I agree 100%. If you're going to normalise profit for the effects of C you should account for all factors.
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And for every buyer at 74c there is a seller... Is this intentional price suppression to keep the price down so that those that need to buy for their MSCI cap thingy can do it at a cheaper price?
https://www.bing.com/videos/search?q...tail&FORM=VIRE
Its been an interesting 9 days to say the least. I got a moderate fever on Wednesday last week that persisted for several days. By Sunday I worked myself into quite a state mentally, physically, emotionally and psychologically. I'm 60 next year and have high blood pressure so definitely in the at risk group. I went and got tested on Sunday. By this Monday I was felling considerably better, temperature had come down and the negative test result that came through on Monday afternoon was a considerable relief.
While staring into the abyss of "what might happen" for days on end I saw some interesting things. My whole life ran before me while in fever and I saw some things I don't like and need to change....perhaps I will share more on this another time, maybe not.
Anyway...I have had quite an epiphany on this stock which I thought I would share.
Going into the early stages of a global recession one really must differentiate between companies that provide needs based services and those that provide wants based services. The needs based (predominantly Govt funded model) OCA use is in my opinion, by a significant margin, the most resilient of the business model's employed by those in the sector. I think they are very well positioned to weather the Covid 19 storm and to continue the transformation of their business model towards care suites and generate enhanced returns over time
With interest rates plumbing unchartered territory you can afford to have almost unlimited patience receiving a dividend yield of 6.6% which I think is sustainable and will grow gradually over time. Their cash flow was up nicely at a 21% increase for the half year and at 74 cents this is on a historical underlying PE of just 9.0 based on last year's result making OCA on an earnings basis the cheapest in the sector, cheaper even than MET.
Looking ahead 86% of their future developments are already consented and they have stated they can slow down their development model without penalty.
Future developments will be undertaken in a "prudent" manner. Earl is a smart guy, holds both Law and Commerce degree's. They have a good board and many have large stakes in the company. The company has an excellent reputation for late stage care. This really matters a lot to me. Its not all about money.
There is a solidness to their operation I really like...I can't articulate if, it just feels safe and solid to me.
Looking into the abyss taught me that all vulnerable people really want is somewhere warm and comfortable where they are cared for really well and treated with respect and dignity. Previously I thought Earl was not commercial enough for me, too soft and caring. Now I feel this is actually what I am looking for in a CEO and I think he's the perfect guy to lead OCA. Previously it worried me that OCA put residents first, second third fourth and fifth and shareholders came a long and lonely last.
Now this is the sort of company I want to invest in again with gusto. I guess when a man stars into the abyss the abyss stars into him and you find your character.
This is the sort of company ethos I admire, where residents welfare is their primary consideration and always will be.
And finally a thought I had on the possible MET takeover. If the MET takeover fails this is unaffected as they have very different business models and the 6.6% yield continues and I can fully understand why Maverick is as happy as a pig in mud to just sit there and enjoy that yield forever and a day.
If the MET takeover succeeds, OCA will be the only stock in this sector left trading at a significant discount to NTA and should get a nice boost as investors look to reallocate their invested funds.
I had another look through the half year result today and the recent investor presentation. Very solid results and they are very well positioned. I am sure I don't need to post links to those reports. Finally, Macquarie have gone. I guess we were right all along, "you can't have too many"...just the timing was wrong.
Disc: I have been buying a few in recent days.
V sorry to hear you've been through the mill Beagle, good to hear you're recovering & obviously a massive relief to test negative.
Appreciate your excellent post.
Thanks Beagle - that is a solid read and also glad you are well.
Top post.
Beagle ... you poor bugger but glad you over it. Just take care of yourself now you are an old bugger.
I wouldn’t mind if Oceania profits went backwards for a few years and they paid no divies.
Lockdown reflections are good - like I keep reading this bit I found and agreeing with it:
So I’m all for Oceania maximising long term benefits for all us - stuff this maximising shareholder profits stuff in next year or two .....even if you have a few years without dividendsQuote:
The world in a sorry state today because guru economist Milton Friedman and his followers said “the only responsibility of business is to maximize short term profits, regardless of the social and environmental costs.”
We’ve got to change that “Maximize short-term profits, regardless of the social and environmental costs” attitude to “maximize long-term benefits for all people and nature.”
Beagle, just one point I want you to be clear on though.
OCA do not have a cure for schizophrenia.
PS glad you are good.
Mods
have you considered insuring his life?
Thanks folks. No experience in life is wasted especially the ones that force you to reevaluate what's really important.
On the dividend thing Winner. I see no reason why OCA can't continue their dividends. Providing the very best standards of care and rewarding shareholders for their investment are definitely not mutually exclusive matters. (To illustrate my point this has the highest yield in the sector at 6.6%, ARV 4.3%, SUM 2.4%, RYM 1.9%, and MET 1.7% but arguably amongst the very best standards in the industry for care).
LOL Peat, I'm okay...but is was really scary.
Crikey Winner you really hit the dividend hound while he is down. No div's perish the thought!!.
Beagle my best wishes for a speedy recovery. Remember the 'health is wealth' mantra.
FWIW I've stocked up on a few OCA this week. A rare incursion into div/yield territory for me. Interesting times.