2. Why OCA?
Put simply I think OCA is a great business selling for dirt cheap.
The great thing about the RV business model is the generation of float. Float is the cash that the retirement villages receive from the customers through an occupational rights agreement. This cash is then reinvested back into developing more property, where they can continue building the float up as well as making a profit through deferred management fees. Float can be viewed as an interest-free, non-callable loan that will never be paid down.
https://lh7-us.googleusercontent.com...YE1-nOK7h9C5OY
CAGR of 15.3% growth since 2012
CAGR of 20.8% since 2017
There is a large number of unsold but finished property that are being sold down, along with property constantly being developed. Conservatively let's say the float can continue to be grown at 15% P.A for the next 10 years, with a return on capital of 4%.
Via a spreadsheet I have calculated that in 10 years a sum of 1.3 billion will have been earnt, discounted (10% p.a) to 826 million. Plus it would easily go for a P/E of 15, which would go for 2.9 billion or discounted to 1.2 billion. Overall, I estimate that Oceania has a NPV of at least 2 billion calculated using extremely conservative estimates. There is so much margin of safety at these prices it’s ridiculous.
3. Why only OCA in the RV sector?
Mostly because OCA is/was the cheapest in relation to both float and equity, and I figure no one RV has a significant edge over the other and I imagine their growth should be somewhat equal.
I can’t seem to find it but I had calculated a price to float/equity ratio for all the companies to see which was trading at the steepest discount. From memory it went OCA, ARV, RYM, SUM, RAD, with OCA being significantly cheaper than all others. RAD had a horrific capital structure when compared to the rest.
This is a very basic overview of my thoughts on OCA, there's alot more that could be discussed like insider ownership.
I hope my post generates some healthy debate, If you think I’m wrong or right tell me your reasons why!