OCA - Oceania Healthcare

[Basil]

The sp doesn't like all this fighting talk, back to 61c.

Quick, let's all have a big group hug lol

[Plata]

This is just one of those stocks where management/company fortunes always seem to be bad. Started off making the wrong play into care instead of independent units, the latter turned out more profitable. Then tried correcting by building heaps of premium care suites and independent units, which now appear to have been hard to sell for the last 2 years or more. Would not surprise me at all if it just plods along doing nothing until it gets taken over at the sub $1 mark. I think the recent takeover proposal for ARV is probably a reasonable example for OCA too, a board so certain of intrinsic value they will turn down pretty reasonable offers. I have not looked at this sector for a while but my gut feeling is ARV is a better buy, at least then you have some confidence the share is actually undervalued given they got offered $1.70 a share mere months ago.

There has to be some sort of lesson with this one, how things can go so wrong for so long despite extremely obvious and forecastable growth in the total addressable market for its products.

[Basil]

Nobody is going to offer more than $1.70 so the problems I have with ARV is the boards intransigence in believing fair value on today's market is close to the intrinsic value they see meaning there is almost zero chance of a takeover going forward.  This is what the board said the day after the shares were trading at a "whopping" 92 cents.  http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/423543/409608.pdf
I note a takeover at $1.70 would have provided an 85% uplift on the share price at the time.  It seems to me the board are completely unrealistic as they say it "meaningfully" undervalues the companies intrinsic value.  Interestingly, if you bring up a 10 year chart of ARV, only for two fairly brief periods of time has it ever traded over $1.70.  With a board with a belligerent attitude like that, who needs enemies lol

At least with OCA there's a chance that any possible future takeover offer might be put to shareholders to vote on.  Yes, there are many lessons with this one.  It would be good if the incoming CEO could for a start be more open, forthcoming and transparent with shareholder communications.  Maybe a new broom can make some inroads into OCA's problem areas with slow selling stock and older villages making ostensibly nothing?  Maybe the new CEO comes up with a radical strategy to clear the decks of some of the problems.  Like closing down marginal care villages they can't sell and turn them into profitable emergency housing centers.  Maybe convert some of their ocean of unsold care suites into cheap ILU apartments and sell them that way?  Some fresh ideas are needed I reckon and maybe a new CEO has some? I hope so.

[Untamed]

Touché

At the risk of being chastised by mods.... *Untamed you are hereby chastised - Mod*

[Basil]

Great that's out of the way and we can all have that big group hug now.  Onward and upward towards $1+ again, what could possibly go wrong lol

[Buzz]

Great that's out of the way and we can all have that big group hug now.  Onward and upward towards $1+ again, what could possibly go wrong lol

Can we be clear about this, we know you have OCA bonds, do you have some shares as well now?

[Basil]

Yes

[Ricky Bobby]

Basil, did u make a brief appearance on the other channel yesterday?... or was I seeing things?!

[Basil]

Imagining things

[winner (n)]

Good news ...REINZ report huge increase in number of property sales in February v February last year. Auckland was standout.

More momentum in sales activity and getting back to historical levels

Good for OCA as sales, sales and even more sales are needed

And prices pretty good as well
https://www.reinz.co.nz/Web/Web/News/News-Articles/Market-updates/REINZ_February_data_More%20sales_prices_rise_activity_builds_in_property%20market.aspx?name=REINZ_February_data_More%20sales_prices_rise_activity_builds_in_property%20market

[winner (n)]

Basil, did u make a brief appearance on the other channel yesterday?... or was I seeing things?!

Funny that. ...I thought the same when a guy called Jagger popped up ...hey that's our Basil

Wasn't him after all

[Basil]

Thanks for sharing the REINZ data Winner.  Looks somewhat encouraging.
This from the other channel from Balance concerns me.  My opinion:  The new CEO absolutely must take action to address their ballooning debt burden.
Honestly, even if I was paid to do so, I wouldn't post on the other channel.

Auckland is where it really needs to happen to drag the property market up further. Still too many NZers leaving for Oz and selling out according to our local B&T real estate agent. Says it is making her wonder if she should do the same herself!

Meanwhile, anyone notice that there is a big step change in interest rates for OCA even while debt levels grow ever bigger?

2022/2023 : Interest is charged using the BKBM Bill rate plus a margin and line fee. Interest rates applicable in the
year to 31 March 2023 ranged from 4.05% to 7.52%(March 2022: 2.48% to 3.7%).

Debt 2022 - $383m
Debt 2023 - $558m

2024 : Interest is charged using the BKBM Bill rate plus a margin and line fee. Interest rates
applicable in the six month period to 30 September 2023 ranged from 7.05% to 7.13%.

Debt Sept 2024 - $621m (going higher as capital commitment of $88m)

So expect interest cost to increase to around $23m for the next half year.

[Greekwatchdog]

And he was later corrected Basil. So his data was off. Brent has already said debt is at peak, so lets see what FY gives us all in May.

Welcome aboard again. Must be a steam train running slow for an old dog to catch up and jump on again

[Teitei]

And he was later corrected Basil. So his data was off. Brent has already said debt is at peak, so lets see what FY gives us all in May.

Welcome aboard again. Must be a steam train running slow for an old dog to catch up and jump on again

My data was indeed off.

I have recalculated (after your clarification) :

I make it now $25.8m for full year.

$17.2m for next half year + $8.6m for first half year :

$395m bank debt X 7.1% = $28m/2 = $14m
$225m bonds at 2.5% & 3.30% = $6.4m/2 = $3.2m

OCA has done very very well locking in those wonderful low interest rates on the bonds!

OCA has to be mindful of using debt to develop the newer developments like St Helier - that's $160m of debt funded project which will cost $11m a year in interest to service until the units are sold. Then, there's the operating costs in the short term which has to be funded as well.

Dis. Bought during index selldown at 59c.

[winner (n)]

Teitei - always good buying at 59 eh