I've been very open with my high expectations on the upcoming 1HY underlying result. According to my calcs, this result was going to be significant as was going to be the first -easy to read- proof of OCAs model finally cranking into action. All the ducks WERE lined up.
Well bad news folks, after some recalculating I have to now downgrade that to just being another benign/flat upcoming result. The kind we have had for 3 years now. Basically their new delivery in Tamaki Makaurau (Eden was going to deliver 49 apartments this HY) being on hold for at least 5 weeks and a few extra Covid costs, will have a material effect on the result. Beagle indicated this a while ago that this might happen but I was hanging onto you guys going to L3 sooner than this.
There is reasonable “ hope” that the gang buster sales and improving price points prior to L4, or even an early delivery date of Eden, may save the day but that is leaving the world of facts that we do know over to crossing fingers.
The delays and covid costs will be of no long term consequence for those of us here who are settled in but I just want to be transparent here of my lowered expectations as I've been quite vocal on this particular HY1 result.
Nice to see you back Mav. Many of the deferred sales from the first half will roll over into the second half so I am not worried about it.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Quick question for you and please bear with me in what appears to be an odd question: in calculating an "adjusted NTA" should we remove the "refundable occupation right agreements" value?
The reason I ask is rather than divide equity by the number of shares I like to adjust the NTA for not just intangibles, but also the various IFRS junk as well as items that are just timing differences. For example prepayments are not really a tangible assets, it is more like a deferred expense and is therefore removed by me. On the flip side of the coin, any deferred revenue balance is also a timing difference and I also remove that. Likewise deferred tax liabilities never crystallise as a liability.
The reason I ask about "refundable occupation right agreements" is because if I am reading the AR correctly, OCA never has to repay that liability. I believe it is the departing right holder who must find another person to take up their right, and that right is then transferred from one holder to another. Is that correct? And if so, does that mean this liability is never actually repaid?
No worries. Rather than answer the middle part (those are just examples of adjustments I make), the question boils down to the first sentence. Should we exclude the refundable rights liability? The justification is per the last paragraph where I believe the liability never crystallises (yes it gets reduced via management fees but that is a separate issue).
Edit: in hindsight, I may have misinterpreted the note at the bottom of page 84 of the 2021 AR in that (my new thinking is that) ORAs would be repayable if the occupancy % reduced....?
Originally Posted by Maverick
Ferg, that is some crazy bunch of questions. I'll try and work through it tomorrow.
I've been very open with my high expectations on the upcoming 1HY underlying result. According to my calcs, this result was going to be significant as was going to be the first -easy to read- proof of OCAs model finally cranking into action. All the ducks WERE lined up.
Well bad news folks, after some recalculating I have to now downgrade that to just being another benign/flat upcoming result. The kind we have had for 3 years now. Basically their new delivery in Tamaki Makaurau (Eden was going to deliver 49 apartments this HY) being on hold for at least 5 weeks and a few extra Covid costs, will have a material effect on the result. Beagle indicated this a while ago that this might happen but I was hanging onto you guys going to L3 sooner than this.
There is reasonable “ hope” that the gang buster sales and improving price points prior to L4, or even an early delivery date of Eden, may save the day but that is leaving the world of facts that we do know over to crossing fingers.
The delays and covid costs will be of no long term consequence for those of us here who are settled in but I just want to be transparent here of my lowered expectations as I've been quite vocal on this particular HY1 result.
Thanks for the update Mav. Obviously, not great news in the short term but, as you say, in the longer term the game is the same. I'm hoping the report will show this hick up for what it is so won't be so bland. Thanks again for your efforts.
Analysts BUY rating 10/10. Don't see that very often !
Median house price in Auckland now $1,200,000 WOW !!
Residents interest free loans to the company must be included as a liability of the company for the balance sheet to show a true and fair view.
Any attempted creativity around that is in my opinion wasted energy. Absolutely its a liability its just whether its a current liability, (within 12 months or not), as I think there is a very good chance the Govt will mandate a maximum timeframe for repayment of these loans.
Real Estate market correcting ? Various economic commentators have been saying that's imminent for years now, most notably with unanimous agreement in early 2020 and they were ALL wrong...I'll believe a decline when I see it and not before.
OCA an almost perfect hedge against inflation.
Last edited by Beagle; 14-09-2021 at 01:33 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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Originally Posted by Maverick
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