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AIMS AMP Capital Industrial REIT: Good value.

Thursday, October 7, 2010

On 28 Sep, I mentioned that I bought more units at 21.5c believing that the REIT still offered good value at this price with a yield of 9.67%.  I also said that "21.5c is psychologically important as it is the midpoint of the old trading range of 20c to 23c".

Today, we see some quiet buying up in this REIT. Of the 2,085 lots which changed hands, 1,672 lots were bought up at 22.5c. Technically, this has created a buy signal in the MACD histogram. The MFI has just dipped into oversold territory while the RSI is bordering on oversold.

There are some who believe that the price would suffer on the 15th when the rights units commence trading with pessimistic forecasts of as low as 20c. If people are willing to sell at 20c, well, I am willing to buy as that would give me a yield of 10.4% per annum.

Related post:
AIMS AMP Capital Industrial REIT: Cheaper please.


JT said...

Why would trading of the rights share push the price down? If wanted to sell, would have sold when the rights were trading. Chances to arbitrage is not high and gonna go thru the hassle of paying for it and stuff. Even if you consider some ppl wanna sell excess right shares etc, don't think will impact much. But well... mkt is irrational, so we shall see.

AK71 said...

Hi JT,

I share your sentiments.

Well, it is what some people are speculating. I do not think too highly of such speculations but, like you said, the market is irrational.

Someone who manages to get a lot of excess rights could decide to sell them off to make a quick buck. To them, it could be money from the heavens. ;)

Jeremy said...

Hi, my thoughts is that seeing the trend of the nil paid rights trading period, the lowest price was $0.055 per unit. So, the minimum price potentially possible for the AIMSAMPIREIT units trading on 15 Oct (after the completion of issue of rights units) is $0.21 per unit after factoring in the conversion price of $0.155 per unit. This is just simple calculation and deduction based on logic.

To sell below this price of $0.21 per unit is making a capital loss for most investors. If the price does reaches $0.21 per unit or below, it is definitely a reasonable buying in price if the market were to be irrational to sell at a lost for many investors.

Anyway, I do not think there should be any major fundamental problems for this REIT at least for the next one year (bearing in mind part of it's debts are only due in 2012 I think). On the other hand, there maybe potential upside for it's unit price if the REIT should surprise investors with improving it's DPU over the next one year (KIV on this depending on their management results over next year in areas such as managing renewal of rental leases, occupany, net income, cashflows etc.). So, this investment to me is low risk and potentially high (??) reward at least for next one year period.

The critical importance is in monitoring the investment and know when to get in (high probability of rewards versus risk) and when to get out (high probability of risk versus reward).

Just my two cents worth....:-)

AK71 said...

Hi Jeremy,

This is definitely more than 2 cents worth. Thank you. ;)

I agree with you on all counts which is why I mentioned that if the market is willing to sell to me at 20c, I am willing to buy (very much more). ;)

Perhaps, the stigma that this REIT seems to be suffering from is a historical baggage from its MI-REIT days. This is, of course, irrational but it is Mr. Market.

Anonymous said...


I bought rights from mkt 6 cents each

I applied 30lots excess rights

whats the ratio of getting the excess ? anyone tried ?

AK71 said...

Hi chan,

You bought nil-paid rights at 6c each. Did you pay 15.5c for these before the deadline of 9.30pm (7 Oct)?

We won't know how many excess rights we have been given (if any at all) until the 15th, I guess. :)

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