OCA - Oceania Healthcare

[winner (n)]

Building luxury stuff

The Helier they originally said was to cost $120m odd ....reports a while said the $150m development ....and now some stories floating around it's $165m

Suppose we'll never know what the final cost was ...but as long as they make 40% development margin on sale it doesn't matter

[BlackPeter]

Building luxury stuff

The Helier they originally said was to cost $120m odd ....reports a while said the $150m development ....and now some stories floating around it's $165m

Suppose we'll never know what the final cost was ...but as long as they make 40% development margin on sale it doesn't matter

Correct.

And hey, just compare it with some public projects ... just read the Christchurch pool complex was originally costed at $230m and now its already well above $700m - and counting - and I am sure we all can name tens of large projects where costs not only doubled, but trippled or quadrupled.

And you are saying OCA's Helier went only up by 37.5%? OCA's building team clearly must be amazing - this is less than standard inflation for building projects.

Maybe they should run Fletchers large projects unit (which so far typically sees a doubling or trippling of the planned building costs) instead of wasting their valuable talent with building retirement villages?

[winner (n)]

BP ..no doubt about it ...Oceania a truly AMAZING company

[Mos]

BELIEVE IN BETTER. Hoping it refers to sales performance but not that confident.

[Basil]

Really weird how Chair Liz Coutts referred to something along the lines of "Brent will update us on sales this year" (or words very close to that effect), in her annual meeting speech and then Brent was completely silent on the issue is his speech.  You would think the Chair and CEO would have conferred after writing their draft speeches to check they were both singing off the same song sheet.  Go figure ? 

[winner (n)]

Really weird how Chair Liz Coutts referred to something along the lines of "Brent will update us on sales this year" (or words very close to that effect), in her annual meeting speech and then Brent was completely silent on the issue is his speech.  You would think the Chair and CEO would have conferred after writing their draft speeches to check they were both singing off the same song sheet.  Go figure ? 

Brent wanted to keep a positive mood atbthe meeting going .......not so good news allowed.

[Basil]

Brent wanted to keep a positive mood atbthe meeting going .......not so good news allowed.

Agree that's the most logical explanation and consistent with their long-entrenched practice of deliberate obfuscation.

[Stockgathering]

I think Lizz far to buzzy with her tennis club to worry about any details regarding OCA.

[Basil]

Comment by Bull on the other channel.

from forbarr and greek

Oceania Healthcare (OCA)
Interest costs, debt, and cash flow
OCA's flagship ~NZ$150m development The Helier will likely be in focus. Large scale launch of the apartment sell down was not until late August. We are unlikely to see many if any sales in the 1H24 period, but OCA should have seen at least a handful after period end. The delay of The Helier will result in yet another period with increasing debt, we estimate ~+NZ$40m (to NZ$585m). For the full year we expect largely flat net debt and positive free cash flow. A first for many years for any of the listed aged care operators.

Earnings changes
We lower our forecasts on the back of lower resale gains (lower prices), lower new sale gains (prices and units in FY24), lower DMF and slightly higher interest costs (OCA has the lowest effective interest rate in the sector given its high portion of fixed debt, notably its retail bonds). Our net debt forecasts increase, and we no longer forecast a fall in FY24 due to higher capex and lower cash flow from new sales.

Doesn't look very good. 

[BlackPeter]

Comment by Bull on the other channel.
Doesn't look very good. 

Feels like you are suffering under the same myopia as bull. Funny that.

Bull obviously picked the 2 for OCA most negative paragraphs out of a long report written by ForBar about their view of the current status of the retiremnt sector. Of course - anybody who knows bull knows all about his droppings and his desire to paint everything in black sludge.

What he missed and you as well - the whole report was very positive about the sector (including OCA)  ... here are (from the same report) some bits summing up their views:

The three aged care companies reporting 1H24 earnings trade comfortably below book value. Hence, we expect focus to be squarely on the ability to control debt. The companies have three levers to control debt with: (1) cash generation from ongoing operations, primarily collecting cash from resales. We expect an improvement from RYM and Oceania Healthcare (OCA), and largely unchanged from Arvida (ARV); (2) capex, we expect meaningfully reduced capex spend from all three, controlling the controllable; and (3) new sales cash flow. This is the biggest unknown, but we expect RYM and OCA to show solid improvements from a (very) weak 1H23 and for ARV to show some deterioration, in-line with its comments at its 2Q24 update.

...

We value both (RYM and SUM) companies on the same multiple. We make minor downgrades to our estimates and reiterate our OUTPERFORM ratings on RYM, ARV and OCA.

Now - maybe you need to practise playing a different tune, but obviously first you could start trashing ForBar (as we all love to do )... just not sure, why you bothered to cite them in the first place. Confirmation bias?

[Breezy]

Comment by Bull on the other channel.
Doesn't look very good. 

That guy is one of the most miserable Trolls I've ever experienced and misery loves company.

[Basil]

Firstly, I hope it works out for you guys but if SUM and ARV are being somewhat affected by the weak and slow real estate market I think Maverick is right to be very cautious about first half sales and note he is only expecting 36 new unit sales.  I find that extraordinary when its known as at last balance date they had circa 400 completed units.  Not long to wait until we finally get an update on OCA's sales.

You've got to wonder a bit why no update was forthcoming at the annual meeting and also its worth noting that SUM and ARV update the market quarterly on their sales whereas OCA don't.  OCA gearing already quite high at 36% as at 31 March.  Hope it doesn't go over 40% and that they don't breech their interest coverage ratio's (ICR) bank covenants, (noting ARV just had to rejig their facilities and banks waived their ICR covenant for 30 September which makes it pretty clear they would have breached if it weren't for the rejig and waiver).

Staying positive about brokers...Craigs made some very good comments about OCA's NTA.

[winner (n)]

Westpac says about REINZ data ' New Zealand's housing market continued to hold its breath in October with prices tracking sideways and sales still low."

So Brent will be able to say with a straight face next week that sales have been a bit sluggish and impact our first half result ....but no worries second half will be a ripper

[Left Field]

1st half results out...... significant progress etc etc....." transformative" they say.... but no interim divvy (and  also no cap raise!)

https://www.nzx.com/announcements/422074

Highlights
• Total assets increased to $2.7bn, a 6% increase since 31 March 2023 which includes the completion of 17 apartments at The Helier (Auckland), 46 apartments at The Bellevue Stage Two (Christchurch) and four villas at Stoke Village (Stoke) plus the acquisition of adjacent parcels of land at our Bream Bay and St Heliers sites.
• Net assets increased to $1.0bn from $962.3m as at 31 March 2023.
• Operating cashflow increased to $48.0m for the six months to 30 September 2023, 53% above pcp.
• Undrawn net debt headroom of $113.9m and gearing of 37.7%, as at 30 September 2023.
• Total sales volumes were up 13% ahead on pcp including a 38% uplift in new sale volumes of 84 independent living units (ILU) and care suites.
• Divested, closed and exited leasehold interests at six care centres and villages.

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/422074/407732.pdf

I will have a look after I have fully digested the Turners result.
Initial impressions. Underlying profit down.  Cancellation of the dividend.