OMG Ronaldson… I am in awe of your willingness to actually do proper research. I love it!
That's ultimately why I still stay on the forum, to get other intelligent people's perspectives.
“It ain't what you know that kills you…it's what you know, that just ain't so...”
So let's unpack just a little bit of your handful of excellent points.
Here's the graph again from Craig's
https://lh6.googleusercontent.com/AT...tAMnIXL5FXlNok
The problem with OCA is that it's sooo multifaceted. Almost no one knows what to do with any new information and its relevance to the bottom line. So general analysis retreats to “Black Rock is buying so OCA must be good" or "the share price is still 80c so OCA must be bad"…. Given the short term horizons of most investors including the fund managers, that way of thinking is probably sufficient anyway- but just for the short term.
Due to OCA`s complexity, here, I am only talking about the rest home type basic care profit part of OCA as per my recent run of posts.
IMO the graph above is brilliant. You correctly analyze DHB fee rates going up c.9% recently, then we know somewhere in there is the promised - but not fully delivered - pay parity, then we also know a lump some was promised by GOVT last November ( was that part of pay parity?)but delivered 31 march FY23 but probably not included until 1 day later into FY24. Then nurses get a whopper pay catch up.( I have not mentioned factors like smashing down existing care beds and cold starting new care suite blocks) …Get my point…it's impossible to figure out - God knows I've tried.
That's why I'm enamored by Craig's rather brilliant idea of encapsulating the aggregate staff cost component into their graph above relative to current GOVT funding.
Tying down the funding to the minimum wage works perfectly as that is the base rate of all regular wages. i.e. An electrician's wage for example is set to the minimum wage + plus $5/hr etc.
So the graph isn't saying all rest home staff are paid the minimum rate . It is using that wage setting cornerstone to measure rates of “ wage change” for ordinary people.
Sure, the execs of OCA`s aren't tied to this base rate but their salaries will come into other areas of OCAs accounts corporate or village development . (as an aside also like interest costs that you mentioned which wont effect any of the extra care profit increase ).
Then Craig's starts off their graph as indexed to a zero start point. So no one gives a rats-arse what that nominal number might be other than its the neutral start point to see any divergence there after. We can see from 2018 the underfunding from this moving below this wage baseline ( representing the aggregate of all ordinary peoples wages) starts to get well underway to its chronic level in CY 2022. ( that's equivalent of OCA FY23).
In my mind , this graph condenses the impossible into a simple picture , all the tech stuff we both can dig infinitely deeper on and never arrive.
I seriously believe this simple comparison works beautifully when coupled with the known ratios I have previously tabled ( of OCAs profit margin on the DHB fees) is simple, reliable and logical. The proof of its accuracy will be FY24 when this idea will prove correct or nonsense.
As the direction of GOVT underfunding changes direction for the very first time in OCAs NXZ listed life span. And a significant change too.
If I and Craig's analysts are right my maths say that's a meaningful windfall of about $8m-, if I'm wrong then nothing is lost as we are only talking about EXTRA care profit on top of all the other simultaneous profit increases I see coming.
That's why you and I invest, we - and all on Share Trader bothering to read to the end of this - try to make sense and see what will happen before it happens.
You would have heard the old story about market efficiency - where 2 people walk past a $20 note in a bush( let's make that $100 to modernize the story) and one says ..oh look $100 in the bush , the other replies …no it isn't , if it was someone else would have noticed it.
Love your work Ronaldson, thanks for your most excellent posts.