Can we get this page back to discussing Oceania? There's other sites and even a thread here on ST for general raving. Thanks.
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Can we get this page back to discussing Oceania? There's other sites and even a thread here on ST for general raving. Thanks.
What do u want to talk about? The result out....it is what is it....SP will trade around 80c ish...till the next result
Certainly no predictions from me about the real estate market.
I have absolutely no clue what will happen to it and neither does anyone else.
Just highlighting that a return to 'normal' so very soon after what we've been through over the last 20 years isn't a clever base case.
Only so much of GDP can go into such things for so long before causing massive structural issues in an economy.
Courtesy of posting by Shareguy on the other forum :
Craigs latest "You can't eat NTA"
OCA delivered a flat FY23 result, with uEBITDA up 5% to $80m (or c.2% organic growth, after backing out acquisitions). OCA's earnings have been broadly flat for five years now as it upgrades its portfolio. Most key metrics deteriorated, with new sales well below our expectations, and the level of unsold inventory almost doubled to $374m over 2H23. Net debt increased to $551m, with gearing up 780bps YoY to 37%, above management's target.
Course correction
OCA's key problems are twofold: i) the existing assets generate negative FCF and ii) its new villages have been slow to sell. Indeed, based on the run rate of sales in 2H23, it is taking OCA around 2 years to sell units. To their credit management have acknowledged the problem and are undertaking correction actions including: i) lowering the build rate to 200-250 units pa ii) lowering the capex intensity of the build rate by pivoting towards broad acre sites iii) selling assets, with over $10m sold to date and c.$50m to go iv) lowering the dividend payout ratio from 50-60% to 30-50% (payout was 38% in FY23). These actions should see net debt start to trend down from 2H24.
You can't eat NTA
Trading at 0.6x NTA, OCA has gained some popularity amongst value investors, but as one seasoned fund manager once told this analyst "you can't eat NTA!". We are cautious on the notion OCA is a "value" stock and caution further that not all NTAs are created equal. We highlight OCA's free cashflow from its existing portfolio (that is, operating cashflows less new sales revenue and growth capex but ignoring interest) was -$11.8m in 2H23 alone. While a slight improvement on pcp, OCA's cash generation is not supportive of the reported book value of its assets in our view. Indeed, as we highlight in the note, OCA's cash generation from its existing assets is significantly worse than RYM and SUM relative to its asset backing. In short, the lower cash generation of OCA's existing assets supports the shares trading at a deeper discount to reported book value than its larger peers.
Upgrade to Neutral, $0.90 TP
OCA is now taking corrective action which should see net debt start to come down from 2H24, at around the same time housing market conditions start to improve post the RBNZ's pause yesterday, while margin from The Helier development should help OCA deliver earnings growth over FY24/FY25 (CIPe +14% FY24/FY25
Craig’s cautious on the notion of OCA being a ‘value’ stock
But I suppose what represents ‘value’ depends on an individuals point of view and no doubt many if not the majority see OCA as a ‘value’ play …..cheap as