OCA - Oceania Group - retirement villages

[jagger]

The earnings call for me was brilliant, gave me more confidence than anything else. How they think about the business etc.

The most telling was the answer to 'why don't you sell assets to close the gap'

They think like Buffett.

Seriously, are you Brent himself?

[jagger]

Brent Pattison


We haven't lowered prices, no. And I know that's a question that's been on people's minds. It's actually been more of just about confidence. People love the product. Lots of people are sitting there waiting for a stabilization in market. It's less about their expectations of what they're going to get from their homes, because a lot of the homes are obviously in the $5 million, $6 million, $7 million range that they are selling.
They just want confidence that if they market and go through that change, that there's going to be a willing buyer on the other end. So it's actually been less about market prices and more actually about an incoming buyer. Are they going to be able to finance it. Are they going to be able to afford that financing at higher interest rates.
As Adrian moves us to hopefully lower interest rates towards the end of this year or early next year, then I just think that it will help with sentiment. So people love the product. People are happy with the price. People are happy with the services, but they need to see some confidence. And as people know, there's an abundance of listing. So eventually, the market will clear that abundance of listings.

I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.

[mike2020]

I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.

I'm inclined to disagree. I just had this conversation regarding sales in a new area near home and some sales are done in a week and others in 12 months, but all the developers have held the line, and sales happen. If they all started cutting prices, I suspect not many extra sales, but margin would be the casualty.
Also, watching Hamilton right now I see huge numbers of new weekly listings, but prices are stable and probably improving and total listings are static and often dropping on weekly numbers, indicating turnover.
Another interesting (disturbing really) conversation recently was a real estate agency planning on increasing fees in July. I bet they can justify it to themselves but I feel it is a bit on the nose.

Anyway, OCA up for the day ARV SUM AND RYM all down. The market has spoken.

[jagger]

I'm inclined to disagree. I just had this conversation regarding sales in a new area near home and some sales are done in a week and others in 12 months, but all the developers have held the line, and sales happen. If they all started cutting prices, I suspect not many extra sales, but margin would be the casualty.

You suspect that there is no price elasticity of demand because property is different to every other good or service in existence or something or whatever.
Right.

Of course property developers are going to hold out because they only ever get one bite at the cherry on development margin when they create a product.

The difference with a retirement operator is that whatever they lose on development margin initially they will get back on resale gains at a later date when the market recovers.
In the mean time they should be aiming to accrue as much DMF as possible.

Brent banging on about cashflow positive developments and heroic development margins means absolutely didly squat if it's eating into his project IRR - he could sit on stock at The Helier for 5 years then puff his chest about 30% development margins and being a wizard, it would be meaningless.
He's got (or rather had, goneburger) a debt issue, sell the product and get cash in the door.

[winner69]

From the other channel this is what Craig’s noted

For OCA shares to begin to close the c.60% discount to adj NTA ($1.46), and
indeed to remain a going concern, cash generation from existing assets must
improve. With OCA consistently failing to deliver the improvement guided to
by management, it has become a "show me" story. We see the appointment
of new CEO Suzanne Dvorak (ex Bupa MD) as potentially a positive catalyst
for change, but she will need to deliver quick results to regain investor trust.
Retain Neutral, target price -10% to $0.67[/quote]

Bit of a worry if an analyst mentions ‘going concern’

[Lease]

From the other channel this is what Craig’s noted

For OCA shares to begin to close the c.60% discount to adj NTA ($1.46), and
indeed to remain a going concern, cash generation from existing assets must
improve. With OCA consistently failing to deliver the improvement guided to
by management, it has become a "show me" story. We see the appointment
of new CEO Suzanne Dvorak (ex Bupa MD) as potentially a positive catalyst
for change, but she will need to deliver quick results to regain investor trust.
Retain Neutral, target price -10% to $0.67

Bit of a worry if an analyst mentions ‘going concern’[/QUOTE]

OCA is able to sell their assets above book value. I reckon its going concern shouldn't be an issue.

[bottomfeeder]

Bit of a worry if an analyst mentions ‘going concern’

Pretty sure they werent referring to the definition as described in terms of insolvency.

[Balance]

Since Balance has posted links to both the Whitsundays and Vietnam when telling us about his tropical paradise, and so far refused to clarify where it is, I suspect it actually exists only inside his skull.

Anyone who chooses to join him there in his imaginary paradise will also expose their psyche to a toxic cauldron of visceral hatred, contempt, bigotry, and villification.

A pity, because his rational analyses are both informative and useful.

LOL.

You seriously think I would disclose on ST to the multitude of posters (unknown individuals to each of us all) where I have my tropical holiday home?

The photos are there to paint an image of what a tropical white sandy beach kissed by the warm clear ocean & sea waters is like. What i would say is that only a madman would buy a beach home in Vietnam or Cambodia - the communist regimes there can take away property rights with a stroke of the pen, backed up by the force of a gun!

And unlike your heroine, Clueless Cindy, who so indoctrinated the likes of you with spin and BS so that you cannot tell truth from lies any more, I do not need to spin and tell lies - only losers do.

[Balance]

I honestly don't understand this mentality.
Just be a price taker.

For every year that they hold out for a price they are missing out on 10% of DMF, implicitly taking a 10% hit on price anyway.

The market should be more understanding that it's better to take a hit on price to a) get cash flow in the door; and b) get DMF ticking.
Rather than holding out for some fictitious 2021 sales price or figure that the valuer has invented.

Agreed. Many a developer has gone broke with that mindset of holding onto unrealistic selling prices. Amateur mindset.

OCA did very well (kudos) to lock in some really cheap interest rates which buys the company time.

But the clock is ticking as you rightly point out.

[jagger]

Agreed. Many a developer has gone broke with that mindset of holding onto unrealistic selling prices. Amateur mindset.

OCA did very well (kudos) to lock in some really cheap interest rates which buys the company time.

But the clock is ticking as you rightly point out.

Yup, rather than obfuscating and talking around the issue just be frank.
It's no secret the macro environment is tough, tell the market to suck it up for 18 months - the strategy is managing for cash, earnings will take a hit but that's only relatively short term.

Cash and residents (i.e. DMF) matter more now than holding out for development margin.
Recycle the cash, get the debt down and keep the pipeline going.