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AIMS AMP Capital Industrial REIT: Buying more?

Tuesday, October 12, 2010

A reader sent me an email saying that he bought more of this REIT at 23c recently and he is dismayed that price has retreated. He asked if I am buying more of this REIT.  Well, firstly, 23c is the upper end of the trading range for this REIT and buying at 23c is buying at resistance.  Never a good move, technically speaking.

On 8 Oct, I said "Looking at the trade summary, of the 58 trades done, more than half (36) were buy ups at 23c but the volume was only 260 lots out of a total of 2,339 lots which changed hands.  This suggests to me that the buy ups at 23c lacked conviction.  23c is still a significant resistance to watch, it would seem."

Fundamentally, however, I don't see a problem with buying at 23c. With a DPU of 2.08c per annum, it still gives a handsome yield of 9.04%.  However, I have been corrupted by TA and I use the charts to help me plan entry points.

Looking at the chart, one can roughly make out that the old trading range has been "revived", XR.  It is quite obvious that the range is still 20c to 23c with the midpoint of 21.5c being an important, many times tested support. 21.5c is also where the rising 50dMA would be approximating soon.  This should lend strength to the support. So? I would buy more at 21.5c if I feel inclined to add to my position in this REIT.

Both the MFI and RSI seem to have formed lower highs which suggest a weaker demand and a weaker buying momentum.  Volume is thinner compared to the first half of September.  This suggests that the recent upmove in price was to due to a lack of sellers and not an abundance of buyers.  Current holders are unwilling to sell and people who want a piece of the pie have to pay a higher price. However, most potential buyers are probably waiting to see what the units would trade at once the rights units start trading on the 15th.

Technically, the uptrend is intact but the momentum oscillators suggest that we could see continuing weakness in price.  Fundamentally, the yield is probably the highest amongst industrial S-REITs.  Its gearing level is acceptable and it is still trading at a big 20% discount to NAV, XR. Buying more at 21.5c? I might.

Related post:
AIMS AMP Capital Industrial REIT: Nick's FA.
AIMS AMP Capital Industrial REIT: Resistance.


Drizzt said...

i blame yours truely for getting vested in 10lots 22.5 last friday.


AK71 said...

Hi Drizzt,

You bought at 22.5c last Friday? Really? I extend my heartiest welcome to a new unitholder of the REIT. :)

Chu Yeow said...

Would love to get more lots at 21.5c too. On hindsight I should have invested more in it at the time heh.

21.5-22c seems like a very strong support level, so is 23c as a very strong resistance level like you've said (I've been watching for it to get taken out). Even trading within this band there's room for capital gains but I'm keeping this one for distribution.

AK71 said...

Hi Chu Yeow,

I made a bold decision to substantially increase my investment in this REIT in its early days. I'm a happy man. :)

As for trading this REIT, I do know of someone, Chan, who is very good at it. He makes a 0.5c gain each time. Good pocket money. :)

I have liquidated my position in CitySpring which I blogged about last week. I would most likely move the funds into this REIT if it does reach 21.5c. Good luck to both of us. ;)

-.-' said...

I would never touch this REIT. To me, this reit is tainted by its management. The following Article says alot about the management of this reit. For those lucky enough to have broken even or profit out of this reit, good for you. But the one laughing all the way to the bank is George Wang.

Im quite glad Cambridge didnt follow AIMS footsteps. AIMS has made no progress in its share price compared to Cambridge.

-.-' said...

Edited to conform to 4096html rule

GUARDS armed with revolvers are a common sight at banks, but at a shareholders' meeting? At a recent extraordinary general meeting (EGM), the manager of MacarthurCook Industrial Reit (MI-Reit) took the unusual step of hiring five armed security guards from Certis Cisco.

But why armed guards when there hasn't been a reported case of violence at such meetings?

Mr Nicholas McGrath, chief executive of the manager of MI-Reit, MacarthurCook Investment Managers (Asia) Limited, told The New Paper: "The board of directors felt that it was important for security guards to be present to ensure events were run in an orderly manner."

He said armed security guards from Certis Cisco were hired as MI-Reit's manager did not have its own in-house security guards.

There were raised voices at the EGM.


He said that at one point, there was a lot of shouting among unit holders who were unhappy with the way the meeting was conducted.

"I saw security guards rush in from outside when they heard the noise," he said.

"I think the security guards overreacted. Mostly, it's just grumbling among unit holders and some cursed. It was not very heated."

He felt that it was unnecessary to have armed security guards present at the EGM. Another investor who was present at the event heard about the presence of the armed security guards, but said he did not see them.

Said Mr Martin Lee: "It was more heated than a normal meeting, but it didn't get out of control. It was still quite civil."

A check with four listed companies on their security measures during AGMs revealed that they either had no security guards present during such meetings or deployed only unarmed in-house security guards.

Said Ms Koh Ching Ching, a spokesman for OCBC Bank: "We usually deploy the security guards from our premises to assist at the external venue where the AGM is held. "This is for crowd control and to ensure the safety of shareholders attending the AGM."

About the EGM

THE MacarthurCook Industrial Reit (MI-Reit) extraordinary general meeting (EGM) was held to debate a contentious $430 million rescue plan, reported TheStraits Times.

The manager of Cambridge Industrial Reit, Cambridge Industrial Trust Management Limited, a key stakeholder in MI-Reit, opposed the rescue plan and had wanted to take over as manager.

But this was rejected by the Monetary Authority of Singapore due to a potential conflict of interest.

In the lead-up to the EGM on 23 Nov, the two real estate investment trusts took out separate full-page advertisements in newspapers setting out their respective positions.

At the EGM, unit holders had to vote for a total of five resolutions, two of which attracted only about 52 per cent of the votes.

The MI-Reit manager, MacarthurCook Investment Managers (Asia) Limited, eventually won over enough unit holders for the rescue plan to be approved.

AK71 said...

Hi -.-,

Thanks for the history lesson. I am very much aware of the past as I was a unitholder of MI-REIT and Cambridge (CIT) as well. My views differ from yours but you are entitled to your opinion as am I.

I mentioned before in various blog posts how the rescue plan proposed by George Wang et al was the only one available at that point in time that would work. I also mentioned before that the mess that MI-REIT was in had its genesis in Chris Calvert's term as CEO of MI-REIT. Chris Calvert is, of course, the current CEO of Cambridge (CIT).

"I was a unitholder of MI-REIT and I was not very pleased with the recapitalisation package proposed late last year but I recognised that it was the best way to strengthen the REIT as there were no other viable alternatives (even though the CEO of CIT claimed there was). The renamed REIT is stronger in its balance sheet which is the most important thing in any business, in my opinion. Why bother objecting to the recapitalisation plan on the grounds that unitholders' equity would be heavily diluted if the balance sheet remained terminally ill?"
Creat more passive income with limited capital.

You seem like you have an axe to grind with George Wang or AA REIT. Do you happen to be a unitholder of the old MI-REIT, CIT and MSPF as well?

I do not think it wise to let past baggage cloud our minds to the current realities. Anyway, good luck and if you are who I think you are, good luck with FCOT too. ;)

If you are not who I think you are, please accept my apology. :)

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