OCA - Oceania Group - retirement villages

[Beagle]

Good on Arena Group.
If one can do the right thing the others should be able to too.

PS.Sorry I posted on this thread,but it was the first retirement sector company that came up.

No need to apologize mate, I always enjoy reading your thoughts no matter what thread but especially if its in the PAZ one :D

[Mudfish]

OCA seems to be in a quiet drift downwards based on no news. Weird how this is happening but I for one have been happily buying during this opportunistic time, just saying.

[James108]

On no news? The result was released last week ?

[DrFeelGood]

Tho it is a little concerning how sensitive the share price is to news related to property values

[winner69]

Fine day ...oysters and chips for lunch down on the beach methinks .....spend a bit of the divie that’s in the bank.

[peat]

Fine day ...oysters and chips for lunch down on the beach methinks .....spend a bit of the divie that’s in the bank.

bit of a measly feed tho really innit just as well you dont want anything expensive to drink with your lunch :p



discl holding a parcel.

[Bjauck]

Fine day ...oysters and chips for lunch down on the beach methinks .....spend a bit of the divie that’s in the bank. A year ago I was not expecting any OCA dividends for a couple of years. So I may have some takeaways fighting off the Seagulls too!

[Ggcc]

A year ago I was not expecting any OCA dividends for a couple of years. So I may have some takeaways fighting off the Seagulls too!
Lucky. I’m using mine to buy a washing machine

[Beagle]

Just humble corn beef sandwiches washed down with filtered water for me because I took the DRIP and am feeling a bit of a drip seeing as shares issued will be just over $1.53 v current share price of $1.47....(will celebrate with a special lunch and drinkies when my DRIP shares are worth $2 each next year).

[Baa_Baa]

Just humble corn beef sandwiches washed down with filtered water for me because I took the DRIP and am feeling a bit of a drip seeing as shares issued will be just over $1.53 v current share price of $1.47....(will celebrate with a special lunch and drinkies when my DRIP shares are worth $2 each next year).

Plain sandwiches for me too, instant ~6 cents lost opportunity taking the DRP. Oh well, it's still a nice chunk of shares at $0 cost or fees which does a little magic on the average holding price.

Hang on ... is that Winner on the beach over there? Maybe I could bludge an oyster or a chip. :)

[Grimy]

I thought I'd cancelled my participation in the DRP, after being stung with the Heartland DRP this time last year. But appears I didn't. No problem in the big scheme, but annoying this time around.
And Baa Baa, hate to tell you they weren't $0 cost shares. They cost you $1.5331........
Hopefully before long they'll look to have been a bargain!

[Baa_Baa]

I thought I'd cancelled my participation in the DRP, after being stung with the Heartland DRP this time last year. But appears I didn't. No problem in the big scheme, but annoying this time around.
And Baa Baa, hate to tell you they weren't $0 cost shares. They cost you $1.5331........
Hopefully before long they'll look to have been a bargain!

In my tiny world of self inflicted confirmation bias and denial of reality, you've burst my bubble. Now I'll have to enter the correct data instead of a creative accounting ... lol.

[dobby41]

A year ago I was not expecting any OCA dividends for a couple of years. So I may have some takeaways fighting off the Seagulls too!

I'll probably use it to buy a bit more wine down here in Central Otago and ship it home.

[bottomfeeder]

Whats wrong with a company that pays regular dividends. = NOTHING.

[Grimy]

In my tiny world of self inflicted confirmation bias and denial of reality, you've burst my bubble. Now I'll have to enter the correct data instead of a creative accounting ... lol.

Sorry about that........

[Waltzing]

good buying down at 1.20?

kicking for sidelines on housing by the local government... wonder what the legislative arm will kick for the white line on next.

3D printing of homes is coming to a yard near you..

will this be the product that finally drives down the sale price <> US house prices , same as problems as NZ.

who wants a 3 D printed retirement villa?

[Waltzing]

bouncing up 1.40 appears to be holding.

[winner69]

The market love for Summerset rather then Oceania is getting stronger and stronger

Since OCA floated the SUM share price over time has performed better than OCA and the market has re-rated SUM heaps more than OCA

Pretty strong trend ... must mean something ...but trend has to stop sometime .... unless OCA goes broke (or taken over)

OCA ging from 19% of SUM share price to 11% is some feat ... possibly SUM being big and more consistent performance has a lot to do with it ....or even more hype less reward:)

No inflection point on this chart

[BlackPeter]

Interesting chart - cheers.

On the other hand - did you notice how the market followed for a long time the Couta theorem until it did not?

In my view is SUM at this stage quite fully priced (with SUM relentless rising), while OCA is not, but than I am probably just suffering from the endowment effect :):

[James108]

Summerset built way more units as a proportion of existing units than Oceania (as well as more than all other operators) and paid out less in dividends. Not a surprise to me that summersets share price outperformed Oceania. Not sure if that is still the case as summerset now have more units and slowed a bit on the development side. Oceania were not actually that big a developer in proportion to how many units they have. Also a lot of brownfield development.

Hold both, though but twice as much summerset.

[Beagle]

OCA has been through the three years of its business transition to get it to the point of inflection. Market is currently waiting to see the results of that bear fruit before according it an average multiple for this sector. I think OCA has a lot of potential to outperform the sector in the next 3 years as the fruits of their business transformation become readily evident to the market.

Management have guided that human resource costs increases going forward are broadly expected to be in line with the MOH care fee growth rate. They have a big job on their hands to control costs as the CAGR in human resources costs since listing has been much higher than the annual rate they have guided going forward. If staff costs continue to grow at 7-8% per annum and care fees only at 3% per annum this will undermine the benefits of their business model transition. SUM's costs were also well up in FY20 so its a problem for the whole sector.

SUM look fully priced to me but with their focus on independent living units are probably a good complimentary holding to OCA. I presently hold NUN but probably should hold SUM, excuse the pun. I think Furbar have SUM on a forward PE of about 22 which is not unreasonable but they are trading right at the top of their price target 12 months hence.

I think the circa 10% correction in OCA's price in the last few weeks has been a bit harsh and they represent good value in the mid 140's but the key risk outlined above should not be ignored.

[justakiwi]

So you no longer hold OCA?

[Beagle]

Just to clarify. I presently hold no SUM. OCA is my #3 investment position. I also hold some ARV in this sector.

OCA tested their 100 day moving average this week at $1.40 and held. That's good. Hope it stays that way.

[justakiwi]

Thanks for the clarification. I misinterpreted your previous comment.

[Blue Skies]

Ditto, also reading that thought you (Beagle) had sold out, but glad to hear OCA your number 3 invest' position, with conviction :)

[clearasmud]

OCA for the long term!
SUM is more expensive because it's a managed funds "darling"

[James108]

SUM is more ‘expensive’ because it has historically grown earnings faster and probably will grow them faster going forward (in the short term). As I mentioned summerset were developing new units at a faster clip (in proportion to current units) than any other operator.

I can understand why there is confusion about the relative growth potential of Oceania vs summerset as the accounts of retirement operators are quite complicated. But I made a detailed model of oca and sum 3 or 4 years ago and it was apparent summerset growth would be far greater.

Does that mean summerset is a better buy at the moment... well no as you pay for that future growth. but compare them solely based on underling p/e at your own peril.

[clearasmud]

Thanks James for your view.

[Beagle]

SUM is more ‘expensive’ because it has historically grown earnings faster and probably will grow them faster going forward (in the short term). As I mentioned summerset were developing new units at a faster clip (in proportion to current units) than any other operator.

I can understand why there is confusion about the relative growth potential of Oceania vs summerset as the accounts of retirement operators are quite complicated. But I made a detailed model of oca and sum 3 or 4 years ago and it was apparent summerset growth would be far greater.

Does that mean summerset is a better buy at the moment... well no as you pay for that future growth. but compare them solely based on underling p/e at your own peril.

Agreed but that's fully priced in. Longer term OCA's model which recycles units faster, (remember they are really targeting an older customer), will kick in and (to quote an overused cliché frequently used by John Key) supercharge the growth going forward.

Yes OCA has reached the point of inflection with their business model transformation but yes it will take time for earnings momentum to grow. The analogy I would use is a snowball rolling down a hill. It gather mass and pace steadily, over time.

[Beagle]

https://www.nzherald.co.nz/business/february-auckland-house-sales-hit-17-year-high-more-than-half-go-for-1m-plus-barfoot-thompson/YNGTJMAJND6EJMJY6TRYPG22NQ/

Full steam ahead for the property market with the highest volumes in 17 years and median prices up 3.7% on January.

And this https://www.interest.co.nz/property/109315/astonishing-increases-housing-values-average-values-some-places-rising-more-50000?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+3 +March+2021

Hope Earl is taking notice and reprices their units as we head into FY22. Put the heat on interested parties, shareholders want better returns and profit growth. I suggest 15% price increases across the board to take effect 1/04/2021. Sign up now or pay more later.

[Pegasus2000]

Housing boom 'past peak', prices to fall, interest rates to rise: Westpac chief economist

https://www.nzherald.co.nz/business/housing-boom-past-peak-prices-to-fall-interest-rates-to-rise-westpac-chief-economist/5NJBMN5NIDVQOOJ6M4ZYWLMJ7Y/

[mike2020]

Housing boom 'past peak', prices to fall, interest rates to rise: Westpac chief economist

https://www.nzherald.co.nz/business/housing-boom-past-peak-prices-to-fall-interest-rates-to-rise-westpac-chief-economist/5NJBMN5NIDVQOOJ6M4ZYWLMJ7Y/

Did you read past the headline? 17% rise this year expected, hes talking 2028.

[Beagle]

Economists forecasts of house prices are just like asking for a long term prediction of the weather...all you can reliably say about the long term is its going to get hotter !

[macduffy]

I suggest 15% price increases across the board to take effect 1/04/2021. Sign up now or pay more later.

Sorry about that, (old) folks! Keep saving!

:(

[Entrep]

Hasn't tested this level, good chance it will

1235212352

[Beagle]

Sorry about that, (old) folks! Keep saving!

:(

You're kidding right ? Average house price increase in the last year is about 17% and most are trading down and reinvesting only a modest part of their house sale into an OCA unit.

The cost of materials to construct new units has risen strongly in the last year as has the cost of land and wages as well as house prices and a host of other things.

Importantly also the cost of staff to run OCA facilities has risen 8% as well.

People need to be realistic and realise that if all the input costs into creating and running a retirement village have gone up by a significant amount the cost of the units and the weekly fees have to rise by a commensurate amount.

[macduffy]

It's OK, Beagle. I was only pulling one of your (hind) legs!

:p

Edit/Disc: I hold most of the players in the sector.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-websit...569/341702.pdf

Looks very good to me. Hope these sort of strong sales are being reflected in OCA sales register too and I hope they're still on track to complete the number new units previously advised, (would be nice to get an update and some assurance around that considering the lockdowns). Interesting seeing what they've done with pricing, see last paragraph of Tristan Saunders report on page 2. Smart man that chap, ex Summerset. I think he has his finger on the pulse. Hope Earl Gasparich and OCA marketing department are taking notes regarding pricing. Might flick them a copy of this and give them a wind up that shareholders expect profit growth and they're not going to get it unless OCA are confident and assertive with their pricing.

[peat]

the link doesnt work for me Beagle.

which co is it an announcement for?



EDIT: OK I see now - its standard non price affecting update from Arvida

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/368569/341702.pdf

Hopefully this one works.

[Curly]

At close of trading today there is only .20c difference between ARV and OCA. In recent times the gap has been as high as .30c. So OCA not looking to bad at current level. I don’t think its the property value issue is affecting share price so much as the muted legislation to pull back some of the rest homes profits on resale of the units and redistribute that profit between the rest home owner and the occupation right holder. Currently all that profit goes to the rest home. Ten years ago unit purchased for $300k. OR holder gets back $210k. Rest home renovates and on sells for $600k or more (metropolitan NZ, not Auckland prices) Does seem bit lop sided. RYM and SUM been creaming it since inception of this model. There will be some tweaking is my guess.

[justakiwi]

I realise I’m only a very small investor, unlike most here, but I think there is room for all of these companies to do better in this area. Yes, of course I want my holding and return to grow, but I’m not greedy. I would have no objection to them profit sharing at some level.

But as you know, I wear two hats when it comes to this sector, so I don’t expect anyone to feel the same way.


At close of trading today there is only .20c difference between ARV and OCA. In recent times the gap has been as high as .30c. So OCA not looking to bad at current level. I don’t think its the property value issue is affecting share price so much as the muted legislation to pull back some of the rest homes profits on resale of the units and redistribute that profit between the rest home owner and the occupation right holder. Currently all that profit goes to the rest home. Ten years ago unit purchased for $300k. OR holder gets back $210k. Rest home renovates and on sells for $600k or more (metropolitan NZ, not Auckland prices) Does seem bit lop sided. RYM and SUM been creaming it since inception of this model. There will be some tweaking is my guess.

[Beagle]

The whole NZX50 is down ~ 6% this year on the back of sharply rising bond yields. By comparison OCA is up 1.6% inclusive of the dividend paid.

[Waltzing]

"i get very nervous when things start to look too good to be true.."

[Habits]

At close of trading today there is only .20c difference between ARV and OCA. In recent times the gap has been as high as .30c. So OCA not looking to bad at current level. I don’t think its the property value issue is affecting share price so much as the muted legislation to pull back some of the rest homes profits on resale of the units and redistribute that profit between the rest home owner and the occupation right holder. Currently all that profit goes to the rest home. Ten years ago unit purchased for $300k. OR holder gets back $210k. Rest home renovates and on sells for $600k or more (metropolitan NZ, not Auckland prices) Does seem bit lop sided. RYM and SUM been creaming it since inception of this model. There will be some tweaking is my guess.

Personally i dont see it as on-selling for 600k .. 600k is simply a notional value to calculate resthome fees. The example you gave of the 300k occupant who paid 70k over 10 years which is 7k/year or 140 per week. Another way to look is $23,333 per year over 3 years or 460pw for 3 years then free thereafter for a further seven years. Tbh thats not a good deal for a retirement operator although this is an example using hypotheticals, it is still maybe not too far off reality

The "purchase price" also equates to an interest free loan to the operator. With interest rates and the cost of capital so low now the inherent benefit of this loan has diminished a lot.

Disc sold two thirds of my oca holding in the weeks after disappointing HY.

[Logen Ninefingers]

Since it hit $1.60 it's been a mad scramble to get out.
Any thoughts on why?

[thegreatestben]

Easy money has been made post covid crash, many taking the money?

[wagwan]

Easy money has been made post covid crash, many taking the money?

And putting it where? :confused:

[thegreatestben]

Buying a ford ranger :p

[Beagle]

12365

Over the last few months it has continued to outperform the NZX50. The whole market has dropped a bit this year.

[TobyPascoe92]

CEO gone :/

[sb9]

CEO gone :/

And very scant on details.....:confused:

Edit: Just saw on NBR that he's moving to take up reins at Metlifecare.

[Pegasus2000]

The coincidence of CEO of Summerset?

[winner69]

CEO gone :/

Should be good for Oceania ....he was getting bored I think ....past the point of inflection so somebody with renewed vigour to lead the way,


Seen the light of day and gone to Metlife

Nice polite note from our Liz wasnt it!

[winner69]

And very scant on details.....:confused:

He’s gone to lead Metlife

[McPussPuss]

Earl heading for the door, hopefully him and Julian Cook aren’t making John Key timed exits.

[allfromacell]

Ha wow! No shame, first they stole our MET and now they've taken our CEO LOL

[JohnnyTheHorse]

He’s gone to lead Metlife

Jeeez don't bring up MET mate. We wont hear the end of how good of a deal those Swedes got. Even though it was bit of a dog, MET probably $10 now if it was still listed.

https://www.nbr.co.nz/story/oceania-healthcare-ceo-quits-take-reins-metlifecare?utm_medium=email&utm_source=Heads%20Up

[winner69]

Jeeez don't bring up MET mate. We wont hear the end of how good of a deal those Swedes got. Even though it was bit of a dog, MET probably $10 now if it was still listed.

Earl will guide Metlife through the next four or five years and then an IPO / relisting at $15

And Earl will get a big success fee

[Beagle]

Earl a nice guy, too nice. Need someone with a more commercial focus laser focused on driving underlying eps growth. Julian Cook ?...personally I'd be very happy to see him come on board.


On to more important things, its good to see this website running at proper speed again. Thanks Vince.

[allfromacell]

Earl will guide Metlife through the next four or five years and then an IPO / revisiting at $15

And Earl will get a big success fee

Not quite Winner, Earl is off to MET to work on synergy strategy before the Swedes eat OCA for $2.5 / share early next year.

[winner69]

Not quite Winner, Earl is off to MET to work on synergy strategy before the Swedes eat OCA for $2.5 / share early next year.

Probably an independent valuation report would only come up $1.60 to $1.70

[dabsman]

And all directors will support the $1.50 revised offer...

[winner69]

And all directors will support the $1.50 revised offer...

Which will be above NTA so a good deal for shareholders

[winner69]

Earl a nice guy, too nice. Need someone with a more commercial focus laser focused on driving underlying eps

.

If new person does focus on profit no matter what I hope it is doesn’t compromise care standards and the wellness of our customers

[Beagle]

Moving to work for the Swedes who arguably pulled off one the of the greatest heists on the NZX with their MET takeover using strongarm tactics and with effect immediately, (I am VERY disappointed in Earl).

Julian finishing up with SUM soon. Hmmm..probably add quite a bit to the share price if he took over as OCA's CEO.

Wonder what Maverick thinks of Earl leaving ?

[justakiwi]

I have messaged him.

Is this something we should be concerned about? Is it just a case of moving on to new challenges and more money, or is there a chance he (Earl) knows something we don’t?



Wonder what Maverick thinks of Earl leaving ?

[Beagle]

With all due respect, its stating the obvious that as the CEO will know more than we do. Its also on the record what his base salary was and to the best of my knowledge its one of the lowest of any CEO of a listed company on the NZX. The Swedes got MET for an extremely cheap price and will be dead keen to have a CEO that can continue the transformation to a business model that offers more of a care focus as we know incoming residents want to see the full continuum of care. I think in that regard Earl has a lot to offer MET and the Swedes can easily afford to pay him more. Join the dots...

Market does not seem to be concerned with Earl leaving and I'm not worried either. Need a numbers man in there like Julian Cook.

[justakiwi]

With all due respect, that was a little condescending. My question wasn’t literal. I’m pretty sure you know what I meant.


With all due respect, its stating the obvious that as the CEO will know more than we do.

[Curly]

Nothing new. Money does not talk, it screams. That OCA did not match what ever package he was offered also speaks for itself. I recall it being said that Earl was too nicer person to be a good CEO. Need someone more out there to sell the game plan and sparkly future. Time will tell. Price languishing at the moment. Don’t want the Swedes sniffing around.

[winner69]

Market does not seem to be concerned with Earl leaving and I'm not worried either. Need a numbers man in there like Julian Cook.

So Earl, being an accountant by profession, was lacking something and OCA has not done as well as it could have.

....they say accountants shouldn’t run big businesses


earl also a lawyer butvaccoubtancy seemed to be his forte

[BlackPeter]

Just had a look at the wording of the announcement re Earl leaving.

https://www.nzx.com/announcements/368720

I guess nothing too unusual with a CEO leaving after more than six years, however the timing of the handover feels a bit funny.

Earl informed the board about his resignation on the 6th of March (btw - a Saturday).

The board appointed immediately an acting CEO.

This means Earl is did not even had to wait over the weekend to go. No notice period? Wouldn't a CEO have at least something like 3 or 6 months notice? No transition required? Wouldn't he help in finding a replacement? Did Early already empty his office?

Somehow I wonder whether there might be more than they are telling us ...

[Sideshow Bob]

Just had a look at the wording of the announcement re Earl leaving.

https://www.nzx.com/announcements/368720

I guess nothing too unusual with a CEO leaving after more than six years, however the timing of the handover feels a bit funny.

Earl informed the board about his resignation on the 6th of March (btw - a Saturday).

The board appointed immediately an acting CEO.

This means Earl is did not even had to wait over the weekend to go. No notice period? Wouldn't a CEO have at least something like 3 or 6 months notice? No transition required? Wouldn't he help in finding a replacement? Did Early already empty his office?

Somehow I wonder whether there might be more than they are telling us ...

If you are going to a competitor, not unusual to be walked out the door and not work any notice period etc.

Might be more to it - but don't know. I thought it was a pretty cursory announcement - maybe the PR dept don't work over the weekend??

[Greekwatchdog]

I would have thought that Earl going to competition would force them to ask him to go immediately. It is what it is. I am sure the CFO has a good grip on things.

[Longhaul]

Earl informed the board about his resignation on the 6th of March (btw - a Saturday).

The board appointed immediately an acting CEO.

This means Earl is did not even had to wait over the weekend to go. No notice period? Wouldn't a CEO have at least something like 3 or 6 months notice? No transition required? Wouldn't he help in finding a replacement? Did Early already empty his office?


I would have hoped firstly, that he had a non-compete or stand down agreement in his contract. It seems there wasn't, so it's understandable OCA didn't want him to spend another minute as CEO while waiting to start at a major competitor.

[Baa_Baa]

Just had a look at the wording of the announcement re Earl leaving.

https://www.nzx.com/announcements/368720

I guess nothing too unusual with a CEO leaving after more than six years, however the timing of the handover feels a bit funny.

Earl informed the board about his resignation on the 6th of March (btw - a Saturday).

The board appointed immediately an acting CEO.

This means Earl is did not even had to wait over the weekend to go. No notice period? Wouldn't a CEO have at least something like 3 or 6 months notice? No transition required? Wouldn't he help in finding a replacement? Did Early already empty his office?

Somehow I wonder whether there might be more than they are telling us ...

I don't think it's all that surprising at an executive level, Earl would have said something like "I am resigning with immediate effect and have accepted a CEO position at Metlife". The Chair would then have said something like "ok if there's nothing we can do to change your mind, and you are moving to a competitor, then you can also leave immediately and your notice period will be paid out". Pop into the office tomorrow and remove your personal belongings.

[Beagle]

Probably time for some fresh vision and more determination to run a tighter ship in terms of costs and being much more assertive with unit pricing.

[BlackPeter]

If you are going to a competitor, not unusual to be walked out the door and not work any notice period etc.

Might be more to it - but don't know. I thought it was a pretty cursory announcement - maybe the PR dept don't work over the weekend??

Good point. Still - appears all a bit haphazard and unprofessional. Anyway, maybe in due time we will learn :):

[swmswm]

It must have nice for him to quietly remove his belongings during the weekend with no one around to bother him.

[Sideshow Bob]

Duplication........:(

[Beagle]

Brent Patison's (acting CEO) number is noted in the announcement. Anyone want to do a bit more digging, give him a call
https://www.nzx.com/announcements/368720

[winner69]

Earl having a bit of break ...not starting new job until mid year

[sb9]

Earl having a bit of break ...not starting new job until mid year

Could well be due to restraint of trade, jumping ship to competitor business.

[Beagle]

Re-read the stock exchange release. Very short statement by Liz Coutts. Immediate departure. Not handled in a very gentlemanly manner...one can't help oneself wondering if the board were really all that happy with his performance ?

[winner69]

Re-read the stock exchange release. Very short statement by Liz Coutts. Immediate departure. Not handled in a very gentlemanly manner...one can't help oneself wondering if the board were really all that happy with his performance ?

Metlife nicer what they said about Sowry

And welcoming Earl

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/368721/341888.pdf

[pierre]

Metlife nicer what they said about Sowry

And welcoming Earl

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/368721/341888.pdf

Metlife knew Earl was coming - OCA didn't know till Saturday he was going.

[Brain]

Re-read the stock exchange release. Very short statement by Liz Coutts. Immediate departure. Not handled in a very gentlemanly manner...one can't help oneself wondering if the board were really all that happy with his performance ?

They maybe totally pissed off that he went to a competitor. The amount of knowledge that he takes with him would be priceless.

[KJMLimited]

Maybe he's sick of all the NZX compliance and liabilty

[Joh13]

I think one of the best outcomes would be for Julian Cook to delay retirement and become CEO of OCA, but I think this maybe a tall order and OCA would have to offer him something pretty decent. Does anyone else see other potential candidates aside from Brent Pattison and do we think if Brent was appointed permanent CEO what could he bring to the table that Earl didn’t?

[Beagle]

Metlife knew Earl was coming - OCA didn't know till Saturday he was going.

That would appear to be the case and when the board were informed that he was resigning they told him to "go away immediately".

[Beagle]

I think one of the best outcomes would be for Julian Cook to delay retirement and become CEO of OCA, but I think this maybe a tall order and OCA would have to offer him something pretty decent. Does anyone else see other potential candidates aside from Brent Pattison and do we think if Brent was appointed permanent CEO what could he bring to the table that Earl didn’t?

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/347068/315202.pdf
Brent has a very similar background to what Julian had when he took over running SUM. SUM did very well indeed under Julian's leadership and Brent looks like he has the background and skills to drive the company forward.

He has extensive investment banking experience and was in fact the lead advisor in the OCA float. Director of investment banking at arguably N.Z's leading firm Jarden for more than 5 years and before that at Forsyth Barr for several years. Linked In profile is here https://nz.linkedin.com/in/brent-pattison-990a5621

Having looked into his background a bit more I would feel very comfortable indeed if he is grated the role of CEO on a permanent basis.

[Baa_Baa]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/347068/315202.pdf
Brent has a very similar background to what Julian had when he took over running SUM. SUM did very well indeed under Julian's leadership and Brent looks like he has the background and skills to drive the company forward.

He has extensive investment banking experience and was in fact the lead advisor in the OCA float. Director of investment banking at arguably N.Z's leading firm Jarden for more than 5 years and before that at Forsyth Barr for several years. Linked In profile is here https://nz.linkedin.com/in/brent-pattison-990a5621

Having looked into his background a bit more I would feel very comfortable indeed if he is grated the role of CEO on a permanent basis.

Brent has an impressive CV and a good track record at OCA. I would like to know firstly whether he thinks the strategy or execution could be improved, or what he might want to do with the business, before appointing him permanently to CEO. Of course there's also the question of who would replace him in his current role.

[Beagle]

Brent has an impressive CV and a good track record at OCA. I would like to know firstly whether he thinks the strategy or execution could be improved, or what he might want to do with the business, before appointing him permanently to CEO. Of course there's also the question of who would replace him in his current role.

Good that he was lead advisor in the OCA float and has therefore had in depth experience with the company from its inception. I am sure he will have some excellent new idea's and implement some common sense ones that Earl may have pushed back against.

[Baa_Baa]

Good that he was lead advisor in the OCA float and has therefore had in depth experience with the company from its inception. I am sure he will have some excellent new idea's and implement some common sense ones that Earl may have pushed back against.

Stuff that! I don't want him changing anything at all, as interim CEO, until the Board and shareholders know what he intends to do, and if he is not to become the permanent CEO, then he better not change anything. I don't want some stop-gap interim CEO, who wouldn't be if OCA weren't blind-side by Earl, to come in and unilaterally screw around with a just-proven high potential strategy, execution and business model.

Not that I think he will, I'm just not going to sugar coat we've lost our CEO, who was great at getting us here, and the interim CEO is unproven in the same role. I'm not giving him the benefit of the doubt or pre-empting what the Board plan to do replacing Earl. Don't mess with what's not broken. I hope the Board take their time to appropriately scope their options for a CEO replacement, and don't change anything in the meantime.

[winner69]

Stuff that! I don't want him changing anything at all, as interim CEO, until the Board and shareholders know what he intends to do, and if he is not to become the permanent CEO, then he better not change anything. I don't want some stop-gap interim CEO, who wouldn't be if OCA weren't blind-side by Earl, to come in and unilaterally screw around with a just-proven high potential strategy, execution and business model.

Not that I think he will, I'm just not going to sugar coat we've lost our CEO, who was great at getting us here, and the interim CEO is unproven in the same role. I'm not giving him the benefit of the doubt or pre-empting what the Board plan to do replacing Earl. Don't mess with what's not broken. I hope the Board take their time to appropriately scope their options for a CEO replacement, and don't change anything in the meantime.

A lot of bad can happen with interim CEOs and the general lack of leadership

Wouldn’t be funny if OCA ended up like A2

[Baa_Baa]

A lot of bad can happen with interim CEOs and the general lack of leadership

Wouldn’t be funny if OCA ended up like A2

Wash your mouth out!

[Baa_Baa]

@Beagle, this is how it rolls at the big end of town.

Headhunter: dials Earl, ring ring
Earl: Hello, Earl here
Headhunter: Hi, thanks for taking my call, I'm Headhunter and before you hang up, I have an offer for you, to double your measly salary and bonuses if you come work for Metlife and do what you did for OCA.
Earl: Ah well, ok, um, let me think about it.
Headhunter: Sure, take your time, I'll call you back in a day or so.
Earl: Yeah nah, I've thought about it, send me the contract proposal signed by the Board. I need to run it by my legal.
Headhunter: No worries it's on its way.
Earl: Gee that was quick, OK make it three times salary and bonuses and you've got a deal.
Headhunter: Earl, you drive a hard bargain (knowing he could go to five times) but Earl's an easy beat.
Earl: Ok it's a deal.

Later ...

Earl: dials Elizabeth, ring ring
Elizabeth: Hi Earl, what's up, it's Saturday and we're just about out of lock-down, I'm at the beach drinking Pina Colada's
Earl: What beach?
Elizabeth: None of your business Earl, why are you bothering me on a Saturday?
Earl: Sorry Liz, just wanted to let you know I'm resigning and going to Metlife, mainly because they're paying way more than you misers want to pay me at Oceania.
Elizabeth: Really, aren't you even going to give us a chance to counter?
Earl: No sorry, it's too late, deal done, I start at Metlife in a few weeks.
Elizabeth: Well, that's disappointing but if you've made up your mind, well, let me ring around the Board just in case ... no wait, since you've shafted us, I accept your resignation. Good luck.
Earl: Um, ok. I'll pop into the office and clean my desk out today.
Elizabeth: Yes, that would be good, please don't copy the strategy or the business plans while you're there, I'd hate for this to become a legal thing.
Earl: Sure, right oh, no need to copy stuff that I made up in the first place. See ya round.
Elizabeth: Yeah, maybe, maybe not. Bye Earl.
Earl: Bye Liz.

[Beagle]

Good story...may not be far from the truth.

[850man]

Shine has been fading from OCA fro a while now, Earl's exit has made it worse. Down almost 5% on the news.

[Alpha]

Time to buy a few more then

[YoungBull]

What a buying opportunity. Beagle, thinking of adding?

[Baa_Baa]

Good story...may not be far from the truth.

4 cent drop through the 100MA, close at the 0.618 Fib retrace from the Dec 2020 run-up and a reasonable technical support area since October 2020 and going back to the high Dec 2019.

[justakiwi]

There seem to be posts missing from the end of this thread :confused:

EDIT: weird - they are there now.

[Beagle]

What a buying opportunity. Beagle, thinking of adding?

I'm quite content with my existing holding but if the market continues to mark them down in an untoward way just because Earl was headhunted by MET then yes, I'd reconsider the situation and may consider adding some more.

[winner69]

4 cent drop through the 100MA, close at the 0.618 Fib retrace from the Dec 2020 run-up and a reasonable technical support area since October 2020 and going back to the high Dec 2019.

Isn't a drop throughthr 100MA a big SELL signal for some?

Chart looking a bit sick ...TA says a lot

[Joh13]

The move through the 100MA is bearish, but it seems that this downward movement in SP hasn't been been backed up with a large volume. It also looks like the SP is pretty close to the 3 standard deviation lower band ($1.35) in the linear regression channel.
Showing a few hidden divergences on the indicators. I see potential downward pressure until $1.35 then a bounce back towards $1.50ish. Doesn't help that Earl has resigned, only fundamental change i can see. Macro changes, treasury bond yields. OCA bond yield has climbed a bit. 2.90%ish
I think this is a market overreaction.

[Alpha]

So a good time to buy then.... ;) I am close to topping up and have been watching carefully. I am keen to see next update re CEO. Otherwise this is a nice long term hold and I also am very comfortable with my current holding

[Entrep]

Hasn't tested this level, good chance it will

1235212352

It's a shame that any image uploaded to this site gets reduced to miniscule size

[Beagle]

The move through the 100MA is bearish, but it seems that this downward movement in SP hasn't been been backed up with a large volume. It also looks like the SP is pretty close to the 3 standard deviation lower band ($1.35) in the linear regression channel.
Showing a few hidden divergences on the indicators. I see potential downward pressure until $1.35 then a bounce back towards $1.50ish. Doesn't help that Earl has resigned, only fundamental change i can see. Macro changes, treasury bond yields. OCA bond yield has climbed a bit. 2.90%ish
I think this is a market overreaction.

Yeah pretty much how I see it too. If he wants to sell his soul for 30 pieces of silver and go and work for the Swedes who strong armed the MET board using shyster tactics, good riddance. You don't get to be director of investment banking at Jarden without a huge skillset and being a great leader so I feel we're in very good hands with Brent Pattison and only a matter of time before the board ratifies his acting role as being permanent.

The market hates surprises like this so hence the share price reaction. Opportunity knocks for those that are prepared to look through the way we've all been sold out and stick to investing for the strong growth in the years ahead. Maybe another day or two of share price weakness, maybe not, and then the market starts to think about the fresh perspective and approach the vastly experienced Brent Pattison will bring to the table as well as the value on the table with the shares trading at only a small premium over 30/11/2020 NAV of $1.24, (perhaps 31/03/2021 NAV is somewhere in the low $1.30's ?)..so really with the shares where they are...any further weakness is quite an opportunity especially for anyone focused on the long term. That's my 2 cents worth after reflecting on it for a while...

[YoungBull]

Forsyth Barr post on the aged care sector this morning. In summary:

Forsyth seeking to track whether the lofty housing market is being reflected in increased pricing in aged care sectors. Forsyth conducted a test of 550 data points from more than 70 individual villages. They used 'like for like' unit pricing comparisons (apples to apples). Their 'Montgomerie Ibbotson' price index showed an increase of 3% in February alone.

This increase in February was driven by Independent Living Unit increases, up 4% (compare this to an average increase of 4-5% per year). HOWEVER, Forsyth note the majority of their data is from SUM, whose ILU's increased by 7% in Feb. Ryman showed a more modest increase of +1%. ​Forsyth have substantially fewer data points for ARV and OCA so conclusions are more difficult to draw, but the data suggests increasing prices for ARV's ILU's and stable prices for OCA.


Side note: google searches for OCA increasing while RYM and ARV have been largely stable.

I hope OCA take correct advantage of the housing market.

[Beagle]

You are right to be concerned about that and I am too to the point where I have raised the issue about pricing several times with Earl since November 2020, most emphatically as recently as last week. My message seems to keep falling on deaf ears. He doesn't seem to have the confidence to price the units in line with house price increases despite very strong sales being reported recently. I note ARV's approach in their recent newsletter is very different.

The plain fact of the matter is you can talk about growth, business model transition, the point of inflection and other nice ESG carbon neutral B.S. aspirations until you are blue in the face but underlying earnings have not grown under Earl's leadership whereas wages costs have grown dramatically. I also raised that point with him last week. Seeing as costs have risen so dramatically pricing MUST go up by a commensurate amount, that was the main message in my email.

[bull....]

1.30 was a previous support level.

[winner69]

You are right to be concerned about that and I am too to the point where I have raised the issue about pricing several times with Earl since November 2020, most emphatically as recently as last week. My message seems to keep falling on deaf ears. He doesn't seem to have the confidence to price the units in line with house price increases despite very strong sales being reported recently. I note ARV's approach in their recent newsletter is very different.

The plain fact of the matter is you can talk about growth, business model transition, the point of inflection and other nice ESG carbon neutral B.S. aspirations until you are blue in the face but underlying earnings have not grown under Earl's leadership whereas wages costs have grown dramatically. I also raised that point with him last week. Seeing as costs have risen so dramatically pricing MUST go up by a commensurate amount, that was the main message in my email.

Many have said nice things about Earl and heaped praise upon over the years ....but his halo sure has lost its glow ..... and it seems good riddance to him (and good luck to Metlife). And Beagle even you have defended him when I've regularly called him pretty useless)

Oh well ....hopefully the days of selling heaps more things and making less are past us

But I still we have been conned by their strategy and the excitment of inflection points and all that crap.

[Beagle]

Many have said nice things about Earl and heaped praise upon over the years ....but his halo sure has lost its glow ..... and it seems good riddance to him is (and good luck to Metlife). And Beagle even you have defended him when I've regularly called him pretty useless

Oh well ....hopefully the days of selling heaps more things and making less are past us

But I still we have been conned by their strategy and the excitment of inflection points and all that crap.

He's a nice guy...probably too nice but I have been most underwhelmed by his lack of action on the pricing front. Even as recently as last week his response to me indicated he still didn't get it.
Nothing like a highly experienced investment banker taking over, (worked an absolute treat for SUM). They see the big picture and know its all about getting revenue to translate to the bottom line and that involves heaps of discipline around cost control.

I think their business transformation approach is sound, as is their business model. We just need a leader to take a more focused commercial approach.

[winner69]

1.30 was a previous support level.

And with a book value of 1.04 its trading at 1.4 times book value

The rerating unwinding .... back to around 1.2 book value gives 1.25/1.30

so 1.30 - spooky eh

and below 100MA

[peat]

It's a shame that any image uploaded to this site gets reduced to miniscule size

he is saying it will test 1.30

[Beagle]

And with a book value of 1.04 its trading at 1.4 times book value

The rerating unwinding .... back to around 1.2 book value gives 1.25/1.30

so 1.30 - spooky eh

and below 100MA

I would definitely buy quite a lot more at $1.30...anyone wanting to unload a bundle at that price please PM me immediately :D

[bottomfeeder]

I bought a few more at $1.37. I am looking at a long term view. I have progressively larger orders in at $1.30 and $1.25. The next CEO will be better.

[BlackPeter]

I bought a few more at $1.37. I am looking at a long term view. I have progressively larger orders in at $1.30 and $1.25. The next CEO will be better.

Don't tell that Metlifecare :):

[daveypnz]

Yeah pretty much how I see it too. If he wants to sell his soul for 30 pieces of silver and go and work for the Swedes who strong armed the MET board using shyster tactics, good riddance. You don't get to be director of investment banking at Jarden without a huge skillset and being a great leader so I feel we're in very good hands with Brent Pattison and only a matter of time before the board ratifies his acting role as being permanent.

The market hates surprises like this so hence the share price reaction. Opportunity knocks for those that are prepared to look through the way we've all been sold out and stick to investing for the strong growth in the years ahead. Maybe another day or two of share price weakness, maybe not, and then the market starts to think about the fresh perspective and approach the vastly experienced Brent Pattison will bring to the table as well as the value on the table with the shares trading at only a small premium over 30/11/2020 NAV of $1.24, (perhaps 31/03/2021 NAV is somewhere in the low $1.30's ?)..so really with the shares where they are...any further weakness is quite an opportunity especially for anyone focused on the long term. That's my 2 cents worth after reflecting on it for a while...

Isn't this what a2 shareholders have been saying about their stock?

[Beagle]

Isn't this what a2 shareholders have been saying about their stock?

One company is backed by solid property assets whereas on the other hand....

[Rawz]

Isn't this what a2 shareholders have been saying about their stock?

One company has had 4 profit downgrades. One hasn't.

[daveypnz]

One company has had 4 profit downgrades. One hasn't.

Beagle had recommended selling a2 when it dipped below it's 100ma, to avoid potential disaster. At that point in time there had only been one downgrade.

Just curious as to why the same logic doesn't apply here.

[Beagle]

Beagle had recommended selling a2 when it dipped below it's 100ma, to avoid potential disaster. At that point in time there had only been one downgrade.

Just curious as to why the same logic doesn't apply here.

I think that's a perfectly reasonable question and one I pondered myself. Some people will say this is a "very convenient" excuse and they'll get no argument from me because I admit it is a little BUT the plain fact of the matter is OCA at its core is a property company and is backed by property assets, (I estimate NAV as at 31/3/2021 at ~ $1.30). I think that puts something of a floor under their price at somewhere about that level. The breakdown below the 100 day MA is concerning but I usually wait 3 trading days for confirmation of that. In any event its been brought about by uncertainty caused by Gasparich selling shareholders down the river for 30 pieces of silver and is not earnings related, in my opinion.

ATM on the other hand has been talking up the value of their I.P. for years and yet all we've seen is their IP protection is ostensibly worthless as the proliferation of other A2 brands continues to gain momentum. That leaves NTA of $1.55 and only earnings to support their price and we've seen what's happened with their earnings forecast which still looks very optimistic.

In summary, its not all about TA but that's definitely a factor and one I have carefully considered in this case. I'm prepared to wear the risk of the TA support breech indicator and see what happens.

[daveypnz]

I think that's a perfectly reasonable question and one I pondered myself. Some people will say this is a "very convenient" excuse and they'll get no argument from me because I admit it is a little BUT the plain fact of the matter is OCA at its core is a property company and is backed by property assets, (I estimate NAV as at 31/3/2021 at ~ $1.30). I think that puts something of a floor under their price at somewhere about that level. The breakdown below the 100 day MA is concerning but I usually wait 3 trading days for confirmation of that. In any event its been brought about by uncertainty caused by Gasparich selling shareholders down the river for 30 pieces of silver and is not earnings related, in my opinion.

ATM on the other hand has been talking up the value of their I.P. for years and yet all we've seen is their IP protection is ostensibly worthless as the proliferation of other A2 brands continues to gain momentum. That leaves NTA of $1.55 and only earnings to support their price and we've seen what's happened with their earnings forecast which still looks very optimistic.

In summary, its not all about TA but that's definitely a factor and one I have carefully considered in this case. I'm prepared to wear the risk of the TA support breech indicator and see what happens.

Fair response. Thanks for your insight.

[macduffy]

In any event its been brought about by uncertainty caused by Gasparich selling shareholders down the river for 30 pieces of silver and is not earnings related, in my opinion.

Really? Isn't he doing what a reasonable person would - accepting a presumably better employment offer?

Disc: Holding OCA.

[peat]

TA is more for trading. I hold companies during rough patches as part of a diversified portfolio if I have strong faith in the company to weather any storm and ALSO if I am appropriately positioned and will never become a weak hand or a forced seller.

[Beagle]

Really? Isn't he doing what a reasonable person would - accepting a presumably better employment offer?

Disc: Holding OCA.

A lot of people think the way that EQT went about strong-arming a weak and inexperienced MET board, EQT are a bunch of shysters. I suppose if you have no principle's about who you work for... Anyway, the record reflects underlying profit went backwards under his leadership so its time that someone who knows how to drive underlying profit growth took over.

[winner69]

Just how useless Earl was in driving profitability shown below - selling heaps more and making stuff all more profit

But jeez he was a great story teller - telling a great story that was good enough to take the the share price from 79 cents on listing to $1.40.

Big re-rating taken place because of his story telling - share price could be a lot less today

Thanks Earl

[winner69]

That Brent guy been CFO at Oceania for a year now - gone through a year end process and half year reporting

Time enough to weave some of the magic he must have learnt at Jardens to make the results look better

But still they were awful disappointing

[Beagle]

To be fair its clear they have been in the process of transforming their business model and there was always going to be some pain involved in that. As the old saying the gym trainers use goes, No pain, no gain !

[Joh13]

Not sure if anyone saw this interesting article from Stuff News that came out yesterday https://www.stuff.co.nz/business/124477974/unprecedented-interest-in-buying-rest-homes-says-leading-broker

[winner69]

As I’ve often said it’s the power of a story drives corporate value .....ie share prices

Oceania a great example of this .....the power of the story has produced a share price of $1.40 whereas if priced at a PE of 11 for a no growth company it would still be 70 cents odd.

[dreamcatcher]

Lets see where these Retirement stock go ....posted on 4/6

Updated ------4/6--...--6/7-----..-5/8........8/9.......7/10.........7/11........3/12.......10/1.......18/2.......10/3

Arvida .........$1.37....$1.48 .....$1.60.....$1.65.....$1.77........$1.78.....$1 .67......$1.75......$1.81.....$1.70
Summerset...$6.34....$6.73......$7.80.....$8.56... ..$9.15.......$10 .50...$10.83....$12.35....$12.92....$12.75
Ryman.........$13.35..$13.04 ...$12.77....$13.79....$14.85.....$14.7 0...$14.69....$15.05....$15.75....$15.44
Oceania........$0.94....$0.95 .....$1.03.....$1.04.....$1.20.......$1.36......$1 .29......$1.46......$1.49.....$1.40
Metlifecare....$4.28....$5.76 .....$5.92.....$5.94.....$5.98 ......$6.00......

These Building Stocks have all declined recently. LVR 30/40 shortly required will bite plus interest rate increases suggests not all rosy outlook

Hold OCA........ but would not buy more

[Beagle]

As I’ve often said it’s the power of a story drives corporate value .....ie share prices

Oceania a great example of this .....the power of the story has produced a share price of $1.40 whereas if priced at a PE of 11 for a no growth company it would still be 70 cents odd.

Market is always forward looking as you well know and sees excellent potential for earnings growth in the years ahead now they've passed the famous "point of inflection" with their business transformation program. Average analyst target price is $1.61 https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

[winner69]

Market is always forward looking as you well know and sees excellent potential for earnings growth in the years ahead now they've passed the famous "point of inflection" with their business transformation program. Average analyst target price is $1.61 https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

Exactly - it’s the story that’s valued, not the financials

Believe the story

Earl wasn’t so bad after all.

[bull....]

the story is dead? earl jumped before being pushed?

[winner69]

the story is dead? earl jumped before being pushed?

Maybe Earl didn't believe the story anymore

Maybe he listened to people who kept telling him there's no money to be made in care (looking after people) so isn't moving more and more to a care model a bit foolish.....and the penny dropped

[bull....]

Maybe Earl didn't believe the story anymore

Maybe he listened to people who kept telling him there's no money to be made in care (looking after people) so isn't moving more and more to a care model a bit foolish.....and the penny dropped

someone needs to interview earl ? i can hear the crowd wondering why he thinks met is much better than oca to work for

[JohnnyTheHorse]

Deeper speculation: https://www.nbr.co.nz/story/headhunting-triggers-speculation-metlifecare-oceania-link?utm_medium=email&utm_source=Heads%20Up

[dabsman]

Speculation is what that is but Im sure it is in their thoughts considering such easy MET profits

[Beagle]

Deeper speculation: https://www.nbr.co.nz/story/headhunting-triggers-speculation-metlifecare-oceania-link?utm_medium=email&utm_source=Heads%20Up

Potential takeover of OCA is definitely something I am worried about down the track especially if EQT / MET use their usual shyster tactics. After ostensibly "stealing" MET off its shareholders why wouldn't they try the same tactics with OCA and try and reap a ton of synergy benefits for free along the way ?

[bull....]

Deeper speculation: https://www.nbr.co.nz/story/headhunting-triggers-speculation-metlifecare-oceania-link?utm_medium=email&utm_source=Heads%20Up

maybe a ploy by someone to prop the stock price ? , often used overseas this tactic to be off- loaded into

[winner69]

maybe a ploy by someone to prop the stock price ? , often used overseas this tactic to be off- loaded into

next an 'insider' will have a 'chat' with somebody from the AFR to get the Aussies keen

[winner69]

Put this on SUM but seeing Oceania sell things on the cheap not so relevant but -

Holy moly median house prices up 7% from January and up 23% from a year ago.

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2021/Residential/February/REINZ%20Monthly%20Property%20Report%20-%20February%202021.pdf

[850man]

Put this on SUM but seeing Oceania sell things on the cheap not so relevant but -

Holy moly median house prices up 7% from January and up 23% from a year ago.

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2021/Residential/February/REINZ%20Monthly%20Property%20Report%20-%20February%202021.pdf

OCA have missed an opportunity to adjust pricing as the others in the sector have done. Not only impacting revenue but also brand if they appear cheap in comparison to the others this may also be seen as inferior from a quality perspective. I had a bit of a nosey at OCA Meadowbank and it certaily didn't appear inferior to the RYM not that far away.

Hopefully now Brent Pattison has the con, there will be more focus on the numbers

[Ggcc]

Put this on SUM but seeing Oceania sell things on the cheap not so relevant but -

Holy moly median house prices up 7% from January and up 23% from a year ago.

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2021/Residential/February/REINZ%20Monthly%20Property%20Report%20-%20February%202021.pdf

And I feel this will be the normal new prices for houses. We are paying for the land and not only for the house. Until land banks increase to meet up with demand, house prices will continue to rise

[Bjauck]

Put this on SUM but seeing Oceania sell things on the cheap not so relevant but -

Holy moly median house prices up 7% from January and up 23% from a year ago.

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2021/Residential/February/REINZ%20Monthly%20Property%20Report%20-%20February%202021.pdf

New normal or puffed up bubble? NZX50 share values (capital) are only up about 10% in the year to 28 Feb. (OCA SP up approx 28%; SUM SP up approx 64%)

[Beagle]

OCA have missed an opportunity to adjust pricing as the others in the sector have done. Not only impacting revenue but also brand if they appear cheap in comparison to the others this may also be seen as inferior from a quality perspective. I had a bit of a nosey at OCA Meadowbank and it certaily didn't appear inferior to the RYM not that far away.

Hopefully now Brent Pattison has the con, there will be more focus on the numbers

Its pretty disappointing. As far back as November last year I had a good conversation about this with Earl but I couldn't get him to see my point of view. Meanwhile construction costs are going up really fast, development margin is going down and company wages costs overall have been going up at ~ 8% per annum, significantly faster than the rate of care fees increase at 3% per annum. But its best to keep the prices the same he said....I assumed he knew something I didn't and knew better than me... Now I think I was right all along. Other sector participants have been quicker and smarter and that's a dead rat sandwich I didn't want to eat. Hopefully this matter will be addressed very promptly.

[justakiwi]

The increase in wages has most likely been due to the roll out over 3 years, of negotiated increases to caregivers/RNs and other “on the floor” staff, pay rates. This will not continue forever. I believe there is one more increase in July of this year, but that is the last one. I seriously doubt we will be looking at any further increases in pay rates, anytime in the foreseeable future. So the 8% increase per year you are talking about, should reduce - unless of course there are increases for “white collar” staff.


Its pretty disappointing. As far back as November last year I had a good conversation about this with Earl but I couldn't get him to see my point of view. Meanwhile construction costs are going up really fast, development margin is going down and company wages costs overall have been going up at ~ 8% per annum, significantly faster than the rate of care fees increase at 3% per annum. But its best to keep the prices the same he said....I assumed he knew something I didn't and knew better than me... Now I think I was right all along. Other sector participants have been quicker and smarter and that's a dead rat sandwich I didn't want to eat. Hopefully this matter will be addressed very promptly.

[Joh13]

Looking at the current state of OCA... inflection point reached (So we’ve e’ve been told) and pretty decent growth ahead maybe 15% CAGR, pricing of units not being increased to what they potentially should be (how long has Met been talking to Earl)? this would be the worst time for a takeover for shareholders and the best time for the likes of EQT, getting in before OCA really gets going. I think a potential takeover price range at the moment would be between $1.80-$1.90 about a 30% premium of today’s SP and around Enterprise Value. Which I think would be a steal in the long term and something I wouldn’t be happy about.

Just thinking out loud.

[Beagle]

Everyone else is doing well with OCA, (except shareholders).
The residents are being extremely well looked after.
The front line staff, office support staff and management are doing extremely well.
Wages and Salaries 2017 $103,274
Wages and Salaries 2018 $112,951
Wages and Salaries 2019 $119,786
Wages and Salaries 2020 $128,100
Wages and Salaries 2021 $136,622 (annualized based off twice the six month figure to 30/11/2020).

OCA are now paying a whopping $33m per annum more in wages and salaries than when they listed !! No wonder underlying profit isn't growing.

That's a compound growth rate of 7.3% per annum when inflation has been less than 2% per annum in most of those years !

Earl told analysts at the most recent briefing after the half year result that looking forward we can expect annual growth in wages to be at ostensibly the same rate as ministry of health care fees, or words to that effect (3% per annum MOH increase 1/7/2020).
I am sorry but I am finding that increasingly difficult to believe with their consistent annual growth at around 7.3% per annum.

If this situation and growth rate in wages continues, (and I am inclined to think it will) this will wipe approx 1 cps off my earnings expectations in the years ahead which I have now recalculated at

FY21 7.0 cps (annualized 12/10 = 8.4 cps)
FY22 9 cps
FY23 11 cps
FY24 13.5 cps

My significantly revised price target 12 months hence is $1.53. The shares are fair value today at $1.40 in my view. Today I recalibrated the size of my shareholding in OCA to take account of my more moderate expectations of near term earnings and earnings growth in the years ahead. I will need to see concrete evidence of a moderation in the extraordinary rate of annual wage costs increases before taking a more optimistic outlook again.

All that said, they have made solid progress on the transformation of their business model and this should reap steady gains in profitability in the years ahead, (albeit at a slower rate than I had previously been forecasting due to staff effectively getting an increasing share of future profits).

I'd grade Earl a D- (lack of diligence) for cost control over the years and F (for failure) when it comes to appropriate unit pricing this year. Hopefully Brent quickly fixes the unit pricing issue and maintains very tight cost controls going forward.

Show me the money Oceania...after all these years where's the earnings growth ? My remaining shares held are "free carry". Rating now downgraded to "HOLD" (a moderate stake as part of a very well diversified portfolio).

[winner69]

Jeez beagle - big numbers

Another way of looking at it in F18 revenues up 8m but wages up 10m

in F19 a bit better revenues up 6.9m and wages up 6.5m

F20 really bad revenues up 6.7m but wages up 8.3m (or up 10.1m if you don't count wage subsidy)

so heaps more wages each year without revenues going up more.

Wonder how much sales people / development peole wages are in the wages figure - or are these to some extent capitalised?

[winner69]

One thing that holds OCA earnings back is that they appear to have to write zillions off each year for the units (basically written off) they convert to new/upgraded care units (booked on as new)

Accounts all to complicated to see the full extent of this -- maybe Mav has sussed it

[Rawz]

The Beagle is out and posted at 3:33.
333 usually means something really amazing is on its way to you right now. Something that will bring much joy and fulfillment.
Ah the signs are so confusing lol.

This pricing issue reminds me of the old management team of Evolve who were discounting the cr&p out of their childcare fees, they thought that was the best way to get new attendees.
New management came in and put a stop to that instantly and now occupancy is increasing. Go figure. And the financials are improving.

As you say, hopefully new leader Brent stops the discounting. People usually associate higher prices with higher quality anyway.

[Beagle]

Accounts are very complicated and if people like me are struggling a bit... You aren't kidding Winner when you said there's no money "in care". Property subsidizes care in a big way.

Rawz - I still have a decent sized shareholding thanks to the free carry of previous profits, (backing up the truck at ~ 70 cents last May means I can ~ halve my stake and carry the rest for free).

[Snow Leopard]

Accounts are very complicated and if people like me are struggling a bit....

Tempted as I am, absolutely no comment:
https://www.naturalworldsafaris.com/media/19809/snow-leopard-tambako-the-jaguar-flickr-2.jpg?width=640&mode=crop&center=0.51,0.26

[Gerald]

Jeez beagle - big numbers

Another way of looking at it in F18 revenues up 8m but wages up 10m

in F19 a bit better revenues up 6.9m and wages up 6.5m

F20 really bad revenues up 6.7m but wages up 8.3m (or up 10.1m if you don't count wage subsidy)

so heaps more wages each year without revenues going up more.

Wonder how much sales people / development peole wages are in the wages figure - or are these to some extent capitalised?


Beagles post translated says the 100ma break and poor TA has got him worried :D

[winner69]

Accounts are very complicated and if people like me are struggling a bit... You aren't kidding Winner when you said there's no money "in care". Property subsidizes care in a big way.

Rawz - I still have a decent sized shareholding thanks to the free carry of previous profits, (backing up the truck at ~ 70 cents last May means I can ~ halve my stake and carry the rest for free).

That's why the Cash Flow Statement is very revealing - recast it and one gets an idea of the 'profitability' of caring and looking after villages costs them

When I posted what I thought the 'losses' were I was lambasted so won't bother again

[Beagle]

That's why the Cash Flow Statement is very revealing - recast it and one gets an idea of the 'profitability' of caring and looking after villages costs them

When I posted what I thought the 'losses' were I was lambasted so won't bother again

I get it, you're grumpy with me.

Arguably wages growth is "the" most spectacular aspect of their growth over the years. ESG enthusiasts must be thrilled..(glad someone is).

Suppose I should be pleased I've got a bit fat off these...better keep an eye out for that snow cat in case he eats my lunch for me. https://i.pinimg.com/736x/81/14/bc/8114bcd2a716d6728888f2e0675c9401.jpg

[Ohdoyle]

One thing that is being missed in this discussion is that selling a unit cheaply isnt profit lost, it is merely profit delayed as OCA buys the unit back at the same price it sells it for. Of course opportunity cost and all that, but my point is if they up their prices to market levels in the future they will be buying the units back at a relatively cheaper price compared to the competition.

This is obviously to the advantage of future shareholders and the sooner they sort the pricing the better. But revenue delayed is not the same as revenue lost and if what everyone is saying is correct, that OCA is underselling its units that means theres a whole lot of extra value hiding in its ballance sheet.

[Rawz]

One thing that is being missed in this discussion is that selling a unit cheaply isnt profit lost, it is merely profit delayed as OCA buys the unit back at the same price it sells it for. Of course opportunity cost and all that, but my point is if they up their prices to market levels in the future they will be buying the units back at a relatively cheaper price compared to the competition.

This is obviously to the advantage of future shareholders and the sooner they sort the pricing the better. But revenue delayed is not the same as revenue lost and if what everyone is saying is correct, that OCA is underselling its units that means theres a whole lot of extra value hiding in its ballance sheet.

Ohdoyle, this is really well said and exactly how I see it. If the only issue is pricing then the next FY results can be exceptional if they sell at market rates and offset some of the ever increasing employee costs that MrB has highlighted above.

Surely the prices Ryman, Summerset etc are selling at sets a mark in the sand where OCA can sell at +-5%
Maybe they need to poach a few of their rivals salespeople.

[James108]

Sorry guys but that is wrong, they miss out on extra DMF.

[YoungBull]

Its pretty disappointing. As far back as November last year I had a good conversation about this with Earl but I couldn't get him to see my point of view. Meanwhile construction costs are going up really fast, development margin is going down and company wages costs overall have been going up at ~ 8% per annum, significantly faster than the rate of care fees increase at 3% per annum. But its best to keep the prices the same he said....I assumed he knew something I didn't and knew better than me... Now I think I was right all along. Other sector participants have been quicker and smarter and that's a dead rat sandwich I didn't want to eat. Hopefully this matter will be addressed very promptly.

This may sound stupid but is there any reason a company would deliberately keep pricing low in a given year? Tax implications? Something along that train of thought?

[Ggcc]

This may sound stupid but is there any reason a company would deliberately keep pricing low in a given year? Tax implications? Something along that train of thought?
Paying back Covid wages maybe?? Clutching at straws here

[winner69]

Sorry guys but that is wrong, they miss out on extra DMF.

Correct ...but you just ruined their story

[BlackPeter]

Everyone else is doing well with OCA, (except shareholders).
The residents are being extremely well looked after.
The front line staff, office support staff and management are doing extremely well.
Wages and Salaries 2017 $103,274
Wages and Salaries 2018 $112,951
Wages and Salaries 2019 $119,786
Wages and Salaries 2020 $128,100
Wages and Salaries 2021 $136,622 (annualized based off twice the six month figure to 30/11/2020).

OCA are now paying a whopping $33m per annum more in wages and salaries than when they listed !! No wonder underlying profit isn't growing.
...



Slightly confused. Just wondering - did you normalize above numbers allowing for staff numbers increasing? They did open some new sites (and increased the number of units for existing sites) over the years and presumably need to fill them not just with residents, but hire as well some more staff to look after them.

Before we complain about a rising payroll, it would be interesting by how much their salaries increased per employee, and whether the staff ratio per resident changed. Does anybody have these numbers?

[James108]

I always thought the Oceania mania was overblown but I’m happy to hold a good company at a fair price. They provide a necessary, high value add service with a growing market and on top of that are backed by land and buildings. Cons are the industry is flooded with capital chasing the same market, although Oceania slightly different which I like.

Some people change their mind like a girl changes clothes tho, was Katy perry talking about investing so you think?

[winner69]

Slightly confused. Just wondering - did you normalize above numbers allowing for staff numbers increasing? They did open some new sites (and increased the number of units for existing sites) over the years and presumably need to fill them not just with residents, but hire as well some more staff to look after them.

Before we complain about a rising payroll, it would be interesting by how much their salaries increased per employee, and whether the staff ratio per resident changed. Does anybody have these numbers?

Think Beagles point is $ wage costs increase more then revenue $s

Yes more sites ...more staff ...but where’s the extra revenue from those extra sites?

[bull....]

I always thought the Oceania mania was overblown but I’m happy to hold a good company at a fair price. They provide a necessary, high value add service with a growing market and on top of that are backed by land and buildings. Cons are the industry is flooded with capital chasing the same market, although Oceania slightly different which I like.

Some people change their mind like a girl changes clothes tho, was Katy perry talking about investing so you think?

there were some good story tellers on this stock. i have never thought it was a good stock for long term ( as its just riding the wave up) but good for trading.

[BlackPeter]

Think Beagles point is $ wage costs increase more then revenue $s

Yes more sites ...more staff ...but where’s the extra revenue from those extra sites?

Isn't that what investing is all about? You first pay for new sites, buildings, staff and than you reap the benefits over time?

Maybe I missed something, but I thought all the previous hype about inflexion point is saying we are now at (or just behind) the point where costs relative to revenue are not anymore rising, and will be dropping in years to come.

Maybe we need a bit of patience to wait for the years to come instead of complaining at inflexion point that costs did rise (as expected and designed?)?

[Mista_Trix]

...Some people change their mind like a girl changes clothes tho...

The casual misogyny probably isn't needed...

[James108]

Just quoting the critically acclaimed cultural treasure Katy Perry. Was she a misogynist? Hmmm

[James108]

Black Peter you are correct but I think if you do the maths your more site hypothesis doesn’t completely explain it.

[James108]

there were some good story tellers on this stock. i have never thought it was a good stock for long term ( as its just riding the wave up) but good for trading.

Well no surprises that I disagree with you, it’s almost like whatever opinion you have I’m almost guaranteed to think the opposite.. wonder what that’s about.

[bull....]

Well no surprises that I disagree with you, it’s almost like whatever opinion you have I’m almost guaranteed to think the opposite.. wonder what that’s about.

thats what makes a market.

[Greekwatchdog]

Opinion is all it is. Its your money that your gambling so no one else's thoughts matters..Its good too read others thought but in the end its our decision.

[Rawz]

Sorry guys but that is wrong, they miss out on extra DMF.

Ah yes. What portion of income does the deferred management fee make up? Say verses income from resale and new units?

[justakiwi]

I can only comment on wage increases for staff that fall under the Nurses Association collective. I have looked at OCA’s collective agreement for last year (can’t find their most recently negotiated one) and their pay increases have been the same as my organisation’s.

Caregiver rates have increased as below:

12373

This is publicly available information. You can view all collective agreements negotiated by the Nurses Association - so if you are interested in seeing pay rates/increases for other staff eg: RNs, cooks, housekeeping etc, you will find it there. You can see agreements for all the other aged care facilities too.

I am currently on $23/hour. In July my pay will go up to $25/hour. When I have completed my Level 4 qualification I will move to $27/hour.

As a shareholder and as an employee, I believe I am worth that. As are all other caregivers working in this field.

NB: I believe there was an earlier increase prior to 2019, but I can’t find previous agreements anywhere so unable to provide those figures.


Slightly confused. Just wondering - did you normalize above numbers allowing for staff numbers increasing? They did open some new sites (and increased the number of units for existing sites) over the years and presumably need to fill them not just with residents, but hire as well some more staff to look after them.

Before we complain about a rising payroll, it would be interesting by how much their salaries increased per employee, and whether the staff ratio per resident changed. Does anybody have these numbers?

[Beagle]

This may sound stupid but is there any reason a company would deliberately keep pricing low in a given year? Tax implications? Something along that train of thought?

Feedback I got from management in November is we would rather concentrate on selling down units. They did that extremely well and sales numbers for the half year recently reported, (not dollar value), were very impressive. I put it to management last week that its long overdue that pricing was recalibrated. I didn't get the response I expected. I forwarded them ARV's report and some other information. Tristam Saunders is a smart cookie. SUM did very well with their sales when he was their GM of sales and marketing. See the final comment in his report on page 2 here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/368569/341702.pdf For the time poor here is what he concluded with (and this is point i have been trying to make to OCA management for some time now)

According to REINZ data, the New Zealand median
house price reached a record of $749,000 in December
2020. This was up 19.3% year-on-year. We continue
to see upward pressure on our pricing regionally and
recently completed a repricing exercise to account for
the strength in the residential property market.

Pricing units too low this year has cost OCA :-
1. Lower development margins on new stock sold
2. Lower profits on units resold
3. Less recurring annual DMF revenue on units sold in the years ahead, (until those units are sold years down the track to new incoming residents at full market value).

On the positive side they will have less unsold units at balance date because they have been selling them so cheaply.

I think its been a poor call and the response I got last week indicated they still don't get it... so yeah, its time for fresh leadership and some fresh perspective.

Coutts told me some time back that OCA pay their village managers very well. (Maybe too well ?).
SUM by contrast are extremely tight and have a very rigid and totally inflexible remuneration policy. X sized village gets you X sized salary. no if's, but's or maybe's and they don't even reimburse the Govt approved mileage rate, (currently 82 cents per km) for any personal use of one's own vehicle. Frankly, I have never heard of that sort of tightness before. (Investment bankers are very good at seeing the whole picture of getting revenue to the bottom line, well Julian Cook certainly is so lets hope Brent Pattison is too as I still have plenty of these shares).

You seriously have to wonder when senior management don't seem to "get it" that they are providing a housing solution and need to price appropriately for changing market conditions https://www.interest.co.nz/property/109462/national-median-house-price-rose-50000-february-auckland-median-100000-month-reinz?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+12+M arch+2021 Last time I checked OCA was not a charitable trust...

[850man]

Thanks Beagle, very well put. Pricing low leading to revenue damage and brand damage from being seen as "cheap' in the market will do them no good. Let's hope Brent gets this dealt to quick smart.

[Rawz]

Maybe now is the true inflection point with new leader/management and new focus (hopefully) on sale prices and costs :eek2:

[bull....]

i thought this was the best run company ever going over the thread?

[winner69]

Thanks Beagle, very well put. Pricing low leading to revenue damage and brand damage from being seen as "cheap' in the market will do them no good. Let's hope Brent gets this dealt to quick smart.

Brents been in the leadership team for a year now ...and no doubt had a great deal of influence with cash involved ....hmmm

[Beagle]

Brents been in the leadership team for a year now ...and no doubt had a great deal of influence with cash involved ....hmmm

And that's one of the issues that worries me. A little birdie told me that SUM's former CFO, (incoming CEO now), set all the unit pricing for SUM. Hmmm

Might try and reach out to him after the annual result and try and get a gauge on his thinking.

[Habits]

i thought this was the best run company ever going over the thread?

Yes ... and the tooth fairy is real

[Ohdoyle]

Ok that's a fair point and not something I actually thought about before I posted . Although I'd say average occupancy length is more important to DMF than say a 5 to 10 percent increase in price.

Dont get me wrong, the best for shareholders is to be charging a market price. I am just trying to point out rest homes arent your typical property development business.

[winner69]

Even allowing for the so-called ‘mix’ impacts this chart from half year preso didn’t seem quite right at the time .....and maybe confirms what we are talking about

[Beagle]

Not sure if you have the time or inclination Winner but it would be interesting to do a chart comparing those selling prices above with the mid point for the relevant period (Sept 2020 for the most recent half year) of the national average market price of houses to track what percentage of the national average price the various types units have been selling for and see what the deterioration in percentage has been.
e.g. Sept 2020 roughly mid point of 1H F21 year national average price was $685K whereas in February 2021 it was $780K so a ~ 14% increase in just 5 months.

I think in the current environment there needs to be firstly an annual pricing change for OCA units effective immediately of circa 23% to account for the movement in the national average price year on year to February 2021 and then quarterly changes from here to ensure they are keeping pace with the market. Their marketing needs to focus more on the benefits of village life and a LOT less on their pricing, (its expensive to live in N.Z. no matter what housing solution you choose including renting, that's just how it is). The standard of care should be forefront in their marketing, lifestyle aspects, camaraderie and companionship with other residents, fixed fees for life, you can bring your pet...all that sort of thing...not price.

[Soolaimon]

Yes ... and the tooth fairy is real

She is too. I just saw her on TV.

[winner69]

Pulled this table out the database just for you Beagle - OCA unit selling prices relative to median house prices

Of course it doesn't reflect the so called 'mix' impacts Oceania talk about

Maybe a story or two in the numbers

I have highlighted the new care suite numbers - that is where I believe all the action is (most sales) and is the future

[Greekwatchdog]

What that doesn't show W69 is Location the units were selling and when. Meadowbank and The Sands would have been in the earlier sales so pricies would have been a lot higher. Makes it hard to get a real analysis done.
I have read intently everyone's thoughts since Monday and found it fascinating. Story goes on just new Chapter has started. I look forward to seeing how Brent takes the reins and if he has his polish to add.

[Brain]

i thought this was the best run company ever going over the thread?

yeah sentiments can change very quickly. I am always surprised that people describe some companies as a long term holds (bottom draw stocks). My experience of the share market is that it is much like a game of whack a mole. Oceania will not be an exception.

[Beagle]

Pulled this table out the database just for you Beagle - OCA unit selling prices relative to median house prices

Of course it doesn't reflect the so called 'mix' impacts Oceania talk about

Maybe a story or two in the numbers

I have highlighted the new care suite numbers - that is where I believe all the action is (most sales) and is the future

Thanks heaps mate, much appreciated. As you've highlighted, it appears care suite pricing in particular is unusually low. Beggars belief that care suite pricing at an average across N.Z. of just $227K in mid-late 2020 is the optimum scenario OCA. Are we running a charity ? I think someone / some people have been incredibly lazy with adjusting prices and have really misjudged things.

The other thing to consider that nobody has really talked about but I am sure plenty have thought about it is that Gasparich will take all his knowledge about rejuvenating old independent living only villages (of which MET have many) and doing brownfields developments by adding care suites with hospital level care and converting old MET villages into full continuum of care facilities. The first mover advantage OCA have enjoyed with their care suites model will only be an advantage for a certain length of time and will gradually dissipate over time as other operators incorporate the lucrative parts of OCA's model into their own business plan.

[winner69]

What that doesn't show W69 is Location the units were selling and when. Meadowbank and The Sands would have been in the earlier sales so pricies would have been a lot higher. Makes it hard to get a real analysis done.
I have read intently everyone's thoughts since Monday and found it fascinating. Story goes on just new Chapter has started. I look forward to seeing how Brent takes the reins and if he has his polish to add.

I realise that

but somebody the other day quoted some work Forbar had done and on a like for like basis (town by town basis or something) OCA pricing was stable in 2020 whereas the others had shown solid incrases in selling prices.

[winner69]

Thanks heaps mate, much appreciated. As you've highlighted, it appears care suite pricing in particular is unusually low. Beggars belief that care suite pricing at an average across N.Z. of just $227K in mid-late 2020 is the optimum scenario OCA. Are we running a charity ? I think someone / some people have been incredibly lazy with adjusting prices and have really misjudged things.

Probably the CFO has to take a lot of responsibility for pricing outcomes ...and he's been there for year care suite pricing has fallen

[Greekwatchdog]

OK Fair enough. Wasn't knocking your numbers just find it difficult to Analyse when there are so many complexities involved.

[winner69]

OK Fair enough. Wasn't knocking your numbers just find it difficult to Analyse when there are so many complexities involved.

I know it's complex ..but high level trends are often useful for assessing situations

[Dotbond]

Change of subject. And potentially a dumb question. When do the shares from the latest DRIP get put into our accounts?

Cheers Trev

[mfd]

yeah sentiments can change very quickly. I am always surprised that people describe some companies as a long term holds (bottom draw stocks). My experience of the share market is that it is much like a game of whack a mole. Oceania will not be an exception.

Fantastic isn't it, these frequent sales on companies you want to own. Always opportunities to pick up decent companies when the narrative has turned against them.

Not sure we're at a massive opportunity just yet, but we certainly got one last year. With a little luck the market will continue to talk itself into a funk and we'll get another bargain.

[BlackPeter]

Change of subject. And potentially a dumb question. When do the shares from the latest DRIP get put into our accounts?

Cheers Trev

Always on the day the divvies are due, which (in this case) was 24 of February. They even said that in their 16.th of Feb announcement:




Oceania Healthcare Limited (OCA) advises that the strike price for the Dividend Reinvestment Plan (DRP) operating in respect of the dividend payable on 24 February 2021 has been set at NZ$1.5331 per share.

This strike price will apply in calculating the number of shares to be issued to participants who have elected to receive additional shares rather than cash.

The strike price has been determined, in accordance with the DRP, as the volume weighted average sale price in New Zealand dollars for Oceania Healthcare shares, calculated on all trades of Oceania Healthcare shares which took place through the NZX Main Board over the period of five trading days starting on 9 February 2021, less a 2.5% discount.

Shareholders who have elected to participate in the DRP will receive shares instead of cash in respect of the dividend payable on 24 February 2021.

Have another look into your (registry-) account ...

[Dotbond]

Thank you, will check there. Thought they would show in my DB account.

[BlackPeter]

Thank you, will check there. Thought they would show in my DB account.

How is DB supposed to know? They are just the broker and do not have registry information. Unfortunately you need to enter them there manually.

[winner69]

Thanks heaps mate, much appreciated. As you've highlighted, it appears care suite pricing in particular is unusually low. Beggars belief that care suite pricing at an average across N.Z. of just $227K in mid-late 2020 is the optimum scenario OCA. Are we running a charity ? I think someone / some people have been incredibly lazy with adjusting prices and have really misjudged things.
.

I wonder what the margin is on those new care suites selling an average for $227k

Aren't they 'premium' as well ....or is 'premium' something else ...Oceania lingo is a bit beyond me at times

[winner69]

I wonder what the margin is on those new care suites selling an average for $227k

Aren't they 'premium' as well ....or is 'premium' something else ...Oceania lingo is a bit beyond me at times

Forgot that strategy is lower margins but greater turnover ..... makes Oceania heaps

[Beagle]

I wonder what the margin is on those new care suites selling an average for $227k

Aren't they 'premium' as well ....or is 'premium' something else ...Oceania lingo is a bit beyond me at times

Probably reflects regional differences in the mix of care suites selling this period compared to the previous periods. Care Suites at the Sands or Meadowbank are likely to be much higher than regional N.Z. but all the same there's no question an average price of $227K in the most recent half year is a disappointing number, there's no way to sugar coat that.

[percy]

Probably reflects regional differences in the mix of care suites selling this period compared to the previous periods. Care Suites at the Sands or Meadowbank are likely to be much higher than regional N.Z. but all the same there's no question an average price of $227K in the most recent half year is a disappointing number, there's no way to sugar coat that.

Most probably best to think the care units are like Pak"n Save,they turn them over quickly.
Lower margin on high turnover can be very profitable.

[Waltzing]

the jumping ship of Earl is not a good look and hunting talent is a constant threat to public companies and he may well have become a bit bored. Lets face it its the tortoise of the sector and Earl might have wanted to drive a new Bentley.

No where to drive one in NZ but hey it looks good in the drive way.

[Beagle]

Most probably best to think the care units are like Pak"n Save,they turn them over quickly.
Lower margin on high turnover can be very profitable.

Yeah I think care suite turnover is every 18-24 months so if they wake up and smell the coffee with pricing it won't take long to start getting better returns.

[Ggcc]

https://www.stuff.co.nz/business/opinion-analysis/300246286/thought-the-property-market-couldnt-get-any-crazier-youre-wrong

[850man]

https://www.stuff.co.nz/business/opinion-analysis/300246286/thought-the-property-market-couldnt-get-any-crazier-youre-wrong

Sign of the times... more people want housing than there is housing to be had, whether it is homes or retirement village units, makes no difference. OCA should be capitalising on this and adjusting their pricing to reflect the demand. Not going to impact their ability to sell as their buyers will be getting more for their home when they sell in this market.
My worry, which I've previously said is that low OCA prices could be seen by their customers as lower quality which is a real concern.

[Maverick]

Sign of the times... more people want housing than there is housing to be had, whether it is homes or retirement village units, makes no difference. OCA should be capitalising on this and adjusting their pricing to reflect the demand. Not going to impact their ability to sell as their buyers will be getting more for their home when they sell in this market.
My worry, which I've previously said is that low OCA prices could be seen by their customers as lower quality which is a real concern.
The recent chat of OCAs pricing policy in that they are basically not pricing their stuff properly, is worthy of comment.

It is known that their pricing policy is that of “progressive pricing” , that is selling cheaper at the beginning and ramping up as occupancy rises. Anybody flying urgently somewhere knows how this works.
This makes obvious sense knowing the cafeteria , 24 hr on-call nursing etc and the myriad of other fixed costs are better paid for by spreading over many customers rather than a few. Let's face it, residents are only there for a couple of years anyway before pricing can be reset. As vacancies diminish the prices will ramp higher.

Location is always key to price setting , Nelson is currently the big care suit seller which explains the average new sale $227k price tag. It is worth noting that resales(older units) are on average $310k which obviously reflects the functioning churn and progressive pricing of Sands and Meadow bank….the process is nearly 1.5 yrs old there.

I've toured Nelson’s Gables during and after completion. These care suites are essentially similar to a nice hotel room with a largish ensuite. They have the nicely blended in gantry rails and stuff for lifting people if required . Not spectacular views but very nice all the same. I'm thinking $227k for one of these , in Nelson, is about right for now.

Now before you all bemoan “ isn't OCA about premium blah blah” I want to add the Nelson apartments upstairs deserve attention. They have the premium views, fabulous balcony and are really something else...I want one! These fellas sell between $700-$900k. That has and always will be where the OCAs substantial profit growth is going to come from. I'm talking about ongoing DMFs on expensive apartments, not the one off new sale margins or care.

Let me expand this a bit more.
OCA has 3 income streams : health care , new building margins and “village profits”.

“Health care” has passed the point of inflection. Upwards and onwards from here.

“New build margins” have and still are reducing for the next few years as the deliveries are not Auckland centric. (That income stream point of inflection is still 2 years away.)

“Village profits” ( the profit essentially made on DMFs for 3 yrs after the new and re-sales) ...now that's the interesting one to watch. They have been more or less flat but from here on they are on a nice upward ride. This is where OCAs bulk growth will come from and starts growing meaningfully in FY22. This is based on increased DMFs on a combo of existing and new sales already made so therefore cannot not happen (double negative intended)

All three income streams added together have resulted in a circa 50m profit for 3 years now as one stream raises while another falls. FY21 (finishing in 3 weeks ) will most likely be another boring 50m result…..1.5 - 2 years beyond that is when all 3 streams start to work positively together, all 3 then will be past their own inflection points. I and all the analysts seem to have concluded the same thing judging by their individual projections.

So worrying about current prices of (Nelson) care suites is a red herring to the big picture which has ample evidence now to demonstrate the plan is going very, very nicely. Just check out the DMF growths in the latest report (C/S and ILU) since listing*, that's the growth that really counts and particularly ILU DMFs as this is where the lion's share of growth is going to come from. The DMF numbers are far more crucial to the big picture than new build margins (which will ultimately go to zero after pipeline completion) or profit on “care” (which will never be spectacular leveling out around $50-55m, by my calcs). Of course , in the medium term, all 3 working positively together will be pleasant, but that's a couple of years away when Auckland new builds start selling down.

So, at the end of all this lengthy post , what does it mean,
Simply, OCA is along term hold that is right on track. We are close to all 3 inflection points when it it will all magically come right on the bottom line and we will all pat ourselves on the back saying how smart we all were to own them.


*If anybody is interested to look up the latest HY21 result presentation for the “village and apartment DMF chart". Its page 18 but note they have mucked up the 1HY20 and 2HY20 values (ie .transposed).

[Waltzing]

Only as smart as the information one has to hand.

For many with a wide range of projects having an in depth model on a specific company is only warranted if one is holding an over weight position on a specific company in a special sector.

I am sure for many information published like the post above will give investors the insight to focus with a more in depth perspective on the company and determine their level of risk.

[Bjauck]

Sign of the times... more people want housing than there is housing to be had, whether it is homes or retirement village units, makes no difference. OCA should be capitalising on this and adjusting their pricing to reflect the demand. Not going to impact their ability to sell as their buyers will be getting more for their home when they sell in this market.
My worry, which I've previously said is that low OCA prices could be seen by their customers as lower quality which is a real concern. However be prepared for the backlash from families who will then claim that they are being robbed by greedy corporates of their expected inheritances of tax free capital gains from the older generation’s real estate home investment for which the government has given an implicit guarantee.

They will want their piece of pie from the real estate property gravy train! Increasingly too they may be banking on it for being able to afford deposits for their own family size home-and-garden.

[winner69]

Good posts Maverick

[Beagle]

Good post Mav but if wages keep rising at a CAGR of 7.3% per annum that'll suck a fair bit of wind out of their sails in terms of future profit growth. Earl claimed at the recent half year analyst briefing that going forward wages would increase broadly in line with the rate of increase in the annual ministry of health grant review. Now he's abandoned ship I'm not sure what credibility, if any, one can ascribe to his forecast of this, their most substantial cost.

I am happy to concede that wages costs this year and in FY20 will have been higher than normal due to Covid but as far as I am concerned I will need to see the rate of wages growth moderate by quite a bit going forward to have more confidence in the veracity of their business model. There's little doubt that the changes in their business model will improve their net profit going forward and if it weren't for the substantial $33m per annum extra they pay staff now compared to when they listed we would have seen profit growth already from their ~ $50m baseline.

So far the only people benefiting from all the changes are staff and management. I hope shareholders start to reap decent rewards going forward.
I was a bit underwhelmed with their half year profit, with the major culprit being the matter I have been talking about.

For now I am happy to have a moderate stake in these as part of a well diversified portfolio, current portfolio allocation with no intention to change it further in the short term, is 5.6%. I note the yield is poor and unimputed so not a great fit for my plans to retire in the not too distant future and live comfortably on dividend income. These need to grow and I am not sure we will see all that much profit growth in FY22. FY23 profit growth should be better if Waimarie street is delivered on time and on budget.

[winner69]

I see they report ‘Termination’ costs in their break down of personnel costs

Some $1.2m in F20 quite a sizeable amount (relative to reported UE)

Wouldn’t want that to continue

[Beagle]

Makes me wonder what the termination cost was to tell Gasparich to "go away" immediately ?

[Baa_Baa]

Makes me wonder what the termination cost was to tell Gasparich to "go away" immediately ?

Unless some fancy employment contract clause at sign up, it's likely he has no payout on resignation except owed salary and leave, plus any accrued bonus (if any). He told them about MET when he resigned, so I think there's no way he was "terminated" by OCA (fired). He resigned, they accepted, simple and done.

[Beagle]

Unless some fancy employment contract clause at sign up, it's likely he has no payout on resignation except owed salary and leave, plus any accrued bonus (if any). He told them about MET when he resigned, so I think there's no way he was "terminated" by OCA (fired). He resigned, they accepted, simple and done.

Hope you're right. Could easily have been him saying he's resigning and happy to work out the agreed notice period and Liz telling him to "go away" immediately, quite possibly in two far less polite words. I think the fact that MET made a long detailed announcement the very next business day and OCA's announcement was very short hints at a less than friendly and amicable parting of the ways.

[winner69]

Suppose everybody happy Brent got top job

After all he has made “significant contribution to both the strategic direction and the performance of Oceania Healthcare over the last 15 months in his role as Chief Financial Officer.”

Onwards and upwards

[winner69]

Capital raise

Bloody heck -- what's up Maverick

And soon after Beagle sold heaps ...hmmm


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/369542/342873.pdf

[silverblizzard888]

Well either of two things, management think the share price is at a premium and would be silly not to raise capital in a low interest rate environment or that they have strong opportunities they want to capitalize on currently.

[winner69]

To buy stuff .... growth through acquisition

Need to play the EPS accretive trick I reckon

At $1.30 seems OK

[winner69]

To buy stuff .... growth through acquisition

Need to play the EPS accretive trick I reckon

At $1.30 seems OK

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/369544/342878.pdf

[winner69]

Good stuff -- immediately EPS accretive ....and NTA accretive

Brent's our man

[bull....]

spooky i did say 1.30 was on the cards

[Jantar]

I got just over 1/3 of the number I applied for via Jarden.

[Baa_Baa]

I got just over 1/3 of the number I applied for via Jarden.

In for a pile as well, actually hate these cap raises that dilute those who don’t have the readies to up their stake, but at this price, well I’m in for the long game.

[Sideshow Bob]

I got just over 1/3 of the number I applied for via Jarden.

Holder and didn't even get a sniff via Craigs.....

[teabag]

got a shade over 1/4 of application, via chrisLee

[Beagle]

To buy stuff .... growth through acquisition

Need to play the EPS accretive trick I reckon

At $1.30 seems OK

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/369544/342878.pdf

Buying at a 3% discount to CBRE's valuation as of 31 March 2020 is an exceptional deal and I note its a full feature village with swimming pool bowling green etc which marks a bit of a departure from OCA's other villages. Its not far away from SUM's Hobsonville village and i know that village has been extremely lucrative for SUM.

Being low to mid single digit underlying eps accretive with immediate effect and with ongoing growth from NTA discount realization as well as scope for inclusion of care suites on the site...all looks really good to me. Likewise the Pukekohe land acquisition facilitates the transformation of a very small low value old care facility into a modern full feature retirement village and will be a good earner for them in this fast growing area. Both these acquisitions add scale to the company without much of any extra overhead. All good so far.

Issuing shares at such a discount, not so good. Doing a capital raise just before they announce their FY21 profit also makes me a little nervous.

Warning - Good rant about Cindy's tax war against investors follows :-

Cindy dressing up the removal of investors ability to claim interest as deductible against rental income as "closing a loophole" is the most disingenuous tripe I have ever heard and cuts directly across the fundamental ethos of the taxation system that a business expense necessarily incurred as part of earning revenue should be tax deductible. That fundamental principle is well enshrined in tax law throughout the western world and has been for as far back as I can ever remember. Calling it "closing a loophole" is blatant leftist propaganda and an outrageous bald faced lie.

No question its a game changer for property investors and over the next four years as interest deducibility is gradually phased out it will suck some wind out of property investors sails.
Might apply for $50K worth in the retail OCA offer if its at the same price as the institutional offer $1.30, (which I think it will be), or might buy some more WHS and / or HLG instead, lets see what their results look like in the next 2 days. Good to see this site up and running again.

[Beagle]

Suppose everybody happy Brent got top job

After all he has made “significant contribution to both the strategic direction and the performance of Oceania Healthcare over the last 15 months in his role as Chief Financial Officer.”

Onwards and upwards

Yes, very happy.

[alokdhir]

Tax loophole which was mentioned while removing mortgage interest deductions for property investors ...they were referring to actual users or owners occupiers not getting that benefit while property Investors getting it as it was a business for them . Owners cannot deduct mortgage interest from their salaries but investors could thus it was a loophole or not level playing field as per them and many others

[Bjauck]

Tax loophole which was mentioned while removing mortgage interest deductions for property investors ...they were referring to actual users or owners occupiers not getting that benefit while property Investors getting it as it was a business for them . Owners cannot deduct mortgage interest from their salaries but investors could thus it was a loophole or not level playing field as per them and many others

Owner occupiers cannot deduct interest because they do not earn taxable income from owning the home. Their annual accommodation benefit from their ownership is tax free. For some reason the income tax system does not tax that benefit from ownership. Owner occupiers still have the advantage. That is the loophole! It still needs to be closed...the playing field is still not level.

[850man]

Tax loophole which was mentioned while removing mortgage interest deductions for property investors ...they were referring to actual users or owners occupiers not getting that benefit while property Investors getting it as it was a business for them . Owners cannot deduct mortgage interest from their salaries but investors could thus it was a loophole or not level playing field as per them and many others

This is not a loophole and the government and other commentators using this term were deliberately misleading the public. This chnage will remove the ability for a residential rental property business from claiming the interest costs for any money they have borrowed (i.e. mortgage) as an expense against revenue earned when calculating net profit. Every business except not residential rental property can claim interest costs as an expense, this is a standard activity and not a loophole. The ability to run a residential rental business at a loss on paper and claim that loss against your salaried earnings as an expense went years ago - LAQC.
This new move will result in either landlords selling their rentals or increasing rents to cover the increased costs they will face. Either way less rentals and those that remain will become more expensive, great outcome for renters!
(apologies this is off-topic)

[winner69]

Won’t be funny if they put retirement sector interest and capital gains into the equation ......you never know what may happen these days

Some say current tax treatment for the sector is a ‘loophole’

[Habits]

Tax loophole which was mentioned while removing mortgage interest deductions for property investors ...they were referring to actual users or owners occupiers not getting that benefit while property Investors getting it as it was a business for them . Owners cannot deduct mortgage interest from their salaries but investors could thus it was a loophole or not level playing field as per them and many others

I suppose next we won't be allowed to use rent to pay off the mortgage as its also unfair to FHB ... Might come a day when we give the total rent to govt. Just kidding,, but this govt has been scheming and plotting ever since 2017 election and no doubt they still are. Thats good for the appeal of equities, some of which have a lot of room left to run. The rental announcements have also brought about low wholesale interest rates,, another positive for equities.

[James108]

Agree calling it a loophole is disingenuous but overall very happy with the change, taking the steam out of the out of control house inflation is more important than tax norms. Housing is supposedly a human right and it is and should be a very heavily regulated sector, all levers should be pulled until residential housing delivers an outcome much closer to what society requires. Luckily for those of us invested in Oceania I believe they are doing an excellent job on delivering on their societal expectations of excellent care.

The outcome as I see it will be, downward pressure on house prices, upward pressure on rents (although the additional costs will not be fully passed on). In Auckland after 10 years of increasing the build rate of new dwellings construction has finally started to exceed that required by population increase, I expect this will help reduce upward pressure on rents. Winners are FHB, losers are landlords and lifetime renters. Owner occupiers little impact.

For us Oceania (and SUM in my case) holders I think the 20% increase in house price seen in the last year will continue to flow through the accounts in the years to come. This may be moderated by maybe a fall in the order of 10% (?) over the next few years.

[Bjauck]

Won’t be funny if they put retirement sector interest and capital gains into the equation ......you never know what may happen these days

Some say current tax treatment for the sector is a ‘loophole’ Labour certainly have some big knives out at the moment. However the villages are usually owned for decades. The government would be cautious about revisiting that taxation of ORAs. More accommodation is needed not less.

[James108]

Labour certainly have some big knives out at the moment. However the villages are usually owned for decades. The government would be cautious about revisiting that taxation of ORAs. More accommodation is needed not less.

I agree, I think the fact these villages provide lots of development at a time when this is sorely needed, increase housing density and excellent care that the government is unwilling to provide themselves insulates them from being a target of a tax that could slow down the excellent work they do.

[Zaphod]

That would depend on how popular sticking it to 'em is with the general populace. I wouldn't underestimate how powerful virtue signaling is, especially towards the end of the electoral term.

[Bjauck]

..Calling it "closing a loophole" is blatant leftist propaganda and an outrageous bald faced lie.
... Thanks for your post. Totally agree. Changing circumstances notwithstanding, Robertson's failure to honour a specific previous promise showed his political manipulation. There were other ways to cool investor demand without lies. I say that as a former Ardern admirer.

[Habits]

Agree calling it a loophole is disingenuous but overall very happy with the change, taking the steam out of the out of control house inflation is more important than tax norms. Housing is supposedly a human right and it is and should be a very heavily regulated sector, all levers should be pulled until residential housing delivers an outcome much closer to what society requires. Luckily for those of us invested in Oceania I believe they are doing an excellent job on delivering on their societal expectations of excellent care.

The outcome as I see it will be, downward pressure on house prices, upward pressure on rents (although the additional costs will not be fully passed on). In Auckland after 10 years of increasing the build rate of new dwellings construction has finally started to exceed that required by population increase, I expect this will help reduce upward pressure on rents. Winners are FHB, losers are landlords and lifetime renters. Owner occupiers little impact.

For us Oceania (and SUM in my case) holders I think the 20% increase in house price seen in the last year will continue to flow through the accounts in the years to come. This may be moderated by maybe a fall in the order of 10% (?) over the next few years.

Brand new housing will be exempt from the BL and interest deductions... govt already signalled plus will not want to upset the construction sector. There is already a trend of build to rent and this move will drive more investors over to new homes I am sure

[Waltzing]

Not a complete write off of a policy but imagine if this sort of malarkey is extended to other party drinks and chips.

Its a slippery slope and if drinks dont sell it will TRY SOMETHING ELSE QUICK!!

we now only have a small holding after that lovely chao at the helm jumped cruise ship.

[bull....]

Won’t be funny if they put retirement sector interest and capital gains into the equation ......you never know what may happen these days

Some say current tax treatment for the sector is a ‘loophole’

yep every dick and harry will be building retirement villages now since they provide such big tax benefits ( loopholes) . the sector will become a glut of villages in the future

[Greekwatchdog]

Yes for the Glut of people who want to buy them..

[Waltzing]

winner is on the money honey... its a socialist party now. Anything goes whatch out. Did not think you would see the day well its here ladies and gentlemen and you wonder why some of us started shipping cargo to estonia. Its a 4 term government and this is just the beginning.

[winner69]

Ok .....what’s going to happen with the sha prices of OCA and others because of these changes

All took a hit yesterday cos of possible fall in property prices

[Blue Skies]

Ok .....what’s going to happen with the sha prices of OCA and others because of these changes

All took a hit yesterday cos of possible fall in property prices



Informed commentary suggests if there's a 10% correction in property prices, they will only fall back to where they were 4 months ago so should have little if any impact in the long run.
Not surprising to see some short term negative sentiment, the market is always over pessimistic just as much as swings to over optimistic.