OCA - Oceania Healthcare

[Mos]

Adding some more to long term holding when it drifts down to 70 cents or less. Slow burn this one.

[Breezy]

Man that SailorRob dude on the other channel stooping to low levels by discriminating against idea service clients on the OCA thread. As someone who has provided services to these clients for 33 yrs now I find his ramblings very distasteful. Thank goodness he isn't on here.

[ValueNZ]

Allow me this latitude.  If you went to see a horse race and there were 4 participants and the TAB had them all at $4 to win, (yes I know this isn't possible and the TAB take a huge margin but please indulge me), who would you bet on.  The horse with form that just keeps on winning race after race after race (SUM), a horse that has never won and delivered real results (OCA) or one of the other two with chequered results in recent races (ARV and RYM), the latter with a jockey with questionable skills?

Do professional horse gamblers make their money by finding the "best horse" that keeps on winning race after race? Or do they attempt to find the mispriced bets within the market?

Similar to betting, the real pros in investing attempt to find the mispriced bets within securities. By choosing the company with the best prior performance in terms of what's happening on the graph, you end up with picks like Microsoft in 1999.

Now, the question changes from what's the best horse to which horse has the most mispriced odds. I believe that OCA is the most mispriced bet in the sector.

[Basil]

The point to my previous post is the whole sector, based on earnings which is all that really matters, is trading on not dissimilar forward metrics.  There is very little mispricing.  Arguably all OCA is worth as company that has now long proven it cannot grow earnings is (Ben Graham no growth 8.5 times) eps of 8 cents = 68 cents. I think the market is wide awake to that fact now as you can see from the share price.  They might temporarily grow earnings a little as they sell down the Helier but I believe after that it will fall back into its rut of about 8 cps give or take a little.  I would argue OCA is now fairly priced.   The problem for OCA is it is handicapped with so much care in its business model, its analogous to having a 125 kg jockey on its back and it simply cannot grow as quickly as the others going forward.  NTA is completely irrelevant if you have an ocean of stock that you can't sell and get earrings from.

For OCA to make any progress it has to prove it can start selling heaps of stock and start growing earnings.  All the punters on the other channel, where you obviously come from think selling down the Helier is the start of that process.  I believe it will give a slight temporary lift in eps in the same way as selling down the Sands in Browns Bay did and then it's back to the same old, same old 8 cents per share give or take a bit.  I think they can service their bonds okay and plod along okay but they are always going to be the runt of the litter plodding along at the back of the field.  My 2 cents worth.  How long do you think dividends will remain suspended for ?

[ValueNZ]

The point to my previous post is the whole sector, based on earnings which is all that really matters, is trading on not dissimilar forward metrics.  There is very little mispricing.  Arguably all OCA is worth as company that has now long proven it cannot grow earnings is (Ben Graham no growth 8.5 times) eps of 8 cents = 68 cents. I think the market is wide awake to that fact now as you can see from the share price.  They might temporarily grow earnings a little as they sell down the Helier but I believe after that it will fall back into its rut of about 8 cps give or take a little.  I would argue OCA is now fairly priced.   The problem for OCA is it is handicapped with so much care in its business model, its analogous to having a 125 kg jockey on its back and it simply cannot grow as quickly as the others going forward.  NTA is completely irrelevant if you have an ocean of stock that you can't sell and get earrings from.

For OCA to make any progress it has to prove it can start selling heaps of stock and start growing earnings.  All the punters on the other channel, where you obviously come from think selling down the Helier is the start of that process.  I believe it will give a slight temporary lift in eps in the same way as selling down the Sands in Browns Bay did and then it's back to the same old, same old 8 cents per share give or take a bit.  I think they can service their bonds okay and plod along okay but they are always going to be the runt of the litter plodding along at the back of the field.  My 2 cents worth.  How long do you think dividends will remain suspended for ?

How long do I think dividends will remain suspended? Probably a year. However, my preference would be to have zero dividends paid out so long as they can continue growing occupational rights agreements at the rate they have done in the past.

[Basil]

I think you'll probably get your preference of zero dividends for quite some time.
Selling down the vast ocean of stock they have is going to take several years.  I don't think the market is fooled any more by their ESG greenwashing and talk of asset growth.

Excerpt from N.Z. market close report, paywalled in the N.Z. Herald
The Warehouse and Oceania Healthcare are falling out of the MSCI Small Caps Index at the end of the month and they were down 9c or 6.21 per cent to $1.36 and 2c or 2.94 per cent to 66c respectively. Oceania last traded at that level on March 30, 2020.

[winner (n)]

REINZ data January

The total number of properties sold across New Zealand in January 2024  4.9% higher than pcp ......so volumes growing although remain at very low levels

But Auckland however lowest sales count month ever recorded (except covid months)

Maybe Brent will have to say sluggish property market holding back sales ...esp in Auckland

Median price down a tad

https://www.reinz.co.nz/Web/Web/News/News-Articles/Market-updates/REINZ_January_data_Golden_weather_sees_confidence_lift.aspx?name=REINZ_January_data_Golden_weather_sees_confidence_lift

[Basil]

WOW Auckland medium house price down a whopping 6.7% for the month and lowest sales since records began.  Ouch !

[Basil]

Another multi year low on huge volume, closing at 61 cents.
Balance on the other channel reckons according to his broker with the exit from the MSCI small cap index on 29 February, index tracking funds have to sell ~ 30 million shares.  Hopefully this doesn't trigger margin calls or stop loss selling from trading positions.
Where's the bottom ?  Is it possible 1 SUM = 20 OCA by the 29th of February and OCA end the closing MSCI exit match process in the mid 50 cent range ?

[Breezy]

Another multi year low on huge volume, closing at 61 cents.
Balance on the other channel reckons according to his broker with the exit from the MSCI small cap index on 29 February, index tracking funds have to sell ~ 30 million shares.  Hopefully this doesn't trigger margin calls or stop loss selling from trading positions.
Where's the bottom ?  Is it possible 1 SUM = 20 OCA by the 29th of February and OCA end the closing MSCI exit match process in the mid 50 cent range ?

Well in order to sell 30 million shares you have to have a willing buyer/s, the other side of the equation seldom mentioned.

[Basil]

Well in order to sell 30 million shares you have to have a willing buyer/s, the other side of the equation seldom mentioned.

But at what price Breezy ?  It would now seem likely its somewhere in the 50's, not 60's to try and clear most of that stock.  The other thing that's quite plausible is that sellers can't find buyers for ~ 30 million shares between now and 29 February so there could remain a stock for sale overhang for possibly quite some time after the index exit.

[Mos]

Fascinating how low this will go. Surely won't test the Covid 38 cent low?

Disc. Hold a few.

[Basil]

You'd think not eh Mos.  That Covid low was fueled by extreme fear...this is just a large index sale event of a very ordinary company that's probably experiencing the same very strong headwinds as RYM with sales as well as having no joy trying to sell any of its loss making basic care villages.  Logic suggests somewhere in the 50's but I wouldn't rule out the possibility of the share price having a 4 handle which would be pretty shocking     

[ValueNZ]

Bought some more at 62c. I hope it gets even cheaper.

[Teitei]

Well in order to sell 30 million shares you have to have a willing buyer/s, the other side of the equation seldom mentioned.

Buy side book build in progress already I suspect.