OCA - Oceania Group - retirement villages

[Snoopy]

2-3% per annum average underlying growth is built into a lot of valuation assumptions Snoops. Quite a body of evidence that construction costs generally move up at a rate slightly higher than the inflation rate as do property prices over the very long run.

Assuming that construction costs move up 2-3% per year sounds prudent. Assuming that you will be able to get the 'rent' increased on a new occupation contract to cover those increased construction costs sounds reckless.

SNOOPY

[Beagle]

Assuming that construction costs move up 2-3% per year sounds prudent. Assuming that you will be able to get the 'rent' increased on a new occupation contract to cover those increased construction costs sounds reckless.

SNOOPY

I don't think so Snoopy. Fact is inflation has been running at somewhere around 2% on average for the last 20 years so 2%-3% per annum assumed increases in revenues is actually just keeping pace with inflation with a bit left over for profit growth. e.g. Govt approved weekly payments for people in care went up by 3.0% from 1 July 2020 as approved by the director general of health Dr Ashley Bloomfield.
PM me your email address and I'll email you confirmation of this if you want it.

[RTM]

Increased borrowings and a decrease in divy?Why even pay a dividend if you need more money!ridiculous

Because in the same way they are caring to their customers, they are caring to their shareholders.
Only reason I can think of. I am pleased to get something....but somewhat surprised.

[Beagle]

I have posted their dividend policy twice quite recently and for anyone who wonders why.... this is their stated policy so there should be no surprises going forward !
Extract from 2017 annual report prepared just after the IPO. http://nzx-prod-s7fsd7f98s.s3-websit...591/262296.pdf
Page 3 under shareholder returns and I quote "Oceania Healthcare has established a dividend policy with a targeted pay out ratio of 50% to 60% of annual underlying NPAT".

Some people want income and for others they have a dividend reinvestment program wherein you can elect to receive shares in lieu of dividend at a 2.5% discount.
I posted a link to the plan booklet last week for anyone interested in this.

[Snoopy]

I don't think so Snoopy. Fact is inflation has been running at somewhere around 2% on average for the last 20 years so 2%-3% per annum assumed increases in revenues is actually just keeping pace with inflation with a bit left over for profit growth. e.g. Govt approved weekly payments for people in care went up by 3.0% from 1 July 2020 as approved by the director general of health Dr Ashley Bloomfield.
PM me your email address and I'll email you confirmation of this if you want it.

I don't doubt your information on the care payment allowance going up by 3% on 1st July 2020 Beagle. The question underlying this is what happens to the capital value of a care unit when the cost of running it goes up by 3% and the payment to cover the running cost goes up by 3%? Net increase increase in income from running that care unit is zero. So net change in capital valuation of that care unit is - drum roll - zero! Isn't that how residential units are valued?

SNOOPY

[Beagle]

There's little value in providing basic care services funded by the Govt Snoopy. Nobody is building new supply of basic care units which typically are only circa 15 sq metes.
I am going off memory here but when OCA listed they were about 70 / 30 basic govt funded care v premium care units.
Over time as they complete their redevelopment program they are moving to 30 / 70 basic v premium care units.
This year marks the point of inflection as noted in their annual report where its about 50/50.
Over the years ahead the sale of occupation right agreement units both apartments and care suites will generate a much higher return on invested capital than the Govt funded basic units would.
A good long read of the investor presentation and annual report would dramatically lift your understanding of their business model.
Investor presentation http://nzx-prod-s7fsd7f98s.s3-websit...710/326865.pdf
Annual Report...some good heartwarming stories in there about how well residents were cared for which got me thinking its not all about just the numbers...bet you never thought a greedy bean counting dog would say that http://nzx-prod-s7fsd7f98s.s3-websit...711/326868.pdf

[Waltzing]

the Beagles post at 6137 is boggling and boiling the brain. Thats what i mean i love to attend a very comprehensive presentation on this share. Holding hundreds of thousands and millions for some investors and upwards for investors is not a light decision on something as complex as valuations on property using Discounted cash flow models. is not something the average investor wants to take a chance on. Thats is why a sector ETF is usually purchased instead.

But in a busy day covering many shares and markets knowing a single company in depth is almost impossible.

DISC: trading this share only until its reporting is untangled.

[Enrix]

Solid operating result from Oceania Healthcare in a challenging environment. Looking ahead, the company expects to complete a further 217 beds and units in FY21F and maintained medium-term guidance of 250+ beds and units while the key negative from OCA’s result was the 4% decline in NTA/share to NZ$0.95. Target price NZ$1.08 (prev NZ$1.00) - reflects near-term earnings upgrades

From a major broker.

[Paradox]

Solid operating result from Oceania Healthcare in a challenging environment. Looking ahead, the company expects to complete a further 217 beds and units in FY21F and maintained medium-term guidance of 250+ beds and units while the key negative from OCA’s result was the 4% decline in NTA/share to NZ$0.95. Target price NZ$1.08 (prev NZ$1.00) - reflects near-term earnings upgrades

From a major broker.

Just listening to the webinar Q&A; the guidance of 200-250 units and all other figures is for the period ending March 2021 and not a full year.

For those who want to listen, here’s the link

https://globalmeet.webcasts.com/view...key=dc7b3b8293

[Beagle]

the Beagles post at 6137 is boggling and boiling the brain. Thats what i mean i love to attend a very comprehensive presentation on this share. Holding hundreds of thousands and millions for some investors and upwards for investors is not a light decision on something as complex as valuations on property using Discounted cash flow models. is not something the average investor wants to take a chance on. Thats is why a sector ETF is usually purchased instead.

But in a busy day covering many shares and markets knowing a single company in depth is almost impossible.

DISC: trading this share only until its reporting is untangled.

Earl Gasparich presented at the N.Z. shareholders association Auckland branch, if my memory serves me correctly, in Sept 2018. Most I spoke to afterwards were impressed with his clear presentation. Perhaps I might have a word with Noodles and see if we can get him back to present sometime in 2021 to get an update on how things are going in what will hopefully still be a post Covid environment.

Other than that the annual meeting is always a good chance to ask questions both during the meeting and afterwards over refreshments and to meet the directors and management and get a feel for yourself on the calibre of people. 27 August 2020 2.00 p.m. at Eden Park Kingsland.

I plan to organise a lunch just around the corner at my nephews restaurant in Kingsland before the meeting. Anyone wanting to come along is most welcome, further details to be provided in due course. Phil is an award winning Michelin star chef and knows how to cook