Weird day - OCA have some relatively good news, SP down 2%, RYM have no news, SP up 6.7%....
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Weird day - OCA have some relatively good news, SP down 2%, RYM have no news, SP up 6.7%....
UBS just upgraded their target price from $1.50 to $1.55.
obviously due to the recent acquisitions.
Pretty heartening especially coming from them. I've seen their 50 page report when they commenced OCA coverage about 1.5 years ago and it was the most comprehensive and thorough from all the reports of seen to date. It specifically dealt with OCA rather than just the more generic retirement village stuff .
I rated UBS very highly after reading it.
For Bars Preview.
Oceania Healthcare; OUTPERFORM — NZ$1.65 target price
Recent acquisition of two villages
OCA announced on May 9th that it has entered into agreements to acquire two premium villages; (1) Remuera Rise in Newmarket,
Auckland, and (2) Bream Bay in Ruakaka, Northland for a total consideration of NZ$57m. We will factor in this acquisition into our
forecasts when OCA reports next week and we receive more information. At face value, we view this as a sensible acquisition which
adds (1) mature cashflows and earnings potential through the Remuera Rise village, and (2) staged, large scale, broad acre
development opportunity through the Bream Bay village. OCA estimates that the deal will be high single digit accretive to FY23
earnings from the debt funded acquisition. As part of the release OCA has increased its debt facilities from NZ$350m to NZ$500m
and extended its facilities to 2027. We believe this to be a clear positive and reduces uncertainty around OCA’s debt costs over the
next five years. However, we will look for more details on the call on what OCA's debt costs will be and where the interest rates have
been fixed.
Outside of the general focus on care costs and interest expense, we will be particularly focussed on care suite DMF and build rateexpectations for FY23 and FY24 for OCA. We expect care suite DMF to grow +30% organically and see this as the number one keydeliverable to support the stock long term. OCA has guided for a build rate of 300 units and care suites, higher than our medium termforecasts and we will look for more detail on exactly how it expects to achieve this build rate.
Craigs as at 29/4/22 (pre new acquisitions) had an average target price of $1.51, range of $1.22 to $1.81.
Quote:
We see OCA as a complementary holding in the New Zealand aged care/retirement sector, particularly for larger portfolios. It has a larger share of aged care than other exposures in our coverage list (Ryman and Summerset), meaning it is at the more defensive end of the market. We see the potential for upside and a higher return profile if management can effectively execute its brownfields development strategy along with recent acquisitions and increase contribution from retirement units, care suites and the overall portfolio to a more premium mix
All these brokers with target price ~50% above todays spot price.. why arent these guys plowing their clients money into OCA?