January Newsletter
2020 year in review, Stock of the month & company update

While 2020 will surely go down in history as an unforgettable year, record low interest rate and rise of pocket apps saw many new investors dip their toes in the New Zealand stock market.

The NZX50 increased by 13.92% (31st Dec '19 - 31st Dec '20) despite the huge drops in March due to Covid related volatility. In the last quarter of 2020 (Oct-Dec) NZX 50 increased by 10.92% with 6 sectors outperforming the index out of 12.

Below stock performance graph shows the industries that outperformed NZX 50 during this last quarter.

Stock of the month: Oceania Healthcare Limited

What does Oceania Healthcare do?
Oceania Healthcare Limited (OCA.NZX) operates in the New Zealand residential aged care and retirement village sectors. The Company offers residents villas and apartments within its 44 retirement villages. The Company also provides a range of residential aged care services (including rest home, hospital and dementia level care) at its aged care facilities.
Why is Oceania our Stock of the Month?

Oceania Healthcare is a new entrant to the retirement village sector compared to established operators such as Ryman and Summerset. Traditionally the retirement sector has performed really well whenever there is a boom in the property prices such as current time.

The company has completed its 61 new care suites in Nelson and stated that it is on track to complete 217 aged care beds and retirement village units by the end of this financial year (31 March 2021). In the second half of the year, Oceania Healthcare is scheduled to complete retirement village apartments at The Bellevue in Christchurch and The BayView in Tauranga, with a further three brownfields developments and one greenfields development underway.

Furthermore, it has resource consents in hand for 84.2% of its 1,780 unit/bed development pipeline which are planned to be delivered over the next six years.

Oceania also reported a strong increase in operating cash flow by 30.9% to $74.6 million. In addition, the company raised $125 million bond issue in October 2020. Net debt of $311.4 million as of 30 November 2020 represents a gearing level of 32.3% (net debt to net debt plus equity) which puts the company in a promising position to fund its future growth.

Recent stock news
Since the 23 March Covid related share price drop, Oceania’s share price bounced up by 297% from $0.38 to $1.51 on Jan 25th.
Financial record
For the six month ended 30 November 2020, the Company has reported the following:
1. A 2.0% increase ($0.7m) in unaudited underlying EBITDA and Unaudited Reported Net Profit after tax (NPAT) of $24.8m, up $9.9m compared to the prior corresponding period
2. Sales volumes (for both independent living apartments and villas, as well as care suites) 44% ahead of the prior corresponding period
3. The completion of 28 apartments and 61 care suites at Green Gables (Nelson) in September 2020 and on track to complete 217 new independent living units (apartments and villas) and care suites prior to 31 March 2021
4. Operating cashflow increased 30.9% to $74.6m as a result of strong sales volumes

5. Completion of a heavily oversubscribed retail bond issue in October 2020, raising $125 million
6. Interim dividend of 1.3 cents per share (not imputed) announced with a record date of 10 February 2021 and will be paid on 24 February 2021. The Dividend Reinvestment Plan will apply to this dividend.
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