OCA - Oceania Healthcare

[Untamed]

Could be that they don't have/need curtains. I expect the windows will all be tinted so nobody can see in, so they may simply have blinds - whatever the latest trend in blinds might be. Also, quite likely that current occupants are away for their annual overseas holiday.

For what its worth the Mrs and I were out for a drive the other day and drove past the Helier and were very impressed with the quality of the village's appearance from a street view but noted it appeared as quiet as a morgue and very few apartments had curtains, so it would seem the vast majority of the village is still empty.  I told my wife the weekly opex to stay there is $550 and she said, that explains it!  I am sure many of us recall the days where a premium site like that would have sold out off the plans long before it was finished.  Gosh, how times have changed.

[Basil]

Could be the case, it certainly looks to have been built to an exceptionally high standard and it's a brilliant location.  From memory Naylor Love were the main contractor so quality control of the build should be top class.

[Poet]

For what its worth the Mrs and I were out for a drive the other day and drove past the Helier and were very impressed with the quality of the village's appearance from a street view but noted it appeared as quiet as a morgue and very few apartments had curtains, so it would seem the vast majority of the village is still empty.  I told my wife the weekly opex to stay there is $550 and she said, that explains it!  I am sure many of us recall the days where a premium site like that would have sold out off the plans long before it was finished.  Gosh, how times have changed.

,$550 a week opex compares very favorably to what a reasonably high end freehold house costs to run in nz. Rates, insurance,water, electricity etc so I wouldn't think it will be a deterrent to the expected demographic of the Helier.

[Mos]

For what its worth the Mrs and I were out for a drive the other day and drove past the Helier and were very impressed with the quality of the village's appearance from a street view but noted it appeared as quiet as a morgue and very few apartments had curtains, so it would seem the vast majority of the village is still empty.  I told my wife the weekly opex to stay there is $550 and she said, that explains it!  I am sure many of us recall the days where a premium site like that would have sold out off the plans long before it was finished.  Gosh, how times have changed.

Like Poet, I wouldn't have thought that $550 a week is much of a barrier for the target market.

A relative recently visited a new resident at The Helier for lunch at the restaurant - the resident confirmed there are "very few" residents at this point and that the new village is "very quiet". Information is a bit third hand but I guess we should not be surprised by this given how long it took Oceania to sell down The Sands in Browns Bay which is in a brilliant location at more affordable price points.  It also is consistent with Oceania taking a long time to sell any of their new villages. I think we can now assume that there was not really much of a wait list for The Helier and that it will take some time to sell down this high quality village. Initially I was expecting the lion's share of the village apartments to sell this financial year resulting in a new sales margin bonanza, but now I think it will be spread over two years with more sold next financial year.

Happy to hold and wait for the value to be realised given average buy in cost under 70 cents, but it would be great if OCA could up their sales game and improve cashflow recycling.   

[Mos]

Brent Pattison video from NBR October. Village looks great. Not convinced by the comments on very strong demand given post above. But will sell down eventually.

https://www.nbr.co.nz/in-case-you-missed-it/rewind-2023-oceania-ceo-brent-pattison/

[Basil]

Thanks for sharing the video.  He's certainly an impressive speaker but as you suggest, sales results to date don't support his claims of very strong demand.  It's clear he's a relative newcomer to the industry because as I posted earlier today, back in the day in RYM's heyday, villages would often sell out completely off the plans long before they were even built.  That's strong demand. 

Fair comment about the opex guys.  I hadn't really thought it through, but I guess rates on a typical, say $3m house in St Heliers would be circa $8-10K per annum and then there's insurance costing many thousands, power, water and repairs.  No argument that it's an impressive village, very impressive but one swallow does not a summer make, and they have a lot of old basic care villages and a very long road ahead of them to gradually transition toward more ILU apartments.  I would think it will take them well into FY26 to sell the Helier down completely, possibly even FY27.  Pretty small market for high end apartments and new entrants have to be 70 years old or more and most will have to sell their existing high-end property in order to settle on their Helier unit.

[Whacc]

6. Scott Scoullar, current CEO was understudy and CFO to the company whilst Julian Cook was CEO, (Julian came from an investment banking background and had a really sharp commercial edge to him that I really liked and frankly I miss catching up with him at annual meetings) and is vastly experienced in running the company and was making great pricing decisions on units and operational matters years before Julian Cook retired.

I don't know how you can hagiofy Julian Cook because he came from an investment banking background when Brent Pattison has the same background (which is likely the genesis for his obnoxious over-egging fast-talking salesman persona).

You also, correctly, have observed that much of the fortunes of the sector have been due to correlation with the housing market but don't make the consequential connection that SUM's historic performance has largely been due to this correlation; so they are the beneficiaries of systemic/macro luck rather than good management.

Their overweight ILU portfolio could have sold itself in the last decade as the country has lost its mind overleveraging into residential real estate.

You still expect SUM to be the pick while believing the housing market will moderate and no one will be able to sell their homes for what they expect.
As if this wave of boomers are never going to die and sit healthy in their 5 bedroom homes for another 50 years.

I'd suggest if/when the housing market moderates this will, longer term, benefit the sector as older generations lose the braindead expectation of huge capital gains on their primary residence, year-on-year-on-year.
That's one of the hardest sells for the sector, getting people to sell up when they think that purchasing an ORA is foregoing the future capital gains on a sure bet - so they loiter in their massive family homes.

[Basil]

I don't know how you can hagiofy Julian Cook because he came from an investment banking background when Brent Pattison has the same background (which is likely the genesis for his obnoxious over-egging fast-talking salesman persona).

Don't hold back, tell us what you really think of Brent lol.   I think he's fallen into ESG traps from a board and other senior management that are myopically focused on all things care with scant regard to financial discipline.  The company made very good money under private equity ownership and had vastly better returns on care probably because private equity management had been instructed to have a laser focus on costs.

You also, correctly, have observed that much of the fortunes of the sector have been due to correlation with the housing market but don't make the consequential connection that SUM's historic performance has largely been due to this correlation; so they are the beneficiaries of systemic/macro luck rather than good management.

I agree OCA have had no luck but they also had a lot of old doggy villages focused on care which is something SUM was never handicapped with.  When the pandemic struck OCA were sitting ducks to be most affected.

Their overweight ILU portfolio could have sold itself in the last decade as the country has lost its mind overleveraging into residential real estate.

I think you are overlooking that most people actually want a full feature, full facility retirement village not a boutique one with limited facilities.  That's why SUM's formula works and they sell their villages quickly, they're selling what people really want.  OCA have an ocean of unsold stock.  Maybe reflect on why that is ?  No doubt they will sell enough of it to service their debt so I'm comfortable as a bondholder, but I'll believe eps growth when I see it and not before.
Disc: At this stage I'm not an equity investor in any stock in this sector.
 

[winner (n)]

2024 - This is our Year

Up the Wahs - and go OCA

Destiny

The year of great things for both long suffering Warriors fans and Oceania loyalists

[Basil]

Would say that OCA promise a lot but rarely deliver, many punters don't like that
This quote a few pages back seems to be a good explanation as any -

In the absence of a track record of accomplishment, you should take a CEO's plans as hopeful intent. That doesn't mean they are lying, just that we really don't necessarily know what they can or cannot do. There is a particular danger if they use language that resonates with you. More than once in my investment career did I fall for someone who said all the right things, except that they hadn't done them — in the past, or as it turned out, in the future." Winner

I think this post of yours on the other channel hits the nail directly on the head.

[winner (n)]

I think this post of yours on the other channel hits the nail directly on the head.

I said this - 'OCA promise a lot but rarely deliver, many punters don't like that'

Possibly explains the trend in this chart ....never before has the OCA share price been this low relative to SUMs

No worries ....this is our year .....go OCA and Up the Wahs

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[Basil]

Picture says a thousand words
Going down to 5% next year by the look of that entrenched trend.

[BlackPeter]

Picture says a thousand words
Going down to 5% next year by the look of that entrenched trend.

Your predictions are far too timid - do a proper linear extrapolation and you clearly see that in three years time one OCA share is negative 1% of a SUM share! Oops.

Anybody can offer still more outrageous forecasts?

What about negative 5 % in 5 years, which means of a SUM share is $10, punters pay 50 cents to anybody taking an OCA share off them?

Obviously - non sensical ... but so much fun ... and nearly as intelligent than the once well known theorem that one RYM share is worth two SUM shares and ten OCA shares, which was meant to be true for eternity as well.

The power of linear extrapolation in a chaotic system composed out of cyclical movements ... but as they say - everything it is good for something - at least as a bad example.

[Basil]

The trend is your friend.  Stated on the other channel years ago, anyone who thought OCA could outperform SUM had rocks in their head and I've been right so far.  Of course, it's perfectly obvious the slope of the line has to reduce at some stage in the years ahead, thanks "Captain Obvious" for being the math's police, but there's no saying it will be this year.

[winner (n)]

Linearity, cyclicality and chaotic states are generally misunderstood phrases, especially in the investing world

They are phrases often used by punters to make themselves sound clever and sophisticated and to rubbish / discredit things they don't like/agree with

Two other phrases that are loosely used to explain/support views are 'supply shocks' and 'demand driven'