OCA - Oceania Group - retirement villages

[Ohdoyle]

One thing that is being missed in this discussion is that selling a unit cheaply isnt profit lost, it is merely profit delayed as OCA buys the unit back at the same price it sells it for. Of course opportunity cost and all that, but my point is if they up their prices to market levels in the future they will be buying the units back at a relatively cheaper price compared to the competition.

This is obviously to the advantage of future shareholders and the sooner they sort the pricing the better. But revenue delayed is not the same as revenue lost and if what everyone is saying is correct, that OCA is underselling its units that means theres a whole lot of extra value hiding in its ballance sheet.

[Rawz]

One thing that is being missed in this discussion is that selling a unit cheaply isnt profit lost, it is merely profit delayed as OCA buys the unit back at the same price it sells it for. Of course opportunity cost and all that, but my point is if they up their prices to market levels in the future they will be buying the units back at a relatively cheaper price compared to the competition.

This is obviously to the advantage of future shareholders and the sooner they sort the pricing the better. But revenue delayed is not the same as revenue lost and if what everyone is saying is correct, that OCA is underselling its units that means theres a whole lot of extra value hiding in its ballance sheet.

Ohdoyle, this is really well said and exactly how I see it. If the only issue is pricing then the next FY results can be exceptional if they sell at market rates and offset some of the ever increasing employee costs that MrB has highlighted above.

Surely the prices Ryman, Summerset etc are selling at sets a mark in the sand where OCA can sell at +-5%
Maybe they need to poach a few of their rivals salespeople.

[James108]

Sorry guys but that is wrong, they miss out on extra DMF.

[YoungBull]

Its pretty disappointing. As far back as November last year I had a good conversation about this with Earl but I couldn't get him to see my point of view. Meanwhile construction costs are going up really fast, development margin is going down and company wages costs overall have been going up at ~ 8% per annum, significantly faster than the rate of care fees increase at 3% per annum. But its best to keep the prices the same he said....I assumed he knew something I didn't and knew better than me... Now I think I was right all along. Other sector participants have been quicker and smarter and that's a dead rat sandwich I didn't want to eat. Hopefully this matter will be addressed very promptly.

This may sound stupid but is there any reason a company would deliberately keep pricing low in a given year? Tax implications? Something along that train of thought?

[Ggcc]

This may sound stupid but is there any reason a company would deliberately keep pricing low in a given year? Tax implications? Something along that train of thought?

Paying back Covid wages maybe?? Clutching at straws here

[winner69]

Sorry guys but that is wrong, they miss out on extra DMF.

Correct ...but you just ruined their story

[BlackPeter]

Everyone else is doing well with OCA, (except shareholders).
The residents are being extremely well looked after.
The front line staff, office support staff and management are doing extremely well.
Wages and Salaries 2017 $103,274
Wages and Salaries 2018 $112,951
Wages and Salaries 2019 $119,786
Wages and Salaries 2020 $128,100
Wages and Salaries 2021 $136,622 (annualized based off twice the six month figure to 30/11/2020).

OCA are now paying a whopping $33m per annum more in wages and salaries than when they listed !! No wonder underlying profit isn't growing.
...

Slightly confused. Just wondering - did you normalize above numbers allowing for staff numbers increasing? They did open some new sites (and increased the number of units for existing sites) over the years and presumably need to fill them not just with residents, but hire as well some more staff to look after them.

Before we complain about a rising payroll, it would be interesting by how much their salaries increased per employee, and whether the staff ratio per resident changed. Does anybody have these numbers?

[James108]

I always thought the Oceania mania was overblown but I’m happy to hold a good company at a fair price. They provide a necessary, high value add service with a growing market and on top of that are backed by land and buildings. Cons are the industry is flooded with capital chasing the same market, although Oceania slightly different which I like.

Some people change their mind like a girl changes clothes tho, was Katy perry talking about investing so you think?

[winner69]

Slightly confused. Just wondering - did you normalize above numbers allowing for staff numbers increasing? They did open some new sites (and increased the number of units for existing sites) over the years and presumably need to fill them not just with residents, but hire as well some more staff to look after them.

Before we complain about a rising payroll, it would be interesting by how much their salaries increased per employee, and whether the staff ratio per resident changed. Does anybody have these numbers?

Think Beagles point is $ wage costs increase more then revenue $s

Yes more sites ...more staff ...but where’s the extra revenue from those extra sites?

[bull....]

I always thought the Oceania mania was overblown but I’m happy to hold a good company at a fair price. They provide a necessary, high value add service with a growing market and on top of that are backed by land and buildings. Cons are the industry is flooded with capital chasing the same market, although Oceania slightly different which I like.

Some people change their mind like a girl changes clothes tho, was Katy perry talking about investing so you think?

there were some good story tellers on this stock. i have never thought it was a good stock for long term ( as its just riding the wave up) but good for trading.