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LMIR: Weakness is an opportunity.

Friday, March 19, 2010

LMIR closed 1c lower at 49.5c today, supported by the 50dMA.  Forming a wickless black candle on increased volume, more downside looks probable.  However, with the 20d and 50d MAs merging and rising in tandem, we should see support at 49c.  The trendline support nears 49c next week and 49c also happens to be a 38.2% Fibo support.

There is obvious distribution taking place today and this can be easily seen in the OBV but the longer term picture of accumulation is intact.  MFI continues to form lower highs and higher lows and the index does not indicate any trend per se.  The MACD turned down towards the signal line and we will have to wait and see if a bearish crossover takes place or if there will be a reversal.

I bought more units at 50c and 49.5c today.  I will now wait to see if the 49c support holds up next week.  If the 49c support breaks, we might see LMIR moving lower to test the recent low of 47c or even move to test the rising 200dMA as support.  The 200dMA is currently at 46c.

I mentioned that I have been waiting for months to buy more at 46c and I am probably not the only one.  If LMIR does test the 200dMA at 46c, I'm going to buy many more units to lock in a yield of almost 11%.  This weakness presents an opportunity to accumulate.

Related post:
LMIR: More units at 10% yield.


drizzt said...

somehow i feel this is a dangerous play. be careful yah.

AK71 said...

Hi drizzt,

Do you mean technically or fundamentally? I'm open to new perspectives. Please feel free to share. Thanks in advance. :-)

Anonymous said...

I've been visting this and a few other place, to understand more about stock investing. - putting in some extra cash here n there.
What are the thoughts on Capital Mall Asia. I know it's NAV is BAD, think it's riding the name of Capitaland..but is it over priced??

AK71 said...

Hi Anonymous,

Reading my various posts on REITs, you would know that I treat REITs like any piece of real estate (which should be the case since they are REAL ESTATE investment trusts). So, I don't like buying REITs at a premium to NAV just like I don't like buying a house above valuation.

However, CapitaMalls Asia is not a REIT. It is a mall owner, developer and manager. It is a company. So, we have to look at it differently.

When I decide whether to invest in a company or not, I look at its Income Statement, Balance Sheet and Cash Flow.

CapitaMalls Asia's 2009 Full Year results are actually very good. Profit after tax surged 233%, it is in a Nett Cash position and it has very strong positive cash flow.

NAV at $1.41 per share and EPS at 20c per share. At the last closing price of $2.39, it's trading at a 70% premium to NAV and a PE of 12x. I think the current price seems fair, fundamentally.

However, they do seem to be rather tight when it comes to dividends though. 1c? You would be buying into this company for the growth story. The story is one which tells of the rise of Asian consumers which should be quite powerful. This is also a reason why I like LMIR but that's another story. ;)

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