OCA - Oceania Healthcare

[Basil]

Maybe its time to do a stocktake Untamed.  Nearly six years on from the IPO and the share price is less than the IPO price.  I think you are very "brave" with RYM's long term track record since their IPO to suggest OCA directors and management have better insight than them.

At least with ARV, (and its dirt cheap with an even bigger discount to theoretical NTA than OCA) they have actually achieved some reasonable earnings growth since their IPO.  I'm probably one of the very few to have made six figures from OCA and lived to tell the tale.  Sold most of my shares at roughly twice the current share price but what would I know...

[Breezy]

Maybe its time to do a stocktake Untamed.  Nearly six years on from the IPO and the share price is less than the IPO price.  I think you are very "brave" with RYM's long term track record since their IPO to suggest OCA directors and management have better insight than them.

At least with ARV, (and its dirt cheap with an even bigger discount to theoretical NTA than OCA) they have actually achieved some reasonable earnings growth since their IPO.  I'm probably one of the very few to have made six figures from OCA and lived to tell the tale.  Sold most of my shares at roughly twice the current share price but what would I know...

Nothing like a good brag.

[Untamed]

I'm not brave at all. Just someone who is able to maintain an open mind based on my observations of OCA with regards to the care branch of their business. Remember that "care" does not simply refer to standard, government subsidised care beds. Every aspect of most  RVs includes some level of care, whether it be the provision of emergency call bells in villas, supported living apartments, care suites or standard care beds. OCA understands care at all of these levels and care has always been the foundation of their overall philosophy. Until that changes, I will continue to consider them the lead provider in terms of care related "insight."

RYM pulling back on care, is possibly something they needed to do right now, under the circumstances, but over the long term, unless they reverse that decision, I think they will lose out on a significant opportunity down the track.

These discussions are not a competition. If I am proven wrong that's fine. I have made a calculated, informed decision to invest in OCA, as you no doubt have, with ARV (if you still hold). Investing is a personal thing - I don't do it to compete with you or anybody else. We win some and we lose some.

Time will tell.

Maybe its time to do a stocktake Untamed.  Nearly six years on from the IPO and the share price is less than the IPO price.  I think you are very "brave" with RYM's long term track record since their IPO to suggest OCA directors and management have better insight than them.

At least with ARV, (and its dirt cheap with an even bigger discount to theoretical NTA than OCA) they have actually achieved some reasonable earnings growth since their IPO.

I'm probably one of the very few to have made six figures from OCA and lived to tell the tale.  Sold most of my shares at roughly twice the current share price but what would I know...

[Breezy]

I'm not brave at all. Just someone who is able to maintain an open mind based on my observations of OCA with regards to the care branch of their business. Remember that "care" does not simply refer to standard, government subsidised care beds. Every aspect of most  RVs includes some level of care, whether it be the provision of emergency call bells in villas, supported living apartments, care suites or standard care beds. OCA understands care at all of these levels and care has always been the foundation of their overall philosophy. Until that changes, I will continue to consider them the lead provider in terms of care related "insight."

RYM pulling back on care, is possibly something they needed to do right now, under the circumstances, but over the long term, unless they reverse that decision, I think they will lose out on a significant opportunity down the track.

These discussions are not a competition. If I am proven wrong that's fine. I have made a calculated, informed decision to invest in OCA, as you no doubt have, with ARV (if you still hold). Investing is a personal thing - I don't do it to compete with you or anybody else. We win some and we lose some.

Time will tell.

Yes well said and if your good and successful at anything in life its always best to be happy in yourself and let others praise you rather than yourself.

[Basil]

I'm out of ARV, was a mistake to get back late last year...headwinds are too strong for this sector, heck even the best (SUM) are in a confirmed downtrend.  ARV bonds at 7% look alright to me though, debt level's well controlled and management are proactive about adapting their build rate to the changing economic situation unlike OCA.

One thing I agree on, RYM are not the same company they used to be.  There was only ever going to be one legend, Simon Challis, when he left he was irreplaceable.  A lot of people are attracted to the veneer of cheap DMF fees and don't realise there is no free lunch and they pay for it with RYM's most expensive of sector by miles, unit asking prices. 

OCA a decade too early with their care suite model is how I see it.  Visionaries or failures, I think the share price speaks for itself.  They will come right at some stage a long way down the track if they don't get themselves into deep doggy doo with too much debt in the meantime.

[Untamed]

Well I am happy to know that you do in fact believe OCA will come right "at some stage." That's good to know 

I don't think their Care Suites are a decade too early. I think the demand is already there but it will probably take a year or three for them to reach peak demand. By the time your ten years is here, I think care suites will be well and truly cemented in, and more than profitable.

Never underestimate the value to the elderly, of continuity of care. It is a big enough change for someone to move out of their home into an RV (at whatever level of care) without having to move again down the track if they require a higher level of care. Moving out of what has now become your new "home" in your 80s or 90s, or older, is hugely traumatic. Especially if you need to leave a spouse behind. Care suites are a blessing in disguise. Believe me.

I'm out of ARV, was a mistake to get back late last year...headwinds are too strong for this sector, heck even the best (SUM) are in a confirmed downtrend.  ARV bonds at 7% look alright to me though, debt level's well controlled and management are proactive about adapting their build rate to the changing economic situation unlike OCA.

One thing I agree on, RYM are not the same company they used to be.  There was only ever going to be one legend, Simon Challis, when he left he was irreplaceable.  A lot of people are attracted to the veneer of cheap DMF fees and don't realise there is no free lunch and they pay for it with RYM's most expensive of sector by miles, unit asking prices. 

OCA a decade too early with their care suite model is how I see it.  Visionaries or failures, I think the share price speaks for itself.  They will come right at some stage a long way down the track if they don't get themselves into deep doggy doo with too much debt in the meantime.

[Basil]

Well I am happy to know that you do in fact believe OCA will come right "at some stage." That's good to know 

I don't think their Care Suites are a decade too early. I think the demand is already there but it will probably take a year or three for them to reach peak demand. By the time your ten years is here, I think care suites will be well and truly cemented in, and more than profitable.

Never underestimate the value to the elderly, of continuity of care. It is a big enough change for someone to move out of their home into an RV (at whatever level of care) without having to move again down the track if they require a higher level of care. Moving out of what has now become your new "home" in your 80s or 90s, or older, is hugely traumatic. Especially if you need to leave a spouse behind. Care suites are a blessing in disguise. Believe me.

I hear what you are saying but the demographics don't support a robust swelling of demand just yet.
I went to a presentation the previous CEO gave at the Auckland branch of the New Zealand shareholders association several years ago.  Two things Earl Gasparich made very clear.
1. We're not building land-based cruise ship villages like the others.  In other words OCA villages are generally not full feature villages with all the bells and whistles like RYM, SUM and ARV with things like bowling green, swimming pool,, spa complex, mini golf e.t.c..
2. We're targeting the 85+ aged group with our boutique villages.

Here's the demographic problem for OCA.
The huge baby boomer tsunami (google baby boomer generation and you'll see its generally considered this is a post-World War 2 phenomenon that started in 1946) are not 85 yet.  OCA will not start to enjoy this tsunami of demand until 1946 + 85 = 2031.  Like I said, about a decade too early.

On the other hand there's plenty of demand from baby boomers in their 70's looking to move into full feature villages for lifestyle reasons and this is why SUM, RYM and ARV villages that offer good continuum of care as well as full feature lifestyle facilities are selling well, as long as they're reasonably priced.
Baby boomers are lapping these villages up because they offer such a wide range of communal activities it gets people out of their units enjoying the facilities and mixing with other residents.  The camaraderie in some of these upmarket villages as the community there come out to play at events held on the bowling green is a lovely thing to see. RYM have a real affordability problem with their average independent living units in Auckland being $1.4m v a median Auckland house price of $1.0m.  I think that's what's contributed to their recent debt fiasco.

One thing OCA have in their favour in a falling market is their village units are generally quite cheap relative to others in the sector.  That might be helpful in the next year or two as people wanting to move to a village choose a more affordable alternative than what they really want.

[Buzz]

Don't have time to a full search but minimum age of entry for residents is 70 years at The Bellevue, Eden Village, Onehunga, Meadowbank, Whitianga and The Oaks. Maybe someone knows the minimum age for all Oceania properties?

[Breezy]

Don't have time to a full search but minimum age of entry for residents is 70 years at The Bellevue, Whitianga and The Oaks. Maybe someone knows the minimum age for all Oceania properties?

It is 70 and if a couple both have to be 70.

[777]

Oh damn. I qualify.

[Buzz]

It is 70 and if a couple both have to be 70.

What that does that do to Basil's analysis, that (he says) it is 85's or older (which maybe it isn't?). Geez, 85, like how small is the potential client base at 85! They'll mostly all be in some retirement village or care before then anyway. Seems a bit silly for them to limit entry to 85 years old, maybe Earl was talking about something else, perhaps entry to hospital care or something, who knows. Anyway, 70 is looking like the entry number so far. That would change the aging population analysis quite a bit.

[Untamed]

You can't restrict entry to hospital level care based on age. It is based purely on need and requires a Needs Assessment to even be considered. The assessment must show that a higher level of care is needed.

... maybe Earl was talking about something else, perhaps entry to hospital care or something, who knows. Anyway, 70 is looking like the entry number so far. That would change the aging population analysis quite a bit.

[Basil]

What that does that do to Basil's analysis, that (he says) it is 85's or older (which maybe it isn't?). Geez, 85, like how small is the potential client base at 85! They'll mostly all be in some retirement village or care before then anyway. Seems a bit silly for them to limit entry to 85 years old, maybe Earl was talking about something else, perhaps entry to hospital care or something, who knows. Anyway, 70 is looking like the entry number so far. That would change the aging population analysis quite a bit.

Read my post again.

What Earl said is our target market is the older demographic, 85+.  I did not say anywhere and nor does that mean that you have to be 85 to move in.  Its 70+ and both partners have to be that age.  Their point of difference is they generally don't offer full feature villages with all the amenities I outlined.  They're smaller boutique villages, generally with a lot lower level of communal amenities which are targeted to appeal to the older demographic.  Sure, some people in their 70's will choose a boutique village with a lot less amenities at a lower price point.  From what I have observed, most people think they want a full feature village even if they don't end up using all the communal facilities very much. 

RYM and Summerset and to some extent Arvida have been successful because they're offering what the baby boomer generation wants right now.  In 10+ years people will be clambering for late stage care as that generation's needs change.  The problem is a decade is a long time in this market especially when one company is carrying far too much debt.

[Mos]

Interesting points Basil. I see Ryman average are of entry (as at Mar 22) is 79.3 years for Independent and 85.7 years for serviced. Suspect Oceania would be in that ballpark or older. Those needs based care suites take a long time to sell down especially when many delivered in the same location at once.

[Basil]

I think the average entry age to ARV and SUM independent living units is very similar Mos.
It never ceases to surprise me why people leave it so late to move into a retirement village.
Without exception every resident I have ever discussed this with at various retirement villages tells me the same thing.  I wish I had moved in earlier.
I guess one reason for couples is there needs to be agreement  by both parties that its a good move.  I suspect, just as is the case in our household, one party is often a lot more interested in retirement village living than the other.