OCA - Oceania Group - retirement villages

[Greekwatchdog]

Didn't sell and won't be. For whats its worth I bought lots during the uncertain times because I backed my self!!

[justakiwi]

.....the huge caregiver wage settlement several years ago which has resulted in rampant wage cost inflation eating up all of OCA's increased revenue and then some.

You were, until recently, the one who was praising OCA for their dedication to and focus on the care aspect of their business. You expressed your admiration for them being different to the others, and understanding the importance of quality care.

You should know by now that quality care comes from people like me. I have shared my personal passion for what I do, so you know how dedicated to my job I am. Yet you seem to believe my dedication, passion, and the quality care I provide, is not worth paying for. Without caregivers, you have no business. We are the concrete blocks at the foundation of every retirement sector business. Not only with regards to care beds/suites, but across the entire business. Caregivers support those in villas (where needed) hospital and dementia wings. Every segment of a retirement village relies on us.

I think you should get right out of OCA, and any other retirement sector holding you have. You are clearly only in it for the money you can make, and not for any of the social conscience/ethical/concern for our elderly, reasons you have mentioned in the past. If you genuinely don’t believe in the OCA care model, this is not the company for you.

Some of us are invested for more reasons than just money.

One other thing. I don’t profess to fully understand the changes the government has made, or whether they will in fact, have any significant impact on the retirement sector. But maybe OCA is not as stupid as you think. As has been discussed often, their prices for apartments/villas have been lower than their competitors. So if the cost of housing comes crashing down, which operators stand to lose more profit? Not OCA. Maybe they have been sensible and priced in anticipation of that happening at some point. The impact of a major drop in house prices, will be much less for OCA than for RYM or SUM.

Or I could be talking complete shyte because what do I know? I’m just a caregiver.

[RTM]

Nobody has "nagged it down", the Govt didn't just shift the goal posts they collapsed them on top of residential investors. If this doesn't do the job they will use a different sledgehammer to stop house prices growing. Once you let the rampant socialist Genie out of the bottle its not going back in until the job is well and truly done. This has implications for OCA's ability to try and grow earnings in the years ahead of a similar magnitude in my opinion to the huge caregiver wage settlement several years ago which has resulted in rampant wage cost inflation eating up all of OCA's increased revenue and then some.

The tide has turned and is starting to go out. OCA may be able to make some headway in terms of eps growth, (none so far since listing) but I think it will be materially less than what would have been the case otherwise. I have been able to adjust my position easily and quickly, the effects of property investors adjusting their position are likely to be felt for many years in my opinion.

Think about it. With this radical change to interest deductibility, the brightline extension to 10 years, inability to claim depreciation, close scrutiny by the IRD on major repairs and maintenance, tenancy act changes and new regulations regarding insulation, have I forgotten anything ?...oh yes, major new initiatives for Govt housing and a projected oversupply of new home builds in the years ahead almost certainly kneecapping much prospect of capital gains why would anyone in their right mind now choose a new path of becoming a landlord ?
You think tens and tens of thousands of landlords might want to quit the game seeing as the rules are now so heavily stacked against them ?

The laws of supply and demand are going to play out here as sure as night follows day, in my opinion.

Probably a good thing in my opinion. For years we have been going on about how NZ'ers obsession with housing as an investment has distorted our investment landscape. Jacinda / Grant had to address this, low interest rates etc have pushed house prices up to much, otherwise Housing for Labour would be what COVID was to DT. Judging by the sectors that are squealing, it would seem that the changes they have made might have an effect. What will be the major beneficiary of less speculation (investing ?) in housing ? Over time it could well be the productive sector in NZ, our sharemarket.

If people have a well diversified portfolio, then this change should not be overly significant. I'm at 9% and sitting on significant gains, might trim a bit but not overly concerned about this over the longer term. However I do tend to mostly hold rather than sell at the first sign of the wind changing. So far so good....

[davflaws]

OCA has doubled since May last year off the back of rampant house price increases. This weeks tax bomb is a real game changer for investors, you either get that or you don't.

And my problem with that lies in separating your professional analysis from your visceral hatred of Cindy and the current Govt and it's policies.

[RTM]

And my problem with that lies in separating your professional analysis from your visceral hatred of Cindy and the current Govt and it's policies.

What was it again...pale male and stale ?

[Beagle]

Please don't put words in my mouth davflaws. I have never said I hate Cindy or Grant. I think Cindy and Ashley Bloomfield have done a very good job with leading the charge against controlling the spread of Covid but I think this latest goalpost collapse is an egregious breech or fair and reasonable tax polices targeted against residential landlords. That is not "hate" by any stretch of the imagination. Up until this change I thought Grant Robertson has done a good job managing the books in a pretty reasonable way.

Why remain holding a modest stake Winner ? Fair question. I'm not completely immune to emotional attachment especially when its free carry but I think my position is more fairly characterized by the old broker expressions of "Underperform" and "Underweight".

[BlackPeter]

You were, until recently, the one who was praising OCA for their dedication to and focus on the care aspect of their business. You expressed your admiration for them being different to the others, and understanding the importance of quality care.

You should know by now that quality care comes from people like me. I have shared my personal passion for what I do, so you know how dedicated to my job I am. Yet you seem to believe my dedication, passion, and the quality care I provide, is not worth paying for. Without caregivers, you have no business. We are the concrete blocks at the foundation of every retirement sector business. Not only with regards to care beds/suites, but across the entire business. Caregivers support those in villas (where needed) hospital and dementia wings. Every segment of a retirement village relies on us.

With all due respect (and independent of what I think about beagles latest change of mind) ... I don't think it helpful if you take every mention of too high care costs as a personal attack against yourself. This is a traders / investors forum, and no matter whether we as individuals think care staff deserve more money than others or not, the costs are very relevant for our investments as well as for society as a whole.

The blow out of care staff salaries (no matter whether justified or not) clearly will impact on our society - and unless we find a way to make care more efficient somebody else will need to reduce their income instead - no society can over the long term spend more money than it makes. Give it another 2 decades and the number of people needing care will be twice the number it is now, but the number of people paying society to afford the care will drop. Something will need to give - and hey, society should also value children's nurses, teachers, policemen (and women), road workers, farmers, bakers, and all these other people doing useful work. Just ask yourself where the money will be coming from if everybody guards their food bowl like a hawk or a beagle?

One other thing. I don’t profess to fully understand the changes the government has made, or whether they will in fact, have any significant impact on the retirement sector. But maybe OCA is not as stupid as you think. As has been discussed often, their prices for apartments/villas have been lower than their competitors. So if the cost of housing comes crashing down, which operators stand to lose more profit? Not OCA. Maybe they have been sensible and priced in anticipation of that happening at some point. The impact of a major drop in house prices, will be much less for OCA than for RYM or SUM.

Or I could be talking complete shyte because what do I know? I’m just a caregiver.

From what I 've seen and heard so far does it appear some investors / traders react as emotional and negatively related to the recent tax changes as you do related to any comments related to increased care giver salaries. Fair enough, humans everywhere. Personally do I think that the impact of the tax changes on OCA's and other companies earning potential will be significantly smaller than the changes of the care givers salaries over recent years (whether they deserve them or not ) ... but I think it is fair to say that as long as society wants and needs care places, retirement villages will survive both.

For what it is worth - I noticed that analyst consensus for OCA did rise over the last couple of months from $1.42 in January to $1.57 today. I think the recent discussion is just another storm in a tea cup.

But I guess not just beagles don't like it if somebody else looks hungry at their food bowl, no matter whether they are able to eat the whole portion or not ;

[Bjauck]

Probably a good thing in my opinion. For years we have been going on about how NZ'ers obsession with housing as an investment has distorted our investment landscape. Jacinda / Grant had to address this, low interest rates etc have pushed house prices up to much, otherwise Housing for Labour would be what COVID was to DT. ...

I agree that NZ relies too much on housing investment. However it is a rational response by investors who seek a tax efficient investment, for which debt financing was readily available, and which governments of all colours ensured would continue to inflate in value.

The Labour government in order to get into power promised the electorate that it would not introduce a CGT, increase the bright line CGT or introduce other new taxes. Obviously it has now back-pedalled on some of those promises. It would be sophistry to pretend that totally eliminating a deduction for interest for landlords, while ostensibly increasing liability for an existing tax, is not a material new tax burden on property investors. Covid and the Labour Party covid response should not be the excuse to throw democracy in the bin.

It could have quickly increased investors deposit requirements (up to 100% if necessary) and then sought cross-party support on other reforms. It could then have faced another election with an array of reforms including introducing stamp duties on investor house purchases, a comprehensive CGT (with concessions for share investments to encourage diversity of investment away from real estate) etc.

[winner69]

What was it again...pale male and stale ?

Reply deleted ...........after all it is Sunday so should be nice

[Beagle]

Reminds me of the time I put too much food into my Beagles bowl and then tried to take some out. My much loved Kelly nearly bit my hand right off lol

Yeah, you take things far too personally on here justakiwi. People who count beans for a living are going to notice that the annual wage cost for OCA is up 30% since they listed 3 years ago and that's eaten up all of the business transformation gains and then some. All investors are left with is the hope that all the talk and all the plans will one day translate to earnings growth. When is something I am seriously beginning to question ? I think there's a very real chance that underlying earnings for FY22 will be less than when the company listed more than 4 years ago when they report them in May 2022. Growth company or hope company with staff getting the lions share of the rewards ?

Its hard to be fat and content eating crumbs. Only reason I have done well is I bought really cheap and people have believed all the talk and have hope that it will translate to earnings growth.

If wages keep going up at the pace they have been and house prices start to materially decline shareholders are effectively on a hiding to nothing and eps could stay stuck in high single digits, maybe for several years more ? Its not like investors get decent yield to keep them enthused and the forward metrics are not that compelling unless there is decent earnings growth.

Waiting for earnings growth with this one is an excruciatingly painful exercise in extreme patience. This dog is no good at waiting years and years between decent feeds. One needs to work within their own limitations.