]

I did a web search on that term and it only comes up as a word you made up on share trader lol.
)

It’ll be in common use one day

[percy]

It’ll be in common use one day

I concur.
And to think we heard it here first.?

[Beagle]

Forthcoming entry in Wikipedia and Oxford English dictionary
Accountonomist - An accountant who takes a dogged approach to analysing financial information

[Snoopy]

Yes, we can use there latest musings on this as a starting point to try and understand the nuances of their forthcoming accounts. I might leave it till then, don't want another headache yet...

Beagle ticked me off in another thread about not understanding the retirement sector. I take my hat off to Beagle, Maverick, Mogul, Winner and all the others who have contributed on this thread in particular and others. Old retirement models morphing into new retirement models? Care revenue integrating with occupation rights? Declared profit and underlying profit? No wonder some of you get headaches! If there is a more difficult sector in the market to understand I don't know what it is (perhaps insurance?).

I took note of Warren Buffett in the 2000 era tech bubble when he was criticized for not riding that wave.

"I don't invest in things that I do not understand" was his response.

Since then I have never worried about 'missing out' and have stuck to investing in areas more amenable to my analysis skills. I haven't invested in the retirement sector to date. But the more I read these threads the more I want to, yet the less qualified I feel to do so! Nevertheless I feel I have benefitted from all of your efforts in educational terms at least. One day....

SNOOPY

PS Keep it up

[Beagle]

You cannot find a harder one to understand than OCA, that much is absolutely cast iron guaranteed, Snoopy. Start with SUM, considerably easier to understand and quite possibly a more profitable exercise for you. The barking was pretty intense on SUM mid year at ~ $5.50 and later in 2019 with MET at ~ $4.50. You don't always have to be the lead Beagle on the hunt mate

[winner69]

So January 24th going to big day

Meant to be half year results but I wonder if there will be any other big announcements (not related to the result)