OCA - Oceania Group - retirement villages

[Baa_Baa]

Why do you think you would "incur ... a traders tax bill"? Either you bought with the clear plan / intention to resell or you have a pattern of doing that. If someone realizes a company is underperforming and they have lost faith in the directors, thats a valid reason to sell in my opinion.

Precisely, it's the pattern of behaviour that trumps the actual event. It doesn't matter whether you write in your investing diary every time you buy a share that you intend to hold for the long term, when every share you buy you end up selling, for whatever reason, and bank the capital gain.

Anyway, I suppose a long term investor in a company isn't going to necessarily agree with the motivations or reasons of someone who decides to sell at any given point in time. Or whether they are liable for capital gains tax if they do sell, for whatever reason.

[Maverick]

How come a lot of this isn’t getting a mention on the other resthome pages well very little considering Rymans and Summerset are tilted more towards the development side of it than care side.

That's a very astute observation. Of all participants, OCA should be the least affected by property price changes being more health focused. For comparison I've put a quick spread sheet below. (I'm hoping it will format ok on the forum). The dates I've picked are the steady patch in FEB when all SPs where settled and at their respective highs. Then 24th March which is 1 day after the tax change announcements and OCA trading halt lifted. Then yesterday.(sad emoji here)

Interpret the numbers how you like but my thinking is firstly, ARV and OCA have been spanked more harshly that the 2 big boys. Secondly OCA has been spanked 10% even harder again than all of them which I put fully down to the oversupply of new shares in the current capital raise process.
Where to from here?...seems apparent the selling is overdone and an easy SP climb of 10-13% just to realign the rest of the players when the new shares have bedded in.

	Mid Feb . SP mostly settled at highs for a few weeks		24 March- 1 day after tax announcement and OCA acquisition		1.April 21	Total over all fall since mid FEB
SUM	$13	-7.08%	$12.08	-1.08%	$11.95	-8.08%
RYM	$15.75	-3.43%	$15.21	0.20%	$15.24	-3.24%
ARV	$1.84	-9.78%	$1.66	-0.60%	$1.65	-10.33%
OCA	$1.57	-15.29%	$1.33	-5.26%	$1.26	-19.75%

[Beau]

That's a very astute observation. Of all participants, OCA should be the least affected by property price changes being more health focused. For comparison I've put a quick spread sheet below. (I'm hoping it will format ok on the forum). The dates I've picked are the steady patch in FEB when all SPs where settled and at their respective highs. Then 24th March which is 1 day after the tax change announcements and OCA trading halt lifted. Then yesterday.(sad emoji here)

Interpret the numbers how you like but my thinking is firstly, ARV and OCA have been spanked more harshly that the 2 big boys. Secondly OCA has been spanked 10% even harder again than all of them which I put fully down to the oversupply of new shares in the current capital raise process.
Where to form here?...pretty easy to see the selling is overdone and an easy SP climb of 10-13% just to realign the rest of the players when the new shares have bedded in.

	Mid Feb . SP mostly settled at highs for a few weeks		24 March- 1 day after tax announcement and OCA acquisition		1.April 21	Total over all fall since mid FEB
SUM	$13	-7.08%	$12.08	-1.08%	$11.95	-8.08%
RYM	$15.75	-3.43%	$15.21	0.20%	$15.24	-3.24%
ARV	$1.84	-9.78%	$1.66	-0.60%	$1.65	-10.33%
OCA	$1.57	-15.29%	$1.33	-5.26%	$1.26	-19.75%

Thanks Maverick puts in in perspective. Then we get a few on this site with none or little skin in the game setting out to drive shares even lower makes me wonder why they aren’t doing it on other resthome sites with the conviction they are doing it on this one.

[Waltzing]

"Retirement villages need to reprice their licences to reflect the supply and demand and not attach themselves to any residential statistics. I see this sector still going to boom for a while yet. I may look at it simply, but you cant get bogged down in too much detail. I am way overweight in OCA and have put in for my 50 k in the issue. Just hoping that the SP drops and stays low for a few weeks yet."

you have to hope the instos and retail investors agree with that.

The point in this views favour is "TINA"

if you dont buy one of these where are you going to go.

I know a few mums who have moved to NZ after hubby passes away in UK or Europe and back in with the children.

[macduffy]

Retirement villages need to reprice their licences to reflect the supply and demand and not attach themselves to any residential statistics.

Yes - and No. Most aspiring residents of retirement villages need to sell their own houses. The price of occupancy licences must therefore reflect the state of the housing market in some respect.

[Beau]

Good to read Rymans offering Ministry Of Health to run their own COVID vaccination programme by fully trained nurses to help out with their enormous task hopefully other resthomes offer as well.

[BlackPeter]

...

For those that keep sticking knives into Beagle, get over it. I think it's bloody great that he wares his heart on his sleeve and tells it as he sees it. Whether you choose to heed his advice or not is entirely up to you. He's a trader at heart and if you're that way inclined, it pays not to get too emotional about stocks. He's been having reservations about the company's ability to contain costs and grow profits for some weeks now. The government's bombshell last week was just the final straw...that was material change right there and you can't blame anyone for taking steps to minimise their exposure to such an outrageous policy change.

Fully second that. While I do not always agree with beagle, I always appreciate to learn about his normally well founded views.

One thing some posters don't seem to get is that the share market is not simply following physical laws - i.e. there is not one easy and infallible formula to calculate what's happening given a certain set of input criteria. And there is no simple right or wrong in determining the future development of a share (well, you could say that all predictions are wrong, but this is a different subject).

While the laws of physics do apply, more important are often the rules of psychology, behaviorism and chaos theory.

To get a somewhat better handle on what's happening we all need to hear differing views from our own, otherwise we end up in an echo chamber and stop learning.

It is the beagles of this world who make it worthwhile to follow forums like this ...

As far as I am concerned ... I don't think that the recent tax changes will, given the supply / demand situation, significantly cut house prices (which would be bad for OCA), but they are likely to curb future price growth. I don't see that they would justify a significant drop in OCA's share price, but obviously - if that's what the market thinks, it is what the market does.

I do see a future $1 SP as a possibility (hey, didn't they sell OCA last year for 40 cents - so what is all the excitement about - this is what share prices do, they go up and down), but obviously - nobody knows in advance where this current downtrend will bottom out :

Long term I think OCA will thrive, and I see them at this stage as cheaper than the competition.

FWIIW - I did rebalance my portfolio somewhat when OCA came close to $1.60 (it was at that stage just too much OCA in my portfolio), which was a good idea in hindsight. Wondered whether the current CR might be an opportunity to refill, but given the current trend not yet sure ... but pretty sure that I will keep my holding and will refill at some stage.

[Bjauck]

GFC 2008... best year was 2018-2019 dividends returns were outstanding.

let me see... 2027? Should be returning to good dividends returns in time for the new 45% tax rate.

Lol.

As today is a bittersweet holiday my prediction for 2027 is :- Labour will have lost the 2023 & 2026 elections, as home owners and investors would have voted in National; GST would be at 20 or 25%; median NZ house price would be at $1,750,000; OCA, SUM and RYM would only be listed on the ASX as NZers capital has been sucked up by direct investment in NZ real estate.

[Getty]

Amen to all of that .#8567

[Beagle]

I think the timing of the capital raise was "unfortunate" for OCA. Announced the day before, and institutional placement book build done on the same day the Red team showed the true extent of their socialist agenda.

As Cyclical suggested, its a great shame the socialist team (that have never been in business), didn't give the market more time for the already radical uplift in investor deposit requirements to 40% to filter its way into the market and didn't attend to the obvious issue of interest only mortgages before bringing out their sledgehammer to bludgeon Mum and Dad's long established rights to fair tax play.

The clear risk here is their extremist socialist approach may not be finished yet and new restrictions around interest only loans may be forthcoming shortly. Add that to higher deposit requirements, a capital gains tax (let's just call the 10 year Brightline test what it really is), and the egregious undermining of fundamental principles of fair play with deductibility of mortgage interest on top of all the tenancy law reform, lack of ability to claim depreciation and so on, the flow of new investment money to this sector will literally dry up overnight.

I put it to you folks the market has already changed and we are in for a dark winter ahead. The momentum is clearly downward and where that ends remains to be seen.

To Mav's point above about OCA being hit more than others. OCA's core care services lose a LOT of money every year and frankly OCA are far more heavily dependent on development and resale profit to subsidise the cost of running their heavily care focused business model than the others.

In a booming real estate market for the last few years since OCA listed, at a time when they have delivered on some really high value developments (The Sands and Meadowbank) to date their underlying eps is less than when they listed four years ago. They can't seem to break escape velocity from the ~ $50m underlying profit figure despite very favorable economic and house price tailwinds and that's in no small way because their annual wage bill has increased a whopping $30m per annum since they listed.

They don't have the benefit of very much in the way of high value development sell-down's in FY22 and they appear set to face headwinds in the real estate market compared to tailwinds in the past. Yes we get some benefit in FY22 from the gradual transformation of their business model with more DMF annuity but the pace at which their gradual snowball is growing is painfully slow and could easily be overcome by ongoing excessive wage cost pressures and real estate headwinds. My sense is they are going to be stuck around the ~ $50m per annum underlying profit level for some time to come. All I am suggesting is that eps growth to date has been non existent after 4 years and the wait for anything meaningful to eventuate is getting painfully slow, really painful and frankly quite exhausting and makes me wonder if this should be priced on non growth forward PE metrics until such time as they can prove their model actually works and does generate growth ?

Put a no growth PE of 11 x annualized underlying earnings of say 9 cps this year and we get ~ $1. Average analyst view is for 9 cps again in FY22 but those estimates will be before the very recent dirty tax bomb and its lingering effects https://www.marketscreener.com/quote...68/financials/. I am certainly not the only one expecting yet another no growth year for FY22 which will make it 5 years since they listed with no growth in eps and we are in a market that's clearly reached a point of inflection where house prices are on a tipping point which doesn't bode especially well for future years profits going forward from FY22. Its all pretty sobering stuff. If wages keep going up at 7.3% per annum or close to that like they have in recent years its clear staff are going to continue to enjoy the lions share of the growth from this company and shareholders will just get the more of the same in terms of stagnant earnings. The new CEO has a big job on his hands and its clear that Earl was not best in class at controlling operational and wages costs. Too kind ?

Maybe our new man (ex Jarden Investment banking director) is cut from the same much tougher cloth as Julian Cook (ex investment banker) ?
I'm calling it, its time for more shareholder focus with this company, if their sole focus is on residents and looking after staff and carbon reduction and other ESG nonsense...it won't be long before I extricate myself from this completely and head off for greener pastures.

For what its worth the last time I caught up with senior management and showed one analysts eps projections out to FY25 I didn't get any confidence that the growth rate was achievable. The sense I got that they're heading in the general direction of underlying eps growth but the growth rate itself, management didn't leave me with much confidence. It was shortly after that meeting I halved my position and have reduced a lot further since then. I think a certain person at OCA knew that ongoing wage cost pressure will continue to suck a lot of the forward growth rate out of this business going forward and that might make CEO incentive package targets a tough ask to beat and therefore a competitors offer of employment was a better option for his family. Suppose we can't blame him for that as a ~ $520K base salary with little prospect of long term incentives being meaningfully in the money isn't all that attractive compared to what other CEO's are earning.