First REIT: Is the bear just resting?

I scanned the charts of the counters I am vested in and, for the first time in a while, I don't really have anything to say. I was actually thinking of not blogging tonight. However, the last chart I looked at gave rise to some thoughts, some bearish thoughts. The chart was a weekly chart belonging to First REIT.

Let us first look at the daily chart. First REIT is in the grip of a downtrend that started on 20 January. This downtrend is very much intact. In fact, the recovery of its unit price from recent lows with price bouncing off support at 72c as provided by the 100dMA seems to have hit a wall this session as a black candle was formed. The reducing volume as price rose is surely not encouraging.

The MACD although having completed a bullish crossover with the signal line is still in negative territory. The recent price recovery could just be a rebound. Without an increase in volume as price tries to move higher, it could indeed be just that. It might also interest investors to look at the OBV which suggests continual distribution since price peaked in middle of January 2011. This could be short term and mild in nature but we should keep it at the back of our minds nonetheless.

Fundamentally, this is still a very attractive REIT for anyone investing for income. However, it does not look very attractive from a technical perspective at the moment. A pullback to the 100dMA at 72c could happen again and I am not discounting a possible pullback to the 200dMA either which is now at 69.5c.

Look at the weekly chart and the bulls would feel somewhat happier because the longer term uptrend is obviously intact. All the weekly MAs are rising nicely. However, pair this picture with the lower highs and lower lows on the MFI and RSI, we have negative divergences. Not so happy anymore? Well, at the most basic level, it shows that longer term momentum is weak.

Remember this blog post: First REIT: Buying more? Well, the technicals are suggesting caution even in the longer term. The recent pullback to 72c (the 100dMA) could just be a precursor. After all, price goes down a river of hope. Never say never and the 200dMA could be called upon as support in the next flush downwards. You could see me loading more units of First REIT then.

Related post:
First REIT: Buying more?

High Yield Portfolio - Update.

Sometimes, we just stumble upon a good thing. One of my inaugural blog posts when I started ASSI on Christmas Eve 2009 remains the most popular blog post today. I am talking about "High Yield Portfolio".

In October last year, a reader asked if I would do an update on the portfolio and I did. However, it was a "Reply from AK71" kind of thing and were mostly one-liners. See it here.

Have I deviated much from the first time I introduced this portfolio for investors who are more interested in investing for income? Not much. I am still invested in all six counters although the weight of each counter in the portfolio could have changed somewhat.

My largest investment is based on rather contrarian ideas and has attracted some skepticism, putting it mildly. I started investing in Saizen REIT at 13c a unit and I kept loading up.  Even at 16.5c a unit, I bought some. For sure, this is an under-performer in terms of capital appreciation. However, I invested in this with a view that it is grossly undervalued and that things could not get any worse. So, if we take care of the downside, the upside should take care of itself. The annualised DPU of about 1c is much lower than my estimates from a year ago and, at first glance, seems unattractive. I did not take into account the amortising nature of its new loans then. However, when we realise that the DPU could actually be 50% higher if not for the amortising nature of its loans (unlike all the CMBS before), it is immediately apparent how strong this REIT's cashflow from operations actually is. See: 2Q FY2011 results.

My second largest investment is also rather controversial: AIMS AMP Capital Industrial REIT. Reading some other blogs as well as comments left in my blog, I realise how there is still deep seated mistrust of its management. This is despite the fact that it is quite a different animal from its MI-REIT days. It is financially stronger and it has two strong sponsors. It has all its financial requirements well looked after and even managed to refinance its loans at a lower interest rate. Some people say that they were the early investors in the REIT during its MI-REIT days and that they would never recover their money. It might surprise them to know that I was also an early investor but when the REIT was recapitalised, I looked at the numbers and decided that at 20.5c, it was a safe investment promising an almost 10% distribution yield. I increased my investment in the company by some 5x right away and I have recovered all my losses and more since, especially with the rights purchased at 15.5c/unit in September last year. See: Rights issue. Would I buy more now? At 20.5c and with an estimated DPU of 2c for a distribution yield of 9.76%, why not? See: Acquisition of Northtech.

My third largest investment is now in First REIT after its recent rights issue. A blog post of mine says that this one is for keeps and I still believe it is so. See: This one is for keeps. Actually, it is more so now after the rights issue and acquisitions. An expected DPU of 6.4c and the current price of 74c, it will deliver a distribution yield of 8.65%. With gearing low at 15% or so, it has more headroom to gear up for future acquisitions which could bump up DPU. See: FY2010 results.

My fourth largest investment is in LMIR. The investment was premised on a robust Indonesian economy with 60% of its GDP from domestic consumption. However, I do not like the idea of the management losing lots of money in foreign exchange forward contracts. See: Foreign exchange forward contracts. I do, however, recognise that this is a stable passive income generator and exchange rates (Rupiah/S$) should be quite stable from here. DPU for FY2010: 4.44c and at a unit price of 54c, that's a distribution yield of 8.22%.

My fifth largest investment is in SPH. No need to say much here. SPH is one of the highest yielding blue chips I know of. Although it is synonymous with The Straits Times and other publications, it is really its exposure to real estate that I really like. I especially like the fact that it owns and manages The Paragon on Orchard Road. I also like that fact that it is a co-owner of the soon to be completed Clementi Mall. Would I buy more now? The yield is still about 6.5% even at recently traded prices. I might buy more if price were to weaken further. See: Final dividend.

My smallest investment in this High Yield Portfolio is in Suntec REIT. This REIT was something I went in big at about $1.00/unit, give or take few cents, with a view that it would be a beneficiary of the expected improvement in tourist arrival numbers and improving office rentals. Technically, it was also looking good then. I think it is quite boring now with price at $1.50/unit or so. I have divested most of my investment in this REIT and still retain a small investment. Expected DPU for 2011: 9.7c. See: Buy calls.

Do I have any counters I would consider adding to this High Yield Portfolio? Yes, there is one: Cache Logistics Trust. I have blogged about it regularly and did so recently again. Read it here. I could replace Suntec REIT with Cache Logistics Trust if the conditions were right.

Tea with AK71: 60c soya beancurd et al!

Tiong Bahru Market is a favourite eating place for me. Today, I had lunch there with my family.

The beancurd at Long Ji (Store No. 250) is the best and cheap too. I have brought friends and customers there before as well. Even the customers from Hong Kong are amazed at how good and inexpensive it is. 60c a bowl!

I always make it a point to bring some back to consume later in the day and night. A big container of yummy beancurd for only $1.10! I bought four containers' worth.

The dough fritters are only 70c each. I bought 3 for $2.00. I think the dough fritters at Food Republic are not as nice and they cost 90c each.

The Lor Mee is also famous.  There are two Lor Mee stores. This is the corner store next to a washing area. I cannot remember the store number. $2.50 a bowl and it includes fried fish and fried wanton.

Original Tiong Bahru chwee kway (steamed rice cakes?)! I prefer this to Jian Bo chwee kway. The secret of good chwee kway is really in the chye poh (pickled turnip?). Cannot be too oily and too mushed up. This is just nice. Price? A princely sum of $1.

Yummy. Burp.

CapitaMalls Asia: Up or down?

Someone asked me what is the probability of CapitaMalls Asia's share price going higher in the next two weeks? This is a fair question since TA is about probability. I am not saying whether it would go up or not but what is the likelihood of it going up or down. We are still trying to look into the future and it is never an easy task, if possible at all.

Looking at the daily chart from day 1, it is very obvious that CapitaMalls Asia's share price is in a long term downtrend. If we believe in trendlines, then, the very sharp downtrend which the counter is now consolidating within is likely to break. We could continue to see some upward movement towards trendline resistance, the nearest and steepest downtrend resistance line is approximating the declining 20dMA at $1.83 next week. Sounds familiar? Yes, $1.83 is a twice tested support turned resistance. Could be a tough nut to crack.

This is a very steep downtrend and, to be prudent, I might close a portion of my long position at $1.83, recognising the strength of the resistance, if tested. Remember, in a downtrend, selling at resistance is conventional wisdom. Keep the rest of my long position open to see if price could break resistance and head higher. In such a case, the next downtrend resistance approximates the declining 100dMA and that would approximate $1.96 next week.

Any signs from the momentum oscillators? Remember we said that the weekly chart is spotting a positive divergence? Remember how I am keeping an eye on the MACD in the daily chart to see if it could form a higher low? It seems that the MACD is forming a higher low. As price moved lower, seeing a higher low on the MACD is good news for bulls as it suggests a likelihood of a reversal in the downtrend.

What about the weekly chart? We still have a positive divergence between falling price and rising MFI and rising RSI. It is also quite obvious that the immediate resistance to watch is at $1.83. An encouraging sign is found in the formation of a white spinning top which is a probable reversal signal. This would need confirmation next week. All in all, things look pretty benign, technically.

Know where the resistance and supports are, know whether it is an uptrend or downtrend, check the momentum oscillators, act accordingly. It doesn't get any better than this, I suppose. Good luck.

Related post:
CapitaMalls Asia: Consolidating?

Daiwa ups CapitaMall Trust to outperform. Daiwa has raised its distribution per unit forecasts by 3.8% in 2012 and by 3.7% in 2013.
Friday, 04 March 2011

© 2011 - The Edge Singapore

STI +1.3%; valuations still attractive - SIAS.  It adds, “investors should start getting in on the market in small amounts as valuations are still attractive and the long-term uptrend remains intact.” 
Friday, 04 March 2011

© 2011 - The Edge Singapore

Golden Agriculture: 72c resistance.

Golden Agriculture hit resistance at 72c and closed lower at 70.5c, forming a black candle in the process.  In its attempt to move above 72c resistance, volume was relatively lower, suggesting a lack of buyers.

A dead cross between the 50dMA and the 100dMA is still on the cards and the market has turned cautious as evident in the declining volume as price tried moving higher in the last 4 sessions. A pull back would see initial support at 68c, followed by 64c, as provided by the rising 200dMA.

What if the counter were to move higher? Well, there is that probability since volume is healthy this week, forming a nice white candle in the process. In fact, it could be a 3 candle reversal pattern. Looking at the weekly chart, 72c is a longer term resistance as provided by the 20wMA. If this were to give way next week, we could see price go higher to 75c and, then, 80c.

On the other hand, things could get quite ominous if the downtrend which started in early January 2011 were to re-assert itself. The 50wMA is currently at 62.5c while the 100wMA is currently at 54c. Both these MAs are long term MAs, however, and should provide strong support if ever tested.

Related post:
Golden Agriculture: Signs of selling into strength.

Tea with AK71: iPad 2.

I have been sorely tempted by the iPad and I have been looking at the Samsung Galaxy Tablet.  I am so glad I did not buy either one because the iPad 2 is coming soon! Best of all, it would not cost more than the iPad. It would be at the same price! I can imagine many who are considering a tablet would now wait for the iPad 2. Bad news for shops selling the iPads... for now, anyway.

Jobs told those gathered for the unveiling the handheld computer is not only thinner than its predecessor, it is "dramatically faster."

"It has a new chip called A5," he said. "It's dual-core, so we get twice as fast performance on the CPU and nine times better graphic performance," the Times quoted Jobs as saying.

The new tablet is 33 percent thinner than the original iPad and weighs 1.3 pounds, down from 1.5 pounds, Jobs said.

Read more: http://www.upi.com/Business_News/2011/03/02/Apple-CEO-Steve-Jobs-gets-standing-ovation/UPI-12761299093214/#ixzz1FY1FAw3t

CapitaMalls Asia: Consolidating?

All we can really say is that the downtrend has come to a halt and that price is testing gap resistance at $1.75. In fact, today, price touched a high of $1.78 before closing lower at $1.74. Traders are selling into strength amid uncertainties in the world markets.

Although an inverted black hammer is not pretty, price still closed above the support line drawn with the low of 28 Feb as the source. This is encouraging. The declining volume as price tried to move higher is the major dampener for bulls here. If this continues, we could be seeing the early days of a longer consolidation process.

Immediate support is still at $1.69 and if this breaks, we could see price moving lower. The gap resistance at $1.75 which has cracked two sessions in a row remains the immediate resistance although weakened. A realistic target upon overcoming gap resistance is $1.83, a twice tested support that gave way on 23 Feb.

Related post:
CapitaMalls Asia: Steady in a sea of red.

Golden Agriculture: Signs of selling into strength.

Golden Agriculture's share price attempted to move higher today and touched a high of 71.5c. This is probably on news of higher CPO price which likely did better due to the strong price of crude oil. The counter's share price eventually retreated to close at 70c. There seems to be some strong selling pressure higher up.

However, closing above the downtrend resistance is good news for bulls since it confirms a nascent uptrend although it is a weak uptrend as suggested by a declining ADX. Unless volume expands significantly on the next upmove, expect continuing resistance as price tries to move higher. The declining 50dMA seems on track to forming a dead cross with the rising 100dMA which is currently at 72.5c. This could cap any upside from here.

Related post:
Golden Agriculture: Downtrend once more.

CapitaMalls Asia: Steady in a sea of red.

For a brief few minutes, its share price overcame gap resistance at $1.75, touching a high of $1.76. Ultimately, gap resistance proved too strong as price closed the session at $1.75. Volume was lower than the preceding session which is probably why price action lacked the impetus to close above gap resistance.

Nonetheless, in a sea of red, closing unchanged is a sign of strength. Both MFI and RSI have turned up. While it is still too early to say, we could be seeing the formation of a higher low on the MACD. It would be clearer by end of the week. This could reinforce the positive divergence we are witnessing in the weekly chart.

Overcoming the gap resistance convincingly could see the share price testing resistance at $1.83 and perhaps even $1.88. A more bullish scenario could even see the longer term downtrend resistance approximating the declining 100dMA tested.

Related post:
CapitaMalls Asia: More upside after gap cover?

Citi upgrades CapitaMall Trust to Buy from Hold. It estimates the Illuma acquisition would increase DPU by approximately 1%, given its low financing cost of 2%. 
Wednesday, 02 March 2011

© 2011 - The Edge Singapore

Golden Agriculture: Downtrend once more.

Golden Agriculture started the day at 69c, touched a low of 67.5c before closing at 68.5c, forming a black candle with a long lower wick. That this formed within a preceding white candle has a semblance of a bearish harami. The bearish tone is reinforced by the fact that the downtrend resistance is at 69c which means that the counter's share price is once again in the embrace of the downtrend which started on 4 Jan.

Although price might go higher to retest previous session's high of 71c, the probability of further weakening is rather high. Why a retest of previous high at 71c and not 72c as provided by the 100dMA mentioned in earlier blog posts? Well, traders are going to remember 71c as the price they could have sold at but didn't. So, 71c is now a psychologically important resistance level.

A weakening in price could see the 200dMA, now at 64c, tested once more as support. If it holds up, I could possibly go long on the counter once more. Otherwise, the next support is the low of 23 Feb at 61c. Making sure that support holds up before going long is the way to go.

Related post:
Golden Agriculture: A one day gain of 7 to 9.4%.

Cache Logistics Trust: A retest of 91.5c low?

This is one counter I have been patiently waiting for price to reach a level I consider relatively attractive. Technically, it is looking quite possible that my wish could come true.

Today's trading volume is the highest since 1 Nov 2010. A long black candle was formed. Coupled with increased volume, this is very bearish. We could see the recent low of 92.5c tested next. Could we even see the low of 26 May 2010 at 91.5c tested? There is a chance.

I have put in my buy queue at 91.5c. With an annualised DPU of 7.76c, it would mean a distribution yield of 8.48%. This is lower than AIMS AMP Capital Industrial REIT's 9.76% (with a DPU of 2c at the current price of 20.5c).

A lower distribution yield is acceptable to me due to the REIT's much lower gearing of 23.7% and much higher interest cover ratio of 9.3x. Cache Logistics Trust's numbers look stronger than AIMS AMP Capital Industrial REIT's (gearing of 33.6% and interest cover ratio of 5x). Buying at 91.5c is still a premium of 2.8% over its NAV/share of 89c but this is marginal and acceptable for a lower risk investment.

Related post:
Cache Logistics Trust: Weakness after XD.

Healthway Medical: 4Q 2010 results.

Not expecting any spectacular improvement in numbers from Healthway Medical. Let's take a look:

1.  Revenue declined 23.8% in Q4 compared to the same period last year.  For the full year, revenue declined 12.2% compared to the previous year.

2. Staff cost increased 11% in Q4 compared to the same period last year.

3. Profit before income tax decreased 68.2% to $1.133m in Q4 compared to the same period last year.

4. Cash flow from operations is positive for the quarter at $6,289m. This may seem like a good thing but scrutinise the numbers and we realise that most of this is because of trade and other receivables which came up to $6,927m. If we take these away, cash flow from operations would be negative.

 

5. EPS for the quarter is 0.04c which is an improvement over the 0.01c in Q3 but down from 0.23c in the same quarter last year. Full year EPS 0.14c.

See results here.


Although the numbers are still bad, generally, the numbers are getting less bad. The increase in staff cost seems to be slowing down while the reduction in profit is not as severe as before. Even the negative cash flow from operation situation is less serious now as compared to negative $2.3m in Q2 and negative $1.278m in Q3.

With an EPS of 0.14c, Healthway Medical is trading at a PE of 100x. No investor worth his salt would touch this. However, there could be opportunities to trade this counter and I would view any rebound as a chance for stale bulls to reduce exposure.

Immediate support is at 13.5c but if this were to break, we could see 12.5c next. Strong support is to be found at 11c. Technically, the only encouraging sign is the MFI which shows some underlying support with higher lows.

So, if we do not see a sell down tomorrow, it would suggest that only stoic long holders are left. In fact, from the peak achieved on 16 June 2010, volume has been declining as share price retreated. No matter how dismal the fundamentals are, if all the sellers have sold, share price could begin to bottom in earnest. Wait and see.

Related post:
Healthway Medical: 3Q 2010 results.

CapitaMalls Asia: More upside after gap cover?

Some may wonder why CapitaMalls Asia seems to be suffering from malaise even as Capitaland's share price recovered almost 3% today. A quick look at the chart and the answer is obvious. Gap resistance is found at $1.75 and the counter closed the gap today. What now?

The MACD histogram has turned green. With the MACD still in negative territory, a green histogram probably indicates a short term bullish bias. The MFI has dipped into oversold territory while the RSI is upturning in oversold territory. Even if the price does not recover in a hurry, the technicals hint that any downside could be limited for now.

Immediate support has been established at $1.69, the low of 28 Feb while immediate resistance remains at $1.75, beyond which, resistance could be found at $1.83 (a twice tested support turned resistance) and $1.88 (downtrend resistance and declining 20dMA).

Related post:
CapitaMalls Asia: Another failed reversal signal.

Golden Agriculture: A one day gain of 7 to 9.4%.

The STI experienced a nice up day as it closed 1.9% higher at 3,067.60. Golden Agriculture closed higher as well, breaking the immediate resistance of 68.5c, touching a high of 71c before closing at 70.5c.

I have closed my long position bought at 64c yesterday at 68.5c and 70c today, locking in a one day gain of 7% and 9.4% respectively. For those who have yet to close their positions, the next resistance levels are at 72c (100dMA) and 73.5c (50dMA). Having broken out of the downtrend which started on 4 Jan on the back of a high volume white candle day, there is a chance that price could go higher. Then, why did I choose to close my position?

A one day gain of 7% to 9.4%, risk free, is good enough for me. There could be another 2 or 3c gain from here but the risk is definitely higher now. 68.5c is also a natural price level for partial divestment as it approximates the position of the downtrend resistance, on top of being the price where we find the 20dMA.

A look at the weekly chart shows that 72c is likely to be a strong resistance. Notice also how the MFI and RSI are forming lower highs and lower lows. We could be experiencing a very strong rebound and when the energy is spent, price is probably heading lower.

STI increases 1.9% to 3,067.60 at closing. Golden Agri Resources surged 8.5% to 70.5 cents. UOB-Kay Hian Holdings raised its rating to “hold” from “sell,” while HSBC maintained its “overweight” recommendation and cut its share-price forecast to 81 cents from 90 cents.
Tuesday, 01 March 2011

© 2011 - The Edge Singapore

Related post:

Golden Agriculture: Stellar FY2010 results.