OCA - Oceania Group - retirement villages

[iceman]

I should leave it for MAV to respond but Mav is no insider - he'll probably tell us he's just a dedicated investor who has deeply researched Oceania and makes sure he keeps on top of things as things unfold - both sector and company wise. Mav has often told us of his site visits and discussions with anybody who'll talk to him.

We should be blessed he shares his thoughts.

Good post winner and thanks to MAV for his wisdom shared on here

[Baa_Baa]

Good post winner and thanks to MAV for his wisdom shared on here

Second that, Mav is an inspiration and so open and sharing such in depth research we are blessed to have his selfless contribution. My few charts are hardly payback for his insights, but nice to be cited.

OCA its one of those stocks that have been running under the radar for a long time, undervalued even against NTA. Then COVID comes along and smashes it into oblivion, giving some the opportunity to buy in at half NTA. Unbelievable, like the silver lining on an otherwise very grim market response. But it takes big cojones to buy a smashed share, however confident you are in its future.

A couple of months later.

OCA tends to creep away from you, a few days of a cent or two or three and you wonder WTF now it’s above IPO above NTA and still well below fair value, but bugger I’ve missed the two bagger already and still don’t know what to do.

Personally I’ve gone nuclear and am so over weight OCA the local investment advisor would have a coronary embolism! Couta would be proud of my disdain for a balanced portfolio! (I hope he comes back, he’s wasted at HC).

So now that I’m in so deep, it’s in my interest to keep a low profile in case I’ve really screwed up and destined to be ruined.

Hopefully not. Gltah,

[bottomfeeder]

Now the sweedes will be looking to get OCA at 70cents. Just dont trust them.

I too have got so many of these, that I dont feel comfortable especially with the viking raiders trying to part me with my rightful shares for under value. Im not looking to get rich quick, I just want a safe haven for my hard earned bucks, safe from inflation pressures to come and a decent return on my investment compared to what else is available today. No takeovers allowed at any price. MET should have got damages and kept the company. Why sell at all.

[tango]

I am heavily loaded up in the retirement sector. I have Summerset, Ryman, Arvida and Oceania

I wish I had topped up on Oceania when it was around $.70. I was going to but hesitated and then the price shot up. I bought into Oceania when it was a dollar so I should dollar cost down but money has been flying everywhere with all the buying opportunities!!!

[Waltzing]

what makes people think the swedes want OCA. It not even half way through it re model. They have enough retirement homes in the land of no winter sun and frozen lakes. There is no cap gain easy pickings in OCA yet. No OCA holder in there right mind would sell this stock for at least 10 years.

[Beagle]

I agree the SUM forecast gave a little bit of comfort about the net effect of Covid 19 and as Maverick astutely notes that forecasted result covers the full period of the Covid direct effect. I am not however as optimistic as you Mav, as you know, because of the substantial difference in their business model, SUM is care light second only to MET and their model is substantially different to OCA.

That being said perhaps I am a little too pessimistic with my forecast range of $40-45m underlying profit for the year. So much depends upon the amount of new unsold stock they held as at 30 November 2019 being sold as the valuers had a 25% discount on that which amounts to 8 cps. Sell most of it and the second half could be very good and if not, not so good. This makes any attempt to forecast anything more or less a guaranteed exercise it getting egg on one's face.

I hope I am pleasantly surprised and end up buying Mav his well deserved beer. Remind me mate what was that bet ? Are you over $50m and I am betting under $50m ?

Coutts kindly forwarded me the other day an email detailing the new weekly care rates the DHB's are paying by region which was sent by our very own very likeable director of heath Ashley Bloomfield. Weekly care rates have gone up 3.0% effective from 1/7/20, a little more than the official inflation rate for the last year at 2.5%. I am reminded that this increase probably doesn't keep up with the real cost pressures of care so the transformation process OCA are on to create a much improved level of return on investment through care suites will be the much needed driver of future profit growth.

Looking at this today, (after yesterday's miserable new chapter in the MET fiasco has unfolded), I am hopeful the Sweedes' stay well away from this one especially with their miserable record of manipulation and opportunistic pricing and we look to enjoying steady profit growth in the years ahead and stay free of a repeat of Covid 19 getting into the community. Provided that happens it is likely we will be very well rewarded in the fullness of time.

[Maverick]

I agree the SUM forecast gave a little bit of comfort about the net effect of Covid 19 and as Maverick astutely notes that forecasted result covers the full period of the Covid direct effect. I am not however as optimistic as you Mav, as you know, because of the substantial difference in their business model, SUM is care light second only to MET and their model is substantially different to OCA.

That being said perhaps I am a little too pessimistic with my forecast range of $40-45m underlying profit for the year. So much depends upon the amount of new unsold stock they held as at 30 November 2019 being sold as the valuers had a 25% discount on that which amounts to 8 cps. Sell most of it and the second half could be very good and if not, not so good. This makes any attempt to forecast anything more or less a guaranteed exercise it getting egg on one's face.

I hope I am pleasantly surprised and end up buying Mav his well deserved beer. Remind me mate what was that bet ? Are you over $50m and I am betting under $50m ?

Coutts kindly forwarded me the other day an email detailing the new weekly care rates the DHB's are paying by region which was sent by our very own very likeable director of heath Ashley Bloomfield. Weekly care rates have gone up 3.0% effective from 1/7/20, a little more than the official inflation rate for the last year at 2.5%. I am reminded that this increase probably doesn't keep up with the real cost pressures of care so the transformation process OCA are on to create a much improved level of return on investment through care suites will be the much needed driver of future profit growth.

Looking at this today, (after yesterday's miserable new chapter in the MET fiasco has unfolded), I am hopeful the Sweedes' stay well away from this one especially with their miserable record of manipulation and opportunistic pricing and we look to enjoying steady profit growth in the years ahead and stay free of a repeat of Covid 19 getting into the community. Provided that happens it is likely we will be very well rewarded in the fullness of time.

Great post Beagle, as always. I think we can actually start quantifying numbers now on covid costs and sales /resales with the clues now out there.
RYM have said their sales were at new record levels pre lockdown. They report inquiry is now higher than usual post covid. However they also said there is a shortfall of covid cost reimbursement from the Govt but the $ amount was vague.
ARV (OCA`s closest cousin)have since answered that question a bit by saying their covid cost shortfall for them was about $3.5m . One cannot however work out how the lockdown sales impacted them as they have new stock they acquired since last PCP.
The mystery of how much sales were impacted during the lockdown levels was quantified this week by SUM sales figures, by my calcs, they are down from PCP by about 17% both on sales and resales each for the quarter. They have also given more clues on covid costs to them which were not too severe with a pretty good profit forecast. (as you say, they don't have as much PPE to worry about compared to ARV or OCA)

We already know how many, what types, values, margins etc OCA units had up for sale in December, we can use industry rule of thumb for the rates of sales/resales of these that happened during summer season (pre lockdown) .
We also know from OCA that their care suits sold right through lockdown and enquiry was above normal levels.

I`ve tweaked the maths after the SUM sales result. I'm very confident we will at least achieve 50m underlying (Yes, where you buy me a beer Beagle), with a possibility up to $53m. Of course there's plenty of likelihood to end up with egg on my face for sure but the mounting clues are real and all paint the same consistent picture and deserve to be commented on. Also supporting these facts is plenty of anecdotal evidence and comments I've heard , without exception these all point together that the upcoming result will be very respectable.

BTW, I did manage to sell that vehicle yesterday and yes, the funds went straight into another piece of care suite.

[value_investor]

Great post Beagle, as always. I think we can actually start quantifying numbers now on covid costs and sales /resales with the clues now out there.
RYM have said their sales were at new record levels pre lockdown. They report inquiry is now higher than usual post covid. However they also said there is a shortfall of covid cost reimbursement from the Govt but the $ amount was vague.
ARV (OCA`s closest cousin)have since answered that question a bit by saying their covid cost shortfall for them was about $3.5m . One cannot however work out how the lockdown sales impacted them as they have new stock they acquired since last PCP.
The mystery of how much sales were impacted during the lockdown levels was quantified this week by SUM sales figures, by my calcs, they are down from PCP by about 17% both on sales and resales each for the quarter. They have also given more clues on covid costs to them which were not too severe with a pretty good profit forecast. (as you say, they don't have as much PPE to worry about compared to ARV or OCA)

We already know how many, what types, values, margins etc OCA units had up for sale in December, we can use industry rule of thumb for the rates of sales/resales of these that happened during summer season (pre lockdown) .
We also know from OCA that their care suits sold right through lockdown and enquiry was above normal levels.

I`ve tweaked the maths after the SUM sales result. I'm very confident we will at least achieve 50m underlying (Yes, where you buy me a beer Beagle), with a possibility up to $53m. Of course there's plenty of likelihood to end up with egg on my face for sure but the mounting clues are real and all paint the same consistent picture and deserve to be commented on. Also supporting these facts is plenty of anecdotal evidence and comments I've heard , without exception these all point together that the upcoming result will be very respectable.

BTW, I did manage to sell that vehicle yesterday and yes, the funds went straight into another piece of care suite.

I think any result from any of the retirement villages where underlying profit hasn't decreased is a mammoth task. SUM have shown this now and ARV has insinuated it. RYM's and ARVs last results are 31/03 YE so a bit outdated showing increases.

Anything $50m+ I'd be impressed with considering the circumstances. Not sure if the care side of the business will be able to stem the flow of reduced profit from increased staffing costs. Plus we've already seen how covid has affected the development and sale side for the others, can't see OCA being exempt from it.

I'd be happy to eat my words on this, considering I am a shareholder. It would be extraordinary if they could pull one out.

[Beagle]

Thanks Mav. I admit I haven't tried too hard to quantify the Covid effect so will be very pleased to buy you a beer if underlying profit is over $50m.
The reason I haven't spent too much time on it is that I have observed with RYM, ARV and now SUM that the market seems quite happy to look through what will hopefully be one-off costs and sales effects with Covid 19 and look forward to future years profits. When one starts to think about OCA's underlying profit for FY21 the shares look very good value here, especially relative to the rest of the market and the other sector companies all trading at a significant premium to NTA, (apart from MET).

[tim23]

what makes people think the swedes want OCA. It not even half way through it re model. They have enough retirement homes in the land of no winter sun and frozen lakes. There is no cap gain easy pickings in OCA yet. No OCA holder in there right mind would sell this stock for at least 10 years.

Article in Herald speculated along these lines.