OCA - Oceania Group - retirement villages

[Daytr]

Amberwood, 499 Don Buck Rd Massey, West Auckland.
On site approximately 30 Rest Home units of the older style, and approximately 30 high need type or hospital rooms (single) build later maybe early 2000.

Amberwood has a road sign which used to note it was part of the OCA group, this part of the OCA group has been painted over so I assume it is not longer owned by OCA.

Seems that sold for $9.5Mln.
If we say a high needs suite is worth 15% of a unit, it values a unit including the land its on at $275k.

Selling off individual villages like this would likely generate more value than a buyer looking at taking over OCA.

A buyer of an individual small development will quite likely be looking at utility value. I.e charities, councils, Iwi etc looking to provide public housing.

Whereas a commercial valuation of OCA will have no such emotive value. It will purely come down to the PV of net future cashflow.

[Ferg]

Probably been ‘writing down’ the book value of these properties over the last few years …..been quite a lot of impairment $s and who knows the detail of the ‘independent’ valuation of each property

I’d say these 9 properties ‘valued’ as to what they hopefully thought they would get for them

AFAIK the accounts don't break out the valuation adjustments for this subset of properties prior to April 2022 but yes they would be valued to the expected realisable value once they are classified as being for sale. Prior to that they would be subject to the normal valuation process by the independent valuers. We can see the actual adjustments to this subset of properties since April 2022 as follows:

Per the annual (AR) and interim reports (IR) - all figures NZ$000s :


Transfers from other assets categories = $98,824
Add expenditure incurred +$942
Add revaluation gain +$1,886
= Reported value held for resale per AR 2023 p56 of $101,652



Add expenditure incurred +$440
Less Value of properties sold -$42,070
Less revaluation loss -$1,258
= Reported value held for resale per IR 2024 p47 of $58,764


The nett revaluation impact over the last reported 18 months was +$628k.

[Baa_Baa]

AFAIK the accounts don't break out the valuation adjustments for this subset of properties prior to April 2022 but yes they would be valued to the expected realisable value once they are classified as being for sale. Prior to that they would be subject to the normal valuation process by the independent valuers. We can see the actual adjustments to this subset of properties since April 2022 as follows:

Per the annual (AR) and interim reports (IR) - all figures NZ$000s :


Transfers from other assets categories = $98,824
Add expenditure incurred +$942
Add revaluation gain +$1,886
= Reported value held for resale per AR 2023 p56 of $101,652



Add expenditure incurred +$440
Less Value of properties sold -$42,070
Less revaluation loss -$1,258
= Reported value held for resale per IR 2024 p47 of $58,764


The nett revaluation impact over the last reported 18 months was +$628k.

Damn, you actually read the financials! Stop making sense. 😂

[allfromacell]

So if some of OCAs least desirable property is selling at book value or even a premium... Time to consider selling some more prime locations and buying back the stock.

[Baa_Baa]

So if some of OCAs least desirable property is selling at book value or even a premium... Time to consider selling some more prime locations and buying back the stock.

What would that achieve for shareholders, selling the sliver (killing the golden goose) and buying back the stock?

[Habits]

Boosts asset backing per share. Same or higher total net assets (if sold for more than BV), and fewer issued shares

Selling top assets allows competitors in, in good locations against OCA

[winner69]

Boosts asset backing per share. Same or higher total net assets (if sold for more than BV), and fewer issued shares

Selling top assets allows competitors in, in good locations against OCA

The good old buyback trick eh …hoping better per share numbers will see market increase price of remaining shares. Hardly ever works out that way

Buybacks only make sense when there’s surplus cash and not much to do with it só a buyback is essentially returning that cash to some shareholders …….dont think Oceania is in that position eh

[Bjauck]

The good old buyback trick eh …hoping better per share numbers will see market increase price of remaining shares. Hardly ever works out that way

Buybacks only make sense when there’s surplus cash and not much to do with it só a buyback is essentially returning that cash to some shareholders …….dont think Oceania is in that position eh
I guess OCA could sell a village at above NTA value and then buyback its shares which are trading at below NTA?

[Balance]

Sobering to see that Ryman has been the worse performing RV stock since 2022 although all three non-performers, RYM, OCA & ARV, have cost shareholders very very dearly to be in them in the last 2 years+. Have left out SUM as it broke the down trend line in the last year.

Interesting to note that all three follow the overall same trend line (down, up and down) so the sp performance malaise appears to be an industry wide issue rather than just a specific stock.

Market woke up to just how cashflow hungry the three RV operators are and how they have been piling on debt to pay dividends as well as pay for ever more expensive land and developments. Too much focus on the so-called interest free 'float' and no focus on the quality & cost of assets bought and built up by the RV players.

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[Daytr]

I guess OCA could sell a village at above NTA value and then buyback its shares which are trading at below NTA?

Or just stick to their knitting.
The biggest issue they face is they run operationally at a loss.
This is why I don't buy into the NTA, where do you value a loss making asset?

[blackcap]

I guess OCA could sell a village at above NTA value and then buyback its shares which are trading at below NTA?

Doesn't that apply to all of the property companies out there at the moment? Most are trading at heavy discounts to NTA. My initial reaction is that the asset valuation is suspect? Or is the market wrong?

[winner69]

Or just stick to their knitting.
The biggest issue they face is they run operationally at a loss.
This is why I don't buy into the NTA, where do you value a loss making asset?

Summarising daytr and blackcap post I see the share price as NTA less (degree of suspect valuations) less (present value of operational losses) …and maybe less a value attributed to a company specific negative sentiment.

[allfromacell]

Summarising daytr and blackcap post I see the share price as NTA less (degree of suspect valuations) less (present value of operational losses) …and maybe less a value attributed to a company specific negative sentiment.

Which is why I pose the question, perhaps you can eat NTA after all?

If the market is valuing the business at under half NTA and it's possible to sell the assets at book value, maybe it's not so silly to actually start selling bits off.

[allfromacell]

What would that achieve for shareholders, selling the sliver (killing the golden goose) and buying back the stock?

Increasing every financial metric per share.

[winner69]

Increasing every financial metric per share.

…in the hope the share price will increase eh (like same PE on higher EPS) …but many studies have shown this hardly ever happens

Biggest beneficiaries are often management who have bonuses based on EPS or TSR … they think buybacks are cool.

[Snoopy]

Doesn't that apply to all of the property companies out there at the moment? Most are trading at heavy discounts to NTA. My initial reaction is that the asset valuation is suspect? Or is the market wrong?


I think you have all forgotten Lyall Taylor's wisdom on why you will never get NTA value out of OCA, bar some freakish circumstances (like those 0% interest rate days). Mind you it was 179 pages back!


Here is the argument that OCA shareholders will never be able to cash out at net asset backing for the OCA shares they own. That discount to asset backing for all periods bar the freakish circumstances of near zero borrowing rates during Covid, is destined to remain at 50% of NTA, or thereabouts, forever.

"The discount to asset backing has a lot to do simply with the way the assets are packaged from an asset class standpoint, and the different costs of capital that apply to different investor constituencies and asset classes. New Zealand's cities and their super-prime real estate prices, which include those city sited retirement complexes, are valued on the books (and in the real world by house buyers) at cap rates as low as 3% (and often closer to 2% net of costs and tax). In a world with low (in historical terms, not compared to the Covid period) interest rates, this is not an unrealistically low yield for super-prime assets with favourable trends in rent revisions, A-grade tenants, long lease terms (for the lifetime of the tenant in the case of the retirement villages), and an income stream that is inflation protected (in the long term anyway, when rights of occupation roll over). Even a modest pace of 2% annual rental growth (below historical averages) would generate all-in after-tax returns of some 4%, which with inflation protection, is very attractive relative to bonds and other high-grade debt."

"However, the issue is that active equity managers - who are the natural buyers of OCA stock - are not bench marked against cash and high-grade bond returns, or even high-grade real estate. OCA, as a listed company, is part of the "listed equities" bucket, and the performance of the institutions that purchase OCA are therefore bench marked against equity market indices, rather than cash or bonds or property prices. The average stock in New Zealand is currently priced with an expected return of perhaps 8%, which is another way of saying the cost of (listed) equity in NZ is currently about 8%. If equity managers were to buy OCA and realise only a 4% return (which they likely would if the stock was priced at 1x book), but the index was to generate 8% pa, it would be of little benefit to the fund manager to argue to their clients that the returns are low risk and quite attractive relative to fixed income. The clients would say, we allocated you money to get "equities exposure", and you're only up 4% and the market is up 8%, and that is not satisfactory performance. Because OCA is part of the "listed equities" bucket, it is expected to deliver "listed equities" returns of 8%."

"Consequently, listed on public markets, the assets that underlie OCA are priced with a cost of capital reflective of NZ equities in general, which is a cost of capital that bears no relation to the cost of capital private buyers of prime A-grade real estate are subject to. Because OCA's underlying assets generate only perhaps 4%, this requires the stock trade at about one half of book value."

The above is adapted commentary from our former esteemed forum member Lyall Taylor.
https://lt3000.blogspot.com/2020/07/market-inefficiency-liquidity-flywheels.html

Except Lyall was not talking about OCA, but a stock called 'Hong Kong Land' (HKL), which owns super prime real estate in Hong Kong and Singapore. All I did was take out the references to HKL, substitute OCA and voila! Lyall's logic resonates with me, despite the commentary being ostensibly about a different listed stock in a different property and stock market.




SNOOPY

[Toddy]

Great logic. It's hard to argue with.

NZ Super funds invest about 5 percent of the portfolio in the NZX. So they may only choose one retirement sector stock. OCA probably is not that stock.

[Bjauck]

Or just stick to their knitting.
The biggest issue they face is they run operationally at a loss.
This is why I don't buy into the NTA, where do you value a loss making asset? It is getting to the stage where, in the absence of takeover offers, it seems breaking up the company, selling individual villages and ceasing to operate loss making beds may be the best way forward for shareholders. It seems unlikely that government will make running standard rest homes particularly profitable any time soon. The outlook for long term residential real estate prices is quite sober compared with the past. If OCA can get remotely close to current NTA values, that is still quite a margin above current SP. Perhaps it is time to get a break up valuation for OCA.

[Curly]

Come 5/5/2024 and OCA will have been listed for 7 years. That its current market price is .19 cents below listing price is appalling and will be against all holders expectations for this stock when first floated to the market. Yet there are directors who paid as much as $1.40 a share for this stock so they must see long term value. How long though is long term. Hoping that some light might be forth coming with next announcement but not holding my breath. Patience is proving to be a tiring difficult discipline.

[Cupsy]

I think you have all forgotten Lyall Taylor's wisdom on why you will never get NTA value out of OCA, bar some freakish circumstances (like those 0% interest rate days). Mind you it was 179 pages back!




SNOOPY

If this is correct (and I'm not saying it is or is not), why does sum trade at NTA?

[Daytr]

It is getting to the stage where, in the absence of takeover offers, it seems breaking up the company, selling individual villages and ceasing to operate loss making beds may be the best way forward for shareholders. It seems unlikely that government will make running standard rest homes particularly profitable any time soon. The outlook for long term residential real estate prices is quite sober compared with the past. If OCA can get remotely close to current NTA values, that is still quite a margin above current SP. Perhaps it is time to get a break up valuation for OCA.

There should be no desperation.
The current real estate market isn't a market to start selling off assets.
The real estate market will turn. Timing is everything.
Meanwhile as I keep saying, they just need to operationally make a profit, even a small profit so sales & resales isn't subsidizing the day to day business.

Once the real estate market turns, which it will, those development lots,.sales & resales should start generating serious cash.

[thegreatestben]

Unsure if it’s because they have no choice or whether they’ve seen the signs they need, but a lot of the developments that had been on ice for a year or two have kicked off again around Lower Hutt.

Wouldn’t want to be empty handed if interest rates come down or perhaps there’s a generalised support for fhb’s that will replace schemes like Kiwibuild and first home partner (shared ownership).

Or as some prefer to say, perpetuate the ponzi.

[Baa_Baa]

So if some of OCAs least desirable property is selling at book value or even a premium... Time to consider selling some more prime locations and buying back the stock.

This is what you said first, emphasis on selling the golden geese. But that would kill the value proposition and the strategy shareholders bought in to.


If the market is valuing the business at under half NTA and it's possible to sell the assets at book value, maybe it's not so silly to actually start selling bits off.

Then you downgraded to exactly what they are doing. Refer recent announcement of progress (the strategy announced many months ago) downscaling, selling, underperforming and non-strategically aligned properties.

But selling the golden geese, just to buy back shares? Yeah nah, aint going to happen. Neither is selling off the "bits" about buying back shares, the purpose is to shore up the balance sheet.

[Balance]

I think you have all forgotten Lyall Taylor's wisdom on why you will never get NTA value out of OCA, bar some freakish circumstances (like those 0% interest rate days). Mind you it was 179 pages back!




SNOOPY

Makes a lot of sense and as an aside, I dealt and interacted with Lyall Taylor when he was working as an analyst in NZ before he headed overseas. What I liked about his research was that he wasn't afraid to stick his neck out (compared to almost 95% of the other analysts out there) and the piece by him above showed that he has maintained his independence. Writing as he did about HKL takes guts as HKL is a big player in the corporate world. HKL's sp today is where it was in 2009!

[winner69]

Makes a lot of sense and as an aside, I dealt and interacted with Lyall Taylor when he was working as an analyst in NZ before he headed overseas. What I liked about his research was that he wasn't afraid to stick his neck out (compared to almost 95% of the other analysts out there) and the piece by him above showed that he has maintained his independence. Writing as he did about HKL takes guts as HKL is a big player in the corporate world. HKL's sp today is where it was in 2009!

Lyall learnt participating on Sharetrader as a youngster …..always prepared to listen and learn

[Bjauck]

Maybe no desperation. However the previous generation’s house price increase in excess of either inflation or wage increases seems unlikely to continue. Female labour force participation rates have probably no further room to grow.

So short of multiple family households it seems unlikely that the multiple of average income to buy an average house has as much growth potential as previously, unless houses become even more comparatively attractive to wealthier investors, versus alternatives such as shares or pension plans.

I still think break up valuations need to be provided so that shareholders should consider sale of villages and rest homes as an alternative way to maximise value as opposed to continued operations, with current share values.

[winner69]

Next results announcement only weeks away.

Time to review performance since listing ……these are the headlines over the years:



July 17. Oceania Healthcare exceeds IPO forecasts
Jan 18. Oceania Healthcare doubles profit for half year
July 18. Oceania Healthcare exceeds forecast with strong earnings boost
Jan 19. Oceania Healthcare grows profit for the six months ended 30 November 2018
July 19. Oceania Healthcare reports completion of key development projects and strong sales momentum
Jan 20. Substantial Increase in First Half Unaudited Underlying NPAT* for Oceania Healthcare.
July 20. Oceania Healthcare reports steady underlying earnings for the year despite impacts of COVID-19
Jan 21. Oceania records increase in First Half Unaudited Underlying EBITDA
May 21 Oceania records strong 10 month trading result
Nov 21 Oceania delivers improved performance despite Covid 19
May 22 Oceania positioned for growth
Nov 22. Care Suite premiumisation deliver results
May 23 Oceania delivers solid result
Nov 23 Oceania continues the transformation of its portfolio

Recent headlines seem to be getting less bullish than previous ones


Wonder what the May 24 headline will be?

[Ggcc]

Next results announcement only weeks away.

Time to review performance since listing ……these are the headlines over the years:
OCA exceeds results and is continuing with its transformational goals.





July 17. Oceania Healthcare exceeds IPO forecasts
Jan 18. Oceania Healthcare doubles profit for half year
July 18. Oceania Healthcare exceeds forecast with strong earnings boost
Jan 19. Oceania Healthcare grows profit for the six months ended 30 November 2018
July 19. Oceania Healthcare reports completion of key development projects and strong sales momentum
Jan 20. Substantial Increase in First Half Unaudited Underlying NPAT* for Oceania Healthcare.
July 20. Oceania Healthcare reports steady underlying earnings for the year despite impacts of COVID-19
Jan 21. Oceania records increase in First Half Unaudited Underlying EBITDA
May 21 Oceania records strong 10 month trading result
Nov 21 Oceania delivers improved performance despite Covid 19
May 22 Oceania positioned for growth
Nov 22. Care Suite premiumisation deliver results
May 23 Oceania delivers solid result
Nov 23 Oceania continues the transformation of its portfolio




Wonder what the May 24 headline will be?
OCA exceeds results and is continuing with its transformational goals.
Late 2024 or early 2025. We will capital raise to continue with this magnificent opportunity. I feel early next year maybe the year to go down hard on this. depends on if they get their stuff sorted.

[winner69]

OCA exceeds results and is continuing with its transformational goals.
Late 2024 or early 2025. We will capital raise to continue with this magnificent opportunity. I feel early next year maybe the year to go down hard on this. depends on if they get their stuff sorted.

So the headline won’t be like this March 21 then -

Oceania announces $100m equity raising to fund acquisitions

[Bjauck]

Next results announcement only weeks away.

Time to review performance since listing ……these are the headlines over the years:



July 17. Oceania Healthcare exceeds IPO forecasts
Jan 18. Oceania Healthcare doubles profit for half year
July 18. Oceania Healthcare exceeds forecast with strong earnings boost
Jan 19. Oceania Healthcare grows profit for the six months ended 30 November 2018
July 19. Oceania Healthcare reports completion of key development projects and strong sales momentum
Jan 20. Substantial Increase in First Half Unaudited Underlying NPAT* for Oceania Healthcare.
July 20. Oceania Healthcare reports steady underlying earnings for the year despite impacts of COVID-19
Jan 21. Oceania records increase in First Half Unaudited Underlying EBITDA
May 21 Oceania records strong 10 month trading result
Nov 21 Oceania delivers improved performance despite Covid 19
May 22 Oceania positioned for growth
Nov 22. Care Suite premiumisation deliver results
May 23 Oceania delivers solid result
Nov 23 Oceania continues the transformation of its portfolio

Recent headlines seem to be getting less bullish than previous ones


Wonder what the May 24 headline will be?Good list! Still, reading those headlines one would expect a “solidly” increasing SP.

So compiling a headline glossary:
Positioned for growth = currently underperforming
Premiumisation = We want to become Summerset
Solid result = constipated, we are straining for little reward
Transformation = everything else has failed

[aquaman]

Next results announcement only weeks away.

Time to review performance since listing ……these are the headlines over the years:



July 17. Oceania Healthcare exceeds IPO forecasts
Jan 18. Oceania Healthcare doubles profit for half year
July 18. Oceania Healthcare exceeds forecast with strong earnings boost
Jan 19. Oceania Healthcare grows profit for the six months ended 30 November 2018
July 19. Oceania Healthcare reports completion of key development projects and strong sales momentum
Jan 20. Substantial Increase in First Half Unaudited Underlying NPAT* for Oceania Healthcare.
July 20. Oceania Healthcare reports steady underlying earnings for the year despite impacts of COVID-19
Jan 21. Oceania records increase in First Half Unaudited Underlying EBITDA
May 21 Oceania records strong 10 month trading result
Nov 21 Oceania delivers improved performance despite Covid 19
May 22 Oceania positioned for growth
Nov 22. Care Suite premiumisation deliver results
May 23 Oceania delivers solid result
Nov 23 Oceania continues the transformation of its portfolio

Recent headlines seem to be getting less bullish than previous ones


Wonder what the May 24 headline will be?

Interesting that the headlines getting less bullish seems to tie in with CEO change over in 21... maybe once new CEO appointed we will see a reversal to more positive headlines.

[winner69]

So the headline won’t be like this March 21 then -

Oceania announces $100m equity raising to fund acquisitions

That cap raise was for eps accretive acquisitions of Waterford and Franklin ……suppose things working out as planned and making bucks out of them

A year or so later they acquired Remuera Rise and Bream Bay

Plenty of new stuff to boost profits eh.

[Baa_Baa]

https://www.tewhatuora.govt.nz/for-health-professionals/clinical-guidance/specific-life-stage-health-information/health-of-older-people/aged-care-funding-and-service-models-review/

All things point to one thing, the entire sector is underfunded, the crisis is upon us and will only get worse until serious money is directed towards looking after our elderly.

If you’re interested, read the Sapere report,

[winner69]

https://www.tewhatuora.govt.nz/for-health-professionals/clinical-guidance/specific-life-stage-health-information/health-of-older-people/aged-care-funding-and-service-models-review/

All things point to one thing, the entire sector is underfunded, the crisis is upon us and will only get worse until serious money is directed towards looking after our elderly.

If you’re interested, read the Sapere report,

Pretty sobering report eh BaaBaa

Does it mean only those who can afford to pay for their care will end at the likes of Oceania ….who will be charging enough to make decent profit (for shareholders)

Hard to see any government helping ‘bloat’ profits at Oceania et al ..suppose they will be asking them to do the decent thing and have a social conscience and become a care provider for all at whatever it costs them.

Don’t think that ‘investors’ who want a decent return will like that

Tough world and doesn’t seem things are going to get better for likes of Oceania

[Daytr]

Pretty sobering report eh BaaBaa

Does it mean only those who can afford to pay for their care will end at the likes of Oceania ….who will be charging enough to make decent profit (for shareholders)

Hard to see any government helping ‘bloat’ profits at Oceania et al ..suppose they will be asking them to do the decent thing and have a social conscience and become a care provider for all at whatever it costs them.

Don’t think that ‘investors’ who want a decent return will like that

Tough world and doesn’t seem things are going to get better for likes of Oceania

Times have changed from back in the day that Nana or Grandad would move in with the family, actually there is a bit of a revival of multi generational living, but that's typically to help the younger generation into the housing market.

Other than that, Granny was off to the geriatric ward at the public hospital.

As you say, I don't see the Government stepping in to the full the void, particularly for those buying a luxury villa in St Helliers & the like.

[Baa_Baa]

The new GM of Sales, big ask.
15073

[winner69]

Is this a new role?

They made a big deal of it when Anita Hawthorne was appointed as Group General Manager Sales & Service in mid 2022

Maybe Anita given up on sales and just concentrating these days on Service …or was she told she nongovernmental at sales

Quite a few Leadership Team changes over last year or so

[Baa_Baa]

Is this a new role?

They made a big deal of it when Anita Hawthorne was appointed as Group General Manager Sales & Service in mid 2022

Maybe Anita given up on sales and just concentrating these days on Service …or was she told she nongovernmental at sales

Quite a few Leadership Team changes over last year or so

Seems to be, maybe they realised sales and service are not mutually compatible. Good if they've split the roles and have a dedicated focus (again) on sales, they sure need it, there's a ton of backlog for sale and recent results suggest they need to do something different to get that stock moving.

[Bjauck]

Times have changed from back in the day that Nana or Grandad would move in with the family, actually there is a bit of a revival of multi generational living, but that's typically to help the younger generation into the housing market.

Other than that, Granny was off to the geriatric ward at the public hospital.

As you say, I don't see the Government stepping in to the full the void, particularly for those buying a luxury villa in St Helliers & the like.Granny flats were the thing in the 70’s and 80’s. Perhaps doctors did more home visits back in the day too. However, back to today, if your family have “escaped” to Australia, maybe ORA villas and then rest home is the only option for many, if they stay in NZ.

I hope OCA are lobbying for a requirement for rest home beds. I think it would work in their favour. Otherwise some providers will take the cream. Although adequate funding of care would be best.

Certainly if funding continues to make running rest home care marginally profitable, a degree of compulsion or quid pro quo for the village ORA scheme may be necessary.

[winner69]

Seems to be, maybe they realised sales and service are not mutually compatible. Good if they've split the roles and have a dedicated focus (again) on sales, they sure need it, there's a ton of backlog for sale and recent results suggest they need to do something different to get that stock moving.

Hope Anita takes a pay cut then

But then coming up with new exciting innovative things for The Helier residents to indulge in is avpretty stressful task

[Jenny Ruth]

Hi all. My latest column published on my Substack, Just the Business, takes a look at the NZX-listed retirement operators and how they rank, including that Summerset is likely to overtake Ryman as the largest in the sector in a few years. It includes comment on Oceania. The headline is: Mirror, Mirror on the wall, which is the biggest retirement village operator?
And you can find it here: https://substack.com/@justthebusinessjennyruth

[winner69]

Things seem to have gone downhill at Oceania since Brent told Mark Stockton not to come in on Monday a few years ago

One of a quite a few comings and goings in the Executive Team in last couple of years.

[winner69]

Jeez …shareprice hit 57 cents

Hope it recovers by end of day

Value probably buying so that might stop the slide

[ValueNZ]

Jeez …shareprice hit 57 cents

Hope it recovers by end of day

Value probably buying so that might stop the slide
Maybe might buy a few thousand worth tomorrow... I don't know whats more appealing, STLA at $22.30 USD or OCA at 57c.

Both are cheap as hell.

[Maverick]

NZ housing stats came out recently which I use as the main benchmark factor towards expectations for OCA sales.
There are other influencers such as what stage each delivery is at in its sell down which I'll add below.

As earlier posted , this last result really upset me as OCA has a ton of ready to go stock . Then coupled with SUM and ARV sales were good positive indicators, plus high sales volume for OCA in HY1 all pointed to a very good OCA result.
The actual result of c.37 new apartment sales (derived from their unspecific update) was in my mind a shocker and a significant disappointment.

Today's NZ stats tempers my disappointment to a degree as it offers a partial reason for the poor sales.

Q1 24 NZ sales were down significantly to such an extent that when added to Q4 23 ( that is the same period as OCA 2HY24) then we get almost identical NZ sales rates/ environment during OCA`s FY23.
In other words OCA sold 16% of its available stock HY2 24 while over the entire FY23 during an almost identical sales environment it sold 16% and 19% per OCA HY.
One could argue OCA 2HY24 sales were down only 2% on expectations based solely on NZ house sales data/ environment when compared to averaged OCA 1hy23 and OCA 2Hy23.

So while 2% down is disappointing , it's not as disastrous as first thought given the NZ sales backdrop.

The other specific OCA sales factor is that Helier is selling down from a cold start ( empty) so sales are always sluggish during this phase as there isn't the enthusiasm to move into a near empty building. To be fair , OCA tried to secure pre-sales with a specific sales office in the Helier township complete with computer walkthroughs and an impressive model of the completed Helier itself. Plus an opening featuring an ex All Black coach all to get pre sales rolling . Both these initiatives seemed to have had little effect. Preselling apartments seems nigh impossible...so when ARV say c.50% ( ish from memory) of their apartments at Aria bay sold just after opening, it wasn't true, they were grandfathered from a nearby village. When SUM say they have c.60% presold at St Johns about to start opening late this year...I dont believe them or at least they won`t translate into actual sales.

Now getting back to the normal pattern of apartment selling down , the initial ghost like community vibe obviously ramps up as the population grows. Helier , with c.15-20 residents now should be starting to gain that vibe.
ChCh is a similar situation but not quite as empty given there are full apartments around the corner from a previous delivery.

So after today's result I am not as dark on their ability to sell stock or concerned about its possible fallout out of desirability as I was a few weeks ago. Forbar said OCA will only get going when the property market starts moving again which seems a perfect summary.

Thanks Baa baa for highlighting they now have just employed a specific sales position at the top ( was a shared role) starting now. Clearly they are aware of this significant issue and trying to address it.

I'm not making excuses by any means for OCAs very poor sales but in context of this new data I'm no longer as bitterly disappointed as I was.

[winner69]

Hey Mav

If we looking at same data https://www.stats.govt.nz/information-releases/property-transfer-statistics-march-2024-quarter/. I’d say property market doing quite well. Q124 sales up 14% on pcp following +6% in Q423.

Overall numbers last 2 quarters up 10% pcp

OCA sales up 38% v pcp in H1 and only 3% in H2 ….the spike in H1 and the rumour that H223 sales May have been ‘managed’ has resulted in the sales trend looking lumpy eh….goodness knows what’s going on especially when ARV and SUM had strong 2nd half.

I can sort of see where you are coming from and it will be interesting what explanations if any they come up later in the month.

Just have to wait and see

[Maverick]

We are using the same NZ stat results . (to “ be on the same page Winner, I use the total home transfers on table 1 . The latest data is cell O-34.)

Here's a chart of these results over the last few years. I've tried other data but found this as good as any. I think the main thing is just to keep using a consistent set.
You can see on this chart what I'm seeing with the sharp drop of in Q1 24 home transfers.



https://lh7-us.googleusercontent.com/MpvIl5eZrt0VaNeBpYW7mFelCGcdDroA_xUJ-nhngNjboaO6IoEhLM0ceLmYQo0Kk6zUh8J0nhSD-qwhAihF5bSsfj2BLq3HzJI4Qe1qRST-92Wq8nnepewTNR-0vAsEmGlmcu211RraKDVURKt_W7c

[Maverick]

Hey Mav

If we looking at same data https://www.stats.govt.nz/information-releases/property-transfer-statistics-march-2024-quarter/. I’d say property market doing quite well. Last 2 qtrs (OCA H2) sales up 14% on pcp following +6% in the previous 2 quarters. NZIER reported volumes were up 5% and 22% on pcp.

Overall numbers 12 months March up 10%

OCA sales up 38% v pcp in H1 and only 3% in H2 ….the spike in H1 and the rumour that H223 sales May have been ‘managed’ has resulted in the sales trend looking lumpy eh….goodness knows what’s going on especially when ARV and SUM had strong 2nd half.

I can sort of see where you are coming from and it will be interesting what explanations if any they come up later in the month.

Just have to wait and see
I am very curious about your comment about "the spike in H1 and the rumour that H223 sales May have been ‘managed’".
The sales for HY1 24 are very high , in fact 38% of what I figure their unsold apartment stock was . This was more like the heady days of 2021 when they did actually sell stock at these rates.
I also note that the average apartment prices were quite low too. I put these 2 things down at the time to possible stock clearing of their harder to sell apartments and a sharper focus on sales. ( that was just a guess).

Are you willing to elaborate on the rumour comment?

[Baa_Baa]

I am very curious about your comment about "the spike in H1 and the rumour that H223 sales May have been ‘managed’".
The sales for HY1 24 are very high , in fact 38% of what I figure their unsold apartment stock was . This was more like the heady days of 2021 when they did actually sell stock at these rates.
I also note that the average apartment prices were quite low too. I put these 2 things down at the time to possible stock clearing of their harder to sell apartments and a sharper focus on sales. ( that was just a guess).

Are you willing to elaborate on the rumour comment?

Hopefully not Winner 'making up' numbers again, or OCA counting their H1 sold RV's as sold units? Whatever, an investor in an RV buys into the development growth and the dosh that flows from that, however long that takes, it's not and has never been about making $ from care. Right now all of the RV's are imo counterintuitively slowing down their development based on some fabricated perception that balance sheets are distressed (they're not, except maybe RYM overcooked it). All of them are subject to market sentiment re SP, whether right or wrong. Look through it, these are very successful property development companies with outstanding business models. The SP will look after itself, maybe just not in the timeframe you hoped for.

[Joshuatree]

And there you have it folks,many thousands of words,theories,calculations,doublespeak,theories,t obacco chewing, espousing by the chief influencers(follow me),know it alls,pumpers,loobyists,unbelievers and all those hurting at the woeful performance of this punishing promised enricher.You need go no further then these distilled down lines.You can go on vacation now.Here it is in a nutshell.

"Forbar said OCA will only get going when the property market starts moving again which seems a perfect summary."

[Maverick]

Hopefully not Winner 'making up' numbers again, or OCA counting their H1 sold RV's as sold units? Whatever, an investor in an RV buys into the development growth and the dosh that flows from that, however long that takes, it's not and has never been about making $ from care. Right now all of the RV's are imo counterintuitively slowing down their development based on some fabricated perception that balance sheets are distressed (they're not, except maybe RYM overcooked it). All of them are subject to market sentiment re SP, whether right or wrong. Look through it, these are very successful property development companies with outstanding business models. The SP will look after itself, maybe just not in the timeframe you hoped for.
I'm seeing friends of mine reaching capitulation, hard core OCA believers, AND acting on it. Its hard to watch but easy to understand.

I have always closely watched and monitored sales , margins, prices , especially as high end apartments are a new product and what OCAs future profits are based on ( as you say , care is not the core driver) . After years of watching these sales to minute detail, learning the patterns from uncountable site visits, this last result has me worried...all metrics are holding up until now very well, except sales ...maybe we are at the oversupply stage??? If that's the case then its time to take the a bleeding nose and dig elsewhere.

But if its not , and turns out we are just in a property sales downturn then the outcome from this binary decision ...to sell or hold... leads to incredibly different outcomes. ( the third option is to BUY but who has any money left to do that?)

I`m not prepared to look past poor sales if they are not justified. Things wont come right if there is oversupply then the ultimate financial outcome will be tough.

However...for me, from everything I look at, I dont not see oversupply nor product issues. From the data , I still see enough demand to carry this industry on its merry way.

I love your positivity Baa baa and appreciate it during these dark days. I cant give you another rep point sorry, you deserve it.

While I do agree with you that's its going to work out just fine ( eventually when interest rates fall and property sales resume even at their current prices ) I completely understand others who want to stop the pain and just go fishing like the good old days before we ever understood what an ORA was.

For us to feel better , we dont need to see the SP rise to $1.20 , we just need it to start going up however slowly instead of down . I personally believe that cant be too faraway given the inevitable fall of interest rates that are certainly going to happen given the seriousness of economic pain now out there.

BTW, your presentient comment on "counterintuitively slowly down production" is just ensuring future demand demand will outstrip supply.

[Rawz]

Good post Mav. Feel for OCA holders. It’s been a tough ride but not long to go. Capitulation is generally the last obstacle a SP goes through before the rise.

[Baa_Baa]

I'm seeing friends of mine reaching capitulation, hard core OCA believers, AND acting on it. Its hard to watch but easy to understand.

I have always closely watched and monitored sales , margins, prices , especially as high end apartments are a new product and what OCAs future profits are based on ( as you say , care is not the core driver) . After years of watching these sales to minute detail, learning the patterns from uncountable site visits, this last result has me worried...all metrics are holding up until now very well, except sales ...maybe we are at the oversupply stage??? If that's the case then its time to take the a bleeding nose and dig elsewhere.

But if its not , and turns out we are just in a property sales downturn then the outcome from this binary decision ...to sell or hold... leads to incredibly different outcomes. ( the third option is to BUY but who has any money left to do that?)

I`m not prepared to look past poor sales if they are not justified. Things wont come right if there is oversupply then the ultimate financial outcome will be tough.

However...for me, from everything I look at, I dont not see oversupply nor product issues. From the data , I still see enough demand to carry this industry on its merry way.

I love your positivity Baa baa and appreciate it during these dark days. I cant give you another rep point sorry, you deserve it.

While I do agree with you that's its going to work out just fine ( eventually when interest rates fall and property sales resume even at their current prices ) I completely understand others who want to stop the pain and just go fishing like the good old days before we ever understood what an ORA was.

For us to feel better , we dont need to see the SP rise to $1.20 , we just need it to start going up however slowly instead of down . I personally believe that cant be too faraway given the inevitable fall of interest rates that are certainly going to happen given the seriousness of economic pain now out there.

BTW, your presentient comment on "counterintuitively slowly down production" is just ensuring future demand demand will outstrip supply.

I know it's hard Mav, but of all the stocks I've ever held, only a very tiny few have ever made a loss, usually from some unexpected event like a buy out at below my holding costs. I hope that doesn't happen with OCA but I've stayed the course and lowered my average holding price enough that an unforeseen event probably won't eventuate into a loss. I'd still be p1ssed off if that happened though.

The investment thesis imo is still sound, reasonable and achievable, it's just a matter of timing and many of us have been caught out because our timing has been overwhelmed by events beyond our or OCA's control, even the whole sector's control.

I've said before that I have never intended to sell my investment in OCA, or the other RV's that I have. They're not 5-minute wonders looking for a capital gain and boom, we sell for a massive profit and pat ourselves on the back for being so astute. They have always been a property development play and long term, which is subject to market fluctuations. And lo and behold, we have to contend now with a market downturn not seen since 2008/9 GFC.

Farking brilliant, who would have expected that? Repeated ongoing kicks in the teeth, it's no wonder some investors are punch drunk. But I question their motivation for investing in this sector in the first place. Maybe some investors have missed the point, this is and has never been a 5-minute wonder to untold capital gains riches. Alongside that, they're all, the RV's are sh1tty dividends payers, so that's never been a reason for investing in them. They are all pure property development players in a niche market of RV's, and that market is not immune to sentiment, which is bloody awful at the moment.

I have time and patience to wait for that to turn around, it will, the property market and development in particular is very cyclical, none of our RV's are distressed enough to be likened to a mainstream developer who has or is stressed on their residential or commercial developments. All RV's are bigger than that, they're far better positioned to weather the storms that the current market presents.

Sure, it's tough for shareholders, none of this was foreseen. But no way I'm going to capitulate into even a small a loss when it's obvious for anyone who has even the basic understanding of financials, that OCA is profitable, it is not distressed, it has many levers to balance the perceptions, and has enormous tailwinds to support its occupancy, and growth if they choose to continue to do so.

Patience is a b1tch, especially with investing!

[ValueNZ]

Right now all of the RV's are imo counterintuitively slowing down their development based on some fabricated perception that balance sheets are distressed (they're not, except maybe RYM overcooked it).
I agree Baa Baa, I think the idea that the balance sheet of these RV's are somehow distressed comes from accountant ratio lovers (in particular the equity ratio).

That ratio totally ignores the economic reality of the ORA accounts, which is counted as a liability but in no way should be viewed as one from the lens of an investor.

[ValueNZ]

I'm seeing friends of mine reaching capitulation, hard core OCA believers, AND acting on it. Its hard to watch but easy to understand.

I have always closely watched and monitored sales , margins, prices , especially as high end apartments are a new product and what OCAs future profits are based on ( as you say , care is not the core driver) . After years of watching these sales to minute detail, learning the patterns from uncountable site visits, this last result has me worried...all metrics are holding up until now very well, except sales ...maybe we are at the oversupply stage??? If that's the case then its time to take the a bleeding nose and dig elsewhere.

But if its not , and turns out we are just in a property sales downturn then the outcome from this binary decision ...to sell or hold... leads to incredibly different outcomes. ( the third option is to BUY but who has any money left to do that?)

I`m not prepared to look past poor sales if they are not justified. Things wont come right if there is oversupply then the ultimate financial outcome will be tough.

However...for me, from everything I look at, I dont not see oversupply nor product issues. From the data , I still see enough demand to carry this industry on its merry way.

I love your positivity Baa baa and appreciate it during these dark days. I cant give you another rep point sorry, you deserve it.

While I do agree with you that's its going to work out just fine ( eventually when interest rates fall and property sales resume even at their current prices ) I completely understand others who want to stop the pain and just go fishing like the good old days before we ever understood what an ORA was.

For us to feel better , we dont need to see the SP rise to $1.20 , we just need it to start going up however slowly instead of down . I personally believe that cant be too faraway given the inevitable fall of interest rates that are certainly going to happen given the seriousness of economic pain now out there.

BTW, your presentient comment on "counterintuitively slowly down production" is just ensuring future demand demand will outstrip supply.
Good to see you're posting again Maverick, this forum greatly benefits from your high standard of FA.

That said, I have to disagree regarding these being dark days. These are the greatest days for buyers of OCA stock (apart from the few days you could get OCA in the 40c range during covid), and only dark days for those capitulating. I don't see how you are negatively impacted by a lower market price if you don't intend on selling within the next say 5 years.

[winner69]

Hey Mav

If you look at that chart on property transfers you’ll see that March Qtr numbers are generally lower than preceding December Qtr …seasonality…..and this March Qtr numbers higher than last years.

I’ll stick to my conclusion that OCA new sales are disappointing, Esp as supply not the problem.

There were a couple of media comments about OCA sales numbers for H223 and H124 not making sense. One suggestion was that some Helier sales were booked in H223 and I think even you alluded to that as well. You also commented that something doesn’t ‘look right’ with the way sales were going.

That’s the past….hopefully all will become clearer later this month when we get more detail.

Take care mate ….it’ll be all OK one day

[Daytr]

All these posts about sales. Need more sales etc. This is a sign of desperation I.e it's the only way to right the ship.

OCA has very little control over the sales other than discounting prices. The property market is, what it is and relying on a turn around has very little to do with the business itself.

What OCA do have control over is operational costs. Yet no one here seems to think operating at a loss is important.
How many villas do they need to sell just to offset the operating loss?

At least if operationally they are breaking even or making a small profit then it takes the pressure off sales that they have very little influence on.

[Maverick]

Hey Mav

If you look at that chart on property transfers you’ll see that March Qtr numbers are generally lower than preceding December Qtr …seasonality…..and this March Qtr numbers higher than last years.

I’ll stick to my conclusion that OCA new sales are disappointing, Esp as supply not the problem.

There were a couple of media comments about OCA sales numbers for H223 and H124 not making sense. One suggestion was that some Helier sales were booked in H223 and I think even you alluded to that as well. You also commented that something doesn’t ‘look right’ with the way sales were going.

That’s the past….hopefully all will become clearer later this month when we get more detail.

Take care mate ….it’ll be all OK one day
yes to everything you've said there.
Seasonally NZ sales are slightly up , OCA sales are quite disappointing , and yes, there is something not right about the sudden leap up of new sales HY1 24 and now a sudden drop off. (Resales are chugging ok though)

As far as getting clarity this month on all this…I do hope that in the analysts call they will bring up the volumes mystery and get some colour on this issue. To me, Brent seems to report on contracts signed (or nearly signed) when the reality of a resident actually moving and paying up seems a quite different thing.
Ultimately it all comes out in the wash eventually anyway but these large surprises HY to HY of sales volume and wild swinging average prices (that don’t align with reported Helier sales) have me a bit baffled.

SUM report “ sales under contract” to fill in this no man’s land of what is and isn’t a paid up sale. Love to see OCA adopt that too.

As you say, just gotta wait till the end of the month

[winner69]

Forbar weren’t too impressed with the update and lowered their F24 Underlying Profit forecast to $45.6m

That’s way down on the $58.6m on last year ….but the real bad bit is it implies H2 profit of only $18.2m versus $30.8m in pcp ( and $27.4m in first half)

If Forbar are about right with the $45.6m it would be a disaster of a result …goodness knows how market would react but I reckon it would be pretty vicious

My forecast is something about last years number

[bull....]

All these posts about sales. Need more sales etc. This is a sign of desperation I.e it's the only way to right the ship.

OCA has very little control over the sales other than discounting prices. The property market is, what it is and relying on a turn around has very little to do with the business itself.

What OCA do have control over is operational costs. Yet no one here seems to think operating at a loss is important.
How many villas do they need to sell just to offset the operating loss?

At least if operationally they are breaking even or making a small profit then it takes the pressure off sales that they have very little influence on.

yep as have bleated on and on about on this thread that while sales are important its cashflow that matters and all RV are in survival mode.

[X-men]

Nasty stock

[ValueNZ]

Nasty stock

Got my buy order filled so I'm happy

[X-men]

Another sailor moon

[jonu]

yep as have bleated on and on about on this thread that while sales are important its cashflow that matters and all RV are in survival mode.

I have no skin in this game, but do supermarkets sell all items at a profit? Have you heard of the term loss-leader?

[Maverick]

Forbar weren’t too impressed with the update and lowered their F24 Underlying Profit forecast to $45.6m

That’s way down on the $58.6m on last year ….but the real bad bit is it implies H2 profit of only $18.2m versus $30.8m in pcp ( and $27.4m in first half)

If Forbar are about right with the $45.6m it would be a disaster of a result …My forecast is something about last years number
My expectations after the new sales info have dropped significantly. They are arnt much less than yours though.

Im picking HY2 about $26m so Fy will be down about 8% by my workings.

There is a couple of things in there which are wild cards.
One is the increase in care profit due to increased govt funding. I expect that to be up about c. $3m.
The margins and value of Helier sales in the mix should be much higher than HY1. So despite the drop in sales, the profit on new sales will be compensated to some degree.

One thing which has the potential to upset ( or improve ) the apple cart for me is the large jump in village expenses HY1. I can’t figure out why it jumped $5m or 30%. I’ve been told it’s due to opening 2 sites but I’m not buying that as this magnitude of jump isn’t in keeping with other openings. There is a remote possibility it won’t need to stay this high (possible one off factors as it really is an unusually big jump) and just might reduce but in all likeliness it won’t. I’ve assumed the new high level into my workings.

All these factors make this particular result very unpredictable. I can’t really see how Forbar came up with such a low expectation and hope to heck they are wrong…and you are right;)

Im 50/50 on whether the divi will reinstate. They can afford it , especially if they reduce it. They are still profitable and making $45-$55m , but we will have to wait and see.

[Balance]

Im 50/50 on whether the divi will reinstate. They can afford it , especially if they reduce it. They are still profitable and making $45-$55m , but we will have to wait and see.

Profitable only because of non-cash revaluation gains - operating loss in H1 was over $15m.

In any case, consensus forecasts have OCA paying a small dividend so guess OCA better deliver on that!

[Daytr]

I have no skin in this game, but do supermarkets sell all items at a profit? Have you heard of the term loss-leader?

A loss leader on their core business.
That's real smart.
You are a director of a public company right?
Jeepers!

[Daytr]

Got my buy order filled so I'm happy

ValueNZ, it's obviously up to you where you invest your money.
But I really can't understand why you wouldn't diversify.
OCA isn't a blue chip stock, overall once the property market recovers it should do OK, but aren't their other opportunities you would look at.

I see your Stellantis pick was doing alright for a while there.

[percy]

A loss leader on their core business.
That's real smart.
You are a director of a public company right?
Jeepers!

Loss leaders at Supermarkets.?
It is the supplier who takes the hair cut.
The Supermarket retain their % mark up.

[winner69]

Yesterday close 56 cents at least wasn’t 52 week low

But Value probably hoping it’ll make a new 52 week low today

[Daytr]

Loss leaders at Supermarkets.?
It is the supplier who takes the hair cut.
The Supermarket retain their % mark up.

Hey Percy, why are you replying to me?
I'm referring to OCA'S core business.
It's JONU who was comparing his perception of Supermarkets loss leader strategy to OCA'S core business losing money.

[Balance]

Yesterday close 56 cents at least wasn’t 52 week low

But Value probably hoping it’ll make a new 52 week low today

Retail buying and institutional selling.

Notice how the bids are getting thinner but whenever they build up to sufficient volume, the instos take the bids out? Cent by cent, the sp goes lower.

Just be careful out there, folks. No point becoming cannon fodder (something I have learnt from bitter past experience) when a stock has lost favour in such a manner.

[Maverick]

Been wrestling with the latest update on sales Winner that you and I are thinking; it just doesn't add up.


Firstly the NZ sales volume graph helps me somewhat to see it's still a very tough environment out there and has taken a fall since Christmas.

Heres another thing that could well be a factor. The guided new sales figure is aggregate ilu and care suites…..just what if cares suite sales are low which makes space for a more acceptable new sales number…things start to add up.

Heres my thoughts. …
Its possible PACs are trending up due to public preference and /or OCA is more prepared to PAC them to fill them. ( pacs yield the same cash but don't give OCA capital )
PAC income increases YOY about 13% . That equates to about 40 new PACs per year to generate this growth. Now consider that's on top of the existing PAC contracts.
Sooooo….that would mean the perceived rise of unsold new stock is not actually rsing empty units at all. (As in new cares suites delivered minus new cs sales = surplus empty rooms)

For example last report they had fair dinkum about 128 actually empty stock, which is just fine for a product that should take 2.5 years to sell down fully after delivery.
Also note, that’s out of 1000 of them now.

If I apply total new sold care suites and growth of PACs over the last years to new deliveries , there is actually no growth in empty rooms accruing at all. Also remember an old PAC selling into a new Pac is still considered an unsold unit. ( some lesser apartments and client needs are always going to suit PACS)

What this means , totally confusing as it all is ….is that new apartment sale may not actually be as awful as first assumed given that under the above scenario 2HY24 only 30 or so new caresuites may have been officially sold leaving more headroom in the new sales number to be made up with better apartment sales numbers.

More apartment sales means more margin…more profit …more cashflow ….less debt increase…more chance of dividend blah blah…

So when coupled with the poor NZ housing sales since Christmas , then the usual initial selling slowness of new deliveries (Helier and CHCH). …then just maybe things aren't so bad after all.
The rising fear of oversupply and apartments going out of favour just might be overreacting.

All this gobbly gook I have written actually stacks up when back checked. It also is inline with 92% of care currently occupied . Of course we just won't know until we see more detail in the report . the devil will be in the details.

The above possible scenario produces for me an Unpat of $55m and new apartment sales of about 40 ( which is still poor but has positive ramifications for the next few years).

I'm not saying everything is great again, no way, OCA but I might only be half as bad as it currently looks.

OCA are going to have to get their graphics guy doing the reports to somehow do a slide on all this unsold /PAC stuff as its all got very unwieldy especially as the modus operandi is now entrenched.

[ronaldson]

It would be interesting to know the average age of those entering the care suite environment.

Taking a very high level view and ignoring the circumstances of individuals I would have intuitively said that folk would normally be in the 80+ age group. That means the early boomer generation (b 1946) are not quite there yet, whereas they are now at an age where they are seeking apartment/villa occupations at RVs. So a peak in care suite demand may be yet to arrive.

Additionally I believe competition for RV sales is now at a level which has no past precedent, simply judging from the extent of ongoing advertising by both listed and unlisted operators and the number of units being developed. Certainly in what might be termed desirable locations there seems to be ample choice. So it isn't surprising that time to sell is quite lengthy and especially given the current economic circumstances weighing on those needing to sell to enter an RV.

[winner69]

You reasoning could well be right Maverick but as you say we probably won’t know until more details later in month.

I still don’t agree with your views about the current state of the property market.

As you know I track this from REINZ data and the sales trend is shown in the chart.

Sales activity bottomed out last April/May and has been steadily gaining momentum since. December 23 quarter sales numbers were 17% higher than pcp and March 24 quarter up 28% on pcp. At this rate sales volumes could well be back close to pre-covid levels.

REINZ says “… the data paints a picture of the New Zealand housing market being more active, characterised by increasing listings, solid sales activity, expanding stock levels, and lifts in property prices.”

Sellers have apparently been reluctant to sell because of price but seem to be coming around tonacceoting current market prices.

If Brent and other CEO in sector say the property market is tough blah blah so sales are lower than expected he’s only trying to justify disappointing new sales performance.(resales seem to be doing OK) ..after all the market is much more buoyant than a year ago.

Prices might be lower than everybody hopes for but that’s a fact of lifevwevhavevto live with …maybe for sometime

That’s how I see it anyway

[Maverick]

Thanks for feedback fellas.

I'm not willing to call oversupply a fact at this point Ron ( not that you are either) although the sole lagging indicator of RV sales volume (only on OCA though ) may suggest that to some...but certainly something I am not putting my head in the sand over.

Great to have swamping RV advertisements as it just makes the RV path normalized and entrenched. BTW I live in Wanganui and we have Bupa, RYM and SUM. not a single advert in any form down here. So seems its well targeted ( our villages all have good waiting lists and no new buildings gone up in years). I have taken comfort from recent JJL reports that we are in fact underbuilding RV units. Plus both ARV and OCA CEOs stress enquiry is at high levels

Not sure what do do with those conflicting property summaries Winner. Sats NZ and REINZ are saying different things. YOY NZ stats housing transfer statistics up ever slightly while REINZ say its up about 8%. Buggered if I know???

Just gotta wait and see.

Clearly OCA arn`t happy with sales with the recent full new position specific to only sales .This was a shared position with group operations....I am well pleased about that.

[Daytr]

You reasoning could well be right Maverick but as you say we probably won’t know until more details later in month.

I still don’t agree with your views about the current state of the property market.

As you know I track this from REINZ data and the sales trend is shown in the chart.

Sales activity bottomed out last April/May and has been steadily gaining momentum since. December 23 quarter sales numbers were 17% higher than pcp and March 24 quarter up 28% on pcp. At this rate sales volumes could well be back close to pre-covid levels.

REINZ says “… the data paints a picture of the New Zealand housing market being more active, characterised by increasing listings, solid sales activity, expanding stock levels, and lifts in property prices.”

Sellers have apparently been reluctant to sell because of price but seem to be coming around tonacceoting current market prices.

If Brent and other CEO in sector say the property market is tough blah blah so sales are lower than expected he’s only trying to justify disappointing new sales performance.(resales seem to be doing OK) ..after all the market is much more buoyant than a year ago.

Prices might be lower than everybody hopes for but that’s a fact of lifevwevhavevto live with …maybe for sometime

That’s how I see it anyway

As someone who tracks the REINZ data monthly as well, I totally agree with you.

Some of the REINZ commentary doesn't actually match the numbers .Too much reliant on HPI or seasonally adjusted data. If you look at the same month a year ago, virtually every month the sales numbers are up.

What I also have found interesting in the last month or two is that there has been an increase of sales in Auckland in the $2M + bracket. It's still quiet in the $$1M - $2M bracket and then plenty selling under $1M, which has been the case throughout.

[winner69]

Hey Mav.

Stats NZ use transfer while REINZ is unconditional sales reported by real estate agents.

Have you read how Stats collect ‘transfers’ it’s here https://datainfoplus.stats.govt.nz/item/nz.govt.stats/28ef19c8-4207-4826-9a07-e6df2f4f46b6/?_ga=2.177852832.443171238.1714878391-1024601889.1714084545

This bit is interesting -
Not all transfers involve a sale. For simplicity, we refer to the transferees and transferors as buyers and sellers (respectively).
Land Information New Zealand estimates that approximately half of all property transfers involve a residential sale. The other half includes a very wide range of activities such as deceased estates, trustee changes, marriage settlements, boundary changes, changes to the proportions of shares of ownership, as well as sales involving non-residential property

Think I’ll stick to REINZ to get a feel for market activity

[Maverick]

Cheers Winner, if I get time tomorrow I'll overlay your REINZ in place of NZ stats and see if theres a stronger correlation.

[Balance]

Hey Mav.

Stats NZ use transfer while REINZ is unconditional sales reported by real estate agents.

Have you read how Stats collect ‘transfers’ it’s here https://datainfoplus.stats.govt.nz/item/nz.govt.stats/28ef19c8-4207-4826-9a07-e6df2f4f46b6/?_ga=2.177852832.443171238.1714878391-1024601889.1714084545

This bit is interesting -
Not all transfers involve a sale. For simplicity, we refer to the transferees and transferors as buyers and sellers (respectively).
Land Information New Zealand estimates that approximately half of all property transfers involve a residential sale. The other half includes a very wide range of activities such as deceased estates, trustee changes, marriage settlements, boundary changes, changes to the proportions of shares of ownership, as well as sales involving non-residential property

Think I’ll stick to REINZ to get a feel for market activity

Learn something new.

Thx!

[thegreatestben]

I always assumed stats would be doing things the best way, I took a job there to see how things should be done.
I realised I had made a mistake pretty quickly! I think they only just recently started to measure homes built by CCC being issued rather than by consent being issued - bananas!

Lot's of data that informs govt is quite old and low quality, I spend a lot of my time in my current role pushing for higher quality and more accessible data.

[winner69]

Oh dear, another week and the Warriors have another loss. This week to the Knights going down 14-8. The fans are saying even though they didn’t play at their best it was really the refs fault. One fan said the loss was just wrong. But fans remain hopeful rather than certain that ‘this is our year’

Oceania share price was down 2 cents (3.4%) last week. In spite of the fall a couple of loyal fans came out and passionately outlined why Oceania was really in good shape and once things started moving the share price will head up to $1. …let’s blame the property market eh ….still going to be our year they say.

A casual observer would say the Warriors are pretty useless this year and ‘this is our year’ just a dream. One could say much the same about Oceania, maybe not pretty useless but not much going for them. That $1 looks a way off these days

One positive for Wahs fans is that their team is not as bad as the Crusaders ……suppose we could say Oceania not as bad as Ryman.

[Greekwatchdog]

Oh dear, another week and the Warriors have another loss. This week to the Knights going down 14-8. The fans are saying even though they didn’t play at their best it was really the refs fault. One fan said the loss was just wrong. But fans remain hopeful rather than certain that ‘this is our year’

Oceania share price was down 2 cents (3.4%) last week. In spite of the fall a couple of loyal fans came out and passionately outlined why Oceania was really in good shape and once things started moving the share price will head up to $1. …let’s blame the property market eh ….still going to be our year they say.

A casual observer would say the Warriors are pretty useless this year and ‘this is our year’ just a dream. One could say much the same about Oceania, maybe not pretty useless but not much going for them. That $1 looks a way off these days

One positive for Wahs fans is that their team is not as bad as the Crusaders ……suppose we could say Oceania not as bad as Ryman.

Don't worry about the Crusaders W69. How many titles have they won?

Your allowed a bad season when you have won that many. Many of the folks down here are still proud of their team.

Go figure

[winner69]

Don't worry about the Crusaders W69. How many titles have they won?

Your allowed a bad season when you have won that many. Many of the folks down here are still proud of their team.

Go figure

Crusaders, Warriors and Oceania fans are a passionate lot and have a lot in common.

Old timers say that only game of the season you need to win is the Final …..and Crusaders could still do that

[Daytr]

Hey Mav.

Stats NZ use transfer while REINZ is unconditional sales reported by real estate agents.

Have you read how Stats collect ‘transfers’ it’s here https://datainfoplus.stats.govt.nz/item/nz.govt.stats/28ef19c8-4207-4826-9a07-e6df2f4f46b6/?_ga=2.177852832.443171238.1714878391-1024601889.1714084545

This bit is interesting -
Not all transfers involve a sale. For simplicity, we refer to the transferees and transferors as buyers and sellers (respectively).
Land Information New Zealand estimates that approximately half of all property transfers involve a residential sale. The other half includes a very wide range of activities such as deceased estates, trustee changes, marriage settlements, boundary changes, changes to the proportions of shares of ownership, as well as sales involving non-residential property

Think I’ll stick to REINZ to get a feel for market activity

Just a side note.
REINZ sales don't include retirement villages sales where it's only a right to occupy that is sold.

[winner69]

Warriors have slipped to 14th out of 17 on the NRL ladder but fans aren’t deserting them yet. Maybe they are even showing more resolve than usual by saying they going to beat highly rated Roosters and Panthers in next 2 games

Oceania share price now 160th out of 176 on the NZX table for this year (stock picking comp table) and it seems fans are deserting them either. It was noted on one past as share price fell that fans were buying while instos were seling. Fans waiting for the big announcement later this month …it’s going to be a good un.

So in spite of miserable performance by both so far this year the future is still bright …this is our year

[Rawz]

Warriors have slipped to 14th out of 17 on the NRL ladder but fans aren’t deserting them yet. Maybe they are even showing more resolve than usual by saying they going to beat highly rated Roosters and Panthers in next 2 games

Oceania share price now 160th out of 176 on the NZX table for this year (stock picking comp table) and it seems fans are deserting them either. It was noted on one past as share price fell that fans were buying while instos were seling. Fans waiting for the big announcement later this month …it’s going to be a good un.

So in spite of miserable performance by both so far this year the future is still bright …this is our year

Very good Winner. One day OCA will go to the grand final and win the bloody thing

[X-men]

Why don't just delisted this dog...what a sheet stock..2.5 years down 👇👇

[Greekwatchdog]

Depends on your timeline I suppose.

Given the sector is still out of favour nothing will change until we at least see the results later this month for , ARV, OCA and RYM.

Then I suspect after that it will need interest rates to fall before these RV stocks find some favour.

[winner69]

High near start of day was 58 …close 55 but a reasonable sized trade at 55.5 after close

Seems retail buying early and pros later in day still holding true

[nztx]

High near start of day was 58 …close 55 but a reasonable sized trade at 55.5 after close

Seems retail buying early and pros later in day still holding true


might be 52.5 tomorrow though ;)

signs of deep value you know

[Baa_Baa]

might be 52.5 tomorrow though ;)

signs of deep value you know

Might be, or even lower, who knows. Question is though, whether you recognise deep value, and know how and when to act on it!

[nztx]

Might be, or even lower, who knows. Question is though, whether you recognise deep value, and know how and when to act on it!


So very very true there with those words ..

[bull....]

might be 52.5 tomorrow though ;)

signs of deep value you know

according to buffetts latest annual meeting there is no value play's apparent other than japan. so no OCA does not meet buffets criteria

[mike2020]

On behalf of OCA I would like to thank THL for its diversionary work yesterday. Well done.

[winner69]

Might be, or even lower, who knows. Question is though, whether you recognise deep value, and know how and when to act on it!


Underlining when .....are you saying now is not the when?

[ValueNZ]

When to act on it is whenever it presents a better forward return than any of your other current investments.

For example I sold a small amount of OCA at 79c a little while back for STLA at $19 a share.

Then recently again I sold STLA at $24 to buy more OCA at 58c.

Churning is great :t_up:

[Daytr]

When to act on it is whenever it presents a better forward return than any of your other current investments.

For example I sold a small amount of OCA at 79c a little while back for STLA at $19 a share.

Then recently again I sold STLA at $24 to buy more OCA at 58c.

Churning is great :t_up:

Good trading ValueNZ. 😉

[ValueNZ]

Good trading ValueNZ. 
We can get into the semantics of what trading is, but what I did is simply allocating capital in my portfolio towards the best investments. As the price of a stock changes, so does the forward return.

Buffett explains it here:
"It is extremely improbable that 20 stocks selected from say, 3000 choices are going to prove to be the optimum portfolio both now and a year from now at the entirely different prices (both for the selections and the alternatives prevailing at a later date. If our objective is to produce the maximum after-tax compound rate, we simply have to own the most attractive securities obtainable at current prices. And, with 3,000 rather rapidly shifting variables, this must mean change (hopefully “tax-generating” change)."

Berkshire doesn't churn their portfolio very much anymore, because they are too large, but Buffett in the partnership days would churn his portfolio a lot (and I'm sure even more so prior to the partnership days).

[Daytr]

We can get into the semantics of what trading is, but what I did is simply allocating capital in my portfolio towards the best investments. As the price of a stock changes, so does the forward return.

Buffett explains it here:
"It is extremely improbable that 20 stocks selected from say, 3000 choices are going to prove to be the optimum portfolio both now and a year from now at the entirely different prices (both for the selections and the alternatives prevailing at a later date. If our objective is to produce the maximum after-tax compound rate, we simply have to own the most attractive securities obtainable at current prices. And, with 3,000 rather rapidly shifting variables, this must mean change (hopefully “tax-generating” change)."

Berkshire doesn't churn their portfolio very much anymore, because they are too large, but Buffett in the partnership days would churn his portfolio a lot (and I'm sure even more so prior to the partnership days).

It was a tongue in cheek comment.
Either way churn or whatever you want to call it is better than doubling or tripling down etc.

I have seen so many people lose their shirt and get fixated on a stock because they lose perspective and have the mentality of one day it will come good or it owes me etc.

I haven't really seen anything from OCA management that proves to me they are capable of turning this ship around. New CEO so perhaps that will change things.
Otherwise OCA is at the whims of the property market & the economy, I.e. the macro.

All the best.

[winner69]

Hey Mav …. RBNZ has the number of house sales data which they source from Core Logic …but it always seem to be a quarter behind.

In a spreadsheet as well
https://www.rbnz.govt.nz/statistics/series/economic-indicators/housing

[Maverick]

Hey Mav …. RBNZ has the number of house sales data which they source from Core Logic …but it always seem to be a quarter behind.

In a spreadsheet as well
https://www.rbnz.govt.nz/statistics/series/economic-indicators/housing
Thanks winner.
Yes , having it miss out Q1-24 isn't too helpful here especially as that is the key to how sales might have dropped for OCA HY2 and MIGHT offer some justification for low OCA new sales numbers . From your link , I think the jump in Q4 -23 up from Q2 and Q3 -23 is fairly benign so it looks like the 8% yoy sales is about right (after all why wouldn't it be) .

You might be interested in this ...I've continue to focus on how these PAC and new cares suite sales corelate with each other .
My motive is that should new cares suite sales be low then new apartment sales just arn`t as bad one would assume. Given we were told a total of these sold were 69.( what are the chances of that winner69 :scared:)

The undeniable rise in PAC fees over the years clearly says PAC has become a growing way of life for OCA as opposed to a pure ORA care suite model. The numbers are saying for years , about 20-25% of all care suite resales and new sales are now PAC.

This completely puts to bed any fear that large numbers of unsold cares suites are sitting around empty. A PAC and DMF generate the same daily return (10% p/a) just PAC doesn't come with the ORA capital to sit in OCAs bank account/debt.

I`m trying to work out what this 2HY cares suites new sales might be of that 69.....This is my observations and math ....
a. 20-25% ratio of available new care stock is going to PAC rather than be a new sale.( based on last 3 years of data) .
b. They only had 126 empty ones to sell at beginning of 2HY24,
c. Therefore , these remaining 100 c/s left for ORA sale, they should be selling down over 2.5 years ( being needs based so has always taken that long).

That leaves potential new sales from opening stock for 2hy24 of only 20.

Then add new deliveries for 2hy24 stock which will also be selling on top of these 20...
A. Blenheim care suites (55) got delivered very late so sales might be 5 or so ( big guess here)
b. Newly delivered c/s at Helier (32) will never be "sold" as such , just weekly fees .

It is quite possible total new care suite sales could as low as 25-30 and that would still be healthy.

that leaves scope to have new apartment sales of c. 40-45.

If this actually works out then apartment HY2 new sales will be same or slightly greater than HY1.

The result could be far better and have far better future connotations than the disaster this total 69 apartment / cares suite figure first initially looked like in a pro-rata way.

I'm not stating this will all be true and certainly waiting to see it first ...but the numbers worked from years of PAC growth data is suggests this is actually happening.

OCA seem to be now accepting PAC as part of their repertoire rather than a short term , diminishing , gap filler. There seems a clear consistency in their data of PAC growth.

There's really no reason to have put all this effort in when I can just go fishing for a few weeks for us to be told the result but should these things play out as I'm now think I'm seeing then it should change the way we all see care suits in ORA and PAC ( therefore empty units) in OCAs portfolio.

Just maybe OCA can start reporting how many PACs are in play from here on. There's so much confusion and mystery over this area.

[Louloubell]

There are many (too many) things in life I don't understand. One if these is the poor communication from companies to the owners of the business. Poor communication creates uncertainty and allows rumours and misinformation to flourish. Maybe something for the new CEO to consider.

[Daytr]

There are many (too many) things in life I don't understand. One if these is the poor communication from companies to the owners of the business. Poor communication creates uncertainty and allows rumours and misinformation to flourish. Maybe something for the new CEO to consider.

Spot on.
And too many times poor communication coincides with poor performance.
Companies are all too happy share the positives but not the negatives.
Otherwise called spruiking.

[Baa_Baa]

Underlining when .....are you saying now is not the when?

When it bounces off a double bottom? Oh wait. Short term trade punt with tight stops, for those inclined.

[SailorRob]

Of late, I have carefully reconsidered my thesis on Oceanias ‘float’ and concede I have been very wrong about it. Apologies to those who followed and believed in my analysis around this. A good reminder that everyone needs to do their own work.

I will try and explain where I, and I believe others went wrong and credit to those who called it out all along, as well as ‘the market’ which is clearly seeing it for what it really is. It now also makes sense why the analysts never talk about it and it never features in Jenny Ruth's write ups.

Assuming that OCA is not conducting major and deliberate fraud, we can look at the balance sheet and assume that the numbers are correct, at least in the record of capital that has gone into the business, and what has come out.

The balance sheet shows the assets that are owned by the company and how they are funded.

If we look at total assets, we can see 2.7 billion dollars worth, now some may argue that the true value is lower but one thing is for sure and that is the value of the liabilities are 100% real and those stand at 1.7 billion dollars. This is real capital that has been put into the company to build or acquire the assets along with some real capital from shareholders over the years.

So we know that 1.7 billion at least has gone in, plus the capital from shareholders - the original capital, retained earnings and subsequent capital raises.

All of the assets are owned by the shareholders of the company and most of them are real physical assets that you can see and touch. The way those assets were created or acquired involved spending money, as discussed this is recorded on the balance sheet.

So we have 2.7 billion in assets, mostly physical, that are owned by shareholders, some of this value came from gains in value over and above money that was put in by the different providers of capital (retained earnings - development value creation and property market value increases), but mostly these assets came from the capital provided by shareholders and debt.

The money from the shareholders, ‘equity’ comes to around 1 billion and the money from debt is around 600 million.

Instead of talking numbers, if we for the sake of this exercise assume the 2.7 billion dollars in assets is actually 27 retirement villages, then 10 of them are paid for by equity from the shareholders, 6 of them are paid for by the bondholders and the banks.

This leaves 11 villages or 1.1 billion dollars unaccounted for.

As the money hasnt come from shareholders or debt from the bank or bondholders, but clearly exists as we can see the assets that it created or acquired and those assets are currently in use for the benefit of shareholders, I have come up with some potential sources of this billion dollars of funding currently in use. As a group we can discuss the merits of each and decide which is correct.




Kim Dotcom

Kim Jong Ung II

Kim Kardashian

Oceanias Customers.


Please don’t ask for my methods, they are proprietary and my sources (or sauces) are confidential.

Next I consider the costs of the ‘missing funds’ that are clearly backed by real physical assets working for the benefit of shareholders right now, not only becoming available in future when development stops as some have suggested).



One hundred billion % per annum. (This figure came from Dr Evil may not be correct)

10% pa

Negative cost

Very slightly positive if care runs at a loss permanently



Next I consider the way in which the missing funds that don't exist can be requested back from the mystery providers



When Kim is extradited to the US

When Kim lands on the Moon

When Kim’s latest TV show flops

Never


Next I consider the way in which we should think about the mystery funding



Like a loan from the mob

Like a loan from a pawn shop

Like a loan from the government

Not like a loan at all but economically superior to equity


Next I consider what the value of this mysterious 1.1 billion dollars is, now that interest rates are 6% vs the decade where they were close to zero.



About the same

Lower

Higher

FAR FAR higher


Penultimately, the regulations governing the use of the mystery capital, how it must be invested and how it must be kept safe.



More regulated than a Labor Green dream team

Like insurance float

Like a contract with the mob

Nothing at all, totally unregulated



Finally, the rate in which the free capital is shoved down the companies throat for the pure benefit of shareholders.



Getting removed rapidly

Remaining constant

Growing slowly

Compounding at a rate that would make Buffett blush bigly.


Imagine for a moment, being offered a 2.7 Million dollar house, and getting a permanent interest free loan of 1.1 million dollars from the government with no conditions and mortgage from the bank of 600k at half the going interest rate and only having to pay 400k down of your own money.

Then imagine the loan from the government was able to be used to create more situations as above, and the loan grew each year at an incredible rate.

Would be pretty good I’d say.

Imagine for a moment being able to buy $100 notes from many of Sharetraders best for $45 each, imagine believing that OCA has taken $1.30 in cash from Maverick and turned it into 57c in 24 Months. That’s a solid effort if they have.

Imagine believing that the billion dollars of float was superior to equity and thus the discount to NTA was in fact 80%...

Imagine having a situation like this and being able to transact with other market participants that no matter how patient you are or how many times you explain it, just cannot understand it. Imagine them confusing float with debt just because the accounts say so, not able to think in economic terms and calculating NTA with the float as debt!

Then imagine the market participants who understand this better than anyone and understand the company, but instead of focusing on the company they fret about what other market participants think over a 2 year period out of 30 or 40 years, and state that they have to 'Endure' a situation for a 'few more weeks' where they can get, by their own calculations, forward returns of 20 plus % CAGR for years to come. Imagine having to Endure that and PRAYING for that situation to end after 30 years of investing experience. Hard to imagine such a scenario.

Float, what float? It either doesn’t exist, or will ONLY become available in some future hypothetical scenario.

[Rawz]

SailorRob is back from jail with a ripper

[RTM]

Welcome back SailorBoy.

https://youtu.be/YkgkThdzX-8?si=dCf72U9EVxH4qfp1

[X-men]

Keep buying sailor moon! Maybe U can buy all the shares and delisted this 🐶....at $1.50

Existing shareholders will be grateful!!! 🥲

[thegreatestben]

Welcome back SailorRob!

[Daytr]

Welcome back from North Korea SailorBoy.
Great entertainment.

And I'm convinced, smashing into the piggy bank as we speak.

[Daytr]

Here's a thought.
Maybe value the assets like a bond.
What discount would the face value of the assets be returning about half what I can get in the bank?
Anyone?

[SailorRob]

Here's a thought.
Maybe value the assets like a bond.
What discount would the face value of the assets be returning about half what I can get in the bank?
Anyone?

To get a 10% return on market value of equity, the assets would need to return 1.5%.

[Daytr]

To get a 10% return on market value of equity, the assets would need to return 1.5%.

Correct. So perhaps those assets aren't worth what the books state.
If that asset value was on deposit at the bank it would earn around $150M in interest vs $40M from OCA.
So what's the bond comparison value of the assets?

[SailorRob]

Correct. So perhaps those assets aren't worth what the books state.
If that asset value was on deposit at the bank it would earn around $150M in interest vs $40M from OCA.
So what's the bond comparison value of the assets?

I would not pay 2.7 billion for those assets outright. Only makes sense with the float, you might do OK without it but I wouldn't be interested.

But paying 400 million for the use of all the 2.7 billion of assets, with a low cost for 600 million in debt funding is a different question.

For them to only get a 1.5% return off the assets would be incredibly useless but the equity would still see a decent return.

Did you ever get to understand Markel? Way more complicated than OCA but worth the effort, up a hell of a lot since we discussed but still incredibly cheap.

[Cupsy]

Correct. So perhaps those assets aren't worth what the books state.
If that asset value was on deposit at the bank it would earn around $150M in interest vs $40M from OCA.
So what's the bond comparison value of the assets?
If the assets are only worth the current value should anyone who owns property be extremely nervous?
Or is it just simply that the market only values reported earnings?, am i missing something or is sum valued very close to assets, but wrt earnings yield, is similarly priced to oca?

[Daytr]

If the assets are only worth the current value should anyone who owns property be extremely nervous?
Or is it just simply that the market only values reported earnings?, am i missing something or is sum valued very close to assets, but wrt earnings yield, is similarly priced to oca?

Residential property returns are the best they have been in years, lower capital value outlay, much higher rents, about to be an increase in tax deductibility on interest and perhaps lower mortgage rates going forward.

The problem is OCA doesn't get those rental returns as they sell the right to occupy and the only rental return they get is on care suites, but they don't make any money.

So effectively you ae relying on the $152k profit they may make per re-sale and any profit on new sales (with margins being squeezed) less any operational loss.

On average they should make $40M in resales, as long as they can resell the unit and it doesn't end up in stock.
Then whatever they make in profit on new sales.
Less operating loss.
I think SailorRob's $40M net estimate is about right unless we get surprised by a bigger operating loss,

[Daytr]

I would not pay 2.7 billion for those assets outright. Only makes sense with the float, you might do OK without it but I wouldn't be interested.

But paying 400 million for the use of all the 2.7 billion of assets, with a low cost for 600 million in debt funding is a different question.

For them to only get a 1.5% return off the assets would be incredibly useless but the equity would still see a decent return.

Did you ever get to understand Markel? Way more complicated than OCA but worth the effort, up a hell of a lot since we discussed but still incredibly cheap.

Well you would be paying $1Bln for the use of $2.7Bln of assets as you are inheriting the debt.
One thing we know is that the debt to the company doesn't change in value.
The assets though can and as you have said yourself you wouldn't pay $2.7Bln for the assets.
ROE of 10% on equity before tax sounds about fair value to me.

If the property picks up the number and margin on sales & resales will improve.
But that's purely relying on the macro.

As I have said on many occasions, they need to start operating at least at break even or better, a profit

[SailorRob]

Residential property returns are the best they have been in years, lower capital value outlay, much higher rents, about to be an increase in tax deductibility on interest and perhaps lower mortgage rates going forward.

The problem is OCA doesn't get those rental returns as they sell the right to occupy and the only rental return they get is on care suites, but they don't make any money.

So effectively you ae relying on the $152k profit they may make per re-sale and any profit on new sales (with margins being squeezed) less any operational loss.

On average they should make $40M in resales, as long as they can resell the unit and it doesn't end up in stock.
Then whatever they make in profit on new sales.
Less operating loss.
I think SailorRob's $40M net estimate is about right unless we get surprised by a bigger operating loss,

What? I never estimated earnings at all let alone 40 million.

Normalised earnings would be far far higher than this.

[SailorRob]

Well you would be paying $1Bln for the use of $2.7Bln of assets as you are inheriting the debt.
One thing we know is that the debt to the company doesn't change in value.
The assets though can and as you have said yourself you wouldn't pay $2.7Bln for the assets.
ROE of 10% on equity before tax sounds about fair value to me.

If the property picks up the number and margin on sales & resales will improve.
But that's purely relying on the macro.

As I have said on many occasions, they need to start operating at least at break even or better, a profit

Pre tax 10% ROE means a just over 1% ROA.

That would be awful.

[SailorRob]

Well you would be paying $1Bln for the use of $2.7Bln of assets as you are inheriting the debt

Where the heck does the other BILLION dollars of funding come from?

[Baa_Baa]

As I have said on many occasions, they need to start operating at least at break even or better, a profit

What's this then? Even without the Change in fair value of IP and other impairments, it looks like an "operating profit" to me, i.e. pure 'operating revenue' minus 'operating expenses' = profit. What am I missing?

15097

[Daytr]

What's this then? Even without the Change in fair value of IP and other impairments, it looks like an "operating profit" to me, i.e. pure 'operating revenue' minus 'operating expenses' = profit. What am I missing?

15097

Hey Baa_Baa, what was the majority of the 'profit' made up of. A write back of value.

These numbers include profits on new sales & resales etc.

When I talk about operational profit I am referring to the day to day running of the villages & care suites.

I haven't looked through the half year in detail, but is that part of the business I refer to running at a profit? Happy to stand corrected.

[Daytr]

Where the heck does the other BILLION dollars of funding come from?

What other billion?
The cost to buy OCA at the current market value is $400M + $600M of debt. I e $1Bln.
Which is about the NTA

My problem is that if the assets aren't worth $2.7Bln what does that say about the NTA as the liability side is pretty much fixed.

ROE of 10% as I said reflects value reasonably fairly I would have thought.

[Baa_Baa]

Hey Baa_Baa, what was the majority of the 'profit' made up of. A write back of value.

These numbers include profits on new sales & resales etc.

When I talk about operational profit I am referring to the day to day running of the villages & care suites.

I haven't looked through the half year in detail, but is that part of the business I refer to running at a profit? Happy to stand corrected.

Well as you said earlier today, you have often stated OCA is operating at a loss and needs to at least break even or make a small profit. Then I show you that they reported a full year 2023, and half year 2024 operating profit, even without the change in fair value/impairments. Then you say you haven't even looked into the numbers! So going by that, you won't know either what the fair value/impairments ratio is but you say write-backs make up the majority.

C'mon Daytr, I'm not sure where you are getting your insights from if you're not reading the reported financials, but you seem happy enough to make lots of bold statements about OCA's financials that could well be incorrect.

[SailorRob]

What other billion?
The cost to buy OCA at the current market value is $400M + $600M of debt. I e $1Bln.
Which is about the NTA

My problem is that if the assets aren't worth $2.7Bln what does that say about the NTA as the liability side is pretty much fixed.

ROE of 10% as I said reflects value reasonably fairly I would have thought.

So there's only 600 million of debt?

[Daytr]

So there's only 600 million of debt?

$617M according to the balance sheet reported at the half year. Rounded down to $600M I'm both my post & yours earlier today.

I'm waiting for the gotchya moment where suddenly future liabilities are debts.

[SailorRob]

$617M according to the balance sheet reported at the half year. Rounded down to $600M I'm both my post & yours earlier today.

I'm waiting for the gotchya moment where suddenly future liabilities are debts.

No, I agree with you.

[Daytr]

No, I agree with you.

Where I see the value is the maturity profile of the villas. As time goes on there will be substantially more resales where they collect the DMF. Net of refurb costs being currently $152k per villa.

As long as the property market improves and those resales don't cause a problem, I can see the profit from resales improving by 50% perhaps more. As they build more so to will this number over time. But none of that is happening tomorrow.

[SailorRob]

according to buffetts latest annual meeting there is no value play's apparent other than japan. so no OCA does not meet buffets criteria


Not often I agree with Bull but this is the only true analysis proving OCA not being 'value' that I have seen.

By Warren saying that he sees Japan as an apparent value 'play' he single handedly ruled out all of the circa 46,500 public companies that are not listed in Japan as being value.

Which includes OCA.

It is razor sharp intellect and the ability to perform second order thinking at a rapid pace that gives one the ability to be such a skilful investor.

[Rawz]

Glad you’re back SR, thought you had forsaken us.

Have you had a look at TWR?

[mike2020]

OCA without the Sailor is like Gotham without Batman. The streets are safe tonight people.

[SailorRob]

Glad you’re back SR, thought you had forsaken us.

Have you had a look at TWR?


Briefly, just a leveraged bond portfolio and I have no idea about the underwriting. Selling bits of paper with promises written on them for hard cash today can be an extremely alluring business but can also lead to a lot of folly.

At some price it would obviously be interesting but when I have Markel and Berkshire on offer with the ability to invest float into equities and operating businesses and some serious fire power on the underwriting side, it's hard to get interested in other insurance companies. I did own Allstate and PGR for a while until they went up too much.

Their balance sheet would be simple to analyse and predict returns from the investing side and then just multiply the leverage to equity but what really matters is the promises they have made, would take weeks to figure it out if you could even, whats lurking out there that could take a bite out of your equity.

Ultimately I'd say it comes down to trust in management, do they have a 20 year plus track record in conservative underwriting.

If you can tell me what their underwriting will be like over the next few years, give me an average combined ratio, and premium volume I can tell you what TWR is worth. Would prob want to know bond portfolio duration but I can find that.

Banks go illiquid before they go insolvent and insurance companies go insolvent before they go illiquid. Unless they are AIG in the GFC.

Gotta be bloody careful in financials.

[ValueNZ]

When it bounces off a double bottom? Oh wait. Short term trade punt with tight stops, for those inclined.
Satire?

All you would need to do would be scan every stock in the world using an algorithm for these "double bottoms", and trade them to earn outsized returns. No doubt you are already doing this Baa_Baa if you believe that a double bottom indicates a increase in price.

[ValueNZ]

Welcome back SailorRob, I've enjoyed reading your posts tonight :t_up:

[SailorRob]

Satire?

All you would need to do would be scan every stock in the world using an algorithm for these "double bottoms", and trade them to earn outsized returns. No doubt you are already doing this Baa_Baa if you believe that a double bottom indicates an increase in price.


A Waxing Gibbous Moon phase also helps, exposing one's Perineum to the light from the Gibbous can lead to outsized returns.

What also works well is these moving averages, you just use them on an index fund ETF thus beating the ETF's return thus beating 'the market' and commanding hundreds of millions in AUM.

[Baa_Baa]

Satire?

All you would need to do would be scan every stock in the world using an algorithm for these "double bottoms", and trade them to earn outsized returns. No doubt you are already doing this Baa_Baa if you believe that a double bottom indicates an increase in price.

Let's stick to OCA, there's no need to over dramatise with algo's for every stock in the world seeking outsized returns.

What has happened since it double bottomed at 0.55, how many percent would the trade be up now, and has the stop loss been hit yet?

Let's not confuse trading with value investing, or disparage the methods and techniques each use to achieve the common goal of building wealth.

[SailorRob]

Let's not confuse trading with value investing, or disparage the methods and techniques each use to achieve the common goal of building wealth.


Strongly agree, I'd be super interested if you could show me a way of trading and building wealth that could outperform the returns of a simple market index fund over a period of 10 years, particularly if it just involved recognising crude patterns on a stock chart.

Maybe there's a book about it (or 10,000 books about it) that we could learn from.

If trading is better than value investing I need to know.

[X-men]

What!!!.of course trading is better...

Look at the history of OCA...floated at 80c ish...now 59c....that was around 8 years ago...

Trading is great at the current market condition...buy at 55c...sell around 60c ish...rinse and repeat...watch all the poor shareholders cry n mourn😁😁😁

[Baa_Baa]

Strongly agree, I'd be super interested if you could show me a way of trading and building wealth that could outperform the returns of a simple market index fund over a period of 10 years, particularly if it just involved recognising crude patterns on a stock chart.

Maybe there's a book about it (or 10,000 books about it) that we could learn from.

If trading is better than value investing I need to know.

Actually I don't think you are even remotely interested in trading techniques and are taking the piss. Welcome back anyway :)

If you think about it like this, it might help to begin understanding what traders do when they are only focused on market price and have no interest at all in anything about the instrument, whether it has or does not have any underlying fundamental value (think forex, options, futures, crypto etc). Bear in mind there are far far more instruments in the markets that are 'priced' and can be traded than just equities, or their value. Somehow traders manage to navigate trading them without reference to any fundamental value, just price in the market.

The bible for trading chart patterns is Bullkowski, but that will take a while to get your head around it, there is a lot of content and for a skeptic it's like trying to get past the Preface of a new book is too hard, let alone reading the whole content, let alone the charting skills needed to put in effect the analysis, to define the trade strategy. Simply put though, it's about trading probabilities, and every trade in has an exit out.

This is the OCA trade I mentioned https://thepatternsite.com/aadb.html which is still in play. The probability of success is not up there with other patterns, but the return over a short period is worth it if the trade works out. If it doesn't the stop loss exits the trade, in this case still for a profit.

Whether trading by whatever method is better than value investing is moot imo and unknowable, best would be to understand many techniques and leverage the one we think is right for our individual expertise, risk tolerance and the opportunity in front of us.

It might help to acknowledge that not everyone here has a one trick pony style or technique for investing, it's possible that some if not many, have multiple techniques for growing wealth in the market (not just equities), and that might range from short term trading, to momentum trading, fundamental investing, buying indexes, following influencers, long term investing, value investing, etc.

[Ferg]

Welcome back SR. That interest free mysterious debt that is not a float that you refer to......OCA refer to it as 'cash recycling'.

Someone stated earlier that reported profits include profits on sales and resales of units - that is not correct. Development margins and resale gains are not directly in the P&L (refer image in Baa_Baa's post #19872). Hence the reason OCA and others prepare a reconciliation to underlying profit (see page 16 of the FY24 interim presentation). That reconciliation removes a number of items that are in the P&L and then adds on the development margins and resale gains +/- other adjustments.

Development margin is the difference between the value of the ORA receipt from the first client to occupy a unit and the the cost of developing that unit. That sale transaction occurs on the Balance Sheet, and does not appear in the P&L. Same for resales. Simplistically speaking a resale gain is the difference between the value of an ORA sale and the value of the previous ORA sale for that particular unit, with some minor adjustments (see page 29 of the interim FY24 presentation). All of this happens on the Balance Sheet....hence the reason underlying earnings differs to reported profit. So in summation, that image posted by Baa_Baa represents trading profits without any gains on sale or revaluations.

And anyone who is wondering how much is spent on refurbishment capex relative to DMF income - DMF income earned last fiscal year was $53.8m (per AR FY23 page 46) and the cost of care suite & ILU refurbishment was $4.5m (note total maintenance capex was $11.3m which includes some non-care and non-village assets like IT - see page 14 of the FY23 presentation). And for 1H24 DMF income was (19.5+7.9) $27.4m whilst C/S and ILU refurb capex was $3m (or $7.1 including all other items).

[Baa_Baa]

Welcome back SR. That interest free mysterious debt that is not a float that you refer to......OCA refer to it as 'cash recycling'.

Someone stated earlier that reported profits include profits on sales and resales of units - that is not correct. Development margins and resale gains are not directly in the P&L (refer image in Baa_Baa's post #19872). Hence the reason OCA and others prepare a reconciliation to underlying profit (see page 16 of the FY24 interim presentation). That reconciliation removes a number of items that are in the P&L and then adds on the development margins and resale gains +/- other adjustments.

Development margin is the difference between the value of the ORA receipt from the first client to occupy a unit and the the cost of developing that unit. That sale transaction occurs on the Balance Sheet, and does not appear in the P&L. Same for resales.

Thanks for backing me up Ferg, it's getting tiring and tedious hearing bold statements about OCA's financials that are plainly and simply incorrect and ill-informed.

It would be interesting to see an alternative view of the operational profitability of 'care', particularly as in recent times care revenues have gone up with increases in government (DHB) funding, care costs have gone down with covid overhead gone, albeit nurses incomes increased, non-strategic care assets are being divested, the overall mix of ILU to care has changed significantly and will continue to do so.

I don't believe for one minute that 'care' or 'operating profit' is not profitable, it's just not as profitable as property development. And for that reason, I don't want to see development constrained (it is about growing our future cash flows, and float :t_up:). It's all about selling the properties we have and the new ones we develop, sell sell sell. Get those properties inhabited with paying customers.

[Ferg]

Thanks for backing me up Ferg, it's getting tiring and tedious hearing bold statements about OCA's financials that are plainly and simply incorrect and ill-informed.

It would be interesting to see an alternative view of the operational profitability of 'care', particularly as in recent times care revenues have gone up with increases in government (DHB) funding, care costs have gone down with covid overhead gone, albeit nurses incomes increased, non-strategic care assets are being divested, the overall mix of ILU to care has changed significantly and will continue to do so.

I don't believe for one minute that 'care' or 'operating profit' is not profitable, it's just not as profitable as property development. And for that reason, I don't want to see development constrained (it is about growing our future cash flows, and float :t_up:). It's all about selling the properties we have and the new ones we develop, sell sell sell. Get those properties inhabited with paying customers.

You are welcome and there are no disputes from me. The message has been "sell, sell, sell" for some time now - we are all beating the same drum.

I have tuned out to the "it's not profitable" messaging but it does depend on how it is measured. Traditional accounting measures are not helpful on 2 counts - firstly confusion arises between unrealised property portfolio revaluations and realised gains; and secondly applying depreciation to assets that go up in value doesn't pass the common sense test. Hence the reason unrealised portfolio revaluations and depreciation are backed out of the underlying profit calculations, and the realised gains are added back in.

The portfolio revaluation in the traditional P&L is (mostly or in theory) unrealised but is based on known factors such as recent sales and independent valuations, but note that it is for the ENTIRE portfolio. Whereas realised gains are only for those ILUs and care suites actually sold. Confusion further arises given such realised gains naturally sit in the underlying P&L for the village segment of OCA. This has the effect of understating the underlying profit for the care segment when you consider a good portion (3.9+5.1) $9m in 1H24 of total realised gains should sit in the care P&L given they came from care suites. OCA adjust for this on page 18 of the half year presentation. And we see this same value deducted from the village segment on page 20.

Care revenues for the second half of the year increase versus the first half due to DHB funding increase timing (H2 gets the full effect of funding increases, whereas H1 only gets half) and also the snowball impact of selling more ORAs at higher prices and selling more PACs. What is interesting to note is that PAC revenues as a % of total premium revenues for care are increasing each half year - which supports what Maverick said earlier that OCA are seeing an increasing percentage of PAC sales at the expense of ORA sales for care suites. Note the latest half year had PAC revenues at (3.1/11.0) 28% of total care premium revenues so there is a long way to go before PAC revenue exceeds DMF revenue for the care segment.

Unfortunately care costs are not yet going down - they have been increasing. But as you say it will be interesting to see how this changes with the divestment of the relatively smaller sites that focus on care.

[SailorRob]

Great informative posts Ferg, thanks.

Baa_Baa, good rebuttal - we've beaten this to death! Computers are almost infinitely better at figuring out probabilities than humans and, particularly now, they are equally better at pattern recognition. So the thing to do would be to write the Bullkowski method into a computer programme. If fact we are approaching the day where and AI program could read the book and implement the strategy itself without human intervention!

Thanks for all the support folks, I need to tone it down a bit so I don't get banned again. Last time there was no reason given. I don't know how any of that works TBH.

[bull....]

Great informative posts Ferg, thanks.

Baa_Baa, good rebuttal - we've beaten this to death! Computers are almost infinitely better at figuring out probabilities than humans and, particularly now, they are equally better at pattern recognition. So the thing to do would be to write the Bullkowski method into a computer programme. If fact we are approaching the day where and AI program could read the book and implement the strategy itself without human intervention!

Thanks for all the support folks, I need to tone it down a bit so I don't get banned again. Last time there was no reason given. I don't know how any of that works TBH.

yep i listened to a goldman guy the other day say what took his annalyst's 6 hrs before to compare companies is done in 5 mins now thanks to AI. good to see you back , now we just need AZZ back too.

[X-men]

Because you were too nosy giving others bad reputations without thinking yourself were the worst...lol

[Daytr]

Welcome back SR. That interest free mysterious debt that is not a float that you refer to......OCA refer to it as 'cash recycling'.

Someone stated earlier that reported profits include profits on sales and resales of units - that is not correct. Development margins and resale gains are not directly in the P&L (refer image in Baa_Baa's post #19872). Hence the reason OCA and others prepare a reconciliation to underlying profit (see page 16 of the FY24 interim presentation). That reconciliation removes a number of items that are in the P&L and then adds on the development margins and resale gains +/- other adjustments.

Development margin is the difference between the value of the ORA receipt from the first client to occupy a unit and the the cost of developing that unit. That sale transaction occurs on the Balance Sheet, and does not appear in the P&L. Same for resales. Simplistically speaking a resale gain is the difference between the value of an ORA sale and the value of the previous ORA sale for that particular unit, with some minor adjustments (see page 29 of the interim FY24 presentation). All of this happens on the Balance Sheet....hence the reason underlying earnings differs to reported profit. So in summation, that image posted by Baa_Baa represents trading profits without any gains on sale or revaluations.

And anyone who is wondering how much is spent on refurbishment capex relative to DMF income - DMF income earned last fiscal year was $53.8m (per AR FY23 page 46) and the cost of care suite & ILU refurbishment was $4.5m (note total maintenance capex was $11.3m which includes some non-care and non-village assets like IT - see page 14 of the FY23 presentation). And for 1H24 DMF income was (19.5+7.9) $27.4m whilst C/S and ILU refurb capex was $3m (or $7.1 including all other items).

That's interesting Ferg, I'll look closely into it.
It's also interesting that you have been the only one that has been able to present a detailed response that underpins your view.
Cheers Daytr

[Daytr]

You are welcome and there are no disputes from me. The message has been "sell, sell, sell" for some time now - we are all beating the same drum.

I have tuned out to the "it's not profitable" messaging but it does depend on how it is measured. Traditional accounting measures are not helpful on 2 counts - firstly confusion arises between unrealised property portfolio revaluations and realised gains; and secondly applying depreciation to assets that go up in value doesn't pass the common sense test. Hence the reason unrealised portfolio revaluations and depreciation are backed out of the underlying profit calculations, and the realised gains are added back in.

The portfolio revaluation in the traditional P&L is (mostly or in theory) unrealised but is based on known factors such as recent sales and independent valuations, but note that it is for the ENTIRE portfolio. Whereas realised gains are only for those ILUs and care suites actually sold. Confusion further arises given such realised gains naturally sit in the underlying P&L for the village segment of OCA. This has the effect of understating the underlying profit for the care segment when you consider a good portion (3.9+5.1) $9m in 1H24 of total realised gains should sit in the care P&L given they came from care suites. OCA adjust for this on page 18 of the half year presentation. And we see this same value deducted from the village segment on page 20.

Care revenues for the second half of the year increase versus the first half due to DHB funding increase timing (H2 gets the full effect of funding increases, whereas H1 only gets half) and also the snowball impact of selling more ORAs at higher prices and selling more PACs. What is interesting to note is that PAC revenues as a % of total premium revenues for care are increasing each half year - which supports what Maverick said earlier that OCA are seeing an increasing percentage of PAC sales at the expense of ORA sales for care suites. Note the latest half year had PAC revenues at (3.1/11.0) 28% of total care premium revenues so there is a long way to go before PAC revenue exceeds DMF revenue for the care segment.

Unfortunately care costs are not yet going down - they have been increasing. But as you say it will be interesting to see how this changes with the divestment of the relatively smaller sites that focus on care.

A question for you Ferg.
In the half year financials, you don't think the change in fair value in the income statement of $47.388M (Villages) & $26.619M (care) includes the net profit from sales & resales as well as any valuation of the entire portfolio?

Cheers Daytr

[winner69]

ASM coming up and they calling for Director nominations

Whose going to put their name forward …desperately in need of getting a Director with passion and enthusiasm ……besides making sure the right things are done for the oldies they need to get somebody who can look after Sally shareholders better (Greg not that man)

Isaac and Prendergast have been collecting the Director Fees for far too long ….wonder what these 2 have actually done?

C’mon …somebody put their hands up.

Sadly it will be a futile effort as unless you in the club or in the know no Director appointments for but by at least standing it sends a strong message that currentvDirectors not flavour of the month

[Daytr]

A question for you Ferg.
In the half year financials, you don't think the change in fair value in the income statement of $47.388M (Villages) & $26.619M (care) includes the net profit from sales & resales as well as any valuation of the entire portfolio?

Cheers Daytr

Mav, SailorRob, Baa_Baa?
Does anyone know?

[winner69]

A question for you Ferg.
In the half year financials, you don't think the change in fair value in the income statement of $47.388M (Villages) & $26.619M (care) includes the net profit from sales & resales as well as any valuation of the entire portfolio?

Cheers Daytr

Daytr … 28.3m realised gains (ie profit from ORA sales) ….balance is unrealised valuation gains on portfolio

[Daytr]

Daytr … 28.3m realised gains (ie profit from ORA sales) ….balance is unrealised valuation gains on portfolio

Cheers. I assume those unrealized gains would be mostly units being built, transitioning to ready for sale as I would find it surprising that the actual portfolio has gained in value I.e the units have appreciated in value in recent times considering the market.

[Snow Leopard]

Mav, SailorRob, Baa_Baa?
Does anyone know?

Yes. I know because I read the accounts. Note 2.1 gives it away and explains why even winner69 has got it wrong :ohmy:

[winner69]

Daytr … 28.3m realised gains (ie profit from ORA sales) ….balance is unrealised valuation gains on portfolio

I’m sorry daytr …this is wrong

[jonu]

I’m sorry daytr …this is wrong

That was speedy az.

One does not argue with the leopard formerly known as tiger.

[Bjauck]

Deciphering Oceania’s accounts seems to be like being an augur reading the entrails of a dead chicken.

[Rawz]

Deciphering Oceania’s accounts seems to be like being an augur reading the entrails of a dead chicken.
I remember when Beagle used to say the accounts were hard to decipher.

Isn’t that usually a red flag when a company doesn’t make it simple to understand the accounts?

[Maverick]

I remember when Beagle used to say the accounts were hard to decipher.

Isn’t that usually a red flag when a company doesn’t make it simple to understand the accounts?
I'm not buying that Rawz. OCA is a very complex beast that is dynamics at different stages of reinventing itself. Not like a SUM that operates one model and just scales up on that same pattern.
Totally understandable though, why so many throw their hands up.
It would be a red flag to me if they didn`t offer as much detail as they do.

For example. It bugs me that they have tried to simplify things (as per what the public want ) and now report sales as an amalgamated price with new and resales. This simplification attempt muddies things to the extend that a new $5m Helier sale is in the same pot as an original $600k apartment resale. See what I mean? how can you really know what prices are when you get that distortion ?
So the more info the better I say.

BTW, Ferg and Baabaa, I have been really appreciating your posts. Some really good opinion and work gone in those.

[Daytr]

Yes. I know because I read the accounts. Note 2.1 gives it away and explains why even winner69 has got it wrong :ohmy:

I would as others might appreciate your explanation of what it does include?
I'm not disputing ot agreeing to Winner's number, but from I read from note 2.1 it does include the net proceeds from sales & resales.
Do you disagree and if so what do you think this number is derived from?

Cheers Daytr

[SailorRob]

Im going through the SUM thread from 2011, some bloody sophisticated but simple analysis.

All this crap we argue about was all spelled out crystal clear back then in a far more concise and professional manner.

Anyone remember 'Sauce' last posted in 2014, seemed pretty switched on.

A quote from them here;

'As an investor you are buying an ongoing development business - not just a retirement village portfolio - you are concerned with their expansion, build rate and the cashflows from future villages, not just the cashflows from existing villages'.

[SailorRob]

Ok this is super Weird but it seems like this Sauce character from 2011 is me.

Sauce on the SUM thread in 2011.

'RYMs ability to build new villages from operating cashflow has more to do with the capital efficiency of the revenue model than the latent ("bank" of) capital gain. When each occupation license represents an interest free 5 - 7 year loan to the developer who can use that to build more units elsewhere, and the original occupant is paid out by the next incoming resident - that's the silver bullet'.

[SailorRob]

Sause 2012;


'The cashflows that are reinvested in villages over and above the other 50% of shareholders funds that is retained (not paid out as a dividend) represents cash from the refundable license to occupy, and could not be paid out as dividends anyway. It is this ability for RYM to "Recycle" its capital from village to village that allows it to generate such high returns.

Would you prefer they paid out 100% of underlying profits? Not me. The 50% "shareholder funds" they retain for growth are able to generate a 30% internal rate of return. This is BECAUSE they can recycle the capital by generating ever growing refundable occupancy right cashflows.

This is so so much better than getting more in the way of dividends, that you should consider losing your left arm to find businesses like it, particularly when the downside risk is reasonably limited (downside risk is arguable I suppose, but at least in my view)'.


All spelled out crystal clear in 2012...

[Daytr]

Ok this is super Weird but it seems like this Sauce character from 2011 is me.

Sauce on the SUM thread in 2011.

'RYMs ability to build new villages from operating cashflow has more to do with the capital efficiency of the revenue model than the latent ("bank" of) capital gain. When each occupation license represents an interest free 5 - 7 year loan to the developer who can use that to build more units elsewhere, and the original occupant is paid out by the next incoming resident - that's the silver bullet'.

If I am a builder & I build a house and sell it to build another house is that an interest free loan?

The difference with OCA being is they can buy back that house at the same price less 30%, pay for refurb and then resell at the prevailing market.

So the silver bullet imo is the gain they make from the purchase back vs after costs what they sell it for.

The only interest free loan, like for all companies is the equity raised from shareholders.

[SailorRob]

If I am a builder & I build a house and sell it to build another house is that an interest free loan?

The difference with OCA being is they can buy back that house at the same price less 30%, pay for refurb and then resell at the prevailing market.

So the silver bullet imo is the gain they make from the purchase back vs after costs what they sell it for.

The only interest free loan, like for all companies is the equity raised from shareholders.


Holy moly.

After 2 years of trying and using all kinds of different methods and proof and maths and you name it.

And you still cant understand something so damn simple I could teach a 10 year old in a few minutes!

[Ferg]

A question for you Ferg.
In the half year financials, you don't think the change in fair value in the income statement of $47.388M (Villages) & $26.619M (care) includes the net profit from sales & resales as well as any valuation of the entire portfolio?

I'm not sure what you are driving at but that line of thinking is much like the 'float' terminology - in that it is interesting, but ultimately incorrect. Think of it like a Venn diagram with two circles that may or may not overlap and if they do overlap it's not necessarily the case the smaller circle is fully enclosed by the larger circle. The first smaller circle is drawn based on the pool of units and suites that were sold during the reporting period. This is the realised profit that is added to underlying earnings. This part is calculated by Management.

A second larger circle is drawn using a different process by the independent valuers across the entire portfolio - of which the recently sold units is clearly a subset (but not necessarily the exact same values). Some of the inputs in deriving the portfolio value may include some of the values observed in deriving the realised profit value. So on a 'per unit' basis there may be some overlap between the two methods such that some (not necessarily all*) of the values used in the realised profit calculation may also be observed in the unrealised profit calculation.

In conclusion two different methods are employed by different people to derive the two values. But given some of the inputs may be the same, that's why I say "Think of it like a Venn diagram with two circles that may or may not overlap and if they do overlap it's not necessarily the case the smaller circle is fully enclosed by the larger circle." Hence the reason you cannot simply deduct the realised value from the unrealised value. And I reiterate it is an interesting way of looking at it, but it is not a correct interpretation of the method used to derive the value for the entire portfolio.

[Daytr]

I'm not sure what you are driving at but that line of thinking is much like the 'float' terminology - in that it is interesting, but ultimately incorrect. Think of it like a Venn diagram with two circles that may or may not overlap and if they do overlap it's not necessarily the case the smaller circle is fully enclosed by the larger circle. The first smaller circle is drawn based on the pool of units and suites that were sold during the reporting period. This is the realised profit that is added to underlying earnings. This part is calculated by Management.

A second larger circle is drawn using a different process by the independent valuers across the entire portfolio - of which the recently sold units is clearly a subset (but not necessarily the exact same values). Some of the inputs in deriving the portfolio value may include some of the values observed in deriving the realised profit value. So on a 'per unit' basis there may be some overlap between the two methods such that some (not necessarily all*) of the values used in the realised profit calculation may also be observed in the unrealised profit calculation.

In conclusion two different methods are employed by different people to derive the two values. But given some of the inputs may be the same, that's why I say "Think of it like a Venn diagram with two circles that may or may not overlap and if they do overlap it's not necessarily the case the smaller circle is fully enclosed by the larger circle." Hence the reason you cannot simply deduct the realised value from the unrealised value. And I reiterate it is an interesting way of looking at it, but it is not a correct interpretation of the method used to derive the value for the entire portfolio.

Thanks and that's exactly how I see it as well.
I'm not driving at anything other than the P&L includes the net proceeds from sales & resales as well as the revaluation of the entire portfolio.

Cheers

[Daytr]

Holy moly.

After 2 years of trying and using all kinds of different methods and proof and maths and you name it.

And you still cant understand something so damn simple I could teach a 10 year old in a few minutes!

OK buddy.
So the occupier in exchange for the $$$ paid gets a house rent free for the duration.
Is that an interest (rent) free loan of the asset to the occupier?

[Ferg]

Thanks and that's exactly how I see it as well.
I'm not driving at anything other than the P&L includes the net proceeds from sales & resales as well as the revaluation of the entire portfolio.

Fair enough and you're welcome. So often people try to take shortcuts by deducting one number from another or comparing A with B etc. when it's a case of reading the annual reports & the accompanying presentations, doing ones own research to understand the numbers and also trusting* the experts. Admittedly digesting the OCA report is not easy given the number of moving parts and the various measures & interpretations, but it's not unsolvable.

*Although I always say "trust...but verify".

[SailorRob]

OK buddy.
So the occupier in exchange for the $$$ paid gets a house rent free for the duration.
Is that an interest (rent) free loan of the asset to the occupier?


I don't understand how that question has any relevance to OCA or this discussion.

The house is not rent free, quite the opposite, the rent is paid upfront. All of it.

[Daytr]

I don't understand how that question has any relevance to OCA or this discussion.

The house is not rent free, quite the opposite, the rent is paid upfront. All of it.

Well it's relevant to your free loan theory.
It's not a free loan, it's an exchange $$$$ for the right to occupy with agreed buyback terms & the buyback terms are the kicker.

A loan is a one sided transaction, not an exchange.

[SailorRob]

A loan is a one sided transaction, not an exchange.


Really, tell us where you get your loans from bud.

[SailorRob]

It's not a free loan, it's an exchange $$$$ for the right to occupy with agreed buyback terms & the buyback terms are the kicker.


It's an exchange $$$ for the right to Occupy yes... But for the love of god Day Trader, the money is paid in advance... Thus a loan and a liability on the balance sheet.... that's why it's not revenue.

Like insurance, money is paid for a service.... But in ADVANCE.....

How many times can we go around in this circle?

[X-men]

Whatever rent U guys talking.... market has spoken...58c

[Baa_Baa]

OK buddy.
So the occupier in exchange for the $$$ paid gets a house rent free for the duration.
Is that an interest (rent) free loan of the asset to the occupier?

Um, not so quick. https://oceaniahealthcare.co.nz/faq/what-costs-are-associated-with-living-in-a-village Could you call this "rent free"?

3.) The Weekly Fee – This fee covers the ongoing maintenance and overhead costs of running the village. The fee varies from village to village and covers costs such as building maintenance, gardening, roading, outdoor lighting, utilities, community centres, insurance, and the village van costs. This fee is fixed for life – guaranteed and stops when you vacate your unit.

[Baa_Baa]

It's an exchange $$$ for the right to Occupy yes... [snip] Thus a loan and a liability on the balance sheet.... that's why it's not revenue.

And its interest free, non-callable while occupying the asset, and repayable when ORA is sold with revenue from the incoming resident, and in the meantime the $ can be leveraged however the company chooses. Development springs to mind.

I'm not sure why all of this is so confusing, except if one tries to reimagine the business model and reinterpret the financials so as to tell some alternate story about whether the business model is profitable, viable, and sustainable.

[Daytr]

Um, not so quick. https://oceaniahealthcare.co.nz/faq/what-costs-are-associated-with-living-in-a-village Could you call this "rent free"?

3.) The Weekly Fee – This fee covers the ongoing maintenance and overhead costs of running the village. The fee varies from village to village and covers costs such as building maintenance, gardening, roading, outdoor lighting, utilities, community centres, insurance, and the village van costs. This fee is fixed for life – guaranteed and stops when you vacate your unit.

The weekly fee isn't rent. It's the equivalent of a body corporate fee.

[SailorRob]

And its interest free, non-callable while occupying the asset, and repayable when ORA is sold with revenue from the incoming resident, and in the meantime the $ can be leveraged however the company chooses. Development springs to mind.

I'm not sure why all of this is so confusing, except if one tries to reimagine the business model and reinterpret the financials so as to tell some alternate story about whether the business model is profitable, viable, and sustainable.

It's not confusing at all, cheers Baa_Baa.

[Ferg]

I'm not driving at anything other than the P&L includes the net proceeds from sales & resales as well as the revaluation of the entire portfolio.
Ok - I just re-read this part again and no this is not correct per the reasons outlined in my previous post. Yes resale gains and development margin are there in the underlying P&L but neither realised gains nor the 'net proceeds from sales & resales' are in the standard P&L. The standard P&L contains the unrealised gains as calculated by the independent valuers. The underlying P&L contains the realised gains as calculated by Management. Per the Venn diagram analogy, these data sets may or may not overlap from an output perspective, so the bold part of your statement is incorrect. As Baa_Baa mentioned one can't reimagine or reinterpret the results in ways not presented. I can't explain this any other way.....what is not to understand?

[Daytr]

It's not confusing at all, cheers Baa_Baa.

Nothing about what either you are saying is complicated. I just don't agree with that it's free money or a loan.

If OCA instead of selling an apartment they rented it out on average 7 years. The rental income would be something like $300K. But OCA can't do that as they have swapped the villa for cash. The rental income not received is the cost of the 'loan'.

Currently someone buys an apartment for $850K they are getting 70% back at the end or $595K the difference being $255k. So they are getting back more than SailorRob pays in rent & the DMF has disappeared.

I prefer to keep things simple. The occupier is paying OCA for the value of the villa up front in exchange for occupation for as long as it takes, could be 20 years (that 'rent' is getting mighty cheap by then) and have agreed to sell it back at 70% of the original price.

Both parties are making an exchange of commensurate value and not being charged interest or rent on either side so one nullifies the other.

[SailorRob]

I really don't know why I do this. I seriously cannot believe we are having this discussion and I place a high probability on the fact that Day Trader is messing with us all very cleverly as it's the only explanation that makes sense.



Nothing about what either you are saying is complicated. I just don't agree with that it's free money or a loan.

If OCA instead of selling an apartment they rented it out on average 7 years. The rental income would be something like $300K. But OCA can't do that as they have swapped the villa for cash. The rental income not received is the cost of the 'loan'. In your example the rental income would be received week by week, yes OCA are giving it up. So they are swapping rent week by week for cash up front. What would you rather and why. Please provide detailed math on the time value of money.

Currently someone buys an apartment for $850K they are getting 70% back at the end or $595K the difference being $255k. So they are getting back more than SailorRob pays in rent & the DMF has disappeared. Again, what has been done with the money in the mean time, and who pays them back at the end?
I prefer to keep things simple. The occupier is paying OCA for the value of the villa up front in exchange for occupation for as long as it takes, could be 20 years (that 'rent' is getting mighty cheap by then) and have agreed to sell it back at 70% of the original price. We know to the day how long the average occupation is. 20 year 'cheap rent' in once case makes little difference.

Both parties are making an exchange of commensurate value and not being charged interest or rent on either side so one nullifies the other. Have you ever heard of a concept called the time value of money

How many landlords out there with a portfolio of 1000 houses would like to receive the next 7 years of rent in advance for all those houses.

How would this be economically different to receiving rent for them week by week?

What could/would you do with the tens of millions?

[Daytr]

I really don't know why I do this. I seriously cannot believe we are having this discussion and I place a high probability on the fact that Day Trader is messing with us all very cleverly as it's the only explanation that makes sense.

How many landlords out there with a portfolio of 1000 houses would like to receive the next 7 years of rent in advance for all those houses.

How would this be economically different to receiving rent for them week by week?

What could/would you do with the tens of millions?

It's not rent. It's a principle payment for the value of the residence.

If it's rent as you say, and equivalent to circa $300k, what does that value the sale of the residence is? The company reports them as sales. Not sales plus prepaid rent.
Otherwise the sale component is far less than the cost to build.

Anyway I have understood what you have said from the start, despite you suggesting I don't have the capability of a 10 year old.
I just don't agree with you.

So not messing with you, just myself and I'm sure many don't agree with you.
Do you have any analysts that back up your take on things?
This is a very well studied sector with many specialist analysts that know the sector backwards.

A bit like your how your float concept for OCA is like an insurance company float. It isn't.

[SailorRob]

It's not rent. It's a principle payment for the value of the residence.

If it's rent as you say I have never said anything about rent, only in reply to you using rent as an example.I have never thought of any of this as rent, and equivalent to circa $300k, what does that value the sale of the residence is? The company reports them as sales. Not sales plus prepaid rent.

Otherwise the sale component is far less than the cost to build.

Anyway I have understood what you have said from the start Nooooo you haven't, despite you suggesting I don't have the capability of a 10 year old. You said it yourself, you said you got 49% in Bursary Math and blamed not studying, but just a basic underlying ability in Math should get you better than 49% without even being in school.

I just don't agree with you. This is what makes a market.

So not messing with you, just myself and I'm sure many don't agree with you. Almost always the majority don't agree with me on most things, if they did it would be terrible.

Do you have any analysts that back up your take on things? This is a very well studied sector with many specialist analysts that know the sector backwards. Funniest thing I have heard in a while.

Are these the same analysts who knew FBU backwards and were all over the cost overruns that must have been incredibly obvious to even a mildly interested observer?

Are these the same analysts who have to work for a wage because they have not been able to amass enough capital and/or get the returns on that capital to live off themselves? Unlike me and many others here on Sharetrader?

The same ones who cannot beat a simple index fund?

Care to name any?

Here is a real analysts 'take on things' kindly provided by ValueNZ, but I guarantee you didn't read it. https://focusedcompounding.com/summerset-sum-a-new-zealand-retirement-village-developer-with-float/

A bit like your how your float concept for OCA is like an insurance company float. It isn't. Correct, it is FAR FAR superior.


Have a great day Day Trader.

[SailorRob]

Do you have any analysts that back up your take on things? This is a very well studied sector with many specialist analysts that know the sector backwards.

Also worth noting here, the bleeding obvious;

If 'analysts' backed up my take on things then the opportunity would not exist.

If I only bought things that the analysts backed me up on then I'd get returns like they do.

[mistaTea]

Do you have a time horizon Rob whereby if the market still values the business well below your estimate of intrinsic value, you would have another think?

Or would it never matter no matter how long the market undervalued the business so long as nothing has really changed according to your model?

Holding forever is great, though there is also the risk of a large opportunity cost.

[SailorRob]

Do you have a time horizon Rob whereby if the market still values the business well below your estimate of intrinsic value, you would have another think?

Or would it never matter no matter how long the market undervalued the business so long as nothing has really changed according to your model?

Holding forever is great, though there is also the risk of a large opportunity cost.

Good point, but for example the market has AND STILL continues to value Berkshire WAY below my estimate of intrinsic value and I haven't flinched at all and have become rich despite the market not understanding the true value. The market has valued it below my estimate for at least 6 years and because of this I have made more money through my own purchases and from Berkshires repurchases.

So no, I think this can go on indefinitely but it wont stop you from making bank anyway as cash returns are cash returns and compounding is compounding.

The latest price action in OCA has allowed me to meaningfully increase my position in OCA (during my ban).

Interestingly a fellow who said I had the logic of a newt for wanting a lower OCA price, himself waited for a lower price (59c) before buying. So his logic was the same as mine...

In the OCA instance, a few years is nothing in the scope of the existence of the business and the future cash flows, remembering I have not been in since the IPO.

The longer the market undervalues the business the better for me, preferably until at least 2040.

[SailorRob]

Another way to think about this would be that if OCA business performance and compounding of float and equity continues at the same rate and the share price continues its collapse in the face of it, I would eventually have a serious shot at making the NZ rich list.

The only thing stopping ValueNZ joining me would be his lack of capital.

If Mav was given the entire OCA business in its current form for xmas it would be the worst day of his life (for reasons I cannot understand)!

Currently if the float was run off, I could make 100 million a year from it alone and just let the rest of the business break even.

[Daytr]

Have a great day Day Trader.

You are like a slippery twisty turny thing.
"I never said it was rent" when you clearly said it was rent several times. But it's also a loan. It's rent in advance....

So now it's not rent, which is I what I said from the start. And it's not a loan.
Unless you agree OCA are lending the unit for free in exchange for cash. I.e two loans, or otherwise known as a swap.
They both get to utilize the principal, I.e OCA the cash & the Occupier the unit, both of the same value and both parties not paying interest or rent.

As I have said on multiple occasions, I think there is value in the maturity profile of the portfolio that will be unlocked over time through resales that will just keep increasing.

So any business reinvesting in itself has a float.
Great, nothing new there.

I think some analysts have seen the opportunity for some time. The opportunity to sell.
Now it's down to around 40% of its peak value, it's quite likely a long term buy.

Have a good day SailorBoy.

[SailorRob]

You are like a slippery twisty turny thing.
"I never said it was rent" when you clearly said it was rent several times.

So you'll be able to show me just once where I said it was rent then?

I referred to 'the rent' in reply to you using that term, but nowhere have I said that it is rent.

I've never thought in those terms.

[Daytr]

So you'll be able to show me just once where I said it was rent then?

I referred to 'the rent' in reply to you using that term, but nowhere have I said that it is rent.

I've never thought in those terms.

Well you said they are swapping rent on a week by week basis for rent in full up front. Implying the principal payment in the sale includes rent.
As you rightly point out, it doesn't.

[ValueNZ]

So any business reinvesting in itself has a float.
Great, nothing new there.
:confused::confused::confused:

[winner69]

Announcement results day coming up

Share price creeping up in anticipation of strong result

[SailorRob]

So any business reinvesting in itself has a float.
Great, nothing new there.

The hell?

As with flat earthers, I think it's better we don't engage. Need to stop taking the bait.

[thegreatestben]

You got it SR, maybe it would be more appropriate to have their handle as Gasli[ighter]

[Daytr]

You got it SR, maybe it would be more appropriate to have their handle as Gasli[ighter]

I'm not the one has been reinventing economics to spruik a stock that is down about 65% from its peak and from what I understand a takeover offer level that apparently wasn't good enough for some as in the long term it undervalued the stock. 😅.

$1.60 then or 58c now?
Personally I would choose both with the benefit of hindsight.
Sell at $1.60 & maybe buy now or nearby.

But to have the benefit of hindsight to say $1.60 wasn't good enough & that undervalued the company. Really?
Rather than admit, actually they just got it wrong.

If it was undervalued then crikey it really is now, but who has been proven right. Not the bulls at a $1.50 - $1.60 that's for sure.

As I have said on multiple occasions, I am not negative on the stock around these levels. I just don't buy into all the hype.

[ValueNZ]

$1.60 then or 58c now?
Personally I would choose both with the benefit of hindsight.
Sell at $1.60 & maybe buy now or nearby.
LOL. I would do the same with the benefit of hindsight.

But we don't make our investment decisions with the benefit of hindsight. You must be trolling.

Plus SR and I didn't own any shares at that price.

[Mrbuyit]

Just checked my OCA trades, it looks like I sold some to build a deck (but not all unfortunately) in November 2020 for 1.35.

Buy and hold for eternity might be the answer from here on out, but it might not too (Ala Ryman)

[Daytr]

LOL. I would do the same with the benefit of hindsight.

But we don't make our investment decisions with the benefit of hindsight. You must be trolling.

Plus SR and I didn't own any shares at that price.

Really I didn't know that. I thought you could turn back the clock.
It was a theoretical discussion.

[Daytr]

Just checked my OCA trades, it looks like I sold some to build a deck (but not all unfortunately) in November 2020 for 1.35.

Buy and hold for eternity might be the answer from here on out, but it might not too (Ala Ryman)

That deck would have cost you a lot more OCA shares now than it did then plus you have had the utility of the deck in the meantime.
Great trade! :t_up:

[SailorRob]

You're right Day Trader, they shouldn't have entertained the offer.

Like I said valuenz and I could make 100 million off the float alone without any effort at all, remember the floats growing bigly and you'd cap that at 25 x minimum, so 2.5 billion just there alone, I'd pay more for it. So just the float is worth $3.50 a share.

[Mrbuyit]

Yip it's great, it could probably do with a coat of oil before next summer.

With the inflation in raw material cost, and the shift in oca share price I'd say the deck would maybe cost me close to 3x as many shares now as it did then.

[ValueNZ]

Yip it's great, it could probably do with a coat of oil before next summer.

With the inflation in raw material cost, and the shift in oca share price I'd say the deck would maybe cost me close to 3x as many shares now as it did then.
That says more about how cheap OCA shares are than anything else. Remembering that OCA gets the benefit of owning properties which cost more now than they did in the past to build. Inflation greatly benefits OCA.

[Daytr]

That says more about how cheap OCA shares are than anything else. Remembering that OCA gets the benefit of owning properties which cost more now than they did in the past to build. Inflation greatly benefits OCA.

I think you will find the cost of building has come down rapidly. Look at some of the packages GJ Gardiner are offering lately compared to a year or two ago.
The Government has also pledged to substantially bring down the cost of building further.

[Daytr]

You're right Day Trader, they shouldn't have entertained the offer.

Like I said valuenz and I could make 100 million off the float alone without any effort at all, remember the floats growing bigly and you'd cap that at 25 x minimum, so 2.5 billion just there alone, I'd pay more for it. So just the float is worth $3.50 a share.

It wasn't about whether they should have taken the offer so much as that has nothing to do with you, but the fact they didn't and not long after it was quite apparent the property market was going to turn & that in hindsight if you had considered the macro it would have been a good time to sell.
Anyway its all theoretical.

Tell me when you have earned that easy $100M. I won't be holding my breath. :cool:
But I'll tell you one thing, selling at $1.50 and then buying back now would make a lot more.
Hindsight is a beautiful thing.

[Baa_Baa]

It wasn't about whether they should have taken the offer so much as that has nothing to do with you, but the fact they didn't and not long after it was quite apparent the property market was going to turn & that in hindsight if you had considered the macro it would have been a good time to sell.

What offer are you referring to? I don't recall OCA ever having been subject to a takeover offer. Refresh my memory please, thanks.

[SailorRob]

I think you will find the cost of building has come down rapidly. Look at some of the packages GJ Gardiner are offering lately compared to a year or two ago.
The Government has also pledged to substantially bring down the cost of building further.

Government pledge?

How many government pledges over every country in the world through all of history have achieved what they pledged.

[Daytr]

What offer are you referring to? I don't recall OCA ever having been subject to a takeover offer. Refresh my memory please, thanks.

Not sure, I wasn't the one who originally raised it & I wasn't following OCA back then.
SailorRob might be able to help you.

[Daytr]

Government pledge?

How many government pledges over every country in the world through all of history have achieved what they pledged.

The obvious point is to anybody who read what I was replying to is that we aren't in building cost inflationary times, quite the opposite, so don't rely on that to boost the SP, not in the near term anyway.

It's actually quite an easy fix for the Government, by simply allowing a lot more products in from overseas that are already approved overseas. We finally don't have a monopoly situation on GIB for example. But there's a lot more coming.

The extra bit will be if they actually manage to streamline the RMA. We will see on that one, but they seem determined and it's a cornerstone policy of the Coalition.

[SailorRob]

Not sure, I wasn't the one who originally raised it & I wasn't following OCA back then.
SailorRob might be able to help you.

Don't bring the Sailor into it!

[Baa_Baa]

Not sure, I wasn't the one who originally raised it & I wasn't following OCA back then.
SailorRob might be able to help you.

But you describe that there was an offer as if it was a fact, quite confidently. I think OCA has never been subject to a take over offer and you might be confused with ARV that in Dec 2023 turned down a takeover offer made in Sept last year?

[SailorRob]

But you describe that there was an offer as if it was a fact, quite confidently. I think OCA has never been subject to a take over offer and you might be confused with ARV that in Dec 2023 turned down a takeover offer made in Sept last year?

When I replied to his comment about the offer, I was getting confused with STU.

Which was another massive 'efficient' market f up. I bought the business for less than net working capital (mostly steel inventory) , got everything else for free.

[Daytr]

But you describe that there was an offer as if it was a fact, quite confidently. I think OCA has never been subject to a take over offer and you might be confused with ARV that in Dec 2023 turned down a takeover offer made in Sept last year?

I think you need to re-read my post as I didn't confidently state that at all.
Also refer to SailorRob's reply a few posts down as it was he who raised the prospect of a takeover way back when. I personally didn't care if there had been one or not & I still don't.

Bit for your reference, I'm referring to a conversation that was on here months ago with SailorRob. It was a hindsight theoretical discussion, but I didn't raise the take over offer, they did as I wasn't even aware of it either and I don'treally care. I believe $1.60 was mentioned at the time.

Perhaps they were expressing a theoretical, it wasn't really the point of the conversation, it was about in hindsight was then a good time to sell.

Why anyway? Do you wish there had been?

[Greekwatchdog]

But you describe that there was an offer as if it was a fact, quite confidently. I think OCA has never been subject to a take over offer and you might be confused with ARV that in Dec 2023 turned down a takeover offer made in Sept last year?

Very True, ARV had an offer late last year for $1.70 which the board turned down without going to shareholders. Interesting meeting coming up at the ASM.

OCA has not disclosed any takeover information in the 7 6.5 years that I have been a shareholder.

[mistaTea]

You guys have been missing the AI contribution, I know it.

Just uploaded the last 5 Annual Reports to GPT4 and asked it to give a summary.



Here's a summary of the trends across the annual reports from 2019 to 2023 for Oceania Healthcare:


**Financial Performance and Growth:**
- **Assets and Revenue Growth:** There has been a consistent increase in total assets from NZ$1.5 billion in 2020 to NZ$2.5 billion in 2023, indicating robust growth. Similarly, revenues have generally increased, reflecting expanded operations and successful new developments【12:1†source】【12:4†source】【12:7†source 】【12:11†source】.
- **Profitability:** EBITDA and net profit trends show improvement, especially notable from 2020 to 2023, despite some fluctuations due to operational challenges like COVID-19 and market conditions【12:1†source】【12:4†source】【12:7†source】.
- **Dividends:** Dividend payments have been consistent, suggesting stable returns for shareholders【12:1†source】【12:4†source】.


**Operational Highlights:**
- **Development and Expansion:** The company has aggressively expanded its care facilities and retirement villages, completing numerous projects each year and planning for more, indicating a strong forward-looking growth strategy【12:3†source】【12:6†source】【12:11†source】.
- **COVID-19 Response:** The company demonstrated resilience during the COVID-19 pandemic, maintaining operations and even experiencing growth in certain metrics like asset values and operational cash flow, attributed to strong management and operational agility【12:0†source】【12:4†source】.


**Strategic Initiatives:**
- **Capital Management:** Oceania has successfully managed its capital, evident from the issuance of retail bonds and other financial instruments to fund growth and maintain strong liquidity【12:5†source】【12:8†source】.
- **Sustainability Focus:** There's a growing emphasis on sustainability and environmental responsibility, including climate risk assessments and green building certifications, reflecting a commitment to long-term sustainable practices【12:11†source】.


**Concerns and Challenges:**
- **Market Sensitivity:** The business shows sensitivity to economic downturns and market volatility, which could affect asset valuations and operational stability. The ongoing adjustments to interest rates and economic conditions could pose challenges【12:15†source】.
- **Operational Risks:** As the company expands, maintaining high standards of care and managing larger operations could strain resources, necessitating careful management and strategic planning to ensure sustainability of quality and service【12:15†source】.


Overall, Oceania Healthcare has shown strong financial performance and strategic growth despite some challenges. The emphasis on sustainability and robust capital management are positive signs for future stability and growth. However, attention should be paid to market dynamics and operational risks as the company continues to expand.

I then asked it if a market cap of $412M was high, low or about right based on those reports.


Assessing whether the market capitalization of NZ $412 million for Oceania Healthcare is high, low, or about right involves considering several factors detailed in the annual reports along with external market conditions. Here’s a breakdown of relevant considerations:

1. **Growth and Expansion**: Oceania Healthcare has consistently expanded its assets and operations, with total assets growing from NZ$1.5 billion in 2020 to NZ$2.5 billion in 2023. This aggressive expansion in care facilities and retirement villages indicates a strong growth trajectory .


2. **Financial Performance**: The company has shown an improvement in EBITDA and net profit, especially from 2020 to 2023. Consistent dividend payments also suggest financial stability and profitability .


3. **Operational Resilience**: The resilience during the COVID-19 pandemic and the ability to maintain and even grow certain financial metrics during such a period demonstrate strong operational management .


4. **Market and Economic Sensitivity**: While the company has shown growth, it is sensitive to economic downturns and market volatility, which could impact asset valuations and operational stability. The real estate and care markets can be particularly susceptible to economic changes .


5. **Valuation Metrics**: A comparison of the market cap with the asset base and profitability metrics like EBITDA would be key. Typically, companies in the healthcare and real estate sectors are evaluated on metrics like price-to-earnings (P/E) ratios, price-to-book (P/B) ratios, and debt levels.


Based on the provided data:
- **Total Assets vs. Market Cap**: With assets worth NZ$2.5 billion and a market cap of NZ$412 million, the market cap is significantly lower than the asset base, which might suggest that the market valuation is conservative or that the market is factoring in potential risks or inefficiencies.


Given these factors, without additional specific financial ratios and current industry valuation benchmarks, it seems that the market cap might be on the lower side, suggesting that the company could be undervalued. However, this preliminary assessment would need to be complemented by a detailed analysis including current market conditions, comparative industry valuations, and investor expectations to provide a more definitive answer.

I then said, come on mate... you can do better. I just gaver you 5 years of financial data. Have a proper go at it.



To perform a valuation based on the financial data provided in the annual reports for Oceania Healthcare, we'll use two common valuation methods: the Price-to-Earnings (P/E) ratio method and the Price-to-Book (P/B) ratio method. These methods will give us an insight into whether the current market cap of NZ $412 million is justified based on the company's earnings and book value.


### 1. Price-to-Earnings (P/E) Ratio Valuation


**Step 1: Calculate Earnings**
We'll use the Net Profit After Tax (NPAT) as the earnings figure.


From the annual reports:
- **2023 NPAT**: Not provided directly in snippets. Assuming similar growth from previous years, we'll estimate based on 2022.
- **2022 NPAT**: Also not directly provided. An extrapolation based on 2021.
- **2021 NPAT**: Estimated from provided growth rates and values in 2020.


**Step 2: Estimate P/E Ratio**
The industry average P/E ratio for healthcare facilities varies but is generally around 15-25 times earnings. We'll use a moderate 20x for our estimate due to the lack of precise NPAT values.


**Step 3: Valuation**
\[ \text{Valuation} = \text{NPAT} \times \text{P/E Ratio} \]


### 2. Price-to-Book (P/B) Ratio Valuation


**Step 1: Calculate Book Value**
Book value can be derived from the equity as reported on the balance sheet.


- **2023 Total Equity**: NZ $2.5 billion (as part of total assets, assuming equity growth with assets).


**Step 2: Estimate P/B Ratio**
Typical P/B ratios for the sector are around 1-3 times. We'll use 1.5 as a conservative estimate.


**Step 3: Valuation**
\[ \text{Valuation} = \text{Total Equity} \times \text{P/B Ratio} \]


### Calculations:


#### P/E Ratio Valuation
If we assume a conservative NPAT for 2023 to be around NZ $50 million (a hypothetical estimate given growth rates):
\[ \text{Valuation} = NZ\$50M \times 20 = NZ\$1B \]


#### P/B Ratio Valuation
\[ \text{Valuation} = NZ\$2.5B \times 1.5 = NZ\$3.75B \]


### Summary
Both the P/E and P/B valuations suggest a potential undervaluation of the company at a market cap of NZ $412 million, especially the P/B ratio, which points to a significantly higher valuation. However, these results are sensitive to the assumptions made about NPAT, equity, and industry ratios. A more precise calculation would require exact figures from the most recent financial year for NPAT and equity, as well as an accurate assessment of current industry ratios for healthcare facilities. Adjustments may be needed based on actual 2023 financials and real-time market conditions.

So my computer says OCA could well be truly worth somewhere betwwen $1.38/share to $5.18/share. The Sailor will be creaming it (and possible his pants) before long.

Man, this fundamental analysis stuff really is easy!

[Curly]

I to are not aware of any take over offer for OCA. I think directors would appose any offer given their skin in the game and their entry levels. A take over attempt would not necessarily be a bad thing in my view. I recall a take over attempt for IFT caused the share value to quickly adjust to a fair market value and has gone north ever since.

[X-men]

Just like that...rinse and repeat 😂

[Daytr]

You guys have been missing the AI contribution, I know it.

Just uploaded the last 5 Annual Reports to GPT4 and asked it to give a summary.



I then asked it if a market cap of $412M was high, low or about right based on those reports.



I then said, come on mate... you can do better. I just gaver you 5 years of financial data. Have a proper go at it.



So my computer says OCA could well be truly worth somewhere betwwen $1.38/share to $5.18/share. The Sailor will be creaming it (and possible his pants) before long.

Man, this fundamental analysis stuff really is easy!

That's a tight range that computer says. 😅
I would say over the next few years it's quite likely to be in that range.
In 2 - 3 years the resales will have well and truly kicked in as the profile of the portfolio matures.

One thing is that end of week price action doesn't bode well for the Wahs on the weekend!

[SailorRob]

Do you have a time horizon Rob whereby if the market still values the business well below your estimate of intrinsic value, you would have another think?

Or would it never matter no matter how long the market undervalued the business so long as nothing has really changed according to your model?

Holding forever is great, though there is also the risk of a large opportunity cost.


@ValueNZ, you should calculate how long it would take one to get on the NZ rich list assuming they had 50k already in OCA and a further 50k a year to deploy and OCA float and equity continued to compound like it has over the last few years while the share price declined like it has, circa 50% over the last 2 years.

How long would it be before you had enough share in the equity to get you on the rich list.

And before anyone even thinks about posting that the SP cannot fall more than 50% for long before it hits zero... It can decline by 50% a year indefinitely....

Be a good exercise for a first year finance student.

[SailorRob]

I'm not the one has been reinventing economics to spruik a stock that is down about 65% from its peak and from what I understand a takeover offer level that apparently wasn't good enough for some as in the long term it undervalued the stock. .

$1.60 then or 58c now?
Personally I would choose both with the benefit of hindsight.
Sell at $1.60 & maybe buy now or nearby.

But to have the benefit of hindsight to say $1.60 wasn't good enough & that undervalued the company. Really?
Rather than admit, actually they just got it wrong.

If it was undervalued then crikey it really is now, but who has been proven right. Not the bulls at a $1.50 - $1.60 that's for sure.

As I have said on multiple occasions, I am not negative on the stock around these levels. I just don't buy into all the hype.

For those interested in Rat hunting, this was the first post about takeover offers.

My reply to it was;

'You're right Day Trader, they shouldn't have entertained the offer'.


​Well of course they shouldn't have... there wasn't one. He's now trying to pin the suggestion of an offer on me.

[Joshuatree]

Beagle come back,and trash this stock for a bit of balance ! :)

[Baa_Baa]

Beagle come back,and trash this stock for a bit of balance ! :)

If you reckon it needs more trashing, go where he is trashing it.

[Baa_Baa]

For those interested in Rat hunting, this was the first post about takeover offers.

My reply to it was;

'You're right Day Trader, they shouldn't have entertained the offer'.


​Well of course they shouldn't have... there wasn't one. He's now trying to pin the suggestion of an offer on me.

So just another fabrication. It wasn't about STU was it and he did bring it up didn't he, it was about an imaginary take over offer of OCA, which he blamed on you?

Frankly, nothing he says here imo has ever had any credibility whatsoever and is not worth our time rebutting it; reinventing the business model and economics of OCA; reinterpreting the accounting financials reported in plain sight (that he doesn't read); arguing incessantly with numerous logical fallacies. Even when the facts are patiently and painfully pointed out, explained rationally and reasonably, with references to source, by very well informed and very clever investors.

I actually think he just dislikes you SailorRob, probably others as well myself included, and has conjured an ill-informed argument to try and refute everything you and we all have said. He reckons he can get a rise from you and others by making ridiculous statements and arguing them incessantly, albeit eventually tying himself in knots. Sadly so far its been working for him.

Definition of a troll, ill-informed, misinformation, disinformation, arguing logical fallacies, baiting, baiting, baiting. For what purpose who knows, but it seems as we have no moderation here, 'ignore' is the only solution?

[SailorRob]

So just another fabrication. It wasn't about STU was it and he did bring it up didn't he, it was about an imaginary take over offer of OCA, which he blamed on you?

All correct. The truth the whole truth and nothing but the truth.

Frankly, nothing he says here imo has ever had any credibility whatsoever and is not worth our time rebutting it; reinventing the business model and economics of OCA; reinterpreting the accounting financials reported in plain sight (that he doesn't read); arguing incessantly with numerous logical fallacies. Even when the facts are patiently and painfully pointed out, explained rationally and reasonably, with references to source, by very well informed and very clever investors.

Strongly agreed

I actually think he just dislikes you SailorRob, probably others as well myself included, and has conjured an ill-informed argument to try and refute everything you and we all have said. He reckons he can get a rise from you and others by making ridiculous statements and arguing them incessantly, albeit eventually tying himself in knots. Sadly so far it's been working for him.

Agreed and a terrible reflection on me, really it's my fault.

Definition of a troll, ill-informed, misinformation, disinformation, arguing logical fallacies, baiting, baiting, baiting. For what purpose who knows, but it seems as we have no moderation here, 'ignore' is the only solution?


Yes and I would suggest anyone interested to go look on the 'Elections' thread and some of the political ones, he's been making some real friends there.

From now on no more taking the bait from Day Trader for me.

[Joshuatree]

Needs more contrarian views rather then all this promoting/ influencing.What , 2 and a half years plus for opportunity cost/ opportunity lost.But yep a stopped clock is right twice a day ehh��

[SailorRob]

Needs more contrarian views rather then all this promoting/ influencing.What , 2 and a half years plus for opportunity cost/ opportunity lost.But yep a stopped clock is right twice a day ehh👍


Hi Josh, I have never seeked to promote or influence, just state facts.

From what I can gather my views are the contrarian ones and most OCA posters are hugely downbeat on the company.

Personally I have no interest in a higher stock price as I have discussed many times. The recent weakness has allowed me to increase my shareholding a lot.

Can you repost a few of your best views on OCA that you have shared with the thread, thanks.

[X-men]

U are crazy sailor moon....only U here want the SP keeps going lower...lol.....down from $1.50 now 56c and U still want it lower?

Maybe U are a shorter.. shorting OCA...lol

[X-men]

Pissed off baba sheep..stop stalking me....jezzz....keep buying if U wish...don't stalk me to buy with your sheet...I will report U if U keep stalking me

[SailorRob]

Pissed off baba sheep..stop stalking me....jezzz....keep buying if U wish...don't stalk me to buy with your sheet...I will report U if U keep stalking me

Might be time to get your meds changed again Sport?

[X-men]

Yeah...your mate baa_baa...is stalking me again....

[SailorRob]

Yeah...your mate baa_baa...is stalking me again....

What you mean is that he gave you another negative reputation comment.

Can you think of any reason that he would have done that?

[Cupsy]

U are crazy sailor moon....only U here want the SP keeps going lower...lol.....down from $1.50 now 56c and U still want it lower?

Maybe U are a shorter.. shorting OCA...lol

I'd love to buy a car selling at a huge discount, I'd love to buy a house at a huge discount, I like my clothes on sale, and my groceries, why any difference for investments? I guess the key point is being able to confidently determine what it is worth to know if the price is at a discount.

[X-men]

I said the truth....only U here expecting the SP 👇👇👇👇

[SailorRob]

I said the truth....only U here expecting the SP 


X-man, I think you will find that ValueNZ, Cupsy and a few others would like a lower price.

However I am not 'expecting it' I have no idea what will happen in the short or medium term.

What I am trying to do is buy as much future cash flow as I can, rather than own the same amount of future cash flow but see the market value of its present value rise.

[SailorRob]

14950
All this talk of “floats “ , are they real , imagined and even useable?
Heres the picture to tell the story from 1hy24.

I apologise for my childish graphics , but stumpy fingures on an iPad will do that…but it does make it clear to deferentiate what I’ve added over the offical release.

There it is ..the float…. Right now it is $950m tied up in property development with $364m now currently ready for sale.

It does exist and being used to handsomely achieve assets CAGR 18 % ( over 6 years. )

Hopefully this picture saves a thousand words.


I forgot that Mav even drew a picture. Amazing that it's impossible to teach some people this and that's what makes a market.

[SailorRob]

Now I've tidied up all my work after reporting season, just for fun I thought I would see where OCA might roughly be, should it stop reinvesting in more land and developments, and just call it a day and finish their current pipeline.

Here's the parameters.
A. All values are at today's expenses and revenue rates.
B. No allowance for resales is included. I am fully in agreement with Sailor Rob that average house price movements simply reflect inflation of the era, no more. There is no real profit. This is a concept that most won't accept. History demonstrates property resale profits simply match inflation in the long run. So RESALE PROFIT is just inflation proofing of the assets- incredibly valuable for the long term investing aspect…but it isn't profit.
C. Clearly, no new sales margins
D. Villages are all completed and sold down to normal occupancy rates over the next 8 years.
E. I don't know what corporate costs will be as many staff won't be needed. I have retained the current expense ratios for this exercise which will no doubt be too high.

So in about 8 years when all this is finished and sold what are we left with?

Underlying Profit should be around $71m ( to compare today's annual unpat with resales removed is $31m - but this obviously includes new sales profit).

To make the numbers real simple… 2032that's $10c EPS + inflation value. So again, because this concept is so important, the $.10c is ON TOP OF inflation.

Here's the kicker …2032 …OCA now has no debt and a $2.4B cash float !

If OCA were to achieve a return of 5% net on this free cash float that's $.20c EPS extra! Yep , 200% more than what they will be making on their properties.

The only 2 questions to ask;


What would you pay for a share making $0.30 EPS ( that is inflation indexed) ?
What kind of mega industry would want to buy this return and access to this source of cash the most?


You can love or hate Sailor as much as you like but he is the one correctly banging on about the “float” , trying to get people to see the ultimate real value of these companies.

He's right , these future numbers are incredible and have feck all to do with what nurses are paid.




Great post from Maverick from December.

Highlighting what would happen should OCA decide to stop growing....

So in 7.5 years time you would be looking at an over 50% return PER YEAR in CASH from current prices. Inflation protected.

Paying less than 60c a share for a return of 30c every year.

This is why I get so upset with you saying you have to 'Endure' a few more weeks of low share prices Mav, this should be the greatest moment in your investing life, not something you are hating.

[bull....]

this has to be the greatest thread on hope she will be right in the long term lol


https://www.youtube.com/watch?v=bvKkUoE8XKM

[mistaTea]

A couple of thoughts.

We must be careful not to think that the resident loans will be invested in new property forever. There will be a critical mass of retirement villages, of which OCA will only get a certain amount in this competitive market.

I think that is important to note because it determines the cashflow profile for the business (which is all that really matters in the end) and when more of the cash can be returned to shareholders (and NZ shareholders are obsessed with dividends for some reason).

Also, the whole discussion about not wanting the SP to rise (and in fact preferring it would fall…)

Yes that makes absolute sense if your analysis on the business and sector is solid and your estimate of IV is reasonably close. No arguments there.

I think the timeframe on when Mr Market finally sees the light and corrects the error of his ways is importantly though.

If the market value of OCA doubles to $800M odd they is wonderful. But if it takes 20 years then that is 3.5% CAGR. Throw in some divvies and after tax you maybe have 4.5%.

I think the sailor, value et al have some solid points about OCA. But as I have stated before, I think dismissing Mr Market altogether creates a kind of blind spot.

Not trying to p1ss anyone off or provoke any harsh replies … just saying that I don’t think it is all quite as black and white as some seem to think. It seldom is.

[Daytr]

So just another fabrication. It wasn't about STU was it and he did bring it up didn't he, it was about an imaginary take over offer of OCA, which he blamed on you?

Frankly, nothing he says here imo has ever had any credibility whatsoever and is not worth our time rebutting it; reinventing the business model and economics of OCA; reinterpreting the accounting financials reported in plain sight (that he doesn't read); arguing incessantly with numerous logical fallacies. Even when the facts are patiently and painfully pointed out, explained rationally and reasonably, with references to source, by very well informed and very clever investors.

I actually think he just dislikes you SailorRob, probably others as well myself included, and has conjured an ill-informed argument to try and refute everything you and we all have said. He reckons he can get a rise from you and others by making ridiculous statements and arguing them incessantly, albeit eventually tying himself in knots. Sadly so far its been working for him.

Definition of a troll, ill-informed, misinformation, disinformation, arguing logical fallacies, baiting, baiting, baiting. For what purpose who knows, but it seems as we have no moderation here, 'ignore' is the only solution?

If that makes you feel better Baa_Baa.

I'm not the one who was banned. Was it once or twice? For incessant trolling and insults etc which is par for the course on this thread for anyone who dares question the 'secret sauce' that has seen the share price down to 35% of its peak value. Apparently anyone who doesn't are idiots & they just don't understand. 😅

Apparently the accounts are also straight forward and easy to follow. If that's the case have you ever thought the market has been right? It may not be right forever, I.e the market might change but that will because the situation has changed, not because of free loans and float BS. The free loans is the funniest one. The float I get, it's just not a big thing as some make it out to be.

If anybody had bothered to notice, I haven't down ramped, quite the opposite.
I just don't believe in fairytales and only those desperate to get their money back seem to do so unquestionably.

Hey, by the way, just in case you are interested. I have some magic beans...

All the best on your holding & good luck for the results released in a few weeks.
I might be joining you once I am done in the resources sector.

PS I looked back at the NTL thread & I see you were one of the first to call BS on that, way before most people & you were criticised heavily. It's now lost 85% of its value so well done.

[ValueNZ]

If that makes you feel better Baa_Baa.

I'm not the one who was banned. Was it once or twice? For incessant trolling and insults etc which is par for the course on this thread for anyone who dares question the 'secret sauce' that has seen the share price down to 35% of its peak value. Apparently anyone who doesn't are idiots & they just don't understand. ��

Apparently the accounts ate also straight forward and easy to follow. If that's the case have you ever thought the market has been right? It may not be right forever, I.e the market might change but that will because the situation has changed, not because of free loans and float BS. The free loans is the funniest one. The float I get, it's just not a big thing as some make out.

If anybody had bothered to notice, I haven't down ramped, quite the opposite.
I just don't believe in fairytales and only those desperate to get their money back seem to do so unquestionably.

Hey, by the way, just in case you are interested. I have some magic beans...

All the best on your holding & good luck for the results released in a few weeks.
I might be joining you once I am done in the resources sector.

PS I looked back at the NTL thread & I see you were one of the first to call BS on that, way before most people & you were criticised heavily. It's now lost 85% of its value so well done.
Daytr here thinks the interest free loans and the float are seperate concepts.

No Daytr, you do not get it. You've shown that in this post alone.

Go read some of SailorRobs/Baa_Baa's earlier posts + the report I reposted a while back.

[Cupsy]

A couple of thoughts.

We must be careful not to think that the resident loans will be invested in new property forever. There will be a critical mass of retirement villages, of which OCA will only get a certain amount in this competitive market.

.

Where money is invested (provided value is not being destroyed) is irrelevant isn't it?

[ValueNZ]

@ValueNZ, you should calculate how long it would take one to get on the NZ rich list assuming they had 50k already in OCA and a further 50k a year to deploy and OCA float and equity continued to compound like it has over the last few years while the share price declined like it has, circa 50% over the last 2 years.

How long would it be before you had enough share in the equity to get you on the rich list.

And before anyone even thinks about posting that the SP cannot fall more than 50% for long before it hits zero... It can decline by 50% a year indefinitely....

Be a good exercise for a first year finance student.

You should be setting the assignments for my finance class! So much BS is taught at my uni it's unreal.
15100

I think this should be about right, probably 18 years.

Everyone should be praying for Oceania's share price to collapse whilst intrinsically growing it's worth.

[mistaTea]

Where money is invested (provided value is not being destroyed) is irrelevant isn't it?

You mean if OCA decided to become a Berkshire Hathaway after they could not reasonably continue building more villages? And used the resident loans to buy other businesses or part of other businesses?

In that case they could continue investing ‘forever’ perhaps and add value … not something I had considered before.

I suspect investors will want a bigger divvy though at that stage…even though dividends are sh1te. In most cases I would prefer a buyback.

[ValueNZ]

You mean if OCA decided to become a Berkshire Hathaway after they could not reasonably continue building more villages? And used the resident loans to buy other businesses or part of other businesses?

In that case they could continue investing ‘forever’ perhaps and add value … not something I had considered before.
Did you think they'd put the cash under a mattress?

At a certain point the shareholder value added from building new villages (you call it critical mass) will be less than the value added from investing it elsewhere, at which point you'd expect them to do something else with the money.

The reality would be slowed development as demand for units is growing.

[Cupsy]

You mean if OCA decided to become a Berkshire Hathaway after they could not reasonably continue building more villages? And used the resident loans to buy other businesses or part of other businesses?

In that case they could continue investing ‘forever’ perhaps and add value … not something I had considered before.

I suspect investors will want a bigger divvy though at that stage…even though dividends are sh1te. In most cases I would prefer a buyback.
Hell even money sitting in a term deposit provides a return if you don't know what to do with it.

[X-men]

Sailor moon, if so true...lower SP is great ...then all the fundies will keep buying! Reality is the fundies are selling ruthlessly...

U n associates are kept buying but in small scale... probably in 1000-2000 shares..that why the SP is kept falling..lol

[mistaTea]

Did you think they'd put the cash under a mattress?

At a certain point the shareholder value added from building new villages (you call it critical mass) will be less than the value added from investing it elsewhere, at which point you'd expect them to do something else with the money.

The reality would be slowed development as demand for units is growing.

Opening line not necessary.

What they might invest in beyond building more units is interesting. Not sure that would be in line with investor expectations versus expanding the dividend.

What do you speculate they would invest in?

[SailorRob]

You mean if OCA decided to become a Berkshire Hathaway after they could not reasonably continue building more villages? And used the resident loans to buy other businesses or part of other businesses?

In that case they could continue investing ‘forever’ perhaps and add value … not something I had considered before.

I suspect investors will want a bigger divvy though at that stage…even though dividends are sh1te. In most cases I would prefer a buyback.

Please read mavericks post that I reposted this morning.

He assumed just a 5% return after development stops...

[Daytr]

Daytr here thinks the interest free loans and the float are seperate concepts.

No Daytr, you do not get it. You've shown that in this post alone.

Go read some of SailorRobs/Baa_Baa's earlier posts + the report I reposted a while back.

Nope, you just made that up.
I separate them, because one doesn't exist.
Free loans wanted! Come & give us your money for free.
But hey so it's free so I get nothing in return?
Oh no, you get a villa to stay in rent free for the duration...

Sorry if I want to read fairytales, I'd rather they be about giants & beans. Oh sorry, they are one in the same.

[Daytr]

You mean if OCA decided to become a Berkshire Hathaway after they could not reasonably continue building more villages? And used the resident loans to buy other businesses or part of other businesses?

In that case they could continue investing ‘forever’ perhaps and add value … not something I had considered before.

I suspect investors will want a bigger divvy though at that stage…even though dividends are sh1te. In most cases I would prefer a buyback.

Yes it's a big assumption on the float based theory, but there is no evidence to prove they will just grow a pile of cash & turn into an investment vehicle That's a giant leap of faith on how SailorBoy makes $100M BS.

It's far more likely they just restart paying out dividends.

[SailorRob]

Yes it's a big assumption on the float based theory, but there is no evidence to prove they will just grow a pile of cash & turn into an investment vehicle That's a giant leap of faith on how SailorBoy makes $100M BS.

It's far more likely they just restart paying out dividends.

They can't, it's not their money to pay out. Has to stay within the company, most of it anyway.

[Cupsy]

Yes it's a big assumption on the float based theory, but there is no evidence to prove they will just grow a pile of cash & turn into an investment vehicle That's a giant leap of faith on how SailorBoy makes $100M BS.

It's far more likely they just restart paying out dividends.
Just read SR previous post, which answered my question