OCA - Oceania Group - retirement villages

[Maverick]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.

This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete.

Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.

Brilliant post .....UBS have recently done a NZ study saying exactly this. Other providers are recognising this and also moving in this direct and also adopting the care suite model.
Luckily there is room for everyone, in fact as a country we need this.

[Maverick]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.

This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete.

Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.

Brilliant post .....UBS have recently done a NZ study saying exactly this. Other providers are recognizing this and also moving in this direction, also adopting the care suite model.
Luckily there is room for everyone, in fact as a country, we need this.

The way you are growing In the investment world Justakiwi, it wouldn't surprise me if you own your resthome one day. Well done!

[Beagle]

This comment is more important than you might realise. I can’t find it now, but I read a Morningstar commentary the other day, on RYM. All pretty positive but they said one of the biggest potential risks for RYM is a drop in the standard or quality of care. Any slide backwards, reduction in service quality etc, has the potential to destroy their reputation in a very big way.This applies to every provider of care. None of them can afford to pull back on costs when it comes to care. They must continue to be seen as providers of quality care. People considering moving into villages or apartments are doing so with the intention of it being their “last stop” before departing the planet. They will not only be looking at what the villas/apartments offer, but also what future care service the provider can offer at the same location. If it is a toss up between two suitable providers that both meet their needs in terms of geographical location, village lifestyle, cost etc; they will probably choose the provider who they feel provides the best future care/hospital/dementia option. I think the time will come where people will be reluctant to go with a stand-alone village. Those villages will eventually be forced to provide on-site care options too, if they want to compete. Care may not be the place to make big profits, for reasons a we have already discussed. But never underestimate the value of a care provision to the overall value to the business.

SUM are doing exceptionally well with a very high proportion of independent living units v care units. I think they attract a younger resident.

[justakiwi]

That may be the case now, but will it be in 10-20 years? If current predictions are correct, we will see people remaining in their homes longer, with more community based support. Unless they have major health related needs, which require hospital level residential care, most of them will not be looking to leave their homes until they are in their 80’s - possibly longer. Some will no doubt still choose a villa or serviced apartment maybe, but many will need standard care at the minimum by then. Even just looking at the last few residents to come into our rest home - 85 to 99 years of age. None of them wanted to leave their home and move to an independent living situation such as a villa/apartment. They just want to live out their days stress free, not have to be bothered with cooking, laundry, gardening any longer.

Maybe the villas will end up being occupied by early retirees - in their 50s and 60s? Providers may find they have to change their demographics in term of minimum age for a villa or apartment (assuming they currently have one). I have no idea, but it’s a real possibility down the track.

Either way, I still believe OCA has the edge in terms of their understanding of care and future care needs. So I’m more than happy to see where they take me.

SUM are doing exceptionally well with a very high proportion of independent living units v care units. I think they attract a younger resident.

[justakiwi]

Thank you

Sadly, I left my investment run way too late for that, but in the back of my head I do have a fantasy dream about owning my own little rest home. If you have Netflix, check out a series called “Derek” - a feel-good, funny, UK series about a family home type rest home. Ricky Gervais produced it and played the main character. I actually don’t particularly like him as a comedian, but he did brilliant job of this series. That’s my dream rest home

https://www.youtube.com/watch?v=N3UvuoCFDcs

Brilliant post .....

The way you are growing In the investment world Justakiwi, it wouldn't surprise me if you own your resthome one day. Well done!

[Beagle]

SUM and OCA have very different business models, which in my opinion makes them quite good complimentary holdings.

[winner69]

Didn’t Mav mention something about the oca share price smashing through the 140 mark soon

Well it’s happened

Smashed through it good and proper

[Baa_Baa]

Didn’t Mav mention something about the oca share price smashing through the 140 mark soon

Well it’s happened

Smashed through it good and proper

Technically on the Daily chart it's looking good as well, through the pivot nicely today (closed on it yesterday), run up through 100MA to the shallow down trend line today, closed on the 50% Fib retrace - perfectly. Still upside room on the indicators.

I shouldn't focus on the short term charts for this long hold, but it's hard not to when you have a lot at stake (relatively speaking).

[Beagle]

I "hounded" up a few more shares at $1.40 on the open this morning. Bit of a curse being an accountant sometimes dealing with accounting standards, conventions and generally accepted accounting principle's.

Managed to drag myself screaming and kicking into the 2020's and embraced this new fandangled total comprehensive income jargon, (I am pretty sure Winner would approve) and try and convince myself they really made $167.8m in total, and that its all really, real profit. Got to tell myself that silly old dog's can learn new tricks and that if something is value accretive to the balance sheet then one way or another, (no matter what accounting standard you choose), its appropriate the share price reflects the increase in balance sheet strength.
Creative accounting 101 will probably get me in trouble one day, but today is not that day

[justakiwi]

Who are you? And what have you done with Beagle?

I "hounded" up a few more shares at $1.40 on the open this morning. Bit of a curse being an accountant sometimes. Managed to drag myself screaming and kicking into the 2020's and embraced this new fandangled total comprehensive income jargon and try and convince myself they made $167.8m in total, and that its all really profit. Got to tell myself that even silly old mutts can learn new tricks and that if something is value accretive to the balance sheet then one way or another, (no matter what accounting standard you choose) its appropriate the share price reflects the value accretion.