I have a lot of respect for the work and analysis you put in too mate but I just want to highlight four key things about the headline growth numbers you've posted above.Quote:
Note these estimates are before the tax changes last week:
UBS project underlying profit of $66m . Up 33.3% from their FY21.
Forsyth project underlying profit of $61.1. Up 22.7% from their FY21.
Credit Suisse project underlying profit of $56. Up 30.7% from their FY 21.
I project underlying profit of $66. Up 32.2% from my FY21. Maverick
Firstly, as you've pointed out all these forecasts were in the market before last weeks bombshell announcement. Its inevitable they will be revised as they are predicated upon rising house prices.
Secondly FY21 is just 10 months and FY22 is 12 months so the growth shown is artificially exaggerated by 20% simply due to the longer financial year in FY22.
Thirdly FY21 included lockdown periods in Auckland (where OCA have substantial numbers of villages), in August 2020, February and March 2021 so if FY22 proceeds without lockdowns the unhampered trading period difference is more like 25%, 12 months in FY22 v approx 9 clear trading months in FY21. This further distorts the headline growth percentages you note
Fourthly - All the brokers are accepting at face value Earl's outlook statement regarding their wages costs growing from FY21 in line with MOH care fee increase when the company has a 4 year history of them growing at 7.3% v about 3% annual increments in the ministry of health care fees. My experience tells me that reigning in wage cost inflation is much easier said than done and if wages costs go up by just 2-3% per annum more than what the brokers are modelling (historically more than 4% higher) that eats away a substantial part of the profit growth.
I think the fortunes of OCA's share price will be dictated by the real estate market this year, just like it was last year. My guess for the near future is that the real estate market will correct downward and take OCA's share price with it.
The share price was $1.39 on the evening before the tax bomb was dropped. It closed on Thursday at $1.26 a drop of 9.4%. I think that's quite a rational early response to such a major policy change especially when that change opens the real prospect of further reform.Quote:
I think OCA`s tokenism of throwing a small portion ($20m) of shares to existing shareholders at a guaranteed lower price ( 2 weeks later than the $80m) has temporarily messed the rational market function up here. Maverick