OCA - Oceania Group - retirement villages

[winner69]

If I take one more step, I'll be the farthest away from home I've ever been.

[Curly]

Based on ARVs recent surge it can only be a matter of time before OCA is rerated upwards.

[Beagle]

A comparison between the current share price and NTA in this sector is interesting.
RYM $13.58 / $5.57 = 2.44 times NTA
SUM $13.48 / $5.94 = 2.27 times NTA
ARV $2.09 / $1.46 = 1.43 times NTA
OCA $1.49 / $1.29 = 1.24 times NTA

Share prices as of this morning. One could make the case fairly easily that its difficult to know which business model of these 4 will work the best going forward but an investment in any is ostensibly an investment in a company that uses property to generate revenue with varying degrees of mix with care and independent living facilities.

I believe we all know there is very little money in care per se, and the real money is made from property. If one assumes that one cannot pretend to know which business model of which company will work the best going forward then its clear with OCA you get a lot more bang for your buck.

That said 5.1% MOH funding increase compared to an 8% increase in OCA's human resource cost confers an ongoing headwind with their high care business model and I for one think MOH funding will continue to lag the true cost of providing late stage care so that in my opinion is an ongoing headwind felt most keenly by OCA because of its business model. To a large extent the care suite model will help with this but price accretion of care suites is very slow.

[Beagle]

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[winner69]

Some talk about Oceania selling prices are not keeping up property prices…. Sometimes not even keeping up like new care suites and new villas are on average cheaper now than in 2018.

Mav pointed out that growth in apartment prices hasn’t been as great as houses. And there’s been discussion about Oceania ensuring relativity’s between villa and care prices.

Whatever I’m still frustrated that Oceania sell heaps more things but don’t make much (or any) more.

If their selling prices had kept up with overall property price growth Oceania would have made $25m to $30m more last year. That’s quite a lot.

Some say OCA are undervalued (which is a rather subjective term). Beagle showed the premium over NTA of the four in the sector. OCA is the lowest. I say that means it’s ‘cheap’ rather than ‘undervalued’ and would add OCA is ‘cheap’ for good reasons.

Oceania tell a great story …..but delivering outcomes has been poor ….which begs the question can delivering outcomes get better? ….I for one are not convinced …..and the market per see seems to agree

[winner69]

Based on ARVs recent surge it can only be a matter of time before OCA is rerated upwards.

Do they deserve to be rerated?

[850man]

Based on ARVs recent surge it can only be a matter of time before OCA is rerated upwards.

I think they are going to have to "show us the money" before a re-rate. As others have said, their pricing seems to lag behind market increases. Time to start closing that gap OCA

[Beagle]

Chewed Earl's ear a couple of times about pricing in general. He simply wasn't interested. All about selling them down he said. Heck of a nice guy...real people person, maybe too nice ?
Maybe Brent with his vast experience as an investment banker will bring a new slightly more commercial focus and see the bigger picture ?
Having a former investment banker in charge of SUM sure didn't do them any harm over the years !

I like investment bankers...Brent already talking my language...nothing cheers a dog's heart more than the words eps accretive acquisitions....the thought of more dog food is irresistible. Next acquisition will be debt funded with cheap debt and will be strongly eps accretive that's my prediction, mark my words.

So many arguments and theories about this one...I sometimes feel like this https://www.youtube.com/watch?v=EUV1LJKYAUc
But I think I'll just play possum in the headlights for a year or three and see how we go. https://www.bing.com/images/search?v...t=0&ajaxserp=0

[winner69]

A few shareholders (at question time) thanked the Board and management for doing a fine job

I understand no standing ovation and not even a decent round of applause in appreciation

[BlackPeter]

...

That said 5.1% MOH funding increase compared to an 8% increase in OCA's human resource cost confers an ongoing headwind with their high care business model and I for one think MOH funding will continue to lag the true cost of providing late stage care so that in my opinion is an ongoing headwind felt most keenly by OCA because of its business model. To a large extent the care suite model will help with this but price accretion of care suites is very slow.

You obviously realise that not all of these 8% are increased salaries, but paying for inevitable inefficiencies while they implemented their strategy of turning cheap dusty and smelly old peoples homes into flash and modern premium apartments? Starting a new apartment complex inevitably requires a lot of staff, even if there are not a lot of residents in the beginning...

One other thing we never seem to mention - OCA has due to their higher care component compared to the other retirement villages a shorter turnaround time (means a higher frequency of the retained management fees) and on top of that are their management fees relative at the high end of the spectrum (30% in a spectrum from 20 to 30%).

So - maybe their higher staff costs kept creeping up while they completed the change over? As well- more care does require more (and potentially better paid staff). However - given that customers are as well happy to pay a bit more (as they do if you look at the total package of higher deferred management fee and shorter stay times) for their outstanding service and care - what is the issue?

I just think that we maybe need to take the constant repetition of the higher staff cost increases out of isolation - don't you think so?