Originally Posted by
Beagle
OCA's care as a percentage of its business model is much higher than Arvida's and OCA reports for the period ended 31 May 2020 which encapsulates the full period of the lockdown and its effects in March, April and May, before we emerged from lockdown in early June. Importantly care suites were deemed an essential service throughout the lockdown.
Taking into account both direct costs and lost profit from inability to sell independent living units, I remain comfortable with my earlier assessment of overall effect $10-15m and nothing in the Arvida analysis has surprised me or caused me to amend my best guess. Importantly we did emerge to level 2 lockdown late in May which will have enabled some independent units to settle before balance date. What I have not accounted for is the slowdown in construction caused by Covid 19.
I remain very cautious about expectations regarding this years underlying profit but its this very thing of a high percentage of care that fills me with so much enthusiasm for the long run as they build heaps more care suites and they churn them every 2-3 years there is such excellent potential for profit growth down the track. This is a long term investment and my caution is those hoping for a quick buck could find themselves frustrated in the short term.
Disc: Holding long term for yield that will grow nicely over the long run.