OCA - Oceania Healthcare

[Basil]

I shall go and walk Tony the Pony.  You clearly don't appreciate my analysis of this stock and others also seem to feel the same way so I will leave you guys to pump each other's tyres.  To be quite frank about it, I couldn't care less about this company anymore.  Only posted because I thought perhaps one or two might be interested in what I thought. If no one is, I am totally relaxed about that and quite content to stop bothering to cover it anymore.

[Minimoke]

I shall go and walk Tony the Pony.  You clearly don't appreciate my analysis of this stock and others also seem to feel the same way so I will leave you guys to pump each other's tyres.  To be quite frank about it, I couldn't care less about this company anymore.  Only posted because I thought perhaps one or two might be interested in what I thought. If no one is, I am totally relaxed about that and quite content to stop bothering to cover it anymore.

I was unmoved by the results. Seems I'm in step with the market that is currently voting at $0.78 / $0.77

[Shareguy]

Had a quick look and think it's a terrible result. 

Gearing increasing to 36.9% (from 30.8% in FY22e). Has entered into an agreement to sell two of its Auckland care sites to a smaller operator. On books at $10.2m so what price I wonder.

Declared final dividend of 1.3 cents per share (not imputed)

$12m insurance income.

$15.4 m profit against $61.1 YEM22

EPS 2.2 cents against 8.7 cents YEM22

In a nut shell care costs are the big issue.

Will continue to hold at this stage.

[winner (n)]

May 2022 acquired Remuera Rise and Bream Bay and proudly said strong accretion in Underlying Earnings per share in FY23

FY22 Underlying Profit $56.7m was EPS of 8.2 cents. FY 23 numbers $58.6m and EPS of 8.0 cents (weighted average number of shares used)

Wouldn't say 8.0 to 8.2 is 'strong accretion'

But essentially the issue is that in spite of two big acquisitions Underlying Earnings haven't really grown at all.

I see in the Notes Bream Bay contributed $1.7m NPBT and Remuera Rise contribution was 'immaterial' ...hmmmm

[winner (n)]

I see Assets for Sale are now $104m

What's the story here

[Poet]

Hmm, I thought it quite a good result.

But then again, I tend to look at the underlying profit ($80m) and the increase in embedded value ($90m) as being the most important metrics at this stage of the company's maturity.

I can't understand why people get hung up on the increase/decrease in property valuations without also acknowledging the significant discount of the SP compared to NAV. Ie the market has already baked in an asset value way below current CBRE valuations

[winner (n)]

Not a pretty picture

Especially considering the acquisitions made over the years (and the capital raises)

You cannot view this attachment.

[Mos]

Two out of three now reported and both epic fails in my opinion.  RYM's figures heavily fudged, see comments in that thread and looking at 20% reduction is eps in FY24.  Both analysts reports I have read have eps all the way out to FY26 being lower than FY23, thanks to the directors and management 'fixing" the USPP fiasco by issuing so many new shares. 

This year, after a protracted consenting and development program that has taken many many years OCA finally delivered the bulk of their apartments at the Helier, (62 of them) and booked their development margin on the bulk of this prestigious village.
Despite this, we see development profit largely unchanged from last year, underlying profit up only 3.4%.
Net profit after tax was FY22 $61.1m , now in FY23 a pathetic $15.4m
Total comprehensive income which captures absolutely everything, was $114.4m, now only $34.5m...oh my goodness, how is that not a disaster?
Cash flow from operating activities was $105.5m, now only $70.2m
NAV which is NTA plus all development work in progress was $1.38, now $1.36 so they're going backwards after paying a pathetic 3 cps in dividends
Final dividend cut to the bone, not unexpected given the huge increase in their debt and substantial reduction in operating cash flow

Six years in a row of no eps growth despite all sorts of assurances at the time of the IPO that the transformation of their business model would deliver much improved returns over its 6 year timeframe.  Whatever happened to the long promised point of inflection with the business transformation process ?  Was this just a marketing B.S. to float this dog on the market ?

Others will try and spin this year's result as some sort of success and that's their prerogative, above is how I see it and as I've said reputedly before, there in NO money in providing care, care suites or no care suites. 

The real money is in independent living units and only on a rising real estate market.

Attempts to sell 10 second rate care facilities over many months has also been an epic fail with only 2 conditionally sold.

I am 100% sure this company over the short, medium AND long term will deliver bottom quartile performance in this sector.

Maybe ARV will deliver something worth thinking about...probably best I don't hold my breath. 

At first glance it looks like the average result we should have been expecting for FY23. I don't think any development margin for The Helier is included in FY23 unless some Helier ORA's were sold and settled. I expect this to be a major boost to FY24. So in a down real estate market this kind of average performance in FY23 seems the best that could have been hoped for. The declining cash inflows are a watch out and we know there is no meaningful profit in care, but unless the real estate market tanks significantly further I am expecting the Helier sale to deliver a very good year in FY24.

[Teitei]

I shall go and walk Tony the Pony.  You clearly don't appreciate my analysis of this stock and others also seem to feel the same way so I will leave you guys to pump each other's tyres.  To be quite frank about it, I couldn't care less about this company anymore.  Only posted because I thought perhaps one or two might be interested in what I thought. If no one is, I am totally relaxed about that and quite content to stop bothering to cover it anymore.

Don't mind too much the detractors, Beagle. They are still punch drunk from the battering they have taken from this stock and cannot handle any objective & meaningful assessments.

OCA's results make for very sobering reading - massive cashflow deficits plugged by massive borrowings. Any company paying dividends using debt waves a very big red flag and OCA is no exception.

I am surprised they did not do a CR but that may be because they have now put $104m of properties for sale. As W69 pointed out, their track record does not give confidence they add much value to their acquisitions and developments.

[Teitei]

May 2022 acquired Remuera Rise and Bream Bay and proudly said strong accretion in Underlying Earnings per share in FY23

FY22 Underlying Profit $56.7m was EPS of 8.2 cents. FY 23 numbers $58.6m and EPS of 8.0 cents (weighted average number of shares used)

Wouldn't say 8.0 to 8.2 is 'strong accretion'

But essentially the issue is that in spite of two big acquisitions Underlying Earnings haven't really grown at all.

I see in the Notes Bream Bay contributed $1.7m NPBT and Remuera Rise contribution was 'immaterial' ...hmmmm

OCA paid $57m in July 2022 for Bream Bay & Remuera Rise - so 3% return in 8 months or 4.5%. Just about covered the interest cost!

[Untamed]

With all due respect Balance, these kinds of comments are condescending and do nothing to enhance your "reputation." You make many assumptions about OCA investors, which are unjustified and incorrect in most cases. I am well down on my OCA holding right now, but not even remotely "punch drunk from the battering." I don't need to justify my investing decisions to anyone but me, and right now I am very happy to hold OCA. The problem you, and some others have, is you are so focussed on the numbers that you have tunnel vision. Yes, the numbers are important, but it is very evident that you do not truly understand either Aged Care (as a societal/health related need) OR what OCA is working to achieve with their business. It is absolutely nonsensical that we have these circular "discussions" on this company, that always end up in a slinging match. Why can't we all bring our own particular skills or knowledge, to the table, and just leave them there for others to "read" and come to their own conclusions about? Why does it have to be a freaking competition all the time? Aside from being incredibly tiring, it achieves nothing and distracts from mature, constructive discussion.

Why does it bother you so much that someone invests in a company you don't approve of? I couldn't care less what you invest in. It's not my business. Offer your contributions in a polite and respectful way, then let it go. These constant personal attacks need to stop - and I mean everyone, not just you.

Most of us came here to avoid that. Don't make us regret it.

Don't mind too much the detractors, Beagle. They are still punch drunk from the battering they have taken from this stock and cannot handle any objective & meaningful assessments.

[Minimoke]

With all due respect Balance, these kinds of comments are condescending and do nothing to enhance your "reputation." You make many assumptions about OCA investors, which are unjustified and incorrect in most cases. I am well down on my OCA holding right now, but not even remotely "punch drunk from the battering." I don't need to justify my investing decisions to anyone but me, and right now I am very happy to hold OCA. The problem you, and some others have, is you are so focussed on the numbers that you have tunnel vision. Yes, the numbers are important, but it is very evident that you do not truly understand either Aged Care (as a societal/health related need) OR what OCA is working to achieve with their business. It is absolutely nonsensical that we have these circular "discussions" on this company, that always end up in a slinging match. Why can't we all bring our own particular skills or knowledge, to the table, and just leave it there for others to "read" and come to their own conclusions about? Why does it have to be a freaking competition all the time? Aside from being incredibly tiring, it achieves nothing and distracts from mature, constructive discussion.

Why does it bother you so much that someone invests in a company you don't approve of? I couldn't care less what you invest in. It's not my business. Offer your contributions in a polite and respectful way, then let it go. These constant personal attacks need to stop - and I mean everyone, not just you.

Most of us came here to avoid that. Don't make us regret it.

I've been in and out of OCA a few times and  been burnt each time. I reckon I have a pretty good handle on our aging popluaiton demographics, the state of our health care system and the aver arching political situation.

And given all that the only thing we should be relying on is the numbers. They tell the story now and in the immeditate future.

So taking those factors into account
- the aging demographics won't change. But what needs to be looked at is the young demographics and the earning ability of those people - because they are the ones that will fund Aged Care in the future. And I dont like what I am seeing there. I think the Brain Drain will be a real problem.
- I see no immediate or mid term change in our health systems. Its like the proverbial oil tanker. Extremely difficult to turn around. And Aged Care isn't a priority.
- Politically. I'm not sensing any appetite by either of the major parties to implement the real and significant change in tehis area

So, for those broad reasons, unless the numbers tell me something different OCA is currently not a goer for me.

Disc - I do hold SUM. And the only reason I invest is to make money (and often I'm not very good at it. But at least wins outweigh the losses)

[BlackPeter]

Not a pretty picture

Especially considering the acquisitions made over the years (and the capital raises)

You cannot view this attachment.

Hmm - I guess I get it ... we are all used to unlimited and exponential growth and if we don't get it, we complain like a bunch of naughty children not getting their sugar fix.

However, what I don't understand is - why should a capital raise result in a higher EPS? A capital raise results (hopefully) in higher earnings, but as well in a higher number of shares ... i.e., what's really wrong if EPS stays constant, assuming its high enough? They asked for some more money and they paying for this money the same return as for the initial amount. Fair enough.

I am quite happy with a rather constant (and good enough) underlying EPS, particularly considering that real estate is cyclical. Lets not forget, that a good part of OCA's real (IFRS) earnings is related to the value of their real estate ... and while last year was a terrible year for the property market, 7 to 8 years in every decade are typically good years for real estate.

Looking forward to the earnings flowing in come 2025 or so ...

[winner (n)]

Hmm - I guess I get it ... we are all used to unlimited and exponential growth and if we don't get it, we complain like a bunch of naughty children not getting their sugar fix.

However, what I don't understand is - why should a capital raise result in a higher EPS? A capital raise results (hopefully) in higher earnings, but as well in a higher number of shares ... i.e., what's really wrong if EPS stays constant, assuming its high enough? They asked for some more money and they paying for this money the same return as for the initial amount. Fair enough.

I am quite happy with a rather constant (and good enough) underlying EPS, particularly considering that real estate is cyclical. Lets not forget, that a good part of OCA's real (IFRS) earnings is related to the value of their real estate ... and while last year was a terrible year for the property market, 7 to 8 years in every decade are typically good years for real estate.

Looking forward to the earnings flowing in come 2025 or so ...

You forget each time acquire something and have a capital raise it is eps accretive ...almost a promise

[BlackPeter]

You forget each time acquire something and have a capital raise it is eps accretive ...almost a promise

.... almost a promise? So - did they, or didn't they?

Honestly - I can't remember a promise - and lets face it, wasn't the majority of their CR's a sell down of Maccas shares? Why would that increase EPS?