OCA - Oceania Group - retirement villages

[BlackPeter]

Yes agree on both points, not a convincing volume for a leak.

Maybe just a small leak? Who knows ...

[dobby41]

Maybe just a small leak? Who knows ...

An up 1% leak?

[Mel]

An up 1% leak?
I agree its just investors who see OCA as undervalued at current prices, with hopefully some actual share price appreciation after tomorrow's announcement (despite the headwinds).

[bull....]

there was something in the budget for retirement stocks ... well sort off they scrapped the price cap on houses for first home buyers help support the sagging housing market

[thegreatestben]

I think they want to enable first home buyers to mop up all the properties that landlords want to dump before they can no longer claim interest against. Nice to see OCA up today.

[Sideshow Bob]

Oceania positioned for growth - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/392382)

Oceania today announced unaudited Underlying Earnings before interest, tax, depreciation and amortisation (EBITDA) of $76.2m for the year ended 31 March 2022, a 16.2% ($10.6m) increase on the year ended 31 March 2021.

Highlights:
• Oceania announced to the market on 9 May 2022 that it had entered into conditional agreements to purchase Remuera Rise (Newmarket, Auckland) and Bream Bay Village (Northland) for approximately $57 million.
• 450 sales across independent living apartments, villas and care suites throughout the year to 31 March 2022.
• 550 units and care suites under construction as at 31 March 2022 and 300 units and care suites forecast to complete in the year ended 31 March 2023.
• Operating cashflow for the year to 31 March 2022 was $105.5m, compared to $96.0m for the 10 months to 31 March 2021, reflecting strong first time sales and resales during the period.
• Total assets increased to $2.2 billion as at 31 March 2022, compared with $1.9 billion as at 31 March 2021.
• Oceania’s net adjusted value (NAV) has increased to $1.38 per share.
• Increase in facility size from $350 million to $500 million and an extension of maturity date to Financial Year 2028.
• Final dividend of 2.3 cents per share (not imputed) announced. This will have a record date of 7 June 2022 and will be paid on 21 June 2022. The Dividend Reinvestment Plan will apply to this dividend.

[winner69]

............

The $59m is the underlying profit I am expecting that OCA will report.

..................
While these small nuisances will affect Fridays result it doesn't matter long term as long as those KPIs mentioned are about right.

Hope that helps.

Reported $56.7m so you must be a bit disappointing eh Maverick (in $ up 16% but eps on my calcs about the same as last year)

But no worries they headlined they are 'positioned for growth' so no worries

Ny view Book Value per share up 10% to $1.32 ....not great but OK

[Muse]

Reported $56.7m so you must be a bit disappointing eh Maverick

But no worries they headlined they are 'positioned for growth' so no worries

Ny view Book Value per share up 10% to $1.32 ....not great but OK

pretty bloody close in my book

[mike2020]

I think it says $1.38

[winner69]

I think it says $1.38

The $1.38 is a thing they call Net Adjusted Value ....NAV

[bull....]

quick look
wasnt to bad a result .. surprised a little i must say
there margins were up when they sell stuff too cheap ( surprised ) but as they say this will provide a buffer going forward.
operating cashflow up too which is good
think they need to crank up the sales more which obviously means more development happening ... starting to address this issue
for all those its so much under NTA its a bargain i guess your be going its more of a bargain now lol

[Greekwatchdog]

quick look
wasnt to bad a result .. surprised a little i must say
there margins were up when they sell stuff too cheap ( surprised ) but as they say this will provide a buffer going forward.
operating cashflow up too which is good
think they need to crank up the sales more which obviously means more development happening ... starting to address this issue
for all those its so much under NTA its a bargain i guess your be going its more of a bargain now lol

I need a drink after reading that Bull. Humble Pie a touch!!

Anyway I am content and look forward to this time next year.

[hyinvest]

Operating cash flows
Net cash inflow from operating activities for 12 months (March, 2022) = 105.5 million.

Convert 12 months of OCF to 10 months to be able to compare it to (10 months to 31 March 2021)
(10*105.5)/12 = 87.9 millions (~ 9% decrease compared to 10 months to 31 March 2021).
To adjust it with 6.9% inflation
87.9*(1-0.069) = 81.8 millions (~15% decrease compared to 10 months to 31 March 2021).

EPS
(~37% decrease in EPS for 12 months) compared to 10 months
convert EPS to 10 months
(8.7*10)/12 = 7.25 EPS (~47% decrease in EPS compared to previous 10 months) without adjusting for inflation.

Total Comprehensive Income
(~31.9% decrease for total income for 12 months) compared to previous 10 months.
Convert total income to 10 months
(114.4*10)/12 = 95.4 millions (~43% decrease in total income for 10 months) compared to 10 months without adjusting for inflation.

13834

[bull....]

I need a drink after reading that Bull. Humble Pie a touch!!

Anyway I am content and look forward to this time next year.

the result explains the strenght in price yesterday and day before , people must have been expecting something positive as i said yesterday it is worth taking notice when you get a stock go against the grain of the overall market on big red days

[Rawz]

delete....

[jagger]

Convert 12 months of OCF to 10 months to be able to compare it with PCP (to 10 months 31 March 2021)


"pcp" is already 12 months.

[winner69]

Total Comprehensive Income $114.4m ..... v $167.9m for 10 months last

Quite a big drop

[winner69]

Suppose the EPS accretive crap still to come .... maybe next year

[hyinvest]

"pcp" is already 12 months.

I meant in their report they are comparing the 12 months (to March, 2022) to 10 months (to March, 2021).
I converted all results for 12 months to 10 months to be able to compare with 10 months (to March, 2021).

[hyinvest]

Total Comprehensive Income $114.4m ..... v $167.9m for 10 months last

Quite a big drop

Yes, significant drop.

[jagger]

I meant in their report they are comparing the 12 months (to March, 2022) to 10 months (to March, 2021).
I converted all results for 12 months to 10 months to be able to compare with 10 months (to March, 2021).

Got ya, you're right - the cash flow was comparing 12m to 10m.

[bull....]

Operating cash flows
Net cash inflow from operating activities for 12 months (March, 2022) = 105.5 million.

Convert 12 months of OCF to 10 months to be able to compare it to (10 months to 31 March 2021)
(10*105.5)/12 = 87.9 millions (~ 9% decrease compared to 10 months to 31 March 2021).
To adjust it with 6.9% inflation
87.9*(1-0.069) = 81.8 millions (~15% decrease compared to 10 months to 31 March 2021).

EPS
(~37% decrease in EPS for 12 months) compared to 10 months
convert EPS to 10 months
(8.7*10)/12 = 7.25 EPS (~47% decrease in EPS compared to previous 10 months)

Total Comprehensive Income
(~31.9% decrease for total income for 12 months) compared to previous 10 months.
Convert total income to 10 months
(114.4*10)/12 = 95.4 millions (~43% decrease in total income for 10 months) compared to 10 months.

13834

cash receipts are up 12% using your method

2021 ....142/10=14.2 x 12 =170
2022 ... 190-170=20 20/170=12% up positive incoming cash

[hyinvest]

cash receipts are up 12% using your method

2021 ....142/10=14.2 x 12 =170
2022 ... 190-170=20 20/170=12% up positive incoming cash

Yes, you are right.
However, I try to focus on what is left after all expenses (net cash inflow).
2021 => convert 10 months to 12 months => (95953*12)/10 = 115.14 millions (9% higher than 2022)

[bull....]

Yes, you are right.
However, I try to focus on what is left after all expenses (net cash inflow).
2021 => convert 10 months to 12 months => (95953*12)/10 = 115.14 millions (9% higher than 2022)

some of the other stuff your looking at can be timing stuff impacting your net figure.

[ronaldson]

Looks ok to me. FY dividend now 4.4cps, albeit unimputed, which is only 53.9% of underlying net profit according to the Annual Report. The 2.3cps final dividend can be taken via the DRP at a 2% discount.

OCA is positioned for growth in my view despite Covid headwinds. I saw the 12 months to 31 March 2022 as consolidating the direction of travel.

[Monarch]

Bottom page 5 of investor presentation, "refreshed strategic focus", "what does this mean for FY2023?" - "A focus on independent living units". At last.

[hyinvest]

some of the other stuff your looking at can be timing stuff impacting your net figure.

That might be the case.
Let's look at it as per share

12 months (March 2022)
105.5 millions net cash inflow /710.24 million shares = 0.148 per share

10 months (March 2021)
95.95 millions net cash inflow / 689.3 million shares = 0.139 per share

0.148/0.139 = 1.06
This means an increase of around 6% in net cash inflow per share for 12 months compared to 10 months without adjusting for 6.9% inflation.

[Rawz]

So.. not good, not bad, divvy is okay, growth ahead.

Guess its a hold

[Panda-NZ-]

growth ahead.

How long has that been promised here.

[couta1]

Still a great long term hold, moving in the right direction re independent units, was up 3% yesterday whilst RYM was down so not expecting too much today.

[Mel]

So.. not good, not bad, divvy is okay, growth ahead.

Guess its a hold
and with the prospect of some PE interest :)

[bull....]

Still a great long term hold, moving in the right direction re independent units, was up 3% yesterday whilst RYM was down so not expecting too much today.
whole sector up today weather its all a bounce from being beaten down or rallying on results today time will tell

[Panda-NZ-]

*except for OCA/ARV.

[couta1]

*except for OCA/ARV. You might want to look again Mr Panda.

[couta1]

Someone happy to dispatch 350k shares at $1.04, must either be bored or want to build a very expensive deck. Lol

[Rawz]

Beagle and Mav havnt said anything yet. Also Ferg. The ole abacus's must be spinning pretty hard in their offices

[Maverick]

Beagle and Mav havnt said anything yet. Also Ferg. The ole abacus's must be spinning pretty hard in their offices
This takes days to unpack properly but I'm VERY happy with the result. Underlying profit is a little lower than I was expecting but that is due to less apartment sales than I anticipated. I was hoping Awatere would have finished before FY cut off but It appears not ( Hamilton contributed no sales therefore it wasn't ready before year end.) This is no biggie as the new sales just happen this FY.

The number I said was the most key to the whole OCA model working ( as in decent future profit growth)is village DMF, and they knocked that out of the park.

When you consider 3 months of the year was in some form of lockdown, they repaid the 1.8m wage subsidy and direct covid costs were $2.5m I think it is actually a very credible result. All the KPIs I outlined earlier this week have hit the mark.

Look at those new build margins , not a sign of reducing. In fact the first half margins were 26% while HY2 was 30%. (the average is as per the reported annual 28%. )

So at first brush...a very solid result and things are bang on track. Watching the share action this morning it appears no one knows what to make of this result yet but I suspect over the weekend the analysts will be beavering away and come back next week with a big thumbs up.

Back to work, no more posts from me for a while until I've squared this away properly . Beagle usually gets a good handle on things pretty quickly and I'm sure will be along shortly.

[bottomfeeder]

Someone happy to dispatch 350k shares at $1.04, must either be bored or want to build a very expensive deck. Lol
I believe that there is a concerted effort to oversell OCA. This is based on the movements in SP over the last six months. Let's be real. NTA at $1.38, inflationary pressures positively affecting real property positively and a profitable company, in a long term secure industry. This SP should be close to NTA. Why oversell the share? Can only think possibility of takeover, or coming accumulation by larger holder.

[777]

That 350,00 shares was an off market transaction. It could be simply a transfer between accounts. Family or Funds.

[couta1]

ARV the runt of the litter today with OCA up 4% in 2 days, SUM up 4% on no news and RYM smoking it up nearly 9% currently, nice not to be the at the back for a change.:cool:

[Poolboy]

Wow, Ryman up 8.2%.

Good profits for anyone thick skinned enough to have bought earlier in the week.

[Panda-NZ-]

The benefits of being a well-known large cap share is apparent today.

[couta1]

The benefits of being a well-known large cap share is apparent today. Some US funds only buy RYM when it comes to our retirement sector so no surprises there.

[Curly]

Mr Market appears to like announcement even though the Dow shows another down day. Got to be a good signal.

[Shareguy]

I’m happy with the result. 300 units to be completed next year with some premium offerings hitting the market. St Helliers will be out soon for expressions of interest. I see it as undervalued and have taken an appropriate position and have been acquiring for some time.

Positioned for growth sums it up perfectly.

[Rawz]

We will never see $1 again

[850man]

We will never see $1 again
The kiss of death... again!

[winner69]

We will never see $1 again

Agree with you big time there Rawz

This time is different ……Oceania have confirmed, without doubt, they.are on a roll and numbers wil only get better from here.

[bottomfeeder]

That 350,00 shares was an off market transaction. It could be simply a transfer between accounts. Family or Funds.

Could be, could be not. Very convenient when results come out and the SP starts to increase.

[Lease]

We will never see $1 again

Are you sure? Given the US market continues to drop, we may soon go to bear market. If that did happen, OCA would almost certainly drop under $1. But surely that will be chance to accumulate.

[Rawz]

Are you sure? Given the US market continues to drop, we may soon go to bear market. If that did happen, OCA would almost certainly drop under $1. But surely that will be chance to accumulate.

Yes i am sure. in fact if it goes below $1 ill go out and buy a hat and then proceed to eat.. wait, never mind

[flyinglizard]

If RYM, SUM, ARV and OCA all present growth annual reports, we should buy the dip instead of selling.

[Curly]

If RYM, SUM, ARV and OCA all present growth annual reports, we should buy the dip instead of selling.
I think most are.

[Lease]

Today RYM & OCA results have proven, again, that retirement village sector is one of the most resilient sector at NZX.

[bottomfeeder]

Today RYM & OCA results have proven, again, that retirement village sector is one of the most resilient sector at NZX.

Particularly with inflation being, I would speculate over 10%. Plus the tsunami of my generation coming through over the next ten years, needing security and care.

[Waltzing]

To the Experts on this stock; has OCA got a handle on expansion and staffing costs ?

Looks like the top line wasnt impacted this time by operating expenses?

As stated by someone take days to go through and finding that time is nigh impossible.

Note: 2.1 and 2.2

[couta1]

To the Experts on this stock; has OCA got a handle on expansion and staffing costs ?

Looks like the top line wasnt impacted this time by operating expenses?

As stated by someone take days to go through and finding that time is nigh impossible.

Note: 2.1 and 2.2 You can make it as complicated as you like, ten minutes reading and its easy enough to determine its a good long term hold.

[tuaman]

You can make it as complicated as you like, ten minutes reading and its easy enough to determine its a good long term hold.

Found this site. Is this up to date research? Says Buy3 Overweight 1 Hold 1 and no sell/underweight. Target price $1.49.

OCA.NZ | Oceania Healthcare Ltd. Analyst Estimates & Rating – WSJ (https://www.wsj.com/market-data/quotes/NZ/OCA/research-ratings)

[Waltzing]

" ten minutes reading"

That's enough to get you in trouble if you make that an investing Rule for all stocks.

It may be suitable however for a defensive sector like this one where you want a chance of capital growth with low probability of capital destruction.

But the FA results for this puppy require full time approach such as MAV has taken.

Notice MR has yet to comment and that is one suspects for a reason.

[jimdog31]

Today RYM & OCA results have proven, again, that retirement village sector is one of the most resilient sector at NZX.

with this bunch of clowns in power, i wouldnt rule out them messing with this sector on the way out. too much uncertainty around this IMHO

[couta1]

" ten minutes reading"

That's enough to get you in trouble if you make that an investing Rule for all stocks.

It may be suitable however for a defensive sector like this one where you want a chance of capital growth with low probability of capital destruction.

But the FA results for this puppy require full time approach such as MAV has taken.

Notice MR has yet to comment and that is one suspects for a reason.


My wife and I have a combined 60 yrs experience in this industry and about 16 yrs in OCA alone, get my point?

[Greekwatchdog]

[QUOTE=Waltzing;958424]" ten minutes reading"

That's enough to get you in trouble if you make that an investing Rule for all stocks.

It may be suitable however for a defensive sector like this one where you want a chance of capital growth with low probability of capital destruction.

But the FA results for this puppy require full time approach such as MAV has taken.

Notice MR has yet to comment and that is one suspects for a reason.


Seriously. Make your own mind up with your analyst.

The fact Beagle hasn't said anything mean he is putting his nose through the figures. After he has been in and out of this stock countless times. Just for the record neither has Ferg or Maverick commentated.

Do you still need your Mum and Dads permission to spend your own money?

[justakiwi]

You must have missed this:

#12787 (https://www.sharetrader.co.nz/showthread.php?9856-OCA-Oceania-Group-retirement-villages&p=958294&viewfull=1#post958294)



Just for the record neither has Ferg or Maverick commented.

[Greekwatchdog]

You must have missed this:

#12787 (https://www.sharetrader.co.nz/showthread.php?9856-OCA-Oceania-Group-retirement-villages&p=958294&viewfull=1#post958294)

I did. Thank you for highlighting this too me.

[Waltzing]

"about 16 yrs in OCA alone, get my point"

Applying a ten minute read is not a good idea ever to a public company.

Working inside an industry certainly reduces Risk.

[Habits]

Put away the cutlery and hide the steak knives, let's take a "ten minute" break. Couta really knows his stuff on this one at least

[allfromacell]

Very happy with the result, especially surprised by the development margins and I can't find any mention of supply chain issues or related cost pressures.

[winner69]

'Cheats' way of forecasting Underlying Profit' is Number of Sales x Realised Gain per Sale +/- a few million for the day to day operational gain/loss

This year all you needed was to forecast 450 sales and $125,300 gain per sale PLUS $1.3m to give $56.7m Underlying Earnings

I was pretty close with the $125k gain per sale but was a bit short of the 450 sales.

[Maverick]

Really nice to see some of the quieter posters with opinions on the result. The “feel “ out there seems pretty positive. OCA really is becoming easier to understand as they turn focus from the highly disruptive brown field developments to the undisruptive work and green field devlopments ahead.

I think Couta summed it up well that it only takes 10 minutes reading to get the vibe things are going ok and indeed OCA is poised for growth.

The negative ;
-The result on an earning per share (EPS) basis however remains bland. Being due to the newly issued shares soaking up the headline improved profit. So 5 years now we have got nowhere on that level.
-Corporate and staff costs continue their inexorable rise.

The positive;
-DMF village growth is growing handsomely ( this is the single most important long term KPI)
-Resales , new sales , new build margins, volumes and prices all going nicely. no weaknesses anywhere.
-empty unit numbers prove sales are still strong.
-Care DMF and PAC are growing into decent numbers now and in line with growth expectations.
-Build rate increased.
-Waimarie and Christchurch to be completed this year FY.
-affordability remains good and prices won't need unwinding due to HPI sliding.

Good to see the result presentation made simpler too with some bits dropped in the “results presentation” for the skimmers ( btw , loved the guy on the front page having a beer. Ha!) and other bits added to help in the annual report for the nerds.

What does all this mean?
Firstly the negatives listed shouldn't be unduly upsetting as they are inline with expectations but I was just hoping they would have started plateauing a little. They will at some point. I accept they are necessary as the increased company growth rate on all fronts is obvious and this all takes more people.
Now we are down to almost no profit margin left on Govt funds after care costs, it's still ok as there are now healthy extra charges for care driving profit growth now demonstrating good traction.

To digress a little , here's the reduction of the profit margin on DHB funding after care costs ...
7 years ago it was 17%. It reduced steadily over the next 4 years to only become 3 % . So for 3 years now the profit on DHB money has been steady around 3% . It was actually 1.5% this year. Now I don't know how much has been deliberate govt underfunding and how much has been covid extra costs. Time will tell. ( Pity the poor rest home owner without these fandangled contracts).

Looking forward;
From here there is still quite a wait for some EPS reward though. With the change in balance date we have a HY1 in winter and HY2 in summer. I'm expecting a weaker result next HY1 but a bumper HY2 result due to oldies hunkering down in the cold. Plus a few covid costs from earlier this year.

With my sheets updated and Waimarie- ,The Helier, brought forward then this company gets real interesting sooner than expected. For now and maybe another result ahead with another benign EPS growth, the share price has no driver to increase (unless the ultra- negative sentiment improves a little) but the profits after HY1 over the following 2 years , particularly 2024, became rather extraordinary. I'm keeping those numbers to myself, sorry guys, just too much work to give away.
So when to buy in is the big question; to wait 6 months or longer seems logical but any big boy who can see the profits looming( which are easy now now with less effort) as my proven spreadsheets are telling , then whammo. This thing is going to “go off” sometime between now and early 2024.

I honestly think Oceania`s biggest risk now is being taken over. These numbers are getting easier to understand in every report. Tons of history now and derisked.The incredible accounting complications of brown field development by emptying , tearing down 15% of your care beds before taking years to build/resell new ones are over as they now only have non disruptive work ahead. You'll notice the usual diagrams of this breakdown/ rebuild process are no longer in the presentations.( of course you did ).Yes, we might get an easy 30% profit tax free with a takeover but I can say that it would significantly pale in comparison to just a couple of years ahead.

Keep an eye on Greg, Liz and the others .I'll bet my right testicle they`ll be buying in as soon as they are allowed.

Over the next 2 years it's going to get pretty sporty.

[Beagle]

https://www.nzherald.co.nz/business/lower-revaluations-push-oceania-healthcare-profit-down-29-operating-revenue-up/LQ24UDW7OHOSNBXYCDH4AAGP6E/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+21 +May+2022

Press are writing it up as a great story.

Oceania themselves say "Believe in Better". http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/392382/370976.pdf

Village DMF revenue up a whopping 30%, Premium room income up 24%, EBITDA up 16%. Sounds fabulous.

So why didn't the share price take off on Friday like RYM's and SUM's did ?

Maverick seems happy.

What could possibly be keeping the share price in the doldrums ? a clue is in the negatives posted by Mav...but wait there's more on that front...I have more number crunching to do and will opine in due course.

[Waltzing]

Look forward to MR B's report.

Note: 2.1 and 2.2 , 3.1 ECT still make for an extensive read.

Fairly large set of Financial Accounts.

At a glance cost's look rampant...

[Ferg]

Overall the result says to me they are on track to deliver growth. As I peruse the old annual reports and the various promises of building new suites and ILUs etc. - OCA have a history of delivering so I have no reason to doubt them on their build rate. They have stated in previous reports the development cycle can take up to 8 years to reach EBITDA maturity for a brownfield site.

Costs aren't too bad IMO. Although an issue for me is the increased Corporate costs - I wonder if some of that is non-recurring due to the share placement, bond issue and 2 acquisitions - but they would have normalised that in the underlying profit which they didn't (I'm referring to opex over and above what was capitalised).

Funding costs increased by $2.6m due to the new retail bond and developments being funded by a combination of debt and ORAs (last year ORAs funded more than 100% of capex, this year was 89% if you exclude the late acquisitions). This sort of cost increase is to be expected.

Staff related costs* are 65.9% of revenues* which is up slightly on last year's 65.2%. Again, there may have been some one off costs due to COVID - time will tell. *Note: this is based on the adjusted underlying numbers. The rate of growth is slowing and I can see cost savings are being made in other areas so I'm genuinely not worried.

When looking at the care results, keep in mind the realised gains (new and resales) for care suites are included in the village numbers. Of the total realised gains of $56m roughly $13m was from care suites (last year $12m).

The pleasing thing for me is that items such as care+PAC revenue per average bed increased 5% over the year. I have previously stated Management and the Board know what they are doing. IMO they are doing what they can to address the biggest issues as evidenced by this sort of thing. Also, cost recoveries from village fees are at an all time high ($ and per ILU).

I expect to see higher everything next year (hopefully not corporate costs) and I will put it out there now that DMF revenue will be $57m+ versus this years $47m (I previously estimated it at $49m but hey.....close enough).

In summary this result gets a pass from me. They have turned a corner (inflection point anyone?) and are poised for growth and efficiencies of scale. I'm a happy holder.

[Rawz]

I try to buy shares to hold for 10 years. Mav saying only need to wait 2 years for the huge profits. Excellent.

[winner69]

So Mav says OCA do what they say and ‘This thing is going to “go off” sometime between now and early 2024.” And profits are going to be huge.

Jeez, wonder what happens after that ……even ‘huger’ profits …maybe exponential growth


Sounds good, thanks Mav

[couta1]

Look forward to MR B's report.

Note: 2.1 and 2.2 , 3.1 ECT still make for an extensive read.

Fairly large set of Financial Accounts.

At a glance cost's look rampant... Do you own any of these or are you just navel gazing? I can never tell.

[Maverick]

Great post Ferg and thanks for sharing. I'd give you another rep points if I could but I'm told to spread the love around first , so sorry about that, you deserve it.

Agree with your numbers (and for the record , we haven't worked on this result together). Excellent summary and I concur with you on ALL of it.

While we Can only work on the historical numbers to work out the future, the last 3 years have been unusually negative for OCA.
-borders closed making our staffing more expensive.
-high extra covid costs
-sales and building disruption
-rapidly increasing corporate and finance costs due to business expansion.
-government underfunding to breaking point (without premium revenue streams)
-very negative sentiment , on the share price at least

well the numbers are so big now that WHEN even one of these negatives return to positive , and they must,(which I have not allowed for) then that's a lot of extra icing on the cake.

Anyway, didn't want to start raving about more possibilities, just wanted to thank Ferg for his excellent report. Great job!

[Bjauck]

The Aged Care Association seems unhappy that nothing much came out of the budget for rest homes and aged care nursing. It seems that the government is still expecting rest homes to be run on the smell of an oily rag - or to be cross subsidised by those who purchase retirement village ORAs.

budget-2021-8m-for-aged-care-commissioner-absolutely-unnecessary (https://www.stuff.co.nz/national/health/125198785/budget-2021-8m-for-aged-care-commissioner-absolutely-unnecessary)

[couta1]

The Aged Care Association seems unhappy that nothing much came out of the budget for rest homes and aged care nursing. It seems that the government is still expecting rest homes to be run on the smell of an oily rag - or to be cross subsidised by those who purchase retirement village ORAs.

budget-2021-8m-for-aged-care-commissioner-absolutely-unnecessary (https://www.stuff.co.nz/national/health/125198785/budget-2021-8m-for-aged-care-commissioner-absolutely-unnecessary) Yes a pretty miserable "Be Kind" message from this helicopter money Govt, plenty of money for all kinds of other fringe stuff but nothing for this very important sector, meanwhile a few more smaller operators and not for profits will be about to throw the towel in, who will pick up the slack? best the larger players don't and pass the problem back to the Govt. Add to this that completely nutty immigration policy change which means the partner of a much needed nurse for instance can now only come on a visitors visa and not work as they currently can, meanwhile Aussie will welcome both on an open work permit, just insane with the dire need in the sector.

[winner69]

I know it's now 'historical' but the FY22 Cash Flow statement was a horror

Collected $190m in fees, gave $208m to employees and suppliers and spent $14m on other stuff which sort of gives an operational cash outflow of $42m

Suppose that's the cost of the 'charitable' stuff that Beagle refers to .... but $42m is a lot

Just as well they got $144m for selling stuff .... but subsidising that to the tune of 442m doesn't seem to make much sense

[Ferg]

I know it's now 'historical' but the FY22 Cash Flow statement was a horror

Collected $190m in fees, gave $208m to employees and suppliers and spent $14m on other stuff which sort of gives an operational cash outflow of $42m

Suppose that's the cost of the 'charitable' stuff that Beagle refers to .... but $42m is a lot

Just as well they got $144m for selling stuff .... but subsidising that to the tune of 442m doesn't seem to make much sense

Hold my beer winner - I have been looking into this given it also initially concerned me.

DMFs are invoiced to the client on say a monthly basis (usually over 3 years I believe). The amounts owed by clients appear as a negative within the workings for the ORA liability (see page 70). This management fee amount payable by the client only crystallises when the outgoing resident departs the village. BUT that amount does not appear in the cashflow because the outgoing client is refunded a nett amount being their ORA less the management fee owed.

In the cashflow we have large ORA receipts for all sales of $214m, then a deduction for ORA payments for outgoing tenants of $70m which has been reduced by the management fee receivable to OCA (and payable by the outgoing tenant). So we have some mismatched lines in the cashflow. Payments for village opex & management appear in the cashflow as per normal as part of the $207m, but the funds to pay for that are hidden within the outgoing ORA payments which have been reduced by the amounts owed by outgoing tenants. In other words the top line receipts from clients of $190m are NOT grossed up for the management fee deducted from the outgoing ORA payment.

IMO to show this correctly, one would gross up the receipts from clients and the outgoing ORA payments for a nett effect of nil on the cashflow. I reckon this would show a more correct cashflow and it wouldn't seem such a "horror" despite the fact the client didn't pay the amount directly; it was paid indirectly via a reduced outgoing ORA refund. OCA did disclose this amount previously - per the 2021 annual presentation, page 32 has a reconciliation of resales cash flows - that shows $14m "DMF realised". That would change the 2021 operating cashflow to a positive. I cannot (yet) find this same figure for 2022 - this might be one of the things that was dropped.

[Waltzing]

"IMO this would show a more correct cashflow "

The cash flow statement is therefore misleading and the Auditors need to Tag it?

In accounting there is a concept called Materiality.

"Its all Debits and Credits all the way down young man."

A play on the classic joke of doctor Richard Feynman.

[Ferg]

No, I don't think so. It's a question of interpretation. By a strict interpretation of cash flows, they have shown it correctly. But from a commercial perspective it is misleading and/or results in misinterpretation. I suppose that is why they used to previously provide the reconciliation because they could see it was a potential issue. I reckon if OCA were to adopt the method I proposed, the auditors may "tag it" as not being in compliance with the rules.

Edit: I should qualify my post in that I am NOT an expert in IFRS.....and my view above may be incorrect. Maybe there is wriggle room within the standards to do what I suggest.

[fish]

Appreciate the financial analysis we are being gifted .
I really struggle with some acronyms-eg ILU I was able to deduce but what is IFRS ?
?a type of financial reporting system or standard

[alokdhir]

Appreciate the financial analysis we are being gifted .
I really struggle with some acronyms-eg ILU I was able to deduce but what is IFRS ?
?a type of financial reporting system or standard

International Financial Reporting Standards ...many many versions too

https://www.ifrs.org

[jagger]

[deleted].

[Baa_Baa]

Edit: I should qualify my post in that I am NOT an expert in IFRS.....and my view above may be incorrect. Maybe there is wriggle room within the standards to do what I suggest.

The best thing about standards, is there are so many to choose from 😂

Thanks for your thoughts and Mav, I’m pretty happy with the results, the investment thesis is intact with a bright future ahead

[winner69]

Jeez - to get the big bonus(LTI) in a few years time they only need to grow underlying EBITDA by 10% pa from 2021 to 2024

EPS Performance Hurdle: Oceania’s annual growth in underlying earnings before interest, tax, depreciation and amortisation per share over the relevant performance period is equal to or greater than 10% per year

And hope the TSR is greater than the 35th percentile return of the NZX50 companies

Doesn't seem particularly demanding does it ...... hopefully not what they think shareholders want them to do

So did +16% in 2022 .... halfway to hurdle with 2 years to go ..... only need 7% pa over next two years ..... bonus money for jam

[Beagle]

Yes a pretty miserable "Be Kind" message from this helicopter money Govt, plenty of money for all kinds of other fringe stuff but nothing for this very important sector, meanwhile a few more smaller operators and not for profits will be about to throw the towel in, who will pick up the slack? best the larger players don't and pass the problem back to the Govt. Add to this that completely nutty immigration policy change which means the partner of a much needed nurse for instance can now only come on a visitors visa and not work as they currently can, meanwhile Aussie will welcome both on an open work permit, just insane with the dire need in the sector.
Just a few very quick comments from me today as a prelude to my detailed thoughts in due course. The political environment and the massive squeeze the Govt are placing on the care sector is a very serious headwind for OCA that won't abate anytime soon. If this woke Govt gets a third term, run for the hills :scared:



In the cashflow we have large ORA receipts for all sales of $214m, then a deduction for ORA payments for outgoing tenants of $70m which has been reduced by the management fee receivable to OCA (and payable by the outgoing tenant). So we have some mismatched lines in the cashflow. Payments for village opex & management appear in the cashflow as per normal as part of the $207m, but the funds to pay for that are hidden within the outgoing ORA payments which have been reduced by the amounts owed by outgoing tenants. In other words the top line receipts from clients of $190m are NOT grossed up for the management fee deducted from the outgoing ORA payment.

IMO to show this correctly, one would gross up the receipts from clients and the outgoing ORA payments for a nett effect of nil on the cashflow. I reckon this would show a more correct cashflow and it wouldn't seem such a "horror" despite the fact the client didn't pay the amount directly; it was paid indirectly via a reduced outgoing ORA refund. OCA did disclose this amount previously - per the 2021 annual presentation, page 32 has a reconciliation of resales cash flows - that shows $14m "DMF realised". That would change the 2021 operating cashflow to a positive. I cannot (yet) find this same figure for 2022 - this might be one of the things that was dropped.
Agree with your prognosis and this eases concerns regarding operating cashflow but there is very little money in care and care suites appear to confer no pricing power...more to come in due course on this topic.


Look forward to MR B's report.

Note: 2.1 and 2.2 , 3.1 ECT still make for an extensive read.

Fairly large set of Financial Accounts.

At a glance cost's look rampant...

Rampant they are indeed. The rate of increase in employee costs has risen to an all time record (12.65% including the profoundly illogical decision to repay the wage subsidy or 11.3% net of this "donation", choose your preferred type of poison) and is seriously outstripping the increase in Rest home Hospital and care fees, up only 5.3%. The increased rate at which employee costs are increasing is in many ways caused by the "Perfect Storm" of Covid and its impacts I'll talk about in more detail when time allows. Sorry, mate, my granddaughter has just arrived...and trust me on this, the decision to spend time with her cuteness or time analyzing OCA financial statements is a very easy one LOL

[Greekwatchdog]

For Bars review. Note they dropped all valuations by 10% last week re market conditions.

OUTPERFORM
Oceania Healthcare (OCA) reported a strong FY22 result given difficult circumstances. Underlying earnings and annuity
EBITDA were up ~+10% versus FY21 on an underlying basis against our expectations of a small decline. Relative to the
other three main listed aged care operators, OCA is more than 2x as exposed to care earnings where funding is currently
increasing substantially slower than costs. It is also (and related) not able to fully capture the all time high resale gains as it
is buying back some independent living units (ILUs) for brownfield development. What OCA has is a fast growing, defensive
and cash generative care suite earnings stream. OCA's care suite DMF and resale gains now equal approximately half of
OCA's FY22 annuity EBITDA. We have left our NZ$1.55 target price and OUTPERFORM rating unchanged.
What's changed?
FY22 result stronger than expected as OCA, much like RYM and ARV, did not see an Omicron slowdown
Annuity EBITDA was materially ahead of our expectations. The key areas that beat our expectations were (1) higher resale gains
driven by higher volumes and margins primarily related to care suites, and (2) lower costs. Net debt of NZ$370m was +NZ$40m
ahead of our expectations due to a number of small deviations and higher capex as OCA ramps up its build rate materially.
The care suite model: Underappreciated and transformational
We believe OCA's pioneering care suite model is underappreciated by the market. General cost increases and funding pressures have
muddied the waters with regards to what we consider a transformational change for OCA over the last two to three years. DMF and
resale gains for care suites have increased by a factor of 2x and now equal ~50% of OCA's annuity EBITDA. This compares to our
estimate of <10% for the other three operators on average. This earnings stream has high cash conversion and low exposure to both
government funding and house prices; the two biggest long terms risks in the sector. We think this warrants a higher multiple.
OCA one of our most preferred stocks in the NZ market
We consider OCA one of the most attractive risk rewards across NZ. OCA is valued on ~10x 12m forward PE, 0.75x book value and
19x EV/annuity EBITDA, a 25-40% discount to its three listed peers. We have some sympathy for the market's impatience with OCA's
transformation. OCA reported similar earnings in FY22 as it did in FY18 despite investing >NZ$700m in the business. Looking ahead,
we believe OCA will deliver sector leading growth and cash conversion. OCA's earnings is substantially less geared to house prices,
this has hurt OCA over the last few years. With house prices in retreat we believe it will be OCA's time to shine.

[justakiwi]

For those who still seem unable able to comprehend the importance of the care arm of this business, read this and let it sink in (underline is mine)



The care suite model: Underappreciated and transformational
We believe OCA's pioneering care suite model is underappreciated by the market.

[Bjauck]

Forbar’s opinion summarised is that the OCA express coach bus to increased profits is further delayed, with government laying down even more underfunding road spikes, but when it eventually arrives it will be a super-luxurious char-a-banc with state of the art care models.

[Beagle]

Annual Review.

Positives
1. The new acquisitions at Remuera and Bream bay are the stand out positive feature of 2022 as the Remuera acquisition in particular is highly likely to be underlying eps accretive and there's plenty of room for future development at Bream Bay.
2. That together with negotiating more funding headroom for future acquisitions is a material and notable achievement for 2022.
3. The review of the development portfolio and planning to achieve an increased build rate going forward is also a good positive.
4. Enduring another year of Covid without any material slippage in underlying eps of just a fraction under 8.0 cps is a satisfactory result considering the extremely challenging environment both on an operating level as well as in a political environment that's clearly unhelpful to the sector.

Negatives
1. The longstanding issue with staff costs rising much faster than operating revenue continues and in fact has got worse this year than ever before.
Total employee costs compared to last years annualized figure are up a staggering 12.65% substantially worse increase that the systemic long run average of 7-8% increase per annum.
2. The repayment of the wage subsidy of $1.8m is completely illogical considering the Govt's systemic underfunding of basic care services and is a very poor decision in my opinion.
3. Even backing out the wage subsidy repayment staff costs increased 11.3% against Rest Home and hospital care fees only up 5.3%.
4. Importantly Government funding is unchanged on the year !
5. Staff costs in total amounted to ~ 67% of all revenue received and importantly the increase this year in human resource ate up 91% of all the increase in gains made from the increases in premium rooms and DMF fees so the long run trend of staff eating ostensibly all the gains from the business transformation process over the years continues unabated.
6.Underlying eps of just on 8.0 cps for 2022 by my calculations in real inflation adjusted terms, (inflation is a serious matter now), is now 17.5% lower than in 2018, the first full year.
7. From my review of the financial statements other costs in the business are also rising at a pace that's concerning.
8. Delivery of new units in 2022 was disappointing, the second year in a row.

Notes from the analysts call on Friday afternoon
1. Direct Covid costs of $2.5m in FY22 are unlikely to repeat in FY23. Comments were made that there was also indirect Covid costs but no explantion was offered as to whether they might repeat.
2. Remuera Rise average age of residents 83.6 years, sounds like 1 resident has vacated already and the apartment will be marketed at about $500K more so management are confident this will be eps accretive and that their assumptions around that are conservative
3. Good cover on fixed price construction contracts right through to December 2024 (which was a very pleasant surprise !)
4. Actively looking for greenfields development sites and some softening in land prices has been observed.
5. An analyst asked if they could detail the price increase that had been applied for care suites and the response was 1-2% (in a year real estate went up circa 20%) The analyst was so surprised he asked again if that figure was right and the CFO assured everyone it was. You could have cut the air with a knife, I think everyone was genuinely shocked, I know I was ! Its clear OCA have very little if any pricing power with care suites.
6. There may be many more care suites for sale than are officially on the books as vacant. Its would appear there are a large number presently being used as PAC rooms. I confess I was getting a bit sleepy towards the back end of the hour long analysts call after spending all morning deciphering the dog's breakfast accounts so please take the total number of units for sale expressed as 450 in the conference call as an indicative number at this stage. I am 99% sure that's the number I heard which is really concerning because that's a whole year's worth of stock. Mav is looking into this with the CFO, and will provide more detail in due course.

Outlook
1. Its one thing to state a new goal of 300 units and another to achieve it. Achieving it in FY23 should be a foregone conclusion with 113 care suites in Milford deferred from last year, (so its really only 187 units in FY23) but I will believe it when I see it in FY24 and beyond.
2. From my 5 year review its clear there is very very little money in care, nothing in basic care and very modest returns from premium care and care suites and notwithstanding the vitally needed pivot towards more building and acquiring more independent living units OCA will be saddled with an extremely high level of their business model being in care which accords a very low return on capital employed for the foreseeable future.
3. The Global shortage of care and nursing staff and fierce competition for them and demands for ever increasing pay rates for the risky work involved are not a situation I foresee changing any year soon. Expect a continuation of multi year trend of staff eating the vast majority of all gains from DMF and premium care revenue increases.
4. The political environment is extremely unhelpful, actually hostile to OCA both from a funding perspective and residency for care and nursing staff with this Govt in its "infinite wisdom" making it less attractive to come here than for staff to go to Australia. With care and nursing staff (nurses up to a whopping $30 an hour more) able to earn substantially more in Australia I expect the recent opening of the borders to exacerbate the staff shortages not help the situation.
5. Fixed price construction costs locked in on projects through to Dec 2024 confers a material advantage compared to others in the sector.
6. 300 units this year sounds impressive but a heck of a lot of them are care suites which appear to have very limited pricing power in a high inflation environment.
7. The Helier should provide a boost in earnings as its sold down in much the same way as the Sands did in 2018 and they might get back to underlying earnings in real inflation adjusted terms in FY24 of about 10.7 cps which while being a 27% increase from this year is still a no growth scenario in real terms since the underlying eps of 2018...so 6 years without any real growth in underlying earnings and that assumes they actually make 10.7 cps in FY24 which is not a certainty.
8. Its very important to note that this woke Govt's review of the retirement village sector remains as something pending and who knows what they might do ?
Its clear I am nowhere near as positive as Maverick and Ferg.
Will they be able to grow earnings from FY24 onwards...only time will tell.
In the meantime for those who want to make a much quicker pivot towards independent living units there are SUM clear alternatives with a long proven track record of strong earnings growth and much better cost control discipline.
9. OCA are cheap and they are cheap for many good reasons and not the least of them is a proven inability to grow earnings despite a booming real estate market for the last 5 years.
10. Its very clear the tide is going out very fast in the real estate sector and the approximate halving of sales volumes recently reported is going to make it much harder for all companies in this sector to execute sales as the vast majority of incoming residents need to sell their home first.
11. I expect extremely challenging real estate and political conditions for the balance of 2022 and for as long as this woke Government is in power the headwinds are most fierce in this sector for OCA.
12. The outlook globally with almost all central banks rapidly winding back stimulatory settings also provides a very challenging backdrop for the market and I remain of the view we are in "Bear" market conditions.

If a Labour Greens Maori coalition get a third term, which they might, run for the hills.

My rating Underweight / Underperform Disc: Will retain a modest stake for now and see if the shares somehow get a lift and go from there.

Others will have a different view and that's fine. DYOR.

[justakiwi]

Why not just get right out Beagle? There honestly doesn't seem to be much about OCA that you really like. Not being a smart arse, just saying it as I see it. OCA has always been, and always will be, focused on care. You knew that when you got in, as did we all. Some of us hold for that very reason. But care is clearly not something you comprehend well, and is not an area you are interested in, either personally or as an investor.

So why do you continue to hold? Just take your money and go invest it in a company you are interested in, and one you have actual faith in. Because OCA is clearly not that company for you.




Negatives
1. The longstanding issue with staff costs rising much faster than operating revenue continues and in fact has got worse this year than ever before.
Total employee costs compared to last years annualized figure are up a staggering 12.65% substantially worse increase that the systemic long run average of 7-8% increase per annum.
2. The repayment of the wage subsidy of $1.8m is completely illogical considering the Govt's systemic underfunding of basic care services and is a very poor decision in my opinion.
3. Even backing out the wage subsidy repayment staff costs increased 11.3% against Rest Home and hospital care fees only up 5.3%.
4. Importantly Government funding is unchanged on the year !
5. Staff costs in total amounted to ~ 67% of all revenue received and importantly the increase this year in human resource ate up 91% of all the increase in gains made from the increases in premium rooms and DMF fees so the long run trend of staff eating ostensibly all the gains from the business transformation process over the years continues unabated.
6.Underlying eps of just on 8.0 cps for 2022 by my calculations in real inflation adjusted terms, (inflation is a serious matter now), is now 17.5% lower than in 2018, the first full year.
7. From my review of the financial statements other costs in the business are also rising at a pace that's concerning.
8. Delivery of new units in 2022 was disappointing, the second year in a row.

Notes from the analysts call on Friday afternoon
1. Direct Covid costs of 2.5m in FY22 are unlikely to repeat in FY23. Comments were made that there was also indirect Covid costs but no explantion was offered ass to whether they might repeat.
2. Remuera Rise average age of residents 83.6 years, sounds like 1 resident has vacated already and the apartment will be marketed at about $500K more so management are confident this will be eps accretive and that their assumptions around that are conservative
3. Good cover on fixed price construction contracts right through to December 2024 (which was a pleasant surprise)\
4. Actively looking for greenfields development sites and some softening in land prices has been observed.
5. An analyst asked if they could detail the price increase that had been applied for care suites and the response was 1-2% (in a year real estate went up circa 20%) The analyst was so surprised he asked again if that figure was right and the CFO assured everyone it was. You could have cut the air with a knife, I think everyone was genuinely shocked, I know I was ! Its clear OCA have very little if any pricing power with care suites.

Outlook
1. Its one thing to state a new goal of 300 units and another to achieve it. Achieving it in FY23 should be a foregone conclusion with 113 care suites in Milford deferred from last year, (so its really only 187 units in FY23) but I will believe it when I see it in FY24 and beyond.
2. From my 5 year review its clear there is very very little money in care, nothing in basic care and very modest returns from premium care and care suites and notwithstanding the vitally needed pivot towards more building and acquiring more independent living units OCA will be saddled with an extremely high level of their business model being in care which accords a very low return on capital employed for the foreseeable future.
3. The Global shortage of care and nursing staff and fierce competition for them and demands for ever increasing pay rates for the risky work involved are not a situation I foresee changing any years soon. Expect a continuation of multi year trend of staff eating the vast majority of all gains from DMF and premium care revenue increases.
4. The political environment is extremely unhelpful, actually hostile to OCA both from a funding perspective and residency for care and nursing staff with this Govt in its "infinite wisdom" making it less attractive to come here than for staff to go to Australia. With care and nursing staff (nurses up to a whopping $30 and hour more) able to earn substantially more in Australia I expect the recent opening of the borders to exacerbate the staff shortages not help the situation.
5. Fixed price construction costs locked in on projects through to Dec 2024 confers a material advantage compared to others in the sector.
6. 300 units this year sounds impressive but a heck of a lot of them are care suites which appear to have very limited pricing power in a high inflation environment.
7. The Helier should provide a boost in earnings as its sold down in much the same way as the Sands did in 2018 and they might get back to underlying earnings in real inflation adjusted terms in FY24 of about 10.7 cps which while being a 27% increase from this year is still a no growth scenario in real terms since the underlying eps of 2018...so 6 years without any real growth in underlying earnings and that assumes they actually make 10.7 cps in FY24 which is not a certainty.
8. Its very important to note that this woke Govt's review of the retirement village sector remains as something pending and who knows what they might do ?
Its clear I am nowhere near as positive as Maverick and Ferg.
Will they be able to grow earnings from FY24 onwards...only time will tell.
In the meantime for those who want to make a much quicker pivot towards independent living units there are SUM clear alternatives with a long proven track record of strong earnings growth and much better cost control discipline.
9. OCA are cheap and they are cheap for many good reasons and not the least of them is a proven inability to grow earnings despite a booming real estate market for the last 5 years.
10. Its very clear the tide is going out very fast in the real estate sector and the approximate halving of sales volumes recently reported is going to make it much harder for all companies in this sector to execute sales as the vast majority of incoming residents need to sell their home first.
11. I expect extremely challenging real estate and political conditions for the balance of 2022 and while Labour is in power.
12. The outlook globally with almost all central banks rapidly winding back stimulatory settings also provides a very challenging backdrop for the market and I remain of the view we are in "Bear" market conditions.

If a Labour Greens Maori coalition get a third term, which they might, run for the hills.
My rating Underweight / Underperform Disc: Will retain a very modest free carry stake.

[Beagle]

With the original float we were "sold" a story that the care suite model would generate significant returns on capital. It was sold in such a convincing way that many of us were lead to believe that return would be higher than for independent living units. We all sat around 4 1/2 years ago at an Auckland meeting drinking and toasting our pending success, "Oceania you can't have too many" We all believed the story we had been told. I think its now clear we were sold a pup.

Earl Gasparich also told us in the January 2021 analysts call that staff costs would rise in the future in line with increases in Government funding. Its clear he really had no forward visibility on this their biggest cost at all. Its a shame he's not around to face the music...I would have given him a real roasting at the forthcoming annual meeting about that !

Its clear the shares are very depressed in this pup at this point. Who knows, they might announce a couple more acquisitions this year and we might get a bounce to $1.25 at some stage. In the meantime the downside is probably fairly limited (barring a major exogenous shock) and the 4.3% yield is better than i am getting on cash.

In short JAK, there's probably a more opportune time for me to invest my capital SUM where else. For what its worth, if it were not for the recent acquisition, the pivot towards ILU and the increase in the build rate I would do exactly as you suggested.

[winner69]

Beagle said - An analyst asked if they could detail the price increase that had been applied for care suites and the response was 1-2% (in a year real estate went up circa 20%) The analyst was so surprised he asked again if that figure was right and the CFO assured everyone it was. You could have cut the air with a knife, I think everyone was genuinely shocked, I know I was ! Its clear OCA have very little if any pricing power with care suites.

Jeez that's really bad ....a 1-2% increase in selling prices ..... really bad

My tracking of the realised gains per resale (care plus ILU) doesn't make good reading - like below -

F2017 $83,795
F2018 $94,056
F2019 $85,446
F2020 $71,380
F2021 $92,335
F2022 $88,316

Making on average less per resale now than years ago.... maybe care suites are the issue .... who knows

Just one of the several things that don't seem to stack up (in my mind anyway)

A

[justakiwi]

As I noted in my post, I was not being a smart arse. I am genuinely puzzled as to why you continue to hold OCA, when there are other companies (particularly in the same sector) that would be a far better fit for you. I was simply asking, why persevere with OCA when it does not appear to meet your needs? No real need to reply though because I'm pretty sure I know the answer.




Not unpacking it any further for you JAW. I make my own decision in my own time. Its clear the shares are very depressed at present. If you'd like to offer me $1.25 for my stake I am all ears.

[winner69]

From that Forbar report - OCA one of our most preferred stocks in the NZ market
We consider OCA one of the most attractive risk rewards across NZ.

I see that Forbar are doing really well in the stock picking competition -- 5th in todays update



Just as well they didn't include OCA in their top 5 picks ---- would have been further down the leader board lol

[bull....]

beagle killed the rally :scared:

[Beagle]

As I noted in my post, I was not being a smart arse. I am genuinely puzzled as to why you continue to hold OCA, when there are other companies (particularly in the same sector) that would be a far better fit for you. I was simply asking, why persevere with OCA when it does not appear to meet your needs? No real need to reply though because I'm pretty sure I know the answer.

I changed my mind and decided to give you a proper answer, see #12844 above.

[justakiwi]

Thank you!


I changed my mind and decided to give you a proper answer, see #12844 above.

[Beagle]

Thank you!

You're welcome, you deserve a proper answer considering the very hard and risky work you do. For what its worth I think all caregivers are taking a big risk with infection and for many, transmission of the virus to their loved ones. In addition the staff shortages and extra pressure and dealing with residents with Covid and having to wear PPE must be very tough. I listened in the other day to the Nurse on the radio talking about the pressure they were under, the risk of inflection on themselves and their loved ones and all for $30 less an hour than what they could earn in Australia. I understand some caregivers are under the same and worse pressure and earning mid $20's per hour which I think is absolutely absurd. Surely given the clear danger to all workers and their families a minimum wage of $30 per hour is warranted ? I would have no problem whatsoever with this. My issue is with the Government that won't fund it and are expecting OCA shareholders to heavily cross subsidize care costs from other village operations.

In many ways Covid is "The perfect storm" for OCA.

[justakiwi]

Covid finally caught up with us (where I work) a couple of weeks ago. We have had 7 residents test positive/in isolation over the past 2-3 weeks. Fortunately, all of them have had very mild symptoms (if any), even the one unvaccinated resident who has it currently. Very interesting that most of them were charted antivirals, which seem to have been incredibly effective. We have been wearing N95 masks all shift, since the first case. Very difficult to breathe in and incredibly frustrating for our residents who are deaf/hard of hearing. They simply cannot hear us. The constant doffing and donning of PPE is tiring and time consuming, but a necessary evil. It is the simple, ever day things that become "difficult" such as taking meals, cuppas, meds to isolating residents. So frustrating to have to fully PPE up just to take someone a cup of tea. Not to mention a huge drag on PPE resources - an N95 on and off for each isolating resident - that's 6 masks just to take a cup of tea to 6 covid residents. The costs of PPE alone nationwide must be huge.

We knew it would get us eventually and we are very lucky that we managed to keep it out until well after everyone was fully vaccinated. We have had it pretty easy compared to some facilities (especially in the NI) where they have had very large numbers of positive cases. It will be interesting to see whether we get a break from new cases, or it will just quietly move through all of our residents, week by week.


You're welcome, you deserve a proper answer considering the very hard and risky work you do. For what its worth I think all caregivers are taking a big risk with infection and for many, transmission of the virus to their loved ones. In addition the staff shortages and extra pressure and dealing with residents with Covid and having to wear PPE must be very tough. I listened in the other day to the Nurse on the radio talking about the pressure they were under, the risk of inflection on themselves and their loved ones and all for $30 less an hour than what they could earn in Australia. I understand some caregivers are under the same and worse pressure and earning mid $20's per hour which I think is absolutely absurd. Surely given the clear danger to all workers and their families a minimum wage of $30 per hour is warranted ? I would have no problem whatsoever with this. My issue is with the Government that won't fund it and are expecting OCA shareholders to heavily cross subsidize care costs from other village operations.

[BlackPeter]

What amazing contributions in the last handful of pages, not just, but especially from Mav, Ferg and beagle - Thanks guys, this makes it a pleasure to return to this thread (as long as the database errors don't return :). Your effort is very much appreciated.

Of course - the posters here don't neccessarily agree on their findings and certainly not on the conclusions what they might mean for OCA's future. Actually - this is good, it helps us to see both sides of the coin. Everybody has a different stand point and therefore a different viewing angle on things - helping the others to see things they can't see. As well - nobody is able to predict the future, i.e. any sentiment how things might develop are just a personal opinion ... and it is up to the reader whether they want to share it.

So - please - lets encourage all posters to continue with such outstanding contributions instead of pushing against any of them just because we don't agree (or don't like) their conclusions. The latter is just creating a GroupThink atmosphere ... and this is the last thing we need.

[dabsman]

Beagle said - An analyst asked if they could detail the price increase that had been applied for care suites and the response was 1-2% (in a year real estate went up circa 20%) The analyst was so surprised he asked again if that figure was right and the CFO assured everyone it was. You could have cut the air with a knife, I think everyone was genuinely shocked, I know I was ! Its clear OCA have very little if any pricing power with care suites.

Jeez that's really bad ....a 1-2% increase in selling prices ..... really bad

My tracking of the realised gains per resale (care plus ILU) doesn't make good reading - like below -

F2017 $83,795
F2018 $94,056
F2019 $85,446
F2020 $71,380
F2021 $92,335
F2022 $88,316

Making on average less per resale now than years ago.... maybe care suites are the issue .... who knows

Just one of the several things that don't seem to stack up (in my mind anyway)

A

I not too concerned with this. As the units are flipped (for lack of a better word) every 2 years you wont see the big increases as clearly as villas or apartments as an example. I would expect the average to be increasing slowly in single digits but I thought the care units were being modernised so once the modern ones start to come online the averages will ramp a bit. I really should know this considering how much I have in this company haha

[Ferg]

Thanks for the counter comments guys. Diversity of opinion and experience is a good thing.

Some points to ponder.

Observed cost increases should be volume adjusted to understand how much came from volume (or activity) and how much came from prices and other factors. For example, resident consumable costs per average resident are falling and they make up ~8% of costs (lowest in 3 years).

Mav and I have already discussed here that Corporate costs are trending higher - but it is unknown if this relates to increased Corporate activity last year.

Operating costs that are not employee, resident consumables or corporate (12.5% of costs) are falling when expressed as a percentage of total revenue. They are 6.7% of revenue which is a 6 year low (peak of 11.8% in FY18, was 8.5% in FY21).

Funding costs are higher due to increased lending to fund growth. The more debt one has the better it generally is for EPS (relative to new shares), but the worse it is for funding ratios and funding costs.

Comparing employee costs to just care revenues is looking at half the puzzle. Not all employees work in care and care fees now make up 72.6% of annual revenues which is down from 89.9% in FY16. Employee costs should be compared to total revenues as I did earlier, given employees efforts are expended in earning all top line revenue items (including resale and new sale gains which are not part of top line revenues). I mentioned earlier employee costs are 65.9% of revenues, up from 65.2% last year.

Care Suite prices: that 1-2% from the analysts call sounds weird. From their AR the average new CS price in 2022 was $296k, up from $234k in 2021 (+26.5%). The average resale CS price was $309k, up from $302k in 2021 (maybe that is the 2%?). Given 66 new sales and 174 resales that is a weighted average CS price increase YoY of 9%. Maybe they are referring to list price increases? But that is not being observed in the actual numbers.

Also, breaking down the average resale prices for the last 4 half years from H1FY21 to H2FY22:
New: $227k -> $261k -> $304k -> $280k
Resales: $310k -> $287k -> $304k -> $314k
Note these are sensitive to the mix of sales (i.e. main centres vs regions)

Care revenues per bed increase every 1 July with the change to the Government dictated contribution. Looking at care + PAC revenues, the revenue per average care bed & suite p.a. from FY17 to FY22 has increased as follows:
$52k / bed & suite p.a. in FY17 -> $54.3 -> $56.0 -> $59.5k -> $62.8K* -> $66.0k in FY22.
FY21 was adjusted by 1.2 for the 10 month fiscal year. Note: this does not include care DMF revenues which would make it look even better. I wouldn't call that flat, and the fact OCA are charging PAC fees is part of the care puzzle.

Also, I mentioned previously circa $13m of realised gains on care suites sits in the village P&L, and is excluded from the care P&L.

Here is a view of the P&L if you combined the comprehensive P&L with the underlying adjustments and sprinkle in some known costs:

13838

Note: I have generally retained original figures where things have been restated so there may be the odd anomaly when looking at a comparative figure. My comments above pertain to these numbers.

[Waltzing]

Many thanks to MR B.

Performance rating above BBB + from years of public practise.

Inflation comments from Bagrie BOY .... tell us the WAGE inflation spiral is just starting....

A lot of stat's from the investor forum certainly makes one recheck the numbers in case there is some gold there.

With Care suites making up a large portion of the total stock their pricing power is paramount to farther gains in the companies financial performance?

[Bjauck]

I not too concerned with this. As the units are flipped (for lack of a better word) every 2 years you wont see the big increases as clearly as villas or apartments as an example. I would expect the average to be increasing slowly in single digits but I thought the care units were being modernised so once the modern ones start to come online the averages will ramp a bit. I really should know this considering how much I have in this company haha
The care units have a higher turnover. The realised gains per unit per year of occupation would be an interesting comparative figure too.

[Ferg]

With the original float we were "sold" a story that the care suite model would generate significant returns on capital. It was sold in such a convincing way that many of us were lead to believe that return would be higher than for independent living units.

An interesting observation and thanks for sharing. I am a late comer to OCA so I do not have this expectation. That may explain why it is an issue for yourself and not such an issue for me. I view care as providing a base of earnings and cashflow with the opportunity to upsell into higher revenue streams, and I also view it as part of the circle of care as a resident moves from a villa or an apartment to either a suite or a bed.

[Rawz]

Does the care offering mean OCA achieve better returns on the villa or apartment? compared to the market or other RV without a care offering..

As if not, then why have care?

[Beagle]

An interesting observation and thanks for sharing. I am a late comer to OCA so I do not have this expectation. That may explain why it is an issue for yourself and not such an issue for me. I view care as providing a base of earnings and cashflow with the opportunity to upsell into higher revenue streams, and I also view it as part of the circle of care as a resident moves from a villa or an apartment to either a suite or a bed.

Thanks for your thoughts Ferg and you know I respect your opinion. One day I might have another look at it but I've done all the work on this at this point that I intend too. Yeah this was really talked up including at an eloquent presentation at the Auckland branch of the shareholders association a few years ago where we were assured by Earl Gasparich that the care suite model was the panacea for all things in getting a really good commercial return on care. In my view OCA must deliver underlying earnings per share growth or they will remain the runt of this retirement litter forever.

Here's something some of you might like to ponder.
With all the obvious cost challenges to providing care and its track record of no earnings growth despite half a decade in business does OCA stand any chance of giving shareholders a superior total shareholder return over the next 5 years compared to SUM with its mainly independent living unit model and its well proven 10 year CAGR of 33% per annum ? I am struggling to think why anyone with detailed knowledge of the retirement sector would back OCA over SUM over the medium to long term other than on a very short term basis because OCA is so beaten down ?

[enzed staffy]

there was a lot of chatter about "having reached the inflection point" and this would result in a rapidly escalation of growth and revenue, but nothing/not much changed over the next HY and FY and then subsequent reports. No talk of the inflection point now.
I agree with Beagle - they tallked the talk but subsequent results have been disappointing.

[winner69]

...........

In my view OCA must deliver underlying earnings per share growth or they will remain the runt of this retirement litter forever.
..........



Increasing EPS always going to be muted as probably need to have a few capital raises to deliver their ambitions

[Beagle]

there was a lot of chatter about "having reached the inflection point" and this would result in a rapidly escalation of growth and revenue, but nothing/not much changed over the next HY and FY and then subsequent reports. No talk of the inflection point now.
I agree with Beagle - they tallked the talk but subsequent results have been disappointing.

Very disappointing. We've heard them cry wolf so many times about promises of growth.

Yes Winner and you can bet your last dollar every time they raise more capital they will tell the story that its eps accretive ;)

[winner69]

FY21 (12 months) Underlying Earnings per share was 7.9 cents (using their weighted average number of shares)

In normal course of events one would have expected some growth eh ...past the point of inflection eh and things going honky dory .... so lets be nice and only assume 5% profit growth - ie say 8.3%

They then acquired Waterford and when asking for punters to buy shares at $1.30 promised it would be EPS accretive

Well Waterford was theirs for most of FY22

Hold on FY22 Underlying EPS only 8.0 cents

Brent would say it's been EPS accretive because 8.0 is higher than 7.9 .....but winner would say we expected at least 8.3 without an acquistion so not accretive ....

Or winner would agree with Brent and say OK its was EPS accretive but jeez Brent the the rest of the business has gone backwards big time eh.

I say Waterford and the $100m raised was not eps accretive.

Pity they couldn't count the $10m gain they booked on the value of assets they acquired as Underlying Earnings

[Waltzing]

"Yes Winner and you can bet your last dollar every time they raise more capital they will tell the story that its eps accretive "

looking at that very issue.

You have pretty much covered what are the foremost issues for yet another round of reinvesting in the SP at what other wise looked like the bottom.

[hyinvest]

I did more digging in the financial statements.
The figures below represent the % change in FY2022 compared to 10m2021.

~ 19% increase in revenue which is slightly larger than the ~17% increase in assets
~ 13.5% share dilution
~ 29% decrease in net income
~ 45% decrease in net income margin
~ 37% decrease in EPS
~ 3% decrease in operating cash flow per share
~ 39% decrease in return on tangible assets
~ 37% decrease in return on equity
~ -0.3 PEG

- All these figures are NOT inflation adjusted.

[couta1]

Care suites are the only side of the care business that makes any real money. Care suites are little gems because apart from a much faster turnover than the independent units they are where those who downgrade from an independent unit end up in most cases so your feeding them from two different angles. Quite a few overseas children buying Care suites for their elderly parents now as well.

[Beagle]

FY21 (12 months) Underlying Earnings per share was 7.9 cents (using their weighted average number of shares)

In normal course of events one would have expected some growth eh ...past the point of inflection eh and things going honky dory .... so lets be nice and only assume 5% profit growth - ie say 8.3%

They then acquired Waterford and when asking for punters to buy shares at $1.30 promised it would be EPS accretive

Well Waterford was theirs for most of FY22

Hold on FY22 Underlying EPS only 8.0 cents

Brent would say it's been EPS accretive because 8.0 is higher than 7.9 .....but winner would say we expected at least 8.3 without an acquistion so not accretive ....

Or winner would agree with Brent and say OK its was EPS accretive but jeez Brent the the rest of the business has gone backwards big time eh.

I say Waterford and the $100m raised was not eps accretive.

Pity they couldn't count the $10m gain they booked on the value of assets they acquired as Underlying Earnings

I believe you are right. Frankly I'd rather have an infected root canal filling done in my mouth than dive into those financials' again because the pain in my head with the root canal would be less, but in there somewhere is the statement that Waterford generated $3.0m earnings in FY22. No explnation of how they measured that, I guess they could have chosen any number of ways ;) 3% return on $100m raised and they promised it would be "low to middle single digit underlying eps accretive" Hmmm...I guess we can add that to the list of other broken promises and creative spin.

Brent did get a nice big fat bonus this year though, both in his short term and long term incentive "scheme's." Nearly doubled his base salary through bonus's this year and quite frankly I am at a loss to understand why when on an underlying annualised basis eps has not grown ?

Suppose if you backed out all the direct Covid costs, all the indirect covid costs and the development delay impacts of Covid as well as their ridiculous decision to donate back $1.8m to the Govt of the wage subsidy (despite the egregious underfunding of care services), you could come up with some sort of creative argument that normalised underlying eps has grown...well enough to pay a nice juicy bonus anyway, how convenient, just add it to the wages bill nobody will notice ;)

[Maverick]

..... Mav is looking into this with the CFO, and will provide more detail in due course.....

Beagle , If The CFO is good enough to respond to my clarification request then I shall be treating her response with the utmost privacy it deserves as with any private conversation.

[justakiwi]

100% correct Mav. Well said.


Beagle , If The CFO is good enough to respond to my clarification request then I shall be treating her response with the utmost privacy it deserves as with any private conversation.

[couta1]

I believe you are right. Frankly I'd rather have an infected root canal filling done in my mouth than dive into those financials' again because the pain in my head with the root canal would be less, but in there somewhere is the statement that Waterford generated $3.0m earnings in FY22. No explnation of how they measured that, I guess they could have chosen any number of ways ;) 3% return on $100m raised and they promised it would be "low to middle single digit underlying eps accretive" Hmmm...I guess we can add that to the list of other broken promises and creative spin.

Brent did get a nice big fat bonus this year though, both in his short term and long term incentive "scheme's." Nearly doubled his base salary through bonus's this year and quite frankly I am at a loss to understand why when on an underlying annualised basis eps has not grown ?

Suppose if you backed out all the direct Covid costs, all the indirect covid costs and the development delay impacts of Covid as well as their ridiculous decision to donate back $1.8m to the Govt of the wage subsidy (despite the egregious underfunding of care services), you could come up with some sort of creative argument that normalised underlying eps has grown...well enough to pay a nice juicy bonus anyway, how convenient, just add it to the wages bill nobody will notice ;) You thought Brent was the man not too long ago. Regarding paying back the wage subsidy, SUM/RYM and MET also paid it back so it would have been a bad look for OCA to have not done so.

[jagger]

You thought Brent was the man not too long ago. Regarding paying back the wage subsidy, SUM/RYM and MET also paid it back so it would have been a bad look for OCA to have not done so.

Yes, I'm glad to see businesses pay back the subsidy.

I can't stand validating the idea of socialising losses and privatising profits.
You either want to live in a free market or not.

[Beagle]

Beagle , If The CFO is good enough to respond to my clarification request then I shall be treating her response with the utmost privacy it deserves as with any private conversation.

Come on mate, for goodness sake, all you're doing is seeking clarification of publicly released information on the call. Lets not pretend its a personal insight of private information she's sharing, its simply confirmation and / or clarification of previously released public information... I would have thought you would have been good enough to share that clarification or confirmation but as you wish, believe me, it makes no difference whatsoever to me. I know what I heard on the call, a lot of it wasn't encouraging and I was the one that invested the time to hear it.

[justakiwi]

Me too. OCA and other businesses who repaid the subsidy, earned my respect. As a shareholder, albeit a small one, they did the right thing.


Yes, I'm glad to see businesses pay back the subsidy.

I can't stand validating the idea of socialising losses and privatising profits.
You either want to live in a free market or not.

[Beagle]

You thought Brent was the man not too long ago. Regarding paying back the wage subsidy, SUM/RYM and MET also paid it back so it would have been a bad look for OCA to have not done so.

You know they were and are egregiously underfunding the care sector and making OCA wear some of the costs of Covid so its seems unreasonable that shareholders funds are used to make a voluntary repayment of a wage subsidy they were legally entitled to claim and retain. Brent obviously had a different view to Mr Gasparich and its part of a slight culture change I am seeing with more emphasis on ESG. You're also well aware with OCA's very care heavy business model they were more deeply affected than others in the sector. In the circumstance's I retain my view repayment was neither legally or morally required but accept that others will have a different view and they're perfectly entitled to that.

I don't mind people being paid a bonus for performance that generates underlying earnings per share growth for shareholders. New information became available on Friday for those that took the time to read the annual report in detail. EBITDA growth at a headline level is not real growth if its inflated by extra shares on issue (the $100m cash issue to acquire Waterford and Pukekohe) and that headline EBITDA figure may have been the basis for the near doubling of his base salary with bonus's. If so that seems excessive. Maybe a good question for the annual meeting is "How come a huge bonus was paid when there was no real underlying earnings per share growth ?

[Habits]

Beagle you said "a wage subsidy they were legally entitled to claim and retain."
Apology if this is really obvious but ... the wage subsidy was if a business had suffered a 30 percent revenue fall. Possibly all the retirement companies revenues do not fluctuate as they seem to go to great lengths to protect that side. So how would OCA be entitled to claim.

I did not claim wage subsidy for my agri-business and my rentals. Agri business continued operating and the rentals were excluded from the scheme. Likewise with OCA??

[Beagle]

Beagle you said "a wage subsidy they were legally entitled to claim and retain."
Apology if this is really obvious but ... the wage subsidy was if a business had suffered a 30 percent revenue fall. Possibly all the retirement companies revenues do not fluctuate as they seem to go to great lengths to protect that side. So how would OCA be entitled to claim.

I did not claim wage subsidy for my agri-business and my rentals. Agri business continued operating and the rentals were excluded from the scheme. Likewise with OCA??

No need to apologize mate. My understanding of this is that the unit sales side of the business suffered a severe setback while in the first full Covid lockdown so they met the reduction in turnover eligibility criteria.

Anyway that's my full wrap on OCA for this annual report. I fully expect others will have a different view, perhaps very different and they're perfectly entitled to it. I'm entirely comfortable with that.

I am sure some will be very pleased indeed I will be turning my attention to Turners reporting tomorrow ;) Hopefully they will be a breath of very positive fresh air with really strong earnings per share growth and very easy to understand financial statements because my brain is still hurting something fierce from deciphering OCA's financials lol

[Habits]

My understanding of this is that the unit sales side of the business suffered a severe setback while in the first full Covid lockdown so they met the reduction in turnover eligibility criteria.

Yes fair enough... people should have browsed online to buy and sign up remotely, it obviously is not a thing. Another thing that intrigues me about the retirement business is the average length of time a resident would normally live in the ILU independent units. Obviously some would stay longer and that is to their benefit as the DMF runs for only 3 or 4 years and then stops.

[Beagle]

Yes fair enough... people should have browsed online to buy and sign up remotely, it obviously is not a thing. Another thing that intrigues me about the retirement business is the average length of time a resident would normally live in the ILU independent units. Obviously some would stay longer and that is to their benefit as the DMF runs for only 3 or 4 years and then stops.

Yeap, everyone who I have ever met in a retirement village when asked how much they're enjoying it say they're so happy and wish they'd done it years ago ! There seems to be such a great sense of camaraderie in most good villages I've seen its so much better than being on your own in the suburbs somewhere.
Move into a really good one as soon as you get to the minimum age eligibility criteria is my preference, one I really wish Mrs B shared.
I really like the waterfront homes at SUM's Hobsonville village...maybe if I show her through one of them as soon as we are both 70 she will see my point of view !

[winner69]

Beagle , If The CFO is good enough to respond to my clarification request then I shall be treating her response with the utmost privacy it deserves as with any private conversation.

Suppose that makes you an 'insider' now Mav

Seems we won't be hearing much from you over the next few years.

Never mind but keep well.....might catch up one day

[Bjauck]

Yes, I'm glad to see businesses pay back the subsidy.

I can't stand validating the idea of socialising losses and privatising profits.
You either want to live in a free market or not. However in this case the loss was the result of actions of the government not of the operation of the “free market.” The government was compensating those who suffered most as a result of the government’s lockdown policies (in other words, as the result of their intervention in the free market.) The free market would otherwise have seen large scale lay offs of employees.

[ronaldson]

I agree with Beagle above. There is a time to make a move after retirement, and most people wait too long before acting. These villages bring peace of mind as well as the potential for companionship. Security and peace of mind are often undervalued commodities, and as well there are usually enhanced amenities to be enjoyed ( swimming pool, cafe, gym, mens shed, library, cinema, bowling green, snooker/pool table, organised outings etc ) with a peer group a majority of whom are likely to be compatible, even if you personally are in denial about ageing up.

Even thou it seems an ever declining proportion of the population in this country are reaching retiring age owning their own home to ensure product affordability this sector still has strong tailwinds. And many of the remainder can afford a care suite when the time for that is appropriate anyway.

[justakiwi]

You just had to go there. This is disrespectful and uncalled for, and is sure as hell not the way Mav deserves to be treated :t_down:



Come on mate, for goodness sake, all you're doing is seeking clarification of publicly released information on the call. Lets not pretend its a personal insight of private information she's sharing, its simply confirmation and / or clarification of previously released public information... I would have thought you would have been good enough to share that clarification or confirmation but as you wish, believe me, it makes no difference whatsoever to me. I know what I heard on the call, a lot of it wasn't encouraging and I was the one that invested the time to hear it.



Suppose that makes you an 'insider' now Mav

[couta1]

However in this case the loss was the result of actions of the government not of the operation of the “free market.” The government was compensating those who suffered most as a result of the government’s lockdown policies (in other words, as the result of their intervention in the free market.) The free market would otherwise have seen large scale lay offs of employees. Trouble is if your the only company in the listed sector that doesn't pay it back its sticks out like a sore thumb and creates a very negative image to many, why risk it?

[couta1]

You just had to go there. This is disrespectful and uncalled for, and is sure as hell not the way Mav deserves to be treated :t_down: For sure and after all there are a few of us so called insiders on here.

[winner69]

Deleted --- was wrong

[Beagle]

Some of us put in an enormous amount of work behind the scenes and are happy to share all the results of that work on a wide range of companies in a spirit of goodwill for the benefit of others. The forum and its participants are best served when people are happy to share the results of their work.

[jagger]

However in this case the loss was the result of actions of the government not of the operation of the “free market.” The government was compensating those who suffered most as a result of the government’s lockdown policies (in other words, as the result of their intervention in the free market.) The free market would otherwise have seen large scale lay offs of employees.

Please. Come off, a pandemic is a natural disaster and this is the response.

The alternative to 'free market intervention' in this instance was all geriatrics dying an untimely death, which would hardly have been great for OCA's business model (or RYM / SUM / ARV for that matter).

So care businesses benefited doubly from the 'intervention' if they took the subsidy.
They hardly 'suffered' either, they still got fortnightly payments from the Government, but still collected bailouts (yes, that's what they were).

[Beagle]

.............

[winner69]

Deleted ……….

[Beau]

Some of us put in an enormous amount of work behind the scenes and are happy to share all the results of that work on a wide range of companies in a spirit of goodwill for the benefit of others. The forum and its participants are best served when people are happy to share the results of their work.

Well put and thanks to all for putting in the time and for sharing

[couta1]

Some of us put in an enormous amount of work behind the scenes and are happy to share all the results of that work on a wide range of companies in a spirit of goodwill for the benefit of others. The forum and its participants are best served when people are happy to share the results of their work. Not sure why you put in such an enormous amount of work in this instance, you could use your time more productively elsewhere im sure. The forum is best served when more members participate in whatever way they can rather than leaving it up to a few, everyone has something to contribute whether small or large.

[Greekwatchdog]

Some of us put in an enormous amount of work behind the scenes and are happy to share all the results of that work on a wide range of companies in a spirit of goodwill for the benefit of others. The forum and its participants are best served when people are happy to share the results of their work.

That is true Beagle and you unless I miss read countless messages you are thanked accordingly. If Mav wishes to keep this conversation confidential then so be it and he shouldn't be put out by you, Winner 69 or anyone else. If you have a question go do the same thing Mav has done as with the rest of your followers.
Mav and others have also added a lot to this thread so maybe a little courtesy wouldn't go astray regarding what they see as Confidential information.

[Beagle]

I was wrong --- misread the report .... wasn't clear though

Totally agree its an absolute dog's breakfast...as expected and the lengthy headache to go with it trying to decipher it, as always happens to me like clockwork. I need to find an easier way to make a living lol

Couta1. I prefer to do my own work and rely on my own analysis because I know I can trust my own work.
https://www.goodreads.com/quotes/457036-love-many-trust-few-always-paddle-your-own-canoe

[Bjauck]

Please. Come off, a pandemic is a natural disaster and this is the response.

The alternative to 'free market intervention' in this instance was all geriatrics dying an untimely death, which would hardly have been great for OCA's business model (or RYM / SUM / ARV for that matter).

So care businesses benefited doubly from the 'intervention' if they took the subsidy.
They hardly 'suffered' either, they still got fortnightly payments from the Government, but still collected bailouts (yes, that's what they were).

You have interesting conclusions from the Covid pandemic.

Care businesses have on-going costs from covid and suffer a chronic under-funding from government. The ORA side of things is a different matter.

Sure we of course don’t have a purely “free market” in NZ and the government makes political decisions as to whom it bails out in an emergency situation. Government policy has winners and losers.

[Beagle]

https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/
Looks like analysts are just as divided as some on here with one upgrade and one downgrade since the announcement and two unchanged at this stage...probably one more upgrade and one more downgrade to come through LOL.
Lowest target is $1.25, heck that's 20% north of here plus over 4% yield = minimum 24% total shareholder return in the year ahead and that's from the most conservative estimate.
Maybe they can get to $1.25 a year from now or a huge surprise and they get to the average analysts price target of $1.52...that would be a phenomenal comeback or maybe the bear market rips even more meat out of our portfolio's and it goes under $1 again...only time will tell. Sometimes I wish I had a time machine and could fast forward and see how things pan out in advance LOL

In the absence of such a miracle machine I remain very cautious of the Bear and the real estate market's remarkably rapid decline and its affect on this sector.

[bottomfeeder]

Josh Wang wants to sell down on OCA. As it's 40% off the highs, I would think that it's a buy. At the very least it should be a hold. It certainly is a buy under a dollar. Overweight in OCA? Sometimes you have to get uber overweight when it's oversold. I have 600k. No way to make money by buying high and selling low.

[percy]

That is true Beagle and you unless I miss read countless messages you are thanked accordingly. If Mav wishes to keep this conversation confidential then so be it and he shouldn't be put out by you, Winner 69 or anyone else. If you have a question go do the same thing Mav has done as with the rest of your followers.
Mav and others have also added a lot to this thread so maybe a little courtesy wouldn't go astray regarding what they see as Confidential information.

So well put.

[Rawz]

Josh Wang wants to sell down on OCA. As it's 40% off the highs, I would think that it's a buy. At the very least it should be a hold. It certainly is a buy under a dollar. Overweight in OCA? Sometimes you have to get uber overweight when it's oversold. I have 600k. No way to make money by buying high and selling low.

This is Joshua Wang's YT video which talks about him wanting to sell down a few.. not now, only after the coming rebound ;). This is what bottomfeeder is referring to

https://www.youtube.com/watch?v=O18vVvkak7Q

600k shares. wow. Nice haul

[Beagle]

This is Joshua Wang's YT video which talks about him wanting to sell down a few.. not now, only after the coming rebound ;). This is what bottomfeeder is referring to

https://www.youtube.com/watch?v=O18vVvkak7Q

600k shares. wow. Nice haul

Really bright young man and so good of him to do so much hard work and share it openly and with complete honesty and transparency even though its his largest position. A real breath of fresh air, he'll go a long way that young chap.

His investment thesis has changed because of inferior returns in the care sector. That's exactly where I'm also trapped because I can't sell what I have left at this beaten down price. I also note he's skeptical about 300+ units in FY24...maybe he's been listening to my barking or maybe he's reached that conclusion based on weak build rates in the last 2 years ?

Pivoting towards ILU developments and builds won't solve the problem of low returns in the care sector, it will only very gradually ameliorate / water it down over the years ahead which explains why I am underweight and rate this as underperform.
A useful analogy that springs to mind is investing in OCA is like riding a bicycle as fast as you can with a flat tyre that can't be fixed.

[couta1]

Really bright young man and so good of him to do so much hard work and share it openly and with complete honesty and transparency even though its his largest position. A real breath of fresh air, he'll go a long way that young chap.

His investment thesis has changed because of inferior returns in the care sector. That's exactly where I'm also trapped because I can't sell what I have left at this beaten down price. I also note he's skeptical about 300+ units in FY24...maybe he's been listening to my barking or maybe he's reached that conclusion based on weak build rates in the last 2 years ?

Pivoting towards ILU developments and builds won't solve the problem of low returns in the care sector, it will only very gradually ameliorate / water it down over the years ahead which explains why I am underweight and rate this as underperform.
A useful analogy that springs to mind is investing in OCA is like riding a bicycle as fast as you can with a flat tyre that can't be fixed. Plenty of heavy hitters on the Top 20 holder list including a director who has added a large number of shares to his holding over the last year at a substantially higher price than current, others directors have solid holdings to boot, even the former CEO still holds. As they say follow the smart money and there is plenty of that involved here.

[Beagle]

Plenty of heavy hitters on the Top 20 holder list including a director who has added a large number of shares to his holding over the last year at a substantially higher price than current, others directors have solid holdings to boot, even the former CEO still holds. As they say follow the smart money and there is plenty of that involved here.

I don't use that strategy, I trust my own research. Last year seems like a long distant memory since this bear market kicked into gear. The restricted trading period for insiders pre annual result is now over and they are free to buy as many as they like. Management call this as poised for growth. I reckon talk is cheap and their premiumization of care strategy hasn't worked for the last half decade. In fact quite the opposite. Margins on care have fallen dramatically despite all the promises over the years that the care suite strategy was a winner.

Lets wait and see how much of their own cash directors and management put in now after they've pivoted towards ILU which for all intents and purposes is basically acknowledging the current strategy isn't working well for shareholders.

[couta1]

Last year seems like a long distant memory since this bear market kicked into gear. The restricted trading period, pre annual announcement is now over and they are free to buy as many as they like. Management call this as poised for growth. I reckon talk is cheap and their premiumization of care strategy hasn't worked for the last half decade. In fact quite the opposite Margins on care have fallen dramatically despite all the promises over the years that the care suite strategy was a winner.

Lets wait and see how much of their own cash directors and management put in now. I don't reckon Greg T needs to prove anything by buying more with a current holding of more than 26 mill shares, his money has already done the talking.

[RTM]

His investment thesis has changed because of inferior returns in the care sector. That's exactly where I'm also trapped because I can't sell what I have left at this beaten down price. .

Of course you can sell Beagle. If you think that that is the right thing to do, please get on with it. I’m sure you will make more money elsewhere

[Beagle]

I don't reckon Greg T needs to prove anything by buying more with a current holding of more than 26 mill shares, his money has already done the talking.

Agree he doesn't need to prove anything to anyone but he has widespread business interests and can easily absorb a very protracted downturn in the market for many, many years if necessary. Hope others who have gone hard can wear a long downturn too. No easy or quick fix to the strong headwinds OCA faces.

[Beagle]

Of course you can sell Beagle. If you think that that is the right thing to do, please get on with it. I’m sure you will make more money elsewhere

I'm waiting to see if there's a more opportune time hoping Mr Tomlinson stumps up with heaps more cash and pushes the price up ;)

[Waltzing]

Market not rushing to buy more. MR B has crushed the rally...:scared:

Wage pressures are going to emerge surely and the retirement company that can keep its EPS moving upward will attract the money.

Soros predicting global depression mean few sectors will be investments and most will move into range trades.

This sector and commercial property could therefore end up being critical to protecting capital.

Mav is probably the only person will a comprehensive model if its accurate. Allows him to buy MORE at potential depressed prices.

Mr B has highlighted the structural trends in the P&L as they stand at present.

Winner(n) highlighted the Consolidated Cash Flow as well worth drilling down farther to uncover the operational cash Profit and Loss.


https://www.stuff.co.nz/national/health/300596497/its-been-really-awful-rest-home-nurse-worked-three-days-without-a-break-amid-staffing-shortages

[bull....]

Market not rushing to buy more. MR B has crushed the rally...:scared:

Wage pressures are going to emerge surely and the retirement company that can keep its EPS moving upward will attract the money.

Soros predicting global depression mean few sectors will be investments and most will move into range trades.

This sector and commercial property could therefore end up being critical to protecting capital.

Mav is probably the only person will a comprehensive model if its accurate. Allows him to buy MORE at potential depressed prices.

Mr B has highlighted the structural trends in the P&L as they stand at present.

Winner(n) highlighted the Consolidated Cash Flow as well worth drilling down farther to uncover the operational cash Profit and Loss.


https://www.stuff.co.nz/national/health/300596497/its-been-really-awful-rest-home-nurse-worked-three-days-without-a-break-amid-staffing-shortages

there never was a rally lol it was a bounce from oversold levels and pre - report buying thats all.
has been in a downtrend for quite some time now just like the whole sector and in fact is down no more than the sector so all the loud talk now about the end is nigh is just noise now the loud warnings were more relevant when it was at 1.50 not 1 dollar

[Waltzing]

If the EPS doesnt grow then 100 is hardly safe as they look for more short term bridging funds.

Is that a hole in the consolidated Cash flow that Winner(n) pointed out?

Or just a false red flag as Ferg countered with.

Needs farther investigation.

If you want to be scared into fleeing the share market stocks subject to inflation listen to this.

Taxpayer Talk: Does Grant Robertson's big spend-up get a passing mark? (buzzsprout.com) (https://www.buzzsprout.com/944017/10644516-taxpayer-talk-does-grant-robertson-s-big-spend-up-get-a-passing-mark)

[couta1]

If the EPS doesnt grow then 100 is hardly safe as they look for short term bridging sources. Pure downramping here, $1 is well below fair value even if eps remains flat which it won't.

[Waltzing]

"Pure downramping here"

IF EPS doesnt grow....

MAV's model says in 2024 it will and therefore anyone who is badly underwater here will be richly rewarded if they AVE down.

But the last few days indicates the Market hasnt yet bought into FOO BARS numbers.

Its worth doing some serious work on the Con Cash Flow and looking at a P&L with the Stock numbers built in which FERG seems to heading towards or already has.

[Habits]

Pure downramping here, $1 is well below fair value even if eps remains flat which it won't.

Should market value equal fair value.. of course not, you are comparing apples with avocados couta mv is sometimes higher than fv but this is not one of those times

[couta1]

Should market value equal fair value.. of course not, you are comparing apples with avocados couta mv is sometimes higher than fv but this is not one of those times Depends what measure you use to assess fv, in this case I use NTA as around fv but feel free to use your avo if you so wish.

[Habits]

Depends what measure you use to assess fv, in this case I use NTA as around fv but feel free to use your avo if you so wish.

It's like the slide show of a house and how it is perceived by the various parties like owner, valuer, REagent, buyer. Very different results for each

[Waltzing]

In an inflationary or STAGGA environment short term the market will price for head winds.

And that is what MR B has highlighted.

[Habits]

Depends what measure you use to assess fv, in this case I use NTA as around fv but feel free to use your avo if you so wish.

It's like the slide show of a house and how it is perceived by the various parties like owner, valuer, REagent, buyer. Very different results for each. That is why I favour charts over over-analysing, it is the markets consensus which takes shape in time

[couta1]

It's like the slide show of a house and how it is perceived by the various parties like owner, valuer, REagent, buyer. Very different results for each. That is why I favour charts over over-analysing, it is the markets consensus which takes shape in time I definately don't over-analyse but I'm one of those nasty 'insiders' with a long term outlook, time to go for a good walk being a magic Welly day.

[winner69]

deleted - off topic .... horse tipping no place on this thread

[winner69]

We will never see $1 again

Hope you are right Rawz

[Waltzing]

Getting close.....

Winner(n) i thought your post was right on topic.

MAV 20 to 1....

If the MAV has legs in this stock market race then 20 to 1 are for the Nag to fall at the last fence and break a leg and be put down....

Else you need to rerate the MAV's odds.

MR B has the Nag at odds that say Nah not betting on this Nag...

How many Nags in the sector race anyway and which one is how many lengths ahead ?

So far SUM other Nag is in the lead heading round the back straight bend...

[bull....]

This is Joshua Wang's YT video which talks about him wanting to sell down a few.. not now, only after the coming rebound ;). This is what bottomfeeder is referring to

https://www.youtube.com/watch?v=O18vVvkak7Q

600k shares. wow. Nice haul

i watched his video , he gives a nice summary of results.

i agree with his comments around capital structure.

[Habits]

Thnx for the link Rawz. Joshua has 11000 subscribers yet only 700 views for this one vid, presumably more will watch

[couta1]

Yes i am sure. in fact if it goes below $1 ill go out and buy a hat and then proceed to eat.. wait, never mind Are you ready to eat that hat, if the sp doesn't pick up before going ex divvy then it could go under $1 post the ex date.

[Old mate]

Didn't take long eh.

[winner69]

Reimagine / reimagination seem to be the latest buzzword in the Oceania vocabulary ... keeps popping up in presentations and reports

Even in their PURPOSE these days

Wonder what it means

For shareholders maybe its imagining great performance and a $2 share price in 2 years

[Curly]

Reimagine / reimagination seem to be the latest buzzword in the Oceania vocabulary ... keeps popping up in presentations and reports

Even in their PURPOSE these days

Wonder what it means

For shareholders maybe its imagining great performance and a $2 share price in 2 years
Since 2017 float based on current price, share price on average has moved up approximately .04c a year. So on that basis $1.08 in 2 years.
Grrrrr.

[couta1]

Since 2017 float based on current price, share price on average has moved up approximately .04c a year. So on that basis $1.08 in 2 years.
Grrrrr. Yeah-nah she be at least $1.30 in 2 yrs if not taken over for $1.50.

[bottomfeeder]

Since 2017 float based on current price, share price on average has moved up approximately .04c a year. So on that basis $1.08 in 2 years.
Grrrrr.
Maybe if all things remained equal. More recent history has introduced a publicised inflation rate of close to 7%. More likely closer to 10 or 12%. Also cost of construction index is much more than CPI, could be closer to 15 to 18%. Interest rates have increased more recently, and look to increase further. OCA has 100 mill raised last year at 3.3% available at that rate for another 4 years at least. These factors while a moderate effect on the company, nevertheless add to the mix. So it's not all bad. Understandably, when a SP sinks (and we don't know the exact reason for this) investor depression takes over creating a pessimism over the company as a whole.

[Curly]

Reimagine / reimagination seem to be the latest buzzword in the Oceania vocabulary ... keeps popping up in presentations and reports

Even in their PURPOSE these days

Wonder what it means

For shareholders maybe its imagining great performance and a $2 share price in 2 years


Yeah-nah she be at least $1.30 in 2 yrs if not taken over for $1.50.
Yeah when I got into these at float my expectation was they would be hitting $3.00 by now. Not so. Things can quickly change though and it does seem they are now positioned for growth. World scene however seems to be in a dark place right now with all that is going on. Negative sentiment is outstripping the positive for now. Still buying the dips however.

[dreamcatcher]

Reserve Bank predicting house price fall of 14% as market turns rapidly - Landlords.co.nz (https://www.landlords.co.nz/article/976520328/reserve-bank-predicting-house-price-fall-of-14-as-market-turns-rapidly)

Higher interest rates eating property prices combined with increasing building materials and labour not a good look

Disc: hold add @ 80c

[Beagle]

I have finished my 5 years overview and a very brief synopsis is as follows.

The Float and Business Case
OCA floated on the premise that the new product called care suites would be transformational and generate far superior returns for investors.
As you can see from the presentation on page 19 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/392382/370976.pdf
the exact opposite of what was promised has occurred and returns on care have nearly halved from an EBITA margin of 21% to just 12%. Importantly returns were declining rapidly before Covid came along but its clear that Covid has exacerbated the issues.

Some of the reasons that explain this spectacular failure in execution of their business case as promoted at the time of the IPO appear to include:-
1. Rampant increases in the cost of human resources in the business with spectacular growth in employee costs from $103m when they listed to $156m last year an incredible 51.5% increase in staff costs.
2. A much slower increase in revenue growth from $171.8m to $231.1m over the 5 years period (34.5%).
3. Government underfunding has seriously undermined their business case and the premiumization of care hasn't worked.
4. Care suites have not met wide market acceptance and there are a total of ~ 450 unsold units inclusive of ILU units as at balance date 31 March 2022, a whole years stock. (Care suites are often initially let out as premium accommodation until they are sold, see footnote at bottom of page 31).

As a result of the spectacular failure of care suites and the systemic underfunding by the Govt of basic care (which and I am going off memory here was just on $100m in 2022 so is a huge part of their business model) underlying eps has declined from 8.60 cps in their first full year of listed operations in 2018 to 7.98 cps in 2022 and decline of 17.5% in real terms if you account for inflation.
As I have pointed out before the company has no pricing power with care suites which were only up 1-2% last year and have not kept pace with the real estate market.
Ultimately from personal experience with my Mum I believe customers are reluctant to commit to an ORA model when they don't know their longevity.

Looking forward to the next 5 years
I expect the cost of provision of care services to continue to experience rampant inflation pressures as a worldwide shortage of care and nursing staff causes huge issues with demands for more money and staff shortages. I also expect the Labour Government will play hardball with retirement village companies and continue to make them heavily subsidise care operations from other parts of their business.
This is going to cause an indefinite period during which OCA will generate very low and completely unsatisfactory returns from care.

So how long will it take OCA to execute their Pivot to independent living units so they represent more than 50% of the business model ?

Looking at page 31 and the PIE charts.
Its important to understand that currently the ratio of care to independent living units is 61:39
There are 1957 units in their development pipeline and 71% of them have already been designed and consented so it would be very difficult to change consented developments.
If they can execute at a sustained rate of 300 units per annum the pipeline will take 6.5 years to complete, a total of 11.5 years since they listed. (Please note that at the time of the listing we were told the business transformation would take 6 years)
As a result of a further 6.5 years of development they will end up with a care to independent living unit ratio of 55:45
In other words it takes a full year to move the needle one percent from care to ILU.

Conclusion
The business case upon which OCA floated has not worked. Its actually been a very poor failure in a period of strongly rising house prices, (DYOR on how much SUM grew underlying earnings in their first 5 years by way of comparison)
Care suites are not meeting wide market acceptance and OCA has no pricing power with them or basic care which combined is currently 61% of their business model.
Despite this they continue a heavy development pipeline of more care suites with most units in FY23 being care suites.

Its one thing to say you are going to pivot to independent living units but it would appear it will be 7-10 years before they have more ILU units than care, (barring major ILU village acquisitions which could somewhat speed up the process)

Seeing as this is an incredibly intense care focused business model and will be for the foreseeable future investors need to decide for themselves whether the intense cost pressures faced by those providing care services will abate anytime soon so that OCA will earn a materially better margin on its services. I think this is extremely unlikely as shortages of staff is a worldwide issue and Covid isn't going away anytime soon. Its very important to understand that even in 2028, (barring major acquisitions which might change the mix a little) OCA will still be predominantly a care based business operation.

People who believe that there is more money to be made in independent living focused business model's can execute their own pivot in less than a minute on the market, not the decade it will take OCA !

Going forward I think this will seriously underperform the others in the sector for the foreseeable future so I completed my exit from the company this week. I think the whole sector faces very serious headwinds for 2022 and potentially 2023 as well so I may remain on the sidelines for some time. In addition the Government review of this sector is very concerning and serious Government underfunding is highly likely to continue under Labour into late 2023 at least.

When the time is right I will invest the proceeds of my sell down in SUM with its well proven business model that has generated an average annual compound growth rate of 33% per annum since it listed.

I will leave you folks in peace on this thread now and conclude by wishing shareholders good luck.

I know some will hate my post and have counter points and that's fine. For the foreseeable future my time with OCA and debating it is over.
I certainly won't miss the headache's of interpreting their financial statements !

[couta1]

No surprises there and the reduction in barking will be much appreciated.

[davflaws]

Thank you Beagle. I really appreciate the hard work you have put into your analysis and your generosity in sharing it. Take the weekend off.

[BlackPeter]

I have finished my 5 years overview and a very brief synopsis is as follows.

...

I certainly won't miss the headache's of interpreting their financial statements !

Thank you for this well reasoned post. While I don't yet agree with the conclusion ... this is a great basis for ongoing discussions.

[limmy]

Thanks Mr. Beagle for your overview. Much appreciated.

[bottomfeeder]

Beagle, fell for the manipulation of the SP. An already beleagured SP dropping, when a dividend is about to be paid, creates suspicion. I hope you dont regret the sell out, when the takeover offer comes out.After all its a well run profitable company. Just possible opinion, not backed up by facts.

[Old mate]

Couta your the one that does all the barking when someone has an opposing view of your "it'll be 50 bucks in 10 years policy."

[couta1]

Couta your the one that does all the barking when someone has an opposing view of your "it'll be 50 bucks in 10 years policy." I think your getting mixed up with FPH being $50 in 5 yrs, wrong thread Old chap. I'm a long term holder of this stock with an insider outlook so are very comfortable holding.

[Habits]

Couta your the one that does all the barking when someone has an opposing view of your "it'll be 50 bucks in 10 years policy."

Good one Old mate... that reminds me of the joke "how do you make a pussy bark?"

[winner69]

The hills are alive with the sound of music
The song rings out BUY Oceania today
The beagle has sold, has sold, they say
Now is the time to BUY Oceania
(Oscar)

[Panda-NZ-]

The hills are alive with the sound of music
The song rings out BUY Oceania today
The beagle has sold, has sold, they say
Now is the time to BUY Oceania
(Oscar)

Hehe good one.

It's moved from BBB to AAA+ today? :p

[couta1]

Good one Old mate... that reminds me of the joke "how do you make a pussy bark?" Hmm your axe grinding crosses various threads, nothing like having a personal stalker.

[Snow Leopard]

And so the point of inflection has finally passed...

[winner69]

I've always found this an interesting chart - the Book Value per share for the main players in the secto. Book Value (sort of NTA) best financialmeasure of company worth imo.

Indexed to March 2017 because that's when OCA listed - in other words I've made OCA the benchmark for the sector

Maybe this is why beagle has given upon both ARV and OCA

[Rawz]

Beagle sells.. come on murphy's law.. do your thing next week

"OCA receives takeover offer for $1.35 per share"

[850man]

Beagle sells.. come on murphy's law.. do your thing next week

"OCA receives takeover offer for $1.35 per share"

That usually only happens after I sell shares! Re the takeover at $1.32, experience to date with Met is takeovers are below NTA :(

[blackie]

thank you Beagle
much respect for your contributions here
very much appreciated

[Mel]

Yes, always appreciate your diligence and insights Beagle

[Onemootpoint]

Thank you Beagle; your (and others’ of course) contribution has been extremely valuable and is appreciated.

[Baa_Baa]

Frequently we see scepticism about the online analysts, which is understandable as they are essentially unidentifiable and probably only a computer algorithm, however some people choose to quote them when it suits their position and deride them when it doesn't.

So what do our bonafide FA guru's think of this? Interested in your thoughts. TIA

From 'Simply Wall Street'

Upcoming dividend of NZ$0.023 per share
Eligible shareholders must have bought the stock before 03 June 2022.
Payment date: 21 June 2022.
Payout ratio is a comfortable 51% but the company is not cash flow positive.
Trailing yield: 4.3%.
Lower than top quartile of New Zealander dividend payers (5.8%).
Higher than average of industry peers (2.4%).

[bottomfeeder]

Frequently we see scepticism about the online analysts, which is understandable as they are essentially unidentifiable and probably only a computer algorithm, however some people choose to quote them when it suits their position and deride them when it doesn't.

So what do our bonafide FA guru's think of this? Interested in your thoughts. TIA

From 'Simply Wall Street'

Upcoming dividend of NZ$0.023 per share
Eligible shareholders must have bought the stock before 03 June 2022.
Payment date: 21 June 2022.
Payout ratio is a comfortable 51% but the company is not cash flow positive.
Trailing yield: 4.3%.
Lower than top quartile of New Zealander dividend payers (5.8%).
Higher than average of industry peers (2.4%).
How can you be cash flow positive when you are expanding your assets. Misleading using this metric as a guide to buy/sell/hold.

[winner69]

How can you be cash flow positive when you are expanding your assets. Misleading using this metric as a guide to buy/sell/hold.

But if you cash flow negative (because of growing assets) should you even be paying dividends?

Borrowing more than needed to pay out the divie?

[fish]

But if you cash flow positive (because of growing assets) should you even be paying dividends?

Borrowing more than needed to pay out the divie?
If you are cash flow positive and this is going to be sustained it would be sending out a very bad signal to stop paying dividends .

[Bjauck]

How can you be cash flow positive when you are expanding your assets. Misleading using this metric as a guide to buy/sell/hold.
It would be better to use the funds to expand, rather than to pay unimputed dividends.

[couta1]

It would be better to use the funds to expand, rather than to pay unimputed dividends. They are using funds to expand, other people's funds at low interest rates so let them keep paying a diivy, even unimputed divvies are okay if your on a lower tax rate cause you get tax back at the end of year and imputations often can't be used and are just carried forward.

[bottomfeeder]

It would be better to use the funds to expand, rather than to pay unimputed dividends.

Not going to be cash flow negative forever. Companies that stop start dividends never have a good SP history. This may be a it tricky, but dividends are being paid from cash flow profits, which may be different to taxable profits, due to various factors such as depreciation. Excess cash flow profits, borrowing and capital raises are used to fund asset expansion. I myself wouldn't mind temporarily ceasing dividends. Effectively this would raise NTA, but the SP is well below NTA, so shareholders would be disadvantaged in the short/medium term.

[winner69]

Looking at Oceania mainly as a property company and as such track key financials / metrics with this view makes it easier to see where value is being added. The care / village segmentation that Oceania uses to me adds little value and just complicates / confuses things.

Key source of tracking data is the Changes in Equity' statement and splitting the reported profit into a few key lines - Realised Gains on sales / Unrealised Gains with the balancing factor being what I call 'Operating Profit' which is essentially what's left out looking after people and running villages. Tracking Cash Burn and funding is also important.

So tracking Changes in Equity along with a few key metrics on the property side is nearly I need to see how things are going. Tells me what the company is worth (Book Value / Equity) and how well or not the property side is going.

The table is below. I've redacted future years forecasts so you don't know whether I see Oceania doing bad, OK or very well ..... and when the next capital raise is likely to happen (sorry)

Whatever I think this approach is good .... and if nothing else it proves to me that Underlying Earnings doesn't mean very much at all when it comes to seeing what Oceania is worth.

[Snow Leopard]

Looking at Oceania mainly as a property company....

....Whatever I think this approach is good .... and if nothing else it proves to me that Underlying Earnings doesn't mean very much at all when it comes to seeing what Oceania is worth.

This is good.

[bottomfeeder]

https://www.newsroom.co.nz/ideasroom/we-need-to-stop-ignoring-the-health-of-older-new-zealanders

[winner69]

That chart I posted the other day showing how the value of the companies in the retirement sector had grown over the last 5 years had SUM as best performer by far, RYM as OK and OCA ans ARV bottom of the table.

Interestingly it seems that this 'ranking' is tied to the strength of each company's Purpose Statement

A purpose statement gives the reason why a company exists, its “philosophical heartbeat”. A well-considered and clearly stated purpose ensures that everyone is paddling in the same direction, gives a sense of worthwhile work, and increases dynamism and innovation. It needs to be ambitious, actionable, inspirational, authentic, and simple but not simplistic. It should also be succinct and devoid of cliches. It then needs to be put at the core of a company’s strategy.

Here's the Purpose Statements of the four in the sector -

Summerset - Bring the best of life to our residents
Ryman - To provide the best of care for our residents in beautiful sustainable homes
Arvida - To enable a more fulfilling life as people age
Oceania -To reimagine the aged care and retirement living experience

All good stuff but to me the Oceania Purpose seems to lack the doing bit - reimagining maybe is inspirational but is it actionable (by all employees). I fear not.

Maybe it's culture per se that is holding Oceania back in company performance and stakeholder returns.

Post inspired by a recent NBR article which made me think a bit about Oceania and the others.

[couta1]

That chart I posted the other day showing how the value of the companies in the retirement sector had grown over the last 5 years had SUM as best performer by far, RYM as OK and OCA ans ARV bottom of the table.

Interestingly it seems that this 'ranking' is tied to the strength of each company's Purpose Statement

A purpose statement gives the reason why a company exists, its “philosophical heartbeat”. A well-considered and clearly stated purpose ensures that everyone is paddling in the same direction, gives a sense of worthwhile work, and increases dynamism and innovation. It needs to be ambitious, actionable, inspirational, authentic, and simple but not simplistic. It should also be succinct and devoid of cliches. It then needs to be put at the core of a company’s strategy.

Here's the Purpose Statements of the four in the sector -

Summerset - Bring the best of life to our residents
Ryman - To provide the best of care for our residents in beautiful sustainable homes
Arvida - To enable a more fulfilling life as people age
Oceania -To reimagine the aged care and retirement living experience

All good stuff but to me the Oceania Purpose seems to lack the doing bit - reimagining maybe is inspirational but is it actionable (by all employees). I fear not.

Maybe it's culture per se that is holding Oceania back in company performance and stakeholder returns.

Post inspired by a recent NBR article which made me think a bit about Oceania and the others. Just as well you haven't quoted purpose statements for care cause the order would be reversed with OCA at the top and SUM at the bottom, RYM still the top dog though when you combine care quality and sales figures at this point in time.

[couta1]

Not feeling the love pre divvy but neither is ARV after its result this morning, reminds me of that Air Supply song "I'm all out of Love".

[bull....]

looks like we going to new lows :scared:

[Baa_Baa]

Not feeling the love pre divvy ... That's OK, forgo the dividend for the DRP and 2.5% discount to vwap. Get me a tailer load of freshly minted shares instead. Happy if it stays down here until ex-div.

[couta1]

And there we go, 2 directors topping up their share holdings.

[Beagle]

...............deleted, inadvertently posted in the wrong thread.

[Curly]

And there we go, 2 directors topping up their share holdings.
And not forgetting Greg Tomlinson’s mega purchase at around $1.40 from memory.

[couta1]

And not forgetting Greg Tomlinson’s mega purchase at around $1.40 from memory. Yep he bought more than 2 million shares last year and most were at $1.40ish, his total holding is now 26 million shares.

[Habits]

Yep he bought more than 2 million shares last year and most were at $1.40ish, his total holding is now 26 million shares.

Another investor who made a small fortune. Down 29 percent which is $800k on his most recent 2m share purchase...

[couta1]

Another investor who made a small fortune. Down 29 percent which is $800k on his most recent 2m share purchase... I doubt he's worried as he obviously doesn't have myopic vision nor follow the "White Noise" barking on some random anonymous internet forum.

[Habits]

I doubt he's worried as he obviously doesn't have myopic vision nor follow the "White Noise" barking on some random anonymous internet forum.

Why bring it up then. Seems you only want affirming responses couta and ones that support wholeheartedly. :confused: My bad

[couta1]

Why bring it up then. Seems you only want affirming responses couta and ones that support wholeheartedly. :confused: My bad Are you a holder as a matter of interest? You seem to still have your axe to grind.

[Habits]

I think you have a very large shareholding and a long history with the company. I usually find when the question of whether someone is a shareholder or property owner comes up it is a loaded question. Shareholder or not I should still be able to comment and pass judgement as this is an investment website and I like to learn more and discuss investments with others. Do you agree couta

[BlackPeter]

I think you have a very large shareholding and a long history with the company. I usually find when the question of whether someone is a shareholder or property owner comes up it is a loaded question. Shareholder or not I should still be able to comment and pass judgement as this is an investment website and I like to learn more and discuss investments with others. Do you agree couta

Absolutely.

[couta1]

I think you have a very large shareholding and a long history with the company. I usually find when the question of whether someone is a shareholder or property owner comes up it is a loaded question. Shareholder or not I should still be able to comment and pass judgement as this is an investment website and I like to learn more and discuss investments with others. Do you agree couta Always good to be honest and disclose your holdings so that others can see which side of the fence you are standing on, you are free to comment like anyone else is, not sure about the passing judgement bit unless you have a very accurate crystal ball.

[Beagle]

Possibly worth noting that Mr Tomlinson is an extremely wealthy man with very widespread and well diversified business interests and just by way of one example has made an absolute fortune on his substantial stake in Heartland.

Like all astute business people he knows not every investment will be a winner and some may be market underperformers for many, many years.
Most of us on here do not have the luxury of waiting indefinitely for an investment to pay off or at least perform in line with the market.
For those of us that do have that luxury, there's also the question to answer of why be emotionally attached to a company if you think there's more money to be made somewhere else ? Each to their own...I think you are better to work things out for yourself.

[percy]

Possibly worth noting that Mr Tomlinson is an extremely wealthy man with very widespread and well diversified business interests and just by way of one example has made an absolute fortune on his substantial stake in Heartland.

Like all astute business people he knows not every investment will be a winner and some may be market underperformers for many, many years.
Most of us on here do not have the luxury of waiting indefinitely for an investment to pay off or at least perform in line with the market.
For those of us that do have that luxury, there's also the question to answer of why be emotionally attached to a company if you think there's more money to be made somewhere else ? Each to their own...I think you are better to work things out for yourself.

He certainly knows the retirement sector.
https://nz.wallmine.com/asx/oca/officer/2039228/gregory-tomlinson

[Beagle]

He certainly knows the retirement sector.
https://nz.wallmine.com/asx/oca/officer/2039228/gregory-tomlinson

Its a shame he can't wield some influence in the capital and get them to stop choking the life out of the care sector.
I'd wager he's more a National supporter and not too cozy with the socialists, Greenies and Maori MP's.

[percy]

Its a shame he can't wield some influence in the capital and get them to stop choking the life out of the care sector.
I'd wager he's more a National supporter and not too cozy with the socialists, Greenies and Maori MP's.

I do not know his politics,but he is a very modest , yet very astute business man.
I think we are most probably seeing a lot of his long term strategy at play here in OCA,but you would need to ask him yourself.

Interesting noting Liz Coutts added to her holding.
As we all know directors sell for any number of reasons,but only buy for one reason.

[Muse]

I do not know his politics,but he is a very modest , yet very astute business man.
I think we are most probably seeing a lot of his long term strategy at play here in OCA,but you would need to ask him yourself.

I agree its important to follow one's own research but Greg involvement and conviction in OCA is interesting.

The man is an ACTUAL hitter. He has done some sensational investments and not just in heartland. For instance he became the major shareholder in the agri pharmaceutical company Argenta back in ~2009 and over 11 years developed that business into some extraordinary, before selling it to KKR no less, for an absolute motza. He built Indevin into one of the largest, highest returning on capital players in the wine space. And on and on.

He has the patience of a bonafide investor. I can understand his philosophy doesn't work for day traders, but can see why it does for investors focused on long term value creation.

[winner69]

Good month for OCA shares .....the price didn't drop

The tide has turned .... might be over 110 by end of June

[bottomfeeder]

Possibly worth noting that Mr Tomlinson is an extremely wealthy man with very widespread and well diversified business interests and just by way of one example has made an absolute fortune on his substantial stake in Heartland.

Like all astute business people he knows not every investment will be a winner and some may be market underperformers for many, many years.
Most of us on here do not have the luxury of waiting indefinitely for an investment to pay off or at least perform in line with the market.
For those of us that do have that luxury, there's also the question to answer of why be emotionally attached to a company if you think there's more money to be made somewhere else ? Each to their own...I think you are better to work things out for yourself.
Mind you what's wrong with a long term hold when you are getting dividends in the interim.

[Beagle]

Fair enough question and one I have thought about carefully.
Leaving aside the question of whether their business model is working or not and I think everyone knows where I stand on that, the truth is property investment companies trading at a deep discount to asset backing are a very common theme on the market now. I did a 5 year stock take and have decided for myself which class of property investment is more likely to perform going forward. OCA closed today at a 22% discount to NTA and many other property companies (REIT's) are trading on a materially larger discount, e.g. ARG and KPG, (about 30% discount to NTA) and both are listed PIE's so their dividends are able to be excluded from your tax return resulting in a gross effective yield north of 8% for those taxpayers on a 33% tax rate, roughly double the unimputed ~ 4% you get in OCA. Residential property is dropping like a stone and I think a well diversified REIT will materially outperform residential property going forward for the foreseeable future.

I believe its highly likely we're on for a long cold Winter in more ways than one. I've gone through my portfolio and anything that can't pay me 8%+ yield to provide a decent counterbalance reward for the risks of holding in a bear market has been culled. Each to their own way of doing things. My portfolio is risk averse and very defensive and I feel I am rugged up pretty well to weather the cold and wintry economic conditions. Naturally I hope I am wrong and the economy dodges a recession or if we get one its short and shallow but that's not my base case of how tough things are likely to get.

For what its worth my biggest holding is now GNE. People will always need power and the gross yield of GNE is 8.5%. Its operations should be extremely resilient no matter how long and deep the recession is.

[Mel]

Good month for OCA shares .....the price didn't drop

The tide has turned .... might be over 110 by end of June
I hope so, but it dipped to 0.98 even today (albeit v. low vols)

[Habits]

Always good to be honest and disclose your holdings so that others can see which side of the fence you are standing on, you are free to comment like anyone else is, not sure about the passing judgement bit unless you have a very accurate crystal ball.

"Disclose your holdings" you start, dont be a hypocrite. I think I have already but you will have to read my posts.

Do you see yourself as the gatekeeper of this thread, where you probe any new participants?

[couta1]

I do not know his politics,but he is a very modest , yet very astute business man.
I think we are most probably seeing a lot of his long term strategy at play here in OCA,but you would need to ask him yourself.

Interesting noting Liz Coutts added to her holding.
As we all know directors sell for any number of reasons,but only buy for one reason. Exactly Percy, people like Liz are not fools and seems she already holds 1.6 mill shares why would you add now knowing all the negatives and current economic climate unless you were very confident in the long term outlook for the company.

[Muse]

Hoooray we are back! - kind of...
good perseverance admins we appreciate ya

[couta1]

Hoooray we are back! - kind of...
good perseverance admins we appreciate ya Good we are back and good to see OCA holding up well after going Ex divvy today, on another note not everyone was taking a nice peaceful break, a certain hound was busy dredging through old posts and dishing out negative reps to a selected few of us, very uncool and childish.

[davflaws]

a certain hound was busy dredging through old posts and dishing out negative reps to a selected few of us, very uncool and childish.

You two have been sniping at each other ever since you went to the Wellington protests and then went back to work. Isn't it about time you kissed and made up?

[couta1]

You two have been sniping at each other ever since you went to the Wellington protests and then went back to work. Isn't it about time you kissed and made up? Nothing to do with sniping, I received a random negative rep whilst the forum was down for my above post talking about Liz Coutts topping up her already large shareholding, 3 other posters being Percy/Fiordland Moose and Iceman also received similar inappropriate rep comments from said hound, as always when you see an iceberg there's a lot more going on under the surface than above it, you don't know all the facts in play here.

[davflaws]

I take it that's a "No"

[Snow Leopard]

....Isn't it about time you kissed and made up?

Some free advice for you:
Never, ever attempt to kiss a Rabid animal.

Very definitely staying with the DRiP for this dividend.

[Bjauck]

Some free advice for you:
Never, ever attempt to kiss a Rabid animal.

Very definitely staying with the DRiP for this dividend. I have resumed full participation for this dividend too. Otherwise a hold for me. It is good to read the Yin and Yang of opinions. Patience is needed sometimes for investment return.

[Baa_Baa]

Very definitely staying with the DRiP for this dividend.


Hey Snowy, nice to see you're a strong hand on OCA as well. Very definitely DRP for me as well. Funny looking back but this DRP, by itself, is currently going to be larger than my very first purchase of OCA shares. Thanks to dividends/DRP and some fortunate post-covid 2020 rebound purchases, this is still in the black for me.

Simply Wall Street sent me an email today, I like this when insiders are accumulating, even though they have heaps already. Liz is one very very smart businesswoman, we're fortunate imo to have her as the Chair, I have the utmost respect for her.

13869

When the market serves up sizeable discounts to long run NTA and share price averages, patient long term investors just keep accumulating. We thank the market for the gift.

[Beagle]

For the record:-
The system allows both positive and negative rep which should not be news to anyone. I reckon I give positive rep about 20 times as often as negative. The break while the system was down gave me the opportunity and time to read through some of the older posts and some personal attacks from the usual suspects warranted negative rep.

Back on topic. Here is a list of premium room charges at various OCA facilities. https://images.oceaniahealthcare.co.nz/wp-content/uploads/2020/11/09181641/Oceania-Premium-Accommodation-Charges-Final.pdf
Maybe the fact that you can get a premium room for a very modest cost per day is why the care suites are such slow sellers ?

[couta1]

For the record:-
The system allows both positive and negative rep which should not be news to anyone. I reckon I give positive rep about 20 times as often as negative. The break while the system was down gave me the opportunity and time to read through some of the older posts and some personal attacks from the usual suspects warranted negative rep.

Back on topic. Here is a list of premium room charges at various OCA facilities. https://images.oceaniahealthcare.co.nz/wp-content/uploads/2020/11/09181641/Oceania-Premium-Accommodation-Charges-Final.pdf
Maybe the fact that you can get a premium room for a very modest cost per day is why the care suites are such slow sellers ? Oh yeah, so a post talking about a director increasing her shareholding is a personal attack and warrants a negative rep, give me a break. PS - You should have used the down time to do something constructive rather than stirring up unnecessary trouble.

[Habits]

Watch out for the speedy barracouta with sharp teeth for ripping and tearing. They hunt for fresh prey.

https://images.app.goo.gl/dFbGs4dCHiMpmJ9MA

[couta1]

Watch out for the speedy barracouta with sharp teeth for ripping and tearing. They hunt for fresh prey.

https://images.app.goo.gl/dFbGs4dCHiMpmJ9MA Nice pic and actually my forum name is my real life nick name, when I catch them and they are worm free we make up a garlic/apricot jam sauce and chuck them on barbeque, very yummy and underrated.

[davflaws]

Nice pic and actually my forum name is my real life nick name, when I catch them and they are worm free we make up a garlic/apricot jam sauce and chuck them on barbeque, very yummy and underrated.

The "worms" are cestode parasites with an interesting life history involving seabirds as secondary hosts. In the couta, they live in the gut and when the fish dies, they burrow their way out into the flesh through the gut wall. If you kill the fish and take the fillets off before it has stopped twitching you will find the fillets are worm free.

[tommy_d]

when I catch them and they are worm free we make up a garlic/apricot jam sauce and chuck them on barbeque, very yummy and underrated.
Agree very underrated eating fish, when not wormy, used to catch a few when targeting big south island searun trout...
chunked the wormy ones into the deep freeze and boiled a few chunks up and used them for chicken food once in a while, chickens seemed to rate them highly too