(STRICT) OCA - Oceania Healthcare

Started by Benji, Jun 24, 2022, 03:46 PM

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Benji

Yesterday's AGM was full of positivism for the future. It is going to be really wonderful.
But they did not say how much profit to expect this year.

My friend says it is a good buy.
Investor on the Beach

Plata

Yes as usual all very positive. Although, I found it pretty telling they avoided using any per share metrics, if they did most of the metrics they allegedly did so well on would be flat year on year or worse.

Benji

Past is gone.
Maybe good future will happen now.
Plenty of positivism.
Investor on the Beach

Minimoke

Their builds are going well. Windermere is coming on really well.

We should spend a moment considering our public health system.

One of the problems it has is a never ending stream of older people who are no longer coping in their own home. It might be due to falls (but the person still relatively independent) or the onset of dementia etc and becoming unwell.

Essentially these folk go to Public Hospital. They get treated (and quite well) and then they get parked in wards for days until a care home beds becomes available.

Think about how our population is aging.

SP is currently hammered (along with every other financial investment vehicle) so could be a good time to buy if you think the overall market has bottomed out.

Disc: Holder

Beagle

#4
Quote from: Plata on Jun 24, 2022, 03:53 PMYes as usual all very positive. Although, I found it pretty telling they avoided using any per share metrics, if they did most of the metrics they allegedly did so well on would be flat year on year or worse.

I am sure they were all there yesterday at the annual meeting patting themselves on the back thinking what a marvelous job they are doing, all the while very conveniently overlooking that fact.

Waltzing

If it was a golfing round how would it score...not under par then?

Minimoke

Good to see this is a "stock" forum. It can cover views on both traders and long term investors. I am the latter

allfromacell

I'm not surprised to hear enquiries are up. NZs public healthcare system is under great strain.

A lot of elderly are a lot safer and would be much better looked after at OCA.

BlackPeter

Absolutely. Great demographic tailwind.

However - this tailwind causing a strain to our old age care system is a threat as well as a benefit. Good to have the huge demand. Not so good that politicians are able to modify the framework without the need to pay.

It just turns OCA (as well as any other retirement village providers) to political footballs.

Increase carers pay package, increase minimum wage without increasing as well governments pay per care patient and retirement villages are screwed.

Force retirement villages to take patients without the ability to ask for a (sufficiently sized)
 surcharge ... and retirement villages are screwed.

Change the taxrules - and retirement villages might be screwed.

So - yes, this can be an amazing field to invest with huge demand and huge opportunities.

However - our politicans can easily screw this up. In a way this is as well a high risk investment.

Discl: Invested in OCA. But try as well to stick to my diversification rules.

davflaws

Quote from: BlackPeter on Jun 25, 2022, 10:28 AMAbsolutely. Great demographic tailwind.


Increase carers pay package, increase minimum wage without increasing as well governments pay per care patient and retirement villages are screwed.

Force retirement villages to take patients without the ability to ask for a (sufficiently sized)
 surcharge ... and retirement villages are screwed.

Change the taxrules - and retirement villages might be screwed.


The "boomer bulge" has had a disproportionate effect on politics and  policy for the last fifty years. It will be another twenty before any government can safely ignore us. There is a reason that there are very few elderly living in extreme poverty and distressingly many children doing so. We vote in very large numbers.

Disc Ridiculously overweight and so far underwater that nitrogen narcosis is all that is keeping me smiling.

Beagle

#10
Quote from: winner (n) on Jun 25, 2022, 02:00 PMA very positive ASM the other day

Easy day for Brent Pattison (and Liz) addressing a group of contented followers - akin to preaching to the converted.

I note that 33% (77 million) of shares voted against increasing directors fees by $133,500 - suppose those shareholders are unhappy / disappointed / frustrated with the company performance over the last couple years

Very unusual to get a negative vote that high !  Does anyone believe that leads to any sort of Mea Cupla that what they have been doing isn't working for shareholders ?

A year down the track are they still simply accentuating the positive, something like "look we've sold XYZ more units and generated greater DMF fees" but overlooking the fact that earnings per share still haven't grown ?

As I've said previously on many occasions if sales and DMF's are growing but costs are growing faster then yes, they can say they are growing and management, directors and staff are happy to put their hand up for more pay rises based on that but shareholders and earnings per share....oh dear.

Does anyone seriously believe this has any hope with its extremely care heavy Govt underfunded business model (that's not been able to grow underlying earnings in the last half decade at all), of outperforming SUM over the medium to long term with its care light business model and proven CAGR of 33% per annum ?

If there's no hope whatsoever of outperforming SUM, (and to be crystal clear that is exactly my contention), then surely this is merely at best a trading stock and at worst a stock to avoid altogether.
Disc: No stake in this sector but when SUM breaks out its downtrend...

LoungeLizard

The business may (or may not) be well run but the aged care industry as a whole is seriously underfunded by the Government and facing staff shortages and cost increases across the board.Much like the Health sector in general. And although OCA and others are pivoting away from aged car into retirement units (particularly Premium units), this model is vulnerable to a declining property market and spiralling building costs. All up margins in both business models are getting squeezed from all angles.
I would say that OCA may have Benn oversold recently but I don't see it returning back to previous levels for quite some time. There's better defensive stocks offering better return out there.

BlackPeter

#12
Quote from: Beagle on Jun 25, 2022, 03:36 PM...

As I've said previously on many occasions if sales and DMF's are growing but costs are growing faster then yes, they can say they are growing and management, directors and staff are happy to put their hand up for more pay rises based on that but shareholders and earnings per share....oh dear.

Does anyone seriously believe this has any hope with its extremely care heavy Govt underfunded business model (that's not been able to grow underlying earnings in the last half decade at all), of outperforming SUM over the medium to long term with its care light business model and proven CAGR of 33% per annum ?

If there's no hope whatsoever of outperforming SUM, (and to be crystal clear that is exactly my contention), then surely this is merely at best a trading stock and at worst a stock to avoid altogether.
Disc: No stake in this sector but when SUM breaks out its downtrend...

Hmm ... I guess your comparative views on OCA vs. SUM are clearly older than this forum  ;) ... and one could say somewhat entrenched;

And sure - SUM was 5 years or so back hopelessly undervalued (we used to agree on that) and clearly took off since then. OCA always looked promising, but it still needs to deliver on its promises.

If you compare the SP developemnt - SUM did much better than OCA on a 5, 3 or 2 year comparison, while on a one year comparison they are only marginally better. Remember: Past performance is no guarantee for future performance.

This could mean that SUM now just caught up with its value ... and from now it well might move together with OCA and the rest of the market.

If I look at OCA at todays price (and use marketscreeners forward earning consensus) , then it has a forward PE of 8, a backward PE (10 years) of 12 and a forward Earnings CAGR of nearly 8. Not bad for a lame duck, isn't it? ... but than - sure, analysts are in predicting future earnings as often right as they are wrong.

Comparing that with SUM: forward PE is 10 (still good, but a bit worse than OCA), backward PE is 11 (slightly better) but forward earnings CAGR is only 1.5. Looks like that SUM might have already reached its earnings potential and OCA has still lots of headroom to grow.

I realise that you feel at the moment much better about SUM than about OCA, but with all due respect ... feelings for companies are a dangerous thing and they do have a tendency to change.

Based on data would I expect both companies to do well, but OCA even a bit better. Obviously - the politcial risks you liked to raise so often in the other forum are real, but I think they are quite material for both of them.

If our politicians screw up the sector (and they might), then there will be no immunity pill - neither for SUM nor for OCA.

Looking at the markets - sure, SUM offers more of a cruise ship atmosphere for its residents as long as they are well and healthy. However - just let one spouse of a couple needing care, than they both would have wished to go the OCA way.

I suppose this effect will over time as well impact on OCA's (positive) as well as SUM's (negative) earnings potential.

Give it a decade and I see OCA clearly ahead of SUM (well, in relative terms).

Ferg

Hello and welcome to everyone from the other place.

In response to Beagle's question and as BlackPeter has touched on, I fully expect OCA to outperform the NZX over the next 2-3 years.  As to how that compares to SUM?  I haven't done the numbers....but it would be great to see both outperform along with a few others in various property industries that have been over-sold lately.

LoungeLizard

You may be right, but for the next 12 months is OCA's SP going to go up, sideways or down? It's crystal ball stuff given all that's going on. Maybe the smart thing is to put your money in a 3.65% ASB term deposit and lie on a beach for 12 months?