Originally Posted by
Maverick
My disappointment with this result was so great I actually sold quite a sizeable portion last week. After a brutal year of SP punishment, 3 relentless years of Covid, care funding cuts and an expected profit rise that never eventuated,I found this result the very last straw.
The sole problem of this result was new apartment sales. Everything , and I mean “everything” else about this report is excellent.
-Resales going higher in price and volumes than anticipated.
-Care suites gaining excellent traction and market acceptance at higher prices. OCA had pre-sales for the first time. ( do not believe the nonsense out there that they ever had 450 empty care suites - that misinformation has always been utter rubbish)
-A meaningful increased Govt DHB rates to be captured in HY2 ( but missed for 1HY). This has nothing to do with the pay parity deal.
-The 2 very substantial developments are still due on time in 4 months with strong pre-sales.
-Excellent resale values from recent acquisitions.
-Very high embedded value underscoring future profits through DMFs and resales.
-Easing of staff pressures.
-I personally like them intending to sell 10 villages that they recognize can't have value added.
You name it, the metrics were all at the top of expectations except 1 - “new apartment sales”.
I have been clear that this report would see good profit growth due solely to a jump in this. This did not materialize . They had nearly 160 apartments to sell , with this large opening stock they should have sold 50-60 ... boom, would have been a great result. But in reality they only managed 28, WTF?
I've since had an intense week studying this result. Scouring the webcast recording multiple times, same with the ARV audio conference, the RYM result , spoken with OCA at various levels and I believe I've got a good understanding as to what went wrong and where OCA are currently at.
From this work I have u-turned and have since bought those sold shares back, albeit at a higher price. I have concluded for myself that the poor sales were an aberration with acceptable reasons behind it and that they were one offs. I personally do not believe the issues are systemic and sales are now back to their normal patterns.
Now I don't expect anyone to take my word for it, nor should they, but I'm saying that even with my original mindset of a portion of capitulation and acting on it, I have found satisfactory explanations to cause me to u-turn back to highly positive once again. My frustration with how slow this process has been is palpable, probably like everyone else's.
Selling or holding OCA really comes down to one issue now with all the other areas going very well from this report... will new apartment sales recover?
Now I'm not trying to sell anything to anyone, I completely understand anyone who has given up on this company, if you can’t quantify for yourself what’s ahead why wouldn't you? I just feel I owe folk an update after being so optimistic about his flat result.
FWIW, like Winners recent comment, I too maintain my FY profit of up around 15% almost unchanged. The delayed HY1sales will re-emerge to some degree in HY2 and the other improved metrics go quite some way to offsetting the 1HY hole. FY24 will still be dynamite. Emotive language but Waimarie with its substantial presales is going to redefine OCAs P&L. I expect no completed sales for 2hy23.
One last thing, The analysts ( from their Q &A on the webcasts to both OCA and ARV) really do have a good understanding of where OCA is at. This seems underscored that OCA didn't get slammed after the result- it could have easily been trashed like RYM was.
Even though RYM underlying was up 44% , ARV about 10% and OCA 0% they seem to understand each company beyond this basic moment in time measurement. I think I'm even seeing buying support for OCA for the first time in a bloody long time.