OCA - Oceania Group - retirement villages

[BlackPeter]

OCA at 113 is on a PE ratio of 8.9 (NPAT)

SUM at 780 is on a PE of 7.5

For those who think that OCA is really cheap relative to SUM think about what the above ratios are really telling you.

Just curious - what input parameters do you use to get for SUM a PE of 7.5? Is this a backward PE based on one exceptional year (FY2017)? Not sure it makes a lot of sense to compare companies based on one stellar result (particularly lying in the past).

In my books is OCA with a forward PE (3 years averaged) of 9, while SUM commands a forward PE (dto) of 12.2. This makes somehow more sense to me, particularly considering that SUM's CAGR (20) is ways higher than OCA's (~7).

[Beagle]

OCA at 113 is on a PE ratio of 8.9 (NPAT)

SUM at 780 is on a PE of 7.5

For those who think that OCA is really cheap relative to SUM think about what the above ratios are really telling you.

One could make the case that seeing as most of OCA's revenue is from care services the reported NPAT, (not that they pay any tax as they have tax losses) is more relevant than underlying profit which is the more common frame of reference for many of the other operators who's primary activity is property. All depends which way you do your SUM's Any way you slice and dice it with SUM's consistently dramatically higher growth rate than RYM, the latter is the one that's the clear outlier of the entire sector in terms of its multiple in my opinion so I actioned that yesterday selling my modest stake and adding to OCA.

If OCA changed their revenue recognition policy to move it into line with normal industry standards and such change is clearly disclosed the accounts including being quantified then I would think its easy enough for most analysts and serious investors to make any adjustment they consider appropriate. Appropriate disclosure of this change means aspersions that accounts are suspect are still unwarranted in my opinion....but people will choose to believe what they want and are perfectly entitled to their own point of view. I hope to get time to read the annual report next week.

[RupertBear]

FOMO can be modified by the fear of being trampled on by an XXXOS sized Elephant coming your way soon. PS-My holding was reduced yesterday morning in anticipation of that.

This bear aint scared of Elephants Couta, bears can run much faster than elephants so there is no fear of being trampled Oh and I probably bought some of your shares yesterday as well, oh dear silly bear How low do you think this will go if the stampeed goes ahead?

[RupertBear]

FOMO can be modified by the fear of being trampled on by an XXXOS sized Elephant coming your way soon. PS-My holding was reduced yesterday morning in anticipation of that.

Knowing you you had an XXXOS sized holding yesterday and now you only have an XOS sized holding

[couta1]

This bear aint scared of Elephants Couta, bears can run much faster than elephants so there is no fear of being trampled Oh and I probably bought some of your shares yesterday as well, oh dear silly bear How low do you think this will go if the stampeed goes ahead?

Your long little bear so no worries, I think you mearnt to say when the stampede goes ahead not if. PS-I reckon $1.05 has a nice ring to it.

[winner69]

Just curious - what input parameters do you use to get for SUM a PE of 7.5? Is this a backward PE based on one exceptional year (FY2017)? Not sure it makes a lot of sense to compare companies based on one stellar result (particularly lying in the past).

In my books is OCA with a forward PE (3 years averaged) of 9, while SUM commands a forward PE (dto) of 12.2. This makes somehow more sense to me, particularly considering that SUM's CAGR (20) is ways higher than OCA's (~7).

Just used last reported eps (SUM last December and OCA for May). Appreciate some timing differences but that’s the last known numbers we have

SUM stellar result? One of many recent stellar years. And wasn’t the OCA result really stellar?

Sort of understand your methodology but is based on assumptions about the future ...isn’t it?

Anyway my comparison of PEs above was a lead into a question as to why.


We (not just you and me but all of us) will never agree what’s best approach.

[BlackPeter]

Sort of understand your methodology but is based on assumptions about the future ...isn’t it?

Isn't any meaningful investment methodology based on assumptions about the future?

Even if you compare just trailing PE's, than your assumption is that they are a meaningful indicator for future performance, which is an assumption about the future ..

So, yes - my investment methodology is based on assumptions about the future (as any other investment methodology) - otherwise it would be pointless.

[RupertBear]

After gobbling up a few OCA this week it is now worth 5.7% of my portfolio. More than SUM which is worth 3.3%. I am thinking my balance is wrong and I have gobbled up too many OCA it is also weighing on my mind so I am thinking I should reduce my OCA holding somewhat. I would be grateful to hear peoples opinions on how much of a ones portfolio one should have in this type of share.

[percy]

After gobbling up a few OCA this week it is now worth 5.7% of my portfolio. More than SUM which is worth 3.3%. I am thinking my balance is wrong and I have gobbled up too many OCA it is also weighing on my mind so I am thinking I should reduce my OCA holding somewhat. I would be grateful to hear peoples opinions on how much of a ones portfolio one should have in this type of share.

"Stay Calm",under 10% of your portfolio in this sector is not going overboard.
After holding SUM,RYM and OCA,I am now happy just to hold OCA.
So hang onto both your SUM and OCA ,and do not worry about having more of one.

[BlackPeter]

After gobbling up a few OCA this week it is now worth 5.7% of my portfolio. More than SUM which is worth 3.3%. I am thinking my balance is wrong and I have gobbled up too many OCA it is also weighing on my mind so I am thinking I should reduce my OCA holding somewhat. I would be grateful to hear peoples opinions on how much of a ones portfolio one should have in this type of share.

Agree with percy. Both defensive shares - and while I am a fan of diversification, you can overdo everything. Both SUM as well as OCA are more than 10% of my portfolio - and this fact is if anything improving my sleep at night ;

As far as the balance is concerned - I see OCA as somewhat higher risk (not of going down the drain, but potentially of disappointing shareholders in the future), but I see them as well as having higher chances to be earlier than SUM in doubling their SP from here. Just a wild guess for the double bagger from here: OCA - 3 years, SUM - 5 years?

But yes, there is no guarantee - and up to the individual how one express this in balancing ones shares. I started with a similar parcel size ($-wise) of OCA and SUM. Both grew well, but at this stage SUM is ahead. Still think OCA might win the race long term, but not too fussed about it.