OCA - Oceania Group - retirement villages

[Ferg]

Thanks mistaTea. You can verify/test the assumptions by reading the accounts as SR suggested. In response to your statements:

1. Can you elaborate on this - was this the statement about including Bream Bay land? This was my critique of the method underlying the info-graphic but not crucial to Aaron's question. Possibly not relevant.
2. This is not an assumption and can be verified per 3.1 under the heading 'Investment property under development at fair value; and also note 3.2 under the column 'Freehold Landand Buildings Under Development'.
3. Acknowledged assumption regarding AR values per my later post, but it is not an assumption the proceeds from new sales are used to repay the dev debt per the OCA transcript.
4. I'm not sure what you mean by 'unaccounted'. All capex was certainly accounted for by OCA and shuffling funds (or words to the effect) was mentioned on the analysts call. The $60m capex which is not part of development assets is not an assumption - refer note 3.1 under 'Completed investment property at fair value' and can be further confirmed by checking how OCA derived the value for 'development assets' as outlined by me earlier.

Hope that helps.

Good post Ferg, and logically laid out.

But how do we test/verify the various assumptions you have made?

1. Inclusion/exclusion mismatches for specific assets and liabilities.

2. Impact of fair value revaluations on book values.

3..Accounts Receivable increases and deferred settlements affecting development debt.

4. Unaccounted capitalised expenditure and fund shuffling.

[mistaTea]

Thanks mistaTea. You can verify/test the assumptions by reading the accounts as SR suggested. In response to your statements:

1. Can you elaborate on this - was this the statement about including Bream Bay land? This was my critique of the method underlying the info-graphic but not crucial to Aaron's question. Possibly not relevant. Ok yes, it was relating to the Bream Bay land comment.
2. This is not an assumption and can be verified per 3.1 under the heading 'Investment property under development at fair value; and also note 3.2 under the column 'Freehold Landand Buildings Under Development'. Ok, thank you - will take a look.
3. Acknowledged assumption regarding AR values per my later post, but it is not an assumption the proceeds from new sales are used to repay the dev debt per the OCA transcript. Ok.
4. I'm not sure what you mean by 'unaccounted'. All capex was certainly accounted for by OCA and shuffling funds (or words to the effect) was mentioned on the analysts call. The $60m capex which is not part of development assets is not an assumption - refer note 3.1 under 'Completed investment property at fair value' and can be further confirmed by checking how OCA derived the value for 'development assets' as outlined by me earlier. Ok, 'unaccounted' was perhaps the wrong term. It sounded like you were making some assumptions to reconcile the $60M.

Hope that helps.

Cheers, Ferg. Comments in line.

Good work.

[SailorRob]

I don't get this statement. I have investments in many companies I don't fully understand. Personally I don't think it's necessary to have a nuts and bolt deep understanding of every nuance of a business. If that were true I doubt anyone would invest in anything. My main reason for buying OCA is the ageing population. Simple as that for me!

Well maybe this is why you dramatically underperform just owning an index, like 90% of professional investors. You'd be far better just owning a simple index fund.

Your main reason is ridiculous, an aging population doesn't mean that a certain company will be profitable or earn an acceptable return on capital. For gods sake you must realise this?

[SailorRob]

“My main reason for buying OCA is the ageing population. Simple as that for me!

”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses[/QUOTE]

Yeah, this is all there is to investing. It's this simple.

With profound insight like this I'd suggest borrowing to invest.

[SailorRob]

”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses

Fair opinion indeed but it's the equivalent of saying that everyone has to eat and that's a good reason to invest in growing food?[/QUOTE]

Not a fair opinion but one of the stupidest things I've ever heard.

You could think of 50 significant trends that a population is doing across the world, won't help you one but in investing.

[Bikeguy]

”

Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses

Yeah, this is all there is to investing. It's this simple.

With profound insight like this I'd suggest borrowing to invest.[/QUOTE]

Your right to your opinion is respected

[ValueNZ]

Does anyone know how the discount rate for the villages is determined? The range is 14-20%, with the median being 14.9%. This seems rather high to me, suggesting that they are understating what their assets are actually worth. A discount rate of 8%-10% in my mind would be more appropriate?

Has anyone here actually done a full DCF of one of the villages? I'd love it see it... Just so I can get my head around how these valuations actually are carried out in it's entirety.

[SailorRob]

Yeah, this is all there is to investing. It's this simple.

With profound insight like this I'd suggest borrowing to invest.

Your right to your opinion is respected[/QUOTE]

Do you think other market participants may have had this profound insight of yours as well?

Seriously dude, listen to what I'm saying.

[Balance]

Deleted

Quotes not working properly

[ValueNZ]

And learn how to do the opposite and not lose money!

How are those Synlait bonds going for ya?

Good luck getting your principal back.