Beagle picked it again...
and I bailed as soon as he said so.....
wrt the whole market I've been reducing ultimate exposure quite significantly over time .... some trades here and there , but the size of the portfolio has been getting smaller and smaller ......... the market overall it just seems exhausted to me.....
and yet SP500 up strongly at close , almost (not quite) a new ATH!
PS sorry to the admins for my outbursts , and thx to all those who helped me get a voice back on this site. ... I will try to be less vociferous in future.
There are other ways to address the problem that have been ignored. Govt ignored the advice of Treasury, the RBNZ and even the IRD
Treasury / RBNZ / IRD dont have bosses who need to be elected buddy ...also their advise has got us in this place ...So I care 2 hoots for their advise ....Will see how it effects her popularity ...She has taken a " Queens gambit " sensing public opinion IMHO
This is what For Bar had to say on "Aged Care Sector" after last weeks events. They still have as outperform $1.70
We estimate that
a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.
Thanks for posting Greekwatchdog. The snippet about Forsyth predicting “a 1% change in unit price growth impacts sector annuity EBITDA by c.1%.” makes perfect logical sense. Of course I've obviously spent this week considering and reworking the implications and various scenarios for OCA`s model when considering a possible HPI fall.
I've already mentioned the 3 income streams OCA has;
Care Profit- this tax change affects nothing.
New build margins- This may be affected in the short term should new build sale prices fall but then country wide supply will shut off until the market rebalances and it's worth building again. So long term, no worries. Besides , new build prices are set by general wages not landlords.
DMF profit (this is the big one also at the core of OCAs growth strategy.) If one agrees with Forsyth, I certainly do, their correlation of 1% HPI fall = 1% fall in EBITDA then should a theoretical fall of say 20% HPI happen (you decide for yourself) then this will take years to fully materialise on the bottom line. That would have only unwound the current 20% HPI gain which has not yet even started to materialise yet as it also needs years to work through. These changes are realized by unit churn and backed up by charting Summersets performance during some sizable HPI rises over the last decade.
In this case of HPI possibly falling 20% from here the impact on the bottom line would be neutral and won't even cause a noticeable ripple to their bottom line.
OCA`s model is certainly enhanced by but not dependent on HPI increases. I know most believe retirement stocks are dependent on HPI rises but they simply are not. Consider RYM or SUM and their sizable CAGRs. The HPI rises, over whatever period you like, have always been significantly lower than the annual profit gains. Profit has always been mostly about the ORA`s and it seems people will never get that.
While HPI rises offer a great tailwind they are only a percentage of the story. While the HPI run has been incredibly rewarding for the sector, this logically had to end at some point. HPI levelling or falling back from the unsustainable rise this year was inevitable in my opinion and expected. This is not a game changer for me as a long term OCA holder. I personally have only ever factored in a HPI +2.5% long term anyway- including this year. Don't overlook that interest rate rises are still yet to come too which IMO is really what is going to hurt the HPI.
Onto the acquisition, remember that old topic? It seems logical. It's not OCAs normal style of purchase but where else can they buy old villages in high end areas any more? I suspect all the low hanging fruit is well gone by now. This is close enough to ticking most of the boxes for them and indicates their willingness to extend the pipeline. This bodes well for shareholders looking for growth 5-6 years out from here which is when they have indicated they will start the value add construction stuff to these purchases.
Once the new supply of $100m of fresh shares settles in and the current negative retirement sentiment inevitably fades once good numbers keep rolling through things will be back to upwards , with some catchup now to boot. ( I do acknowledge market sentiment is a powerful force to the share price in the interim).
While my confidence remains in the science of all this , the sentiment of the sector is anybody's guess and my own expectation is that it will only change from here when good numbers prove the story…..its already started at 1HY21 but still quite embedded to see, but the analysts do now. The bottom line numbers should get really nice for most who don't do the deep and very difficult analyst stuff on this company will see 1HY22 , about 8 months from now.
Disc, I'm a long term investor so any fancy ideas of getting out and back in before then is not something I'm interested in.
Thank you Maverick for your constructive analysis on this past week. I signed off for the next truck load for capital raise. Still good value at these levels.
Maverick, very good post agree that the recent 20% rise in HPI (house price index?) hasn't even shown up in the books yet and will take many years to flow completely through (although in my view will be moderated by recent tax change).
As an aside some of my colleagues had a site visit to the Waimarie Street development and were very impressed (unfortunately I couldn't make it), it is a major and very involved development.
Unless GDP outperforms the need for tax payer support across a huge numbers of sectors is only going to increase. From health, education to fast trains and roads.
we await the next 12 months numbers for OCA. Its still got a well thought out model according to Mr M.
The relationship between retirement sector share prices and HPI is interesting - see graph
Rises and falls in HPI might not always impact bottom lines (sort of what Mav was saying this time around) it appears to impact market sentiment and as a consequence sector share prices
The perception that HPI impacts share prices is strong and enduring - is this time different
Was a screen shot - cant remember from whose report.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
The relationship between retirement sector share prices and HPI is interesting - see graph
Rises and falls in HPI might not always impact bottom lines (sort of what Mav was saying this time around) it appears to impact market sentiment and as a consequence sector share prices
The perception that HPI impacts share prices is strong and enduring .
We can always count on you Winner for a tidy graph to save a lot of words.
I just want to clarify one point you obviously know yourself but in case others miss it.
Your graph demonstrates HPI vs share price reflects market sentiment. Whereas my calcs and personal Summerset graph reflect HPI vs underlying profit.
So regarding HPI changes , a trader would care more about the market sentiment aspect while an investor would care more about the profit affect.
Sorry to be a bit anal but it's a huge difference if others didn't pick it up. Nice graph as always Winner.
We can always count on you Winner for a tidy graph to save a lot of words.
I just want to clarify one point you obviously know yourself but in case others miss it.
Your graph demonstrates HPI vs share price reflects market sentiment. Whereas my calcs and personal Summerset graph reflect HPI vs underlying profit.
So regarding HPI changes , a trader would care more about the market sentiment aspect while an investor would care more about the profit affect.
Sorry to be a bit anal but it's a huge difference if others didn't pick it up. Nice graph as always Winner.
Appreciate that Mav
Changes in sentiment short term but generally market sees the long term value
Bit like that sporting adage - Form is temporary but class is permanent
Last edited by winner69; 27-03-2021 at 07:43 PM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Reply With Quote
Originally Posted by Beagle
Bookmarks