OCA - Oceania Group - retirement villages

[Joshuatree]

You really need to learn how to read accounts properly .

Please share your reading of the watery ones inwards SN.

[Beagle]

The main factor was the sales at The Sands are much slower now than when they first started. They sold only 4 in the last 3 months Maverick

That has to be real worry given the real estate market In Auckland has been pretty good in this last quarter. With waterfront developments, units are separated out into two distinct categories in residents minds. Those with sea views and those without. The ones with stunning seas views will always sell quickly regardless of the price difference because there's plenty of people with plenty of money who want a first class unit. Those without a sea view is analogous to a cruise ship trying to fill inside cabins with no sea view on a cruise. Its a MUCH harder sell. The way unit sales have slowed down suggests they have a serious problem with selling non sea view units and this has to be a concern going forward.

The other major let down was their care profit. There expenses are creeping as expected (as Beagle often and quite correctly points out) but the surprise to me is their care revenue has taken quite a dive. At the AGM Earl stated that care profits would be inline with last year but right now they are down 24%. (and there has been 3 years of decline now) Maverick

Earl was very wrong to give you the guidance he did. "Blind Freddy" could tell you there was a problem coming here and this underscores my belief that its very important that investors look at the established historical trend in what is happening with any company and listen less to management's theory that they have stopped the rot. Unfortunately this ongoing trend is likely to continue as noted above as OCA has by far the greatest exposure to staff wage and salary increases in the sector. While it is true that over the long run the very gradual change in their business model to eventually get to a 60 / 40 new ORA model v old model after about 4-5 more years will ameliorate this problem, its not a problem solver per se and if they can't control costs future gains from the change in their business model with be eaten up to a large extent by care service cost increases.

My Key Reservation.
I just don't think there is great money in providing "intensive" care services to very elderly residents no matter how you slice and dice it. The real money in this sector is in selling someone a unit for $X and making 30% of $X when you do so, letting them do their own thing and then taking 30% off them when they pass on and reselling it for 2$X to the next incoming resident 7 or so years later. My contention is a simple one, the lower the number of staff involved in this "capital gain and 30% licence fee charge model" the better for shareholders.

[winner69]

OCA share price will be over $1.40 next week I reckon ...bit of a stretch for today

If punters switch from SUM to OCA it’ll go ever higher

[Beagle]

OCA share price will be over $1.40 next week I reckon ...bit of a stretch for today

If punters switch from SUM to OCA it’ll go ever higher

Why would they, more expensive on a forward PE basis and substantially lower growth. No overhang with SUM either. Notice how its MET with their lower level care model the predators are trying to take over...because that's where the real money is !

[LAC]

Decent result, esp for the long term holders. I was hoping the expenses would be a little under control by now though...

[King1212]

OCA share price will be over $1.40 next week I reckon ...bit of a stretch for today

If punters switch from SUM to OCA it’ll go ever higher

More likely switch from OCA to SUM

[trader_jackson]

When OCA released their results, its then that people begin to realize how great the one that shan't be named is (it starts with an A and ends with rvida) - its obvious they are doing a better job with a similar model... no wonder it is up more than OCA is today.

But at least OCA's NPAT is up.

[winner69]

Call me soft-hearted, but share price demand & supply is about more than just the numbers, though I love that sustainable dividend. Most of all I love the BRAND of Oceania, "Earl is a real people person and people pleaser. He's running it for the residents and staff". That BRAND is what attracted me to Oceania, as a place my dear old Mum would've been happy in, along with the happy & professional staff taking care of them.
That BRAND is gold to me and many others, value it correctly, stick that in the accounts and carry on forward from there. Converted long term holder!

Agree Dave with your general sentiments - particularly your comments about brand

Most Trusted Brand in this sector generally is Ryman (2019 Trusted Brand Report). They've lead the way for many years now. In 2019 Summerset and Bupa got a Highly Commended

So maybe Brand does count for something in share valuations

[Davexl]

Agree Dave with your general sentiments - particularly your comments about brand

Most Trusted Brand in this sector generally is Ryman (2019 Trusted Brand Report). They've lead the way for many years now. In 2019 Summerset and Bupa got a Highly Commended

So maybe Brand does count for something in share valuations

We don't do Brand valuation particularly well in NZ, goes back to our "bricks and mortar" mentality. Need to mature a bit more on this aspect IMHO.

[percy]

We don't do Brand valuation particularly well in NZ, goes back to our "bricks and mortar" mentality. Need to mature a bit more on this aspect IMHO.

Please no.
Bad enough with goodwill and intangibles valuations.
Think we are best to make our own "valuations" of brands.