OCA - Oceania Group - retirement villages

[Blue Skies]

Jarden dropped two large research reports on the RV and aged care industry in recent days.

Interesting that while SUM is their sector pick it is more from a catalyst and TA perspective, while according to their analysis OCA offers the highest prospective 1 year total returns (inc. divs).

OCA: OW, TP $1.20, 32.7% projected return
ARV: OW, TP $1.60, 18.8% projected return
SUM: OW, TP $11.50, 17.2% projected return
RYM: Neutral, TP $9.50, 10.8% projected return

Could do with some good news! Thanks for this.

[Baa_Baa]

Could do with some good news! Thanks for this.

There are some who are unfortunately no longer here, we'll miss their insights, that have tended to go on an on about OCA's exposure to nursing/carer costs, based on a perception that the word 'care' in their portfolio of accomodation means a linear amount of care workers, ergo costs, for each 'unit' that has care services. That isn't the case at all.

At the old age and end of life high needs end of the spectrum is hospital care, it has the highest proportion of carers to residents. That proportion reduces as the spectrum of care reduces to resident (rest home) care, ILU care, apartments, villas care and so forth. There is not a linear relationship of carer cost to all dwellings that include 'care services' in their name.

The 'continuum of care' is a major selling point for OCA, where residents can buy into apartments and ILU's at one end of the spectrum can progress through to old age at the other end, with proportionate care available to them.

Many sites actually have no onsite continuum of care across the whole spectrum, they are just ILU's, villas and apartments. Here's a good place to learn more about the OCA portfolio, you'll see many have high quality accomodation with care services available, but are not continuum through to elder rest home, hospital or end of life care. Correspondingly, the ratio of carers and nurses, and costs, are lower than the words 'care services' might imply. https://www.villageguide.co.nz/operator/oceania

It's best imo not to generalise that carer expenses are some linear proportion to all 'units' that have care services in their name, or that all OCA facilities that say 'care' are in fact catering solely to care, as they are not. Moreover it is access to care as required that many facilities are offering, not guaranteed onsite high cost dedicated carers per population of residents.

These things are not and cannot be found in financial reports which focus only on numbers and history. If one DYODD, which some have done here to great lengths, they can be discovered elsewhere, usually hiding in plain sight. If you're looking in the right places.

OCA is still the highest dividend percentage payer of the sector which speaks to the sector, or the risk proportionment, all of which are frankly awful dividend payers considering their excess cash flows and profits. Care is nothing really, except a rounding error on the overall business. Any which way you look at it, care expenses really are just a cost of doing business, for all of them. The business is property.

The very safe margin all RV's apply in valuing their properties, and the infrequent revaluations (which determine NTA) means there is a very high degree of wiggle room across all of them. The market valuation is another thing altogether, which only matters if you care about capital market value (which means you want to sell higher than the mug you bought off).

Reflect imho on the tailwinds in the RV sector and the historical success of all the listed RV's and you'll see that opportunity presents itself only occasionally, to accumulate quality equity assets at depressed market prices. These are those times. It is upon us now.

Don't waste a good recession.

[Blue Skies]

Further confirmation of the sectors strong long term tailwinds & what may currently be a golden opportunity to top up at current levels.

https://www.rnz.co.nz/news/business/...-demand-report

[Bjauck]

Further confirmation of the sectors strong long term tailwinds & what may currently be a golden opportunity to top up at current levels.

https://www.rnz.co.nz/news/business/...-demand-report

Contrary to the expectations of many, Covid illustrated the benefits of a retirement village with the safeguards they could put into place, and the value of a "village" (pooling of resources, neighbourliness.) So in the face of more younger kiwis moving abroad for economic reasons, future epidemics and climate change/ extreme weather the popularity of senior housing schemes may increase

[Joshuatree]

I hope to renenter at some point but just too much uncertainty ,volatility,walls of worry, inflation,prop downturns etc etc.Not trying to pick a bottom just a bit nearer to one, with less risk.

[bull....]

this sector is uninvestable now i reckon... why

the rapid increase in covid deaths now in the older age groups means retirement villages are going to lose a lot of there customers going forward as the new variants work there way thru village populace. ( vaccine not as good against new variants )

30 a day probably higher as new govt rule on reporting will hide the real rate equates to 10000 odd in a yr a lot of customer reduction.

it is no wonder the sector is not participating in rally.

[ratkin]

this sector is uninvestable now i reckon... why

the rapid increase in covid deaths now in the older age groups means retirement villages are going to lose a lot of there customers going forward as the new variants work there way thru village populace. ( vaccine not as good against new variants )

30 a day probably higher as new govt rule on reporting will hide the real rate equates to 10000 odd in a yr a lot of customer reduction.

it is no wonder the sector is not participating in rally.

I thought deaths were a good thing for sector, plenty on the waiting lists ready to jump into the better homes.

[justakiwi]

Do any of you ever stop to think about the potential impact of posting your (presumably) sarcastic comments here? Does it ever occur to your capitalist, money focused pea brains that there could be forum members here who have lost someone to covid, or who may currently have a loved one or dear friend who is very unwell with covid?

Nah ... didn't think so.

EDIT: Thank you for the negative rep vote Gerald (whoever the hell you are), and for your suggestion that I contribute something of value, rather than "clogging up this thread." Do a search for my name in this thread, and you'll see that I have contributed quite a lot, as someone working in the sector. There is more to "contributing" than financial analysis. Those of us working in the sector have a far better handle on it than you ever will buddy. Have a wonderful evening.

[Rawz]

this sector is uninvestable now i reckon... why

the rapid increase in covid deaths now in the older age groups means retirement villages are going to lose a lot of there customers going forward as the new variants work there way thru village populace. ( vaccine not as good against new variants )

30 a day probably higher as new govt rule on reporting will hide the real rate equates to 10000 odd in a yr a lot of customer reduction.

it is no wonder the sector is not participating in rally.

Uninvestable???? Not sure about that..

Every now and then we get a bad flu season despite the flu vaccine. You wouldnt go around saying the RV sector is uninvestable. Yet more of the elderly die in that year.

Do the RV's not have strict covid policy in place as before? You are assuming its going to flood in and knock everyone out

Anyways, investing in OCA or others, covid isnt a major factor when thinking about it. Property prices and long term trends much more important

[Habits]

Down to 91, I wonder if will retest recent low of 88. More than likely IMO. Whether that is fair value or below, who would know