Thanks also for sharing Maverick much appreciated.
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Thanks also for sharing Maverick much appreciated.
No disrespect intended mate and you know I have always been appreciative of your input on here BUT, you have consistently been too optimistic with your underlying profit forecasts. We hit over 800 cases today and its quite obvious that now that schools are back with vast numbers of unvaccinated kids spreading it to their parents and grandparents case numbers will be in the thousands per day before very long at all, perhaps by the end of February.
OCA faces a huge number of challenges in this environment and many millions per annum in extra Covid risk prevention costs which the Govt have staunchly refused to reimburse them for. Further, the Govt are not even funding basic care properly, (the 4.8% care cost dispute).
In this environment I think they will struggle to do $50m underlying profit for FY22 (even aided and abetted by the change in depreciation accounting treatment for PPE) that's significantly less on an eps basis (with all the new shares on issue) than pre covid.
OCA do face the stiffest headwinds of their sector from the prevailing staff and Covid care cost perspective due to them having the business model with the highest level's of care. Further, I have previously clearly articulated my deep concerns about the rampant rise in human resource costs within the company and this is systemic multi year issue that continues unabated and uncorrected.
They seem cheap with the discount to adjusted NAV but they are cheap for good reasons (not the least of which is underlying eps going backwards since they listed many years ago) which is an appalling situation for a company that was supposed to be past the point of inflection in 2020.
If they get back to their listing price of about 80 cents then they would be cheap.
Mark my words mate, they will remain the runt of this sector until they can prove beyond reasonable doubt that their business model of high care actually works for shareholders. Until they can prove they can grow underlying eps year on year on year they will never get to a PE of 20. You earn PE's like that the hard way with multi year proof of earnings growth, they are not grated to you.
I don't think the extra multi millions of Covid costs per annum and all the other headwinds imposed on the business by Covid are going to end anytime soon.
Disc: Now down to a 3.5% portfolio allocation which has been rebalanced due to the natural dilutionary price process accorded to me by the market ...not in any hurry to top up.
Not intended as a dig at you as quite frankly I think you do extremely well to be as objective as you are, but since time began and Adam was a boy its easier to be more objective when you either have no shares or just a very modest holding. I know once I go over 15% for any one stock in my portfolio...my objectivity becomes severely compromised.
Thanks for your insights. I feel that the price depreciation comes in part due to lack of building materials. Summerset can’t even source concrete for some of their works and GIB not available until May-June. This is a nationwide shortage. If that were the case, can you work out what the loss of increases profit would be due to a halt in expansion for a year?
I’m a holder, but like many looking short term is showing its frustrations. Hopefully 2023 proves to go better
Plus then there is Omicron and how it could affect villages
For what its worth on the last investor call with half year results in late November they said that their construction contractors were managing supply chain issues quite well with limited impact...but that was more than 2.5 months ago so the current situation could be worse.
Beagle, I very much appreciate your insightful and countering opinions. It is most healthy and why the forum is here, to debate.
Yes, I have indeed been too optimistic several years ago But to be fair they were different days. I was as green as and the only financials you had to know then was all retirement shares went up about 20% P/A , Couta had a bullet proof theory of 1 Rym=2 Sum=5 Oca and in fact we all thought “deliveries” meant “sales”…and covid didn't exist.
I've applied an intense focus since then, learnt and worked an enormous amount. To be transparent and open to scrutiny here for many reports now I've preannounced my categorized expectations publicly here and they have been pretty spot on.
You have a fantastic nose to smell trouble brewing or a feed for the taking and taking the correct action. I also applaud how you are willing to change direction often multiple times and notify us here as you do. Often to the displeasure of fellow posters.
From all of this I think it is clear that where we differ most is you are far more focused on 6 months ahead and you're damn good at it. Best summed up as a momentum trader while I'm a “buy and hold” value investor which can take years for sentiment to change. Also the tax free way. As an example I've bought sizeable amounts of RBD at $.60c, THL at $.42 SKL at $1.25 and HLG at $3. All of these took a couple of years at least to go from out of favour but the results speak for themselves. (OCA meets the selection process perfectly , but covid has extended the out of favour time frame)
You may be well right about the costs and effects of covid for the next while. I do believe I've factored in enough though, but I'm ultimately looking through it anyway.
Government funding will take care of itself, it has no choice. It can't get much lower without closures. I certainly haven't heard of anybody actually opening a rest home these days. OCA are currently down to making about only 2% profit on all the govt care revenue they receive after costs (when their extra bed DMFS and PACs revenues are removed). Private rest homes without these fandangled contracts must be all but non profit enterprises at this stage. I'm saying this is the bottom.
The $ numbers on my earlier post demonstrate that care profit is not the real source of profit growth anyway.
Ironically , OCAs side hustle nurse training programme makes almost the same profit as their ENTIRE care operation ( again , without including DMF or PAC extra revenues)
Supply or labour issues have not proven to slow OCA at any stage. Awatere is about to open in advance of its intended date. Again with my horizon , it will all sort itself out soon enough anyway.
I don't in any way want to come across preachy or an OCA salesman. I just wanted to put out some fundamental facts that suggest everything's going as planned, other than 5 months of SP falling badly.
OCA is on track doing what it said it would. If absolutely nothing was different right now other than the SP was $1.60 we'd all be saying what a marvelous company it is and what great investors we all are.
Keep your counterpoints coming Beagle, they are very welcome. I really think over both our 2 different time frames that we just might end up both right.
They should have their supply chain sorted with the existing contracts. I would gob smacked if existing builds had issues considering those items would have been pre ordered months ago. The issues are going forward and how the manufacturer's sees there working arrangements with you and how they continue to supply remainder of their clients. There is just too much demand and not enough hours in the day to produce whats required.
I have asked this question before on a number of occasions and to me it is an important question particularly in the case of OCA. Most people on this thread view this share as undervalued and in the long term should be a good investment. Brokers value the share at higher than current price and I guess institutions would come to the same conclusion. So the question is who is driving this market? Is it the technical analysts that see a squiggly line trending down and Steepen the curve by selling in the expectation they can buy in the future at a better price or are there some “wise heads” who really understand what’s going on.
Known Covid costs and issues, sentiment and fear of the unknown is what's in the driving seat at this stage Brain.
Fear and Greed have always been the biggest motivators. Greed's time will come again in due course but that time is not now or anywhere close just yet, in my opinion. Wait till we get many, many thousands of cases a day and its impact on this sector....you won't have to wait long.
It was always a case of once the schools went back and hundreds of thousands of unvaccinated kids started mixing case numbers would grow exponentially. Overseas schools make kids take RAT tests several times a week. Here, the current kindergarten incompetence of central Govt around the whole RAT matter means we are seeing just the very beginning of case numbers absolutely exploding.
Its virtually impossible for the share prices of this sector to head north in that environment.
And who would have thought a pandemic would come along and **** up everyones medium term investment plans eh? But it has been two years now and we are into the final phase, albeit scary numbers about to come.
Transpose that reality into an investment thesis and you're looking at a massive discount to N(TA/AV) already. Anyone with a longer term horizon will be capitalising on a dirt cheap future.
The really savvy will be patient waiting for the the 2nd Covid low. The first was under 40 cents.
I am not sure you can be sure that we are in the final phase of Covid. New and more dangerous variants are a credible and near and present threat in my opinion. If I was confident we were in the final phase I would be warming up the truck engine getting ready to back up the truck....but I am not even looking for the truck's keys at this point.
Picking the next low is not going to be an easy thing. Some good TA skills like you have and I have tried to learn a little about over the years might come in quite handy ;)