I am not talking about the development margin, I am talking about the cash in the door early. Not the DMF... but the cash.
We are talking about the same thing.
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Recent developments in the listed retirement sector are showing the kings who have no clothes.
OCA does not have to reduce debt, it is the only listed RV that has tons of low very low interest rate debt long dated. (and no I'm not talking about ORA liabilities that the company never has to generate the cash for repayment), I'm talking about development debt. But it seems to have fallen into 'analyst' sentiment that debt is too high, cashflow is too low, build rates are too aggressive, land banking is too soon. I say bullsh1t to all of that. Have you ever seen an 'analyst' who would be a better manager of the company that they analyse? Yeah nah.
This is a common theme lately, and imo it's well overdone, turning into alarmism. The most alarmed are those who don't have vested interest in any of them, and most don't seem to understand the business model either. Sadly those same people seem to have the most to say about RV's.
ARV has gone into distress mode, that was was a very concerning imo message to market that they will consider any pathway out of their current situation, including merging or sale! Like Balance said generally, this looks like a property developer who got caught out by the property market downturn, is leveraged upto the hilt and is distressed and likely to hit the wall if there's not a pivot to some other financial support.
RYM story is well known now, they have screwed up with their US debt, been forced to exit it with a massively dilution cap raise and are still marginal on debt coverage, cashflows and development build exposure. Just acknowledging the shift in accounting reporting is not going to shift the dial for RYM, they're in trouble and it's obvious. It would be a disaster if the largest RV in NZ came fully unstuck, but it's possible they will.
SUM continue to be the apparent sector darling, but they're hiding behind sector sales volumes that mask the underlying financial strength which is just as exposed as the other development intensive companies. Notice the flatline shareprice, the market is saying yeah good reporting but not so sure about whether to believe it all and how about the future?
Metlifecare and Bupa aren't listed. I suspect they are both feeling the pain as well.
Combined, these RV's hold a 48% share of the village market, which is almost two-thirds of all the country's retirement living units.
It is certainly not in the best interests of NZ for any of these RV's to fold, despite which ones you personally prefer to invest in, if any.
Spme chit chat in the other retirement operator forum that is specific to OCA.
I have just done some preliminary numbers on OCA.
They are trading at a 60% discount to NTA. How is this even possible????
I get that. But does that not imply that the valuation (and audited) they use is actually very wrong. Should the auditor not pick up on that?
It makes a mockery of the whole NPAT as well. Annual revaluation creates profit/loss. It is a sad indictment on Accounting Standards et al.