Originally Posted by
Baa_Baa
Ok, love the optimism, but I'm going to lob the bomb into the room. Look forward to your replies. (great to have you back Ferg, Mav)
I think the 'elephant in the room' is the abysmal EPS since IPO. It is indefensible. Notwithstanding the share price and market cap, there's a message being sent there by 'the market', and keep in mind there's big insto/funds money behind this, that they need to show a return to their investors. They can't though. OCA returns nothing to investors right now.
They can't, and don't show that return to investors, and it got worse with Div's being cut, EPS and returns has bascially dissolved into nothing. Sure, it's short-termism but that market sentiment decides the market cap, and it's saying "show me the money"! So how are they going to do that?
Investors, shareholders, have not and are not being rewarded for their commitment of capital to OCA. We might like it as we can buy OCA at multiples discount to all metrics, but NZ investors in the majority are passive and rely on their financial advisor/broker to recommend investments that return earnings to them.
Sure, we can accept all of the OCA strategy and aggressive developments and growth ambitions, and obfuscated financial reporting like unpat and masked cashflows, but what we eventually cannot (should not?) accept as investors is a flatline EPS, and now no returns to shareholders.
Like you can get 6+% compounding just by putting your money in a bank TD, so why would you 'invest' in a RV that pays out nothing, has no rewards for investment? Unfortunately many think like this, they just take advice and get out of no-return equities and put it in TD's.
OCA has to show us how they're pivoting to the new norm. Where they rationalise developments to reduce capex, sell their excessive (obscene?) stock of property, unload a few remaining unwanted villages to get their debt a bit lower before it expires and reverts to high interest, restores healthy cash flows and restores returns to investors. Some transparent and understandable financial reporting might help as well.
Until these things happen, instos and funds will divert their big money elsewhere, where the returns to their customers are a lot better. It could take a while to restore investor confidence in OCA, not everyone has a 10, 20, 40 year horizon.
Truth be known, probably bugger all have that horizon, and OCA is a dud investment until they start returning EPS to their investors.