China Minzhong: Emerging from a down trend.

The last time I blogged about China Minzhong, I said that the longer term downtrend was still intact. Has this changed? Yes, it broke out of this downtrend middle of August and briefly went under the trend line in early September.

Both MACD and MFI have formed higher lows. Breaking the down trend with stronger positive momentum is good news for the bulls. Now, all eyes would be on 78.5c, the recent high of 23 August as well as the declining 200d MA at 80c. If price action is able to break these resistance levels and move higher, we could see a move to test a band of resistance between 88c to 94c.

In case of further weakness, I see support at 66c, provided by the 50d MA. Stronger support is at 63c, the top of a 5 months base formation (March to August 2012). I would be accumulating on weakness.

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We expect higher operating cash flow and less Capex in FY13, thus the first positive free cash flow in three years. We cannot rule out the possibility that Minzhong will pay dividends or buy back shares in FY13. Although we have not put in any dividends payments or share buyback forecast as our base case, we believe such actions will boost the valuation if they eventuate. (Kim Eng, 28 August 2012)

Related post:
China Minzhong: Pushing higher.

Wilmar: Is the tide turning as buying pressure returns?

I bought more shares of Wilmar as its price went to a new low yesterday. Some might question why I did this. Was I not afraid of losing even more money? Well, it was a calculated risk based on certain technical signs.

As Wilmar's share price went lower, I noticed that the CMF was forming higher lows. So, share price was forming a positive divergence with the CMF. What is CMF?

CMF stands for Chaikin Money Flow. This is a money flow oscillator that measures buying and selling pressure. When the CMF is in positive territory, the bulls have the upper hand. When it is in negative territory, the bears are stronger.

So, if we look at Wilmar's chart, selling pressure was reducing even as its share price drifted lower.  We can see the selling pressure letting up with the CMF forming higher lows. It is a process.

When the CMF forms a bullish divergence while still in negative territory, it is saying that selling pressure is reducing. When the CMF crosses over to positive territory, it is saying that smart money has moved back in and selling pressure has given in to buying pressure. So, the smart money are buying as weaker long holders or late short sellers continue to sell at lower prices. Yes, price could continue to move lower even as buying pressure returned and it did.

Those who short sold as share price retested and broke the low of $3.04 just a few sessions ago probably contributed to the heavy buying today as they scurried to close their short positions.

If we double check with the MACD which is a pure price oscillator, we notice that it did not form new lows even as share price moved lower. If we check the MFI, a favourite of mine as it takes in price and volume and more effectively measures demand, we see it forming a higher low as price formed a lower low. Another positive divergence.

With central banks around the world easing monetary supply, expectations are for commodities and other cyclicals to do much better in future. Wilmar seems like a logical beneficiary.

I would pay attention to the declining 50dMA. At $3.32, it is just 8c away from today's closing price of $3.24. If it should be overcome on high volume, it would attract more buyers and force more shortists to close their positions. Then, we could see price going higher to test the support turned resistance at $3.52.

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Wilmar said on Thursday it had repurchased 7.4 million shares from the open market, representing 0.115% of outstanding shares, at $3.00 each.

“The buyback is because Wilmar is good value at these prices. It also reflects the confidence that the Wilmar board has in the long term fundamentals and growth prospects of the group,” Wilmar’s spokeswoman said in an email.

REUTERS

Religare Health Trust: 8.5 to 9% yield.

A new business trust to be listed soon in Singapore, it seems.

Religare Health Trust, which will own assets managed by Indian hospital group Fortis, is offering an indicative yield of 8.5% to 9% for its initial public offering that could raise as much as $500 million. The units offered will comprise about 70% of the total, the source added.

The listing is planned in the third week of October, sources said.

Religare Health Trust has a mandate to invest in medical and healthcare assets and services in Asia, Australasia and emerging markets, Fortis Healthcare has said previously.

Source: REUTERS

Fortis Healthcare is controlled by billionaire brothers
Malvinder and Shivinder Mohan Singh.

The distribution yield is tempting, for sure. However, I wonder what is the debt level going to be like. After all, it was reported in August that Fortis Healthcare, the sponsor of the trust, has a very heavy debt burden.

Religare Health Trust is set to launch an up to US$400 million ($498 million) initial public offering in Singapore, a source said, in a move that will allow the backer of the trust, Indian hospitals group Fortis Healthcare, to cut its substantial debt level.

Fortis is India’s No. 2 hospitals operator after Apollo Hospitals Enterprise. It had consolidated net debt of 62.37 billion Indian rupees ($1.39 billion) as of end-June.

Source: REUTERS

Details are lacking at the moment. What is the gearing level going to be like, pro forma? What is the NAV/unit? Apart from hospitals in India, where and what are the other assets to be held by the trust? Are the assets of good quality?

Apart from watching some documentaries and news coverage on the country, India is a country I barely know. This is also only the second listing in Singapore by an Indian company. Some of us might remember that in 2009, there was Indiabulls Properties Investment Trust.

To trust or not to trust? I will need more information.

Tea with AK71: Tonkatsu, Saizen REIT, Mazda cars.

Many things happened in my life lately. Some good and some bad. Well, mostly bad, I feel. Anyway, all I can do is to soldier on and roll with the punches. Take the good with the bad.

Today, after going out in the morning for an extended family gathering, I detoured to Orchard Road to take in the sights and have lunch at a tonkatsu place in the basement of Ion Orchard which my sister brought me to once before. It is called Ginza Bairin. Very good and cheaper than Tonkichi. The generous portion really filled me up too.

Fillet Katsu Set. $16.90. 3 pieces of fillet katsu which I prefer to loin katsu as it has less fats.
Served with rice, miso soup, pickle, salad, a really generous slice of fresh lemon (not the dried up type) and two sauces for the salad and tonkatsu.

Then, I bought the latest issue of The EDGE and went to Scotts Square's UOB to rest my feet. Only my second time there after I discovered that they serve a very fragrant Osmanthus green tea a couple of months ago. I asked for the same tea again today.

The least expensive apartment at Scotts Square is 600+ sq ft in size and has a price tag of $2.2m. As much as I like the place, it is unlikely that I would ever be able to buy a unit there. So, I can only enjoy the view from UOB on the third floor. Hahaha...

The EDGE has a few interesting articles in this issue. For anyone interested in Saizen REIT, luxury condominiums or shoebox apartments in Singapore, go pick up a copy.

Saizen REIT's unit price has shown strength lately and it is revealed that the REIT is attracting buying interest from wealthy investors in Singapore. Mr. Raymond Wong, executive director and major shareholder of the REIT's manager, declines to identify them but says that they are "entrepreneurs the locals would have heard of".

Intriguing. I wonder who they are...

According to NRA Research, units in the REIT are trading at a much steeper discount to its book value than its peers listed in Japan, which are trading at 0.75x book value.

Saizen REIT's NAV/unit is about 30c. So, 0.75x book value would translate to 22.5c. Saizen REIT is currently trading at about 16c per unit. I wonder...

I also flipped through the many magazines at UOB and one of them was an auto magazine. The back of the magazine has the latest prices of all the major makes sold in Singapore. I took a photo of the price list for Mazda cars in Singapore.

Wow! Would you pay S$128,988 for a Mazda 2?

I have to go out in a while. Family dinner. Hope the weekend is a good one for everyone. :)

Related posts:
1. Saizen REIT: 2H FY2012.
2. Quick, buy a new car cheaper now!
3. Hainanese pork chop rice.