OCA - Oceania Group - retirement villages

[winner69]

Probably no more real news about financial performance until November

Hope Forbar had a bit of wink wink nudge nudge and increase their target this week

[Maverick]

Righto….. back in Wangas and it's raining cats and dogs, what better time to wrap up the meeting notes. Beagle did such a good report on the SUM agm a few years back , it's only fair to offer the same.

Here are some of the key takeaways that I'm happy to share that may be of interest. Some of the points, details and numbers have been left out.

Overall there were no real surprises, just a whole bunch of confirmations on assumptions I had already made.here goes….

A.OCA is now geared and keen to acquire stuff. They are far more growth driven than I expected with more acquisitions to come. This seems evident already anyway given their capital restructure, recent purchases and the fact they've got a guy on the payroll prowling around.

B.Care suite sales are going very strongly .There are now some waiting lists on earlier C/S deliveries. Prices are stronger than anticipated. They are not worried at all about getting best dollar first time around as they can re-evaluate prices on turn over no2. We are seeing this anyway with resale CS margins a whopping 19% after only 2-3 years.
Analysts have been historically shy of the CS model as it has been unknown and untested but now have satisfactory evidence it's not only working but surpassing expectations of market acceptance and original price points.
Care suites now are derisked.

C.Oca has its own warehouse with pre-ordered stuff so supply issues aren't a problem.
Contractor costs are currently not a problem.

D.OCA models no HPI growth before committing to a project so all HPI rises are considered a bonus .

G. All the directors seemed very sharp, knowledgeable and impressive. They answered everyone's simple and tricky questions with ease and accuracy.
Four of them were up for re-election and had to give their pedigree. Kerry Pendergrass for example is a midwife and ex local politician so is strong at getting consents through councils.

H.Overall there was not a single concern I could detect and things are going very well. I smelt no fudging or inaccuracies. All directors I spoke to (4) exuded a very positive ( but not frothy) vibe on progress. This shouldn't be surprising given their personal share purchases.

I.Brent (CEO) is within the group working on the retirement housing reform with politicians etc. Generally reporting here ,without details of the conversation, indicates this process should not put fear into investors. This will be a long process with a fair outcome.

Overall, the fact there were no new facts was also a takeaway. Things are progressing well or slightly better in some areas ( particularly C/suites) . I was particularly impressed with the high caliber of all our directors. There is enough in the numbers now to see proof of what is going on. I have walked away with no concerns and assumptions now confirmed as correct. This company has enough evidence now, even before meeting, that things are all go.

My expectations for this company financially are now slightly higher and growth will continue much longer than the current 7 year pipeline. The overall takeaway for me of the afternoon is that this company is now de-risked and doing just what it said it would with results likely to be better than hoped. Any analysts changes after this meeting , if any, will be slightly up , not down.

To conclude IMO nothing has changed, as said here many times on ST;
A.You can't have too many,
B.The drunk monkeys are sobering up
Last and most importantly...
C.This is a stock you put in your bottom drawer and just leave alone. (Baa Baa)

Hope that's helpful folks.

[Greekwatchdog]

Thanks Mav for taking time out to report on your thoughts. Much appreciated.

[Leftfield]

Great post thanks Maverick..... good to be on this ride. Onwards and upwards.

[Ggcc]

Righto….. back in Wangas and it's raining cats and dogs, what better time to wrap up the meeting notes. Beagle did such a good report on the SUM agm a few years back , it's only fair to offer the same.

Here are some of the key takeaways that I'm happy to share that may be of interest. Some of the points, details and numbers have been left out.

Overall there were no real surprises, just a whole bunch of confirmations on assumptions I had already made.here goes….

A.OCA is now geared and keen to acquire stuff. They are far more growth driven than I expected with more acquisitions to come. This seems evident already anyway given their capital restructure, recent purchases and the fact they've got a guy on the payroll prowling around.

B.Care suite sales are going very strongly .There are now some waiting lists on earlier C/S deliveries. Prices are stronger than anticipated. They are not worried at all about getting best dollar first time around as they can re-evaluate prices on turn over no2. We are seeing this anyway with resale CS margins a whopping 19% after only 2-3 years.
Analysts have been historically shy of the CS model as it has been unknown and untested but now have satisfactory evidence it's not only working but surpassing expectations of market acceptance and original price points.
Care suites now are derisked.

C.Oca has its own warehouse with pre-ordered stuff so supply issues aren't a problem.
Contractor costs are currently not a problem.

D.OCA models no HPI growth before committing to a project so all HPI rises are considered a bonus .

G. All the directors seemed very sharp, knowledgeable and impressive. They answered everyone's simple and tricky questions with ease and accuracy.
Four of them were up for re-election and had to give their pedigree. Kerry Pendergrass for example is a midwife and ex local politician so is strong at getting consents through councils.

H.Overall there was not a single concern I could detect and things are going very well. I smelt no fudging or inaccuracies. All directors I spoke to (4) exuded a very positive ( but not frothy) vibe on progress. This shouldn't be surprising given their personal share purchases.

I.Brent (CEO) is within the group working on the retirement housing reform with politicians etc. Generally reporting here ,without details of the conversation, indicates this process should not put fear into investors. This will be a long process with a fair outcome.

Overall, the fact there were no new facts was also a takeaway. Things are progressing well or slightly better in some areas ( particularly C/suites) . I was particularly impressed with the high caliber of all our directors. There is enough in the numbers now to see proof of what is going on. I have walked away with no concerns and assumptions now confirmed as correct. This company has enough evidence now, even before meeting, that things are all go.

My expectations for this company financially are now slightly higher and growth will continue much longer than the current 7 year pipeline. The overall takeaway for me of the afternoon is that this company is now de-risked and doing just what it said it would with results likely to be better than hoped. Any analysts changes after this meeting , if any, will be slightly up , not down.

To conclude IMO nothing has changed, as said here many times on ST;
A.You can't have too many,
B.The drunk monkeys are sobering up
Last and most importantly...
C.This is a stock you put in your bottom drawer and just leave alone. (Baa Baa)

Hope that's helpful folks.

Thanks for your post

[The Punter]

Great post Maverick, thank you for that....all seems well, but I'm very curious about this warehouse-whats it holding?...appliances or plain old building hardware?...maybe they could expand it and buy SkyTV s Mt Wellington building...

[thegreatestben]

I’ve got a couple of houses being built currently and my builder said there’s no shortage of materials just a long lead time. OCA probably being smart and getting everything ordered well ahead of time. This normally is not efficient but probably the best/safest way to ensure costs and progress remain on track.

[Greekwatchdog]

Not too mention your paying sweet FA interest costs. Not much point having lots of dollars in the bank earning next to nothing. I have been doing this since Oct 2020 and having Head Office question me on it. My answer is simple our lead times are still 4/5 weeks whilst everyone else's increase to 8/10 weeks. Shuts them up pretty quick as we are gaining business.

[Beau]

Thanks very much again Maverick for putting in the time and sharing great to hear everything still on track.

[Beagle]

Good work Mav. Don't want to rain on your parade but...

B.Care suite sales are going very strongly .There are now some waiting lists on earlier C/S deliveries. Prices are stronger than anticipated. They are not worried at all about getting best dollar first time around as they can re-evaluate prices on turn over no2. We are seeing this anyway with resale CS margins a whopping 19% after only 2-3 years.
Analysts have been historically shy of the CS model as it has been unknown and untested but now have satisfactory evidence it's not only working but surpassing expectations of market acceptance and original price points.
Care suites now are derisked.

All that sounds great until one ponders that the median hours price in N.Z. over the last 3 years is up about 43%. On a rainy afternoon I spent a bit of time pondering this.
Such a modest increase relative to the median increase, actually a decrease in relative terms compared to the market average performance of 24%.
On one hand I can certainly appreciate that when they initially build a whole block of care suites on one site at one time they have to price them very attractively to fill them up as quickly as possible...I can certainly appreciate the commercial wisdom behind that and yet on the other hand I can't help pondering why (if the care suites were so attractively priced in the first release) the prices on resale are not at least keeping up with the movement in the average price of real estate ?

As you would expect...I have a couple of working theories to explain this...but its quite probably not one you folks want to hear so I won't unpack it unless people really want me to.
I hope over time the concept and market acceptance of care suites matures to the point where people see them as a lifestyle choice more than shopping around for the best deal on meeting late stage care needs.