OCA - Oceania Group - retirement villages

[winner69]

Market Screener. 4 analysts, just moved average target price up a smidgen. From $1.68 to $1.71. Still all 4 analysts with a buy rating.

https://www.marketscreener.com/quote...ITE-103506268/

Broker analysts are real gurus eh …targets 150 to 180 ….but when I click on that link it still shows 168, not 171


Shareclarity says it worth 116 …they not gurus

[Beagle]

Click on consensus first. Average target will probably go higher still shortly with Forbar recently raising their price target to $1.90.

I take no notice whatsoever of share clarity numbers.

[winner69]

Simply Wall St seems to have a 230 value

They are real gurus

Any more guesses out there

[dompf]

Simply Wall St seems to have a 230 value

They are real gurus

Any more guesses out there

craigs have it @
Target Price
Average NZ$1.84
High NZ$1.90
Low NZ$1.7

[Mudfish]

Market Screener. 4 analysts, just moved average target price up a smidgen. From $1.68 to $1.71. Still all 4 analysts with a buy rating.

https://www.marketscreener.com/quote...ITE-103506268/

Thanks for the heads up Dub. Had a quick look at M Screener, seems RYM, ARV, and OCA all have a positive re-rate. Only SUM no change. Must be a bit of homework going on by the guns, at least one gun anyway. Will be interesting to see if other guns also have a closer look. Either way, hard to see this as anything but a good sign for the sector.

[Maverick]

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....?

Hey Ferg,
In response to your question yesterday I've tried to figure out the angle you are looking at. You're obviously a very bright cookie judging from your posts. I'm not an accountant by any stretch and I see Beagle has already answered your question today, cheers Beagle.( good post too mate)

In basic words, the liability of having to pay out all residents their remaining contract is already subtracted as a liability from the balance sheet. It was $618m in FY2021 so if everybody up sticks and left OCA would be in a pile of poo due to cash flow problems.

I am not sure of OCAs time policy on paying out vacated ORAs before being re-let to the new incoming guys. This is one of the aspects the retirement commission wants to nail down as a standard across the industry. Knowing OCAs style they will surely pay out in a timely fashion so will need to carry some debt between occupants.

Back to asset backing , OCA had an asset backing of $1.28 as at 31.3.2021 but you may not be aware that there is another 8 cents you can add to that for your personal formula. That 8c is not counted yet as its unsold stock and based on the cost price of the buildings. The 8c is realized upon the first sale of the units.

If you want to get real clever you can also add the embedded value part yet to be realized on currently occupied units , that's 15c extra. I personally wouldn't because that is too far down the track to worry about, spread over many years. It materializes as resale gains.

Frankly I find it astonishing that you only have to pay a 13% premium on NTA (based on $1.36 NTA at todays closing price) to own a high class, fully managed spread of NZ property, with a growth strategy and pays a dividend.( with NZ least troublesome tenants) It makes personally owning a domestic rental house utter madness.
It is an indictment on the financial ability's of average NZ`ders that would much prefer to own/ manage their own rental and all the associated costs and hassles while perceiving this sharemarket offering as "way too high risk."

[Beagle]

Good post Mav. NTA will be up a bit more shortly too with another 6 months capital gains since 31 March. Looking further ahead consumer expectations are for more gains. https://www.stuff.co.nz/business/126...September+2021

[Ferg]

I am not sure of OCAs time policy on paying out vacated ORAs before being re-let to the new incoming guys

Thanks Maverick for your reply and kind words. I agree the NTA is higher than first appears.

The part I have quoted is exactly what I was driving at with my earlier post.

Whilst the liability exists and is real (and has been booked and it should be, which is 100% not in dispute from me) for each individual ORA, I'm trying to assess the likelihood of the overall liability crystallising if the timing of a payout to a former rights holder is dependant on a new incoming rights holder. If the occupancy rate is maintained (or increased) and the unit prices are maintained (or increased) then I cannot see how this liability would ever crystallise when viewed in conjunction with the deposits from incoming residents. To Beagle's point it is effectively an interest free loan but I am trying to look past the IFRS/accounting rules to get a better understanding of the the financial reality.

Is the liability ever repaid when you view it from the angle of current and prospective rights holders? I can't find anything on the timing of payouts to former rights holders - but I was convinced I saw something previously that said payment was dependant on the incoming rights holder. If that is the case then IMO that is a major game changer, assuming there is no Government intervention.

[Beagle]

Interest if your unit remains unsold

If you ever need to leave your Oceania apartment or villa, we make it as stress-free as possible – even if your unit doesn’t sell straight away. We will pay you interest on your refund amount if your villa or apartment remains unsold after six months.

From their website.

How much will be refunded when I leave my villa or apartment?
When your villa or apartment is vacated, a new incoming resident can be offered the Occupation Right Agreement. Once the new resident has paid their Occupation Licence Payment you, or heirs to your estate, will receive a refund. The amount we refund is called the Net Refundable Amount.

Here’s an example to demonstrate how the Net Refundable Amount would be calculated for a villa priced at $300,000:

Capital amount of the Occupation Right Agreement: $300,000

3 year Deferred Management Fee 30%: $90,000

Total paid to resident on exit: $210,000

"Can be" more to come on that tomorrow.

[Ferg]

Thanks Beagle.

My interpretation: if you can find a new owner you get paid out straight away, otherwise you wait 6 months for payment if the unit remains unsold - is that correct?

Cheers, Ferg