OCA - Oceania Group - retirement villages

[winner69]

Seems I’ve called it right for years -

1) OCA objective seems to be to sell heaps more units and make no more (profit) and

2) going down the care path is flawed strategy because there’s no money to be made in care.

[Waltzing]

"Ya what?? If that's not one thoroughly stirred up Beagle"

classic!!!

Well the local hounds can get a bit excited waiting for the next hunt i have notice as i cycle past them on a lovely antipodean autumn day.....


His model requires a greater ROI if risk entails more than just market risk.

Mr B knows his clients are going to be going Ballistic and that consultant for handling upset clients is not yet on the payroll.

Although one ACA firm recently hired a marketing consultant who looks to me like she dresses at HLG!

Very summer dress code ...........looked right off MR B's favourite fashion website!!!!

[Waltzing]

"old lefties"

well NZ might only be starting the move to the left!!! So everyone else belt up and hold on tight.

[Beagle]

Seems I’ve called it right for years -

1) OCA objective seems to be to sell heaps more units and make no more (profit) and

2) going down the care path is flawed strategy because there’s no money to be made in care.

Yeah, I am happy to concede you were right. Rampant wage cost inflation has sucked all the growth out of this company and is likely to suck A LOT of the growth out of it going forward. "Wages will go up in line with MOH funding going forward" Earl Gasparich. Yeah Right !

If the brokers rework their DCF's with zero house price inflation for the next few years and wages costs going up at 7.3% per annum they'll get a very much lower DCF valuation to $1.70 !

If Cindy makes companies share the capital gains we could see the 70 part of that without the dollar in front

[Waltzing]

"we could see the 70 part "

if that happens we better load up a ton or 2 on ARG and wait for you all to want some...

[Beagle]

Been backing up the truck on ARG this week.

[Scrunch]

The bigger concern now is where will the socialism stop ?
After reform of rental properties then greedy retirement companies are next so that capital gains are shared but who is next after that ?

Or if this isn't effective to stop rising prices, will they start to deny deductions for other expenses on the pretext that this is also a "loophole"?. What about rates, insurance and repairs and maintenance. These expense types have the benefit of catching every property investor, not just those with a mortgage on the property or who have recently purchased (or intend to purchase). If prices rise by another 5-10% in the next year, I'd be very worried about losing deductions beyond just interest.

So the policy risk around rental investment has just gone through the roof. In all likelihood if prices increase there's going to be another negative policy change implemented. If prices decrease, you are losing money. The chances of stable to very low growth (sub 3% pa?) has got to be small.

And back directly to retirement companies, the risk of amended taxation rules on retirement company profits has just increased, how much I'm not sure but it has increased. If net surplus's were to fall by 28%, what impact would that have on share prices? Would the ability to provide imputated dividends mitigate some of this impact?

The facts being:
>Retirement companies pay a very low effective tax rate (near zero %).
>Sometimes a social benefit argument has been used around why this situation will remain
>Sometimes the argument is used that its non-taxable under existing tax principles and these principles are embedded tax law developed over centuries

But the government has just confirmed that it doesn't respect:
>existing tax principles
>the social benefit argument either because property landlords provided housing to people who couldn't afford or didn't want to buy houses. If they didn't do this the government would need to step in and provide more social housing. Property landlords have just been hit with altered tax laws despite the fact they provide a socially desirable service.

[dompf]

Nicely put, I'm a holder and intend to participate in new issue, just means I'll probably get more shares that I thought, good news for long term holders.

I’m picking up my allocation as well; it’s a long plan 5+Years for OCA more people retiring with money it’s still a good sector to park up in. I can’t help but think Earl rolled out at a good time, without all the noise being listed; sure same industry but I reckon APVG got a steal on that deal.

[winner69]

.....

That's the thing with valuations sampson, its a double whammy. Once you start winding back future years eps and the DCF of that one must also wind back what is an appropriate PE for a much lower growth, if any, company. The combined effect of that can give startlingly different results. We are seeing exactly this situation being played out at the moment with ATM. Wind back the growth expectations and the PE and the result is some very serious pain and likely plenty more to come. OCA is however underpinned by its NTA of $1.02.


......

Seems OCA share price going down the ATM share price path ...ouch

Underpinned by a NTA of 1.02 — a 10% revaluation downwards of 10% of investment properties etc would wipe about 14 cents off that

[Beagle]

Or if this isn't effective to stop rising prices, will they start to deny deductions for other expenses on the pretext that this is also a "loophole"?. What about rates, insurance and repairs and maintenance. These expense types have the benefit of catching every property investor, not just those with a mortgage on the property or who have recently purchased (or intend to purchase). If prices rise by another 5-10% in the next year, I'd be very worried about losing deductions beyond just interest.

So the policy risk around rental investment has just gone through the roof. In all likelihood if prices increase there's going to be another negative policy change implemented. If prices decrease, you are losing money. The chances of stable to very low growth (sub 3% pa?) has got to be small.

And back directly to retirement companies, the risk of amended taxation rules on retirement company profits has just increased, how much I'm not sure but it has increased. If net surplus's were to fall by 28%, what impact would that have on share prices? Would the ability to provide imputated dividends mitigate some of this impact?

The facts being:
>Retirement companies pay a very low effective tax rate (near zero %).
>Sometimes a social benefit argument has been used around why this situation will remain
>Sometimes the argument is used that its non-taxable under existing tax principles and these principles are embedded tax law developed over centuries

But the government has just confirmed that it doesn't respect:
>existing tax principles
>the social benefit argument either because property landlords provided housing to people who couldn't afford or didn't want to buy houses. If they didn't do this the government would need to step in and provide more social housing. Property landlords have just been hit with altered tax laws despite the fact they provide a socially desirable service.

Excellent post containing a number of very good points. Once you let the socialism Genie out of the bottle almost anything is possible under the auspices of the greater good for all.
You could be right about denial of ability of claiming rates, insurance, repairs and maintenance as deductible because home owners can't claim them so this must be a "loophole" right ?...and the roars of approval from the "cheap seats" would only get louder. Leaving aside the huge new risk to the retirement sector for a second, if OCA can't grow earnings on a rapidly rising housing market how on earth will they grow earnings on a declining property market ?

Surely its just a matter of time before Cindy gets the sledgehammer out again to knock greedy retirement companies into shape to save poor old mum's and dad's from being "exploited" ? If they have no qualms about attacking one of the foundational principles of the tax system that was established more than a hundred years ago legislating to overturn a binding ruling regarding the tax treatment of financial arrangements for licenses to occupy in retirement villages which has only been around for 25 years or so will be a mere trifling matter of little consequence by comparison. Closing another tax "loophole" and the crowds in the cheap seats will cheer again !

Where this ends is anyone's guess...hopefully at the next election.