OCA - Oceania Group - retirement villages

[percy]

One of the most impressive and seductive presentations I’ve seen is one CBL did a couple of years ago. It impressively outlined how their business worked, how their business model makes money and the accounting treatment of some items.

It really was an impressive and seductive presentations

Every time I see an Oceania presentation certain parts of it remind me of that CBL presentation.

We laughed at Methven's presentations,until they did what they said they would do,then we brought their shares, and made money.....[Will CVT's excite us?.Will they ever do what they say they will do?l]
Some companies do what they say they will do,others don't.
The secret is buying companies that do what they say they will do.
Always easy to compare results with previous presentations.
That said, I have never understood Insurance companies,their presentations,or their results.Beyond me,so I have avoided them.

[Brain]

The general opinion seems to be that the aged care part of the business cannot be profitable. For The Sands the care units are sub $300k for an ORA with fees of $1200/week. It is quite possible that an independent apartment could be sold to a 70 year old and he/she could live to 90. I would imagine that most entrants into care probably would not have long to live. I hope Couta or Justakiwi will comment on likely average term of residency for a person in a care unit.

The higher turnover of the ORAs for the care units may possibly underpin the profit.

It is also worth noting that the care units at The Sands are almost all sold.

[justakiwi]

Interesting question. I can only speak for the one I work in (Presbyterian Support home), of 30 permanent residents. Our oldest resident is 103 and has been there for 4-5 years I believe. Our youngest is 69 (note that’s 34 years difference between youngest and oldest!). The youngest residents could very possibly be with us for another 10 years at least. On the flip side, in the 16 months I have been there, 8 residents have died in the rest home, and another 4 have died after moving to either hospital or dementia level care. Sometimes we feel a particular resident doesn’t have long left, but they surprise us and are still with us a year later. Other times a resident dies completely unexpectedly.

I found this article from 2017, which sheds some light on the subject, and is quite interesting. Particularly interesting to see the length of stay for different geographical regions.

https://www.stuff.co.nz/national/hea...-just-17-years

I would imagine that most entrants into care probably would not have long to live. I hope Couta or Justakiwi will comment on likely average term of residency for a person in a care unit.

The higher turnover of the ORAs for the care units may possibly underpin the profit.

It is also worth noting that the care units at The Sands are almost all sold.

[Snow Leopard]

Basically no increase in real underlying profit, (when you strip out the on-paper theoretical gain of the millions of dollars of deferred tax losses that might not get realised and therefore see any real value for a decade or more), so where on earth did these one off magnificent gains from the sale of most of the prime units at the Sands and Meadowbank go ?
....

The last time you made the no increase claim I suggested that you had not read the accounts carefully and you very kindly admitted that you had not.

Obviously you have not bothered to educate yourself in the meantime and your statement is [still] complete and utter rubbish.

[Beagle]

If we completely skip the tax debate and revert to the catch absolutely everything measure of earnings, how much did their Net Asset Value go up in the period, which includes more than just NTA movement, it only went up 1 cent ! Add 2.6 cps divvy paid and total catch everything gain was just 3.6 cps for the half year...surely that's not impressing anyone...

Any way you slice and dice this it was a very disappointing result especially in the context of the company selling down many of its premium units at the Sands and Meadowbank. Where did all those extra profits go from the sales of all those premium units ? That's the $64,000 question shareholders should be seeking answers too...

I don't have a stake in this and am not short the stock so I have no vested interest. I'm predisposed towards wanting to like this stock again but at this point I don't see any good reason to do so especially relative to other opportunities.

[Brain]

Interesting question. I can only speak for the one I work in (Presbyterian Support home), of 30 permanent residents. Our oldest resident is 103 and has been there for 4-5 years I believe. Our youngest is 69 (note that’s 34 years difference between youngest and oldest!). The youngest residents could very possibly be with us for another 10 years at least. On the flip side, in the 16 months I have been there, 8 residents have died in the rest home, and another 4 have died after moving to either hospital or dementia level care. Sometimes we feel a particular resident doesn’t have long left, but they surprise us and are still with us a year later. Other times a resident dies completely unexpectedly.

I found this article from 2017, which sheds some light on the subject, and is quite interesting. Particularly interesting to see the length of stay for different geographical regions.

https://www.stuff.co.nz/national/hea...-just-17-years

Thanks for that Justakiwi. It would seem that from your experience with 12 residents dying in the space of 16 months and also the stuff article would indicate that the turnover of the care units will be very frequent which could support Oceania’s decision to concentrate on care suites.

[Snow Leopard]

....In my opinion due to the ongoing nature of the operations it is highly unlikely the company will derive any cash benefit against its current year tax in the foreseeable future therefore I stand by my comment that the result itself and the gain in underlying profit after tax is a very poor quality one, in that it was materially boosted by deferred tax benefits that may not be realised for many years.

I am happy with my interpretation of the result....

This is really the crux of the matter.

Despite you telling all and sundry that the important metric is underlying earnings and also stating that you are 'facts orientated' around various threads and myself twice pointing out that your statement with regard to no real increase in underlying earning is not backed up by the accounts you still try to ignore the fact that underlying earning (both before and after tax) are well up.

As for your complete twaddle about the deferred tax then the accounts give the lie to that as well.

As is often the case you can not see the true numbers for your biases.
Your opinion is worthless, but I hope that you enjoy living in your own little world.

Disc: Own a few OCA, consider it trading around fair value, not buying more but will hold and see what happens down the track.

[Beagle]

If I thought this company was going to perform (even in line with the sector), I would buy some as a diversification strategy. Happy trails pussy cat.

[davflaws]

The tone has deteriorated (on this and some other threads) in the last few days and good natured jousting has given way to slightly snarky putdowns.

Lets keep trying to treat one another well even as we disagree.

[Ggcc]

I am happy with my analysis of the accounts. You are of course free to interpret them whichever way you like. I have no bias, am sitting on considerable cash at present, do not hold any shares or a short position and have been an accountant for far too long. If I thought this company was going to perform (even in line with the sector), I would buy some as a diversification strategy. Happy trails pussy cat.

One thing I had been taught was always to follow the advice from your accountant. In saying that and it has happened to me. How come accountants can give two sets of answers that differ from the same books.

Plus my current accountant found loads of mistakes in my books from my old accountant on their first year they took over, the old accountant is a tax auditor........ Follow your gut instinct and I believe Couta uses this theory well.