OCA - Oceania Group - retirement villages

[Curly]

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.

Intelligent response Good Kiwi. Interesting to see a beagle’s response when cornered by a watchdog.
I to won’t be selling. I wont be losing money till sp goes down to .75c. When I do sell I hope to retire and buy a couple of properties for my kids.
Intelligence and stone throwing? I work in a sector where I have a lot of contact with financial advisers, accountants, solicitors etc, people our society would class as “intelligent”.
My observation is their prime concern is the bottom line, whats in it for me. That’s not very bright in my view.

[mike2020]

I'm at 10% of my portfolio and I will hold my OCA shares long term, shares move on emotion and the words here are expressing many. The results are not in on the housing market yet. Will attacking the investment market change the market for homeowners? Not as much as increased supply will and at this stage you can barely complete a dwelling. I have worried about the effect of rising house prices on generations to come, I have seen this in my time as a dairy farmer, a two tiered society. Will your parents need to own a home for you to have a chance of it? I was glad our kids had bought homes already but now there are grandkids on the way. I cant see this govt killing off the housing market they have done all they can to push it along.

[Beagle]

I agree that NZ relies too much on housing investment. However it is a rational response by investors who seek a tax efficient investment 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.

That hits the nail directly on the head.

[Beagle]

My observation is their prime concern is the bottom line, whats in it for me. That’s not very bright in my view.

When you start investing using something other than earnings (like the current ESG and bitcoin craze for example), you're building your house on sand.

[justakiwi]

Just to clarify ... I don’t always take every mention of too high care costs personally. My comments/reaction now are specifically related to Beagle’s abrupt “about turn” on OCA. As I said, he has frequently upsold OCA on their care model and their focus on providing quality one on one care. I felt he was genuine about that, but apparently not. He didn’t bitch about care costs back then - he has only recently started doing that, which is why I have now reacted the way I have. If care costs weren’t an issue for him months ago, why are they suddenly an issue? Go back through this thread and look at some of his positive (about OCA and care) posts.

People can believe what they like. I know next to nothing. But I know one thing. NZ is heading for an aged care/dementia crisis. Future needs are going to be much less focused on independent living situations, and much more on care facilities. Even one of my organisation’s managers commented to me the other day, that she thinks in 10-15 years (probably much less) rest home level care will be obsolete. Rest homes like the one I work in, will no longer exist. People will receive community based assistance for longer and by the time they need a higher level of care, it will be hospital level care they need. I don’t even need to mention dementia level because anyone with half a brain can already see where that is heading. OCA is the only one that I can see, who seems to have any comprehension of this. Yes, care is expensive, but it will always be needed. More so in the future than ever before. The government will always subsidise it - they have no choice. Regardless of which party is in power.

Right now OCA come out on top as being the most forward focused provider and if they continue to stick to their care focus/model, they will be successful. Patience is a virtue. Good things take time.

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?



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 ;

[winner69]

.....

Patience is a virtue. Good things take time.

Beagle often said on this thread Rome wasn’t built in a day

[Beagle]

Quality care and earnings growth need not be mutually exclusive things and that's what I thought we had justakiwi.
Its no longer a level playing field. I get it that many people on here don't understand the enormity of the changes this week, that much is perfectly obvious. What I have tried to clearly articulate based on my ~ 40 years professional experience acting for residential property investors is these latest changes will profoundly undermine any motivation for fresh capital to be applied to residential property investment.

Take away depreciation and now even more importantly interest deductibility as well as impose a quasi capital gains tax with a 10 year brightline test, add in all the compliance with reforms of the tenancy act, increased risks of dealing with problematic tenants and methamphetamine contamination, (which has happened to many of my clients at costs usually around $30,000 - $50,000 to repair) why would anyone bother applying fresh capital to residential property investment now ? The short answer is they won't. All the fuel that's powered the market higher has been snuffed out overnight. Why would anyone remain a residential property investor if they are highly leveraged ?

To a large extent, in my opinion, rampant house price gains in the last (6 months at least) have powered OCA up from ~ $1 to where it is now. Those tailwinds have gone and its a new ball game.

I get it that some people hate that I have changed my position. If you want to win in any game you need to adapt quickly when the rules change. If all I wanted was a market performance I'd just buy a bunch of ETF's and go boating.

[justakiwi]

Yeah, you take things far too personally on here justakiwi.

If you say so.

If wages keep going up at the pace they have ...

This was the first major aged care pay rise for many years. I have no expectation whatsoever that we will get another one anytime in the foreseeable future.

[Ggcc]

Quality care and earnings growth need not be mutually exclusive things and that's what I thought we had justakiwi.
Its no longer a level playing field. I get it that many people on here don't understand the enormity of the changes this week, that much is perfectly obvious. What I have tried to clearly articulate based on my ~ 40 years professional experience acting for residential property investors is these latest changes will profoundly undermine any motivation for fresh capital to be applied to residential property investment.

Take away depreciation and now even more importantly interest deductibility as well as impose a quasi capital gains tax with a 10 year brightline test, add in all the compliance with reforms of the tenancy act, increased risks of dealing with problematic tenants and methamphetamine contamination, (which has happened to many of my clients at costs usually around $30,000 - $50,000 to repair) why would anyone bother applying fresh capital to residential property investment now ? The short answer is they won't. All the fuel that's powered the market higher has been snuffed out overnight. Why would anyone remain a residential property investor if they are highly leveraged ?

To a large extent, in my opinion, rampant house price gains in the last (6 months at least) have powered OCA up from ~ $1 to where it is now. Those tailwinds have gone and its a new ball game.

I get it that some people hate that I have changed my position. If you want to win in any game you need to adapt quickly when the rules change. If all I wanted was a market performance I'd just buy a bunch of ETF's and go boating.

I don’t hate it, but have you paid the correct tax on your trading. That is not an answer for me, but for the IRD

[Beagle]

The next installment of provisional tax for FY21 is not due until 7 May 2021.