Originally Posted by
Maverick
After Beagles comment on where the brokers might redirect the MET money. I believe that his quick comment was prescient and worthy of further consideration.
$1.4B MET is showing up in peoples bank accounts on the 3 November, no doubt what so ever.
Where is that free capital likely to flow? It will almost certainly be highly influenced by the recommendations to Jo public and institutions by the brokers, these recommendations all being based on the analysts reports. I checked out 4 traders' summary of analysts opinions on all the NZ retirement operators as suitors.
In a scale of 1-10 (1 sell-10 buy)- Worth noting SUM and OCA have only recently been strongly upgraded, the RYM and ARV have remained unchanged for some time.
RYM 4
ARV 4
SUM10
OCA 10.
If $1.4B was all fully redeployed back into the sector on a pro-rata basis OCA would receive about 7.5% =$110m .
Obviously it won't all go back into the sector. However it would seem reasonable OCA and SUM will get more share than RYM or ARV of what is. You can actually already see the sway of the recent changing analysts opinion working through the SP charts on these 4 companies. Over the 2-3 weeks since the upgrades have shifted SUM and OCA up and RYM and ARV down. (all this without the influence of the impending wall of cash yet in play).
The new money heading to OCA will start flowing almost immediately upon arrival and then quickly over fairly short time frame. ( This is over a 1/3rd of the size of the massively disruptive MAQ sell down of $300m earlier this year) but this time around its buying pressure as opposed to selling/dumping pressure. All long term OCA holders here know full well how long the tails of both MAQ sell downs lingered over the share price.
One thing I've learnt the hard way this year is how powerful the supply/demand relationship is on a share price and how it absolutely trumps any company fundamentals. (think OCA at $0.38 cents.)
So, based on this, it would be reasonable to assume some sort of similar opposite an, this time, a positive effect of buying pressure that should easily last until the HY1 report comes out in late Jan 2021.
Now onto the fundamentals of OCA, ...It is well documented here that I am expecting a substantial profit rise in HY1 This should equate to about 50% greater than the 2 recent analyst reports expectations of about 49m annualized underlying profit ( similar to the last 4 years excluding covid costs ).
So these 2 immediate events lined up amongst the frothy general NZ property situation is all getting rather exciting, simply;
Scenario 1. a wall of money likely to boost the OCA share price followed up by a (IMO) substantial profit upgrade. Share price therefore heads towards $2.00 early-mid 2021
Scenario 2. If I “crash and burn '' and OCA only produce profit as per the analysts lowly expectations. (BTW, I`m not doubting my math's but it would be foolish not to at least consider it.) Then the share price will settle back down to about where its is now at $1.40 after the new cash injection works through. Around the mid-point of both brokers recent upgrades.
Not very often a nice opportunity like this comes along with very little downside risk,
“ Heads you win , tails you at least get your money back.”